D-Day Looms For Retail Food Group
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Today could be D-Day for embattled fast food franchisor, Retail Food Group (RFG) and its collection of chains that include Crust Pizza, Michele’s, Brumby’s bakeries, Gloria Jean’s and Donut King.
It is when the company’s auditors are supposed to sign off on the December 31 accounts which would then allow to issue the December 31 accounts and financial results.
There is a chance that might not happen though.
Retail Food Group was suspended from trade on the ASX yesterday for failing to lodge its half-year report by February 28 (Wednesday).
RFG said it had delayed the release of its results on Wednesday, saying it was waiting for its auditor to sign off on the report, which may not happen until today (Friday).
The ASX released a statement on Thursday listing RFG as one of five companies that have been suspended from trade for “failing to lodge their half-year report and accounts”.
In its Wednesday statement 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 months to $2.04.
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.
At the AFR he was a finance writer, Finance Editor, News Editor and Chief of Staff. At the Nine Network he was supervising producer of Business Sunday for more than 16 years. He has also written for other online and analogue print publications here and overseas.