| Mon 28 May 2012, 8:56 | | VMK - Verimark Holdings Limited - Summarised audited group financial |
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VMK
VMK
VMK - Verimark Holdings Limited - Summarised audited group financial
information forthe year ended 29 February 2012
VERIMARK HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1998/006957/06
Share Code: VMK
ISIN Code: ZAE000068011
("Verimark" or "the Company")
SUMMARISED AUDITED GROUP FINANCIAL INFORMATION FOR THE YEAR ENDED 29 FEBRUARY
2012
HIGHLIGHTS
- Revenue decreased by 2,3% to R451,2 million (2011:R461,7 million);
- Operating profit before finance income and finance expense decreased by
15,2% to R49,0 million (2011: R57,7 million);
- Profit before taxationdecreasedby 15,1% to R41,9 million
(2011:R49,3million);
- Headline earnings decreased by 19,8% toR26,8 million (2011: R33,5 million);
- Headline EPS decreased by18,1%to 25,8 cents (2011: 31,5 cents);
- Dividend per share declared decreased by 10,0% to13,5 cents(2011: 15,0
cents);
- The Verimark share performance ranked in the top 40 on the JSE (out of
approximately 420 companies) over a 12 month period (last year 4th) -
Business Times survey, October 2011.
Michael van Straaten, Chief Executive Officer of Verimark, said: "It was
expected that given the phenomenal growth in sales of 84% achieved over the
last 2 years, that the business would enter a consolidation phase. Revenue
for the year was marginally down by 2.3% to R451,2 million. The exceptional
growth achieved previously resulted in Verimark literally outgrowing its
infrastructure, which brought about huge pressure on the business and new
management team. The challenges to upgrade our infrastructure distracted from
the focus required to grow sales and contain costs.
To date good progress has been made in upgrading the infrastructure for the
next growth phase. We are moving into a new custom built, double size
warehouse / head office later this year. New product introductions resulted
in sales starting to increase toward the end of the year. This trend
continued into the current year."
Financial overview
Both headline earnings per share (HEPS) and basic earnings per share (EPS)
for the year ended 29 February 2012were25,8 cents, compared to 31,5 cents for
the previous comparable period.
Revenuefor the year decreased by 2,3% to R451,2 million while gross profit
decreased by 5,6% to R188,8 million. Taking into account the operational
gearing of the business, even a marginal decrease or increase in sales will
have a far bigger impact on profitability. As the Group benefited
exponentially from this in the past when high sales growth was achieved, the
slight decrease in sales in the current year was the main reason for the
decrease in profits. The weakening of the Rand in the second half of the
year also negatively impacted on our gross profit margin.Selling expenses
declined by 4,5% primarily due tolower sales, in-store advertising and
related selling costs. Other operating expenses only increased slightly
by0,1% in the effort to contain costs.
Investment of R7,6 million was made in plant and equipment to support sales
and the operations of the Company and its subsidiary ("the
Group").Improvements in the customer collection processresulted in a lower
trade receivables, however the cash effect of this improvement was offset by
higher creditor payments at year end. Due to the operational challenges
mentioned earlier, the efficiencies in inventory management were not fully
realised by year end.
Bank and cash balances decreased by R8.85 million (53.1%) mainly as a result
of the reduction of R8,0 million in the cash operating profits (before
working capital movements).
The reduction in long-term liabilities was mainly due to the lower investment
in capital expenditure in 2012.
Final dividend
In line with the dividend policy of 50% of profit attributable to owners of
the Company, the Board of Directors ("the Board") announced, on 30 March
2012, a final dividend, based on the preliminary unaudited resultsfor the
financial year ended 29 February 2012, of R15,4 million or 13,5cents per
share(2011:R17,1 million or 15,0 cents per share). For more details refer to
the SENS announcement dated 30 March 2012.
Segmental analysis
The directors have considered the implications of IFRS 8 Operating Segments
and are of the opinion that the operations of the Group are substantially
similar toone another and that the risks and returns of these operations are
likewise similar. Resource allocation and the management of the operationsis
performed on an aggregated basis and as such the Group is considered to be a
single aggregated business and therefore there is no additional reporting
required in terms of IFRS 8.
Prospects
The sales trends experienced towards the end of the previous financial year
have continued into the current year. This, and the new product
introductions since the year end, have allowed for positive growth to be
recorded in the first 2 months of the current financial year. The
anticipated improvement in sales and the realization of better operational
efficiencies and cost controls augur well for sustainable earnings growth.
Any reference to future financial performance included in this announcement
has not been reviewed or reported on by the Group`s external auditors.
Events after the reporting period
No event which is material to the understanding of this report has occurred
between the financial period end and the date of this report.
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 29 February 2012
Group
2012 2011
R`000 R`000
Revenue 451 150 461 654
Cost of sales (262 325) (261 567)
Gross profit 188 825 200 087
Other income 1 700 1 312
Selling expenses (47 413) (49 655)
Other operating expenses (94 129) (94 006)
Operating profit before
finance income and
finance expense 48 983 57 738
Finance income 8 140 2 966
Finance expense (15 251) (11 387)
Profit before taxation 41 872 49 317
Income taxation (15 064) (15 834)
Profit for the year 26 808 33 483
Other comprehensive income --
Total comprehensive income
attributable to owners
of the Company 26 808 33 483
Basic earningsper share (cents)25,8 31,5
Diluted basic earnings 25,3 31,3per share (cents)
DETERMINATION OF ATTRIBUTABLE EARNINGS AND HEADLINE
EARNINGS
Group
2012 2011
R`000 R`000 R`000
R`000
Gross Net Gross Net
Attributable profit to - 26 808 -
33 483
owners
Loss/(profit) on sale of assets 42 30 (29) (22)
Headline earnings 26 838
33 461
Weighted average shares 2012 2011
reconciliation no of shares no of shares
Shares in issue at beginning of
Year 114 272 328 114 272 328
Treasury shares - VEET (4 000 000) (4 000 000)
Treasury shares - Verimark (6 380 870) (4 064 304)
Proprietary Limited
Weighted average shares 103 891 458 106 208 024
Share options dilution 1 924 393 611 983
Diluted weighted average shares 105 815 851 106 820 007
Basic earnings per share (cents) 25,8 31,5
Headline earnings per share(cents) 25,8 31,5
Diluted basic earnings
per share (cents) 25,3 31,3
Diluted headline earnings
per share (cents) 25,4 31,3
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
at 29 February 2012
Group 20122011
R`000 R`000
ASSETS
Non-current assets 31 256 31 185
Plant and equipment 14 298 14 200
Intangible assets 14 663 14 342
Deferred taxation asset 2 295 2 643
Current assets 124 186 139 988
Inventories 62 640 60 274
Trade and other receivables 49 188 62 543
Prepayments 211 268
Loans receivable - 234
Bank and cash balances 12 147 16 669
Total assets 155 442 171 173
EQUITY AND LIABILITIES
Equity attributable to owners 92 246 80 626
of the company
Share capital 346 346
Share premium 21 378 21 378
Share based payment reserve 788 393
Retained earnings 69 734 58 509
Non-current liabilities 5 645 7 905
Interest-bearing liabilities 5 645 7 905
Current liabilities 57 551 82 642
Preference share liability 15 857 15 371
Trade and other payables 31 024 61 100
Short-term portion of interest- 3 689 3 783
bearing liabilities
Taxation payable 2 651 2 388
Bank overdraft 4 330 -
Total equity and liabilities 155 442 171 173
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 29 February 2012
Share Share Share based Retained Total
capital premium payment reserve earnings
Group R`000 R`000 R`000 R`000 R`000
Balance at 1 March 2010 356 25 104 - 31 439
56 899
Total comprehensive
income for the year
Profit for the year - - - 33 483
33 483
Transactions with ownersrecorded in equity
Treasury shares held by
Verimark Proprietary
Limited (10) (3 726) - - (3 736)
IFRS 2 share-based
payment transaction 393
393
Contributions by and
distributions to owners
of the Company
Dividend paid to equity
holders of the Company (6 413) (6 413)
Balance at 28 February 346 21 378 393 58 509
80 626
2011
Total comprehensive
income for the year
Profit for the year - - - 26 80826 808
Transactions with ownersrecorded in equity
IFRS 2 share based
payment transaction - - 395 - 395
Contributions by anddistributions to
owners of the Company
Dividend paid to
equity holders of
the Company - - - (15 583) (15 583)
Balance at 29 February 346 21 378 788 69 73492 246
2012
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 29 February 2012
Group
2012 2011
R`000 R`000
Cash flows from operating
activities
Cash generatedby 37 242 49 515
operations
Finance income 8 140 2 966
Finance expense(13 585)(9 970)
Income taxation paid (14 453) (21 267)
Dividend paid(15 583) (6 455)
Net cash inflows 1 761 14 789
from operating activities
Cash outflows from investing (7 870) (11 420)
activities
Acquisitions of plant (7 596) (11 552)
and equipmentto expand
operations
Acquisitions of intangible (603) (233)
assets to maintain operations
Proceeds from disposal of plant 329 365
and equipment and intangible
assets
Cash outflows from (2 743) (440)
financing activities
Loans receivable collected 232 232
Interest-bearing liabilities (3 934) (2 590)
repaid
Interest-bearing liabilities 1 559 5 894
raised
Repurchase of own shares - (3 736)
Preference share liability (600) (240)
repaid
Net (decrease)/increase in cash (8 852) 2 929
and cash equivalents
Cash and cash equivalents at 16 66913 740
beginning of year
Cash and cash equivalents at 7 817 16 669
end of year
Reporting entity
Verimark Group Limited is a company domiciled in South Africa. The summarised
audited group financial information as at and for the year ended 29 February
2012 comprise the results of Verimark Holdings limited and its subsidiaries.
Basis of preparation
The summarised audited group financial information for the year ended 29
February 2012 have been prepared in accordance with the recognition and
measurement principles of International Financial Reporting Standards and
presented in accordance with the minimum content, including disclosures,
prescribed by IAS 34 Interim Financial Reporting applied to year end
reporting, and South African Statements and Interpretations of Statements of
Generally Accepted Accounting Practice (AC 500 Series) and the requirements
of the JSE Limited and Companies Act of South Africa.
The accounting policies applied in the presentation of the summarised audited
group financial information are consistent with those applied in the prior
year, except for any new standards and interpretations that became effective.
The adoption of these standards has had no material effect on the results for
the period nor has it required the restatement of any prior year amounts. The
summarised audited group financial information has been presented on the
historical cost basis and are presented in Rand thousands which is Verimark`s
functional and presentation currency.
The summarised audited group financial information for the year ended 29
February 2012 have been prepared by SR Beecroft CA(SA), Financial Director.
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.
Audit opinion
KPMG Inc. has audited the financial statements from which the financial
information set out in this report has been derived. Their audit report on
the financial statements is unmodified and is available for inspection at the
group`s registered office. KPMG Inc. has issued an unmodified extraction
opinion on this summarised audited group financial information and this
opinion is available for inspection at the group`s registered office.
On behalf of the Board
Michael van Straaten Dr J T Motlatsi
Chief Executive Officer Chairman
Randburg
28 May 2012
Directors:
M J van Straaten (Chief Executive Officer), S R Beecroft (Financial
Director), Dr
J T Motlatsi*, J M Pieterse*
*Independent Non-Executive
Company Secretary:
S J Preller
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
Website: www.verimark.co.za
Transfer secretaries: Computershare Investor Services (Proprietary) Limited
Auditors: KPMG Inc.
Sponsor: Grindrod Bank Limited
Date: 28/05/2012 08:56:03 Produced by the JSE SENS Department.
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