|
Buderim Ginger Limited Chairman, John Ruscoe, today announced a further proposed acquisition outside the Company’s traditional ginger business. In announcing this move Mr Ruscoe signaled a major change in future strategy whilst warning that 2004 profits would fall below those of the previous year because of a decline in the profitability of its traditionally-dominant export ginger sales. He went on to say that “the company had completed a scoping study which had identified that this segment of its business was unlikely to generate strong returns in the near term. A high Australian dollar coupled with relatively low growth and increasing competition from Asian countries was expected to constrain profits. However, far from walking away from this business the company will continue to selectively compete where the Company’s quality position held value and use the cash flow generated from the core activity to fund more profitable activities and expansion.” He said “the company would concentrate on the more profitable sale of higher value, elaborately transformed products and branded retail products for the domestic and targeted export markets while seeking additional profit growth through tourism and new businesses. Our new jointly-owned themed tourist attraction “Stowaway” at the Ginger Factory is expected to be open in time for Easter 2005.” Mr Ruscoe also announced that “the company yesterday signed an in-principle agreement to acquire the business assets of Aldente Foods Pty Ltd, a Brisbane based supplier of prepared meals to the domestic market. The agreement is subject to due diligence and a number of other conditions and is expected to take effect from 1 February 2005. The purchase price of $1M, adjusted for stock and staff entitlements, with a further component based on performance will be satisfied by cash and scrip. The business is expected to add over $3M annually to sales. The acquisition will be integrated into the Company’s baking division and significant operational synergies are expected. Mr Ruscoe reported that the recently acquired baking business was performing well and is exceeding expectations.” Mr Ruscoe said that “while the Company had recovered well from its first half loss it was unable to make up sufficient shortfall to reach the level of before tax profit achieved in 2003 of $0.75M. It is now anticipated that 2004 before tax profit will be less than half this level. The Board is very aware that the results for 2004 will be disappointing for shareholders. Since the new board took over in 2002, it has battled hard to improve the Company from the poor state it was in. Much has been accomplished on all fronts but three years of drought and an Australian dollar which has risen by more than 50% in value since this time had constrained the company’s potential to reach acceptable profitability from existing activities. The Company’s new direction and resultant initiatives will create a major turnaround in 2005. In contrast to the expected 2004 result, we are projecting a before tax profit in 2005 of more than double the reported 2003 level with further gains beyond.” ENDS For further information contact: John Ruscoe on 04 3843 4993; or Gerard O’Brien on 04 0801 7611. |
 |