Veritas forecasts revenue drop in 2017, gets lending extension from ANZ Bank

Friday 23rd September 2016

Veritas Investments says revenue will drop in 2017 as Mad Butcher sales continue to fall, while its bank has extended its lending facilities beyond next year.

Revenue would be in a range of $50 million to $55 million in the year ending June 30, 2017, compared with $56.5 million last year, the company said today.

Of that 2017 revenue, its Nosh Food Market unit was expected to deliver between $22 million and $23 million, compared with $22.5 million in 2016. Sales at its Mad Butcher stores would fall to between $7 million to $8 million, from 2016's $9.8 million, and The Better Bar Company would have sales of $21 million to $24 million, down from $24.1 million.

Last month, Veritas reported a full-year loss of $4.6 million compared with a profit of $3.3 million in 2015. Its underlying net profit from continuing operations was $3.16 million, within its guidance range of $3 million to $3.5 million. Today it gave 2017 underlying profit guidance of $3 million to $3.6 million.

Las month it described the results of its unprofitable Nosh business as "disappointing", having said in April that it planned to franchise the existing Nosh stores and said trading at Mad Butcher was affected by supply shortages and a "very competitive" market. It closed three unprofitable Mad Butcher stores in the latest year and the original Mad Butcher store was liquidated in July, with the liquidator Peter Jollands saying the business model was flawed and unsustainable.

"As disclosed in our annual financial statements for FY16, the Veritas Board is considering a number of restructuring options for the loss-making operations of Nosh and the two group-owned Mad Butcher stores," the company said. "Accordingly, this guidance is subject to any write-offs and restructuring costs, if any, that are incurred in connection with the implementation of these initiatives."

Notes to Veritas's 2016 accounts show it had current liabilities of $21.4 million and assets of $6.8 million. It has $16.5 million of debt coming due within the next year, and a further $16.7 million is due beyond that. Debt of $3.3 million is due for repayment on a month by month basis to September 2019.

Today, the company said ANZ has "confirmed its support" for the company by extending the terms of its banking facilities beyond the 2017 financial year.

The shares last traded at 23 cents and have fallen 52.1 percent this year, having dropped sharply after the 2016 earnings were announced.

BusinessDesk.co.nz

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