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Verimark - Unaudited interim results for the six months ended 31 August 2005
VERIMARK HOLDINGS LIMITED
(previously Creditvision Holdings Limited)
Incorporated in the Republic of South Africa
Registration number 1998/006957/06
Share code: VMK & ISIN: ZAE000068011
("Verimark" or "the company")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2005
HIGHLIGHTS
* Headline earnings per share increase b y 39%
* On track to achieve results projected in the Pre-Listing Statement
GROUP INCOME STATEMENT
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 August 2005 31 August 2004 28 February 2005
R"000 R"000 R"000
Revenue 137 427 121 377 281 066
Operating profit 25 415 17 263 45 231
Investment income 105 - 212
Net finance costs (466) (758) (1 119)
Net profit
before taxation 25 054 16 505 44 324
Taxation (8 912) (4 952) (15 200)
Net profit after
taxation 16 142 11 554 29 124
Weighted shares
in issue 111 424 110 110 000 000 110 000 000
Earnings per
share (cents) 14,49 10,50 26,48
Headline
earnings per
share (cents) 14,63 10,50 26,48
GROUP BALANCE SHEET
Unaudited Unaudited Audited
Six months ended Six months ended Year ended
31 August 2005 31 August 2004 28 February 2005
R"000 R"000 R"000
ASSETS
Property, plant
and equipment 2 713 3 204 3 101
Goodwill 12 920 200 200
Investment in
subsidiary
companies - 29 -
Loans receivable 1 898 - -
Deferred tax
asset - 6 892 298
Non-current
assets 17 531 10 325 3 599
Inventory 26 054 17 591 28 695
Accounts
receivable 38 676 26 693 30 614
Pre-payments 402 514 1 479
Loans receivable 570 - -
Short-term
investment - - 8 212
Cash and cash
equivalents 4 687 13 498 13 143
Current assets 70 389 58 296 82 143
Total assets 87 920 68 621 85 742
EQUITY AND
LIABILITIES
Capital and
reserves 49 569 41 451 34 088
Interest-bearing
borrowings 7 214 1 716 912
Non
interest-bearing
borrowings 874 10 076 19 609
Non current
liabilities 8 088 11 792 20 521
Accounts payable 16 530 15 378 21 705
Receiver of
revenue 13 733 - 8 606
Short-term
portion of long
term liabilities - - 822
Current
liabilities 30 263 15 378 31 133
Total equity and
liabilities 87 920 68 621 85 742
GROUP CASH FLOW STATEMENT
Unaudited Audited
Six months ended Year ended
31 August 2005 28 February 2005
R"000 R"000
Cash flows from operating activities 2 839 (4 202)
Cash generated by operations 18 074 33 417
Dividend paid (11 237) (36 500)
Finance costs paid (466) (1 119)
Taxation paid (3 532) -
Cash inflows/(outflows) from
investing activities 1 730 (9 313)
Additions to plant and equipment (474) (1 404)
Proceeds from disposal of plant and
equipment 28 91
Acquisition of subsidiary (6 037) -
Listed investment redeemed/(acquired) 8 213 (8 000)
Cash (outflows)/inflows from
financing activities (14 006) 14 951
Increase/(Decrease) in
interest-bearing liabilities 5 256 (409)
(Decrease)/Increase in interest-free
borrowings (19 260) 15 360
Increase in loans receivable (2) -
Net (decrease)/increase in cash and
cash equivalents (9 437) 1 436
Cash and cash equivalents at
beginning of period 13 143 11 707
Cash and cash equivalents of
subsidiary on acquisition date 981 -
Cash and cash equivalents at end of
period 4 687 13 143
GROUP STATEMENT OF CHANGES IN EQUITY
Share capital Accumulated
and premium profit Total
R"000 R"000 R"000
Balance at 1 March 2004 27 321 8 143 35 464
Net profit for the year - 29 124 29 124
Dividend declared - (30 500) (30 500)
Balance at 28 February 2005 -
audited 27 321 6 767 34 088
Net profit for the period - 16 142 16 142
Dividend declared - (11 341) (11 341)
Issue of shares into IFRS 3 10 680 - 10 680
Balance at 31 August 2005 (six
months) 38 001 11 568 49 569
Innovation, quality and service guaranteed!
COMMENTS
INTRODUCTION
Verimark listed on the JSE Limited on 11 July 2005 through a reverse listing
into CreditVision Holdings Limited. The effective date of the transaction was
1 July 2005. The consolidated results were prepared in terms of IFRS 3 (Business
Combinations). Consequently, the consolidated results for the six months ended
31 August 2005 include the trading results of CreditVision Holdings Ltd (now
Verimark Holdings Limited) for the two months from 1 July 2005 to 31 August
2005, as well as the trading results of Verimark (Pty) Limited for the entire
period under review.
Verimark has evolved from a start-up company in 1977 to an integrated marketing
company that converges the power of Direct Response Television (DRTV) marketing
with the volume benefits of retail distribution. Verimark is the market
leader in the DRTV industry in South Africa, and has become one of the most
recognised and trusted brands in the country through its "only the best
product" philosophy and aggressive advertising strategy.
OVERVIEW
Headline earning per share increased by 39% to 14.49 cents per share despite a
relatively low increase in revenue of 13%. The increased profitability resulted
from a change in the product mix, a focus on growing more profitable sales
outlets at the expense of less profitable ones, as well as sustained cost
control. These factors combined resulted in an increase in operating profit
margin to 18.5% from 14.2% previously.
The results for the 6 months are slightly ahead of the projection disclosed in
the Pre-Listing Statement.
In line with management"s stated intentions, good progress has been made in the
winding-up of the business of the old CreditVision. Debtors books are being
recovered in line with expectations, and the loss-making subsidiary,
MotorVision (Pty) Limited was sold on 30 June 2005.
PROSPECTS
A number of new products will be launched over the Christmas season. New
distribution channels are also being tested in an effort to reach niche markets
previously not covered. As a result of these efforts, continued focus on
controlling operating costs and the natural growth phase Verimark is
experiencing, management is confident that the attributable income projection
(R38.6 million or 33.79 cents per share) for the year ending 28 February 2006,
as disclosed in the Pre-Listing Statement, should be achieved.
DIVIDEND
In view of the effective date of the reverse listing of Verimark of 1 July
2005, and in accordance with the Pre-Listing Statement, no interim dividend has
been declared.
However, the Board confirms its policy to pay bi-annual dividends in future at
the rate of approximately 80% of headline earnings. Verimark"s maiden dividend
will be for the period ending 28 February 2006, and is expected to be in line
with the 18 cents per share forecast in the Pre-Listing Statement.
NEW DIRECTOR
Mr JM Pieterse was appointed as an independent non-executive director at the
board meeting of 3 November 2005. Mr Pieterse is an experienced retailer and
brings a wealth of knowledge and management expertise to the board.
SUPPLEMENTARY INFORMATION
1. Accounting policies
The accounting policies used in the preparation of these interim results are
consistent with those applied in the previous period and in accordance with
International Financial Reporting Standards (IFRS), the Listing Requirements
of the JSE Limited and schedule 4 of the Companies Act. The interim report
has been prepared in accordance with IAS 34: Interim Financial Reporting.
2. IFRS 3: Business Combinations and the appendix for Reverse Acquisitions has
been used in order to determine the accounting effects of the reverse
listing.
3. A lease accrual to the value of R393 303 has been raised for the current
period in order to apply the straight-line basis of accounting as per IAS
17: Leases and Circular 7/2005 issued by SAICA.
4. Earnings per share was calculated in accordance with IAS 33: Earnings per
share and IFRS 3: Business Combinations. Headline earnings per share was
calculated in accordance with Circular 7/2002 issued by SAICA. The ordinary
shares outstanding were weighted in the calculation for the effect of the
reverse acquisition.
5. The total number of shares in issue as at 31 August 2005 was 114 272 331.
On behalf of the Board of Directors
Michael van Straaten Du Toit Britz
Managing Director Financial Director
7 November 2005
Johannesburg
Directors: MJ van Straaten (Managing Director), FP Du T Britz, HW Bonsma*,
Dr JT Motlatsi*, JM Pieterse*
*Non-Executive
Company Secretary: EG Schubert
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
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited
Auditors: KPMG Incorporated
www.verimark.co.za
Date: 07/11/2005 12:35:21 PM Produced by the JSE SENS Department
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