Tegel directors say accept Bounty offer as net profit falls

Tegel Group Holdings says its directors and its auditor are in dispute over the value of the company’s goodwill and its annual net profit fell nearly 24%.

The directors are also unanimously recommending shareholders accept the Bounty $1.23 per share takeover offer because it is fair and within both the independent valuation by KordaMentha and the directors’ own valuation.

However, they say there is no benefit in accepting the offer early but that, if shareholders do, they will still be entitled to the 4.1c a share dividend.

Net profit for the 52 weeks ended April 29 fell to $26.1 million from $34.2m for the previous 53-week period – the company says the result was 17.7% lower on a 52-week comparison.

“While the company delivered another year of record poultry volumes and revenue, the result was affected by non-repeating costs of approximately $9.9m in total before tax,” the company says.

“These came mainly from industry compliance, ex-cyclone Gita and organisational restructuring” and fell within the previously indicated range.

Tegel says its auditor, PricewaterhouseCoopers, felt the goodwill of the company has been impaired but the directors “have formed the view that the discounted cash flows model consistently used by Tegel arrives at a more accurate estimate of the value of the business.”

"The qualified audit opinion has no impact on the takeover offer for Tegel,” it says.

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