Veritas’ profit hit by write-offs

VeritasFood and beverage retailer, Veritas, has posted an unaudited net loss of $4.59 million for the year ending June 30 compared to a profit of $3.33 million the previous year.

The total losses, $7.75 million, stemmed from losses from operations held for sale and discontinued operations.

The owner of the Mad Butcher franchise, Nosh and Better Bar Company stated the losses were due to the end of its Kiwi Pacific Foods venture, which held a preferred supply deal with the local Burger King franchise operator, Anatares Restaurant Group. Veritas bought half of meat patty maker Kiwi Pacific Foods in late 2013. The other half of Kiwi Pacific Foods is owned by Antares.

In May this year, Veritas Investments, sold the land and building owned by the Kiwi Pacific Foods at 22 Alderman Place, Mangere East, Auckland. Proceeds of the sale was used to repay Kiwi Pacific Food’s external debt, with the remainder distributed to each joint venture partner.

The sale of the freehold land and buildings at 22 Alderman Place follows the orderly wind down programme for the Auckland-based company, which has been agreed between Veritas and its joint venture partner, Antares Restaurant Group.

Tim Cook, chairman of Veritas, said the company’s board assessed the impairments and other write-offs of $5.59 million, made up of $2.90 million for the carrying value of Kiwi Pacific Foods Ltd (KPF) following the decision to close the company; and write-offs relating to the Mad Butcher business and other restructuring costs of $2.35 million.

“We are working closely with franchisees to support and maximise their performance. During the second half of FY16, we closed three Veritas owned stores which, in spite of extensive support from the franchisor, were consistently unprofitable,” he said.

Cook said despite the challenging environment, the majority of Mad Butcher stores are trading profitably and the brand still continues to be a major contributor to Veritas’ profitability generating an EBITDA of $4.57 million in the year. There are currently 33 Mad Butcher stores in the Group, 31 of which are franchised and two are owned.

According to Cook, FY16 has been disappointing for Nosh.

“As reported in Veritas’ half year report in March 2016 the Nosh business lost EBITDA of $1.01 million for the six months to December 31. The loss in the second half of FY16 was $866,414, which, although an improvement, fell short of budget. The full EBITDA loss of $1.88 million for the year compares to $1.19 million for the previous part year. A substantial effort from the board and management continues to focus on gross margins, stock levels and operational improvements to bring the business into profitability.”

In April 2016 Veritas announced the commencement of a programme to franchise the existing Nosh stores to qualified people.

“A franchise strategy for Nosh has always been part of our vision since we acquired the business nearly two years ago. As at June 30, 2016, we were working through a short list of potential franchise operators. In addition to franchising, the Board are exploring a number of options relating to the future of Nosh,” Cook said.

The company has declared no dividend for the year ending June 30.

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