Audit reveals full extent of Oliver's Real Food woes

Audit reveals full extent of Oliver's Real Food woes

"The worst is now behind us," says chairman Nicholas Dower.

Oliver's Real Food (ASX: OLI) has come out of an almost month-long suspension from trading to report a net loss of $15.7 million for FY19, despite a return to profitability in the final quarter that has continued into the current financial year.

The Central Coast-based company was unable to get its annual report ready on time by 30 September, and it wasn't until 21 October that Oliver's announced the report and an audit had been lodged for the ASX review process a few days prior.

After struggling to deliver on its IPO promises made in mid-2017, a year later company founder Jason Gunn was removed from the board and the chain's fortunes went from bad to worse.

Oliver's has been given an ounce of optimism though since March this year when Gunn returned to the role, leading to a "remarkable turnaround" that prompted Oliver's Real Food to finish FY19 on a high note with earnings of $161,000 for the fourth quarter.

On 24 October the news got better still when the company reported an unaudited EBITDA of $466,000 for the first quarter of FY20.

Today the full extent of the damage in FY19 was revealed. While in FY18 it had posted a woeful loss of $5.3 million, the FY19 loss was almost three times that.

Chairman and former Video Ezy franchisor Nicholas Dower has apologised to shareholders for the delayed lodgment of Oliver's Real Food's audited accounts and noted a net loss of $15.7 million.

"The primary reason for missing the deadline to lodge before 30th September 2019 was due entirely to the difficulties experienced in processing and reconciling the data from the old accounting system to the new one, which was introduced into the business by previous management in December 2018," Dower said.

"It was not until our auditors were well into the audit that the extent of this problem became clear.

"The Board immediately acted by engaging an additional accounting firm to assist both Oliver's and the auditors in an attempt to apply as many resources as possible to achieve our lodging deadline."

Dower said the new accounting system was poorly implemented from the start and "has been challenging to say the least".

"However, the Board and management are confident we are now very close to overcoming the obstacles presented, and that the worst is now behind us," he said.

"While this financial report is not a good result, we would once again like to draw attention to the fact that the entire loss was incurred by the company in the first three trading quarters of FY19, and it is important to recognise that the following quarter under new management delivered a small EBITDA profit.

"It is also important to recognise that the reported net loss for FY2019 of $15.7 million is largely due to impairments and write-offs, and that the trading loss was in fact less than half of that figure at $6.5 million EBITDA."

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