Gold Coast company Retail Food Group reveal $87.6 million net loss for financial year

UPDATE: Retail Food group shares have plunged another new low after it flgagged huge losses for the financial year and an expensive payout for a former executive.

The group behind Donut King have been crushed on the sharemarket and on its balance sheet. Photo: iStock

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

RFG shares were trading as high as 80c before the announcement, but had sunk to 72.5c by mid-morning. Six months ago they were worth $4.40 each.

In an announcement to the ASX this morning, RFG said “one-off turnaround costs” and impairment charges booked on December 31 would drive down an underlying net profit after tax of $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 was hoping the loss would be slightly cushioned by $3 million in international licence fees it hoped to receive before the end of June that it was unable to include in the guidance.

The franchisor, which operates Gloria Jeans, Michel’s Patisseries, Brumby’s Donut King, Crust Gourmet Pizza and more, posted a $87.8 million first-half loss in March, down more than $120 million on last year’s $33 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 on Friday.

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Andre Nell, former RFG managing director. Photo: Regi Varghese

“Trading performance has continued to be impacted by a combination of previously noted 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,” the statement said.

“The statutory FY18 NPAT figure is also impacted by termination payments to former Managing Director, Andre Nell, and other additional one-off turnaround expenses.

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“The group also continues to maintain dialogue with its bankers and their advisers in regard to its expected FY18 result and forecast FY19 result, in line with the 31 December 2017 results announcement in early March 2018 that outlined the Group’s banking position.

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