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Summarised audited consolidated financial statements for the year ended 29 February 2016, dividend announcement and
Verimark Holdings Limited
(Incorporated in the Republic of South Africa)
Registration Number: 1998/006957/06
Share Code: VMK
ISIN: ZAE000068011
("Verimark" or "the Group" or “the Company”)
SUMMARISED AUDITED CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 29
FEBRUARY 2016, DIVIDEND ANNOUNCEMENT AND NOTICE OF ANNUAL GENERAL MEETING
HIGHLIGHTS
- Revenue from continuing operations up 3,7% to R430,8 million (2015: R415,4 million)
- Profit before tax from continuing operations of R13,1 million (2015: R17,0 million)
- Headline earnings of R8,6 million (2015: R11,2million)
- Basic EPS at 7,8 cents per share(2015: 10,4 cents per share)
- Headline EPS at 8,0 cents per share (2015: 10,4 cents per share)
- Net asset value per share at 119,2 cents per share (2015: 116,8 cents per share)
During the past year the challenging economical environment experienced over recent years,
continued to worsen further, affecting the South African consumer. This, plus the depreciation of
the Rand to record levels in the year under review, impacted negatively on all import/consumer
related businesses. Notwithstanding, Verimark managed to reverse the downwards trend in
revenue growth experienced over the recent years, by recording an increase in sales revenue and
gross profit.
Improvements in cash generation and a focus on the employment of funds resulted in the further
strengthening of the balance sheet.
OVERVIEW
The past year was recorded by most economists as the worst in the current economic cycle. The
growth in sales revenue accomplished, confirms the resilience of Verimark’s business model and
its proven ability to source and develop the best innovations to improve the lives of millions of
consumers.
Sales revenue for the year under review was higher by 3.7% at R430.8 million from R415.4 million
in the previous year. Sales revenue for the first six months was down 2.5% compared to the same
period in the previous year, but up 9% in the second six months. A further noteworthy achievement
has been the exceptionally strong growth of 60+% achieved through some of the largest retail
partner stores during the December 2015 festive trading period. This increase in sales revenue in
the second half of the year and the impact thereof on profits, were unfortunately in part offset by the
exceptional depreciation of the Rand that resulted from various political developments that took
place during the second half of the year under review.
Profit before tax decreased by 22.7% to R13.1 million from R17.0 million in the previous year. The
foreign exchange loss for the year of R3.7 million compared to a prior year foreign exchange gain
of R0.4 million had a negative impact on profits. As a direct result of the exceptional depreciation of
the Rand the product cost ratio increased over the financial year, negatively effecting margins and
profit before tax.
The focus on operational efficiencies and stringent cost management has not wavered. While there
was a need to increase selling prices given the exceptional depreciation of the Rand during the
year, the cost management programme has resulted in selling and operating expenses being
contained below inflation. Cash Generated from operation improved by R22.2 million to R30.9
million from R8.6 million in the previous year.
FINAL DIVIDEND
The Board of Directors (the “Board’) is pleased to announce that the declaration of a final dividend
for the financial year ended 29 February 2016, of R4,23 million or 3,70351 cents per share
(2015:R5,6 million or 5,21778 cents per share) has been approved by the Board. This is consistent
with the dividend policy of 50% of profit attributable to the shareholders of the Company. This policy
will be reassessed by the Board on an ongoing basis. In accordance with the settlement
procedures of Strate, the following dates will apply to the final dividend payment:
Last date to trade cum dividend Thursday, 9 June 2016
Trading ex dividend commences Friday, 10 June 2016
Record date Friday, 17 June 2016
Dividend payment date Monday, 20 June 2016
Share certificates may not be dematerialised or re-materialised between Friday, 10 June 2016 and
Friday, 20 June 2016 both days inclusive.
The final dividend will be subject to dividend withholding tax at a rate of 15%, which will result in a
net dividend of 3,14798 cents per share to those shareholders who are not exempt in terms of
section 64F of the Income Tax Act. The final dividend has been declared out of income reserves.
As at 29 February 2016 and as at today, there are 107 891 458 shares in issue, excluding the
6 380 870 treasury shares. Verimark’s income tax reference number is 9638138843.
REPORTING ENTITY
Verimark is a company domiciled in South Africa. The summarised audited consolidated financial
statements as at and for the year ended 29 February 2016 comprises the consolidated results of
Verimark and its subsidiaries.
BASIS OF PREPARATION
The summarised consolidated financial statements are prepared in accordance with the
requirements of the JSE Limited Listings Requirements for abridged reports, and the requirements
of the Companies Act applicable to summarised financial statements. The Listings Requirements
require abridged reports to be prepared in accordance with the framework concepts and the
measurement and recognition requirements of International Financial Reporting Standards (IFRS)
and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and
Financial Pronouncements as issued by the Financial Reporting Standards Council and to also, as
a minimum, contain the information required by IAS 34 Interim Financial Reporting.
The accounting policies applied in the preparation of the consolidated financial statements, from
which the summarised consolidated financial statements were derived, are in terms of IFRS and
are consistent with the accounting policies applied in the preparation of the previous consolidated
annual financial statements.
Mr Bryan Groome CA (SA), Acting Financial Director, was responsible for supervising the
preparation of the consolidated annual financial statements and preparing these summarised
consolidated financial statements.
These summarised consolidated financial statements have been extracted from the audited
consolidated financial statements, but is not itself audited. The audited consolidated financial
statements on which the auditors, KPMG Inc, have expressed an unqualified audit opinion and a
copy of the auditor’s report is available for inspection at the Company’s registered office.
The Board take full responsibility for the preparation of the abridged report and that the financial
information has been correctly extracted from the underlying annual financial statements.
The Group has no assets or liabilities measured at fair value, by valuation method, which method,
which requires fair value hierarchy disclosures. The carrying values of financial assets and financial
liabilities as requested in the statement of financial position approximate their fair values at the
reporting date.
To obtain a copy of the annual financial statements that have been summarised in this report,
please go to www.verimark.co.za and click on the Annual Reports hyperlink on the website.
SEGMENTAL ANALYSIS
During 2013, the Group expanded to Singapore where a company was started. Per IFRS 8 Operating
Segments the operations of the Group are split between South Africa and Foreign. Operations in
Singapore have been discontinued and is reflected as discontinued operations in the 2016 financial
year as well as the prior year.
RELATED PARTY TRANSACTIONS
There have been no significant changes in related party relationships and/or transactions since the
prior year, other than in the normal course of business.
CHANGES TO THE BOARD
With effect from 23 March 2016,Mr Shaun Beecroft resigned as an Executive Director and
Financial Director and Mr Bryan Groome was appointed as an Executive Director and Acting
Financial Director.
SUBSEQUENT EVENTS
No events material to the understanding of this report have occurred in the period between the
reporting date and the date of this report.
PROSPECTS
The declining business confidence in South Africa is expected to continue beyond 2016. There are
numerous negative domestic and external economic as well as political issues impacting the
economy, leading in part to continued weakness in the Rand. There remains a real danger that
South Africa’s economy could enter a recession, which is an extremely concerning factor
considering this may well precede an economic downgrade.
Verimark will continue to place emphasis on increasing the pace of new products introduced;
normalizing margins that were eroded due to the weakening of the Rand; maximising operational
efficiencies; as well as cost containment in the year ahead. Given the economic challenges and the
uncertainty around the Rand exchange rate, Verimark is exploring a number of diversification
strategies locally, as well as internationally.
The group remain’s confident that the resilience of its business model and the overall talent of its
people will bode well for the future.
Statements contained in this announcement, regarding the prospects of the Group, have not been
reviewed or audited by the Groups external auditors.
SUMMARISED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended 29 Year ended 28
February 2016 February 2015
Audited Audited
R’000 R’000
Continuing operations
Revenue 430 798 415 374
Gross profit 172 936 168 872
Operating profit before net finance expense 17 830 18 108
Finance income 1 785 2 376
Finance expense (6 467) (3 480)
Profit before taxation 13 148 17 004
Income tax (3 882) (5 010)
Profit for the year 9 265 11 994
Discontinued operations
Loss for the year from discontinued operations (after (801) (736)
tax)
Profit for the year 8 464 11 258
Other comprehensive income
Items that are or may be reclassified subsequently to
profit or loss
Foreign currency translation reserve movement (157) 1
Total comprehensive income for the year 8 307 11 259
Basic and diluted earnings per share 7,8 10,4
Earnings and diluted earnings per share (EPS) – 8,6 11,1
continuing operations
Loss and diluted loss per share (EPS) – discontinued (0,7) (0,7)
operations
Diluted earnings per share (EPS) – continuing 8,6 11,1
operations
Diluted loss per share (EPS) – discontinued operations (0,7) (0,7)
Headline earnings (HEPS) 8,0 10,4
SUMMARISED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At 29 February 2016 At 28 February
Audited 2015
Audited
R’000 R’000
Assets
Plant and equipment 8 295 11 264
Intangible assets 14 336 14 623
Deferred taxation asset 3 305 4 961
Non-current assets 25 936 30 848
Inventories 65 581 79 531
Trade and other receivables 61 970 64 073
Prepayments 463 496
Prepaid taxation 23 498
Asset held for sale 164 2 632
Cash and cash equivalents 15 651 444
Current assets 143 852 147 674
Total assets 169 788 178 522
Equity and liabilities
Share capital 360 360
Share premium 32 269 32 269
Foreign currency translation deficit (324) (167)
Retained earnings 96 341 93 506
Equity attributable to the equity holders of the parent 128 646 125 968
Interest-bearing borrowings 3 367 4 085
Non-current liabilities 3 367 4 085
Trade and other payables 25 271 33 327
Liabilities directly associated with assets held for 0 301
sale
Current portion of interest-bearing borrowings 702 1 422
Bank overdraft 9 929 13 285
Taxation payable 1873 134
Current liabilities 37 775 48 4698
Total liabilities 41 142 52 554
Total equity and liabilities 169 788 178 522
SUMMARISED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Share Foreign Share Retained Total
Capital Premium currency based earnings
translation payment
deficit reserve
R’000 R’000 R’000 R’000 R’000 R’000
Balance at 28 360 32 269 (168) 468 82 248 115 177
February 2014
Total comprehensive
income
Profit for the year – 11 994 11 994
continuing operations
Loss for the year – (736) (736)
discontinued operations
Other comprehensive 1 1
income
Transactions with
owners recorded in
equity
IFRS 2 share-based (468) (468)
payment transaction
credit
Balance at 28 360 32 269 (167) 0 93 506 125 968
February 2015
Total comprehensive
income
Profit for the year – 9 265 9 265
continuing operations
Loss for the year – (801) (801)
discontinued operations
Other comprehensive
income
Transactions with (157) (157)
owners recorded in
equity
Dividends paid (5 629) (5 629)
Balance at 29 360 32 269 (324) 0 96 341 128 646
February 2016
SUMMARISED CONSOLIDATED STATEMENT OF CASH FLOWS
Year ended 29 Year ended 29
February 2016 February 2015
Audited Audited
R’000 R’000
Net cash inflows from operating activities 20 571 486
Cash generated from operations 30 895 8 679
Dividends Paid (5 629)
Finance income received 1 785 2 378
Finance costs paid (6 467) (3 480)
Taxation paid (13) (7 091)
Cash outflows from investing activities (1 510) (3 791)
Acquisition of plant and equipment to expand (2 795) (3 690)
operations
Acquisition of intangible assets to maintain (37) (181)
operations
Movement in assets held for Sale 1226 -
Proceeds from disposal of plant and equipment 96 80
Cash outflows from financing activities (1 438) (1 425)
Interest-bearing borrowings repaid (1 438) (1 425)
Net Increase/(decrease) / increase in cash and cash 17 623 (4 730)
equivalents
Cash and cash equivalents at beginning of year (12 841) (7 030)
Cash and cash equivalents held for sale at beginning 1 081
of the year
Cash and cash equivalents held for sale (141) (1 081)
Cash and cash equivalents at end of year 5 722 (12 841)
SEGMENTAL INFORMATION – for the year ended 29 February 2016
South Africa Foreign Group Total
(Discontinued) elimination
R’000 R’000 R’000 R’000
Revenue 430 799 1 112 431 911
Profit before tax 13 148 1 941 (2 742) 12 347
Profit after tax 9 266 1 941 (2 742) 8 464
Segment assets 169 624 164 169 788
Segment liabilities (41 142) (41 142)
SEGMENTAL INFORMATION – for the year ended 28 February 2015
South Africa Foreign Group Total
(Discontinued) elimination
R’000 R’000 R’000 R’000
Revenue 415 697 2 312 (323) 417 686
Profit before tax 17 022 (736) (18) 16 268
Profit after tax 12 007 (736) (13) 11 258
Segment assets 175 877 2 663 (18) 178 522
Segment liabilities (52 252) (4 253) 3 952 (52 554)
DETERMINATION OF ATTRIBUTABLE EARNINGS AND HEADLINE EARNINGS
Year ended 29 Year ended 28
February 2016 February 2015
Audited Audited
R’000 R’000
Attributable profit (after tax) 8 464 11 258
loss/(Profit) on sale of plant and equipment 163 (14)
Tax on profit on sale of plant and equipment (45) 4
Headline earnings 8 582 11 248
Shares in issue 114 272 328 114 272 328
Shares held by subsidiary (6 380 870) (6 380 870)
Weighted average shares for the period 107 891 458 107 891 458
Diluted weighted average shares Share options 107 891 458 107 891 458
dilutive portion
Earnings and diluted earnings per share 7,8 10,4
Headline and diluted headline earnings per share 8,0 10,4
Net asset value per share* 119,3 116,8
Net tangible asset value per share** 105.9 103,2
*Net asset value per share
Shareholders’ equity divided by the weighted average number of shares in issue at the end of the
year. Shareholders’ equity is the equity attributable to equity holders of the parent (which is basically
total assets less total liabilities).
**Net tangible asset value per share
The net asset value of the tangible assets divided by the weighted average number of shares in issue
during the year.
NOTICE OF ANNUAL GENERAL MEETING
Notice is hereby given that the Annual General Meeting of the shareholders will be held at the
registered office of the Company, in the Boardroom, 50 Clairwood Avenue, Hoogland Ext 55,
Randburg, on Thursday 4 August 2016 at 10h00, to transact business as stated in the Notice of the
Annual General Meeting. Part of the Integrated Annual Report which will be made available on the
Company website (www.verimark.co.za). The Abridged Annual Report which will be dispatched to
shareholders on or about Friday 27 May 2016.
The record date for purposes of determining which shareholders are entitled to receive the notice of
Annual General Meeting was Friday, 20 May 2016.
In order for shareholders to be able to attend, participate and vote at the Annual General Meeting, the
date’s shareholders to be registered in the Company’s register are as follows: last date to trade is
Friday 22 July 2016 and record date is Friday, 29 July 2016.
On behalf of the Board
Michael van Straaten
Chief Executive Officer
Johannesburg
23 May 2016
Directors:
Dr J T Motlatsi (Chairman)*, J M Pieterse*, M MPatel*, M J van Straaten (CEO),B M Groome,
*Independent Non-executive
Company Secretary:
Premium Corporate Consulting Services (Pty) Ltd
Registered office:
50 Clairwood Avenue
Extension 55, Hoogland
Randburg 2194
Postal address:
PO Box 78260, Sandton 2146
Email address:
investors@verimark.co.za
www.verimark.co.za
Transfer Secretaries:
Computershare Investor Services (Pty) Limited
Auditors:
KPMG Incorporated
Sponsor:
Grindrod Bank Limited
Date: 23/05/2016 07:51:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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