Veritas Investments has undergone significant changes during the current financial year ending June 30 through acquisitions of the Nosh Food Market business and The Better Bar Company group business. The board is aware that these changes have made it difficult for shareholders to accurately gauge the performance and, importantly, the potential of the Veritas Group, including the metrics of its four underlying businesses.
Management has undertaken a thorough business planning exercise as a part of its annual budget process, and the board has approved the group business plan for FY16.
The context of the group business plan is as follows.
• Mad Butcher: The key focus for the year is to open further Mini Mad Butcher stores following the launch of the first smaller format store in Mosgiel. A commitment has been made for a store replacement site in Massey, with this likely to come on stream mid-2016 following completion of the development within a new high-profile retail precinct.
• Better Bar Company Group: More focus on food offerings is seeing very positive results across this business, with music and entertainment changes and a higher focus around sporting events. A number of sites are undergoing changes to drive higher outdoor patronage to lift results further.
• Nosh Food Market: The business turnaround is progressing well, with a number of changes to drive higher sales and margins, particularly with the very successful relaunch of the VIP program, and a focus on opening the new Pakuranga store in August. The refurbished Glen Innes store is performing well, and will be used as a template for other sites.
• Kiwi Pacific Foods: After a solid FY15, the business is looking to increase business with key customers.
The plan is for the group to generate revenue of $86 million to $92 million in FY16, segmented as follows: Mad Butcher from $32 million to $34 million; Better Bar Company group from $25 million to $28 million; and Nosh Food Market from $28 million to $30 million. The total is $85 million to $92 million.
Mad Butcher revenue includes rebate revenue and carcass revenue. Product mix can have a material effect on revenue, but is neutral at gross profit level.
The above table excludes Kiwi Pacific Foods, as revenue from that business is equity accounted as a 50 per cent joint venture. If Kiwi Pacific Foods is included in the calculation, the group would be managing more than $100 million in revenue between its four businesses.
The current plan is for the group to achieve underlying net profit after tax (NPAT) for continued operations of $5.3 million to $5.5 million for FY16, which equates to EBITDA of between $10.5 million to $11.0 million.
As previously stated, starting with the first quarter of FY16 ending September 30, the board will provide the market with quarterly updates of the performance for the group. These quarterly updates will be provided towards the end of the month following each quarter end, and after the Veritas Board meeting for that month.
This will enable investors to monitor progress and performance of the individual businesses, and the Veritas Group as a whole.
As noted on June 10, Mark Darrow is stepping down from the board and from his role as chairman on June 30 2015. Tim Cook will take over as acting chairman while a review of the board is undertaken. The market will be notified when a permanent appointment is made.
