NZX Release
28 February 2017
Preliminary results announcement for first half of FY17
Veritas Investments Limited (NZX: VIL) announces that its unaudited net
profit after tax (NPAT) for the six months to 31 December 2016 increased to
$1,205,546, compared to a net loss of $(4,815,958) in the previous
corresponding period, an improvement of $6,021,504.
The Underlying NPAT from continuing operations and before significant items
(Underlying NPAT) improved by 29% to $2,513,762 in the reporting period,
compared to $1,941,386 in the previous corresponding period. There were no
significant losses in the first half of FY17 compared to $(4,223,033) in the
first half of FY16. Operating cash flow improved by 128% to $1,833,467, from
$804,894 in the previous period.
Net revenue for the period was $15,912,862 compared to $19,133,865 in the six
months to 31 December 2015, a decrease of 17%, due to the closure of a number
of underperforming Mad Butcher stores and the sale of three bars in Hamilton.
Total losses from discontinued operations were $(1,308,216) in the first half
of FY17 compared to $(2,534,311) in the first half of FY16.
A reconciliation of the VIL Group''s Underlying NPAT to its reported result
complying with generally accepted accounting practice (GAAP) is as attached.
Commentary on Veritas'' individual businesses is detailed below:
Mad Butcher
The market has been competitive with supply shortages creating challenges
around product choice and pricing. The Board''s focus is on ensuring
profitability within each store and we are working closely with franchisees
to support and maximise their performance. During the first half of FY17, we
purchased two stores and sold one store.
The brand continues to be a major contributor to Veritas'' profitability
generating EBITDA of $2,132,915 in the period compared to $1,916,933 in the
previous corresponding period.
There are currently 32 Mad Butcher stores, 29 of which are franchised and
three are company owned. The Board are exploring a range of options for these
company owned stores.
The Better Bar Company
The Better Bar Company exceeded its targets for the period. Some
redevelopment of existing sites was completed, including the creation of
additional space in the two high profile Viaduct Harbour outlets in Auckland,
Danny Doolans and O''Hagan''s.
A focus on improving the customer experience through enhanced menu and
entertainment options and good cost control has led to improved results, with
the bars earning EBITDA of $3,081,255 in the period compared to $2,654,912 in
2015.
Nosh
Subsequent to balance date Veritas sold the Nosh business to Gosh Holding
Limited on 24 February 2017, with the net proceeds of the sale used to reduce
Veritas group''s bank debt to ANZ. Accordingly, the results of the business
have been reclassified as a discontinued operation. The half year financial
statements do not include any amount for the loss on sale, which is expected
to be in the range of $2.2m - $2.6m after tax.
Kiwi Pacific Foods
All material matters pertaining to the closure and wind up of the business
will be completed by 31 March 2017.
Updated Outlook and Market Guidance
Our previous market guidance for FY17 on 1 November 2016 was for the Group to
achieve Revenue of $50m - $55m, EBITDA of $7.4m - $8.0m and Underlying NPAT
of $3.0m - $3.6m for the full FY17.
Given the reclassification and subsequent sale of Nosh as a discontinued
operation, the Board is restating the guidance for the full year to Revenue
of $26m - $31m, EBITDA of $7.9m - $8.5m and Underlying NPAT of $3.7m - $4.3m
for FY17.
No interim dividend
The Board has resolved that no interim dividend will be declared for the
period ended 31 December 2016.
For further information, contact:
Tim Cook, Chairman
Veritas Investments Limited
021 764 401
timc@corporateadvisory.co.nz
About Veritas Investments Limited
Veritas Investments is an NZX Main Board-listed investment company focusing
in the Food and Beverage, Franchise and Hospitality sectors. 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. In November 2014 Veritas acquired The Better Bar Company group
business.
www.veritasinvestments.co.nz
End CA:00297519 For:VIL Type:HALFYR Time:2017-02-28 09:21:59