Verimark Holdings records an increase in revenue
Verimark Holdings Limited released its unaudited condensed consolidated interim results for the six months ended 31 August 2017.
- Revenue from continuing operations increased by 13.7% to R209.7 million (2016: R184.4 million)
- Gross Profit increased by 10.6% to R88.6 million (2016: R80.2 million)
The first six months trading has been tough for most consumer related businesses tough economic conditions and heightened political instability, both of which resulted in lower consumer confidence and spend.
Notwithstanding the worsening of the South African economy, Verimark has achieved positive revenue growth. Profits are down in comparison to the prior year’s six months trading due to an increase in new products introduced which resulted in higher advertising spend. The financial benefits of this increase in new product introductions will be seen in the months ahead.
The Group’s total revenue increased by 13.7% to R209.7 million (2016: R184.4 million). The increase
is mainly attributable to the following;
- Price decreases in March 2017 compared to the price increases in the prior year;
- Increase in advertising spend, due to the increased number of new products introduced; and
- Additional stores made available by retail partners, given the sales potential.
Gross profit increased by 10.6% to R88.6 million (2016:R80.2 million). This is lower than the 13.7% increase in revenue, as a result of price decreases and lower gross margins as well as increased advertising costs. The increased advertising cost’s is a result of the increased number of new products introductions, which were 85.7% higher than comparative period.
Operating costs increased by 12.1% to R87.7 million (2016: R78.2 million).This increase is directly correlated to the increase in revenue. Cost containment remains crucial, however as in the past, certain upfront costs are necessary to ensure future growth.
Profit before taxation decreased to R2.2 million (2016: R3.9 million). Net finance charges increased by R0.98 million, which is due to changes in working capital, as cash has been utilised to ensure sufficient inventory levels for the expected sales increases over the festive season as well as increased inventory levels of the new products introduced during the period under review.
Verimark is a company incorporated in the Republic of South Africa (“South Africa”). The unaudited condensed consolidated financial result comprises the unaudited consolidated results of Verimark and its subsidiaries for the six months ended 31 August 2017 (“interim financial results”).
No dividends were declared for the six months ended 31 August 2017. Dividend payments will be reconsidered in accordance with the existing pay-out policy on completion of the current financial year.