Verimark slips from black into red

The group, which is trading under a cautionary, said it had not managed to deliver the expected turnaround in its financial position during the period under review.

Last year's net profit of R8,5m was reversed, with Verimark reporting a net loss of R4,2m, which translated into a headline loss per share of 3.4c against a gain of 4.1c per share last year.

CEO Michael van Straaten said the past year had “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.”

He said although “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 had delayed the turnaround process. However, he did not give any further indications of the company's prospects.

Verimark reported headline earnings per share 64.7% down at 4.1c as an awaited turnaround plan failed to deliver dividends. In the previous year, the telemarketing group reported headline earnings down 66% to 11.64c due to a drop in sales, the late introduction of new products, supply problems with a key product and a weakening rand, which affected gross margins.

The company, known for its frequent television advertisements, did not declare a dividend as it made a loss during the year. Its operational gearing “remains a challenge and management continued their efforts to align costs with the operational levels of the business,” it said.

Borrowings increased to R23,9m from R13,5m due to the acquisition of franchise stores, investment in assets and an increase in the use of overdraft facilities. The effect on earnings has been an increase in interest due.

Verimark acquired a number of franchise stores during the year, which resulted in improved turnovers and margins but also increased associated costs. Turnover for the year was “marginally lower” than in the previous year.

Source: Business Day

Published courtesy of