VENDOR AND SUPPLIERS | Staff Reporter, Australia

Find out how Retail Food Group's profit rose 17% to $62m in FY17

This is due to the Group’s growing international network and acquisitions during the period.

According to Retail Food Group’s operating performance report for 2017, the underlying NPAT rose to 14% to $75.7m from $66.4m in the same period last year. The Company’s underlying EBITDA is up 12.1% to $123.5m from $110.2m of last year. The surge was predominantly attributable to positive contributions from FY17 HPC and AFS acquisitions, the realised synergistic benefits from vertical integration and restructuring activities, sale of Master Franchise Licences, and an increase in higher margin product sales in the Coffee & Allied Beverage segment.

The results for the 2017 financial year reflect a continuation of the contribution from the Group’s existing Cash Generating Units, contributions from Hudson Pacific Corporation (HPC) and Associated Foodservice (AFS) during the year, and benefits from organisational restructuring activities undertaken as a consequence of acquisition completion, and costs which have been segregated from underlying operations.

Retail Food Group has opened 81 international licensed territories, following the grant of 15 new international territory licenses since the conclusion of FY16.

RFG managing director Andre Nell noted that the Group’s growing international network extends the Company’s revenue streams, enhancing future growth opportunity.

“Global license activity not only provides immediate short term benefits on the grant of a new license, importantly, it also contributes to building recurrent revenue streams which increase as international territories grow their outlet footprint, providing a strong platform for increased royalty and product supply earnings,” he said.

The Company’s international platform was further enhanced in the 1H18 by RFG’s entry into breakthrough joint venture arrangements with leading UAE based businesses, the Al Hathboor Group and HKO Group, to accelerate Brand System expansion within the Gulf region and establish a world class coffee enterprise focused on realising significant untapped coffee opportunities throughout the Middle East & North Africa (MENA) region.

Underlying Franchise Operations (Bakery/Café Division, QSR Division, and Coffee Retail Division) EBITDA for FY17 was $97.5 million, representing growth of 1.5% (or $1.4 million), primarily attributable to a decrease in operational costs arising from the investment in organisational restructuring and synergy extraction activities undertaken in FY16 and operating cost savings emanating from the further programmed reduction in Corporate stores traded compared to the prior corresponding period.

A report by Motley Fool noted that the biggest drivers of Retail Food Group’s 12.1% increase in EBITDA was its International Brand Systems division, which helped offset a reasonably weak performance by its Domestic Brand Systems division which delivered EBITDA growth of just 0.1% to $78.1 million.

Per the report, organic growth is anticipated across all divisions in FY18, largely driven by International, C&AB and Commercial performance, contributing to forecast FY18 underlying NPAT growth of c.6%.

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