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Trading Statement
Verimark Holdings Limited
Incorporated in the Republic of South Africa
Registration number: 1998/006957/06
JSE share code: VMK
ISIN number: ZAE000068011
("Verimark" or "the company")
TRADING STATEMENT
In terms of paragraph 3.4(b) of the Listings Requirements of the JSE
Limited, an issuer is required to publish a trading statement as soon
as they are satisfied that there is a reasonable degree of certainty
that the financial results for the next reporting period will differ by
at least 20% from those of the previous corresponding period.
The first half of the year has been characterised by a tough retail
environment due to a weaker consumer demand, higher interest rates and
negligible economic growth in South Africa.
As a result of the ongoing depreciation of the Rand against the US Dollar,
it became necessary for Verimark to increase selling prices in mid-February
2014, the second time since June 2013. Never before, has Verimark, had two
price increases within twelve months. These price increases were the main
reason for the negative impact on the group’s sales volumes, revenue and
profitability in the six months ended 31 August 2014.
Despite strict cost control measures, cost containment was unable to offset
the reduction in gross profit generated.
Shareholders are advised that it is anticipated that the Group will record
a loss before taxation for the six months ended 31 August 2014, of between
R4,7 million and R5,0 million, an increase of between 292% and 317%,
compared to the loss before taxation of R1,2 million reported on in the
previous corresponding period.
Headline loss per share for the six months ended 31 August 2014 is expected
to be in the range of 3,5 and 4,0 cents, an increase of between 192% and
233% compared to the headline loss per share of 1,2 cents, as reported on
in the previous corresponding period.
Loss per share for the six months ended 31 August 2014 is expected to be in
the range of 3,5 and 4,0 cents, an increase of between 218% and 264%
compared to loss per share of 1,1 cents, as reported on in the previous
corresponding period.
FUNDING
The anticipated loss together with higher inventories on hand has resulted
in negative cash generation for the six months ended 31 August 2014.
Management is confident that the inventory levels will return back to their
normal operating levels during the second half of the year.
The company remains favourably geared and adequately funded to continue on
Verimark’s growth path.
PROSPECTS
Management’s focus on mitigating the impact of the Rand devaluation, its
continued strive towards improvement in the operating margins and the focus
on the operating efficiencies are expected to result in earnings
improvements in the future.
The Board is confident that the medium- and long-term prospects of Verimark
remain positive.
The information on which this trading update has been based has not been
reviewed or reported on by the company’s auditors.
The company`s financial results for the six months ended 31 August 2014
will be released on SENS on 9 October 2014.
3 October 2014
Sponsor
Grindrod Bank Limited
Date: 03/10/2014 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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