Veritas profit drops 23%, to pay smaller dividend   28 Aug 2015

Veritas profit drops 23%, to pay smaller dividend as Nosh, BBC acquisitions weigh

By Paul McBeth

Aug. 28 (BusinessDesk) - Veritas Investments, the food and beverage investor, posted a 23 percent drop in annual profit and will pay a smaller dividend to shareholders as it wrestles with integrating its Nosh Food Market and Better Beer Co acquisitions.

Net profit fell to $3.34 million, or 8.17 cents per share, from $4.35 million, or 11.72 cents, a year earlier, the Auckland-based company said in a statement. While revenue soared to $45.7 million from $10.9 million on the Nosh and BBC acquisitions, transactions costs, higher property expenses and a rising interest bill kept a lid on earnings. Underlying profit fell 4.3 percent to $4.3 million, meeting the downgraded guidance Veritas gave in May.

The board declared a final dividend of 1.066 cents per share, payable on Sept. 25 with a Sept. 11 record date, taking the annual payout to $3.766 cents, less than half the 8.16 cents paid in 2014.

"Although this is a lower level of dividend (50 percent of profit for the year) than in previous financial years (70 percent of profit for the year), the board considers that this level of dividend is prudent, having taken into account the working capital needs for the company and the potential need to fund further growth in our business over the short to medium term, especially in our Nosh Food Markets business as it expands," the company said.

The shares fell 1.6 percent to 60 cents, and have slumped about 51 percent this year.

In June, Veritas said it expects 2016 profit will rise to between $5.3 million and $5.5 million, a level it thought it would be at in the financial year just ended before cutting guidance.

Veritas funded the Nosh and BBC acquisitions through debt, and had total debt of $37.3 million as at June 30, up from $2.8 million a year earlier, and boosting the company's interest expense to $1.2 million from just $88,000 in 2014.

The company's $11.4 million of current assets, including cash and receivables, as at June 30 was less than the $12.2 million of current liabilities, though the board prepared the statements as a going concern with cash flow forecasts expected to provide "adequate resources to continue operations."

Veritas generated an operational cash outflow of $783,000 in the year, compared to a cash inflow of $3.1 million in 2014.

The company's Mad Butcher franchise posted flat earnings before interest, tax, depreciation and amortisation of $6.4 million on an 11 percent lift in sales to $12.1 million, and its Kiwi Pacific Foods joint venture contributed earnings of $726,000, up from $415,000 a year earlier.

The Nosh segment added revenue of $18.4 million, while posting an ebitda-loss of $1.2 million, while the BBC business generated earnings of $3 million on sales of $15.1 million.

(BusinessDesk)

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