Rfg Acquires Big Dads Franchise System

Wednesday, December 23, 2009

Food brand manager and franchisor Retail Food Group Ltd (RFG) has acquired the Big Dads Pies franchise system, and reaffirmed profit guidance.

Retail Food Group chief executive Tony Alford said Big Dads Pies brought the acquisitions announced by the company to four, and was wholly funded from cash reserves.

"The Big Dads Pies franchise system comprises 37 South East Queensland based outlets renowned for their specialty pies produced fresh daily," Mr Alford said.

"The menu offer is complemented by various other quality products synergistic with those of the company's existing Brumbys Bakeries franchise system." "Big Dads Pies will be aligned to, and be developed under the umbrella of, the Brumbys system and represents a further opportunity to add a successful, value accretive business capable of providing additional scale, revenues, synergies and intellectual property expansion to the Companys retail food franchise system portfolio." In November, RFG announced that it had entered into conditional agreements to acquire the DCM Coffee & Donuts franchise system, the Brumbys North Queensland and Brumbys New Zealand master franchises.

"Whilst the four acquisitive transactions announced by the company over the past month are individually small, together they represent an immediate 2H10 EBIT contribution for RFG and, importantly for the company, a further platform for additional scale and increased shareholder value," Mr Alford said.

RFG also reaffirmed that, based on year to date unaudited management accounts, first half net profit from core operations would be in the range of 10 per cent to 15 per cent over that reported for the corresponding period last year, which was $11.05 million.

"The company has also achieved its 1H10 organic new outlet growth guidance of 20 outlets," RFG said.

RFG will release first half results in late February, 2010.

The company's existing debt facilities mature in December 2010 but RFG said that it has resolved that refinance of its existing facility will be comfortably deferred to the new year.

"The company's free cash generation remains strong and RFG is confident that net debt will be reduced below $80 million by the December 31, 2009, which will represent an $11 million reduction in the first half.

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