RFG SHARES IN OVERDRIVE AS PROFIT HITS $55M
Written on the 27 August 2015 by Jenna Rathbone
SHARES in Retail Food Group (ASX:RFG) surged as much as 16 per cent this morning as the Gold Coast-listed franchise group delivered another record result for the year ending June 2015.
A buying spree that included international expansion through the Gloria Jean's Coffees acquisition boosted the company's bottom line to $55.1 million, a 7.2 per cent increase on last year's results.
EBITDA sits at $88.8 million, up 50.2 per cent on FY14, while revenue grew 63 per cent to $210.4 million.
The results sent the company's shares into overdrive, surging 76c to a high of $5.56 before they settled back around $5.45.
RFG managing director Tony Alford (pictured) has labelled FY15 as a "watershed year" for the group, with acquisitions delivering an additional $19.8 million in underlying EBITDA, some $1.5 million or 8.2 per cent more than anticipated.
"Having undertaken its most ambitious merger and acquisition program to date, FY15 has proven to be the most momentous year in the company's history, expanding RFG's geographic footprint and enhancing its growth prospects across key revenue streams of franchise and coffee," says Alford.
"Each acquisition bolsters RFG's franchise network whilst having a complementary effect on the group's vertically integrated coffee roasting business by increasing the throughput, distribution and sale of coffee to franchised brand systems and third party customers".
Growth has been buoyed by the acquisition of Cafe2U, Gloria Jean's Coffees Group and Di Bella Coffee in FY15 and comes after the group stepped up the pace of its offshore expansion.
This included the establishment and launch of a dedicated international division, aided by a company organisational restructure, which was driven by what RFG described as a growing coffee culture in the developing world.
"RFG now operates four state-of-the-art roasting facilities across Brisbane, Sydney, Auckland and Los Angeles, with the company's strategic plan mandating establishment of international coffee roasting and distribution hubs to support global expansion of the group's brand systems and international relaunch of wholesale coffee brands, including Di Bella Coffee and Café Palazzo," says Alford.
Gloria Jean's has grown its international footprint to more than 800 outlets, while Di Bella coffee exceeded its acquisition KPI by 7.4 per cent, contributing $2.9 million to FY15 EBITDA.
RFG currently roasts around 5.9 million kilograms of coffee each year.
During FY16, RFG's coffee and allied beverages division will also develop new revenue streams through the re-launch of its Yatala facility as a production hub.
RFG says it is still on track to deliver on its recently published three-year strategic plan to drive network population beyond 3500 outlets, while nurturing its coffee and international businesses so they generate 40 per cent and 25 per cent of group EBITDA by FY18.
RFG chairman Colin Archer says since listing in June 2006, RFG has consistently met ambitious performance targets via strong organic and acquisitive growth.
He has described the past 12 months as "company defining" and highlights that the assets which generated 100 per cent of FY06 earnings now represent just 12 per cent of the company's underlying EBITDA.
RFG is paying a final fully franked dividend of 11.75c per share, bringing the full year payout to 23.25c.
"The company's FY15 final dividend represents the 18th consecutive occasion since listing on which RFG has increased rewards to shareholders, and contributed to a FY15 pre-tax total shareholder return of 26.9 per cent," says Archer.
RFG's brands include Donut King, Brumby's Bakery, Michel's Patisserie, bb's Café, Esquires, It's A Grind, Pizza Capers Gourmet Kitchen and Crust Gourmet Pizza Bar.
Author: Jenna Rathbone
About: Jenna Rathbone is a Queensland-based journalist who writes on a range of issues including business and property affairs and social issues.Connect via: Twitter