Bitter takeover battle makes a meal of Oyster Bay's profit

The fight for control of Oyster Bay Marlborough Vineyards and complaints to the NZX have flattened the wine company's annual profits despite a major boost in revenue.

The company has also warned it may have to spend more than $1 million to deal with legal issues resulting from the battle, which saw Delegat's end up with 50.1 per cent of Oyster Bay.

In the year to June, Oyster Bay trading revenue leapt 49 per cent to $10.6 million, while the pre-tax operating surplus was 179 per cent better, at $2.2 million.

But the tax bill was nearly $500,000 higher, there were no gains from land sales and non-recurring costs after tax were $559,000. Operating expenses and interest costs also increased significantly, reflecting the fact that vineyards were now fully developed.

The end result was a net profit just $1000 better than last year, at $920,000.

Oyster Bay said yesterday that last year's contested takeover offers and the complaints made by Peter Yealands Investments (PYIL) to the NZX had cost it $835,000. Oyster Bay still had to recover $295,000 plus GST of takeover company statement costs from PYIL, despite having invoiced them.

It said it remained in dispute with PYIL, with the companies' claims against each other due to be resolved in the High Court. It appeared Oyster Bay owed about $50,000 as a result of various parties seeking costs.

Also, Oyster Bay said that, depending on the final outcome of cost and compensation claims, it might have to spend between 6c and 15c a share "dealing with the legal issues which arose during the course of the contest". With 9 million shares on issue, that equates to between $540,000 and $1.35 million.

Oyster Bay chairman Bill Falconer said yesterday the trading result signalled what the company could achieve in normal circumstances, because profits were satisfactory once the non-recurring costs were taken out.

Delegat's managing director, Jim Delegat, said he was pleased at Oyster Bay's increasing yield and underlying performance and saw it as "a significant long-term supplier to us".

Oyster Bay said "the task before directors is to clear away the residue from the takeover contest as rapidly as possible and to settle the company into a stable operating framework with continuing emphasis on optimising operational performance".

A dividend of 10c a share has been declared, compared with none the year before. Oyster Bay shares closed down 2c yesterday at $2.34.