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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 loss per share and loss
per share attributable to shareholders for the six months ended 31 August 2008
is expected to be 5.18 cents per share compared to a headline profit per share
and profit per share attributable to shareholders of 1.24 cents per share for
the previous comparable period.
The reason for the disappointing reduction in earnings is due to the lower level
of turnover and resultant gross profit.
Turnover has continued to be under pressure and is down 12% compared to the
previous corresponding period. This is as a result of the continued `lag` effect
caused by the slower rate of product introductions in prior reporting periods
and the reconfiguration of some space and positioning with certain retailers.
These issues continue to be addressed and progress has been made that will
ultimately result in improved trading performance. Notwithstanding the
reduction in sales of old products due to the reasons mentioned, new product
introductions have performed well. Sales of new products continue to meet
management expectations. This bodes well for future trading.
Gross profit is expected to be down 11% compared to the previous corresponding
period. The gross profit margin has shown improvement due to a better mix of
products, improvements in achieved selling prices on existing products and the
introduction of new products at acceptable margins. The increased number of
company managed stores has also benefited the overall margin as we are able to
achieve full retail selling prices.
The much higher expected decline in the net profit is due to the operational
gearing of the business. Although it may appear that operating costs have
increased compared to the previous corresponding period, indirect costs have
been impacted by the increased number of company managed stores as compared to
the previous reporting period. Overall expenses of the business have been
controlled and excluding the additional costs incurred for the company managed
stores, increases have been contained to below inflation.
Despite the reduction in sales and profitability, the directors and management
are pleased with the continued increased rate of new product introductions. The
`lag` resulting from the limited new product introductions during 2007 continues
to be felt, but will decrease each year as new product introductions continue at
the existing rate. The Directors are confident that `turnaround` strategy is
being implemented, but it is expected to take longer than anticipated due to the
current economic turmoil and recent management changes. We continue to be
positive about Verimark`s ability to make a full recovery and continue its long
term success track record.
Shareholders are advised that the financial information 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 2008 will be released on
SENS on or about 13 November 2008.
Randburg
7 November 2008
SPONSOR
PSG Capital Limited
Date: 07/11/2008 15:09:01 Produced by the JSE SENS Department.
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