VIL
27/02/2014 13:19
HALFYR
REL: 1319 HRS Veritas Investments Limited
HALFYR: VIL: Veritas confirms profit forecast; increases dividend
For NZX & Media Release
27 February 2014
Veritas confirms profit forecast; increases dividend
Highlights
o Full year forecast on track
o Dividend increased to 70% of NPAT for FY14
o Interim Dividend of 3.94 cents per share
o New acquisition Kiwi Pacific Foods settling in well, new GM appointed
o Mad Butcher Store openings on target
o Retail environment tough and experiencing product shortages, but product
opportunities identified
Veritas Investments Limited (NZX:VIL) is increasing its forecast dividend for
the 2014 financial year from 60 per cent of net profit after tax (NPAT) to 70
per cent of NPAT on the back of a solid forecast and higher cash holdings.
The Auckland-based investment group today announced its unaudited half year
result for the six months ended 31 December 2013. Veritas is on track to meet
the profit forecast for the 2014 financial year set out in its Investment
Statement dated 28 March 2013.
Trading
For the six months ended 31 December 2013, Veritas reported EBITDA of $2.8m
against a full year forecast of $6.2m while NPAT was $2.0m, compared to the
full year forecast of $4.2m. Revenue for the six months was $14.5m, compared
to the full year forecast of $35.8m, noting a higher level of rebate based
business in the product mix. While trading initially experienced a slower
start for the first quarter, total revenue contribution of $3.9m for the full
6 months was in-line with forecasts.
Acquisition of joint venture interest in Kiwi Pacific Foods
On 20 December 2013, Veritas announced an investment in Kiwi Pacific Foods
Limited, a manufacturer and supplier of meat patties for local and
international markets. The remaining 50% of Kiwi Pacific Foods is owned by
Antares Restaurant Group Limited, which holds the Burger King franchise in
New Zealand.
Kiwi Pacific Foods owns and operates a Ministry for Primary Industries (MPI)
approved meat patty production facility in Auckland, employing 14 staff and
with a preferred supplier arrangement with Antares. The purchase price had
three elements; $2.8m in cash, $0.6m of Veritas shares issued at $1.38 per
share and an earn-out calculated by reference to export profits over the
three years following acquisition.
Veritas also acquired the rights to manage Kiwi Pacific Foods' operations on
behalf of its shareholders. From the 2015 financial year, Veritas expects
Kiwi Pacific Foods to contribute around $0.6m of NPAT per annum to the
Veritas group.
Following the acquisition, Kiwi Pacific Foods has appointed Gus Crawford as
General Manager. Mr Crawford, who joins the business in March 2014, has more
than 20 years' experience in meat processing including seven years as general
manager for ANZCO Prepared Foods, a key food supplier to McDonalds.
Mad Butcher CEO Michael Morton says the Kiwi Pacific Foods acquisition is
settling in well.
"We were delighted to secure Gus Crawford with his wealth of experience to
run the Kiwi Pacific Foods business for us. We see good potential for
increasing export sales and will work closely with our joint venture partner
Antares to develop overseas markets. These are exciting times for Kiwi
Pacific Foods."
Regarding further acquisitions Chairman Mark Darrow added: "We continue to
look for further complementary investments. While we continue to actively
look at a number of businesses, we are not currently in any advanced
discussions.
"The Board is working very hard with the investment strategy to ensure any
further acquisitions meet the criteria of growing shareholder value in the
long term without materially affecting dividend streams."
Mad Butcher Stores
As forecast, the Mad Butcher business is on track to open four new franchised
stores in the year ending 30 June 2014. In the six months under review, Mad
Butcher has opened new stores in Invercargill, Kapiti and New Plymouth.
Management is now working on a Nelson store which it hopes to open by
mid-year. In Invercargill, Mad Butcher has taken initial ownership of the
store while a franchisee is being inducted.
Dividend
The Veritas Board has declared a fully imputed interim dividend of 3.94 cents
per share. This represents an increase on the forecast dividend from 60% of
NPAT to 70% of NPAT. Subject to cash requirements for acquisition
opportunities, the Board expects to maintain this increased dividend payment
ratio for the final dividend in respect of the 2014 financial year.
Mark Darrow commented: "Based on the strong cash position of the Group, we
are comfortable to increase the dividend for the year from 60 per cent to 70
per cent of NPAT within the band of our dividend policy."
The record date for the interim dividend is 14th March 2014 and the interim
dividend will be paid on 28th March 2014.
Trading environment
Mad Butcher CEO Michael Morton expects both risks and opportunities in the
short term.
"We are seeing a shortage of protein available following the 2013 drought and
higher meat exports both contributing to domestic supply shortages.
"We are operating in a tougher retail environment from the points of view of
both competitive activity and consumer spend. We do see opportunities with
the change in pork meat regulations driving better supply and lower pricing
in the fresh pork sector.
"We are also looking at other supply opportunities to mitigate local
shortages. Our relationship with key suppliers is important and we continue
to be very well supported by them," Mr Morton says.
-ends-
About Veritas Investments Limited:
Veritas Investments is an NZX-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. Veritas continues to look for
additional acquisitions in the food, beverage and franchise sectors.
Contacts:
Mark Darrow, Chairman, Veritas Investments Limited, Mob: 021 88 88 58,
email: [email protected]
Michael Morton, CEO, Mad Butcher Limited, Mob: 021 725 458,
email: [email protected]
End CA:00247582 For:VIL Type:HALFYR Time:2014-02-27 13:19:39
