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VMK
VMK
Verimark - Unaudited Interim Results for the six months ended 31 August
2006 and dividend declaration
Verimark 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 2006
Innovation, Quality and Service. Guaranteed!
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
six months six year
months
ended ended ended
31 August 31 August 28
February
2006 2005 2006
R"000 R"000 R"000
Revenue 139 101 137 427 322 175
Operating profit 9 461 25 415 57 114
Finance income 687 198 1 231
Finance costs (144) (559) (911)
Profit before taxation 10 004 25 054 57 434
Income tax expense (5 244) (8 912) (18 720)
Profit for the period 4 760 16 142 38 714
Earnings per share 4,17 14,49 34,31
(cents)
Diluted earnings per 4,17 14,13 33,88
share (cents)
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
six six year
months months
ended ended ended
31 August 31 August 28 February
2006 2005 2006
R"000 R"000 R"000
Assets
Plant and equipment 4 126 2 713 2 347
Intangible assets 14 663 12 920 14 463
Loans receivable 997 1 898 1 176
Non-current assets 19 786 17 531 17 986
Inventory 27 411 26 054 27 439
Trade and other 42 380 38 676 45 522
receivables
Loans receivable 570
Prepayments 613 402 496
Prepaid taxation - - 63
Bank and cash balances 531 4 687 22 948
Current assets 70 935 70 389 96 468
Total assets 90 721 87 920 114 454
Equity and liabilities
Share capital 381 381 381
Share premium 37 621 37 621 37 621
Retained earnings 18 331 11 567 34 140
Total equity 56 333 49 569 72 142
attributable to equity
holders of the parent
Interest-bearing 33 6 742 244
liabilities
Interest-free - 874 10
liabilities
Non-current liabilities 33 7 616 254
Trade and other payables 17 979 16 530 24 297
Provisions 30 - 593
Short-term portion of 439 472 607
non-current liabilities
Taxation 15 907 13 733 16 561
Current liabilities 34 355 30 735 42 058
Total equity and 90 721 87 920 114 454
liabilities
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Retained
capital
and earnings Total
premium
R"000 R"000 R"000
Balance at 28 February 2005 27 321 6 767 34 088
Profit for the year - 38 714 38 714
Net proceeds on the issue 10 681 10 681
of share capital
Dividend declared - (11 341) (11 341)
Balance at 28 February 2006 38 002 34 140 72 142
Profit for the period - 4 760 4 760
Dividend declared - (20 569) (20 569)
Balance at 31 August 2006 38 002 18 331 56 333
(six months)
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Audited
six months year
ended ended
31 August 28
February
2006 2006
R"000 R"000
Cash flows from operating (18 947) 28 907
activities
Cash generated by operations 7 477 49 909
Dividend paid (20 539) (11 341)
Finance income 687 1 231
Finance costs (144) (911)
Taxation paid (5 835) (10 574)
Cash outflows from investing (3 260) (19 035)
activities
Acquisition of plant and equipment (2 920) (947)
Acquisition of intangible assets (357) (122)
Proceeds from disposal of plant 17 28
and equipment
Acquisition of subsidiary - (17 994)
Cash outflows from financing (210) (9 260)
activities
Proceeds on the issue of ordinary - 10 680
share capital
Interest-bearing liabilities (379) (1 107)
repaid
Interest-free liabilities repaid (10) (18 424)
Decrease/(increase) in loans 179 (409)
receivable
Net (decrease)/increase in cash (22 417) 612
and cash equivalents
Cash and cash equivalents at 22 948 22 336
beginning of year
Cash and cash equivalents at end 531 22 948
of period
Accounting policies
1. 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. These policies can be found in the most recently published set of
Annual Financial Statements.
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 have been used in order to determine the accounting effects
of the reverse listing.
3. 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 in issue were weighted in the calculation for the
effect of the reverse acquisition.
August August February
2006 2005 2006
R"000 R"000 R"000
Profit per financial 4 760 16 142 38 714
statements
Adjustments:
Loss on sale of fixed assets - 157 157
Headline earnings 4 760 16 299 38 871
Headline earnings per share 4,17 14,63 34,45
(cents)
4. The total number of shares in issue as at 31 August 2006 was 114 272
328.
5. According to IAS 8, a prior year adjustment was required in order to
take into account additional stamp duties relating to the reverse
listing of Verimark. The prior year Cash Flow Statement, Investment in
Subsidiary and Provisions in the Balance Sheet, have been adjusted by
R592 673. This adjustment does not affect the Income Statement.
COMMENTS
Financial overview
After achieving excellent results for the year ended 28 February 2006,
Verimark issued a trading update on 20 July 2006 to warn that certain
operational difficulties would impact negatively on its business for the
interim period ended 31 August 2006. The actual results achieved for the
interim period were within the parameters projected in the trading
update.
Headline earnings per share for the interim period decreased by 71% to
4,2 cents compared to the comparative period despite turnover increasing
slightly to R139 million. As previously reported, the decrease in
profitability is mainly a consequence of a less favourable product mix,
higher imported costs due to the weaker Rand and additional costs
incurred to strengthen the company"s sales network.
While most of the older, established products performed in line with
sales projections, the lack of new product introductions during the
period also impacted negatively on sales and profits. This is certainly
unusual in the trading history of Verimark. The pioneering of new
product concepts is not an exact science. Although Verimark has a proven
ability to consistently over time identify and introduce new concepts,
these opportunities do not always present themselves evenly.
Prospects
The significant weakening of the Rand is expected to keep overall
profitability under pressure. Operating costs are evaluated on an
ongoing basis to ensure the company"s cost structure is in line with the
level of turnover achieved.
The efforts in developing new product concepts during the interim period
are now coming to fruition. New product introductions during the balance
of the financial year will exceed the level of introductions achieved in
prior years. However, due to the timing of these introductions, the full
benefit to the company will only be realised in the next financial year.
Dividend
The directors are pleased to announce that although the company
experienced difficult trading conditions during the interim period, a
dividend of 3 cents per share has been declared. In accordance with the
settlement procedures of STRATE, the last day to trade cum dividend will
be Friday, 24 November 2006, trading ex dividend commences on Monday, 27
November 2006, the record date will be Friday, 1 December 2006 and the
dividend will be paid on Monday, 4 December 2006.
Share certificates may not be dematerialised or rematerialised between
Friday, 24 November 2006 and Friday, 1 December 2006, both days
inclusive.
On behalf of the Board
Michael van Straaten Du Toit Britz
Chief Executive Officer Financial Director
Johannesburg
3 November 2006
Directors:
M J van Straaten (CEO), F P Du T Britz, Dr J T Motlatsi*, J M Pieterse*,
H W Bonsma* (retired 22 June 2006)
*Non-Executive
Company Secretary:
Premium Corporate Consulting Services (Pty) Limited ("PremCorp")
E G Schubert resigned on 31 July 2006. The Financial Director (Du Toit
Britz) acted as company secretary until the appointment of PremCorp on 2
November 2006.
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
Sponsor:
PSG Capital
www.verimark.co.za
Date: 02/11/2006 05:05:17 PM Produced by the JSE SENS Department
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