Johannesburg - Retail company Verimark Holdings [JSE:VNK] on Tuesday reported diluted headline earnings per share of 9.7 cents for the six months ended August 2010 from a loss of 10.1 cents in the previous corresponding period. Diluted earnings per share were at 9.7 cents from a loss of 10.1 cents.
The group said despite the improvement in the overall trading results, the board considers it prudent not to declare a dividend due to its entering its peak trading period when cash is required to be retained in the business in order to fund the current growth.
Dividend payments will resume in accordance with the existing payout policy should the current trend continue for the remainder of the financial year, it said.
Revenue was up 56% to R200.7m, mainly due to the continued introduction of new innovative products that complement Verimark's existing successful product range, increased and significant investment in television and print advertising and other promotional activities, the continued improvement in prominence and space utilisation within the group's retail partner stores and growth in its direct stores.
Profit before tax was at R17.0m from a loss of R11.1m. The group said that gross profit improved on the back of an increase in sales volumes.
"The turnaround in the group's results was due to the continued positive trend in trading and profitability reported for the final six months of the previous financial year. This excellent performance is a result of improved operational efficiencies and the re-ignition of Verimark's entrepreneurial spirit brought about by a complete overhaul in top management over a three year period," said CEO Michael Van Straaten.
"In addition, the increased number of company-owned stores had a positive impact on the overall margin as full retail selling prices are achieved in these stores, this increase in margin is partly offset by an increase in the cost of operating these new stores," said Verimark.
Total operating costs increased mainly due to the increased sales volumes. Foreign exchange losses amounted to R2.2m compared with R4.4m for the prior period.
"These losses were as a result of fair value adjustments on open FECs and foreign exchange losses due to the strengthening in the rand over the prior six months and are included in finance costs," said the group.
Verimark said that its prospects for the future look positive and it is expected that the growth in revenue will continue, but at a lower rate.
"Given the gratifying results of the last twelve months, the group is committed to and confident in its ability to not only sustain its recent performance, but to continue its success record that has been built over the last thirty three years," said Verimark.