RFG SAVOUR SWEET PROFITS (7/4)

BRANDCHISOR Retail Food Group Limited (ASX: RFG) has achieved a 10.6 per cent increase net profit of $26 million, up from $23.5 million on last year.

The company’s record NPAT result follows five successive years of annual profit growth underpinned by a broadened revenue base, enhanced licence fee revenues and robust acquisitions.

RFG has announced a 37 per cent increase in fully franked final dividend to 6.5 cents per share (FY09: 4.75cps), to be paid on October 7 2010 following a record date of 14 September 2010.

Driven largely by its Donut King, Brumby’s and Michel’s Patisserie outlets, the company also reduced debt levels by $17.7m to $72.9m.

It completed acquisition of Brumby’s Bakeries master licence territories of New Zealand, Western Australia, North Queensland and Northern Territory and acquisitions of DCM Coffee & Donuts and Big Dad’s Pies franchise systems.

RFG chairman John Cowley says the results come on the back of difficult trading conditions and are testament to the resilience of RFG’s franchise business model.

“The underlying strength of the Company is best demonstrated by RFG’s five year NPAT and EPS cumulative average growth rates (CAGR) of 50.2 per cent and 38.9 per cent respectively,” said Cowley in a statement to the ASX.

CEO Tony Alford says franchisee reported network sales were up $8.6m and spending frugal.

“The company has significantly reduced its costs of doing business without impacting upon franchisee service delivery, personnel complement or ability to convert value accretive opportunities into tangible and positive outcomes for all stakeholders,” he says.

“Of particular note, the company has continued to build upon and enhance its proprietary coffee business. This revenue opportunity is thus far relatively untapped with the company having throughout FY10 completed the commissioning of enhanced coffee blends to all its franchise systems and is now in the final stages of implementing a roll-out of proprietary packaged coffee products for sale in non-traditional markets including wholesale channels”.

The transition of Michel’s Patisserie franchisees to the royalty model remains on schedule with the number of participating outlets now exceeding 200.

RFG also announced today the appointment of the National Australia Bank (NAB) as its future debt facility provider.

“RFG’s resolve to refinance with NAB follows evaluation of a number of very strong
submissions received in connection with RFG’s debt facility. Not only does this transaction provide certainty to the Company’s shareholders, given the maturation of existing facilities on 5 December 2010, it aligns RFG with a robust banking partner that will facilitate continued benefits flowing from improved margins generated by a lower debt profile,” says Alford.

RFG is the franchisor and intellectual property owner of the Donut King, Michel’s Patisserie, Brumby’s Bakeries, bb’s café and Big Dad’s Pies franchise systems.

There are five brands and 1122 franchised outlets led by Donut King, which has 358 stores in Australia and 10 in Japan; Brumby’s with 330 stores in Australia and 18 in New Zealand; Michel’s Patisserie (337 Australia; 18 NZ) and bbs cafe (60 Australia; 22 NZ).