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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 year ended 29 February
2008 are expected to be between 55% and 75% lower than those reported for the
previous corresponding period.
The reason for the reduction in earnings is due to the lower level of turnover
and gross profit margins. Expenses are now well controlled and are lower than
the previous corresponding period.
Turnover is expected to be down compared to the previous corresponding period.
Key reasons for the reduced sales include the "lag" effect caused by the slower
rate of new product introductions during the previous financial year and the
ensuing decision by one of our major customers to reduce our trading space.
Moving forward, this "lag" will decrease each year as the rate of new product
introductions continues at existing or higher levels. New products sales have
been satisfying and on par with our expectations. This improvement will be
reinforced by a number of new products that have already tested successfully and
will roll out early in the new financial year.
Although forward exchange contracts are used to hedge the business against
foreign currency fluctuations, gross profit is expected to be down due to the
rapid rate at which the Rand depreciated in the second half of the financial
year. Selling prices and configurations of some product offerings are being
reviewed to improve gross profit margins in the coming year.
Total costs were considerably reduced compared to the previous period but the
reduction in sales and the high operational gearing of the business had an
adverse impact on net profit. Finance costs were much higher due to foreign
exchange losses on the hedge contracts and interest on the preference share
liability relating to the consolidation of the Verimark Employee Empowerment
Trust.
Whilst our efforts over the last year to reverse the current performance do not
reflect in the results yet, we remain confident that the corrective actions and
strategies will bear fruit. We are committed to do this in the shortest possible
time.
The financial results on which this trading statement has been based have not
been reviewed or reported on by Verimark`s external auditors.
The Group`s results for the year ended 29 February 2008 will be released on SENS
on or about 16 May 2008.
Randburg
15 May 2008
SPONSOR
PSG Capital Limited
Date: 15/05/2008 11:35:01 Produced by the JSE SENS Department.
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