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Veritas affirms annual profit as Kiwi Pacific acquisition makes up for slow Mad Butcher sales

Veritas Investments [NZX: VIL], which owns the Mad Butcher franchise chain, has affirmed its forecast annual earnings as last year's acquisition of Kiwi Pacific Foods made up for slower than expected sales at the butchery business.

The Auckland-based company sees net profit of $4.2 million in the 12 months ending June 30, unchanged from its last update in February, Veritas said in a statement. Third-quarter sales at the Mad Butcher business were weighed down by product shortages created by last year's drought, and aren't expected to recover in the fourth quarter. Still, the company's half-stake in Kiwi Pacific Foods, which makes hamburger patties for Burger King, is expected to make up for the shortfall.

"Any shortfall against NPAT for FY2014 in the Mad Butcher business is expected to be offset by a positive NPAT contribution from Veritas' 50 percent interest in Kiwi Pacific Foods," the company said. "The board also expects to see an improvement against forecast in the group's FY2014 tax position."

The Auckland-based company bought the Mad Butcher in May 2013 in what was effectively a reverse listing, having sold its assets and returned capital to shareholders.

The NZX-listed investment company, which focuses on the food and beverages sector, bought half of Kiwi Pacific Foods in December for $2.8 million in cash and $400,000 in shares at $1.38 apiece, with potential earn-outs if certain export targets are met. The remainder of the business is owned by Antares Restaurant Group, which holds the New Zealand Burger King franchise.

Veritas affirmed its expectation the final dividend will be consistent with making a full-year return of 70 percent of net profit.

The shares were unchanged at $1.15, and have dropped 18 percent this year.

(BusinessDesk)