Focus on expanding Franchisee Business- Retail Food Group Limited is an Australia-based company engaged in the intellectual property ownership of the Donut King, Brumby’s Bakery, Michel’s Patisserie, bb’s Cafe, Gloria Jean’s Coffees, It’s A Grind, The Coffee Guy, Cafe2U, Esquires, Pizza Capers Gourmet Kitchen and Crust Gourmet Pizza Bar franchise systems. The embattled group that was lately removed from the S&P/ASX 200 Index effective at the Open on June 18, 2018, will provide an update to the market in due course while itexpects FY18 underlying NPAT to be approximately $34.5 million and statutory NPAT to be a loss of approximately $87.6 million, taking account of the substantial impairment charges booked at 31 December 2017. The Group has witnessed an improvement in terms of reducing franchisees cost of goods, renewal and new store fees, and is working with franchisees to pilot innovative new store concepts.


EBITDA Performance (Source: Company Reports)

The fall in guidance was a result of difficult retail market conditions, the impact of the planned closure of domestic outlets and due to the negative sentiments for retail franchising and RFG in the market. Recently, the Board announced that its lenders have agreed to waive testing of the financial covenants under the Company’s senior debt facilities with respect to the period ending 30 June 2018. The Group focuses on improving its performance and growing a stronger balance sheet now and into the future and has suspended all the Dividend payments. The Group has all the assets that are needed to deliver its diversified business strategy. RFG now has 84 international licensed territories across 12 Brand Systems. It has expanded globally also and has established a world-class coffee enterprise throughout the Middle East & North Africa (MENA) region and is accelerating Brand System expansion within the Gulf.

Its Commercial Division has performed well that too in line with the expectation, contributing $7.2 million to 1H18 underlying Group EBITDA, a 94.6 per cent increase on PCP reflecting the full period contribution of FY17 acquired assets. As the Company progresses, consideration will be given to further structural improvement so that it is able to apply resources more effectively. During 1H18, RFG’s three-year debt facilities of $150 million were extended, with $100 million maturing in January 2020, and a further $50 million maturing in December 2020. The stock was down by 1.07 per cent as on 6 July 2018 and was down by 89.19 per cent in 5 years as on 5 July 2018. The latest allegations by a former Brumby’s Bakeries franchise owner are now doing the rounds under scrutiny of franchising systems that RFG’s ex-chief executive, Tony Alford, used him to keep the loss-making stores under the wraps and for misleading the market.

 
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