RETAIL FOOD GROUP CALLS OUT UBS OVER YESTERDAY'S SHARE PRICE PLUMMET

Written on the 6 June 2017 by David Simmons

RETAIL FOOD GROUP CALLS OUT UBS OVER YESTERDAY'S SHARE PRICE PLUMMET

RETAIL Food Group (ASX: RFG) has offered an explanation as to why its stock plummeted by 11 per cent yesterday, and has slammed two reports issued by investment bank UBS which the company claims had a significant impact on its share price.

RFG, owner of popular fast food chains including Donut King, Gloria Jeans and Pizza Capers, says its shares dropped significantly after the release of the reports, which mused that RFG would be hit by changes to international accounting standards over the next two years.

Yesterday's share price tumble was RFG's largest nine years, as the company reached a low of $4.64.

RFG called out the content of the UBS reports in an announcement to the market, saying they were 'unsubstantiated'.

"Beyond the limited information disclosed therein, RFG has little insight into the basis upon which the UBS Reports were prepared," says RFG.

"Indeed, at no stage prior to the publication of the UBS Reports did UBS consult with or seek engagement with the Company regarding the matters outlined in the UBS Reports."

The new accounting standards brought by the International Accounting Standards Board, as referenced by UBS, will mean Australian companies such as RFG will need to consolidate all operating leases onto balance sheets instead of noting them separately.

In this respect, RFG says the UBS reports on the possible effects of new standards are premature.

The company also says UBS would have 'no insight into the company's position' when it comes to the impending changes.

RFG says any advice about its shares should come directly from RFG once it can properly assess the impact of these accounting standards themselves.

"RFG continues to assess the extent of any future impact of the new accounting standard with its external accounting advisors and auditors, and will disclose this assessment as required in the notes to the Company's statutory financial statements," says the company.

"RFG considered that any assumptions as to the potential impact of [the new accounting standards] on the Company's financial statements, lending covenants or other debt arrangements is both premature, precipitous and with respect, an exercise in speculative guesswork."

RFG has not suggested it will take any action against UBS for material harm to the Company.

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Author: David Simmons

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