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Retail Food Group Limited flags more trouble ahead

Retail Food Group Limited (ASX: RFG) shares entered a trading halt this morning after the company announced its results would likely be delayed. The company stated:

“(Our half-year) results can only be finalised and released to the ASX once RFG’s financial statements for the period have been finalised. That can only occur once the auditor’s report has been issued which may not, RFG currently understands, be available to RFG until Friday 2 March 2018.

RFG confirmed that its first half net profit after tax (NPAT) would be “materially less than the result for the equivalent prior period.”

It appears a delay with the auditor is the cause of the trading halt, but I find this unusual. I don’t think Retail Food Group has ever been late reporting in the four years that I’ve followed them, which makes me question whether there is more at play.

This is pure speculation on my part, but I wonder if Retail Food has either had an argument with its auditor, or if it had trouble finalising its own accounts.

Given the media reports of troubles at its franchises, and the vagueness of the profit downgrade on 9 January, where profit guidance was for “below $22 million”, I am beginning to think RFG’s upcoming report will be ugly.

We will have full coverage for you when it arrives.

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Motley Fool contributor Sean O'Neill has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Retail Food Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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