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Rand dents Verimark's revenues

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Verimark CEO Michael van Straaten.
Verimark CEO Michael van Straaten.
Cape Town - The financial year ending February 28 2014 was challenging for retail group Verimark [JSE:VMK], said CEO Michael van Straaten.

He said this was because of the pressure facing all stakeholders in the consumer market.

"The primary reason in our case was the depreciating of the rand," Van Straaten told Fin24.

It depreciated by over 20% during the period under review, while depreciating close to 40% in two years before.

It recorded a decrease in revenues of 5.2% R430.5m from R454.1m in 2013 due to the increase of retail selling prices across certain of its high-volume products.

However, despite this, he said the group feels excited about the progresses made in the past financial year.

The group reported a comparative improvement in the restated operating profit of 34.3% to R22.3m. Over 3.5 million products were delivered to Verimark customers with over 85 000 deliveries from the new 13 000m2 head office and centralised warehouse north of Johannesburg.

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The highlights of the last 12 month’s performance:

- Operating profit was R29.6m from R16.6m in 2013
- Profit before tax was R23.4m from R15.3 in 2013
- Headline EPS was at 16.9 cents from 8.4 cents in 2013
- Improved net cash position of R20m
- Market leader position maintained


The board also decided not to declare a final dividend in order to continue to improve the group’s cash position ahead of the anticipated seasonal working capital increases in the second half of the year.
 
"We feel we are very well positioned to take advantage of growth in the future. Clearly the focus will be on growing our local business," said van Straaten.

He added that some retailers have already indicated that they will give Verimark more prominence.

Van Straaten also pointed out that the international market holds vast opportunity for Verimark and this will help offset the depreciation of the rand.

"It is critical for us to grow that international business."

The next six months will be tough, but thereafter Verimark will optimise growth, concluded Van Straaten.

 - Fin24


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