PDA

View Full Version : (RFG) Donut King ++ BB's Coffee



Pages : [1] 2

robbo
31-08-2006, 12:46 PM
Retail Food Group -- (RFG)--

[ Donut King Australasia @ NZ & also Franchisor/ Licencee Distributor Corporate Group - (RFG) - who do own/control the Donut King ... Trade Mark; and also .... the .... BB's Coffee establishment network, ... 'vis- a- vis'... both Franchise Networks, .... in .... Australia and New Zealand. .... ] :)

( Retail Food Group . >> ASX Code: RFG )

Donut King & BB’s Coffee.

Is Retail Food Group ( ASX Code: RFG) the next big "franchise" growth stock like say .... Domino s Pizza (ASX Code: DMP) .... ?

Yep, imo only, I think so, & frankly; at least ..... on my own analysis .....

And.... what is more.....

.... >>> ..... imo, with even greater "yummy" [:p]upside .... :)

More facts and detail re: (RFG) very soon ..…. ( promise !)- ;)


Just some “food …. (Donuts actually ) ) & crownies for thought -- from, …….. The Pub. ”

Kindest Regards,

Robbo:)

DISCLAIMER
Views expressed in this email and/or internet correspondences, are my tentative thoughts and opinions only. These views are not to be read as being, or forming…. any form of a recommendation; of any sort whatsoever. Rather, they just simply personal opinions, and are NOT financial advice. Furthermore, these views are unwarranted and ought not to be read, as other than personal opinion and speculations, and are not warranted in any way whatsoever, either expressed or implied, for their accuracy, veracity, or likely predictive outcome. Furthermore, these comments are highly subjective and prejudiced by the writers own opinions and outlook. Therefore these views may be prone to errors, as they have not been checked by a third party, and are possibly incomplete and/or inaccurate. The opinions expressed here; are strictly on a “Without Prejudice” basis only. These personal subjective thoughts herein expressed, are only one view among many, and at best; are only the author’s whimsical thoughts, impressions, and intuitions. Obviously, as with all opinions, they are open to discussion and refutation, as well as consideration of other interpretations and review. For any investment decision, always do your own separate investigations and research, and always seek your own qualified and authorized third party independent financial advice.

Kindest Regards,

Robbo :)

robbo
05-09-2006, 03:36 PM
Retail Food Group. (RFG).

**


>> .... Maybe, .. it is now time, ..... To get Your Donuts, while they are Fresh & Hot .... ;) [:p] . ....


(RFG) imo, Might Be Ready to take off very Soon .... :):)

(Donuts, Cafes ....and soon Coffee Manufacturing System Rollout.)

Hi gals & guys,

Note last few days; that Donut King etc-- ie: (RFG) shares increasing, in Volumes Traded ..... through (RFG)..... these last few days; and that the volume increase is ....very Significant. [^]


In this respect; it does appear, that Funds/Instos have been quietly building a (RFG) Holding and strategic Position, since only last Thursday..... while it is still "off the Radar" a bit ..... :);)

This fact is in conjunction with even yet more Director Buying of Ordinary (RFG) Shares, --- "On Market".

And, re (RFG), btw ....>>>> Was wondering;..... if someone knows how to .....down load .....the Latest (RFG) Prelimnary Report (seven pages) and post it here at Share Trader--- well that would be much appreciated and very good. [?] :)

Below is an overview, for those interested, of what Retail Food Group (RFG) is.... all about.

---------------------------------------------------------------


Retail Food Group Limited (RFG) is a leading Australian retail food brand manager and franchisor. It is the franchisor and intellectual property owner of the Donut King and bb's café franchise systems.


As at 31 March 2006, the company has a network of 327 outlets including 261 Donut King outlets, 41 bb's café outlets in Australia and an additional 25 bb's café outlets in NZ. Total Network sale for FY2005 was in excess of $139m. The number of chain outlets in the fast food retailing sector has grown by 52.3% from 2001 to 2005.


RFG operates "full format" franchised business. Under the full format franchising, the franchisee is contractually bound to operate the business according to systems, formats and operational standards specified by the franchisor and pay a royalty based on sales turnover of the franchise outlet. Thus, RFG provides the blue print for the franchise operations as well as directs the overall marketing strategy for the brand.

Donut King:

Donut King operates within the "impulse buy", "reward" and "treat" segments of the food retailing sector. Donut King is Australia's largest specialty donut and coffee chain. Donut King also offers a product range extending to a broad range of food products including savories and other snack foods. Donut King outlets are typically located in shopping centres and are positioned in high traffic flow areas.

BB's Café:

bb's café operates within the "time out", "relaxation" and "meeting place" segment of the food retailing sector. BIS Shrapnel research showed that in 2005, bb's café was the 6th largest coffee chain in size in Australia in terms of number of outlets. The repositioning of bb's café from a muffin and snack destination to a specialty coffee and light meal provider over the last 3 year period is reinforced by the brand's position as the third largest Australian founded café concept.
------------------------ end of Summary -----------------------


Kindest Regards,

Robbo :)

DISCLAIMER
Views expressed in this email and/or internet correspondences, are my tentative thoughts and opinions only. These views are not to be read as being, or forming…. any form of a recommendation; of any sort whatsoever. Rather, they just simply personal opinions, and are NOT financial advice. Furthermore, these views are unwarranted and ought not to be read, as other than personal opinion and speculations, and are not warranted in any way wh

robbo
05-09-2006, 05:00 PM
Retail Food Group (RFG)

Donuts (Donut King) , Cafes (BB' S) and Coffee Manufacturing System.

In the last post I forgot to mention; that for (RFG) the latest June, 2006 Net Profit After Tax was: $5.94 Million Dollars -- (ahead of all forecasts) -- the market Cap is only, #56 millions, and the NPAT from continuing Operations .....is now, $6.49 million dollars.

And yep, those numbers, are .... Net.:)

On the above basis, the PE for Retail Food Group (RFG)-- is only about : PE 8 - 9.

What did strike me was... when recently, doing a comparo on NPAT, earnings, and PE verus Market Cap ......with Dominoes Pizza (DMP).....

My own conclusion,from that (DMP) comparo.... is that (RFG) is an absolute rare bargain. :)

Kindest Regards,

Robbo:)

PS. if you are new to this (RFG) thread, you might ...... find my previous post ......(on this thread (RFG)---) ..... very interesting .... 'vis- a -vis' ..... what is now, imo "brewing" for RFG investors. ........ ;)

DISCLAIMER
Views expressed in this email and/or internet correspondences, are my tentative thoughts and opinions only. These views are not to be read as being, or forming…. any form of a recommendation; of any sort whatsoever. Rather, they just simply personal opinions, and are NOT financial advice. Furthermore, these views are unwarranted and ought not to be read, as other than personal opinion and speculations, and are not warranted in any way whatsoever, either expressed or implied, for their accuracy, veracity, or likely predictive outcome. Furthermore, these comments are highly subjective and prejudiced by the writers own opinions and outlook. Therefore these views may be prone to errors, as they have not been checked by a third party, and are possibly incomplete and/or inaccurate. The opinions expressed here; are strictly on a “Without Prejudice” basis only. These personal subjective thoughts herein expressed, are only one view among many, and at best; are only the author’s whimsical thoughts, impressions, and intuitions. Obviously, as with all opinions, they are open to discussion and refutation, as well as consideration of other interpretations and review. For any investment decision, always do your own separate investigations and research, and always seek your own qualified and authorized third party independent financial advice.

Kindest Regards,

Robbo :)

tommy
05-09-2006, 05:19 PM
Great thread robbo,

I bought RFG too after the great announcement but the market has completely ignored it! Cannot believe it, the price level at the moment is absolutely rediculous.

They need to do an investor presentation to wake up the market, they only listed recently so obviously many investors do not even know that this company exists.

Keep up the good work mate, I totally agree with you on this one[:I]

robbo
06-09-2006, 11:04 AM
Retail Food Group (RFG)

Hi Tommy,

Reflection:

Donut King (RFG) is really for some folks, imo, .....

>>> a PARADOX!!

What do I mean?

Well it is almost too easy....

You get too much easy Value, in a Defensive stock... is Too Obvious, (so it must "not" be true).....

Let us instead find something more complicated ..... hmmmm ;)[?]

Kindest Regards,

Robbo :)

ohmyme
06-09-2006, 01:52 PM
Gees Robbo you are good at picking them. I have a big holding in RFG as well now, latest market research tells me that selling donoughts is a cracking business. I also know a few people who own some stores and they say its like printing money.

Anyway you look at it, RFG is cheap. With a forecast dividend of 6c for 06/07 they are sitting on a dividend ratio of 7.5% Fully Franked!!!

Short term price target for me is $1.20 places it on a forward PE ratio of around 12 I think and dividend yield of 5%(will have to check my notes when I get home).

Thanks for sharing mate.

cheers.

robbo
06-09-2006, 04:15 PM
Retail Food Group.(RFG)

Hi guys,

Looking at the (RFG) depth....

seems the Donut and Coffee Cat ....is now very

nearly.....almost ...

"Ze Cat is Out of the Bag"

Kindest Regards,

Robbo :)

tommy
06-09-2006, 04:42 PM
Hi robbo and ohmyme,

Yeah, looking better by the day! This stock is a bargain under $1... can't believe it's still in this price range though.

It might take quite a while to reach market cap of $100 million at which point the dynamics will change... How long do you think it will take robbo?

robbo
06-09-2006, 04:53 PM
Retail Food Group (RFG)

Good question; and an intriguing one Tommy?

It really is All about SYSTEMS"--Franchise Systems that is....

Talking to some ..... "Cluey Stock Analyst Cat" ;) --just the other day, over a Crownie and a Coffee and a Donut as it so happened-- (Seriously I was....) ... and this dude ......had a Genius Insight about (RFG) ....


The Genius Insight was this:


And that is that these guys (RFG) will probably not limit themselves to "Sytematizing--franchise systematizing that is..."--

(1) Donut King and (2) BB's Coffee and (3) Coffee Roasting

But will also strategicaly target other under exploited Retail or other Categories that could be Value Added to a significant high and scalable Degree ..... (mouth watering possibilities)-- [:p]:)[:p]

(B) Another point re your last post too Tommy....

Re Market Cap ceiling of $100 millions??

Q.1.---What is the :current" undilutued Market Cap of Dominoes (DMP)?

Q.2. What was the Revenue and Profit Growth of (DMP)for just this most recent 12 months-- in a relatively so called mature market like Pizzas ??

Gotta fly, Back soon.....

Kindest Regards,

Robbo :)

tommy
06-09-2006, 05:49 PM
Robbo,

Thanks for your feedback mate, here are a couple of not so recent articles about RFG:

http://www.theage.com.au/news/Business/Donuts-drive-Retail-Food-Group-profits/2006/08/22/1156012527800.html

Donuts drive Retail Food Group profits

August 22, 2006 - 3:04PM


Newly-listed Retail Food Group Ltd, which runs the Donut King network, says it is confident of achieving its 2006/07 net profit target.

Retail Food, which opened 15 new Donut King stores in 2005/06, posted a 76 per cent lift in net profit to $5.9 million.

Earnings before interest and tax (EBIT) was $10.5 million - 18 per cent above the prior year and exceeded the prospectus forecast by $400,000.

Chairman John Cowley said Retail Food had performed strongly during the past 12 months, meeting or exceeding the growth and performance targets outlined in its prospectus.

"The company has been able to exceed its prospectus forecast as a result of higher franchise and other revenues, together with lower than forecast corporate expenses," Mr Cowley said.

"In particular, franchise revenue growth was driven by new outlet openings and increases in average weekly outlet sales," he said.

By June 30, 2006 Retail Food had 332 franchised outlets, including 265 Donut King outlets and 67 bb's cafe outlets.

"Based on these strong results, we are confident of achieving the 2006-07 EBIT forecast detailed in the prospectus of $11.7 million and 2006-07 net profit after tax forecast of $7.4 million," Mr Cowley said.

He said the store opening program is already well advanced to realise net store growth of 21 stores, mostly in the Donut King network, thereby achieving the prospectus forecast of 353 outlets by June, 30 2007.

At 1450, Retail Food Group shares were five cents higher at 79 cents.


__________
http://www.qbr.com.au/index.cfm?storyid=28200&cp=displaystory

Retail Food Group profit exceeds prospectus forecasts
Wednesday 23 August 2006

Newly-listed Australian retail food brand franchisor Retail Food Group has announced a net profit after tax of $5.9 million – up 75.74% on the previous corresponding period.

The company’s net profit after tax from continuing operations (the basis upon which the capital raising was successfully undertaken in June 2006) was $6.4 million an increase of $1.5 million on FY2005 or 31.4%.

EBIT (earnings before interest and tax) from continuing operations of $10.5 million was 18% above the FY2005 result and exceeded prospectus forecast by $400,000.

The EBIT for the 12 months ending 30 June 2006 was generated from total network sales across its Donut King and Australian bb’s café systems of $143.1 million, an increase of 10.42% on the previous year and equal to the Company’s prospectus forecast.

As at June 30, 2006, Retail Food Group had 332 franchised outlets, including 265 Donut King outlets, an increase of 15 stores on the previous year, and 67 bb’s café outlets, a decrease of two stores on the previous year.

Consistent with its prospectus, the Directors have not recommended the payment of a final dividend for the year ended June 30, 2006.

robbo
07-09-2006, 11:35 AM
Hi Ohyme, Tommy and all other Donut Lovers....,

Many thanks for that. Finanacial Results Presenation you have re ... produced for the (RFG) thread....[^]

Tommy, let me tell you.... that You are better than me .....at down loading stuff, like you did, as I could not Save and transfer ---- so thanks agains & that is Appreciatied!

So then; What do we now FOCUS steadilly on ??[?][?]

Yep, just gotta FOCUS on that (RFG : $ 9.15 Million Dollars EBITA Profits Results against the very low PE and low Market Cap of only $60 millions....

ie: Focus on extreme under -valuedness of (RFG) imo.

To self answer my own previous post, Dominoes (DMP)question, at the same (DMP) EBITA and/or NPAT (Net Prfoit After Tax Dominoes(DMP) was a market Cap of 2.7 times Greater than DONUT KING (RFG) is now ....:)[:p]

Repeat. 2.7 times more highly priced !!

And here is something rational and I reckon, easilly backed by the facts...

The Market Share potential of Retail Food Group (RFG) and growth potential, imo, is far higher for RFG (Donut King and.... for the BB's Coffee franchise et al....

>>> ...>> Why so Robbo .... ?

Well how many other Large National Pizza Brands are there to take Market Share from Dominoes ?

Answer: At least 3 or 4 others.

And how many Donut Competitors operate in a similar Space?[?]

Answer: Almost Zero.

Also compare the Profit Margins!:)

And now here, imo is the clincher.

Dominoes currently has a market cap of a whopping $233 millions versus Dominoes (RFG) is only $60 m Market Cap.... (both on a like for like unduiluted basis).

Finally, do as Legendary Value Investor Peter Lynch -- [^][^] style -- as --Lynch himself recommends; and do your self a favour; and do a personal investigation of the every day success of the Donut King Stores for yourself.

Just simply ..... >>> Stand outside any Donut King Store (RFG) in any medium or major shopping centre..... for 30 minutes and see how they are going ... ??!! [?]:)

Next interesting tit bit.

In any larger shopping centre (say AMP or Westfield) see how many Donut Kings (RFG) are operating ?[?]:)

Answer: It is more than one....?? ;);)

And, ask yourelf: Are the Donut Kings (RFG) all busy and successful?[?]:)

Check it personally out for yourself.....:)

One final thought.

(1) Ask any Donut King (RFG) share investor, whether they sleep contentedly at night .... in now knowing .....that they personally--- own a Company (RFG) with north of 350 ++ Donut King Stores,operating seven (7) Days every week of the year, and.... like-wise ... also.... umpteen successful BB's Coffee Stores....

(2) And also now, with the synergy benefits and extra profits to be realistically obtained from the .... up coming Coffee Roasting Factory.... in South East Queensland (See ASX Reports)

(3) And also, with even more Franchise Systems of Donut kings, BBS Coffees and other systemizable franchies..... with good Trademarks and identifiable successful Brands.... and with their Expansion Plans in Progress right now....

(4) And that with all these three (3) excellent very highly profitable (37 + %) scalable repeat sales high profit margin busineses (cash cows) ---

(5) And ... WITH even more to come (as announced by RFG on ASX) -- this year and in future years, in the Pipe Line --- and that they ....(the share investor) own a share of that group of instantly recognizable Franchises.... franchise? [?][:p]

Ask these self- same group of relatively new (RFG) investors; If They ........ want to sell, THEIR own (RFG) shares ?

Think you know what the answer will be....

Gotta fly,

Kindest Regards,

Robbo :)



DISCLAIMER
Views expressed in this email and/or internet correspondences, are my tentative thoughts and opinions only. These views are not to be read as being, or forming…. any form of a recommendation; of

tommy
07-09-2006, 02:49 PM
Good summary robbo, but the share market won't realize their under-valuedness for a while until they do an investor presentation... shame. Only listed a few months ago, the company needs more exposure!

Doesn't matter to me though, I am still topping up at these cheap prices. (I bought most of my holdings around 79c)

Keep up the good work mate;)

mark100
07-09-2006, 03:10 PM
Wilson HTM did the IPO for RFG and I understand they will be initiating coverage once the 'blackout' period has ended

robbo
07-09-2006, 03:43 PM
Retail Food Group (RFG)

Hi Mark & Tommy,

btw before I respond to RFG, hope you guys also got on board ANG, as the depth on Sell side is now drying right up as we speak .... [:p]:)...

And Mark, good piece of research there mate.

Who/How did you find that interesting info morsel out ??

btw, Mark, did your get my email return to your questions/comments??

Which also leads me to mention; that am really these days enjoying Share Trader, as I get the general vibe; -- that we are GENUINELY really trying to assist each other make money, and are not just ramping/damping..... or telling...... too many "porky chops".... ;) [^][^]

Good one.[^]

And yep ... Tommy,

Agree with you about the lack of RFG "road shoe" presentation...

... >>> ... YET. ;)

But also; in a sense, this is a: "chicken and egg discussion"-- ..... with a bit of Catch 22 thrown in.... [:o)][:I]..

I mean; do we want to load up into RFG after the Big Investor Presentation, and The PRICE has gone to north of $1.35....??

Also my contacts do tell me that their is some steady fund style investor build up going on in RFG --while it is still Under the Radar...

btw, I also notice that RFG has not had one single mention on a certain other allegedly metallic "Hot C " Share Web site...

Not a peep.!! amazing stuff, and all the more for us ... :)[:p]

And for sure, I am not starting a thread over "there" either !!:);)

Stay tuned.

Kindest Regards,

Robbo :)

mark100
07-09-2006, 04:57 PM
Robbo, I got my info from someone who works at Wilsons. I haven't emailed you so not sure what you mean about the email

robbo
07-09-2006, 06:46 PM
Retail Food Group (RFG)

Sorry Mark,

it was another Mark !! [:I][B)]

Regards,

Robbo :)

edison
08-09-2006, 08:17 AM
Robbo,

RFG looks good mate. Just have to wait until next year April for dividends though (from prospectus) :) I think the shareprice will take off when it start giving dividends, or they do a road show, whichever is earlier.

robbo
08-09-2006, 11:18 AM
Retail Food Group (RFG) (Donut King et al)...

HI edison, Tommy and all other (RFG) DONUT KING-- folowers....

errrr I hear the "when (RFG) will take off" comments....[?];)

But do note' that Retail Food Group (RFG) --- has even NOW actually in fact; risen Up; in a bearish only last 1 week and say 2 days, .... about an increase of: 14-15%--- since I first began just very recently placing the odd post re: (RFG) here; on Share Trader.[:0]

And as mentioned , no posts at all yet; on (RFG)- at/on Hot Copper btw.... ;):)

So by next up coming Friday week, I personally ... would not be at all suprised; to not see (RFG) knocking on door of 92-93 ++ cents.... [^]:)

errrr. maybe it is Ground Hog Day ... again and again and again...... or.... it just Might be my own strange sense of....

de ja vu,..... but I seem to recall having these similar style of:

"won't probably get going conversations" --- ;)[8D]--- on Emitch (EMI) , Port Bouvard (PBD) and Mc Millan Shakepeare (MMS) & actually a myriad host of other growth shares; ...

... >> ... And also recently; same with Dulhunty Power (DUL) and Austin Engineering (ANG) ; to name only a few..... regards ... this sort of sentiment: " xyz under valued Share you like Robbo, will have no support conversation"

.... "And ; will probably not take off for another 3-4 months Robbo".... hmmmmm.... ;)

So then; will leave you all; with a Question to ponder your own answer to:


In your own appraisal and opinion (not mine); --

--- Will Instos and quality longer term larger Support Investors arriving on the (RFG) register; would want to very soon; desire to get on board a:-- "free cash flow repeat sales business; in a defensive recession proof category like chocolate -- in this case coffee and donuts; in what is a massive Franchised monopoly "cash cow" style business like (RFG) --(Donut King).... :)[?]


Food for thought anyway.

Kindest Regards,

Robbo :)

tommy
08-09-2006, 02:47 PM
Hi robbo,

Just one question:

Why is this category recession-proof?

I would have thought that retail food stores would be affected during a recession... people try to spend less not more on takeaway foods, etc. If the entire size of the pie decreases, naturally everyone in the industry would struggle to get a piece of that pie, right?

I think revenues will be affected if unemployment increased and people's disposable income decreased but I do expect RFG to expand its network at a growing pace nonetheless.

Thanks in advance mate!

Halebop
08-09-2006, 02:58 PM
quote:Originally posted by tommy

Why is this category recession-proof?


Donut King are arguably in what some demographers call the "small luxury" consumption category. (In food industry language they would put themselves in something like a "treat" category). Small Luxuries tend to do OK in recessions. When the pocket book is tight and you want to express yourself through retail therapy, buying a $1 or $2 donut is more acceptable than a $100 fragrance or X Box title. Given the purchase is also a tasty food item, it ties in well with other needs too. I won't comment on the downstream impact of all that fat, food colouring and sugar!

robbo
08-09-2006, 03:06 PM
HI Tommy,

Good question Tommy.

Interestingly; people buy relatively more "impulse buy"-- inexpensive "feel good" products like lollies, tatts lotto tickets,go to the poker machines, smoke more cigarettes,partake of illicit drugs, watch more hired videos,have more sugar cravings and eat more chocolate,ice creams and donuts and caffeine (coffee). etc etc....

This fact has been well documetned and is covered in most Economics text Books, Sociology texts, and Psychology Text Books.

It is also backed up by research and statistics from the last few recessions ....going back ....say 70 years.

IN the Great Depression of the thirties, for example; more people than ever; went to the Horse Races and to Sporting Events.... to watch Don Bradman play cricket; or cheer on their favourite footy team play; even thought the cost of admission might have been seen as "out of bounds'... But in reality, strangely...>>> not so.

It is basic Human nature to "live for the present".

It is along the same "need for escapism" and human psychology lines; as if there is a predicted "end of the world" event or say when Nazi Germany was facing certain defeat in the Second World War, that more drunken abandon all decorum sex orgies became the norm ......

To the extent; when a certain decadence and "live and let live"-- spirit prevails -- might as well have fun "while Rome burns" as the saying goes ....

Kindest Regards,

Robbo :)

tommy
08-09-2006, 03:11 PM
quote:Originally posted by Halebop


quote:Originally posted by tommy

Why is this category recession-proof?


Donut King are arguably in what some demographers call the "small luxury" consumption category. (In food industry language they would put themselves in something like a "treat" category). Small Luxuries tend to do OK in recessions. When the pocket book is tight and you want to express yourself through retail therapy, buying a $1 or $2 donut is more acceptable than a $100 fragrance or X Box title. Given the purchase is also a tasty food item, it ties in well with other needs too. I won't comment on the downstream impact of all that fat, food colouring and sugar!


Thanks for the explanation halebop,

Good point: "retail therapy"... gee, I love that word! I personally never understood the meaning of spending small amounts though, I'd rather save every penny and then splash out big on a long luxurious holiday!

That said, the current anti-fast-food climate can't entirely be in RFG's favor, as the whole nation tries to blame donuts and burgers for their obesity problem (my opinion: get off your lazy **** and start exercising and eating healthy food you fat slime! hehehe)

Nonetheless, I do like the brand power of Donut King and the fact that it is literally EVERYWHERE... they don't really need to advertise on the media to boost sales because they are already exposed to the masses.

I have never run a franchize business so I don't know the pros and cons of the system, but Donut King seems popular in Australian shopping malls for sure.

Halebop
08-09-2006, 03:38 PM
Hi Tommy,

I agree there is reason for pause when considering backlashes against fast food. But despite the hype, this seems a case of follow what people do rather than what people say. Fast food generally has been doing well and I think will continue to do so within the bounderies of economic and demographic performance.

Halebop
08-09-2006, 03:39 PM
Hi Davidrob,

I like the look of this company. Was a bit worried about how "recurrent" franchise fee revenue might be and it’s impact on the bottom line. This seems both diverse and recurrent and I was surprised how small this portion of earnings actually was in relation to ongoing franchise revenue over-rides.

While they are a "modest" grower, maybe around circa +10% per annum, I prefer this nature of company for predictability and manageability. The BBs Cafe business looks like a bit of a dogs breakfast but seems a minor component of the overall schematic. I suspect there might also be a speculative upside in taking Donut King into new markets or purchasing other franchise systems.

Because they are essentially an IP company rather than operator, the balance sheet is a bit light but return on assets and equity are outstanding as a result. I don’t like debt on the balance sheets of IP companies but given the maturity of their systems’ cash flow they look more than capable of servicing it (as the almost 11% forecast gross dividend yield attests).

A 5 year 10% growth scenario, with a 3% termination rate and 12% discount rate, would support a value around $1.60. Am a little dubious of retail and the sharemarket right now but that discount to intrinsic looks good. Thanks for posting.

Disc: None but looking.

ohmyme
08-09-2006, 03:50 PM
I think its funny, if you watch a donought store at a shopping centre etc, you will notice that a lot of parents get ambushed by their kids wanting donoughts from donought king. I am sure the colouring and branding etc has a big part to do with that, because I know that my nephew rates donought king up there with McDonalds.

Another observation is the high levels of signage that these donought stores are starting to put up. So many deals, the other day for eg, they had hot dogs and milkshake for $5.00, I couldnt help myself. I justified is as some market research, I wonder if I could write off the expense against my profits this year ;)

edison
08-09-2006, 11:59 PM
Have to say I have never bought anything from Donut King in my life but will probably do it soon to see why Donut King is so popular. After all I do see a lot of it across Australia since I was young, and never see those franchises closing down ... I wonder which is better, Donut King or Krispy Creme?

soulman
09-09-2006, 03:59 AM
Wow, this thread is expanding rapidly since Robbo started it.

I know a Donut King franchisee and I can tell you that it's not that smooth sailing. It seems this RFG earn their revenue from the royalties (about 9% to 10% of gross sales) but before COGS from the franchisee all over Australia, just like Janine Ellis with Boost Juice (that's why she is very rich) and Jim's Mowing with the Jim's Mowing franchise name and etc...etc.

Income for the franshisor, in this case RFG is limitless. That is, when someone start a franshise, they will gain from the royalties. And with the coffee factory RFG are setting up, this factory will also earn profits from their Donut Kings and BB Cafe franchise. It's like robbing their own kind. The only loser ----- the franchisee. You don't see D King close down because they are passed from franchisee to franchisee. So when one franchisee isd PISSED OFF, he or she sells it to another would be taker and so on and so on.

This company looks good on growth and yield but the share price IPO was $1 and the first day of trading a few months ago I remember RFG opens at 92 cents (already under water) and drops to the 80's soon afterwards. Now, they are still underwater and I can see that directors are picking them up at these prices.

As to compare RFG to Domino's, possibly, since both are in the food industry. But Domino's earned most of their dough (no pun intended) during the dinner time, when Donut King are already closed in the shopping centre. Domino's target both kids and adults whereas Donut King target the elderly with their coffee and the younglins with those sweet weird looking coloured donut.

ohmyme
09-09-2006, 08:55 AM
I personally know one person with a donught king franshise in the north coast of QLD. They use the store to fund their retirement. From the prospectus you can calculate the average sales that one store generates by dividing number of stores by group sales. It comes out at around $500g per year. RFG get 7% of gross sales or $270 per week which ever is higher. I ran some rough figures and its not that difficult to see that a donught king store would generate close to $100g for the operator, which is plenty. Fair enough the yatalla store is going to cost the store operators more money, but the whole point of it, is that it cuts down the time that they have spend in the morning making donughts and stuff like that. I guess it means less time for the store operators, it also means they can control quality better by centralising production of goods and coffee etc.

Anyways if director buying isnt evidence enough for you then I dont know what it. Classic example of this was ANG, directors were buying with their ears pinned back at below 40c, its now 59c. I am a happy RFG holder.

tommy
14-09-2006, 03:15 PM
I'm still quite surprised that RFG is still trading at 80c, which is basically little different from pre-announcement levels at a PE of 10, with a thicker sell side than buy side. Market cap is still 60 million!

I've been steadily accumulating but wouldn't mind getting more around 75c. Shame they don't pay dividends, it might have help attract more investor attention... yawn.

Halebop
14-09-2006, 03:48 PM
Not a lot of data to attempt trending the share but we can see which way the band is pointing...

http://img214.imageshack.us/img214/9136/rfgax22jun06to16sep06li9.png

RFG is more or less ranging with the rest of the market but at -20%, they are probably being double hit by investors cutting their losses. Unless the Bull emphatically returns to the ALL ORDS, the uncertainty inherent in small companies is likely to be rated lower than the stability of large caps.

I'm happier to wait on this one. If I'm wrong buying at 90 cents on the way up is a small price to pay versus buying at 80 on their way down to 60.

On the question of dividends, the earnings shareholders are now buying will have a distribution componant attached. I think 6.25 cents was the mooted dividend? As a non Australian I could care less but it demonstrates the "prospectivity" of their cash flow.

tommy
19-09-2006, 01:28 PM
Hi all,

RFG bounces back from a low of 74.5c to 80c, damn I wanted to buy more at low 70s but missed the boat[|)]

Still very low volumes so it looks like it's gonna take a while for RFG to see the limelight... no investor presentation or analyst report yet, surely those who bought in the float don't want the stock to remain below the IPO price? Yawn.

ohmyme
19-09-2006, 01:48 PM
Definate game playing here Tommy. This morning the depth looked sick, with sellers down to 75c, and some poor sod selling their shares for 74.5c to another lucky sod.

Now have a look at the depth, 250k and 100k+ bidders all the way up to 79.5c

Patience is the key with this one. I dont see why this one would not trade at a PE of 15 like the broader market. 50% upside based on historical results. When you factor in growth potential and acquisition potential (this is the biggie IMO) then $2.00+ share price is not out of the question.

I hold stacks.

cheers.

robbo
19-09-2006, 01:50 PM
Retail Food Group (RFG)

Hi Tommy,

Was also buying quite a few in that little "window" at between 75-77 cents range... to add to my RFG holding.

Have also been adding to ISS and ITe (ITE) significantly over last 3-7 days.....& especially yesterday....

Tommy, IF.... you quietly look at the first 3 or 4 lines --(ON RFG) , that is, on my sources, 2 different Funds -- in the Depth--whihc is why there is a sudden 500,000 odd shares in the Depth at 76, 77, 79, 80 and above Share Price on the Retail Food Group (RFG) BID/BUY Side.

This has only occured Today; as of only 1/2 hours ago, from approx: AEST at 12.30 pm... (19/9/06).

Gotta fly...

Kindest Regards,

Robbo :)

robbo
19-09-2006, 02:01 PM
Hi ohyme,

You must have posted at same second as me !!

BTW, wonder who the lucky sod/s are/were ?? ;)

And also, besides.... errrrr ..... why did they sell ??

Regards,

Robbo :)



quote:Originally posted by ohmyme

Definate game playing here Tommy. This morning the depth looked sick, with sellers down to 75c, and some poor sod selling their shares for 74.5c to another lucky sod.

Now have a look at the depth, 250k and 100k+ bidders all the way up to 79.5c

Patience is the key with this one. I dont see why this one would not trade at a PE of 15 like the broader market. 50% upside based on historical results. When you factor in growth potential and acquisition potential (this is the biggie IMO) then $2.00+ share price is not out of the question.

I hold stacks.

cheers.

tommy
19-09-2006, 02:12 PM
Hi davidrob and ohmyme,

Hahaha, so it looks like we were all watching the suspicious activity in RFG this morning at the same time[:I]

The average price of my holdings is 81c at the moment, I was hoping to bring that down a bit but no luck...

Robbo, good on ya for picking up on the cheapo side, I think I might have been a bit too greedy waiting for low 70s!

ohmyme, you suggested acquisition but who could RFG buy?? I would have assumed that organic growth is their focus?

robbo
19-09-2006, 02:15 PM
RFG

Reckon that ohyme might be Right On the Money with that hypothesis Tommy...

Aqusition, after all is one of RFG's "raison d etre"....

And my own feeling is within 2 months...

Kindest Regards,

Robbo :)

ohmyme
19-09-2006, 02:21 PM
Tommy, read the prospectus. Its basically the emphasis of the entire document, that the management have built up expertise through their franchise of BBs and Donught King, and that there were many opportunities in the market place to buy out other brands in coffee and food etc, who lacked the muscle etc to make it work under the franchise model.

I am sure that this will be one of the major price catylysts for RFG. In addition as I think Robbo has pointed out, check out the resumes of the management team behind RFG. Wow! is all I have to say.

tommy
19-09-2006, 02:29 PM
Hi guys,

err... you are totally right! Didn't read the prospectus properly, I just scanned through the figures (lazy me)

Prospectus:
http://www.rfg.com.au/rfg/prospectus/RETFO0252_WebProspectus_new.pdf

2.4 Retail Food Group’s growth strategy
The Company has in place a clear and defined strategy for driving
growth. The key elements of this strategy include:
- continuing to achieve consistent and sustainable growth in new
outlet openings
- driving Outlet Average Weekly Sales growth
- the CMF pilot which if successful, will be rolled out on a national
basis allowing centralised manufacture and distribution of fresh
food products into the majority of outlets
- continuing development of the Donut King and bb’s café
menus to increase customer purchase frequency and average
purchase value
- encouragement of multi-outlet Franchisees
- assessing and undertaking suitable acquisitions
- expansion of the Company’s brands internationally.

tommy
19-09-2006, 05:44 PM
I was just digging more info on RFG and found this at the FloatTank:

Does anyone know anything about this so-called legal action?

______________
http://www.floattank.com.au/focus.php?page=928641?printfriendly=Y

Retail Food Group

Company: Retail Food Group (RFG)
Status: Listed
Amount Sought: $ 35,500,000.00
Issue Price: $ 1.00
Shares on Issue: 35,500,000
Closing Date: 16 Jun, 2006
Listing Date: 22 Jun, 2006
Stag Price: $ 0.92
Last Price: $ 0.82 (19 Sep, 2006)
Website Address: http://www.rfg.com.au
Organising Broker: Wilson HTM
Phone: 07 5591 3242
Recommendation: Avoid
Review Date: 25 May, 2006

Mmm … doughnuts. The prospectus for Retail Food Group explains that its principal business, Donut King, ‘operates within the “impulse buy”, “reward” and “treat” segments of the food retailing sector’, and they’re not kidding. We must confess that we at The Intelligent Investor occasionally succumb to our impulse for doughnuts on a Friday afternoon. But are the shares in Retail Food Group likely to ‘reward’ and ‘treat’ investors?
The company operates Donut King as a franchise network, but there’s more to it than ‘mere’ doughnuts. It also acts as the Australian and New Zealand franchisor of the bb’s café chain. All told, the company operates 261 Donut King outlets and 41 bb’s café stores in Australia, with an additional 25 coffee shops in New Zealand.

The company has a simple, but highly effective, business model. Store operators pay it marketing contributions and franchise fees. The marketing contributions are set aside in a fund to be spent on marketing and advertising promotion for the two brands, so they don’t contribute directly to profit.

The franchise revenue, however, is highly profitable. The company charges franchisees initial set up fees, training fees and a percentage of weekly sales. In return, they get some administration services, such as negotiating bulk purchasing agreements, and training. The other main expense for the company is staff wages for two teams, one dedicated to sourcing new franchises and the other for setting up the new stores. It all adds up to some excellent financial results. The company is expecting to make earnings before interest and tax (EBIT) of $10.1m in 2006, on revenues (excluding marketing revenue) of $19m – a margin of 53%.

The company’s main attraction is a scaleable business model. As shown above, the company generates fantastic margins because the expenses are low and largely fixed. That means a large part of revenue growth flows straight through to the bottom line. So, if the company can successfully execute its business plan of opening 15–20 new stores a year, it should be able to grow revenues at a significantly higher rate than expenses, and record double-digit earnings growth.

Retail Food Group is forecasting a net profit of $7.4m and earnings per share of 10.3 cents in 2007, placing the stock on a forecast PER of 9.7 at the $1 issue price. When combined with a prospective fully franked dividend yield of 6.25%, that looks pretty attractive. But as always there are two sides to any story.
[b]
While the company appears to be on the right track now with the Donut King and bb’s café franchises, it doesn’t have a flawless track record. The company jumped on the juice store bandwagon a few years ago and started up its own franchise network called Juice Fusion. This idea lasted less than two years and caused a lot of financial pain.

This is part of the reason the company has resorted to using ‘adjusted’ historical EBIT figures in the prospectus. Basically the numbers look a lot better if management’s stuff-ups over the past few years are ignored. The table below shows how the company has actually performed recently compared to the adjusted earnings figures.

2003 2004 2005
Adjusted EBIT ($m) 7.6 8.3 8.9
Actual EBIT ($m) 2.2 6.8 6.1

A review of the prospectus also reveals a few red flags over corporate governance. Individually they look pretty innocuous, but they do build up. Firstly there is the relationship wi

tommy
19-09-2006, 05:57 PM
mmm, read this:

____

http://franchisetalk.net/2006/05/30/a-hole-in-the-donut/

A hole in the donut?

30th May 2006

doughnut555.jpg

Daily Telegraph:

SOON-to-float Donut King has defended itself against criticism it sugar-coats financials, wastes store-owners’ money on the CEO’s race car and faces legal claims which could cost millions.

Criticisms have been made by IPO analysts Float Tank, which has told would-be investors to “avoid” the $37 million offer by Retail Food Group — the company behind the 260-strong Donut King franchise.

“At the time of the prospectus, Retail Food Group was facing two separate legal actions, with the threat of another raft of claims from franchisees of the company’s former Juice Fusion operation,” Float Tank said in its report on the RFG offer.

“The damages bill and legal fees from such claims could potentially run into the millions, and any adverse decisions might put quite a dent in the company’s earnings.”

However RFG CEO Tony Alford said “litigation potential” needed to be “put in perspective”. After including its chain of bb’s cafes, the company had 330 franchisees, yet it was facing only two actions.

“Two out of 330 is a fairly low strike rate,” Mr Alford told The Daily Telegraph.

In the RFG prospectus, the company’s directors said they did not believe the former Juice Fusion franchisees have a “valid claim”.

Float Tank also questioned RFG for having “resorted” to adjusted earnings figures in the prospectus.

tommy
20-09-2006, 02:31 PM
Hi davidrob and ohmyme,

RFG buy side looks thin again, might be a chance to pick up some cheapo stocks.

Did you guys read those articles I posted above? Were you aware of these factors? Perhaps that's why the share price isn't taking off... oh well, time will tell.

Halebop
20-09-2006, 03:13 PM
Legal stoushes are a reasonably common occurance in the franchise business. The number of disagreements in this instance is not especially material.

The Juice business I think took everyone by surprise. First by its rapid expansion and then by it's rapid contraction as operators discovered how easy it is to emulate. While RFG were perhaps silly to try their hand so late, they followed quite a bit of "smart money" in doing so. I don't have any insight into the disagreements with former franchise holders but would be surprised if RFG has a contractual liability and suspect judgement will be required to clarify a moral one.

Donut King has been a long term performer. Joint venture expansion into Asian markets would seem the most likely "winning" combination to add some growth "gloss" to the share price. The existing mature business in Australasia still has incremental growth prospects in any case. Growth by aquisitions will either be expensive or risky and new concepts are a lottery. I would be hoping they don't get too innovative.

OneUp
20-09-2006, 04:02 PM
Hi guys,
great to be back from a month long holiday and find another great idea from the brains trust at sharetrader.

RFG seems a very interesting prospect.

One question: how much room for expansion is there? They already seem to have a lot of donut stores operating.

CF Halebop's comment about Asian expansion, the western-style bakery/donut shops in China were best described as deserted. McDonalds, KFC, and Pizza Hut, however, were humming (Pizza Hut being the height of fine dining in China).

OneUp
29-09-2006, 04:32 PM
quote:Originally posted by OneUp
One question: how much room for expansion is there? They already seem to have a lot of donut stores operating.


500 stores possible. Plus expansion in NZ (not too many donut stores here).

Looks like insto buying this week.

robbo
29-09-2006, 08:42 PM
RFG.

Legend of an investment imo.

But you already know that. :);)

Kind Regards,

Robbo :)

OneUp
29-09-2006, 09:03 PM
BTW Robbo, what would you make of Dunkin' Donuts as a competitor to Donut King?

robbo
29-09-2006, 10:23 PM
RFG.

Market Share and Balance Sheet miniscule compared to RFG....

btw, would maybe expect.... a Biggish aquisition by RFG soon-ish-- (within 3 mths at a guestimate maybe-- ) that will make BB's as significant as the D K side of the bizz in near term....with BB's to be absorbed into the Target perhaps ;)??

Also, partly ALSO in relation to first part of your querry One Up: Teaser Question for ya, --- What is the Sustainable Competitive Advantage that Donut King Has?

Kindest Regards,

Robbo :)

OneUp
29-09-2006, 11:10 PM
quote:Originally posted by davidrob
Also, partly ALSO in relation to first part of your querry One Up: Teaser Question for ya, --- What is the Sustainable Competitive Advantage that Donut King Has?


A bit hard to answer that question without checking out their systems and products first hand.

But from what I can see, their donuts look better than Dunkin Donuts, which in NZ atleast doesn't even have a real chocolate (or choc with nuts) alternative!! I mean Donut King can bury 'em.

robbo
06-10-2006, 05:09 PM
Retail Food Group (Donut King)

Wanna Buy a Tasty Donut ? [?][8D]

It'll cost you 93 cents..!! --- [:p][:p]

Retail Food Group Today, (RFG) is healthy and Up another 4.3% Today !! ...:)

Looks to me like RFG, is now indeed, [:p]-- starting to get a head of.... BB's inspired-- Cappucino Steam !!- ;)

Kindest Regards,

Robbo :)

tommy
06-10-2006, 05:11 PM
Hi robbo,

I owe you a doughnut and a coffee mate[8D] I'm happy holding RFG, let's see how soon it will hit 100 million market cap!

robbo
11-10-2006, 02:50 PM
Retail Food Group. (RFG) -- Donut King and "Franchise Systems"--

Up another 5% again today....

So then, what to do...?? [?]-- [8D]

errrr.... >> Keep on enjoying the Delicious Donuts ..... heh what !! [:p][:p]

RFG is Up 25% now .... in only, about 5-6 weeks--since this Thread started ... [^]

Kindest Regards,

Robbo :)

tommy
11-10-2006, 02:51 PM
RFG up 4% today, looking at the thin sell side we might have an upswing soon[:p]

This is my largest holding in my portfolio, PE is still 11 compared to sector average of 18 so we have some room left for improvement!

OneUp
11-10-2006, 02:56 PM
Great pick Robbo.

I'm guessing that's Halebop buying.


quote:Originally posted by Halebop
I'm happier to wait on this one. If I'm wrong buying at 90 cents on the way up is a small price to pay versus buying at 80 on their way down to 60.

ohmyme
11-10-2006, 03:03 PM
For non-believers, ie people that dont think RFG will get re-rated to a PE in line with its peers, have a read of this very juicy article from their website: http://www.rfg.com.au/rfg/investors/media_centre/

Download the "Brutal Honesty and Transparency With Franchisees" PDF from the above link.

cheers

tommy
11-10-2006, 05:17 PM
RFG hits $1, sell side almost none existent! YAY[:p]

robbo
11-10-2006, 05:28 PM
rfg/ITE--

Tommy, ohyme, One up etc etc etc ...

..see ite post

Regards,

Robbo :)

tommy
11-10-2006, 05:38 PM
Hahaha robbo, hope you have a massive fridge for those crownies mate:D

RFG up 16% now, this is crazy! Why the sudden interest? Is it halebop going nuts after 90c and becoming a substantial shareholder?!

ohmyme
11-10-2006, 05:47 PM
I am not sure a fridge will cover it Tommy, more like an industrial sized shed!!!

I hope those expansion plans are running to schedule Robbo, there is a fleet of trucks headed your way :)

cheers

Halebop
11-10-2006, 06:03 PM
Not me. I dipped my toes a couple of days ago with a partially filled order but haven't been following the market for the last few days and now find myself somewhat priced beyond my tolerance. Given the small purchase to date I'm not sure I could manage more than a small beer for Robbo!

robbo
11-10-2006, 06:09 PM
Gee Halebop,

Your a 'mean man' Halebop !! [}:)][}:)] -- ;)

Kindest Regards,

Robbo :)

tommy
11-10-2006, 06:13 PM
Some people seem to be desparate to get in before the close of the market, three buy orders for 70,000 shares at 1.05, while the next two buy orders are for 10,000 shares at only 0.955.

Massive discrepancy there, why in a rush to buy above $1???? Doesn't make sense to me[?]

ohmyme
11-10-2006, 06:35 PM
Its simple Tommy. Someone with deep pockets needed to have a stake in RFG. Their price limit was much higher than prevailing market prices. Maybe they see the undervaluedness of RFG, maybe there is a large acquisition in the wings - hang on, no it couldnt be the last one because no insider trading happens on the ASX. At the end of the day sometimes when people take stakes in companies they dont worry about a few cents, because they understand the bigger picture so they wade in and just get their allocation.

cheers

tommy
11-10-2006, 07:04 PM
Hi ohmyme,

Yeah, your hypothesis makes sense but I was also wondering whether an acquisition or some other subtantial announcement was coming soon, therefore the rushed buy orders. No insider trading on ASX? mmm, if that is the case michael jackson must be born white[}:)]

Not complaining about the sudden price hike though, I think once they get their investor presentation out, people will start noticing RFG:)

OneUp
11-10-2006, 08:49 PM
Don't worry Robbo, I'm keeping your crate of Crownies nice and cool [8D][8D] for the $2 party!

Bobbyvee
11-10-2006, 11:18 PM
Do you think the raised level of interest in RFG could come as a result of the current franchising expo in Melbourne?

edison
12-10-2006, 03:16 AM
whatever happens it is now back to the original floated share price ...... I am suprised by the rush of shares. Thin sell side (with 100K at $1.10) ..... I am tempted to take a profit here .....

robbo
12-10-2006, 11:26 AM
Retail Food Group (RFG)

Yep, they gotta a Speedy Gonzales--

.... Speeding Ticket.!! ;)[:0]

Regards,

Robbo :)

tommy
12-10-2006, 01:59 PM
http://www.theage.com.au/news/business/out-on-lim-emirates-branches-out-north/2006/10/11/1160246196480.html?page=2


Donut King hit


A SUDDEN interest in the previously neglected Retail Food Group sparked a couple of takeover rumours among trading types yesterday.

Shares in the owner of the Donut King franchise surged 14¢ — or 16 per cent — to $1.05, causing some to muse about whether one of those private equity sorts so keen on Aussie retailers at the moment was circling. It was the company's biggest single-day share price rise in its four-month history as a listed entity, and trading volumes were significantly above average. Yesterday's close was a record high for the Brisbane-based group, whose shares have languished since the float despite recently reporting a 76 per cent jump in profit to $5.9 million — suggesting there's money in deep fried dough.

Perhaps KKR, the US buy-out firm leading a $17 billion tilt at Coles Myer, has found smaller fish — or donuts — to fry?

robbo
12-10-2006, 02:01 PM
rfg.

Great little bit of 'very juicy'-- [:p] research Tommy.

Thanks,

Robbo :)

tommy
12-10-2006, 02:17 PM
quote:Originally posted by davidrob

rfg.

Great little bit of 'very juicy'-- [:p] research Tommy.

Thanks,

Robbo :)


Hi robbo,

No worries mate, RFG is dirt cheap at this price level so being a takeover target would be no surprise. Not selling my shares under $2 though[}:)]

tommy
12-10-2006, 05:48 PM
RFG runs out of steam[|)] Oh well, at least it looks like it's gonna finish above the dollar mark.

tommy
17-10-2006, 07:10 PM
MMM, what was this all about??

Comment re: Newspaper Article
http://sa.iguana2.com/cache/82d289590ba074170129448c4ed04100/ASX-RFG-181644.pdf

senor guacamole
17-10-2006, 07:28 PM
yeah i clocked that one this morning too.
the release refutes a newspaper article with a RFG mystery buyer theory as being incorrect specifically in the size of the purchase. but not the guts of the mystery buyer theory. meaning...?

tommy
17-10-2006, 07:53 PM
quote:Originally posted by senor guacamole

yeah i clocked that one this morning too.
the release refutes a newspaper article with a RFG mystery buyer theory as being incorrect specifically in the size of the purchase. but not the guts of the mystery buyer theory. meaning...?


Can someone post the contents of the original article or a link to it? I can't find it!

And may we presume that there is a "mystery buyer" out there then? the press release basically refutes the quantity of shares (acquisition of 9 million shares) referred to in the news article and just reconfirms its principal base of business.

BUT IT DOES NOT refute that the management is trying to "second guess" the identity of this mystery buyer!!!!

OneUp
17-10-2006, 07:57 PM
I've heard that Krispy Kreme tried to float not too long ago but it failed for lack of interest.

I hear their Melbourne stores have qeues. But Sydney is a different story.

Also, Donut King seems to get quite a lot of business thanks to discount vouchers. All good for the franchisor but a little hard on the franchisee.

robbo
18-10-2006, 01:41 PM
RFG Retail Food Group. (Donut King)

ASX Positive Announcement just out now.[8D]

(RFG) Earnings ahead of forecast and Growth Plans with new factory ditto !! ...[:p]:)--

Normally;..... about this time of the day --(11.30 am)-- I would go and another couple of cold crownies......[:p]

- But today; definite Change of Schedule:

Definitely; Going to now have a few more:

....>>> Fresh Hot Donuts <<<[:p][:p]

Kindest Regards,

Robbo:)

tommy
18-10-2006, 03:52 PM
Yeah man, this is such a predictable outcome, the share price hasn't reacted at all[}:)]

BTW, about this coffee selling idea... am I the only one who thinks RFG are cheeky for "double dipping" into their franchisees' revenue? Great idea, cannot see it flopping.

Property Acquisition Settles/New Outlets Exceed Forecast
http://sa.iguana2.com/cache/f9e8ed284097a78f380db3d0393b4bbf/ASX-RFG-181697.pdf



18 October 2006
Property Acquisition Settles Whilst New Outlet Commissionings Exceed Forecast


On 1 August 2006 Retail Food Group Limited (RFG) announced to the market that it had entered into a conditional contract to acquire suitable premises for the establishment of a Central Manufacturer Facility (CMF) and Coffee Roasting Facility (CRF) at Yatala, on
Queensland's Gold Coast.

Completion of the contract occurred yesterday (17th of October 2006).
The premises has been acquired for $2.3 million and was fully funded by debt.

RFG expects the extensive refurbishment of the premises to cost approximately $1.5 million and will commence immediately.
Delivery of the specialized CMF equipment remains on target to enable commissioning of the CMF in January 2007, with operations commencing in mid-March 2007.

The commissioning of the first commercial CMF will realize the Company's FY2007 primary growth initiative whilst also delivering to all franchisees in South East Queensland a consistent and quality product without the requirement for each franchisee to manufacture certain product in-store.

The CRF will supply coffee to all Australian Donut King and bbs cafe outlets.

All capital costs of the CRF including plant and equipment, establishment and commissioning (but excluding premises fitout costs which will be equally funded by the joint venture participants) are being attended by RFG's joint venture partner Koffee-Tek
Pty Ltd.

Retail Food Group CEO Tony Alford said both the CRF and CMF were designed to streamline supply, help drive growth and generate additional income streams for the Company via vertical integration.
"The Coffee Roasting Facility joint venture offers less risk, greater potential for future income and an enhanced quality coffee taste profile for Donut King and bb's cafe outlets.

Koffee-Tek will meet all capital costs in establishing the facility," he said.

"To date, the pilot Central Manufacturing Facility has proven successful and achieved our goals of economically producing consistent high quality products for our outlets

"We believe that in the future, the Central Manufacturing Facility and Central Roasting Facility when operating at full capacity will provide attractive returns for the Company together with opportunities for third party supply".

"The quantum of the increased returns anticipated from the CMF and CRF initiatives has yet to be fully determined and therefore is not included in RFG's FY2007 earnings forecast".

The Company's FY2007 new outlet rollout program is well advanced.
New outlet commissionings for FY2007 as indicated in the Company's 9 May 2006 Prospectus noted 21 Donut King and 4 bb's cafe outlets.
As at the 11th of October 2006, RFG has commissioned 8 Donut King franchised outlets. In addition, RFG has secured sites, leases and franchisees for a further 27 outlets (being 21 Donut King and 6 bb's cafe outlets), 11 of which (8 Donut King and 4 bb's cafe) will
be commissioned by 30 November 2006.

"Given confirmed new outlet commissionings of 35 being achieved relatively early in the 2007 financial year, not only have we already exceeded our prospectus forecast new outlet commissionings, but the number of new outlets which will be trading prior to Christmas fortifies outlet network sales forecasts for the financial year".

"As matters presently stand, the programmed new outlet commissionings in 1 HFY2007, if achieved, will represent the most significant 6 monthly quantum of store openings in the Company's history", Mr Alford said.

ENDS

(Note: the released PDF format was an image file so OCR'

robbo
18-10-2006, 06:44 PM
(RFG) --

Don't worry Tommy---

Seen this sorta thingo before Tommy, -- errrr.....

Good gosh; now where are all..... 'the bloody buyers' ;)[:0] -- .....where are they--[?]!!-- are they out to lunch --- [?]and dash them; why don't they come back inside .... and start eating donuts---[}:)] ;)

But we know; announcements like the 'good' one on the ASX today; are .... just Another ...... excellent, 'brick in the foundation' --

And another Tick[^]-- in one of the Good (Donut)-- RFG-- Boxes....

'Patience' will, imo..... be rewarded ....with this one.:)

Regards,

robbo :)

senor guacamole
18-10-2006, 08:19 PM
Pauline's gone do-nuts

Sydney Confidential

October 11, 2006 12:00
Article from: The Daily Telegraph

Font size: + -

Send this article: Print Email

PAULINE Hanson should consider herself lucky to be mixing in such esteemed company.
The fiery redhead, better known for deep-frying fish and chips, is bizarrely the face of food chain Donut King's new advertising campaign, alongside a few other names that prove the company's campaign budget must have been tight.

"We've used a selection of people that have had their five minutes of fame,'' Donut King's marketing man Les Hall said yesterday.



They are former Big Brother contestant Bree Amer, Winter Olympics gold medallist Steven Bradbury, ex-weatherman Brian Bury and former Test league fullback Gary Belcher.

The reaction to Hanson's appearance - where she asks viwers "what do you feel like'' - hasn't been all sugar-coated.

"Yes ,there's been people who have registered their dislike for Pauline,'' Donut King's Hall said.

We know what we feel like doing when we watch it.


sorry cant post the link but there is a youtube video showing pauline asking the question....made me feel like a king! i think the fact theyve done the ads on a budget is encouraging, paulines politics makes me feel like puking but the fact is the ad is catchy and will have people talking if only to mock. good work DK, this and the tone of the recent releases makes me think management is reasonably media savvy AND have a sense of humour!

tommy
18-10-2006, 08:38 PM
quote:Originally posted by senor guacamole
sorry cant post the link but there is a youtube video showing pauline asking the question....made me feel like a king! i think the fact theyve done the ads on a budget is encouraging, paulines politics makes me feel like puking but the fact is the ad is catchy and will have people talking if only to mock. good work DK, this and the tone of the recent releases makes me think management is reasonably media savvy AND have a sense of humour!


well done mate for finding it, here's da link:

http://www.youtube.com/watch?v=f5iAQSzPnDQ

What a tacky ad... low or no budget?! They need a better tune than that, and god knows why they hired pauline hanson to build their brand image... are they nuts?

Seriously thinking about selling off all of my holdings after watching that[xx(] I hate political correctness but don't like to see my investment funding her retirement either.

senor guacamole
18-10-2006, 08:52 PM
hi tommy, i was searching for that buyer article but that came up ....WTF....that tune...its certainly got under my skin! i think i could do better bloody animation.. im sure you wont sell though its all good publicity and the littleys *as i understand they are call in Oz( will be singin it all day long....

tommy
18-10-2006, 09:40 PM
http://www.news.com.au/heraldsun/story/0,21985,20564167-28957,00.html

A please explain over ad choice

October 12, 2006 12:00am
Article from: Herald-Sun


PAULINE Hanson's new gig as doughnut spruiker isn't sitting well with some politically minded chain store customers.
The redhead, better known for deep frying fish and chips, has bizarrely been chosen as the face of Donut King's new advertising campaign.

The reaction to Hanson hasn't been all sugar-coated.

"Yes, there's been people who have registered their dislike for Pauline," Donut King's marketing man Les Hall said yesterday.

But Hanson's fading star is not the only one fronting the company's campaign.

"We've used a selection of people that have had their five minutes of fame," Hall said.

They are Big Brother contestant Bree Amer, Winter Olympics gold medallist Steven Bradbury, ex-weatherman Brian Bury and former rugby league Test fullback Gary Belcher.

Bobbyvee
18-10-2006, 09:53 PM
Hanson - What a disasterous selection. Makes you worry about the company management.

tommy
19-10-2006, 03:13 PM
http://www.gcbulletin.com.au/article/2006/10/19/1318_business.html

RFG beats new stores target

19Oct06


RETAIL Food Group, the company behind the Donut King and bb's cafe chains, has beaten another prospectus forecast.

The Southport-based company announced yesterday that it had already either commissioned or was about to commission 35 new franchised outlets, smashing the prediction of 25 such stores for 2006-07 made in the group's May prospectus.

RFG, which is chaired by former Gold Coast Indy chairman John Cowley, has more than 330 franchised Donut King and bb's cafe shops throughout Australasia.

Nineteen of the new stores will be commissioned by November 30. It was not the first time RFG which recorded a 76 per cent jump in its profit this year to $5.9 million had beaten the company's prospectus forecast.

Its 2005-06 revenue of $10.5 million beat its prediction by $400,000.

Meanwhile, RFG's purchase of a Yatala property, which it will turn into a manufacturing and coffee roasting plant for the outlets, went unconditional yesterday.

The $2.3 million deal was fully debt-funded, while RFG will spend another $1.5 million on refurbishing the building.

The coffee roasting plant a joint venture with Koffee-Tek will replace existing suppliers, while the manufacturing facility is expected to allow more room to develop new products.

Chief executive Tony Alford said the plants also provided the company with an opportunity to supply others.

RFG's share price which reached a record high of $1.05 on heavy trading on October 11 climbed 2c to $1.01 yesterday.

tommy
25-10-2006, 04:51 PM
Just noticed that RFG buy side is suddenly thin and sell side is stacked up... what da[?]

Bobbyvee
25-10-2006, 05:04 PM
True Tommy the buy side is a little thinner than it was however more concentrated in the mid 90s. I don't believe there is any stacking up of the sell side - been like that for a while. In fact the big seller at $1 has largely gone.
BobbyVee

tommy
25-10-2006, 05:25 PM
Hi bobby,

mmm, I was wondering whether the share price is gonna slide back to the 80s again[|)]

OneUp
25-10-2006, 05:38 PM
quote:Originally posted by tommy

Hi bobby,

mmm, I was wondering whether the share price is gonna slide back to the 80s again[|)]


I hope so![:p][:p]

Bobbyvee
25-10-2006, 06:00 PM
Yes OneUp, good for a top-up.
By the way have you guys looked at HYO which is going gangbusters this week. I believe it is a company really going places.

tommy
26-10-2006, 04:24 PM
Annual report:

http://sa.iguana2.com/cache/2482be31ceeab0885b20503449ad6893/ASX-RFG-181961.pdf

"OUTLOOK

Supported by the strong results achieved in 2005/2006 as well as the Company’s first quarter 2007 results, Retail Food Group remains confident of achieving the 2006/2007 EBIT forecast as detailed in the prospectus of $11.7 million and 2006/2007 net profit after tax forecast of $7.4 million.

Further the Company’s outlet opening program is well advanced to realise the forecast net organic outlet growth of 21 outlets, principally within the Donut King network, thereby achieving the Company prospectus forecast of 353 outlets by 30 June 2007. To be sure in terms of new store commissionings for the 2007 financial year, Retail Food Group has already identified sites, secured leases and recruited franchisees to achieve its full year forecast of 25.

It is also relevant to note that the Company is currently investigating licensing opportunities in international markets, such as Asia and India.

Management continues to invest considerable resources in enhancing its fundamental and underlying business drivers, particularly that of
developing franchisees’ average weekly sales and average transaction value. These two fundamentals, along with new outlet commissionings,
have historically formed the cornerstone for revenue growth.
Network sales growth during the next 12 months will be driven by consistent and continued targeted marketing programs for both systems and ongoing development of new menu items.

As detailed previously, the development of the CRF and CMF represent an exciting new growth potential for the Company. In addition, it is
envisaged that the CMF will also assist in increasing franchisee multi-outlet ownership by removing some of the day-to-day pre-trade operations required at outlet level.

Clearly, both the Donut King and bb’s café networks are benefiting from the proven management, training and support systems of Retail Food Group. Furthermore, and consistent with one of the Company’s principal motivations to list on the Australian Stock Exchange, the Company remains confident of the available opportunity within the Australian retail food franchising sector to consolidate a number of franchise systems.

In particular, acquisitions are viewed as a mechanism for growing revenue, earnings per share, increasing purchasing power with suppliers and benefiting from economies of scale in marketing, field operations and administration.

The Company continues to assess synergistic acquisition opportunities and will, if and when required, make appropriate announcements to the
market concerning these activities.

Through its high-profile brands of Donut King and bb’s café, Retail Food Group is confident of executing its business strategy of delivering strong consistent and above all sustainable revenue and earnings for the 2007 financial year."

robbo
26-10-2006, 04:51 PM
Hi Bobbyvee,

And ....'by the way'... re. HYO....

Are you going to OPEN A THREAD-- on HYO...??

And why...do you think HYO is 'going p[laces' Bobbyvee...?? [?]??

What causes you to assess HYO as going places...in your view..??

Kind Regards,

Robbo :)


quote:Originally posted by Bobbyvee

Yes OneUp, good for a top-up.
By the way have you guys looked at HYO which is going gangbusters this week. I believe it is a company really going places.

djones
26-10-2006, 05:25 PM
quote:Originally posted by Bobbyvee

Yes OneUp, good for a top-up.
By the way have you guys looked at HYO which is going gangbusters this week. I believe it is a company really going places.


Shot up 37.5% on the 25th, 3 Down Today (14%). Quite alot of turnover as well. All due to quite a good quarterly report. Please start a thread on this stock with what you know of the company!

Bobbyvee
26-10-2006, 05:34 PM
Hi there Robbo.

I opened a thread on HYO some weeks ago and have been posting without gathering much attention from the likes of you , Tommy (until yesterday),AA etc. Have a look at the thread and we can then chat there some more.
I have been surprised you have not latched on to Hyro - it seems to me just the sort of company you would target.

Cheers

BobbyVee

mark100
27-10-2006, 01:41 AM
I was expecting the sponsoring broker of the IPO to initiate coverage of RFG but apparently that won't be happening. Seems like they aren't big fans of RFG and their management

tommy
27-10-2006, 02:39 AM
quote:Originally posted by mark100

I was expecting the sponsoring broker of the IPO to initiate coverage of RFG but apparently that won't be happening. Seems like they aren't big fans of RFG and their management


Hi Mark100,

mmm... is that unusual?

Wonder what the specific reasons are for not endorsing their IPO client, anything smelling fishy?

mark100
27-10-2006, 10:24 AM
Hi tommy,

For IPO's of RFG's size the sponsoring broker often follows up a few months later with some research.

I don't know the specific reason for them not wanting to provide research but it seems to have something to do with RFG's management.

cheers

robbo
27-10-2006, 11:15 AM
Hi Mark,:)

Very interesting hypothesis....:)--- ie: "it seems to be something to do with RFG management"----

Do you know Mark, who was the RFG-- IPO associated Broker?[?]

Is 'the something to do with mgt' YOUR hunch' [?]:)....or a little more....[?] (btw-- Mark, on reflection it would NOT at all, surprise me..and I was thinking along similar lines...)-- ' and my hypothesis for agreeing with you Mark, on the "it would not surpise me' will follow immediately..!!

I am interested to hear your thoughts first if you do not mind......but you are imo, probably, on the 'same mental mind map track' ----although maybe[?] we may end up infering diffeerentn concluions...?? ;)[?][?]

Regards,

Robbo:)

------------------------------------------------------------------



quote:Originally posted by mark100

Hi tommy,

For IPO's of RFG's size the sponsoring broker often follows up a few months later with some research.

I don't know the specific reason for them not wanting to provide research but it seems to have something to do with RFG's management.

cheers

tommy
27-10-2006, 03:19 PM
Hi mark100 and robbo,

IPO Organising Broker for RFG was WilsonHTM
(source: http://www.floattank.com.au/focus.php?page=928641)

I would also like to know what you mean by "seems to have something to do with RFG management"...

Are we talking about non-coverage due to:
1) Potential governance concerns at RFG;
2) Personal/political reasons;
3) Dislike of how management runs business; or
4) [ ] <= Please fill in correct answer mark100 mate!

This is really bugging me now, robbo what do you think about this?

mark100
27-10-2006, 04:40 PM
Hi guys,

I don't claim to know all the details but I think some of the concerns were:

1. A few corporate governance issues (which Float Tank pointed out ie sponsorship of a director's motor racing team etc)

2. Concern that management tend to go off on a tangent and don't take good advice when its given to them (all a matter of personal opinion)

3. Not a great historical record with Juice Fusion etc

4. Not the same quality operation as Dominoes. Dominoes own 30% of their stores. Apparently this means DMP's management have 'their finger on the pulse' in terms of knowing how stores should be performing etc.

Of course most of these issues are a matter of personal opinion. I like the RFG business and consider them to be cheap at current prices. However management may have to prove themselves before they are marked significantly higher by the market?

cheers

Bobbyvee
27-10-2006, 04:50 PM
Hi Mark,
Interesting indeed. Can only comment on point 4. I have close associations with someone who runs another large franchise group. They certainly tend to reduce rather than increase owned stores. They know very much how they should be run and support the franchisees in that.

Cheers

BobbyVee

mark100
27-10-2006, 04:59 PM
Hi Bobbyvee,

My initial thoughts were that not owning any stores is better. Less capital tied up, lower capex etc

And as the market has just seen, Dominoes aren't perfect either!

chers

Bobbyvee
27-10-2006, 05:08 PM
Agreed - and also less direct staff to worry about.

Further if you are running a franchise business why complicate it by owning stores youself - surely that's not what franchising is about.

Halebop
27-10-2006, 06:01 PM
At a strategic level they get far better insight from information systems than from owning a few dozen stores. The sort of pay a store manager might earn doesn't really buy scintillating industry insight and any other oversight such as areas managers or business analysts could review an independant store just as efficiently (or inefficiently) as a company owned one.

Franchise systems tend to keep the best stores when they opt for ownership which can actually skew decision making because their economics can be very different from average. A no capital down , no store owned approach is optimal from a return on equity and ability to fund expansion stance. While absolute profits suffer by sharing them with independant owner/operators, the pie is baked much bigger and quicker than otherwise possible. Let them buy stores when they run out of other expansion opportunities.

robbo
27-10-2006, 06:24 PM
Retail Food Grp.

Hi guy,

Here's my take....

Basically RFG mgt-- ....are a combination of:

'retail is detailers' -- ie: folk who have successfully extracted Value-- and have built these sort of business operations from ground up--AND Lawyers and Accountants--who specialize -- not in Donuts or Coffees-- or Pizzas .....or in Coca Cola-- but in what--[?][?]

The clue is in their tag line to their name-- they are experts in developing and extracting max value-- in... "franchise systems"....

That is thier core Competitive Advantage.

All else is peripheral. Got it...?? [?]

All else is extranaeous.... ie: Not all that relevant.

Again-- Do please .... read the Reports, read read read....and read the information in its context and ....'holistically' -- guys--.....:):);)

.... .... You guys ought to know me..... by now.....-- I am not just saying this..... 'to ramp'-- I am saying this..... coz sometimes ....you guys ...... seem to .... miss the 'wood from the trees'....

Now I have..... a few jaundiced theories for the reason for this.... ;)[8D];)....

... Either: --

(1) You sit there; watching ....'the bloody ticker'--- all day--which if you do .....I recommend..... you do what my good girl-friend[8D]; English cover-girl model ....Kate Moss does.... ;)-- and instead be more productive.... and snort cocaine all day instead ....

-- As imo, it is far less addictive; and less stupid...than watching the silly ticker....

(2) When you do bother to 'read'-- the various Reports in detail -- you SKIM-- and you read too 'historically'-- and/or ....'out of context'--- and/or ....not within the totality of the situation...or in the parallel context of the preceding Reports and the other available data ..... 'as a package'.... [?][?][?]

(3) So, from point (2) ... understand what the opinion of Brokers is worth..??[?]

Here is my estimation of their overall worth to us Investors:

The fungal mushroom..... that I just pis%$#Sed on .... and then squashed with my Gum-boots -- is worth a whole lot more-- than any brokers opinion or Report or self-agenda selfish non private client interest driven superficial air head opinion.... of a silly air head Broker....

I mean look waht the Merrill Lynch guys were doing to their Clients in the States the other month---!! --yuk-- [}:)][}:)]

(4) So from points (2) and (3) ,.....what do Brokers really want...??

..... In a few words, imo.... .....

Preference and Informational Advantage....

And the ability, imo, to a lesser or greater degree, be allowed .....to be put into some form of:.... 'market cornering', 'market maker' position.... in a stock-- to churn for Broker fees.... Why??

Coz that is how they (Brokers) make a living !!...

Then they 'cover the stock'-- and subtly ramp the crap out of it--

(5) Conclusion.

RFG --- imo--- have probably-- is my assesment; not ....'played the game'-- ie: the typical --- 'micro cap stock brokers game'....etc etc etc... and instead have been very Guilty..

errrr, Robbo, RFG Guilty...??--Guilty of what Cardinal Sin...[:0]?[?]

..... Guilty of .... 'Being Boring'.

Guilty of not wasting money on Consultant fees.

Guilty of not wasting money on Brokers Fees.

And Mgt Fees....

And Guilty ....of only playimg.... strictly ....by the rules, and doing the minimal amount outside .....of actually Running the business for a profit.....;)

... That simple....:)

And being shop-kepers, accountants and lawyers-- they are interested in 2 Main issues.

(1) Running a meticulously tight ship.

(2) Being judicious legally in only saying what needs to be said.
(3) Running a tight Franhisee System business Operation.

[b][i]>>> ... A Disciplined

winner69
27-10-2006, 08:29 PM
Those pink racecars look really cool man
http://www.gtpracing.com.au/racingGallery/round_Gallery.aspx?Circuit=easternCreek&Round=3

Keeping these running along with naming rights of a whole series must use up a fair chunk of the marketing money

But then Donut King has 98% recall or something according to the justification for this 'innovative marketing spend'

And that man Alford and his mates get around a bit .... 24 hour races in Europe .... Dubai ..... good if you can get it .... maybe global expansion on the cards .... but then Donuts weren't sponsoring those sort of trips

Corporate Governance perfectly OK in this respect .... interest in Alfords hobby disclosed .... except for the amount

OneUp
27-10-2006, 09:38 PM
quote:Originally posted by davidrob
(1) You sit there; watching ....'the bloody ticker'--- all day--which if you do .....I recommend..... you do what my good girl-friend[8D]; English cover-girl model ....Kate Moss does.... ;)-- and instead be more productive.... and snort cocaine all day instead ....

-- As imo, it is far less addictive; and less stupid...than watching the silly ticker....

(3) So, from point (2) ... understand what the opinion of Brokers is worth..??[?]

Here is my estimation of their overall worth to us Investors:

The fungal mushroom..... that I just pis%$#Sed on .... and then squashed with my Gum-boots -- is worth a whole lot more-- than any brokers opinion or Report or self-agenda selfish non private client interest driven superficial air head opinion.... of a silly air head Broker....


Robbo, the Kate Moss bit cracked me up :D.

Great post, and have a great weekend.

robbo
27-10-2006, 10:42 PM
RFG

Yeah you too One UP...

Was feeling a bit creative--- and that 'metaphor' re the bodilly response .....towards.... the poor 'ol-- fungal mushroom -- and then squashing it "with my gumboots"-- just hit me when I was reading .....some old Footrot Flats Cartoon books ..... which I absolutely adore... actually !!:D

Have-a-good-weekend to One Up ...

Robbo:)

mark100
28-10-2006, 12:33 PM
Robbo,

Considering Wilsons earned around $1.4m in underwriting fees from RFG I would have thought that they had lined the pocket of the broker quite well. That is why I thought it interesting that they had subsequently decided not to provide research on RFG.

Also as I said in my post, the issues which I raised are mostly a matter of personal opinion by the analyst. However I do find it strange that you regard the opinion of an analyst as lower than a fungal mushroom that you've p!ssed on but on the ISS thread you have been claiming that analyst presentations will help get the price moving.

And for the record I like the RFG business model provided they can keep it simple and not get carried away with dud acquisitions etc

robbo
29-10-2006, 01:42 AM
RFG....

Mark, just being colorful & metaphoric....[:o)];)

....and yes--....brokers.... 'can get the price moving'-- if othere stars are in alignment-- which does not change my view ....of their opinions/shallow and usually completely unoriginal and uninspiring analysis-- as the two subjects....

(1) Their analysis being judged on basis of: (a) insightfulness-- and (b) objectivity and (c) in interests of Investors.. and

(2) The igniting of the share price--

....are hetrogeneous and not homogeneous....issues... imo...

But Mark,

....Being a 'contrarian' and 'primary documents only sorta independent wally'-- who likes picking mushrooms-- and distrusts Brokers.... with a fervent intensity--...

Means, I am admitedly 'one eyed, biassed. and prejudiced....[}:)];)

Hey Mark, --->>>>--- ever read the recent story about Enron which had a very good wrap from none other than Mr W. Buffett, called:

"The Smartest Guys in the Room'-- ??[?][?]?? ...

... Great read -- this one-- 'The Smartest Guys In The Room'!!

Now here.....imo, is a Classic Case Study.... on Wall Street Brokers and Analysts-- from Citigroup to Merrils to Morgans etc etc... and again with World-Com.... -- and the list goes on, even with Martha Stewarts Company etc etc... that all rams home the point-I am maing, and why I distrust em with a fervent intensity...

Why Robbo...?? Answer: Coz their track record stinks....

- Wall Street and Capitalist history demonstrate-- repeatedly and refularly-- that Brokers are driven often by Greed and Fees....--


Greed and Fees, Fees and Greed... and not the Investor.

And also become all to easilly a part of the mindless 'herd on the hill"---- --driven by Consensus-- and rarely have clear independent 'Private Client driven' Insight -- and ethics-- that makes the Private investor wealthy and Rich....

Instead they (brokers)-- are all about--- churn and trade,--- churn and trade, ---churn and trade....---which I find a very rational thing to do-- if you like losing money....

So consequently Mark, I never read Newsletters, Brokers Reports, so called Analysts Reports or anything else of that nature. ..... Never ever ever.

And guess what...?

By just being resolutely independent, errr and.... hopefully sometimes .....clear minded-- [:o)][:I] and very boring....[:I]--

I turned a very small $10K only 5.5 years ago-- into enough to Retire on ....and not have to work and live 'okay'...[:I][:I]-- at 39-40 years of age.....

And actually Mark; I admit--- I did get stung...not once.... but twice... [}:)][}:)][:0]

I had turned..... the super modest $10K into $20 k on my own... and then was silly and listened to ....--- two (2) seperate brokers (from 2 seperate Firms)-- so called-- 'professional advice'-- actually 2 brokers... and guess what Mark, [?][?]-- was soon back down.... to only ....$13 K... [B)][B)]

So I soon started to not answer their phone calls or listen to their ideas or recommendations... thank goodness...:):)

And now guess what. ..?

errrr....

...........Well let's just say.... that fortunately.... I am now past the $20K post.... errr.... again.... [:I];)

... So Mark... you are probably right...

I AM biassed due to my bad experiences....

But I must also say-- that I have compared my own situation with others ....who started out with a lot more money than me-- a lot more money !!-- -- try $100 and $200K plus-- professional types-- lawyers, accountants, doctors etc, etc...and guess what[?]-[?]- they are not now....that far ahead....and some of them ....are BEHIND !! -- from whence they started...[:0]:)

And for my silly old self... since I started using my own Pub Dart Board-- I reckon .... personally anyway-- that....I am better off without Brokers....

.... Mark, one last Final thought...

I have three other people-- one here in Brisbane, and t

winner69
30-10-2006, 12:10 PM
No real buyers today?

robbo
30-10-2006, 12:27 PM
Retail Food Group (RFG)

Hi winner69... ... :)

And the significance ....(I was wondering)-- of that insight and observation ....in your last post being...??[?]??...

Kindest Regards,

Robbo:)

tommy
02-11-2006, 05:52 PM
Does this mean Donut King is being introduced to China????????

http://biz.yahoo.com/prnews/061102/hkth001.html?.v=52


China's Largest International Franchising Exhibition Opens Today
Thursday November 2, 12:05 am ET
Century 21, Papa John's and SUBWAY Among Exhibitors

HONG KONG, Nov. 2 /Xinhua-PRNewswire-FirstCall/ -- China's largest franchising exhibition opens today and will run through Nov. 3 at the China World Trade Center in Beijing. The Ninth Annual Franchising China Conference & Exhibition will feature over 300 booths and 120 exhibitors including Cartridge World, Century 21, Kenny Rogers Roasters, King Koil, Linguaphone, Office 1, Papa John's Pizza and SUBWAY.

(Logo: http://www.newscom.com/cgi-bin/prnh/20030303/LNM011LOGO-b )
The event will also be held at:

-- Garden Hotel, Guangzhou from Nov. 6 through 7, 2006
-- Shanghai Mart, Shanghai from Nov. 9 through 10, 2006

Franchising China is hosted by eMedia Asia, a joint venture between Global Sources (Nasdaq: GSOL - News) and CMP Media.

eMedia Asia president, Mark A. Saunderson, said: "With the Beijing Olympics in 2008 and the Shanghai World Expo in 2010, global franchise companies see great opportunity to establish their brands in China's business hot spots. Beijing expects the Olympics to attract over 4 million overseas visitors and 150 million local visitors. The Beijing Municipal Bureau of Tourism forecasts retail spending of more than US$19 billion in 2008.

"Franchising China, China's largest, most-established international franchising show, will help both local and international investors profit from the huge and growing China market.

"More than half of this year's participants are new exhibitors. They include franchise brands from the US, the UK, Australia, Canada, China, South Korea, Malaysia, Philippines, Singapore and Thailand."

International Franchising Association (IFA) Chairman and President to Deliver Keynote Addresses

IFA Chairman, Lawrence J. Cohen and IFA President, Matthew R. Shay, will co-present the keynote addresses in Beijing, Guangzhou and Shanghai.

Cohen and Shay will discuss the latest developments, trends and challenges in the international franchise industry, as well as franchising opportunities in China.

IFA is the world's oldest and largest trade association representing the franchising sector. Its membership includes more than 1,000 franchisors, 8,000 franchisees and 400 suppliers worldwide.

Franchising China hosts first-ever summits

Held on the second day at each location, the summits aim to help entrepreneurs understand how to efficiently and profitably operate a franchise in China.

Sessions will be hosted by franchising experts on these topics:

-- Franchising Industry in China -- Where it is Today and the Major
Disputes Between Franchisors and Franchisees
-- Finding a Qualified Franchise Partner
-- Essential Elements of a Practical and Fair Franchise Contract
-- Obligations of Franchisors and Franchisees to Achieve a Successful
Franchise Partnership

Admission to the summits is free and open to all qualified visitors.

Linguaphone, Papa John's and SUBWAY to Host Franchising Opportunity Seminars

Visiting entrepreneurs can attend free Franchising Opportunity Seminars to find out more about specific products and franchisors.

Exhibitors hosting seminars include Beijing Origus, Fornet, Kwik Kerb, Linguaphone, Papa John's, SUBWAY and TAYOHYA.

Austrade Joins International Associations at the Event

For the first time, the Australian Trade Commission will participate in Franchising China. Austrade's presence is strengthened by popular Australian franchise brands, including Cartridge World, bb's cafe, Donut King and Gloria Jean's Coffees.

Other associations participating this year are Singapore's Franchising and Licensing Association and Thailand's Department of Export Promotion.

Saunderson said: "The 2005 exhibition attracted 24,000 prospective investors, up 18 percent over the previous year. We

Bobbyvee
02-11-2006, 06:42 PM
My guess is that AusTrade drummed up interest from various Australian franchise groups and RFG decided to give it a go, to see if there is any real potential. My guess is that any move into China would be a way off.

BobbyVee

OneUp
02-11-2006, 06:54 PM
Very sharp Tommy, thanks for the link.

Some Western franchises have done extremely well, others haven't.

Pizza Hut, McDonalds and KFC are raging successes. Chinese can't get enough.

Subway is a dud in China. Why? They charge Western prices to people who make 1/5 the income. Plus sandwhiches don't seem very popular.

So it's good to see RFG test the water in China but they really will have to do their homework before going in. Pizza Hut totally revamped its strategy in China (i.e. unlike in Aus and USA where Pizza Hut is run of the mill cheap eats, they positioned the brand as the best restaurant in town. Helps that no one else in China can make edible pizza). McDonalds has a chicken-centric menu; only the Big Mac, McChicken and Chicken nuggets were common to the Chinese McD and NZ McD. KFC was quite similar.

I didn't come across any donut stores in China. So I'm not sure whether they'd succeed, or whether Chinese people have a liking for donuts. They already have lots of other sugary breads and sweets, if you go into any good Chinese bakery. (Though I'm personally much more of a donut fan).

As many western companies have found to their loss, China is not el dorado!

Kell
29-11-2006, 04:42 PM
RFG AGM looked very promising!! Although, it has mostly been said before. Did anyone notice anything new in there?

tommy
29-11-2006, 05:06 PM
Here is da link for 2006 AGM Presentations & Slides:

http://stocknessmonster.com/news-item?S=RFG&E=ASX&N=183274

Yeah man, absolutely brilliant presentation, I'm excited! This has been my single largest holding for months but now I want to top up even more... someone sell me more below 90c!!!!!

tommy
29-11-2006, 05:17 PM
Here is the snippet of the presentation:

Nework sales growth forecast for FY2007 is 9.5%
* 3.4% for bb's cafe
* 10.6% for Donut King
Retail Food Group confident of achieving FY2007 network sales growth of $156 million:
* 2.27% for bb's cafe for period ended October 2006
* 6.68% for DK for period ended October 2006

Average Weekly Sales FY2007 Forecast Increases
Donut King Full Concept: 3.9%
Donut King Express Concept: 4.1 %
bb's cafe Concept: 3.5%

YTD October 2006 indicates:
a 1.57% increase in AWS for Donut King (0.91 % on this period LY)
a 5.63% increase in AWS for bb's cafe (6.63% on this period LY)
The 6 month YTD September 2006 average weekly sales growth for bb's cafe New Zealand was 10.9% against a 12 month forecast increase of 4%

Average Transaction Value
* Continues to trend positively for October 2006 YTD:
* a 6.03% increase in Donut King average transaction value (4.65% on this period LY)
* a 5.84% increase in bb's cafe average transaction value (4.86% on this period LY)

2006-07 Outlet Growth
As at 31 December 2006
Expect to have achieved the bulk of the full year forecast net outlet growth
Expect to have achieved 24 new outlet commissionings, only 1 less than the full year forecast

Growth Strategies

Yatala Premises:
Retail Food Group recently announced it would establish
* a Coffee Roasting Facility (CRF)
* a Central Manufacturing Facility (CMF)
* CRF and CMF to be established at a premises purchased
at Yatala, in the Gold Coast-Brisbane corridor.
* The purchase price is $2.3 million, fully funded by debt, with an extensive refurbishment and fitout of the premises to cost approximately $1.5 million.
* Upon completion of the refurbishment program, scheduled for January 2007, premises is be sold and leased back on commercial terms

The Central Roasting Facility (CRF)
* A joint venture with Koffee-Tek Pty Ltd which will blend and roast coffee for the Donut King and bb's cafe systems, existing Koffee-Tek customers and prospective third-party bulk roasting clients
* The joint venture offers less risk, greater potential for future income and an ongoing program of enhanced quality coffee taste profile for Donut King and bb's cafe outlets
* Koffee-Tek will meet all capital costs in establishing the facility.

Central Manufacture of Product:
* Builds upon the successful pilot program which has now been supplying fresh products daily to outlets in south-east Queensland for the past 18 months.
* Central manufacture and distribution of food and beverages products, which are subject to the Company's proprietary blends and recipes, also ensures uniformity, quality, and consistency throughout all Australian outlets.

CRF & CMF - Additional Revenues & Earnings
* Management is of the opinion that the CMF and CRF, when fully operational, will provide attractive additional revenues and contribution to earnings together with opportunities for third party supply.
* Financial impact of these initiatives to be determined
* Franchisee responsive because it will allow a substantial increase in multi outlet ownership aspirations, enhanced lifestyle changes and importantly a redoubling by our franchisees on retailing and local store marketing

[b] Acquisition, Multi-Outlet Ownership & International Expansion
* RFG continues to investigate acquisitions to grow revenue, earnings and purchasing power. These investigations and negotiations are confidential.
* RFG continues to develop initiatives which assist and encourage franchisees to become multi-outlet owners. The CMF will assist in growing the number of multi-store owners.
* Retail Food Group is actively investigating licensing opportunities in Asia and India which will allow for international expansion.

The Year Ahead
Store rollout plans on track for FY2007
Continue to sustain and drive growth in average weekly sales via marketing initiatives and quality new site selection
Growing average weekly sales, average transaction value and new outlets will again be the fundame

ohmyme
29-11-2006, 06:49 PM
I thought it was excellent as well, I cant believe though that with all the good news etc they didnt up their profit forecasts. If I was a betting man I would say they are going to smash those forecasts.

Still holding, and like Tommy if I had some spare cash I would probably take out those cheap shares at 99c and $1.00.

cheers.

tommy
30-11-2006, 02:24 PM
http://www.gcbulletin.com.au/article/2006/11/30/2097_business.html

Asia the next stop for RFG

30Nov06


RETAIL Food Group has cast its net over Asia as it vets joint venture partners to help it expand its Donut King and bb's cafe businesses.

Managing director Tony Alford, after addressing the company's first annual general meeting as a listed entity, yesterday said Retail Food Group was in 'robust' discussions with two parties looking to establish the brands in Asia, including India.

Mr Alford stressed that discussions were at an early stage, adding that the company remained on the lookout for acquisitions.

Shareholders in Retail Food Group, which listed in June, yesterday were given an upbeat outlook after a year in which the company either met or exceeded its performance targets.

"The strength of the company's unique business model and strong management was demonstrated with the announcement of annual results which exceeded forecasts," said chairman John Cowley.

"This trend of meeting forecasts has continued into the 2006-07 financial year."

Retail Food Group posted a net profit of $5.9 million in 2005-06, up 73 per cent on the previous year.

Talk of a downturn in consumer sentiment had not swayed it from forecast sales growth of 9.5 per cent this financial year to $156.7 million.

"Retail Food Group is in an enviable position in that it has a broad revenue base, including product supplier revenue fees, franchise service fees and earnings derived from new outlet growth," said Mr Cowley.

"As a result, it is able to offset softness in any one revenue stream by outperforming in others."

As for the rollout of new stores, Mr Alford said the company was expected to commission 24 of the full-year target of 25 stores by the end of December.

As a result, the company was planning to open an extra 10 new stores in 2007.

"The number of new store openings achieved in the first half of this financial year is the most significant in the history of the company," said Mr Alford.

Mr Cowley said Retail Food Group was on target to pay its forecast dividend of 6.25c a share this financial year.

younga
30-11-2006, 03:20 PM
That seems a nice dividend yield for a growth stock. It would be exciting if it went into china or india - or indeed any other country.

ohmyme
30-11-2006, 03:37 PM
And there she goes. This is another gem identified by Robbo. Next stop $1.50.

cheers

tommy
30-11-2006, 03:41 PM
Sell side disappearing, RFG finally seems to be ready for some action[:p]

Still grossly undervalued though at PE of 10[:0]

tommy
30-11-2006, 05:49 PM
hehehe, more media coverage;) I'm sure the announcement of dividends (6.25c per share) will make heaps of investors interested too!

http://www.qbr.com.au/index.cfm?storyid=29423&cp=displaystory


Retail Food Group bolsters full-year sales + profit forecasts
Thursday 30 November 2006

Retail food brand franchisor Retail Food Group has upgraded its full-year new store opening target after confirming that it expects to almost achieve its original full-year forecast in the first six months of this financial year.

The company has originally forecast that it would open 25 new Donut King and bb’s café outlets this financial year, but confirmed at this week’s AGM that it now plans to open 35 new outlets. Retail Food Group expects to have 284 Donut King and 69 bb’s café outlets at June 30, 2007.

CEO Tony Alford says the new store openings achieved in the first half of this financial year had been the most significant in the company’s history.

"The continued proliferation of franchised outlets is a result of the company’s long-standing policy to manage outlet growth in a consistent, sustainable and conservative manner," he says.

"Donut King outlet growth is expected across all states this financial year, with the majority in Queensland and New South Wales where the company has historically experienced strong and consistent growth in outlet numbers.

"At the same time, the rationalisation and repositioning program for bb’s café was substantially completed during the last financial year, with the company now looking forward to a conservative and sustainable growth phase."

Alford adds that the company is confident of achieving all its forecasts this financial year, in particular network sales growth to increase by 9.5% to $156.7 million and an EBIT result of $11.75 million.

The company’s FY2007 financial forecast did not factor in the benefits of the additional 10 outlets expected to be commissioned during the financial year as well as the potential upside to be delivered from the commissioning this financial year of the central manufacturing facility and coffee roasting joint venture as well as the undertaking of its other growth strategies.

"Based on the network sales growth achieved in the first quarter of this financial year, we are confident of achieving this forecast. In the September quarter, network sales increased 2.03% for bb’s café and 6.6% for Donut King.

"We are also pleased to report that the average weekly sales and average transaction value continue to trend positively for both systems," he says.

senor guacamole
30-11-2006, 05:57 PM
wahh? is that a real or anticipated dividend announcement, tommy?

tommy
30-11-2006, 06:06 PM
quote:Originally posted by senor guacamole

wahh? is that a real or anticipated dividend announcement, tommy?


Source:
http://www.gcbulletin.com.au/article/2006/11/30/2097_business.html

"Mr Cowley said Retail Food Group was on target to pay its forecast dividend of 6.25c a share this financial year."

Bloody good dividend if you ask me, but not sure if it is fully franked. I never buy a stock for the sake of dividends, but an added bonus doesn't hurt either:)

Halebop
30-11-2006, 06:25 PM
Fully franked and was forecast in the prospectus.

tommy
30-11-2006, 07:14 PM
quote:Originally posted by Halebop

Fully franked and was forecast in the prospectus.


Thanx halebop for da clarification!

Finally RFG is trading above the float price ($1) after a good five months... glad I bought heaps at the low 80c, I don't think we'll ever see the stock that cheap again[:I]

Considering that even PFL (Patties Food) floated at a premium, the lack of interest in RFG over the past few months has been astonishing. .. perhaps sugar-laden donuts aren't sweet and sexy enough these days for many health-conscious, obesity-battling investors (oops, politically-correct term may be "weight-challenged investors") who prefer blaming fast food for their poor lifestyle choices[}:)]

It would be very interesting to see how they expand into Asia, as there are many valuable lessons to be learnt from the likes of Mister Donut which operates very successully in Japan and other Asian countries (Mister Donut is now owned by Dunkin Donuts but retains its brand still in Asia). The key to success for food businesses in Asia is adapting to local tastes without sticking to the original menu offerings. Mister Donut even offers yum-cha in Japan!

OneUp
30-11-2006, 09:11 PM
Hi Tommy, great example of success in Asia with Mr Donut, and also how they've had to adapt their menu to local tastes. Had never heard of that outfit before.

Chinese cakes and bread are terrible. No donuts at all. Market opportunity? Hard to tell!

On milkshakes, which RFG sells, there are a number of low quality milk or powdered milk drinks. Iced Coffee (at McDonalds) is very popular...but obviously a foreign concept. I bought an iced coffee from one McDonalds, where instead of keeping the coffee cold (and cream on top) they made the coffee piping hot and the cream melted and got all mixed in together [xx(]. They assured me this was how an iced coffee was meant to be made!

The problem for RFG making milkshakes would be where to get the milk from; in China they generally use powdered milk. If RFG outlets provided real milk in their milkshakes, could be a big hit.

Errrr, anyway, back to the figures.

I noticed that average weekly sales (AWS) are lagging forecasts. This has been made up for by a substantial increase in the number of outlets.

Not sure how they calculated AWS...did it include or exclude all these new stores?

Also concerned at talk of "offsetting" weaker consumer spending on doughnuts with increased franchise establishment fees revenue which implies no increase in forecast NPAT is warranted.

tommy
30-11-2006, 09:56 PM
Hi Oneup,

In regards to Mister Donut, well I lived in many countries so know more about local businesses in Asia than the average aussie investor:)

RFG would be stupid not to take a leaf or two out of Mister Donut's successful business model in Asia (actually I need to correct the above post because I think Dunkin Donuts no longer has a stake in Mister Donut's Asian operations, I think it is now operated by Japanese cleaning products/services company Duskin in Japan and joint ventures in other countries if my memory is correct.)

For example check out their menu:
http://www.misterdonut.jp/menu/index.html
http://www.misterdonut.ph/op-otherdelights.htm
http://www.misterdonut.com.tw/..%5Cproduct%5Cindex.htm

More info:
http://www.answers.com/topic/mister-donut
http://www.misterdonut.ph/misterdonutphilippines.htm
http://www.misterdonut.com.tw/

If Donut King is to expand into developing countries like China, India and Indonesia, then supply of food ingredients may be the key as you highlighted... but that can't be too difficult considering that they seem to be very good at supply chain management. I would be more worried about their menu content and pricing, and their target demographics (marketing and branding strategy).

Ensuring consistent, good quality supply would probably be more difficult in countries like South Korea and Japan where customers are super-critical of inconsistent product/service quality, not to mention the high costs that cannot be passed on to consumers in the form of high price necessarily due to cut throat competition!

I will also look into the average weekly sales figures, BTW what was the forecast?? I'm having trouble finding it...

OneUp
30-11-2006, 10:28 PM
Hi Tommy, I didn't mean to suggest that raw ingredients sourcing is the key. However it is likely a much bigger issue than in Australia/NZ. I recall McDonalds was forced to set up its own beef farms in India or somewhere, just to make sure it could sell safe beef and to international standards.

I would imagine pricing and creating demand as you say will be of paramount importance.

tommy
04-12-2006, 04:07 PM
http://www.qbr.com.au/index.cfm?storyid=29464&cp=displaystory

Retail Food Group unveils new bb’s café model to spur growth
Monday 04 December 2006


Retail brand manager Retail Food Group has unveiled a new business model for its bb’s café network aimed at expanding its revenue base, attracting new customers and growing the brand’s network within the competitive café industry.

The new business model, called bb’s café PLUS, will feature a contemporary design, licensed premises, extended menu and larger seating areas.

Managing director Tony Alford says the new model was developed following a comprehensive review of the Australian industry and the existing coffee franchise.

"The market for speciality coffee within the Australian café scene has grown rapidly in the past few years as companies begin to tap into the evolving European tastes of Australian consumers," he says.

"Competition is fierce, so it’s important for us to continually develop new ways to evolve with our existing customers while at the same time diversifying our markets.

"The bb’s café PLUS model has been designed to attract a broader customer base, including the 25 to 35-year old market – a demographic with a high disposable income."

Alford says the new model features a two-pronged service strategy, offering customers the comforts of the traditional bb’s café coupled with a licensed restaurant.

"Apart from giving stores a more dynamic and eye-catching look, the new design will also cater to customers wanting to sit down and enjoy a nice meal and a glass of wine," he says.

"As a result, the bb’s café PLUS stores will feature a large outdoor seating area, and an enhanced menu, without losing the relaxed atmosphere of its traditional coffee shop ambience.

"Under the new model, bb’s café outlets will bring to the market a stream of new and improved value-added products and services that will ultimately enable our franchisees to achieve higher profits."

The new model is under trial at Brisbane’s South Bank and South Australia at Mile End. If successful, it will be included as a new store option for sale in all states.

The café is one of Australia’s leading café franchises, with 42 outlets in Australia and 25 outlets in New Zealand.

tommy
11-12-2006, 04:56 PM
RFG now sailing along smoothly since latest announcement, those who bought in at the float should feel more secure by now:

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Arfg&draw.x=0&draw.y=0

Still undervalued at PE of 12, market cap of 81 million is too low for a high growth company with generous forecast dividends. Need to hit the 100 million mark to gain further momentum... shame there are no analyst reports to attract a bit of interest in this still-largely-ignored company.

mark100
11-12-2006, 06:18 PM
Hi Tommy,

A week or so ago Wilsons changed their tune on RFG and came out with a buy recommendation and a $1.20 price target. Too low if you ask me but its a start anyway. Before that they were quite negative in their analysis of RFG.

cheers

tommy
11-12-2006, 06:33 PM
quote:Originally posted by mark100

Hi Tommy,

A week or so ago Wilsons changed their tune on RFG and came out with a buy recommendation and a $1.20 price target. Too low if you ask me but its a start anyway. Before that they were quite negative in their analysis of RFG.

cheers


Thanks Mark100 for that info mate, didn't know that at all... but $1.20 target?? Gotta be joking, RFG deserves a much higher share price than that IMHO. I'd be surprised if it didn't hit $2 in the next 12 months.

senor guacamole
11-12-2006, 08:40 PM
why oh why is there no tread on Hot copper for RFG?.(not that it would compare to the rigorous analysis found here) do they have some kind of cool your heels period for new issues? HC scared of pauline hansen?

tommy
13-12-2006, 02:56 PM
Did anyone else notice that someone traded over $1 million worth of RFG shares today at $1.25 this morning?

Chart still looks good:
http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Arfg&draw.x=0&draw.y=0

mark100
13-12-2006, 03:11 PM
Just looking through my commsec research and it appears Austock has also recently initiated coverage of RFG with a buy recommendation

tommy
13-12-2006, 03:21 PM
Well spotted mark100, I never look at that function on commsec but certainly does say "strong buy" recommendation by Wilson HTM and Austock!

tommy
18-12-2006, 11:37 AM
Acquisition! Get ready for the upcoming re-rating, this will be a good Xmas present[:p]

18 December 2006
Retail Food Group announces plan to purchase Brumby's Bakeries Holdings Ltd

Consistent with the objective stated in its May 2006 Prospectus, Australian retail food brand franchisor Retail Food Group Ltd (RFG), which listed on the ASX in June, today unveiled its plan to acquire Brumby's Bakeries Holdings Ltd (BBH), adding the 316 bakery franchise system to its existing Donut King and bb's cafe networks.

The acquisition is proposed to be undertaken by a Scheme of Arrangement and would be funded by debt and existing cash reserves. If the Scheme is successful BBH shareholders and option holders will receive consideration of $36 million and a $2 million additional payment of a gross fully-franked dividend.

RFG is offering BBH shareholders $2.685 in cash for each BBH share, and a fully-franked dividend of $0.10883 for each BBH share (or 15.5 cents per share gross of imputation credit). RFG is also offering BBH's option holders a cash amount equal to the difference between $2.685 and the exercise price for each BBH Option.

Based on an enterprise value of $36 million, RFG's preliminary assessment is that the acquisition would represent an EBIT multiple of approximately 8.4 times BBH's FY2007 earnings before taking into account synergies between RFG and BBH. RFG anticipates synergies of at least $1 million per annum from the acquisition.


RFG anticipates the BBH acquisition to be earnings per share (EPS) accretive within the range of 15% to 30% in FY2008.

As disclosed in the company's prospectus, RFG is forecasting 2007 NPAT of $7.4 million (EPS 10.3 cents) and a fully franked dividend of 6.25 cents and is confident of meeting those targets.

Brumby's Bakeries Ltd is currently listed on the Bendigo Stock Exchange, with approximately 280 shareholders.

RFG and BBH have executed a Merger Implementation Agreement - the material terms and conditions are detailed in the attached schedule. The completion of the Scheme is subject to a number of standard commercial and procedural matters including;
satisfactory due diligence inquiries, and shareholder and Court approval.

The purchase would not affect the day-to-day operations of the 316 Brumby's Bakery outlets stores across Australia and New Zealand, which are owned and operated by single-unit franchisees.

RFG Chairman John Cowley said the Board was thrilled about the proposed acquisition as it was in line with the company's growth strategy.

"This is a strategic acquisition which will allow RFG to apply its proven expertise in managing franchise systems to another high-profile Australian brand."

RFG CEO Tony Alford said the potential acquisition was part of the company strategy of using its proven management, training and support systems to consolidate a number of franchise systems.

"Brumby's Bakeries is an excellent complementary acquisition which would result in excess of 690 franchised outlets under RFG's stewardship and one which would fit both strategically and synergistically with those franchise systems we already manage," he said.

"The Brumby's franchise system has significant scale and is a well developed and successful system which has delivered consistent earnings to its shareholders. The Brumby's franchise system is underpinned by a resilient staple food product offering, and is of a sufficient scale and maturity that it will be a positive earnings contributor to Retail Food Group."

Brumby's Chairman Terry O'Dwyer said that the majority of the Brumby's Board would recommend Retail Food Group's offer to shareholders. The offer reflects the value of Brumby's strong brand name and its exceptional growth opportunities both in Australia and New Zealand as well as new overseas markets.

"I am confident Retail Food Group will be an excellent fit with Brumby's franchisees and suppliers given its extensive and successful experience with franchised food operations through its brands Donut King and bb's cafe in Aus

tommy
18-12-2006, 01:54 PM
Up 11%[8D] 100 million market cap, here we come!!!!

P.S. Robbo mate haven't heard from you for a while, I owe you a big fat donut and a capuccino mate on this one[:I]

tommy
18-12-2006, 05:56 PM
http://www.qbr.com.au/index.cfm?storyid=29656&cp=displaystory

Retail Food Group eats up Brumby’s Bakeries in $36m takeover
Monday 18 December 2006


ASX-listed Retail Food Group has today unveiled plans to acquire the Newcastle Stock Exchange-quoted Brumby’s Bakeries Holdings for $38 million in cash and dividends.

The acquisition, which will add 316 bakery franchises to its existing Donut King and bb’s café networks, will be undertaken by a scheme of arrangement funded by debt and cash reserves.

If accepted, Brumby’s 280-odd shareholders and option holders will receive consideration of $36 million and a $2 million additional payment of a gross fully franked dividend.

RFG is offering BBH shareholders $2.685 in cash for each share and a fully franked dividend of $0.10883 for each share (or 15.5 cents per share gross of imputation credits). Option holders are being offered a cash amount equivalent to the difference between $2.685 and the exercise price for BBH options.

Based on an enterprise value of $36 million, RFG’s preliminary assessment is that the deal will represent an EBIT multiple of 8.4 times BBH’s financial year 2007 earnings before taking account of synergies, which are anticipated at around $1 million a year.

The Gold Coast-based RFG expects the acquisition to be earnings per share accretive within the range of 15 to 30% in FY 2008.

As disclosed in its prospectus lodged prior to its listing in June, RFG forecasts 2007 NPAT of $7.4 million and a fully franked dividend of 6.25 cents.

Brisbane-based Brumby’s reported a 21% increase in net profit to $2.08 million in the 2005/06 financial year.

Subject to due diligence and shareholder and court approval, the purchase is not expected to affect the day-to-day operations of Brumby’s 316 outlets in Australia and New Zealand, which are owned and operated by single-unit franchisees.

RFG chairman John Cowley says the takeover is in line with the company’s growth strategy and will allow it to apply its proven expertise in managing franchise systems to another high-profile Australian brand.

CEO Tony Alford adds: "Brumby’s Bakeries is an excellent complimentary acquisition which would result in in excess of 690 franchised outlets under RFG’s stewardship and one which would fit both strategically and synergistically with those franchise systems we already manage."

The deal, he says, will benefit all franchisees by allowing for cross-pollination of products, collaborative marketing initiatives, co-branding, supply economies and leveraging of RFG’s franchise management systems and growing national presence to take advantage of the significantly increased scale.

"Over time we are motivated to introduce significant enhancements to the Brumby’s system and its franchisees by the introduction and supplementation to the operation of the Brumby’s systems our well-proven administrative, servicing and marketing systems and to ultimately conduct the operation of the systems as we do for our Donut King and bb’s safe brands."

Brumby’s chairman Terry O’Dwyer says the majority of the board will recommend RFG’s takeover to shareholders. The deal is expected to be completed in the last quarter of the 2007 financial year.

tommy
18-12-2006, 06:46 PM
For those interested in the latest acquisition, here is Brumby's annual report:

http://www.brumbys.com.au/corporate/reports/Brumbys_AR_2006_hires.pdf

Interestingly Brumbys had the plan to enter the Middle Eastern market in 2006/2007.

____

Source: http://www.brumbys.com.au/News/Default.aspx?ID=18

Brumby’s on the rise in the Middle East
posted: 12.Jul.2006 | Brumbys News

Leading Australian and New Zealand bakery franchise operator Brumby’s Bakeries Ltd will have stores opening across the Middle East after announcing its had reached an agreement for a local Master Franchisee in the region.

The ten-year agreement with Middle East consortium IIC Group covers member countries of the Gulf Co-Operation Council (GCC) - Saudi Arabia, Bahrain, Kuwait, Oman, Qatar and the United Arab Emirates (UAE) – as well as Iran.

Brumby’s managing director Michael Sherlock said he expected the first Brumby’s stores to open in the Middle East in the 2006-2007 financial year.

“Since signing an initial memorandum of understanding late last year we have been finalising our business plan and conducting extensive market research,” Mr Sherlock.

“It is clear that there is a tremendous potential in the Middle East and we expect to see considerable store growth during the next decade.
“Populations in the Middle-East are young, with two thirds of the population under 25, with increasing demand for convenience foods.”
Mr Sherlock said Brumby’s – which currently has 317 stores across Australia and New Zealand – would continue to investigate suitable opportunities in other countries.

“Apart from the Middle East, over the past 12 months we have conducted pre-entry studies and held discussions with potential master franchisees in Thailand, Malaysia, Singapore, China, Fiji, and South Africa,” Mr Sherlock said.

Brumby’s is listed on the Bendigo Stock Exchange.

____________

I hope that Brumby's expansion plan based on the agreement with IIC Group will provide opportunities to RFG in the Middle East!

tommy
19-12-2006, 01:58 AM
THE AGE article:

http://www.theage.com.au/news/business/retail-food-offers-big-dough-for-brumbys-bakeries/2006/12/18/1166290459624.html


Retail Food offers big dough for Brumby's Bakeries


December 18, 2006 - 2:24PM

Talk about making dough. The company behind the Donut King brand is forking out $38 million to add the Brumby's Bakeries chain to its menu.

And the board of the takeover target said it's already digested the offer with a resounding yes.

Retail Food Group Ltd (RFG) today said it planned to acquire Brumby's Bakeries Holdings Ltd (BBH), offering $36 million cash plus a $2 million fully franked dividend payment.

"This is a strategic acquisition which will allow Retail Food to apply its proven expertise in managing franchise systems to another high-profile Australian brand," said Retail Food chairman John Cowley.

The Gold Coast-headquartered Retail Food manages under licence the Donut King and bb's cafe brands in Australia and New Zealand and listed on the Australian stock exchange in June this year.

Retail Food says its offer comprises $2.685 a share that included a fully franked dividend of 10.883 cents.

Retail Food said the acquisition of the Bendigo Stock Exchange-listed BBH would add between 15 to 30 per cent to its earnings per share outlook for the 2008 financial year. It also expects synergy benefits of at least $1 million a year.

BBH chairman Terry O'Dwyer said the majority of the company's board would recommend the offer to shareholders, saying the deal reflected its strong brand and growth opportunities.

"I am confident Retail Food Group will be an excellent fit with Brumby's franchisees and suppliers, given its extensive and successful experience with franchised food operations through its brands Donut King and bb's cafe in Australia and New Zealand," he said.

Retail Food has forecast a net profit of $7.4 million for fiscal 2007 and earnings per share of 10.3 cents.

BBH has about 280 shareholders and 316 outlets across Australia and New Zealand that are owned and operated by franchisees.

BBH reported a 21 per cent lift in fiscal 2006 net profit to $2.08 million.

AAP

tommy
19-12-2006, 02:13 PM
More news articles:

Retail Food Group's top dollar for baker

19Dec06


RETAIL Food Group is poised to swallow Brumby's after yesterday launching a $38 million bid for the bakery chain.

The cash offer looks set for success, with the Southport-based company pitching its bid at a whopping 58 per cent premium to the existing Brumby's share price.

This is despite the possibility of a counter-offer emerging through a management buyout.

Brumby's Bakeries, which is listed on the Bendigo Stock Exchange, immediately recommended its shareholders accept the offer, although chairman Terry O'Dwyer said any alternative bid would be considered.

RFG chief executive Tony Alford said the hefty premium sought for the shares reflected a favourable earnings multiple of 8.4 times Brumby's forecast profit for 2007 on the $36 million purchase price.

He said the deal also would provide immediate savings of about $1 million a year through synergies between Brumby's 316 franchised outlets and RFG's Donut King and bb's cafe businesses.

These savings would drop the earnings multiple to 6.9 times 2007 profits.

Brumby's posted a 21 per cent lift in net profit last financial year to $2.08 million.

RFG expected the takeover, which would not be finalised until April, to add between 15 and 30 per cent to its earnings per share in the 2008 financial year.

"The purchase will not affect RFG's 2007 profit forecast of $7.4 million or its proposed dividend re-investment plan," said Mr Alford.

RFG is paying $2.68 a share for Brumby's as well as a 15.5c special dividend sweetener, worth an extra $2 million, to be paid to Brumby's 280 shareholders. After franking, the dividend will be pared down to 10.8c a share.

"Brumby's is an excellent complementary acquisition which would result in excess of 690 franchised outlets under RFG's stewardship and one which would fit both strategically and synergistically with those franchise systems we already operate," said Mr Alford.

"The Brumby's franchise system has significant scale and is a well-developed and successful system which has delivered consistent earnings to its shareholders."

RFG chairman John Cowley said the deal, RFG's first acquisition since listing in June, was nurtured over the past three months.

"It is a really, really good fit for us," he said.

"This is a strategic acquisition which will allow RFG to apply its proven expertise in managing franchise systems to another high-profile Australian brand."

Mr Alford said savings would come through job losses, most of which would occur through normal attrition.

"It won't occur overnight," he said.

Mr Alford said there was considerable duplication of services between RFG and Brumby's which would account for the bulk of the $1 million savings the company attributed to the deal.

"It is not our integration to compromise or in any way alter the integrity of the brand," he said.

Mr O'Dwyer said the board welcomed the offer and supported 'the aspirations of RFG for Brumby's'.

The takeover news pushed RFG shares up more than 10 per cent yesterday to close at $1.35, after hitting a record high of $1.40.

tommy
19-12-2006, 05:32 PM
http://www.news.com.au/couriermail/story/0,23739,20947814-3122,00.html

$40m bunfight

James McCullough

December 18, 2006 11:00pm
Article from: The Courier-Mail

A $40 million brawl for control of Brumby's Bakeries has begun after the recently listed Retail Food Group yesterday swooped on the Brisbane baking icon.
Retail Food, the owners of the Donut King and bb's cafe franchises, is offering $2.84 a share for control of Brumby's, a company listed on the Bendigo Stock Exchange with extensive franchise operations throughout the state.

The offer comprises $2.685 cash and a fully franked special dividend of 15.5¢, an offer RFG chief executive Tony Alford described as "exceedingly generous".

Mr Alford points out that Brumby's shares last traded on the Bendigo exchange at $1.80 with the previous trade $1.70.

"I think if you take everything into account it is an extremely generous offer," Mr Alford said.

Brumby's chairman Terry O'Dwyer agrees, recommending the offer to shareholders in the absence of any second higher bid.

"I am confident RFG will be an excellent fit with Brumby's franchisees and suppliers given RFG's extensive and successful experience with franchised food operations through Donut King and bb's cafe," Mr O'Dwyer said.

However, Brumby's founding director Michael Sherlock and his fellow director Marcus Barlow are not convinced, advising the company they were working on a management buyout alternative.

"I am putting the final touches on a proposal at the moment," Mr Sherlock said from Melbourne yesterday.

"We are very confident of another alternative."

Mr Sherlock, Mr Barlow and general manager Steve Brown claim to speak for nearly 30 per cent of the stock in the company and are confident they have a blocking stake for the bid.

"Brumby's is a very valuable company and I think it has been undervalued for a very long time," he said, pointing out that three years ago the stock listed on the Bendigo exchange at 56¢.

Retail Food Group disagrees, Mr Alford arguing there was little liquidity in the stock and the offer was fully priced and already endorsed by the bulk of the board.

"By adding Brumby's to our highly visible and well patronised Donut King and bb's cafe brands, RFG will further strengthen its position as a leading retail brand manager while achieving significant benefits through synergies and franchisee service integration of the three systems," he said.

RFG has made no secret it was looking for acquisitions, Mr Alford said at its recent annual meeting, pointing out the group had three targets in mind.

Brumby's was one target and the company is continuing its search for further acquisition.

"We will continue to actively purchase acquisitions where we can," Mr Alford said.

Brumby's has about 14 million shares on issue with about 280 shareholders and 316 outlets across Australasia that are owned and operated by franchisees.

Retail Food shares ended up 9.5¢ to $1.355, after hitting an all-time intraday high of $1.40.

tommy
12-01-2007, 03:09 PM
Hi all,

Just came back from my overseas holiday where internet access was rudimentary, so it seems it will take a bit of time for me to catch up with all that was happening in the ASX over the past few weeks [:o)]

Anyway, Brumby's takeover offer by RFG is looking a bit shaky due to some members of the management launching a rival bid... mmm, what are da implications of this? Not ready to analyze with a clear head yet due to jet lag...hahaha


Last Update: Tuesday, January 9, 2007. 2:23pm (AEDT)
Brumby's bakery team aims to top buyout offer


The head of Brisbane-based bakery Brumby's says the battle for control of the company may be just heating up.

Managing director Michael Sherlock has teamed up with two other members of the Brumby's management team to top a cash offer for the bread chain from Gold Coast rival, the Retail Food Group.

Mr Sherlock says he expects his team's $40 million bid to be successful, but he says they are prepared to review their offer in order to see through their business plan for Brumby's.

"We feel that we're adding enhancements and improvements to the company, and we're probably 30 per cent along the way of what we want to do, of things we'd like to add to the company," he said.

"And we'd like the opportunity to finish the job, so we're putting our whole future in achieving this outcome."

tommy
25-01-2007, 04:26 PM
yawn...

25 January 2007
ANNOUNCEMENT
BRUMBY'S BAKERIES LIMITED (BSX:BBH)


On the 8th January 2007 the sub-committee of the Board of Brumby's announced details of a competing offer that had been received from the syndicate of director Marcus Barlow, CEO and managing director, Michael Sherlock, and company secretary Steve Brown. This followed an announcement on the 18th December 2006 that Brumby's had entered into a Merger Implementation Agreement with Retail Food Group Limited (RFG).

The offer from the syndicate is to acquire 79.06% of the company held in non-associated shareholder's hands for $2.80 cash for each BBH share and a fully-franked dividend of 10.883 cents per share.

The sub-committee of the Board wishes to inform the market that it has been advised by the syndicate that the timing for its financiers is as follows:
* Friday 2 February - NAB, the primary financier, expected to have all due diligence reports completed.
* Friday 9 February - Target date for any final letter of offer from NAB to the syndicate.

The syndicate has advised that it expects the timing for the mezzanine financier to mirror that of the NAB outlined above.

The syndicate has also proposed a variation to the treatment of employee options.

The syndicate proposes to offer non-associated employee holders cash of $1.55 per option and that there will be no option exchange for those option holders. In relation to the options held by Michael Sherlock and Steve Brown, the syndicate proposes an option exchange arrangement, the details of which remain to be provided to the board sub-committee.

The sub-committee of the Board awaits the outcome of these matters before making a recommendation to shareholders on the syndicate's offer.

In the meantime, the sub-committee of the Board continues to progress the RFG Scheme in accordance with the company's contractual obligations under the RFG Merger Implementation Agreement.

ENDS

Enquires to:
Scott Emerson
Crook Publicity
Mb: 0401 99 81 81

tommy
29-01-2007, 03:15 PM
29 January 2007
Retail Food Group Maintains Strong Position


Retail Food Group Limited (RFG) today announced that, based on unaudited management accounts, the Company's earnings before interest and taxes (EBIT) for the six months ending 31 December 2006 is approximately 22.6% up on EBiIT for the corresponding period of FY2006.

This result reflects strong performances by the Company's Donut King and bb's cafe systems, which has witnessed franchise revenue increase of 21.5% above that franchise revenue for the previous year corresponding period.

The Company tracks ahead of FY2007 Prospectus forecast and has now achieved in excess of 50% of its full year forecast EBIT.

Retail Food Group CEO Tony Alford noted that, "the strong half year result, when coupled with those other initiatives which the company is presently engaged, including the commissioning of the Coffee Roasting Facility and Central Manufacturing Facility - neither of which have been factored into RFG's forecasts - supports both an exciting and rewarding year for the Company and its shareholders".

Mr. Alford further stated, "The strong half year performance was fortified by 24 new outlet commissionings compared with 14 in the 2006 corresponding period."

Results for the six month period ending 31 December 2006 will be announced to the market in late February 2007 at which time further commentary and explanation will be provided.

Retail Food Group is a leading Australian retail food brand manager and franchisor. It is the franchisor and intellectual property owner of the Donut King and bb's cafe systems. As at the date hereof, there was a total of 279 Donut King outlets established in Australia with a further total of 70 bb's cafe outlets established within Australia and New Zealand.

ENDS: For further information contact:
Liz Christiansen, BBS Public Relations, 07 32216711

tommy
30-01-2007, 10:23 AM
RFG on an upswing now, ready for some healhty gains:

http://asx.netquote.com.au/charts.asp?code=rfg&x=0&y=0

Here are some of the latest news articles on RFG:


http://www.theaustralian.news.com.au/story/0,20867,21139195-643,00.html

RFG bakes profit rise
* January 30, 2007


RETAIL Food Group, owner of Donut King and the BB's cafe chain, yesterday reported a strong performance with earnings growth of 22.6 per cent for the six months to December 31.
RFG, which made a $38 million takeover offer for Brumby's Bakeries, said it had already achieved more than 50 per cent of its full-year earnings before interest and tax forecast of $11.7 million stated in its prospectus.

Chief executive officer Tony Alford said the company's solid unaudited results were driven by Donut King and BB's, which saw a 21.5 per cent lift in franchise revenues.

Over the past six months, RFG has added 18 new Donut King franchises and six BB's outlets compared with 11 Donut King and three BB's the previous half year. RFG, which listed on the stock exchange in June last year, said its half-year results would be released at the end of February.

The company's takeover bid for Brumby's Bakeries, made just before Christmas, has been endorsed by Brumby's board of directors.

The move prompted a management buyout bid for Brumby's with a syndicate headed by the company's chief executive officer, Michael Sherlock, launching a counter and higher $40 million offer for Brumby's two weeks ago.

______________

http://www.news.com.au/couriermail/story/0,23739,21137877-3122,00.html


Retail Food on a roll

Carin Pickworth

January 29, 2007 11:00pm
Article from: The Courier-Mail


THE popularity of doughnuts and coffee are responsible for Retail Food Group reporting an earnings growth of almost 23 per cent for its first half.
Retail Food Group shares soared 5 per cent yesterday to close up 7¢ at $1.45 after the release of half-year results showed the group was on track to achieve well above its full-year EBIT forecast.

Based on unaudited management accounts the company's EBIT for six months ending December 31 is 22.6 per cent up than the same period last year.

Retail Food Group chief executive officer Tony Alford said the result reflected strong performance by Donut King and bbs cafe systems which has witnessed a franchise revenue increase of 21.5 per cent on the previous year.

The company has now achieved more than 50 per cent of its full-year forecast EBIT.

"The strong half result, when coupled with other initiatives including the commissioning of the central manufacturing facility supports both an exciting and rewarding year for the company and its shareholders," Mr Alford said.

He said the strong half year results was fortified by 24 new outlet commissionings compared with 14 in the 2006 corresponding period.

Retail Food Group has 279 Donut King outlets and 70s bb's cafe's across Australia and New Zealand.

___________________
http://www.theage.com.au/news/business/retail-food-result-gives-investors-a-tasty-treat/2007/01/29/1169919274151.html


Retail Food result gives investors a tasty treat

Rebecca Urban
January 30, 2007


RETAIL Food Group, the listed company in a bidding war for Brumby's Bakeries, has been buoyed by news that half-year profits will be better than expected.

Retail Food Group shares gained more than 5 per cent in late trading yesterday — up 7¢ to $1.45 — after it was revealed pre-tax earnings for the six months ending December would be about 23 per cent higher than the previous corresponding period.

In a statement to the stock exchange, Retail Food Group chief executive Tony Alford said more than half the company's forecast profit for the 2007 financial year had already been achieved. The company, which is behind the Donut King and bb's cafe franchises, made $10.5 million profit before tax during the year to June, and has forecast that to rise to $11.7 million by the end of the year. Mr Alford said the opening of 24 stores had boosted earnings.

tommy
02-02-2007, 01:50 PM
http://www.gcbulletin.com.au/article/2007/01/30/3023_business.html

December gives RFG major boost

30Jan07

RETAIL Food Group is on track to beat its forecast profit this financial year after yesterday unveiling a surge in earnings over the December half.

The Southport-based company, which operates the Donut King and BB's Cafe franchises, said unaudited accounts showed earnings before interest and tax for the six months to December 31 were up 22.6 per cent on the same period in 2005.

The figures were aided by a 21.5 per cent increase in franchise revenue from its 279 Donut King and 70 BB's Cafe outlets.

The unaudited results came as no surprise for Retail Food Group chief executive Tony Alford.

"The business has been tracking really well and we anticipated this sort of result," he said.

"The strong half-year performance was fortified by 24 new outlet commissionings compared with 14 in the 2005-06 corresponding period."

Mr Alford said new initiatives by the company, including a coffee-roasting and central manufacturing facility at Yatala, have yet to be factored into profit forecasts, supporting 'both an exciting and rewarding year for the company and its shareholders'.

The Yatala facility is set for commissioning in mid-February.

Retail Food Group is expected to release its full interim profit results at the end of February.

The company last month undertook its first acquisition attempt since listing in June last year, launching a $28 million bid for the Bendigo Stock Exchange-listed Brumby's Bakery chain.

However, to win control it must fend off a rival buyout attempt by a trio of Brumby's executives, led by managing director Michael Sherlock.

Retail Food Group, which remains the Brumby's board's endorsed bidder, is still undertaking due diligence on the purchase.

Shares in the company rose 7c to close at $1.45 yesterday.

tommy
06-02-2007, 05:45 PM
RFG still hovering around $1.40, I'm quite surprised that the market has not reacted more positively to the recent announcement. I was expecting it to reach $1.50 in no time, so obviously the market doesn't agree with my sentiment...yawn.

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Arfg&draw.x=0&draw.y=0

Are there any dark clouds looming over the Brumbies' takeover deal? Haven't been able to get more news on this lately, but I hope RFG doesn't end up paying too much for Brumbies as a result of the rival MBO (management buyout) offer...

tommy
10-02-2007, 04:24 PM
RFG now trading above 1.50 and sell side is virtually non-existent. Now that market cap is over 100 million, I would imagine more instos would have RFG in their radar...

Still holding this stock Robbo? Any rumors at da pub?

I can't wait for the half year results[:p][:p][:p]

Bobbyvee
10-02-2007, 05:20 PM
Hi Tommy,
I am still very much in RFG (thanks to Robbo) and up overall 100%, which is a great start. Agree now market cap over $100M the wider market will be more interested. Exciting times ahead and I am in for the long term.

- I am also back into ITE, as I believe you are also.

Cheers
BobbyVee

robbo
11-02-2007, 07:05 PM
RFG...

Some at the PUB-- amy, possibly-- think they heard their Aunt's cousin reckon ....that; their are good odds --on RFG getting Brumbys...and not necessarilly for much if any more money....
And who said Brumbys was the alpha and the omega anyway.... espcially 'the omega'--if you get what the Riddle Doctor--Uncle Maxie is trying to say--he's a bit under the weather with crownies is old UNcle Maxie... he was on TRF light and EZY heavy--and they had a nice run last week....!!

-errrr.. What's that Uncle Maxie???-- ...something about remembering to remember.... what are RFG Really are -not just a donut shop...uhhhh.... but something starting with the letter..."s".....stop spluttering on over your Crownie heady froths and bubbles-- Uncle Maxie !!


...errrr..and yes Auntie Maxie reminds punters here at the Pub--to iognre certain Brokers Reports saying that with the advent of healthy foods--Donuts are Dead...as the famous American Mark Twain once said--rumours of my death--are greatly exaggerated....!!

Kind Regards,

Robbo:)

tommy
19-02-2007, 08:32 PM
Brumby’s Management Confident of Buy-Out Success
Monday, 19 February 2007, 5:30 pm
Press Release: BBS

Brumby’s Management Confident of Buy-Out Success

BBS, the syndicate behind a management buy-out offer for leading bakery franchise Brumby’s Bakeries Limited (BSX:BBL), today welcomed the announcement by the Board of Brumby’s of a deadline of this Friday, 23rd February, to enable non-conflicted directors to assess BBS's offer against the Retail Food Group (RFG) scheme offer.

Michael Sherlock, managing director and CEO of Brumby’s - who along with fellow director Marcus Barlow and general manager and company secretary Steve Brown comprise the BBS syndicate – said he was extremely confident that the offer to acquire 79.06% of the company held in non-associated shareholder’s hands for $2.80 cash for each BBH share and a fully-franked dividend of 10.883 cents per share would be successful.

“It is good to see the Board of Brumby’s has given RFG a final date to complete their due diligence,” Mr Sherlock said.

“Given BBS’s offer is 11.5 cents higher than RFG’s, we are looking forward to the Board assessing the competing offers.

“We are confident the Board will recommend BBS’s offer as being in the best interests of shareholders and franchises.”

tommy
20-02-2007, 03:07 PM
http://www.gcbulletin.com.au/article/2007/02/20/3376_business.html

RFG 'unfussed' by rival Brumby's bid

20Feb07

BRUMBY'S Bakeries has given Southport-based Retail Food Group until this Friday to wrap up the due diligence for its proposed $28 million takeover of the company.

The Bendigo Stock Exchange-listed Brumby's said that it would be considering the counter offer led by managing director Michael Sherlock this Friday and needed to compare both bids before making its decision.

Mr Sherlock said his buyout syndicate, which includes Brumby's director Marcus Barlow and company secretary Steve Brown, had cleared due-diligence requirements with its financier and was in the process of negotiating a term sheet to proceed with the deal.

Retail Food Group, owner of the Donut King and BB's Cafe franchises, has offered $2.685 a share for Brumby's, which has since been trumped by the syndicate's bid of $2.80 a share.

RFG chief executive Tony Alford said yesterday his company had completed its due diligence and would easily meet the Brumby's deadline.

He said the company also remained 'unfussed' by the Sherlock-led bid.

________________

I know this one is not really relevant but hey, Donut King is being targeted by some thief!!!!


'Cleaner' walks off with store's safe

20.02.2007
By SAM BENGER A THIEF with a weakness for donuts has robbed a second Donut King store on the Coast in as many weeks.

Maroochydore police acting Senior Sergeant Paul Reilly said the man, who posed as a cleaner, robbed the Kawana ShoppingWorld Donut King just after 5pm on Sunday.

Sgt Reilly said the man, who was caught on video surveillance footage, posed as a cleaner equipped with bucket and mop when he broke into the store and stole the safe.

He said video footage identified the man as the same person who stole money from the Sunshine Plaza Donut King on February 4, and who also robbed a Wendy’s store at Chermside in Brisbane’s north.

Donut King Kawana manager Trish Gomez said the thief appeared to have grabbed the “flour bin” and emptied some of the contents before going to the back room and putting the safe in the flour bin.

The thief was then said to have put the flour bin and safe in a shopping trolley before leaving the complex.

Ms Gomez said “everything was a mess” when employees turned up for work yesterday morning.

She believed the thief knew the layout of the store.

Sgt Reilly warned owners at small kiosks in shopping centres to be vigilant and asked anyone who saw someone acting suspiciously to contact police immediately.

“Security or cleaning staff who witness someone acting suspiciously should check the person’s credentials or contact police,” he said.

Sgt Reilly also asked shop assistants to be wary of a person matching the man’s appearance staking out store layouts.

He said police were unsure if the offender was a local man and they were circulating video footage of the theft to police in Brisbane.

The man may be driving a small, light-coloured sedan or hatch.

Anyone with information should phone Crime Stoppers on 1800 333 000 or Kawana police on 54937100.

robbo
20-02-2007, 06:22 PM
quote:Originally posted by tommy

http://www.gcbulletin.com.au/article/2007/02/20/3376_business.html

RFG 'unfussed' by rival Brumby's bid

20Feb07

BRUMBY'S Bakeries has given Southport-based Retail Food Group until this Friday to wrap up the due diligence for its proposed $28 million takeover of the company.

The Bendigo Stock Exchange-listed Brumby's said that it would be considering the counter offer led by managing director Michael Sherlock this Friday and needed to compare both bids before making its decision.

Mr Sherlock said his buyout syndicate, which includes Brumby's director Marcus Barlow and company secretary Steve Brown, had cleared due-diligence requirements with its financier and was in the process of negotiating a term sheet to proceed with the deal.

Retail Food Group, owner of the Donut King and BB's Cafe franchises, has offered $2.685 a share for Brumby's, which has since been trumped by the syndicate's bid of $2.80 a share.

RFG chief executive Tony Alford said yesterday his company had completed its due diligence and would easily meet the Brumby's deadline.

He said the company also remained 'unfussed' by the Sherlock-led bid.

________________

I know this one is not really relevant but hey, Donut King is being targeted by some thief!!!!


'Cleaner' walks off with store's safe

20.02.2007
By SAM BENGER A THIEF with a weakness for donuts has robbed a second Donut King store on the Coast in as many weeks.

Maroochydore police acting Senior Sergeant Paul Reilly said the man, who posed as a cleaner, robbed the Kawana ShoppingWorld Donut King just after 5pm on Sunday.

Sgt Reilly said the man, who was caught on video surveillance footage, posed as a cleaner equipped with bucket and mop when he broke into the store and stole the safe.

He said video footage identified the man as the same person who stole money from the Sunshine Plaza Donut King on February 4, and who also robbed a Wendy’s store at Chermside in Brisbane’s north.

Donut King Kawana manager Trish Gomez said the thief appeared to have grabbed the “flour bin” and emptied some of the contents before going to the back room and putting the safe in the flour bin.

The thief was then said to have put the flour bin and safe in a shopping trolley before leaving the complex.

Ms Gomez said “everything was a mess” when employees turned up for work yesterday morning.

She believed the thief knew the layout of the store.

Sgt Reilly warned owners at small kiosks in shopping centres to be vigilant and asked anyone who saw someone acting suspiciously to contact police immediately.

“Security or cleaning staff who witness someone acting suspiciously should check the person’s credentials or contact police,” he said.

Sgt Reilly also asked shop assistants to be wary of a person matching the man’s appearance staking out store layouts.

He said police were unsure if the offender was a local man and they were circulating video footage of the theft to police in Brisbane.

The man may be driving a small, light-coloured sedan or hatch.

Anyone with information should phone Crime Stoppers on 1800 333 000 or Kawana police on 54937100.




Hi Tommy,

don't tell anyone--.....but does sound ....suspiciously ....like my chariot....;)[}:)][:0].

--and btw--am still 60/40 guessing in fave--of RFG getting this one "over the line" ... ...and bring home the bacon--or should I say..."the bread"...;)

Regards,

Robbo:)

tommy
20-02-2007, 06:29 PM
Hi Robbo mate,

Don't know about this Brumbys ordeal really, hope they don't end up paying too much than it is worth because I don't know much about the successfulness of Brumbys.

I am hoping anyway the RFG will produce a profit upgrade for the full year results at the going rate... but don't want any nasty surprises like what we have seen at Dominos!!!!

My target is $2.50 by the time the full-year results are announced this year. PE of 15 is still below sector average of 19, so reasonably price still IMHO.

What's your analysis robbo?

robbo
26-02-2007, 01:17 PM
Retail Food Group. (RFG)

Nice set of numbers...[:p]:)

with NPAT up by >38&..... and Revenues up in double digits....

errrr...... And; ......Tommy, think you can safely add 15% to your projected forecast figures in your last RFG post....And still..... am waiting...... for the crownies.....;)

--Do you recall btw--we first --here at S/Trader-- due to uncle Maxie's Dart Board Guesses.....;)...jumped into RFG at 75 cents...!! [:p][8D]...

To buy RFG now is high $1.85-$1.90 territory as of about now!!

So that must be a &age increase on a Predictable Researched share of about 130-140% ....or whatever.... rather about now.....:)

....ENJOY ....all...!!

Also,on anothr note; we are about due for some sort of..." one way or the other".....--(as aceptances etc.... were to be finalized on Friday last)--so outcome, ought-- [?]- to be known.... re Brumbys....--...any day soon now....

Kindest Regards,

robbo.:)

tommy
26-02-2007, 04:38 PM
Excellent results Robbo!! Happy indeed... wonder what's gonna happen to Brumbies????????????????

__________
http://www.supplychainreview.com.au/article.cfm?StoryID=30387&SiloID=0


Retail Food Group serves up 38.9% jump in half-year earnings
February 26, 2007


Retail Food Group Limited (RFG) has announced a 38.9% increase in first half NPAT (net profit after tax) to $3.9 million on the back of strong performances by the company's Donut King and bb's café franchise systems.

The improved earnings are largely due to record network sales of $79.2 million (an increase of 12%) and total franchise revenue of $9.6 million.

RFG has now achieved in excess of 50% of the FY2007 full year forecast EBIT and NPAT detailed in the company's May 2006 prospectus.

RFG chief executive officer Tony Alford says the company remains confident of achieving its revised forecast of 35 new outlet commissionings as announced at the RFG AGM in November 2006.

He says 11 outlets are programmed to be opened before the end of the 2007 financial year, and the company has achieved 24 new outlet commissionings (18 Donut King and 6 bb's café outlets).

Donut King had 279 outlets operating in Australia at December 31, 2006, and bb's café had 70 outlets across Australia and New Zealand.

"The 2007 half year results fortifies both the strength of the company's franchise model and the retail integrity of our Donut King and bb's café systems," says Alford.

"As well we are encouraged by the penetration and cut through of our in-store promotions and support network provided to our 349 franchises.

robbo
26-02-2007, 04:51 PM
rfg.

Tommmy....

"if".... .....errrrr...... I knew definitively,

could not .....;)[8D]...and would not ...obviously be able to say !!;)[:0]

Regards,

Robbo :)


quote:Originally posted by tommy

Excellent results Robbo!! Happy indeed... wonder what's gonna happen to Brumbies????????????????

__________
http://www.supplychainreview.com.au/article.cfm?StoryID=30387&SiloID=0


Retail Food Group serves up 38.9% jump in half-year earnings
February 26, 2007


Retail Food Group Limited (RFG) has announced a 38.9% increase in first half NPAT (net profit after tax) to $3.9 million on the back of strong performances by the company's Donut King and bb's café franchise systems.

The improved earnings are largely due to record network sales of $79.2 million (an increase of 12%) and total franchise revenue of $9.6 million.

RFG has now achieved in excess of 50% of the FY2007 full year forecast EBIT and NPAT detailed in the company's May 2006 prospectus.

RFG chief executive officer Tony Alford says the company remains confident of achieving its revised forecast of 35 new outlet commissionings as announced at the RFG AGM in November 2006.

He says 11 outlets are programmed to be opened before the end of the 2007 financial year, and the company has achieved 24 new outlet commissionings (18 Donut King and 6 bb's café outlets).

Donut King had 279 outlets operating in Australia at December 31, 2006, and bb's café had 70 outlets across Australia and New Zealand.

"The 2007 half year results fortifies both the strength of the company's franchise model and the retail integrity of our Donut King and bb's café systems," says Alford.

"As well we are encouraged by the penetration and cut through of our in-store promotions and support network provided to our 349 franchises.

tommy
27-02-2007, 02:15 PM
Article:
http://www.news.com.au/couriermail/story/0,23739,21290734-3122,00.html


Vow to build on 39% lift

Trevor Chappell

February 26, 2007 11:00pm
Article from: The Courier-Mail


RETAIL Food Group expects new manufacturing and supply initiatives to provide a solid platform for growth after the company reported a strong lift in half-year profit.
The food brand manager and franchisor company yesterday reported a 38.9 per cent lift in interim net profit to $3.9 million. The company said the result was driven by a strong performance from its Donut King and bb's cafe franchises as new outlets were rolled out.

RFG said the performance of bb's cafe chain had surpassed expectations: "RFG has now achieved in excess of 50 per cent of the full year 2007 EBIT and net profit detailed in the company's May 2006 prospectus, and remains well poised to deliver a robust annual result."

RFG chief executive Tony Alford said initiatives to reduce overall reliance on franchise service fees, by broadening the company's revenue base had a positive effect on the half-year result. "The strong half year, together with the progression of the coffee-roasting and central manufacturing facilities, augurs well for a rewarding year for the company and its shareholders," Mr Alford said.

"Importantly, these two initiatives also provide a solid platform for additional future growth and earnings."

The manufacturing centre at Yatala, south of Brisbane, will supply most southeast Queensland Donut King franchisees, making in-house manufacture unnecessary. The coffee roasting plant, also at Yatala, is a joint venture that will blend and roast coffee for Donut King and bb's.

RFG shares fell 2¢ to $1.50.

tommy
01-03-2007, 02:13 PM
Brumbies due to make a decision today on takeover vs management buyout issue.

Fingers crossed!

mamos
01-03-2007, 05:57 PM
Does someone know something about the deal. Up 10c to new record highs on no news.

tommy
02-03-2007, 04:49 PM
Change in Recommendation[:0]

Brumbies now recommends management buyout!!

http://sa.iguana2.com/cache/37a2bd66ad0665c052ff7af9b867b248/ASX-RFG-185837.pdf


mmmm, what's gonna happen now? Place a higher bid or let it go?

tommy
02-03-2007, 06:44 PM
Article in THE AGE:

http://www.theage.com.au/news/Business/Brumbys-says-MBO-offer-unconditional/2007/03/02/1172338840069.html

Brumby's board gives the nod to BBS bid

March 2, 2007 - 10:44AM


Brumby's Bakeries has recommended an offer by its management team to take over the breadmaker after its $28.5 million bid became unconditional.

The bid by BBS Pty Ltd, which includes Brumby's chief executive Michael Sherlock who holds around 21 per cent of the breadmaker, followed an initial offer by the Retail Food Group (RFG).

Mr Sherlock said the next move would have to come from RFG, the company behind the Donut King brand.

"It's like a game of poker, they can throw their hand in or raise us," Mr Sherlock said.

The BBS offer to the 300 shareholders of the Bendigo Stock Exchange-listed Brumby's is for $2.80 a share for the remaining 79 per cent of the company and a fully franked dividend of 10.88 cents.

On December 18, Brumby's entered into a merger implementation agreement with RFG that offered $2.68 a share along with the dividend.

RFG will earn a break fee of $360,000 if it pulls out of the bidding for Brumby's.

Mr Sherlock said the decision by the Brumby's board on Friday was in the best interests of shareholders and franchisees.

"The BBS offer ensures that the successful management team that has guided Brumby's outstanding performance in recent years will remain in place," he said.

© 2007 AAP

tommy
03-03-2007, 01:45 AM
http://www.news.com.au/couriermail/story/0,23739,21314940-3122,00.html

Baker's buyout almost on counter

Carin Pickworth

March 02, 2007 11:00pm
Article from: The Courier-Mail



THE management buyout of Brumby's Bakeries Holdings is almost fully cooked with the bid by management team BBS now unconditional.
After the completion of due diligence the $28.5 million bid for the breadmaker is no longer conditional on finance.

The BBS offer is to acquire 79 per cent of the company held in non-associated shareholder's hands for $2.80 cash for each Brumby's share and a fully franked dividend of 10.883¢ a share.

The offer by BBS, headed by chief executive Michael Sherlock who holds a 21 per cent slice of the company, is 11.5¢ higher than an offer made to acquire Brumby's by Retail Food Group (RFG) last December.

The Brumby's board had previously recommended the offer by RFG, which agreed to purchase Brumby's shares for $2.68 a share with the additional fully franked dividend of 10.883¢.

The board's change in recommendation means Brumby's has to reimburse RFG a fee of $360,000 to terminate the merger implementation agreement entered into last year.

Mr Sherlock said the board had previously indicated it was only recommending the RFG offer in the absence of a better deal.

"The board has had a chance to compare the offers and made its decision," Mr Sherlock said.

He said the board's decision was in the best interest of Brumby's franchisees and BBS syndicate members looked forward to working with the board to ensure Brumby's shareholders had an opportunity to vote on the new scheme.

Brumby's chairman Terry O'Dwyer said the non-conflicted members of the board had recommended the BBS offer.

"They considered it to be in the best interests of shareholders in the absence of a better or higher offer," Mr O'Dwyer sai

tommy
05-03-2007, 05:01 PM


BRUMBY’S BAKERIES HOLDINGS LIMITED (BSX:BBH)


Last Friday 2 March the non-conflicted directors of the board of Brumby's announced their change in recommendation in favour of the BBS offer over the RFG Scheme.

The non-conflicted directors of the board wish to publicly confirm that none of the members of the syndicate of director, Marcus Barlow, CEO and managing director, Michael Sherlock, or general manager and company secretary Steve Brown have been present at, or a party to, any board deliberations on the RFG Scheme, the BBS offer or the change in recommendation made by the board sub-committee last Friday.

As a result of the change in recommendation in favour of the BBS offer, Brumby's has received a written demand from Retail Food Group Limited (RFG) for payment of a Reimbursement Fee of $360,000. Brumby's has advised RFG that it will pay the Reimbursement Fee to RFG by close of business tomorrow in accordance with its obligations under the merger implementation agreement (MIA) with RFG.

RFG, although entitled to immediately terminate the MIA on the change in recommendation, has not elected to do so. Brumby's may terminate the MIA if after 7 days it can not agree with RFG to reinstate its recommendation of the RFG proposed scheme and it has paid the reimbursement fee.

Brumby's acknowledges that RFG is considering its position in relation to the recommendation and awaits further discussions with RFG.

The non-conflicted directors of Brumby's wish to reiterate their commitment to achieving the best result for shareholders, and to make it clear that Michael Sherlock and Marcus Barlow were in no way involved in the non-conflicted directors' decision to change their recommendation. The nonconflicted directors changed their recommendation on the basis that the offer made by BBS was for
a higher cash price than that offered by RFG by in excess of 11 cents per share. The nonconflicted directors of Brumby's do not endorse in any way or take responsibility for any statements made by Mr Sherlock in the media, in particular, in relation to any potential impact on franchisees relating to either offer. It is the board sub-committee's view that RFG has great capacity to operate well with franchisees as demonstrated by RFG's successful operation of its Donut King and bb's
café franchise systems.

The non conflicted directors acknowledge the importance of their independent role in securing the best outcome for Brumby’s shareholders. At no time will Michael Sherlock, Marcus Barlow or Steve
Brown be involved in any Board deliberations on the offers for Brumby’s shares”.

The non-conflicted members of the board will continue to keep shareholders updated on developments.

ENDS

Enquires to:
Scott Emerson
Crook Publicity
Mb: 0401 99 81 81

Bobbyvee
05-03-2007, 05:33 PM
One presumes the following statement from today's announcement -

"The nonconflicted directors of Brumby's do not endorse in any way or take responsibility for any statements made by Mr Sherlock in the media, in particular, in relation to any potential impact on franchisees relating to either offer. It is the board sub-committee's view that RFG has great capacity to operate well with franchisees as demonstrated by RFG's successful operation of its Donut King and bb's café franchise systems."

Refers to the following comment in the press by Sherlock -

"Mr Sherlock said that the Brumby's board decision yesterday was in the best interests of shareholders and franchisees. "The BBS offer ensures that the successful management team that has guided Brumby's outstanding performance in recent years will remain in place,"

I conclude that the non conflicted directors still like the idea of working with RFG if they can get the right offer. From all I have heard the past management performance has not been all that flash.

BobbyVee

tommy
06-03-2007, 02:37 PM
Hi bobby,

I think RFG might increase their offer based on the news article below:

http://www.gcbulletin.com.au/article/2007/03/06/3669_business.html

RFG to stay in hunt for Brumby's

06Mar07

SOUTHPORT-based Retail Food Group yesterday continued to assess its faltered $38 million bid for the Brumby's group, despite its demand for the bakery chain to repay it a $360,000 reimbursement fee.

Brumby's yesterday said it would repay the fee by the close of business today after last week putting its weight behind a management buyout led by Brumby's managing director Michael Sherlock.

The management bid trumped the Retail Food Group (RFG) offer of $2.685 a share by 11.5c a share.

This led to the Bendigo Stock Exchange-listed Brumby's on Friday overturning its original recommendation of the RFG bid which was made in December.

In a move to distance itself from any concerns of conflict of interest over its latest decision, the Brumby's board yesterday assured the market its recommendation of the management buyout did not involve any participation by Mr Sherlock, fellow director Marcus Barlow and company secretary Steve Brown, who made up the buyout group.

Brumby's yesterday said RFG, which owns the Donut King and bb's cafe chains, had yet to terminate its merger implementation agreement and that it was awaiting further discussions with the company over its original offer.

RFG chief executive Tony Alford yesterday did not rule out increasing the company's offer for Brumby's or producing an alternative bid.

"Our motivation has not been dissuaded in any way," he said, adding that RFG would discuss the bid with the Brumby's board this week.

Meanwhile, Brumby's also said yesterday comments by Mr Sherlock that the RFG takeover would not be supported by the bakery chain's franchisees did not reflect the board's view.


The Sherlock-led buyout team controls just under 21 per cent of Brumby's and has said it would not lift its off

robbo
06-03-2007, 06:17 PM
rfg

Brumbies....not all over.....until the Fat Donut sings.

Regards,

robbo:)

tommy
09-03-2007, 06:12 PM
Back to square one... obviously Brumby's wasn't worth the extra dough!


Brumby’s: Termination Of RFG MIA
Friday, 9 March 2007, 4:51 pm
Press Release: Brumbys

9 March, 2007


Brumby’s Bakeries Holdings Limited (Bsx:Bbh)

Termination Of RFG MIA

The non-conflicted members of the Board of Brumby’s Bakeries Holdings BBH advise that the Retail Food Group (RFG) has advised it today that it has terminated its merger implementation agreement (MIA) with BBH.

RFG’s decision follows an announcement last Friday (March 2) by the non-conflicted members of the Board of Brumby’s that they were now recommending to shareholders an offer for Brumby’s from BBS (2006) Pty Ltd (a company backed by the syndicate of director Marcus Barlow, CEO and managing director, Michael Sherlock, and general manager and company secretary Steve Brown) as higher and superior to RFG’s proposal.

Brumby’s has signed an Implementation Agreement with BBS and this now comes into force with the RFG MIA being terminated.

The BBS offer is for the acquisition of 78.98 per cent of the company held in non-associated shareholders hands for $2.80 cash for each BBH share by way of scheme of arrangement under Chapter 5.1 of the Corporations Act. BBS also proposes that the Company pay a fully-franked dividend of 10.883 cents per share.

In advising that it has terminated the MIA with BBH, RFG said the termination did not preclude RFG from making a further offer to acquire BBH or its business, nor otherwise the parties furthering their discussion regarding the potential change by the non-conflicting directors of their recommendation in favour of the BBS proposal.

ENDS

Zephyrus
12-03-2007, 12:26 PM
I'm glad they're not going into a bidding war over Brumbies. better to wait for another opportunity to come along. They're own business is growing nicely enough. No point spending too much to grow by aquisition.

tommy
15-03-2007, 01:35 AM
What da, bidding war?!
http://www.gcbulletin.com.au/article/2007/03/15/3844_business.html

Brumby's no loafer as chain makes more dough

15Mar07

BAKERY franchise and takeover target Brumby's Bakeries yesterday reported a near 8 per cent lift in first-half profit as customers sought cheaper and fresher bread, ditching products offered at major supermarkets.

The Bendigo Stock Exchange-listed Brumby's said net profit rose 7.8 per cent to $1.073 million in the six months to December 31 from the same period in 2005.

Its 318 stores in Australia and New Zealand achieved sales growth, on average, of 7.6 per cent -- and as much as 17 per cent in some regions, as more customers sought Brumby's preservative-free, fresh-baked bread.

"Our rising revenue is being strongly fuelled by the combination of two factors, both of which have made us far more competitive with our major rivals -- the supermarkets," said managing director Michael Sherlock.

"Firstly, the retail price of Brumby's standard white sliced loaf is now, on average, less than the equivalent loaf being sold at supermarkets," he said.

Supermarket bread prices had shot up by more than 24 per cent in the past year compared with an 11 per cent rise for Brumby's.

"Secondly, there is a growing awareness among consumers that the plant bread they have traditionally bought at large supermarkets is often days old," he said.

"Brumby's expects this trend to continue as part of a growing movement among consumers searching for 'fresh' food'.

The management-led buyout by Mr Sherlock's consortium, BBS Pty Ltd, has emerged as the preferred bidder for Brumby's after bumping out a rival offer by the Southport-based Retail Food Group.

Brumby's has recommended an offer by BBS, which owns 21 per cent of the company, to buy out the remaining stake in the bread chain for $28.5 million.

However, Retail Food Group, which owns the Donut King franchises, could be poised to make a higher bid for Brumby's.

BBS has offered $2.80 a share for Brumby's, up from Retail Food's original bid of $2.685.

Brumby's said it was not able to declare a dividend until the acquisition was approved by shareholders.

Both offers to acquire the company included a special dividend of 10.88c per share.

tommy
15-03-2007, 03:38 AM
http://www.smh.com.au/news/business/no-to-archer-is-to-pull-long-bow/2007/03/14/1173722556606.html?page=2

Making bread

For most people on a salary, earning a crust is akin to making some dough or, if you're really big on slang, you can always collect the bread (as in bread and honey = money).

But in the bakery business, bread is literally money, especially if your loaf is cheaper than those being sold in the major supermarkets as Michael Sherlock, managing director of Brumby's, sought to explain yesterday.

Apparently, a standard Brumby's white loaf costs less than one from Woolies, Coles or Franklins, based on Sherlock's claim that their prices, on average, have gone up 24 per cent in the last year compared to the 11 per cent at the bakery franchise chain.

As well, customers have noticed that Brumby's bake fresh every day as opposed to the days-old bread you might find on a supermarket shelf, a useful observation in that it helped to lift Brumby's half-year profits yesterday by nearly 8 per cent to just under $1.1 million.

The better result has turned up the heat in the takeover battle for Brumby's where the management team has a recommended $28.5 million bid on the table whilst the listed Retail Food Group, the company behind Donut King, is said to be mulling over a higher offer after its initial approach was trumped by Mr Sherlock and colleagues two weeks ago.

Shares in Brumby's, listed on the Bendigo Stock Exchange, were unchanged at $1.80.

tommy
29-03-2007, 03:35 PM
Is RFG no longer considering takeover?

http://www.gcbulletin.com.au/article/2007/03/27/4107_business.html

Brumby's buy group trumps its own offer

27Mar07

THE Brumby's Bakeries board yesterday again threw its weight behind the latest bid by management buyout firm BBS, recommending the increased takeover offer for the company.

BBS, which is headed by Brumby's managing director Michael Sherlock, last Friday trumped its own offer for the bakery chain with a bid of $2.87 a share and a special franked dividend of 30c.

The latest bid, which includes a 13c franking credit and takes the offer to $3.30 a share, values the Bendigo Stock Exchange-listed company at $46 million.

It was a pre-emptive move by BBS, which already controls about 21 per cent of the company's shares, to thwart a revised offer by Southport-based Retail Food Group, which controls the Donut King and bb's cafe franchise chains.

The BBS buyout team, which comprises Mr Sherlock, fellow director Marcus Barlow and Brumby's company secretary Steve Brown, has lifted its offer by almost 18 per cent, leaving Retail Food Group's first bite at Brumby's languishing at $2.685 a share.

Retail Food Group is understood to have been reworking its original offer before BBS played its trump card on Friday.

A Retail Food Spokesman could not be contacted for comment.

In a statement yesterday, Brumby's chairman Terry O'Dwyer said the non-conflicted members of the board had 'recommended the BBS offer in the best interests of shareholders and in the absence of a better or higher offer'.

Retail Food Group shares remained steady to close at $1.48 yesterday, while Brumby's shares last traded at $1.80.

tommy
30-03-2007, 07:56 PM
RFG sell side almost non-existent (one seller only!)

Never seen RFG being so illiquid[:o)]

tommy
03-04-2007, 03:49 PM
$2,660,000 (1,900,000 shares) changed hands today @ $1.40 today[:0] What is going on!

http://stocknessmonster.com/stock-trades?S=RFG&E=ASX

Robbo, are you still interested in RFG?

tommy
10-04-2007, 07:37 PM
RFG losing momentum continuously and is looking awefully cheap at PE of 13 against sector average of 17.

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Arfg&draw.x=0&draw.y=0

Suppose Brumbies deal is now flushed down the toilet... no updates on negotiations lately. YAWN!

mamos
05-05-2007, 05:27 PM
What does everyone think about the increased offer for RFG. $3.40 completely cash offer. They now have 15.59%. This stake could deter another offer by BBS. The previous BBS offer was for $3.30. Part of the consideration included dividend and franking credits.

Extrapolating the HY07 results. The offer puts Brumby's on a PE of 20 and therefore will not be earnings accretive. However RFG see significant synergies between the franchise systems and are looking for further acquisitions also.

What do we think of Brumby's? This outcome is a blessing in disguise. Does it just produces a bland range of breads and pastries no different to competitors, in an industry with some of the lowest
barriers to entry around?

Cheers,

Mark

Halebop
05-05-2007, 05:47 PM
The price offered for Brumby's is fairly rich but RFG would potentially gain synergy benefits by merging franchise administration with their own operations (The management offer vehicle does not gain any economy of scale / loss of duplication benefits without making further acquisitions). At this price though I suspect they are really banking on success in a new international market.

In retail nobody enjoys a barrier to entry beyond scale. The only differentiation possible is essentially style and branding. In the instance of franchise systems at least expansion is paid for by someone else, delivering faster than normally possible organic growth and high return on assets (albeit on lower absolute profits as gains are shared with the equity backers / franchise holders).

Disc: None

tommy
07-05-2007, 04:40 PM
Hi all,

I personally think this is as high as RFG will go to buy Brumbies... don't want them to pay too much for the acquisition unless the benefits are going to be reflected in the bottom line in the near future.

Now the ball is in their (BBS) court. Interesting times!

_____________________
http://www.gcbulletin.com.au/article/2007/05/05/4923_business.html

RFG ups bid for Brumby's

05May07

RETAIL Food Group has spiced up the takeover battle for Brumby's Bakeries by snaring a key stake in the retail chain.

The Southport-based owner of the Donut King franchise has paid $6.8 million for River Capital's 15.59 per cent holding in Brumby's.

RFG has forked out $3.40 a share for River Capital's two million shares, which is a 10c premium to the $3.30 a share being offered by a management buyout team headed by Brumby's managing director Michael Sherlock.

The share swoop has been accompanied by an off-market bid by RFG for the remaining shares in Brumby's which is listed on the Bendigo Stock Exchange.

RFG chief executive Tony Alford said the bid represented a 'higher and more attractive return' for Brumby's shareholders, many of whom are franchisees.

He said he was confident the bid, which values Brumby's at $47.4 million, would be embraced by the 'non-conflicted' members of the company's board.

The Sherlock-led buyout offer comprised a $2.87-a-share cash component and a special franked dividend of 30c a share plus a 13c franking credit, taking the total bid to $3.30 a share.

On a cash basis, the RFG bid is more than 7 per cent higher than the buyout offer.

RFG has maintained a dogged desire to add Brumby's to its business profile since launching its original bid of $2.685 a share in December.

At the time, RFG said it identified annual savings of about $1 million a year through synergies between Brumby's 316 franchised outlets and RFG's Donut King and bb's cafe businesses.

Brumby's posted a 21 per cent lift in net profit last financial year to $2.08 million.

"The RFG board holds the view that Brumby's bakeries remains an excellent complementary acquisition," said Mr Alford.

tommy
15-05-2007, 02:59 PM
Excellent news:)

14 May 2007
Brumby’s Board unanimously recommends RFG’s Bid

Brumby’s Bakeries Holdings Limited (Brumby’s) has today announced that its Board of Directors has, in the absence of a superior offer, unanimously recommended Retail Food Group Limited’s (RFG) cash offer of $3.40 per share for all of the issued capital of Brumby’s.

RFG’s offer, announced on the 4th of May 2007, represents:
- An 88% premium to the Brumby’s closing share price of $1.80 on 15 December 2006, being the last trading date prior to the announcement of RFG’s earlier scheme of arrangement proposal (‘Scheme Proposal’);
- A 108% premium to the volume weighted average price of $1.63 in the three months prior to the announcement of RFG’s Scheme Proposal;
- A 111% premium to the volume weighted average price of $1.61 in the six months prior to the announcement of RFG’s Scheme Proposal; and
- A 7% premium to the cash consideration most recently offered under the scheme of arrangement proposed by BBS (2006) Pty Ltd.

RFG will make a separate offer by private agreement to acquire the Brumby’s options which are currently on issue. The offer under that agreement will be $3.40 less the exercise price of the relevant option and will be subject to various conditions, including the Brumby’s Board resolving to vary the terms of the Brumby’s options to permit the option holders to deal with them.

The Brumby’s Board’s recommendation followed advice from BBS (2006) Pty Ltd (a company backed by the syndicate of Brumby’s director Marcus Barlow, Brumby’s CEO and managing director Michael Sherlock and Brumby’s company secretary Steve Brown) that it or its associates:

1. do not intend to make a further offer, nor amend their current offer, to acquire the balance of Brumby’s shares not controlled by them;
2. have sold 420,000 Brumby’s shares (or 3.91% of the issued capital of Brumby’s) to RFG; and
3. intend to accept (in the absence of a superior offer) RFG’s offer for the remainder of their Brumby’s shares following commencement of the offer period under RFG’s impending Bidder’s Statement.

The transaction outlined at Item 1 above was entered into today, the 14th of May 2007, for a cash consideration of $1.428 million (being $3.40 per share).

Following the acquisition of these shares, RFG will control approximately 19.9% of the issued capital in Brumby’s.

Those Brumby’s directors not associated with BBS (2006) Pty Ltd have also indicated an intention on their part to accept RFG’s offer in relation to all of the Brumby’s shares they own or control.

Brumby’s Chairman Terry O’Dwyer said that “RFG’s offer provides the best option for shareholders to maximise the value of their investment in Brumby’s and is fully endorsed and recommended by the whole of the Brumby’s Board”.

Brumby’s Managing Director, and director of BBS (2006) Pty Ltd, Michael Sherlock said “we are pleased that recent events have now brought certainty not only for Brumby’s and its shareholders, but also our Brumby’s franchisees and master franchisees”.

“The fact that RFG have continued to pursue Brumby’s in the face of BBS’s earlier offers no doubt reflects the high regard it has for the Brumby’s business. I consider this to bode well for the future of Brumby’s and we therefore have no qualms in fully supporting RFG’s bid”, he said.

RFG CEO Tony Alford said that, “he too was pleased that today’s events have brought certainty to matters surrounding the future ownership of Brumby’s”.

“It is extremely satisfying that the Brumby’s Board and BBS syndicate have given their support to RFG’s offer. The BBS syndicate members’ interests in Brumby’s, particularly that of Mr Sherlock and Mr Brown, went beyond those of a mere financial nature. They have dedicated significant personal time and effort to the development of the Brumby’s brand over a number of years and it is therefore no small action that they have placed their full support behind RFG’s offer”, he said.

“Ultimately, the RFG Board has consistently maintained that Brumby’s Bakeries is an e

tommy
16-05-2007, 02:35 PM
http://www.foodweek.com.au/main-features-page.aspx?articleType=ArticleView&articleId=141

The private equity-led owners of Michel’s Patisserie have indicated they might entertain approaches to sell all or part of the business.

The Australian Financial Review reports today that restructuring of the business since ANZ PE and executive director John Livy bought it in March last year had achieved significant improvements in operating performance. In an interview with the paper, Livy said Michel’s was “content to pursue growth independently, but would consider the right offer. “It would depend on the partner and what they might bring to the merger,” he told the paper.

It suggested Retail Food Group – currently in a hostile takeover bid for bakery chain Brumby’s – was interested in acquiring Michel’s, which has about 350 coffee and cake outlets trading in Australia and New Zealand.

But to acquire both businesses, RFG would need to raise significant funding.

Livy declined to comment to the AFR on whether RFG had approached the business.

“There are a number of people who have contacted us,” he said.

tommy
17-05-2007, 03:52 PM
RFG seems ready to break out from current trading range, though trading volume is small (illiquid stock!) after the almost-in-da-bag takeover announcement of Brumby's.

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Arfg&draw.x=36&draw.y=8

Still cheap IMHO[:I] Boring stock for traders though...

trader-jim
28-05-2007, 01:24 PM
Anybody heard any rumours, price jumped and now none on the sell side. I know its lightly traded but maybe a ann about the buyout is due.

tommy
28-05-2007, 02:59 PM
quote:Originally posted by trader-jim

Anybody heard any rumours, price jumped and now none on the sell side. I know its lightly traded but maybe a ann about the buyout is due.


Hi jim,

Not many stocks available to begin with so getting decent volume is hard without pushing price up with RFG... perhaps its just a delayed reaction to the recent announcement that the takeover of Brumbies is a "done deal"? In any case, I am not complaining... I still hold a bucket load of RFG and haven't sold a single share since picking them up $81c;)

trader-jim
28-05-2007, 03:09 PM
Hi jim,

Not many stocks available to begin with so getting decent volume is hard without pushing price up with RFG... perhaps its just a delayed reaction to the recent announcement that the takeover of Brumbies is a "done deal"? In any case, I am not complaining... I still hold a bucket load of RFG and haven't sold a single share since picking them up $81c;)


[/quote]

Hi Tommy,

Still have all mine too from 84c. Also noticed that the market cap has now gone over 100m (by my calcs at 1.52)so if it can stay over that it may get some attention, especially since its already in the news

tommy
30-05-2007, 01:54 PM
Target statement released:

http://sa.iguana2.com/cache/30b9e2a4a44b002fbd4675d76df1895a/ASX-RFG-188397.pdf

tommy
22-06-2007, 04:13 PM
RFG might have bottomed out but very thinly traded so difficult to judge...

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Arfg&draw.x=0&draw.y=0

Over 1m in shares changed hands yesterday, wonder what that was all about. PE of 13 is still very cheap IMHO:)

tommy
29-06-2007, 04:47 PM
Yawn...
http://www.smh.com.au/news/Business/Retail-Food-Group-extends-Brumby-offer/2007/06/27/1182623974238.html


Retail Food Group extends Brumby offer

June 27, 2007 - 3:49PM

Retail Food Group Ltd (RFG) has extended its offer for Brumby's Bakeries Holdings Ltd by a fortnight.

The offer, under which RFG is offering Brumby's shareholders $3.40 per Brumby's share, will now close at 1700 AEST on July 18.

The company said it had offered the extension because a number of Brumby's shareholders had indicated they would prefer to accept the offer in the next financial year - fiscal 2008.

"We wish to ensure that all Brumby's shareholders have every opportunity to maximise the value of the offer," RFG chief executive Tony Alford said.

"The extended offer period will give shareholders additional time to accept the offer post 30 June 2007, should they choose to do so."

RFG announced the off-market takeover bid for Brumby's on May 4 and the company's board gave its unanimous support for the offer, short of a better bid, on May 14.

As at 1700 AEST on June 26, RFG had gained 5,593,274 Brumby's shares, representing a stake in the company of 43.4 per cent.

The Brumby's directors, who currently control 37.12 per cent of the company, have indicated that they intend to accept RFG's offer in the new financial year.

tommy
06-07-2007, 04:11 PM
RFG takeover of Brumbies now a done deal, yawn...

http://sa.iguana2.com/cache/fc2e7efa586b382d6a0b4724e734ea48/ASX-RFG-189546.pdf

mamos
07-07-2007, 03:13 PM
What does everyone think of the Brumby's takeover.

I am a little concerned as obviously they have paid a lot more than what they initially wanted to purchase it for. However, management must be confident of the significant synergy benefits they can achieve. The bakery franchise posted a $2.0m profit last year, so RFG is buying Brumby’s at 24x earnings, significantly greater than the 15x (forecast) FY2007 earnings multiple the sharemarket has awarded RFG. However, the FY07 multiple is expected to be lower.

What concerns me is that Brumby's is an acquisition more like BB's where there is extensive competition in the market and less like DonutKing where they have the market largely to themselves. BB's has struggled whereas DK has been the main source of growth for the company.

Is anyone concerned with the increased presence of KrispyKreme and Dunkin Donuts affecting DK? These brands only have a limited presence in Australia, but internationally they are quite well known. I am worried that these international brands may become more popular than the Australian Donut King brand. Furthermore, I dont see how international expansion will be successful having to fight these larger brands for market share and franchisees.

The FY07 results will be lower to reflect one-off costs associated with the acquisition of Brumby’s.

I applaud the management of this company for constantly trying to improve earnings per share growth through initiatives such as the centralized donut manufacturing system and coffee roasting facility. However, I am concerned about the industry and whether the donut sector is becomming saturated and furthermore, will competition eat away into profits?

I have yet to check the financials after the acquisition but I can imagine RFG will be loaded up with debt.

Huang Chung
07-07-2007, 03:41 PM
I like the acquisition Mamos, but yes, RFG hasn't picked Brumby's cheaply.

Bakery chains like Brumby's and Baker's Delight really seem to be humming in our neck of the woods. I also like the fact that Brumby's have a significant presence outside of the big Westfield type shopping centres.

A friend of mine is currently trying to get set in RFG, but there don't seem to be many sellers wanting to let go of their stock at the moment.

tommy
07-07-2007, 03:58 PM
Hi mamos/HC,

I agree with you guys that the acquisition was NOT cheap for RFG, but at least they managed to pull it off as promised in the prospectus.

As for the potential threat from competitors like KK and Dunkin, I think at least in Australia, Donut King has carved out a nice position in every Westfield/shopping center so not too worried about it... Donut King is literally everywhere! On the other hand, you hardly see KK and Dunkin where Donut King operates. As for expansion into overseas, yes, it will be tougher especially if they target Asia due to different tastes and preferences among consumers (as I discussed previously with reference to Mister Donut).

Will RFG consider making some kind of centralized bread making facility for BB and Brumbies, like they have done with coffee roasting facility and centralized donut manufacturing system? This way they can "double dip" into franchisees' revenue.

BTW, does Donut King, BB and Brumbies have a large presence in NZ or are they insignificant there?

cloggs
08-07-2007, 07:22 PM
I've seen BBs in shopping centres, and I know of one Brumby, but Bakers Delight seems to have a bigger presence. Can't say I've ever seen a Donu King. Asked my 19 year old son, he'd never heard of it.

mamos
08-07-2007, 07:35 PM
Yeah it is a different situation in New Zealand. Baker's delight and other bakery stores like Michel's and Pandorro are more established than Brumbies.

In regard to Donuts Donut King is not really established at all. It is mainly Dunkin Donuts. But all in all there are not many donut stores. I went to Dunkin Donuts today and it was quite busy actually.

tommy
09-07-2007, 04:19 PM
Thanx for da info on RFG's presence in NZ guys, highly appreciated!

BTW, Brumby's board has been reshuffled completely

http://sa.iguana2.com/cache/1a68bd29682e3db722c262dd9830bd42/ASX-RFG-189613.pdf

RFG board replaces Brumby's board. Wonder whether this was a good move? Market didn't like it....

OneUp
05-08-2007, 11:40 AM
insignificant is indeed the word.... Tommy..

In the Bay Of Plenty ... Tauranga Im only aware of one BB's cafe... (rather busy) donut outlets are very very limited in NZ, a few in shopping complexes is about it.... the markets pretty limited here when it comes to donuts... As Mamos mentioned Bakers Delight has a reasonable present within the market.

Brumbies...... WHO?

AA

Yeah, I've noticed that Dunk'n Donuts hasn't been that successful in NZ. One of their first outlets was opened in Pakuranga some years ago...but it had closed the last time I went out there. At the K Road branch, the subway line is long but hardly anyone goes to Dunk'n Donuts.

I'm not sure why the formula isn't working that well here. If Donut King wants to make a splash, they'll need to make sure they customize the offering to local tastes a bit better than Dunkin' Donuts (how hard can it be to realise a plain donut with solid chocolate coating and sprinkled with chpped nuts is a best seller here?!).

I was at the Warehouse Hypermart at Silvia Park the other week and Brumby's was dead. It's a tough market for bakeries in Auckland.

mamos
05-08-2007, 01:13 PM
I sold out of RFG recently, before the correction, although the share price has held up reasonably well despite this. My main reason being I felt that the Brumby's acquisition was too expensive and there are better bargains available in the market than RFG currently.

Bobbyvee
06-08-2007, 10:03 AM
Interesting discussion. Personally I am holding as I expect a positive financial report in the coming weeks. These franchisor businesses are potentially great cash cows just through the growth in number of outlets/shops franchised.

tommy
06-08-2007, 09:03 PM
Hi all,

I'm still holding all my shares too, not gonna sell a single share because it's way too early to sell out... Only concern might be debt levels.

Bobbyvee
08-08-2007, 07:43 AM
Has anyone heard what is happening with the commissioning of the Central Manufacturing Facility (CMF) - supposed to be completed in '07 FY and the Coffee Roasting Facility (CRF) supposed to be "blending and roasting" by April '07.

I can find no further mention of these since February.

Bobbyvee
29-08-2007, 11:06 AM
I like this result from Retail Food Group. They have achieved very profitable operation throughout the takeover of Brumbies and are now looking ahead to further expansion.

FY2007 NPAT of $7.52 million representing a 26.7% growth from FY2006(1), and
exceeding the Prospectus forecast of $7.4 million

EBIT growth of 25.8% over pcp to $12.2m

Earnings per share increase of 22.1%

Full year dividend of 3.125 cents per share

37 new outlets commissioned exceeding Prospectus forecast by 48% or 12 outlets
360 Donut King and bb’s café outlets as at year end (an increase of 28 stores)
Central Manufacturing Facility operational and already servicing 50 Donut King
Outlets

Coffee Roasting Facility commissioned

Successful acquisition of Brumby’s Bakeries Holdings Limited (Brumby’s)

FY2008 EBIT forecast to grow by 55% to $19 million following Brumby’s
Acquisition

NPAT for FY2008 forecast to increase by 30%

FY2008 new outlet commissionings programmed to exceed 50 stores

(1) Represents 17.5% increase in NPAT from Continuing Operations.

See also the press release.

tommy
29-08-2007, 04:46 PM
Hi bobby,

Yeah not a bad result apart from the market reaction :-(

Highlights are:


"In respect of FY2008, RFG is forecasting an EBIT growth increase of 55% to approximately
$19 million.

Based upon net debt (excluding property debt the subject of a sale and lease back
arrangement) of $57.5 million as at 8 August 2007, RFG is forecasting FY2008 NPAT to be
approximately $9.8 million representing a 30% increase over FY2007.

FY2008 EBIT growth will again be driven by strong new outlet commissionings which are
forecast to be in excess of 50 across the Donut King, bb’s café and Brumby’s Bakeries
franchise systems.

“RFG is a company with significant momentum and with the value added foundations laid to
date, we remain extremely enthusiastic regarding the Company’s prospects for FY2008 and
beyond”, Mr Alford said."

I think I will continue holding patiently :-)

Bobbyvee
29-08-2007, 10:44 PM
Yes Tommy patients is certainly required until the brokers start to see the value in RFG. I believe there are indications of another takeover in the wind so maybe that will also give the SP a boost.
I too will continue to hold.

Snoopy
30-08-2007, 03:23 PM
BTW, does Donut King, BB and Brumbies have a large presence in NZ or are they insignificant there?

Mailer through the letterbox 29th August 2007 shows the location of all cafe bb's in NZ.

AUCKLAND
1/ BBs cafe Ascot Hospital
2/ BBs cafe Downtown Shopping Centre
3/ BBs cafe Dress-Smart Onehunga
4/ BBs cafe Eastridge Shopping Centre
5/ BBs cafe Foodtown Supermarket, Browns Bay
6/ BBs cafe Freedom Furniture Wairau Park
7/ BBs cafe Meadowbank Shopping Centre
8/ BBs cafe Southgate Retail Centre
9/ BBs cafe Supa Centa Manajau City
10/ BBs cafe Waitakere Mega Centre
11/ BBs cafe Pacific Plaza Whangaparoa

HAMILTON
12/ BBs cafe Chartwell Square Shopping Centre
13/ BBs cafe Dress-Smart Te Rapa
14/ BBs cafe Farmers Hamilton

TAURANGA
15/ BBs cafe Bayfair Shopping Centre
16/ BBs cafe Fashion Island Papamoa
17/ BBs cafe Fraser Cove Shopping Centre

NEW PLYMOUTH
18/ BBs cafe The Valley Mega Centre

PALMERSTON NORTH
19/ BBs cafe Farmers Palmerston North

WELINGTON
20/ BBs cafe Dress-Smart Tawa
21/ BBs cafe North City Shopping Centre Porirua

CHRISTCHURCH
22/ BBs cafe Dress-Smart Hornby
23/ BBs cafe Merivale Mall
24/ BBs cafe Tower Junction Mega Centre


HTH

SNOOPY

Huang Chung
30-08-2007, 05:45 PM
Was amazed at the number of people waiting to get served at the Doughnut King at Westfield Chermside (Brisbane) last Saturday morning. Business was booming!

Why not..... the price of the Doughnut King offering is very reasonable, and their coffee ain't bad either. :)

tommy
30-08-2007, 10:13 PM
Thanks snoopy for the list of bb cafes, highly appreciated mate.

Huang Chung, Donut King in Sydney especially those in Westfield shopping center is always busy, particularly after school hours and on weekends. I must confess I can't help grabbing one of those donuts and a coffee now and then for a sugar boost :-P

In contrast, krispy kreme isn't half as busy. Perhaps their brand color is too boring/bland compared to the loud-pink donut king?

Bobbyvee
07-09-2007, 12:20 PM
As I noted a week or two ago here is RFG's next growth move.

"Retail Food Group Limited (‘RFG’) today announced that it had entered into a conditional
Scrip & Cash Terms Agreement (‘SCTA’) to acquire all the issued shares in The Michel’s
Group Australia Pty Ltd (‘TMGA’). TMGA is the intellectual property owner and manager
of the Michel’s Patisserie franchise system (‘Michel’s’), a well known Australian food
retailer which specializes in the sale of cake, coffee and patisserie related products.
Currently Michel’s have a total of 340 franchised outlets in Australia, and a further 6
franchised outlets in New Zealand. Upon completion of the transaction and following
RFG’s recent acquisition of the 321 store Brumby’s Bakeries franchise system, the total
number of franchised outlets under the stewardship of RFG will exceed 1,020 outlets,
making RFG one of the largest retail food franchisors in Australia and the largest by a
considerable margin with respect to “home grown” retail food franchise concepts."

tommy
07-09-2007, 02:32 PM
RFG up 25% today!

"RFG provided FY2008 guidance on the 29th August detailing a forecast increase in
EBIT of 55% to $19 million and an increase in NPAT to $9.8 million (an increase of
30%)."

So that makes RFG even cheaper than ever before!

OneUp
07-09-2007, 02:42 PM
They weren't being very committal on EPS increments. However it's easy to see massive economies of scale for the CMF making bakery products for Brumby's/Doughnut King/Michelle's.

Michel's is a great franchise.

tommy
07-09-2007, 02:59 PM
Hi oneup,

Yeah but only concern is how are they gonna finance it? Debt? They already have quite a bit of borrowings...

OneUp
07-09-2007, 03:17 PM
Hey mate,

I think we'll see a mix of debt/equity. Hopefully a placement for half the needed funds at circa $1.60. Getting a few instos in the register would be no bad thing. Tired of seeing the share price slide on no volume.

Technically, and maybe a TA junkie can confirm, we may have a breakout of the $1.30-$1.70 trading range she's been oscilating between all year.

Huang Chung
07-09-2007, 08:32 PM
Does anyone know what this centralised manufacturing facility at is supposed to accomplish. I understand that it is currently servicing SE Qld. Surely, you can't transport jam doughnuts and the like any distance....or does the facility only make the pastery bit, with all the trimmings like cream etc added by the franchisees?? Are they going to roll these facilities out, in say, Syndey and Melbourne?

What happens in other areas of the country...does each franchisee have to make everything from scratch? Does RFG make money by selling finished / partly finished product to the franchisee, as opposed to the franchisee buying raw ingredients (from RFG?) and making the stuff themselves?

Any ideas guys???

tommy
07-09-2007, 08:33 PM
Hi Oneup

Yeah low liquidity has been a big problem with RFG for the past year... no one wants to buy or sell the stock (including myself!)

Getting instos in their shareholder registry will be a nice move, especially if they can write off all the debt (although I hate dilution of shareholder value).

I totally agree that Michel's is a good business and a good fit for RFG, they are everywhere in Sydney (almost as prevalent as Donut king). Excellent move by RFG indeed, it is soooo undervalued now.

Note that they Michel's have their own coffee roasting and training facility already, plus their expansion plan (will they sustain this expansion? See bold section)

http://www.michels.com.au/pages/about/index.htm

The Story
Michel’s Patisserie was established in Sydney in 1987 by joint founders Noel Roberts and Noel Carroll. It began with a bakery in Hornsby NSW delivering fresh products daily to two stores, Michel’s Patisserie Newport & Castlecrag NSW. Their passion for the business has seen it grow into an entity turning over more than $220 million annually with over 320 retail outlets across Australia. The name is French, but it’s 100% Australian owned and operated.

Our Bakery offers an extensive range of ‘quality fresh’ baked cakes (gateaux, fruit flans, traditional, special occasion small and large), with the inclusion of Danish pastries, quiches, gourmet pies and sausage rolls to satisfy even the most discerning of culinary palates…it’s what our customers expect – great tasting and great variety at the right price.

As a natural accompaniment to our selection of patisserie products, Michel’s own in-house coffee roasting and training facility, Michel’s Espresso is paramount in ensuring our franchisees and their staff are able to meet and exceed our customer expectations of a ‘great tasting’ coffee.

The Michel’s Franchise system owes its recipe for success to strong management; comprehensive training and a ‘family culture’ based work ethic. It is unique in that it is not royalty based and offers major key benefits such as no manufacturing and a strong retail / marketing network from within.

It is not by coincidence that Michel’s Patisserie has grown to become one of the most successful franchisors in Australia, when it invests in people who have a passion to achieve and strive for ‘best practice’ in franchising and retailing. Michel’s management, office personnel and bakery staff together form a strong enterprise that is committed to deliver quality product along with customer value and experience with each visit to a Michel’s Patisserie outlet.

As a responsible corporate citizen, Michel’s Patisserie is proud to be associated with various charities, including the Starlight foundation.

Over a period of six consecutive years Michel’s Patisserie has been awarded the status of a “high achiever” by its industry peers and has earned the honour of being awarded:
Winner of the “Franchise System of the Year” (capital entry costs $50K - $200K category) for 1995, 1996, 1997, 1998 and 1999 plus OVERALL “Franchise System of the Year” in 2000 and 2003. In 2005 we were again a finalist for "Franchise System of the Year". In addition to the above, Michel’s was also a finalist in the Franchise Council of Australia’s “Best Homegrown Franchise System” in 1998, 1999 and 2000. These industry awards are held annually by the Franchise Council of Australia.

In February 2006, Michel's Patisserie completed a management buy-out, and merged with its master franchisee for Queensland and Victoria to create a single national franchise business. The transaction is the final step in the process of consolidating Michel’s Patisserie into a single national business.

The business is well established and resourced to continue growth within Australia, with plans for significant NEW store growth. There will be an increasing focus on the marketing direction and continued introduction of new products. With Michel’s Patisserie’s strong prominent brand, strong franchise system and innovative distribution model as key strengths, the business is positioned well for significant growth over coming years.

The company plans to have 50 stores per year throughout Australia and to increase expansion offshore in the not too distant future. There are currently 6 stores in New Zealand and one in China. With this in mind we have committed to developing our computer technology to ensure the effective and efficient operation of on-line communications with our franchisees, customers and suppliers to further enhance the Michel’s chain.


____________________

And here is a news article in the AGE, surely this would raise more interest next week:

http://www.theage.com.au/news/Business/Retail-Food-Group-makes-bid-for-Michels/2007/09/07/1188783458372.html

RFG profits to soar after Michel's buy

September 7, 2007 - 10:19AM


Franchisor Retail Food Group Ltd expects to boost before-tax earnings this year by a hefty 167 per cent, after swallowing Michel's Patisserie chain in an $88 million deal.

When the latest deal is complete - coming just weeks after the franchisor snapped up Brumby's Bakeries for $45.8 million - RFG will have more than 1020 donut shops, cafes, cake shops and bakeries on its books.

But RFG chief executive Tony Alford still has an appetite for more buys, describing the retail food space as "flush with opportunity".

"Do we have any in mind? Yes. The answer is we continue to investigate potential acquisition targets," Mr Alford said.

Any target must be "immediately EPS accretive" and must be able to be integrated into RFG's existing business easily, he said.

In particular, the RFG boss noted the outstanding human resources coming into the company with its purchases of Michel's and Brumby's.

"It's as much about acquiring human resources as it is acquiring the systems," he said.
Mr Alford tipped cafes as the most likely direction for RPG to expand by acquisition as its existing coffee chain bb's is significantly smaller than its other brands.

"We are going to have to look at a bolt-on acquisition to complement that," he said.

Even before factoring in synergies, efficiencies and savings, RFG expects the Michel's deal will boost its fiscal 2008 earnings before interest and tax (EBIT) to $32 million from $12.2 million in the previous year.

A revised guidance on net profit will not be released until the franchisor has finalised the funding for the cash component of the deal.

Nevertheless the earnings forecast alone excited investors who pushed RFG stock up 40.5 cents, or 28.2 per cent, to $1.84.

The latest deal comprises $50 million in cash and a scrip component hitched to the strength of Michel's EBIT performance this financial year.

In total, the deal could be worth up to $88 million.

The takeover of Michel's, due to complete in November, if shareholders approve, comes less than two months after RFG acquired the 321-store Brumby's Bakeries franchise chain.

Michel's has 340 franchised outlets in Australia and a further six in New Zealand.

Before this buy, RFG already had 289 Donut King outlets and 71 bb's cafe outlets.

Mr Alford said both the Michel's and Brumby's systems would provided an immediate positive earnings contribution to RFG along with a platform to drive medium and long term shareholder value.

RFG will continue developing the Michel's network across Australia and New Zealand.

"Indeed, Michel's prominent brand, innovative distribution model and service systems positions the brand well for future organic growth," Mr Alford said.

Last week, RFG reported a 27 per cent rise in net profit to $7.52 million for fiscal 2007 and upgraded its fiscal 2008 guidance for profit to grow by 30 per cent to $9.8 million.

Its fiscal 2008 EBIT was forecast to grow 55 per cent to $19 million after the Brumby's acquisition.

tommy
07-09-2007, 08:52 PM
More news articles! Key personnel to stay with RFG, which is good.

http://www.foodweek.com.au/main-features-page.aspx?articleType=ArticleView&articleId=748

Retail Food Group to acquire Michel’s Patisserie chain



Retail Food Group Limited has today announced it has entered into a conditional agreement to acquire all the issued shares in The Michel’s Group Australia (TMGA).

TMGA is the intellectual property owner and manager of the Michel’s Patisserie franchise system (‘Michel’s’), a well known Australian food retailer which specialises in the sale of cake, coffee and patisserie related products.

Currently Michel’s has 340 franchised outlets in Australia, and a further six franchised outlets in New Zealand. Upon completion of the transaction and following RFG’s recent acquisition of the 321 store Brumby’s Bakeries franchise system, the total number of franchised outlets under the stewardship of RFG will exceed 1020 outlets, making RFG one of the largest retail food franchisors in Australia and the largest by a considerable margin with respect to “home grown” retail food franchise concepts.

The acquisition is anticipated to be completed by the end of November 2007, however pursuant to the SCTA RFG will be entitled to the whole of TMGA’s FY2008 earnings (after deduction of interest on TMGA’s existing debt) from July 1.

The consideration payable to TMGA shareholders is $50 million cash and a scrip component being subject to an incentivated earn-out program based on TMGA FY2008 adjusted EBIT performance. TMGA shareholders will be entitled to be issued with RFG scrip on a pro rata basis where TMGA’s adjusted FY2008 EBIT is between $13.25 million and $18 million.

Assuming full entitlement to the earn-out the maximum value of the consideration payable is $88 million with any scrip entitlement being issued on the earlier of the finalisation of the FY2008 audited accounts or 30th October 2008.

TMGA also has debt of approximately $56 million which will either remain with the company on completion of the SCTA or be refinanced by RFG. RFG provided FY2008 guidance on August 29 detailing a forecast increase in EBIT of 55% to $19 million and an increase in NPAT to $9.8 million (an increase of 30%).

Prior to factoring synergies, efficiencies and integration savings which would be achievable from the incorporation of Michel’s into RFG’s management and operational service structure, RFG expects that the successful completion of the TMGA transaction would result in revised FY2008 guidance of $32 million in EBIT, an increase of approximately $20 million or 167% on FY2007.

Additionally, while RFG is confident that the TMGA acquisition will be earnings per share (EPS) accretive in FY2008, the quantum of such increase will depend upon the funding structure adopted and the scrip issue as a consequence of the earn-out.

The acquisition is subject to a number of conditions including shareholder approval, ASX not objecting to the terms of performance shares which will be issued in connection with the scrip component of the consideration and satisfactory completion of RFG’s current due diligence enquiries.

The agreement is also conditional on RFG obtaining financing on terms which are satisfactory to it. RFG has yet to determine the structure and composition of the funding of the cash component of the consideration.

John Livy, the managing director of TMGA will remain with Michel’s. Livy has extensive experience in multi outlet retail environments including TAB (10 years) and Regional Director of Franchising - Pepsi Co Restaurants Group (11 years). Occupying the position of MD of TMGA since early 2004, he has developed and refined the franchisee service delivery systems for Michel’s as well as recruiting an extremely robust and skilled management team – all of which have agreed to go forward under RFG’s stewardship. In addition Livy has committed to a long term involvement with the RFG senior management team, both with respect to Michel’s and RFG’s other systems.

Bruce Hancox will join the Board of RFG. Bruce has been a strategic advisor to the TMGA Board since October 2006 and has been instrumental in corporatising TMGA and developing its non-operational service systems. Bruce has over 35 years experience in corporate positions, manufacturing and retailing including 19 years with Brierley Investments (occupying the positions of director and chairman).

RFG chairman John Cowley said “the Board is extremely excited about the proposed TMGA acquisition as it represents a fantastic opportunity for the company to consolidate another impressive, and complementary, retail food system under its management umbrella”.

“Not only does the Michel’s Patisserie acquisition allow RFG to apply its proven expertise in managing franchise systems to another high-profile Australian brand”, he said, “it also further delivers on the strategic growth initiatives outlined in the company’s May 2006 prospectus”.

Livy said “the opportunity to partner a successful and growing public company with strong management skills and ready access to capital such as RFG will provide early access for our franchisees and stakeholders to the benefits of a larger organisation”.

RFG CEO Tony Alford said “the TMGA acquisition was part of the company’s strategy to consolidate a number of retail food franchise systems to achieve economies of scale through multi-brand ownership and leveraging of existing franchise systems.”

“Michel’s will bolster RFG’s outlet numbers to in excess of 1020 franchised units”, Alford said, “As with the recent Brumby’s acquisition, the Michel’s system will fit both strategically and synergistically with our Donut King and bb’s café systems”.

“Michel’s is a well developed and successful franchise system particularly in NSW with 195 outlets. Franchisee revenue is underpinned by its coffee and cake product offering and is of such scale and maturity that, similar to the Brumby’s system, it provides an immediate positive earnings contribution to RFG as well as providing a further platform to drive medium and long term shareholder value”, he said.

Alford said “the TMGA purchase would not only benefit the franchisees of Michel’s, but also RFG’s existing Brumby’s Bakeries, Donut King and bb’s cafe franchisees by allowing further cross-pollination of products, collaborative marketing initiatives, co-branding, supply economies and leveraging of RFG’s proven franchise management systems and growing national presence to take advantage of the significantly increased scale.”

He said “Michel’s, as with Retail Food Group’s existing systems, would retain its unique and distinct branding and identity.”

Alford said Retail Food Group would continue the development and growth of the Michel’s network across Australia and New Zealand. Indeed, Michel’s prominent brand, innovative distribution model and service systems positions the brand well for future organic growth”.

Retail Food Group is a leading Australian retail food brand manager and franchisor. It is the franchisor and intellectual property owner of the Donut King, bb’s café and Brumby’s systems.

_________________
http://news.brisbanetimes.com.au/retail-food-group-makes-bid-for-michels/20071907-xqi.html
RFG profits to soar after Michel's buy


Franchisor Retail Food Group Ltd expects to boost before-tax earnings this year by a hefty 167 per cent, after swallowing Michel's Patisserie chain in an $88 million deal.

When the latest deal is complete - coming just weeks after the franchisor snapped up Brumby's Bakeries for $45.8 million - RFG will have more than 1020 donut shops, cafes, cake shops and bakeries on its books.

But RFG chief executive Tony Alford still has an appetite for more buys, describing the retail food space as "flush with opportunity".

"Do we have any in mind? Yes. The answer is we continue to investigate potential acquisition targets," Mr Alford said.

Any target must be "immediately EPS accretive" and must be able to be integrated into RFG's existing business easily, he said.

In particular, the RFG boss noted the outstanding human resources coming into the company with its purchases of Michel's and Brumby's.

"It's as much about acquiring human resources as it is acquiring the systems," he said.

Mr Alford tipped cafes as the most likely direction for RPG to expand by acquisition as its existing coffee chain bb's is significantly smaller than its other brands.

"We are going to have to look at a bolt-on acquisition to complement that," he said.

Even before factoring in synergies, efficiencies and savings, RFG expects the Michel's deal will boost its fiscal 2008 earnings before interest and tax (EBIT) to $32 million from $12.2 million in the previous year.

A revised guidance on net profit will not be released until the franchisor has finalised the funding for the cash component of the deal.

Nevertheless the earnings forecast alone excited investors who pushed RFG stock up 40.5 cents, or 28.2 per cent, to $1.84.

The latest deal comprises $50 million in cash and a scrip component hitched to the strength of Michel's EBIT performance this financial year.

In total, the deal could be worth up to $88 million.

The takeover of Michel's, due to complete in November, if shareholders approve, comes less than two months after RFG acquired the 321-store Brumby's Bakeries franchise chain.

Michel's has 340 franchised outlets in Australia and a further six in New Zealand.

Before this buy, RFG already had 289 Donut King outlets and 71 bb's cafe outlets.

Mr Alford said both the Michel's and Brumby's systems would provided an immediate positive earnings contribution to RFG along with a platform to drive medium and long term shareholder value.

RFG will continue developing the Michel's network across Australia and New Zealand.

"Indeed, Michel's prominent brand, innovative distribution model and service systems positions the brand well for future organic growth," Mr Alford said.

Last week, RFG reported a 27 per cent rise in net profit to $7.52 million for fiscal 2007 and upgraded its fiscal 2008 guidance for profit to grow by 30 per cent to $9.8 million.

Its fiscal 2008 EBIT was forecast to grow 55 per cent to $19 million after the Brumby's acquisition.


__________

http://optuszoo.news.ninemsn.com.au/article.aspx?id=108088

RFG profits to soar after Michel's buy
Friday Sep 7 17:45 AEST

Franchisor Retail Food Group Ltd expects to boost before-tax earnings this year by a hefty 167 per cent, after swallowing Michel's Patisserie chain in an $88 million deal.

When the latest deal is complete - coming just weeks after the franchisor snapped up Brumby's Bakeries for $45.8 million - RFG will have more than 1020 donut shops, cafes, cake shops and bakeries on its books.

But RFG chief executive Tony Alford still has an appetite for more buys, describing the retail food space as "flush with opportunity".

"Do we have any in mind? Yes. The answer is we continue to investigate potential acquisition targets," Mr Alford said.

Any target must be "immediately EPS accretive" and must be able to be integrated into RFG's existing business easily, he said.

In particular, the RFG boss noted the outstanding human resources coming into the company with its purchases of Michel's and Brumby's.

"It's as much about acquiring human resources as it is acquiring the systems," he said.

Mr Alford tipped cafes as the most likely direction for RPG to expand by acquisition as its existing coffee chain bb's is significantly smaller than its other brands.

"We are going to have to look at a bolt-on acquisition to complement that," he said.

Even before factoring in synergies, efficiencies and savings, RFG expects the Michel's deal will boost its fiscal 2008 earnings before interest and tax (EBIT) to $32 million from $12.2 million in the previous year.

A revised guidance on net profit will not be released until the franchisor has finalised the funding for the cash component of the deal.

Nevertheless the earnings forecast alone excited investors who pushed RFG stock up 40.5 cents, or 28.2 per cent, to $1.84.

The latest deal comprises $50 million in cash and a scrip component hitched to the strength of Michel's EBIT performance this financial year.

In total, the deal could be worth up to $88 million.

The takeover of Michel's, due to complete in November, if shareholders approve, comes less than two months after RFG acquired the 321-store Brumby's Bakeries franchise chain.

Michel's has 340 franchised outlets in Australia and a further six in New Zealand.

Before this buy, RFG already had 289 Donut King outlets and 71 bb's cafe outlets.

Mr Alford said both the Michel's and Brumby's systems would provided an immediate positive earnings contribution to RFG along with a platform to drive medium and long term shareholder value.

RFG will continue developing the Michel's network across Australia and New Zealand.

"Indeed, Michel's prominent brand, innovative distribution model and service systems positions the brand well for future organic growth," Mr Alford said.

Last week, RFG reported a 27 per cent rise in net profit to $7.52 million for fiscal 2007 and upgraded its fiscal 2008 guidance for profit to grow by 30 per cent to $9.8 million.

Its fiscal 2008 EBIT was forecast to grow 55 per cent to $19 million after the Brumby's acquisition.

tommy
07-09-2007, 09:04 PM
Does anyone know what this centralised manufacturing facility at is supposed to accomplish. I understand that it is currently servicing SE Qld. Surely, you can't transport jam doughnuts and the like any distance....or does the facility only make the pastery bit, with all the trimmings like cream etc added by the franchisees?? Are they going to roll these facilities out, in say, Syndey and Melbourne?

What happens in other areas of the country...does each franchisee have to make everything from scratch? Does RFG make money by selling finished / partly finished product to the franchisee, as opposed to the franchisee buying raw ingredients (from RFG?) and making the stuff themselves?

Any ideas guys???

Hi HC,

Central manufacturing facility is "a dedicated facility established to manufacture and supply doughnut and bakery products on a wholesale basis to its franchisees".

http://svc114.wic011v.server-web.com/rfg/franchising/resale/
"This store is involved in the Donut King ‘Centralised Manufacturing Facility’ process (CMF) and receives all its product fresh into store daily. The CMF service daily dressed is unique to the Donut King stores in SE Queensland, and only requires a weekly product order to be sent to head office each week.

As such, this process brings balance between owning & operating your own business and the lifestyle that only the Gold Coast can offer."

Basically a way of making more money out of existing franchisees!

P.S. One up, as for the technical trend of RFG, I think the trading volumes are way too low (and stock too tightly held) to determine any up/downtrend but hopefully we will stay at least above $1.60 from here onwards. A bit of a scary stock to hold because of its lack of liquidity, but this has been my single largest holding for a while now. If this tanks I will be burnt badly!

Bobbyvee
09-09-2007, 02:02 PM
Have to agree with you Tommy. I too felt I was holding a bit too much RFG given they can be almost impossible to sell at a fair price in any quantity. As a consequence I used Fridays good news and buyer interest to sell half my holding. I have some regret in doing this as I feel they have great potential. Still, a good profit is worth having in the pocket - I gave far too much back in the recent correction!!! As I am sure did many others.

tommy
11-09-2007, 06:01 PM
RFG reaches all time high of $1.92 albeit on thin volume, not doing too bad in this volatile market:-)

Hopefully two dollars will come sooner than later, though uncertaintly remains until the financing structure is disclosured. Will ANZ be interested in a placement? mmm...

P.S. Bobbyvee, well done on cashing in, we all have to take profits some time. I don't wanna sell out RFG yet because this latest deal has finally put it into the radar of bigger players and I believe there is more upside and downside at the current price level. Still underpriced IMO.

http://www.news.com.au/adelaidenow/story/0,22606,22392164-913,00.html


Retail Food Group bids for Michel's
September 10, 2007 11:30am

TONY Alford is now Australia's fast-food franchise king. First it was Donut King, then Brumby's Bakeries, now Michel's Patisserie.
Yesterday Mr Alford, the managing director of Retail Food Group, made an $88 million offer to buy 346 franchised Michel's cake outlets in Australia and New Zealand, sealing his position as the country's leader in the fast-food franchise fiefdom.

Soon he will be in control of 1020 food outlets -- among the most in the country -- with 322 Brumby's Bakeries stores, 290 Donut King shops and 70 bb's cafes, besides the 346 Michel's cake shops.

The move on Michel's sent RFG's share price soaring more than 28 per cent to $1.84 -- the biggest one-day gain since the company listed in June last year.

And Mr Alford will not be stopping at cakes. He is now eyeing a chain of coffee shops to complement his food empire.

"We are discerning in what we acquire -- we want quality franchise chains with strong management and experienced teams. There are over 8000 coffee shops in Australia and only 1400 are franchised. The sector is ripe for consolidation."

RFG will pay $50 million in cash and $38 million worth of RFG shares if Michel's is able to deliver earnings before interest and tax (EBIT) of $18 million in 2008.

RFG will also assume Michel's debt of $56 million.

Mr Alford said that the transaction will probably be debt-funded but the company is also considering a capital-raising.
"The finance structure has yet to be finalised but it will be done in the best interest of shareholders," Mr Alford said.


With the acquisition, RFG has now upgraded its EBIT forecast for next year to $32 million -- an increase of $13 million over earlier guidance given at the end of last month. This year the company reported EBIT of $12.2 million.

The acquisition will also be earnings-accretive in 2008.

Noel Roberts and Noel Carroll started Michel's as a bakery in Hornsby in northern Sydney 20 years ago. The chain quickly grew into 320 outlets turning over more than $220 million a year, selling gateaux, fruit flans, pastries, quiches, pies and sausage rolls.

Early last year, there was a management buyout led by John Livy who merged it with the master franchisee for Victoria and Queensland to create a national franchise business.

Mr Livy, who will remain with Michel's, said the acquisition by RFG will provide easier access to capital.

RFG chairman John Cowley said: "The acquisition represents a fantastic opportunity for the company to consolidate another impressive and complementary retail food system under its management umbrella."

Mr Alford said Michel's had a well-developed franchise system that would offer synergies with the rest of RFG's food operations.

In May, RFG paid $45.8 million for 321 Brumby's Bakeries shops.

tommy
13-09-2007, 02:12 PM
RFG falls to $1.71, on small volumes (as usual)... mmm, is this stock ever gonna take off? I'm getting bored of holding this stock!

RFG basically will more than double in size after Michel's takeover and has greater growth potential than ever before, yet it can't stir interest in the market? Isn't the franchise business model one of the safest havens at times like this? We need an investor presentation!

Bobbyvee
13-09-2007, 07:02 PM
Share all your frustration Tommy. I will now sit on to my reduced holding looking for that elusive blast-off, but I fear it might take 6 months!

mamos
14-09-2007, 06:12 PM
Are you guys worried about the debt levels at all.

My analysis below extracts from company announcements:

Brumby's
The Company expects that the compulsory acquisition in respect of acceptances not received pursuant to the offer will be completed by mid-September 2007. The Company expects the total acquisition cost to be approximately $45.8 million. The acquisition cost except for $2.76 million has been funded from debt.

Michel's
The consideration payable to TMGA shareholders is $50 million cash and a scrip
component being subject to an incentivated earn-out program based on TMGA FY2008
adjusted EBIT performance. TMGA shareholders will be entitled to be issued with RFG
scrip on a pro rata basis where TMGA’s adjusted FY2008 EBIT is between $13.25
million and $18 million.

TMGA also has debt of approximately $56 million which will either remain with the
company on completion of the SCTA or be refinanced by RFG.

I have assumed the cash consideration for the Michel's deal will be fully debt funded which may or may not be incorrect.

RFG Borrowings 30 June 07 24372000
Funding for Brumby's 43000000
Brumby's Debt 31 Dec 06 approx 2000000
TMGA Funding 50000000
TMGA Debt 56000000
Total $175,372,000

$175m in debt with very minimal few tangible assets to back this up. Most of the assets comprimise intangible assets. Although the FCF's are strong, I am uncomfortable investing in RFG with this level of debt as what I am buying is effectively a whole lot of debt that will take many years to clear from the earnings of the company, and even longer if dividends are continued to be paid to shareholders.

tommy
15-09-2007, 03:56 AM
Very valid point there mamos, I am well aware of the level of debt... that is why I previously said I suspect a placement is due with instos sooner or later. Not necessarily a bad thing if it goes into the portfolio of a few super funds given the fair dividend payout ratio.

I hate dilution of shareholder value but I don't think I would ever be able to buy back RFG at 80c again so am still holding patiently. If I could find better value in another stock, I would have sold out... but the market is too volatile at the moment, and I have plenty of cash so I am willing to stick RFG under the bottom drawer:-)

In regards to the asset backing issue, in a franchise business I would have assumed that there isn't really a lot of "tangible assets" in the first place as the franchiser doesn't own fixed assets and stuff, it's the franchisee who has to foot the bill... am I wrong here?

In any case, RFG intends to expand further through acquisitions of coffee chains, so they are definitely in need of cash. RFG is really tightly held and I don't like the fact that it is prone to market manipulation, so expanding the shareholder base wouldn't be a bad thing if it gets insto support. If it is just a capital raising through public issue I will be very disappointed because then they will be selling themselves too cheap. Michel's is a very established brand in Australia with a widespread national presence and the latest takeover is an excellent strategic move.

Given that Krispie Kreme in Tokyo is creating a lot of buzz among local consumers (people are queuing like the Russians in former Soviet Union!) RFG should also take a leaf out of their book and analyze the Asian market in the future for expansion of Michel's and Donut King there.

Huang Chung
15-09-2007, 08:18 AM
I think management need to better explain the RFG model to investors. If investors fully understood what RFG provides franchisees, the make up of its revenue stream, and had more information on the centralised manufacturing concept, cross selling / cross promotion between the chains in the RFG stable etc, they may be more comfortable with buying into the stock....myself included.

tommy
17-09-2007, 02:39 PM
I think management need to better explain the RFG model to investors. If investors fully understood what RFG provides franchisees, the make up of its revenue stream, and had more information on the centralised manufacturing concept, cross selling / cross promotion between the chains in the RFG stable etc, they may be more comfortable with buying into the stock....myself included.

Hi HC,

Hope the latest presentation makes a bit of sense to you about RFG's business!

http://sa.iguana2.com/cache/b28b15ab153120e0c621c8d5d4e222a7/ASX-RFG-191636.pdf

Interesting thing is that michel's main revenue source is wholesale and manufacturing margin, as opposed to franchise service fees, i.e. royalties.

"CMF currently delivering consistent high quality product to 50 South East Qld Donut King
franchisees

- Planned roll out of CMF product to a further 23 stores in North Qld underway
- CMF frozen blank pilot commenced - Revised taste profiles & coffee blends for Donut King and bb’s café completed
- CRF roasting and distribution underway following extensive product taste trials
- Initial production target set at 2.7 tonnes per week

CMF / CRF
- National rollout of Donut King CMF product to continue throughout FY08
- Planning for bb’s café product rollout for SE QLD to be completed within 6 months
- Investigations underway for CMF product supply to Brumby’s franchise system
- CRF product rollout underway to Donut King system to be followed by bb’s café and Brumby’s
- Joint venturer to pursue potential 3rd party sales contracts

Revenue & Profit Drivers
- Following Brumby’s acquisition:
- FY08 EBIT forecast to grow by 55% to $19 million
- FY08 NPAT forecast to be approximately $9.8 million representing a 30% increase over FY2007
- Underlying business drivers – ie increasing and sustaining franchisee AWS and ATV allied with new outlet commissionings - will again be the fundamental drivers of RFG revenue in FY08
- Brumby’s to provide additional Franchisee Revenue (excluding marketing) of circa $11 million – up 48% on FY07
- Corporate expenses FY08 forecast to be circa 42% of Franchise Revenue

Michel’s Acquisition
Scrip & Cash Terms Agreement Consideration
- Pursuant to the SCTA, RFG will be entitled to the whole of TMGA’s FY08 earnings (after deduction of interest on TMGA’s existing debt) from 1 July 2007
- Consideration payable to TMGA shareholders is $50 million cash and a scrip component being subject to an incentivated earn-out program based on TMGA FY08 adjusted EBIT performance
- TMGA shareholders will be entitled to be issued with RFG scrip on a pro rata basis where TMGA’s adjusted FY08 EBIT is between $13.25 million and $18 million
- Assuming full entitlement to the earn-out the maximum value of the consideration payable is $88 million with any scrip entitlement being issued on the earlier of the finalisation of the FY08 audited accounts or 30th October 2008
- TMGA debt of approx $56m will either remain with the company on completion of the SCTA or be refinanced by RFG

Funding of Acquisition
- Total Acquisition Cost:
Assumption of TMGA debt $56m
Cash Payout to Vendors $50m Funding solution proposed to be provided by ANZ
Total Acquisition Cost $106m
- Incentivised Earn-Out:
Where EBIT =< $13.25m nil
Where EBIT => $18.00m $38m
Payable by: Issue of RFG scrip no later than 31 October 2008
Scrip Pricing at 3 month VWAP less Discount
Discount on VWAP 10% if RFG (VWAP) share price is > $1.68 per share
5% if RFG (VWAP) share price is > $1.52 < $1.68 per share
0% if RFG (VWAP) share price = < $1.52 per share

Michel’s FY08 P&L Forecast
- FY08 Revenue principally derived from wholesale and manufacturing margin, as opposed to
franchise service fees, i.e. royalties.
- FY08 Outlet growth forecast to be 25 new stores

FY08 Outlook Combining TMGA with RFG
- Pre-synergies, the successful completion of the transaction is forecast to result in revised FY2008 EBIT of $32 million(1), an increase of approx $20 million or 167% on FY2007
- RFG is confident that the Michel’s acquisition will be EPS accretive in FY08 - quantum of EPS accretion is dependent upon the funding structure adopted and the scrip issue as a consequence of the earn-out

Capital Management
With the completion of the Brumby’s acquisition RFG’s debt to equity ratio stood at 60% [ND/(ND+E)].

This sits at the upper end of RFG’s preferred debt to equity range of 40% to 60%.
- Following the completion of the Michel’s acquisition (and assuming all debt funding) RFG’s debt to equity ratio would increase to 80% which sits outside its acceptable debt to equity ratio range. The Michel’s acquisition is subject to completion of RFG’s due diligence enquiries and is due for settlement late November.

- In conjunction with the acquisition of Michel’s RFG is reviewing its capital management. Such review will take account issues such as additional equity requirements and the current shareholder register including liquidity.

Bobbyvee
17-09-2007, 02:54 PM
So Tommy do you take the last paras to mean they will be looking to raise funds through specific institutional share placements?

tommy
17-09-2007, 03:29 PM
So Tommy do you take the last paras to mean they will be looking to raise funds through specific institutional share placements?

For the sake of existing shareholders, I would prefer them that they did so, but in terms of liquidity and expanding the shareholder base (it is sooooooo tightly held at the moment!), a public issue might be in the cards... given Michel's status as the number one coffee/patisserie chain in Australia, its brand name alone might be enough to garner enough interest from the public. However, I can't imagine instos not being interested in RFG's, so let's keep our fingers crossed. That said, the management might seek to combine the two...

Acquisition of Brumbies doubles the size of RFG, and the takeover of Michel's will mean it will triple... this is a huge acquisition and makes RFG a dominant player in the coffee/donut/patisserie franchise industry.

What surprised me the most in this presentation is that Michel's profit margin is derived from whole sale and manufacturing instead of franchise royalties. As we already know, RFG is trying to make more money out of existing franchisees through whole sale and manufacturing by CRF and CMF, so obviously they see a lot can be learnt from Michel's supply chain (synergies!)

Michel's has a great reputation for its coffee too and I had no idea they were a bigger chain than Gloria Jeans, McCafe, Starbucks and Coffee Club!! I wonder which coffee chain will join RFG next? Very excited about Michel's acquisitions, I hope the capital management issue gets sorted out soon.

Huang Chung
17-09-2007, 07:09 PM
The RFG presentation was very interesting Tommy.

Any thoughts about the quality of the balance sheet? Assets are by and large intangibles, which I guess is the nature of the beast.......

Bobbyvee
25-09-2007, 10:21 AM
Well! well! So now RFG is ex dividend and we revert to dull trade and negligible buyer interest. Maybe all will remain quiet until they clarify the financial plan moving forward. Let's hope there are some juicy buying opportunities in the meantime.

mamos
25-09-2007, 11:05 AM
With the completion of the Brumby’s acquisition RFG’s debt to equity ratio stood at 60% [ND/(ND+E)].
This sits at the upper end of RFG’s preferred debt to equity range of 40% to 60%.
�� Following the completion of the Michel’s acquisition (and assuming all debt funding) RFG’s debt to equity
ratio would increase to 80% which sits outside its acceptable debt to equity ratio range. The Michel’s
acquisition is subject to completion of RFG’s due diligence enquiries and is due for settlement late
November.
�� In conjunction with the acquisition of Michel’s RFG is reviewing its capital management. Such review will
take account issues such as additional equity requirements and the current shareholder register including
liquidity.




Are you guys worried about the debt levels at all.

My analysis below extracts from company announcements:

Brumby's
The Company expects that the compulsory acquisition in respect of acceptances not received pursuant to the offer will be completed by mid-September 2007. The Company expects the total acquisition cost to be approximately $45.8 million. The acquisition cost except for $2.76 million has been funded from debt.

Michel's
The consideration payable to TMGA shareholders is $50 million cash and a scrip
component being subject to an incentivated earn-out program based on TMGA FY2008
adjusted EBIT performance. TMGA shareholders will be entitled to be issued with RFG
scrip on a pro rata basis where TMGA’s adjusted FY2008 EBIT is between $13.25
million and $18 million.

TMGA also has debt of approximately $56 million which will either remain with the
company on completion of the SCTA or be refinanced by RFG.

I have assumed the cash consideration for the Michel's deal will be fully debt funded which may or may not be incorrect.

RFG Borrowings 30 June 07 24372000
Funding for Brumby's 43000000
Brumby's Debt 31 Dec 06 approx 2000000
TMGA Funding 50000000
TMGA Debt 56000000
Total $175,372,000

$175m in debt with very minimal few tangible assets to back this up. Most of the assets comprimise intangible assets. Although the FCF's are strong, I am uncomfortable investing in RFG with this level of debt as what I am buying is effectively a whole lot of debt that will take many years to clear from the earnings of the company, and even longer if dividends are continued to be paid to shareholders.

tommy
27-09-2007, 11:24 PM
Hi Bobby, mamos et al

RFG full year accounts released:

http://sa.iguana2.com/cache/124176d11d469e1499d358f44c24c547/ASX-RFG-192049.pdf

Nothing much in there... yawn.

tommy
28-09-2007, 02:41 PM
Now RFG forecasts a minimum EPS increase for FY2008 over FY2007 of 50&#37;.
Funding structure still under review though. yawn!

http://sa.iguana2.com/cache/eaaa76cff6999fa8a61d75b8d339e736/ASX-RFG-192072.pdf

ASX/media release
TMGA DUE DILIGENCE UPDATE & EPS GUIDANCE


On 7 September 2007 Retail Food Group Limited ('RFG') announced that it had entered into
a conditional Scrip & Cash Terms Agreement ('SCTA') to acquire all of the issued shares in
The Michel's Group Australia Pty Ltd ('TMGA').

TMGA is the intellectual property owner and manager of the Michel's Patisserie franchise
system ('Michel's'), a well known Australian food retailer which specialises in the sale of
cake, coffee and patisserie related products. As at 7 September 2007, there were a total of
340 Michel's Patisserie franchised outlets in Australia and a further 6 franchised outlets in
New Zealand.

The acquisition is subject to a number of conditions including shareholder approval, ASX
affirming the terms of the performance shares which will be issued in connection with the
incentivised scrip based earn-out and satisfactory completion of RFG's due diligence
enquiries.

RFG is pleased to announce that its due diligence enquiries have been satisfactorily
completed and that the SCTA is no longer subject to this condition.

RFG will keep the market informed as to satisfaction of the remaining conditions precedent to
the acquisition in accordance with its disclosure obligations.

Further to the revised guidance provided by the Company on the 7 September 2007, RFG
has continued to review its capital management strategies and in particular to resolve an
appropriate funding structure for the TMGA acquisition. Such review is ongoing.


In respect of FY2008, RFG has also previously indicated that the TMGA transaction would
be EPS accretive. Whilst the quantum of that increase will depend upon the funding structure ultimately adopted, the Company's Directors are of the belief that the TMGA transaction combined with the Brumby's take-over (which was completed on 3rd September 2007) will result in a minimum EPS increase for FY2008 over FY2007 of 50%.


RFG CEO Tony Alford said that "the Company's Board of Directors remain extremely excited
about the TMGA acquisition and the benefits which will flow from it, not only in favour of
Retail Food Group and its shareholders, but also the stakeholders in each of the Michel's
Patisserie, Brumby's, Donut King and bb's cafe franchise systems Retail Food Group is a leading Australian retail food brand manager and franchisor. It is the franchisor and intellectual property owner of the Donut King, bb's cafe and Brumby's systems. As at 28 September 2007, there were a total of 686 outlets comprising 324 Brumby's stores established in Australia and New Zealand, 292 Donut King stores established in Australia and a further 70 bb's cafe stores established within Australia and New Zealand.

ENDS

tommy
03-10-2007, 05:32 PM
RFG struggling to break two dollar mark, still hovering around $1.90.

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Arfg&draw.x=54&draw.y=17

Suppose no action until capital arrangement is finalized... yawn.

soulman
03-10-2007, 06:47 PM
Be patient Tommy. Sometimes impatient will cost you money. It has cost me plenty of money the past few months where I set a target and lowered it and eventually the original target will get hit in a few days time. It can cost plenty in the long-term.

The problem with RFG (I am not a holder) is the uncertainty surrounding the capital raising. Obviously, you know once the uncertainty has been removed, then the SP can climb again. Of course, it all depends on the take-up of the capital raising, if there is any and the price. If the price is a premium to the current share price, watch RFG go.

tommy
04-10-2007, 03:50 PM
The problem with RFG (I am not a holder) is the uncertainty surrounding the capital raising. Obviously, you know once the uncertainty has been removed, then the SP can climb again. Of course, it all depends on the take-up of the capital raising, if there is any and the price. If the price is a premium to the current share price, watch RFG go.

Hi soulman,

Agree with you that capital raising is the current bottleneck. But can't see it taking place ABOVE the current share price though, more likely to be a bit below the current levels to entice instos to join in.

In the meantime, I'm gonna stick this one back under the carpet... yawn!

tommy
16-10-2007, 06:08 PM
RFG finally breaches 2 dollar mark, sell side disappears :-)

Finally time for a party?

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=AU%3Arfg&draw.x=54&draw.y=17

esprit
17-10-2007, 05:48 PM
Chart looking great tommy, congrats.

Whatever happened to Robbo btw? (original starter of this thread).

_Michael
17-10-2007, 05:58 PM
Yeah - nice call Tommy/Robbo :eek:

Have been following but it was one of those where you wait for the pullback, but instead it just keeps charging forward, first through $1 then $2. I can also say that I am a regular user of their recently acquired bread businesses, my fiance and I have no substitute for Brumby's when it comes to good bread. It seems to be a massively successful franchise set up over here in NZ.

M

tommy
17-10-2007, 06:21 PM
Chart looking great tommy, congrats.

Whatever happened to Robbo btw? (original starter of this thread).

Cheers espirit, as for Robbo I have no idea what happened to him... he just seems to have disappeared! It's a shame because his posts were fun and his stock picking skills were amazing.

Michael, thanx for the thumbs up for Brumby's! Didn't know they were popular in NZ. Anyway, RFG has always been a scary stock to hold because of its total lack of liquidity... it is virtually impossible to sell large volumes without causing the share price to plummet. Trading volume is virtually nonexistent so if someone decides to sell large holdings, the stock can tank quite a lot (though luckily this hasn't happened to date).

Let's see how RFG trading volume will change after capital raising.

tommy
18-10-2007, 01:45 PM
Trading halt! WTF? Capital raising? Don't tell me its a another takeover, I can't keep up with this!

etrader
18-10-2007, 01:54 PM
Tommy given that's till monday and the weekend falls, my gut would tell me that it has become a takeover target, or they are taking something else over.

tommy
18-10-2007, 02:02 PM
Tommy given that's till monday and the weekend falls, my gut would tell me that it has become a takeover target, or they are taking something else over.

Hi etrader,

I doubt RFG has become a takeover target (in fact I would NOT be happy if it is snapped up before it realizes its full potential) simply because I don't see any company that is bigger and could be a good franchise fit with RFG... if it is a takeover, they will be the ones snapping up smaller fish. But so soon even before finalization of Michel's deal?

I would have thought its more likely to be about the capital arrangement through a placement that they have implied previously to sort out the financing to take over Michels. But then again, they should just announce it rather than going into trading halt... mmm?

trader-jim
18-10-2007, 02:03 PM
I don't think there have been trading halts for the previous takeovers and they would be a bit stretched to start another takeover so more likely to be capital raising.

If its a takeover of RFG who would be likely bidders?
:confused:

mark100
18-10-2007, 02:29 PM
Page 2 of the annoucement says the halt is for a placement

tommy
18-10-2007, 02:44 PM
Page 2 of the annoucement says the halt is for a placement

woops. missed page 2, thanx mark for the clarification! Now all that matters is whether it is institutional and what the issue price will be. Better not be below $1.90!

tommy
19-10-2007, 11:19 PM
Wow, that's a big placement... market cap will be close to 200 million after that.

But at least its all instos, not surprising they got commitments considering the good price ($1.85).

Now that the financing structure is clarified, I expect a bit of a retreat in share price and then a rerating upwards. Still holding :-)

____________________________

19 October 2007

ANNOUNCES $44.4 MILLION CAPITAL RAISING

Retail Food Group Limited (RFG) announced today that it had received commitments for a
placement of 24 million ordinary shares at $1.85 per share to raise $44.4 million before
costs.

Participants in the placement represent a range of institutional and private investors with all
existing institutional shareholders participating in the placement.


Funds will be applied to partially fund the cash component of the consideration payable to
The Michel’s Group Australia Pty Ltd (TMGA) and also pay down debt associated with the
recent acquisition of Brumby’s.

The placement has been made to new and existing institutional and sophisticated investors
pursuant to Section 708 of the Corporations Act 2001. All of the shares issued under the
placement will rank equally with existing ordinary shares.

The placement has been structured as follows:
• Tranche 1 – comprised of 11 million ordinary shares placed using the Company’s
15% placement capacity under ASX Listing Rule 7.1 raising $20.35 million; and
• Tranche 2 – comprised of 13 million ordinary shares placed subject to shareholder
approval under ASX Listing Rule 7.1 to raise $24.05 million.

A meeting of RFG shareholders to approve Tranche 2 of the placement is proposed for 28
November 2007. The notice of meeting will be sent to RFG shareholders shortly.

Following completion of the issue, RFG will have approximately 97.6 million ordinary shares
on issue.


RFG CEO Tony Alford said “we are extremely pleased with the significant interest and
response received in connection with today’s share placement and the tremendous support
RFG has recently enjoyed in respect of its industry consolidation aspirations and acquisition
activity”.

RFG Chairman John Cowley said, “a number of well respected institutional investors have
now become shareholders following the placement and the Board would like to sincerely
welcome them to the register whilst also thanking those existing shareholders who have
increased their shareholding in the Company”.

Mr Alford added, “not only has today’s placement facilitated the prompt raising of capital
necessary for the further realisation of the strategic plan outlined in our May 2006
Prospectus, it allows RFG to redouble its focus on managing its business, and in particular,
finalising the integration of Brumby’s Bakeries”.
ASX/media release

“With the composition of the Company’s capital structure now substantially determined, and
assuming the TMGA transaction is completed in 1HFY2008, the Company’s Directors remain
confident that the EPS accretion for FY2008 over FY2007 will be equal to or exceed 50%”,
he said.


“The acquisition of Michel’s Patisserie, which will bring total store numbers under RFG’s
stewardship to in excess of 1,030 outlets, bodes well for the Company’s shareholders and
RFG is well placed to deliver further rewards to its shareholders both this financial year and
subsequently”, he said.

Austock Corporate Finance Limited acted as lead manager to the placement referenced
above.

TMGA Update
As previously advised on 7 September 2007, RFG announced that it had entered into a
conditional Scrip & Cash Terms Agreement (“SCTA”) to acquire all the issued shares in
TMGA, the intellectual property owner and manager of the 348 store Michel’s Patisserie
franchise system (“Michel’s”).

The consideration payable to TMGA shareholders is $50 million cash and a scrip component
subject to an incentivated earn-out program based on TMGA FY2008 adjusted EBIT
performance. Assuming full entitlement to the earn-out, the maximum value of the
consideration payable to TMGA is $88 million.

TMGA also has debt of approximately $56 million which will either remain with the company
on completion of the SCTA or be refinanced by RFG.

Together with regulatory and shareholder approval, the SCTA remains conditional upon RFG
obtaining finance on terms which are satisfactory to it.

The balance cash component of the consideration (not covered by funds raised under the
above placement) payable to TMGA shareholders on completion of the SCTA will be funded
by debt and existing cash reserves.

Retail Food Group is a leading Australian retail food brand manager and franchisor. It is the
franchisor and intellectual property owner of the Donut King, Brumby’s and bb’s café
systems. As at 19 October 2007, there were a total of 687 outlets comprising 292 Donut King
outlets established in Australia, 325 Brumby’s outlets established in Australia and New
Zealand, and a further 70 bb’s café outlets established within Australia and New Zealand.

ENDS
Matthew Hart BBS Publications Relations - (07) 3221 6711

thereslifeafter87
22-10-2007, 09:40 AM
It looks to me like RFG will still be loaded up with debt even after the capital raising.

The $44 mill won't even cover the purchase price for the new acquisition, and they're assuming another $56 mill in debt on top of the cash they're forking out!

Has anyone done the work to see the likely debt/equity split post acquisition?

tommy
28-11-2007, 05:51 PM
RFG share price has been struggling badly lately but hopefully the latest release will boost confidence. Today's trading volume was unusually large despite being on a down day of the overall market.
Following is an extract of today's MD presentation:

RFG has previously provided FY2008 earnings guidance;
• inclusive of the Brumby’s Bakeries Holdings Limited acquisition; being a 55% increase in EBIT to approximately $19 million and NPAT of $9.8 million – an increase of 30%, and
• inclusive of the Brumby’s Bakeries Holdings Limited and The Michel’s Group Australia Pty Ltd acquisitions; being annualized FY2008 EBIT of $32 million – an increase of $20 million or
167% over the Company’s FY2007 EBIT result and a minimum increase in EPS of 50%.

By way of current status we advise that as at the 31st October 2007;
• ATV and AWS in the Brumby’s Bakery, Donut King and bb’s Café systems are trending positively and are either consistent with or exceeding FY2008 forecast for the same period,
• Gross New outlet rollout is also ahead of forecast, and
• At this juncture the Company will exceed forecast 1HFY2008 New outlet and Net outlet growth.

That said, RFG is comfortably achieving its FY2008 earnings guidance so far as it pertains to its business operations without regard to the acquisition of TMGA.
So far as TMGA is concerned, we have also reviewed their management accounts for the period ending 31st October 2007 and can confirm, that based upon current performance TMGA is presently on track to achieve that FY2008 EBIT forecast by RFG, namely $13.2
million.

As previously detailed in this Address, the Christmas, New Year and Easter retail trading periods are critical in determining the outcome of full year operations and we will provide the market with further advice when the Company announces its 1HFY2008 results.

tommy
09-01-2008, 04:02 PM
WTF, RFG down to $1.60, this in painful man...

http://bigcharts.marketwatch.com/interchart/interchart.asp?symb=au%3Arfg&draw.x=0&draw.y=0

Low volumes as usual so not worried but lack of depth is a real risk at times of market volatility. All my small caps are getting burnt badly, including ADA.

Anyone still holding?