Veritas shareholders vent spleen at Mad Butcher, Nosh performance

Veritas chairman Tim Cook

Veritas chairman Tim Cook on the turnaround plan

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Disgruntled Veritas Investments shareholders fired a salvo of questions over poor performance and the tanking share price for the group, which includes the Mad Butcher, Nosh, and Better Bar Company brands, at today's annual meeting in Auckland.

Veritas has said it is on track to meet 2017 guidance after first quarter trading, with revenue expected to be lower than last year at between $50 million and $55 million and underlying net profit in the range of $3-3.6 million. In August it reported a full-year loss of $4.6 million, compared with a $3.3 million profit the prior year.

John Hawkins, chairman of the New Zealand Shareholders' Association, questioned whether Veritas was simply at the mercy of its bankers, given its high debt levels, and expressed concern that 66% of its assets were intangible and would have no value if the company was no longer able to keep on as a going concern.

He accused the board of "glossing over" a lot of serious issues.

Chairman Tim Cook, who was re-elected today despite some shareholder criticism, said the company enjoyed a "strong relationship" with its banker, ANZ. It made a deal in September to reschedule and reduce the group's debt repayments. The deal includes the board preparing a plan to address its capital structure by the end of February and it can now only issue dividends with the bank's approval.

Auckland-based Veritas had current liabilities at the end of the June 2016 financial year of $21.4 million against assets of $6.8 million. It has to repay $16.5 million in debt within the next year and a further $16.7 million beyond that.

Mr Cook said as a shareholder who had bought into the company at the time of the initial public offering at $1.30 a share and with the share price now trading at 20c per share, no one was more motivated than himself and chief executive Michael Morton to turn around the company's performance.

New strategy
The strategy to restore profitability included finding a new point of difference for the Mad Butcher stores, seven of which had closed, with beef prices up 28% over the past two years and intensified competition from supermarkets. Mr Cook said the board was looking at offshore meat retailing trends, given it could no longer compete on price. It was also re-franchising four company-owned stores.

With the Nosh food supermarkets, the board is relying on selling eight company-owned stores to franchisees, who Mr Cook said historically perform better than employees in lifting sales. When asked why good franchisees would be attracted to the poorly performing brand, Mr Cook said they were offering the franchises at a significantly discounted price to attract the right people.

With the Better Bar Company, the only division that is performing well, three loss-making bars in Hamilton were sold and the remaining eight were trading profitably. Mr Cook said it was making some investment in redeveloping existing sites to lift revenue and profitability and was open to acquiring more bars, though he didn't say where the funding for that would come from.

One shareholder questioned the board on why auditor PwC had qualified its opinion of the listed company's full-year accounts after saying the Nosh investment was carried at $4.6 million in the consolidated statement of financial position but was unable to obtain sufficient evidence to support that valuation.

Mr Cook said the board "couldn't agree on the number" with PwC, and was confident of achieving the key assumptions of cumulative sales growth of 15% over three years and a gross margin improvement of 3.5% over the same period.

Legal advice questioned
Richard Flower, who told the meeting he was regrettably a shareholder, questioned the legal advice the board had received over its 50% in Kiwi Pacific Foods, which supplied meat patties for Burger King outlets and will be wound up by the end of March next year. Veritas has made a $1.6 million loss on that investment after Antares Restaurant Group decided to source the meat more cheaply elsewhere.

Mr Cook said the board had relied on legal advice from two law firms that Antares couldn't do that under the contract but an independent arbitrator had ruled it could.

"After burning $250,000" on legal fees fighting the case, Mr Cook said the board decided it wasn't prudent to burn another $250,000 taking it to appeal.

(BusinessDesk)


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"Veritas shareholders vent spleen at Mad Butcher, Nosh performance"

Can't blame them. I'd be wanting to add Cook's kidneys in a steak pie, and fry his liver with bacon.

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Cook said as a shareholder who had bought into the company at the time of the initial public offering at $1.30 a share and with the share price now trading at 20c per share, no one was more motivated than himself and chief executive Michael Morton to turn around the company's performance.

Unfortunately, other shareholders don't have the luxury of $400,000 salaries being paid to them while they wait.

How on earth did Tim Cook get voted back in? Then there is Morton, former owner of the Mad Butcher, how is he still in?

Maybe some fresh faces or a liquidator may be a better bet

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3 of the 4 companies have failed or are failing. The common denominator is pretty obvious.

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Who is the idiot that wants to buy shares at 20c!

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Richard Flower, who told the meeting he was regrettably a shareholder

Nice to see a well respected old school sharebroker still going to AGMs - hope you got a Mad Butcher sausage off the barbie Rick!

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So Mr Flower is no shrinking violet.

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"Chairman Tim Cook, who was re-elected today despite some shareholder criticism, said the company enjoyed a "strong relationship" with its banker, ANZ."

Is this in the same league of relationship that underpinned the Molotov–Ribbentrop Pact of 1939? We all know how that one ended...

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Companies in trouble always cite their 'strong relationship with the bank', until of course the said bank appoints a receiver.

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"The deal includes the board preparing a plan to address its capital structure by the end of February"

That ended well for PPL didn't it !

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The ANZ are probably getting quite experienced at this sort of thing now Rog....

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Options are major asset sales or capital raise. Based on market capitalisation of $8m it will have to be pretty ugly if they can even get something away?

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Why on earth would shareholders trust them with more of their money when they've made such a mess with existing resources ?

Given the crisis of confidence you'd have to say the odds on a successful capital raise at any price are very slim.

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Looks like Mr Cook will have to have a sausage sizzle.

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If MB's shares were meat in the fridge, it would be moving on its own accord

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So the Board are looking at overseas trends, now that they realise they can't compete on price.. Spare me..

I'm pretty well-travelled & can't think of any country with stand-alone meat retailers ? Sure, upscale boutique butchers in most high-end suburban blocks - but that strategy 'aint gonna help any of the remaining Mad Butchers.

Perhaps they should just realise they can't compete - [NOSH included] and call it a day.

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More bar acquisitions could surely only come from Moreton's pocket or finding some suckers prepared to take scrip..

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What a load of rubbish! Pure rubbish. This company is a disaster because its Chairman and directors are totally incompetent. Could they run a coke dispensing machine or operate a barbecue? No way! Welcome receivership and goodbye Mr Cook.

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The reality is here we have a fading old style business( Mad Butcher), a loss making food retail business with little prospect of making a profit and probably some pretty good bars( the jewell in the crown). Debt is the killer unfortunately. The doctor would kindly ask Mr Morton to take back the Mad Butcher for his shares in Veritas and a handful of dollars, close down Nosh(realise the NTA and hopefully the lease exit costs won't be horrendous) and have a bar business making some money and look to acquire more bars. But even with this approach ,given the large bank debt the shares will be worth less than 20 cents. But the status quo is heading for bust.

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This was Mark Darrow's creation which Peaches hasn't forgotten. He put out a rosy forecast as Chair, resigned and promptly sold his shares at a considerable premium to the current market price leaving Mr Cook and the lovely Sharon to pick up the pieces. This is a veteran move but a reputation destroying move by Mr Darrow in Peaches humble opinion. No cream for you Mark!

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Cant compete on price confirmed by the chairman so looking for something else. Guess we should all shop elsewhere in the meantime till they figure it out, is that what he means?

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Could the NBR quit using a very old photo of Tim Cook grinning like a Cheshire Cat? We want one of him looking crook and worried. The guillotine is being readied no doubt.

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Agree with Roger Smith! NBR please get rid of all photos of Tim Cook.
He is an embarrassment being a Director

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