Ann: 1H23 Results Presentation, page-16

Sorry, everyone. In my last post naming the lenders, I marked sentiment as buy. That was before I looked at the half yearly accounts. Sentiment should have remained as hold.

All those wonderful stories and improvements and the EBITDA, which George's remuneration depends on, mean diddly squat when you look at the key figures. Simply move the figures around so you claim the great EBITDA "before the etc", which are normal expenses now. The upshot is that in the period, the company reported a loss before tax benefit (if it ever eventuates) of $1.36m. Most of the payments for the ceased ACCC and class action commitments will be paid in the second half, not in this period (remember RFG has a commitment of $13m for this).

Additionally, the cash flow result is also poor. The cash from basic operations was just $8m, which was insufficient to meet interest, principal reduction and lease payments. The financials did not contain a breakdown of accounts receivables that, in the final accounts, show that the company was covering the franchisees who do not pay for the goods they sell.

Until the company actually achieves positive cash generation and real profits, I can't support a buy sentiment. I can't support George's bonuses nor that the company has really turned around.

I hoped for a lot better result this half year.

A lot of posts have mentioned the possibility of a take over. The biggest benefit of a take over of RFG is not the value of the underlying businesses but legitimate access to the over $400m in retained losses! That's a lot of tax saving!