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VMK
VMK
VMK - Verimark Holdings Limited - Trading Statement
VERIMARK HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1998/006957/06)
JSE code: VMK & ISIN: ZAE000068011
("the company")
TRADING STATEMENT
In accordance with paragraph 3.4 of the Listings Requirements of the JSE
Limited, companies are required to inform shareholders as soon as there is
a degree of certainty that the earnings of the company are likely to vary
by more than 20% compared to the previous reporting period. The board of
directors therefore wishes to advise shareholders that headline earnings
per share and earnings per share attributable to shareholders for the six
months ended 31 August 2007 are expected to be between 60% and 80% lower
than those reported for the previous corresponding period.
The reason for the disappointing reduction in earnings is due to the lower
level of turnover and gross profit. Expenses have been well controlled and
are lower than the previous corresponding period.
Turnover is expected to be down by about 10% to 15% compared to the
previous corresponding period. This is as a result of the sales of some
older product categories having fallen at a faster rate than expected,
stock shortages due to a cautious approach taken to stock ordering levels
earlier in the year and the reconfiguration of some space and positioning
with certain retailers. Notwithstanding the reduction in sales of old
products due to the reasons mentioned, new product introductions have
performed well. Sales of new products are almost double that of the
previous corresponding period. This bodes well for future trading.
Gross profit is expected to be down by 25% to 30%. The gross profit margin
was impacted by the continued lower margin product mix due to the decline
of certain high margin intellectual property products in the old product
category. Every effort is being made to improve margins through higher new
product introductions.
The much higher expected fall in the net profit is due to the operational
gearing of the business, although operating costs have reduced considerably
compared to the previous corresponding period. The effect is exacerbated by
foreign exchange losses due to the relative strength of the Rand compared
to the previous reporting period, as the company enters into forward
exchange contracts for all imports.
Despite the reduction in sales and profitability, the directors and
management are pleased with the increased rate of new product introductions
towards the latter part of the period and with the reduction of expenses
starting to come through. The recovery strategy is now well underway and
we are positive about Verimark`s ability to make a full recovery and
continue its long term success track record.
Shareholders are advised that the forecast contained in this Trading
Statement has neither been reviewed nor reported on by the company`s
external auditors.
The group`s results for the six months ending 31 August 2007 will be
released on SENS early November 2007.
Randburg
23 August 2007
SPONSOR
PSG Capital Limited
Date: 23/08/2007 16:50:34 Produced by the JSE SENS Department.
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