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VMK
VMK
VMK - Verimark - Audited Results for the Year Ended 28 February 2009
VERIMARK HOLDINGS LIMITED
Registration number: 1998/006957/06
Share Code: VMK
ISIN Code: ZAE000068011
("Verimark" or "the Company" or "the Group")
AUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2009
HIGHLIGHTS
- Revenues marginally lower to R252 million (2008:R253 million)
- Improved margins
- Headline loss of 3.4 cents (2008: Headline profit of 4,1 cents)
- Continued new product introductions and in-store reconfigurations
- Franchise store acquisitions
Michael van Straaten, Chief Executive Officer of Verimark, said: "The past year
has unfortunately not delivered the turnaround that we had anticipated, however
turnovers and margins were maintained. The continued management changes and the
impact of the depreciating Rand during the period under review added to the
challenges."
Financial overview
Headline loss per share and loss per share attributable to shareholders for the
year ended 28 February 2009 is 3.4 cents and 3.3 cents per share respectively,
compared to a headline profit per share and profit per share attributable to
shareholders of 4.1 cents for the previous comparable period.
As indicated in the trading statement issued on 23 April 2009, the Group
acquired a number of franchise stores during the period under review. Whilst
this resulted in improved turnovers and margins, there was also an increase in
associated costs.
Turnover for the year was marginally lower than the previous year. The
acquisition of franchise stores, the continued introduction of new products and
the reconfiguration of space and positioning in some retailers assisted in
maintaining turnover.
Gross profit and gross profit percentage improved compared to the previous year.
This was due to the acquisition of franchise stores. Although forward exchange
contracts were utilised, the substantial decrease in the Rand exchange rate did
negatively impact on margins.
Expenses have increased over the period, due mainly to the acquisition of the
franchise stores and the "straight lining" of their respective lease contracts
(the impact of this will reverse over the remaining period of these leases).
The operational gearing of the business remains a challenge and management
continued their efforts to align costs with the operational levels of the
business.
Included in finance expenses is an amount provided for the cumulative preference
dividend as a result of the consolidation of special purpose entities for BBBEE
purposes, even though the risk of payment of the resultant preference share
liability does not lie with the Group.
Borrowings of the Group has increased to R23,9 million (2008: R13,5 million)
which is due to the acquisition of franchise stores, investment in assets and an
increase in the utilisation of the Group`s overdraft facilities. The effect on
earnings has been an increase in interest payable.
Final dividend
Given that the Group has reported a loss for the period under review, no
dividend has been declared.
Accounting policies
The summarised consolidated financial information is based on the audited
financial statements of the Group for the year ended February 2009 and has been
prepared in accordance with the Group`s accounting policies which comply with
International Financial Reporting Standards ("IFRS"), the listing requirements
of the JSE Limited, as well as the requirements of International Accounting
Standard 34 and the South African Companies Act 61 of 1973, as amended, and are
consistent with those of the previous year.
Segmental analysis
There are no significant identifiable segments and therefore no segmental
information has been disclosed.
Prospects
Whilst every effort continues to be made to reverse the Group`s financial
performance, the effects of the depreciation of the Rand combined with the
bedding down of senior management changes made over the last two years has
delayed the turnaround process.
Post balance sheet events
No significant events have occurred in the period between the reporting date and
the date of this report, but shareholders are referred to the cautionary
announcement below that was released on SENS on 23 April 2009.
BALANCE SHEET
at 28 February 2009
Group
2009 2008
R`000 R`000
ASSETS
Non-current assets 24 450 21 953
Plant and equipment 5 521 3 647
Intangible assets 14 140 14 317
Loans receivable 239 459
Other receivables 2 909 2 909
Deferred taxation asset 1 641 621
Current assets 81 320 80 822
Inventories 39 676 39 363
Trade and other receivables 40 156 40 641
Prepayments 394 133
Short term portion of loans 459 239
receivable
Prepaid taxation - 37
Bank and cash balances 635 409
Total assets 105 770 102 775
EQUITY AND LIABILITIES
Equity attributable to equity 44 919 48 590
holders of the parent
Share capital 368 368
Share premium 26 730 26 730
Retained earnings 17 821 21 492
Non-current liabilities 18 671 11 821
Preference share liability 13 281 11 821
Interest-bearing liabilities 5 390 -
Current liabilities 42 180 42 364
Trade and other payables 23 241 28 358
Shareholders for dividend 42 42
Short-term portion of interest- 1 178 5 907
bearing liabilities
Bank overdraft 17 429 7 580
Taxation payable 290 477
Total equity and liabilities 105 770 102 775
INCOME STATEMENT
for the year ended 28 February 2009
Group
2009 2008
R`000 R`000
Revenue 252 511 253 031
Cost of sales (165 853) (169 996)
Gross profit 86 658 83 035
Other income 943 4 628
Selling expenses (25 751) (23 167)
Distribution expenses (5 513) (3 054)
Other operating expenses (59 091) (47 904)
Operating (loss)/profit before (2 754) 13 538
net finance expense
Finance income 3 232 266
Finance expense (4 698) (5 316)
(Loss)/profit before taxation (4 220) 8 488
Income tax 549 (4 014)
(Loss)/profit for the year (3 671) 4 474
Attributable to shareholders (3 671) 4 474
Basic (loss)/earnings per share (3.3) 4.1
(cents)
Diluted (loss)/earnings per share (3.3) 4.1
(cents)
DETERMINATION OF ATTRIBUTABLE EARNINGS AND HEADLINE
EARNINGS
2009 2008
R`000 R`000
Attributable (loss)/profit to (3 671) 4 474
ordinary shareholders
Profit on sale of assets (84) (7)
Headline earnings (3 755) 4 467
Shares in issue 114 272 328 114 272 328
Treasury shares (4 000 000) (4 000 000)
Number of shares at year end 110 272 328 110 272 328
Basic (loss)/earnings per share (3,3) 4,1
Headline (loss)/earnings per (3,4) 4,1
share
STATEMENT OF CHANGES IN EQUITY
for the year ended 28 February 2009
Share Share Retained Total
capital premium earnings
Group R`000 R`000 R`000 R`000
Balance at 1 March 381 37 621 23 303 61 305
2007
Treasury shares held (13) (10 891) - (10 904)
by VEET
Profit for the year - - 4 474 4 474
Dividend paid - - (6 285) (6 285)
Balance at 28 368 26 730 21 492 48 590
February 2008
Loss for the year - - (3 671) (3 671)
Balance at 28 368 26 730 17 821 44 919
February 2009
STATEMENT OF CASH FLOWS
for the year ended 28 February 2009
Group
2009 2008
R`000 R`000
Cash flows from operating
activities
Cash (utilised)/generated by (5 204) 20 994
operations
Dividend paid - (6 285)
Finance income 3 232 266
Finance costs (3 238) (4 400)
Income tax paid (622) (3 337)
Net cash (outflows)/inflows from (5 832) 7 238
operating activities
Cash outflows from investing (4 454) (1 991)
activities
Acquisitions of plant and (4 516) (1 864)
equipment to maintain operations
Acquisitions of intangible assets (40) (151)
to maintain operations
Proceeds from disposal of plant 102 24
and equipment
Cash inflows/(outflows) from 662 (2 915)
financing activities
Repurchase of own shares (10 904)
(treasury shares) -
Proceeds from issue of redeemable 10 904
preference shares -
Decrease in loans receivable - 239
Other receivable raised - (2 909)
Interest-bearing liabilities (200) (6 023)
repaid
Interest-bearing liabilities 862 5 778
raised
Interest-free liabilities raised 2 000 16
Interest-free liabilities repaid (2 000) (16)
Net (decrease)/increase in cash (9 624) 2 332
and cash equivalents
Cash and cash equivalents at (7 170) (9 502)
beginning of year
Cash and cash equivalents at end (16 794) (7 170)
of year
Audit opinion
KPMG Inc. has audited the financial statements from which the financial
information set out in this report has been extracted. Their unqualified audit
report on the financial statements is available for inspection at the Group`s
registered office.
Cautionary announcement
Shareholders are referred to the cautionary announcement published on SENS on
23rd April 2009 and are therefore advised to exercise caution when dealing in
the Company`s securities until further announcements are made.
On behalf of the Board
Michael van Straaten Dr J T Motlatsi
Chief Executive Officer Chairman
Johannesburg
30 April 2009
Directors:
M J van Straaten (Chief Executive Officer), D N Reichenberg (Financial
Director), Dr J T Motlatsi*, J M Pieterse*
*Non-Executive
Company Secretary:
D N Reichenberg
Registered office:
67 CR Swart Drive, Corner CR Swart Drive and Freda Road, Bromhof 48, Randburg,
2154
Postal address:
Verimark Holdings Limited
PO Box 78260, Sandton 2146
Email address: investors@verimark.co.za
Website: www.verimark.co.za
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
Auditors: KPMG Incorporated
Sponsor: PSG Capital (Proprietary) Limited
Date: 30/04/2009 17:30:01 Produced by the JSE SENS Department.
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