Legacy tax liability eats into profits at Avondale Foods
A LEGACY tax liability of nearly £1.5 million severely dented profits at Craigavon-based Avondale Foods, despite its sales soaring by 22 per cent in the year to last March.
The company, founded by brothers Harry and Derek Geddis in 1965 and employing close to 500 staff, reported a record turnover of £63.1 million.
That was up from £51.5 million a year earlier, and came as it further beefed up its supply deals with major supermarket chains and retailers across Ireland and Britain.
But profit before tax slumped from £2,660,364 the previous year to £501,241 in its current trading period.
This follows Avondale having to make a payment of £1,458,900 to HM Customs and Revenue following a long-standing enquiry arising from earlier payments to two employee benefit trusts and a special purpose trust.
However, the directors still heralded it as a successful year and say they are committed to the long-term success and profitability of the company with a combination of product development, product efficiency and building key customer relationships.
They said: "This financial year has seen the continuation of a significant investment regime in the company, increasing capacity and making ready for new product opportunities in line with the company's strategic goals."
A strategic report accompanying the accounts says that factors affecting performance include pressure to reduce prices from customers, higher operating costs, pound/euro currency fluctuations, and maintaining supply of high quality ingredients during seasonal changes and in varying climates.
Avondale, a market leader in fresh packaged food produce, manufactures vegetable accompaniments, wet salads such as coleslaw and potato salad, fresh soups, sauces, dough balls, porridge and noodles for distribution throughout the UK and Ireland.
The company trades under its own brand name Country Kitchen, but also makes products sold under brand names agreed with major supermarkets including Sainsbury's, Asda, Tesco, Waitrose and Marks & Spencer.
The latest accounts reveal that it hired an additional 55 production staff to increase its payroll to 498, which in turn bumped up its wages bill from £10.6m to £11.6m.
The company, which benefited from £1.1m in government grants during 2018/19, had year-end net assets of £21.5 million.