$306m loss: RFG’s future under cloud
THE future of Donut King operator Retail Food Group remains under a cloud after it announced a $306.7 million full-year loss and flagged up to 250 store closures by June.
The loss compared to a $61.9 million profit in FY17, and came despite revenue increasing 7.1% to $374 million.
RFG was hit with accusations from former and current franchisees late in 2017 that they had been run into the ground with exorbitant fees, including high marketing and food costs, poor quality food and a lack of support.
RFG’s share price plummeted and it initiated a restructure of the business.
The company, which has $265 million in secured syndicated loans with a maturity date of October next year, remains at risk of breaching its fi- nancial obligations to lenders.
“There remains a significant risk that the group may breach financial covenant thresholds under its financing agreements within the next 12 months,” RFG said.
“As a result, there is a material uncertainty that may cast significant doubt on whether the group will continue as a going concern, and, therefore, whether it will realise its assets and settle its liabilities and commitments in the normal course of business.”
RFG said the directors have concluded there are “reasonable grounds” to believe that the financiers will continue to support the business and that it will remain a going concern for the next 12 months.
The full-year loss was more than three times larger than the $87.6 million forecast just a few months ago, a fact CEO Richard Hinson attributed to the auditing process.
That auditing process involved had revealed $402.9 million in impairments and provisions to cover store closures, restructuring and a reduction in the value of its brands and assets.
Impairment charges included $90.1 million for Gloria Jean’s $59.2 million for Michel’s Patisserie, as well as $4.5 million for Pizza Capers.
However, Mr Hinson said it had not decided to sell brands to cut debt, but rather was keeping its options open.
Mr Hinson said the increased store closure forecast for FY19 – up from between 160 to 200 to 250 – reflected tough market conditions and would be carried out on a caseby-case basis.
He said he had a positive response from a recent roadshow where he met 700 franchisees to discuss the future of the business. Shares closed down 8.8% , or 5.5 , at 57 . SALLY COATES
WHO better to whip techaddicted kids into shape than Australian Army veterans?
In an effort to help address technology addiction in young people, Veteran Mentors is offering Junior Leaders Programs – a tech-free nine-day boot camp in the hinterland.
The program is run by ex-servicemen and women, including former Australian Army Combat Engineer Troy Methorst and former Corporal Glenn Filtness who, using skills they learnt during their service, are helping kids become accountable for their behaviour.
“Mobile phones are definitely part of our lives but often, with uncontrolled overuse, we can become addicted and teenagers are especially prone to this,” Mr Methorst, who served in Afghanistan and East Timor, said. “We take the phones and other devices away for the entire nine days ... we then work with the teenagers and their parents to develop healthy lifestyle habits they can implement at home.”
The team also do motivational speaking and smaller team building sessions at schools, and parent workshops.