RFG flags full-year loss

RETAIL Food Group shares plunged to a new low after the company flagged a net loss of $87.6 million for the financial year, pushed by a payout to former managing director Andre Nell.

RFG shares were trading as high as 80¢ before the announcement, but had sunk to 72.5c by mid-morning.

They recovered some ground to close 2¢ lower, or down 2.5 per cent, at 76¢.

Six months ago they were worth $4.40 each. RFG yesterday said the forecast loss was a result of “one-off turnaround costs” and impairment charges booked on December 31. It expected underlying net profit which strips out one-off items after tax of about $34.5 million.

The company had previously flagged impairments including writedowns on some of its brands and the cost of closing up to 200 stores.

The company said it is hoping the loss would be slightly cushioned by $3 million in

international licence fees it hopes to receive before the end of June, but is unable to include in the guidance.

The franchisor, which operates brands including Gloria

Jean’s, Michel’s Patisserie, Brumby’s Bakery, Donut King, Crust Gourmet Pizza and more, posted an $87.8 million first-half loss in March, down more than $120 million on last year’s $33.5 million profit for the same period.

The company last week announced the immediate departure of Mr Nell. A parliamentary hearing into the franchising sector kicks off in Brisbane tomorrow.

“Trading performance has continued to be impacted by persistent difficult retail market conditions, the cumulative impact of planned domestic outlet closures, and ongoing negative sentiment regarding both retail franchising and RFG in particular,” a statement from RFG said.

“The statutory FY18 net profit after tax figure is also impacted by termination payments to former managing director, Andre Nell, and other additional one-off turnaround expenses.

“The group also continues to maintain dialogue with its bankers and their advisers in regard to its expected FY18 result and forecast FY19 result.”

RFG said it would provide a detailed market update with the FY18 results announcement in August.