Why shares of Retail food are up by over 15% today?

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On 14 January 2019, Retail Food Group Limited (ASX: RFG) has announced that trading in the company’s shares will be temporarily paused due to a pending announcement, post opening the day’s session at A$0.330.

In a further announcement, the company noted the comments in Australian Financial Review about the potential sale of assets by RFG, which also includes Crust Gourmet pizzas. RFG confirms that they are looking for reducing its debt by various means, which also includes the sales of its assets, although that process is ongoing, and no formal binding agreement has been reached with any buyer at this stage. 

Post this announcement, the company’s stock resumed trading on ASX, ending the day’s session up by 15.25%.

Retail Food Group Limited is an Australian based food and beverage company. The company is headquartered in Queensland, Australia with over 15,000 employees. The company is the largest multi-brand retail food franchise owner which also supplies high-quality coffee products.

It is speculated in the article that the amount for the sale of Crust Gourmet Pizzas has surpassed the company’s expectations. The company has stated that they will keep the market updated regarding the sale of its assets or other steps taken to reduce its debt, with their continuous disclosure obligations.

On 21 December 2018, the company’s board group has announced that their lenders have agreed to waive testing of the financial covenants with respect to the period ending 31 December 2018 under the company’s senior debt facilities.

On 3 December 2018, Mr. Richard Hinson has resigned as Group’s Chief Executive Officer, against the warning of Group’s major restructuring announced at the recent annual general meeting of the company. This restructuring is an immediate priority for the company so that it can reduce its costs and due to that company will become a more agile and customer-focused organization. In parallel with the restructuring, the company is also focusing on serving franchise and non-franchise customers through the promotion of brands, by introducing innovation in their products, and giving superior service to their customers.

FY18 Financial Performance: The Company’s statutory loss after tax for the year stood at $306.7 million in FY18 (over the prior period, which was $61.9 million), which reflects non-cash impairments and write-downs, and provisioning of $402.9 million recognized in FY18.  RFG’s net profit for the year stood at $33.3 million in 2018, representing a downside of 56.1% over the $75.7 million recorded in the corresponding period in 2017.

On Balance Sheet front, Net Assets for the year stood at $158,040,000 in FY18, representing a downside of 66% over the $465,172,000 recorded in the corresponding period in 2017. As at 30 June 2018, the company had cash and cash equivalent of $16,498,000 (over the prior year which was $10,269,000).

Stock performance: The shares of the company closed at A$0.340, up by 0.045 points, as compared to the previous close of A$0.295. The market capitalization of the company stands at circa $53.91 Million with approximately 182.75 million outstanding shares. In the time span of the previous six and three months, the stock delivered the returns of -35.16% and -33.71%, respectively. During the last one month, RFG delivered the negative return of 13.24%.


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