Shares in Retail Food Group (RFG), the stricken listed franchising group lost more value yesterday after it emerged as the prime target in the final report of a lengthy Federal parliamentary inquiry into franchising.
Retail Food has further increased its coffee empire, adding Di Bella Coffee to earlier acquisitions of Gloria Jeans and Cafe 2U, and now boasts extensive roasting, distribution and retail capacity, the broker notes. RFG’s AGM update was otherwise a little soft, but FY15 guidance has been maintained.
FY14 results were in line with the broker’s estimates while both franchising and wholesale revenue were higher. FY15 guidance was softer than expected and UBS suspects this is because of higher cost investment and subdued growth in network sales.
Retail Food Group has raised $53 million via a share placement and is looking to raise a further $7m via a share purchase plan. The purpose of the funds is to increase flexibility in anticipation of acquisitions. The company reiterated profit guidance for FY14 but UBS notes there’s now modest upside to this.