Trouble Ahead As Retail Food Delays Results

By Glenn Dyer | More Articles by Glenn Dyer

When it comes the half year report from embattled fast food franchisor, Retail Food Group, is likely to be bad, very bad for shareholders with big losses, no dividend and before that a possible suspension by the ASX today after the company missed the February 28 cut-off date for December 31 reporting companies.

That’s after shares in troubled food and coffee franchisor Retail Food Group went into a trading halt yesterday at the company’s request ( when its auditors were unable to sign off on the December-half accounts before February 28, the last day of December half year reporting season.

Retail Food Group owns chains including Donut King, Gloria Jean’s, Brumby’s Bakery and Michel’s Patisserie and it asked for the trading halt on Wednesday morning, saying it was waiting for its auditors to report on the December-half results and accounts.

Retail Food Group was originally due to release its interim results a week ago today (Thursday) and the week-long delay suggests that the auditors may have significant concerns about the accounts and whether the company is a going concern.

RFG believes the auditors report may not be issued until tomorrow (March 2)

If RFG fails to lodge its half-year results by today, March 1 the shares will be suspended . RFG reiterated that statutory net profit for the six months ended December 31 was likely to be materially less than the result in the year-ago period.

RFG issued two profit downgrades in two months after weak trading at its core food chains was exacerbated by negative publicity following a Fairfax Media investigation into its treatment of franchisees.

After warning in December that net profit would fall to $22 million, compared with $33.5 million in the first half of 2016-17, RFG said in January that net profit would be below $22 million.

Fairfax Media revealed that hundreds of franchisees across the company’s chains – Brumbies, Donut King, Gloria Jeans and Michel’s Patisseries had been forced out of business thanks to crippling franchise fees, high rents, rising labour and product costs and deteriorating product quality.

Chief executive Andre Nell hired Deloitte to review the Australian operations, including auditing franchisees to see if they are underpaying staff. The shares have fallen 53% in the past three month to $2.04.

Glenn Dyer

About Glenn Dyer

Glenn Dyer has been a finance journalist and TV producer for more than 40 years. He has worked at Maxwell Newton Publications, Queensland Newspapers, AAP, The Australian Financial Review, The Nine Network and Crikey.

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