VIL
26/02/2015 08:49
HALFYR
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REL: 0849 HRS Veritas Investments Limited
HALFYR: VIL: Veritas announces solid half year result
NZX release
26 February 2015
Veritas announces solid half year result, confirms 70% dividend.
Highlights
- Half year revenue increase of 89 per cent.
- NPAT of $1.7m for the half year after acquisition costs.
- Full 70 per cent interim dividend declared at 2.7cents per share.
- Nosh Food Markets business (Nosh) acquired and turnaround plan being
implemented.
- Nosh General Manager, Rod de Vries appointed.
- The Better Bar Company group business (BBC) acquired. Some risk resulting
from legislative changes.
- 40th Mad Butcher store opened in Nelson.
- Mad Butcher operating to plan despite supply and price pressures.
- Kiwi Pacific Foods operating above target.
Veritas Investments Limited (NZX:VIL) announces an unaudited net profit after
tax (NPAT) of $1.7m for the six months ended 31 December 2014. The result
includes one-off net costs of acquiring both the Nosh and BBC businesses.
Revenue of $27.4m for the six month period was an increase of 89 per cent
from the previous year ($14.5m) boosted by the addition of Nosh in September
2014 and BBC in late November 2014.
Business Trading
Mad Butcher
The Mad Butcher opened its 40th Store in Nelson in November 2014. The
business is tracking to targets although there is some pressure from the
tight supply of product and price pressures. Wholesale red meat prices in
particular have been at elevated levels and for longer peak periods, fueled
by increased export demand.
As noted in the Financial Statements, Veritas has retained ownership of the
Invercargill store and any sale process relating to that store has been
postponed until revenues have grown. Mad Butcher also owns the Onehunga and
Henderson stores which are now being actively marketed for re-sale. Ownership
of stores as a transitional arrangement is a normal part of franchisor
activity.
Kiwi Pacific Foods
The joint venture with the Burger King franchisor Antares Restaurant Group is
going well and ahead of plan. The combination of winning several new supply
contracts and better procurement processes are making a positive contribution
to the business.
Nosh Food Market
Nosh was acquired in September 2014 and is a turn-around business that was
distressed at the time of purchase and that was reflected in a purchase price
below net assets. The Board is pleased with progress and the business is
showing positive signs of improvement.
Rod de Vries was appointed General Manager for Nosh and commenced in January
2015. The Veritas Board says Nosh is marginally behind in its turn-around
plan and expects to make a small loss in the turnaround period.
The supply logistics plan will be finalised during the next few months and
that is expected to materially reduce operating costs. The customer offering
has improved markedly. Nosh aims to open a new store in Pakuranga around July
2015 and has secured a high profile site on Pakuranga Road, a major arterial
road directly opposite Pakuranga Plaza.
The Better Bar Company
The Better Bar Company was acquired on 28 November 2014 and one month's
trading has been included in the half year results. The business is
immediately profitable and will be a material contributor to the Veritas
Group. The Auckland metro sites are operating above plan. The Hamilton sites
that were acquired by the vendors in late 2014 are operating below plan. The
three Hood Street sites are all relatively new including the iconic 'Good
Home' site. A marketing campaign commences in late February 2015 to launch
the bar precinct which is anticipated to lift business and profile.
BBC operates in a highly regulated industry and the new drink-driving
legislation that came in to force on 1 December 2014 has had an impact on the
business, particularly affecting suburban areas. While a known risk, there
has been a larger than expected adverse effect right across the hospitality
sector and the business is closely monitoring how that settles down over time
and actively working on counter strategies. The industry overall has been
slow to react with low alcohol beer and wine alternatives and these industry
strategies are now being brought forward.
Forecast
The Veritas Board has reviewed the forecast for the full financial year
ending 30 June 2015 and estimates performance at the lower end of the range
as indicated in the pro-forma forecasts at the annual general meeting on 25
November 2014. The key determinants of the full year result will be the speed
at which the Nosh business improves, performance of the Hamilton BBC sites
and the medium term effect of the new drink-driving legislation. The Board
will keep the market appraised later in the year.
Dividend
The Veritas Board has declared a fully imputed interim dividend of 2.7 cents
per share. This represents a dividend payout of 70 per cent of NPAT, at the
top of the dividend policy range.
The record date for the interim dividend is 16 March 2015 and will be paid on
30 March 2015.
For and on behalf of the Board
Mark Darrow, Chairman, Veritas Investments Limited
About Veritas Investments Limited
Veritas Investments is a NZX Main Board-listed investment company focusing in
the Food and Beverage sector. The shell company was formed in December 2011
and made its first acquisition of the Mad Butcher franchisor business in May
2013 through a reverse acquisition transaction. A further investment was
made in December 2013 for 50% of Kiwi Pacific Foods Limited. In September
2014 Veritas acquired the Nosh Food Market business. In November 2014 Veritas
acquired The Better Bar Company group business.
www.veritasinvestments.co.nz
For further information contact:
Mark Darrow
Chairman
Veritas Investments Limited
Mob 021 88 88 58
End CA:00261159 For:VIL Type:HALFYR Time:2015-02-26 08:49:21
