Oliver’s Real Food Issues Profit Guidance; New Management Remains Optimistic, Stock Zooms

  • May 29, 2019 AEST
  • Team Kalkine
Oliver’s Real Food Issues Profit Guidance; New Management Remains Optimistic, Stock Zooms

Oliver’s Real Food Limited (ASX: OLI) provides healthy fast food substitutes. Headquartered in NSW Central Coast, the company addresses the travellers on Australia’s major arterial highways. OLI is deemed to be the world’s first "certified organic fast food chain”.

Company products (Source: Company website)

Today the company released to the exchange its profit guidance and letter to the shareholders.

On 30th January 2019, OLI’s previous Board had announced to the market a revised loss (EBITDAI) of around $4 million for the year ended 30th June 2019. Out of this, $3.5 million had already been reported for six months until December 2018. In the third quarter of the year, from January till March 2019, the company witnessed a trading loss of nearly $1.8million

The new Board of the company, along with the senior management team, took over the reins in the first half of March 2019 and immediately took charge and commenced addressing the poor trading situation and the subsequent cash burn.

The new Board informed shareholders that all remedial measures to combat the adversity has borne fruit with the company expecting probable trading position for the quarter of April till June 2019 to be at a breakeven situation, which has been deemed as an extraordinary improvement. This would also, eventually eliminate the cash burn and the company would be in a viable condition to reap benefits and generate profit.

Furthermore, the company would report a trading loss of approximately $5.3m for the 2019 financial year. However, all of this has taken place before the actions and initiatives of the present Board and the new senior management team. The new team is positive about having investigated and rectified the major issues.

The company thrives to move ahead, back to its original culture and focus. It looks forward to improving the sales margins and efficiencies, given that the platform is now sound enough to commence work. OLI expects an optimistic cash flow statement and a positive cash flow is anticipated for the balance of this year.

As for the outlook for 2020 is concerned, the Board is confident of witnessing a return to profits. It intends to pursue various potential opportunities.

The chairman in his letter highlighted that the new management has consciously closed several stores, stopped unproductive activities at the head office and brought the company’s focus back on the stores. The KPI’s and NPS have witnessed their best scores.

The below table depicts the highlights of OLI’s cash flow statement for the quarter ending 31st March 2019, as released on 30th April:

Earlier in March this year, the company appointed David McMahon as its permanent CFO, who replaced the interim CFO Rowena Hubble.

Share Price Information:

At the end of 29th May 2019 day’s trade, the stock closed at A$0.034, up by 54.54%. The market cap of the company is A$5.52 million.


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