Oliver's Real Food founder departs again amidst question marks over financials

Oliver's Real Food founder departs again amidst question marks over financials

The future of Oliver's Real Food (ASX: OLI) is yet again in doubt with its founder and chairman Jason Gunn leaving the company for the second time in three years, following a suspension from trading last week after the company's auditor raised concerns over restructuring plans and debt repayment.

Gunn's wife Amanda Gunn, who is also a director at Oliver's, has also departed with both resignations effective today.

Non-executive director and former Queensland Productivity Commission chair Kimley Wood will step into Gunn's shoes as company chairman.

In September last year, dissident shareholders affiliated with Gelba Pty Ltd had called for an extraordinary general meeting (EGM) in an attempt to put two nominated directors including Wood and Dr Michael Green on the board.

Two months later however, that EGM was cancelled as Wood was appointed by the board anyway. 

On 18 December proxy forms were sent giving shareholders an opportunity to approve of Wood as well as Green's brother Martin. Both received resounding votes at the postponed Oliver's annual general meeting (AGM) on 22 January, while the remuneration report received a first strike with 44 per cent of votes cast against the motion.

Now with the Gelba faction holding more sway at the company it appears Gunn has been pushed out. The company founder is yet to respond to requests for comment. 

"The Board wishes to take this opportunity to express their sincerest gratitude to Mr Gunn, the founder of the company, for his dedication, leadership, and counsel over the past two years," the company said.

"The Board wishes to thank Mrs Gunn for her contribution to the Company and wishes her well for the future."

The company's founder previously left the company in March 2018 after the group failed to live up to expectations from its initial public offering (IPO) on the ASX the previous year.

But Gunn rejoined in March 2019 and embarked on a turnaround plan that he fiercely defended as recently as November 2020 amidst an onslaught from Gelba as well as its associates Michael and Suzanne Gregg. 

The company managed to reduce its half-year loss by $1.69 million in the December half despite a 31.8 per cent fall in revenue from operations to $12.2 million. Like so many companies in Australia, Oliver's survival was propped up by JobKeeper wage subsidies to the tune of $3.44 million.

However, auditor Bishop Collins noted it had been unable to "obtain sufficient appropriate audit evidence to provide a basis for a review conclusion on the half-year financial report".

The auditor explained the NSW Central Coast-based Oliver's was "critically dependent upon achieving a number of assumptions to continue as a going concern".

"Many are not at a stage where counterparties have committed to the course of action the Group proposes, are not sufficiently secured at this time, or evidence is not available to us to perform our obligations," Bishop Collins said.

The auditor explained it had not received binding written agreements around the quantum, timing, terms and conditions of arrangements to source additional capital, while trade and other payables amounted to more than $7 million.

"Other than with certain Australian government agencies, binding written agreements regarding the re-negotiation of the repayment conditions and/or extinguishment of the liabilities were not available to us," the auditor said.

"Additionally, evidence regarding the likelihood of obtaining this capital in the timeframes required by the group was not available to us.".

"Accordingly, we consider to have not gathered sufficient appropriate evidence regarding the implications of this on whether the going concern basis of preparation is appropriate.

Because of these issues raised, on the same day of reporting the ASX suspended OLI shares from trading until the company could demonstrate compliance with Listing Rule 12.2, whereby a listed entity's financial condition must be sufficient to warrant the continued quotation of securities in the market operator's opinion.

Prior to today's announcement of the Gunns' resignations, earlier this weeks the Greggs and Gelba cancelled their association with one another, and each party sold a small portion of their shares.

"The board is undertaking all necessary steps to satisfy the ASX with the aim of an early reinstatement," Wood added.

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