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VMK
VMK
Verimark Holdings Limited - Trading update
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")
Trading update
Shareholders are advised that turnover for the 4 months ended
30 June 2006 is down 3% on the comparative period last year,
but is expected to be in line with last year for the 6 months
ending 31 August 2006. However, both headline earnings and
earnings per share for the interim period are expected to be
between 55% and 75% lower than that of the comparative period
last year. The decline in profitability is mainly as a result
of the following:
* The current sales mix is less profitable as a result of a
major decline in sales volumes of two intellectual
property (IP) type products that made significant
contributions to Verimark"s profitability in the
comparative period.
* The imported content of Verimark"s current product mix is
at a historical high of 85%, with the result that the
weakness in the South African Rand impacted on Verimark"s
profitability.
* The demand on management time necessitated by the listing
of the company on the JSE during the middle part of 2005,
impacted negatively on product development, ultimately
resulting in a temporary slowdown in the introduction of
new products during the interim period.
* Additional costs were incurred to extend and improve the
company"s sales network for the level of growth
anticipated at the beginning of the 2006. These
additional expenses assisted Verimark to maintain
turnover at the same level as last year despite the lack
of new product introductions, but at a much higher cost.
* The increase in Secondary Tax on Companies (STC) as a
result of the higher dividend paid to shareholders in
June 2006.
Management is taking corrective action on the expense side,
and at least 10 new products are being launched before the
start of the Christmas peak trading period. The new products
include 3 Exercise products, 6 Household products and 1 Toy.
Historically, about 60% of the annual profit is made in the
second half of the financial year. In the absence of
unforeseen circumstances, management believes that
profitability should be restored during the second half of the
year.
The financial results on which this trading update has been
based have not been reviewed or reported on by Verimark"s
external auditors.
Verimark"s results for the six months ending 31 August 2006
are expected to be published on SENS on or before 31 October
2006.
Johannesburg
20 July 2006
Sponsor: PSG Capital Limited
Date: 20/07/2006 04:32:04 PM Produced by the JSE SENS Department
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