The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

AML Foods has scored a “first big win” through the efficiency and liquidity gains created from the $5m cut in its inventory levels, its president and chief executive has revealed.

Gavin Watchorn, writing in the BISX-listed retail food and franchise group’s just-released 2024 annual report, told shareholders that this was the inaugural improvement generated by greater reliance on technology and data in the decision-making process.

Revealing that this is just one of “three core areas” that will enable AML Foods to beat its goal of generating $250m in annual revenues by 20230, he confirmed that it plans to continue expanding its store network and establish business-to-business (B2B) partnerships to help create new income steams.

“As we look ahead, we are confident that we will exceed our goal to generate $250m in revenues by 2030. Our growth will be centred around three core areas,” said Mr Watchorn, who recently disclosed to Tribune Business that the group is now targeting $300m in top-line income within the next six years.

“Firstly, we expect our investments in technology to continue, specifically in the space of gathering and leveraging data to provide insights into how we can improve our business. Our first big win in this space was the recent reduction in our inventory levels by approximately $5m - delivered by the analysis of our sales and purchasing data.

“This reduction has freed up liquidity and improved efficiency levels within our operations. Secondly, we expect that we will continue to add new locations to our store fleet. These locations may be a combination of new builds and acquisitions. Thirdly, we will leverage digital capabilities to create B2B partnerships, expanding our current base and creating new revenue streams.”

Mr Watchorn was backed by Franklyn Butler, AML Foods’ chairman, who affirmed the $250m target and the increasing focus on technology to generate cost savings and efficiencies. “Over the last year, we continued our journey of upgrading our systems, fine tuning many of our processes since migrating to our ERP (enterprise resource planning) system,” Mr Butler wrote.

“We are now confident that we have a solid grasp on several of our key measures of success which are inventory costs, shrink and out of stocks.... Additionally, our focus on cost containment and sustainability remains a top priority, and we will continue to invest in solar and other energy efficient technologies to counteract our impact on our environment and mitigate the rising costs of power and utilities.

“We believe that this investment, coupled with our ongoing investment in our associates who are benefiting from our training and development programmes, will continue to set us apart from our competitors,” Mr Butler continued.

“In the first quarter, we also concluded the purchase of four acres in the Carmichael Road and Faith Avenue areas which we plan to utilise for future growth and expansion as we set our eyes on achieving our growth target of $250m in annual revenues by 2030.”

Elsewhere, AML Foods’ financial statements for the year to end-April 2024 reveal that there has been seemingly little progress in resolving two disputes - the first involving the Department of Inland Revenue’s demand for $949,833 in allegedly unpaid VAT stemming from Grand Bahama’s post-Dorian tax free zone, and the second its attempted purchase of the former City Markets headquarters on East-West Highway.

“On November 21, 2023, the company was issued a formal and final levy from the Department of Inland Revenue (DIR) concerning alleged unpaid taxes totalling $949,833 which related to VAT outstanding for items sold VAT-free in Grand Bahama during the period of January 1, 2019, through December 31, 2021, under the SERZ (special economic recovery zone) order,” AML Foods said.

“On December 20, 2023, the company, with the assistance of legal counsel, initiated a formal dispute against the DIR related to this assessment. To comply with the appeal process, the company was required to provide full payment of the assessment, which the company also made on December 20, 2023.

“This payment was made without waiving any rights in the ongoing dispute, and the company intends to vigorously contest the assessment. The full payment of $949,833 is included in other assets on the company’s statement of financial position as at April 30, 2024.”

AML Foods provided no details on what the Department of Inland Revenue is using as the basis to justify its claim for unpaid VAT.  The period in question, though, relates almost entirely to the Minnis administration’s time in office and to the SERZ orders it would have implemented. These effectively made Grand Bahama and Abaco tax-free zones to facilitate post-Dorian reconstruction and rebound.

Meanwhile, AML Foods’ attempted purchase of the former City Markets headquarters remains embroiled in a Supreme Court dispute involving multiple parties. “On September 21, 2016, the company signed an agreement to purchase a building located at Soldier Road Industrial Site for $3.359m,” the financial statements said.

“Subsequent to the payment of the final purchase price in July 2017, a dispute arose as to the ability of the vendors to provide good title to the property. This dispute is currently before the Supreme Court. Included in other assets is $3.138 which excludes VAT.”

That transaction, agreed almost eight years ago, has become embroiled in a furious legal battle stemming from disputes between parties associated with the vendor, the City Markets employee pension fund. AML Foods, in its substantive claim still to be determined by the Supreme Court, is seeking declarations to uphold and confirm the validity of its purchase or, in the alternative, recover the full price paid.