Retail Food Group Limited Investor Class Action

This is a proposed class action against Retail Food Group Limited (ASX:RFG) (RFG) in relation to losses suffered by shareholders following disclosures between December 2017 and February 2018 that revealed that RFG's franchise model was under stress and required a fundamental rebalance.

Shareholders who acquired shares in RFG in the period 18 April 2017 to 28 February 2018 inclusive (Relevant Period) are invited to sign up with IMF.

Background

RFG operates several franchise networks in Australia and overseas, under brands including Donut King, Gloria Jean's Coffee, Michel's Patisserie, Brumby's, Crust, Pizza Capers, The Coffee Guy and Cafe2U.

On 7 and 13 December 2017, RFG disclosed that in June 2017 the Board of Directors had commissioned its former auditors Deloitte Touche Tohmatsu to conduct a Business-Wide Review of the sustainability of the company's franchise model and franchise network operations. During the same period Fairfax Media reported that RFG's franchise model had caused significant financial stress across its domestic brands.

Between 8 and 18 December 2017 RFG's share price fell $1.75 (approximately 40%) as a consequence of the above RFG Disclosures and Fairfax media reports.

On 19 December 2017 RFG announced that its 1H18 results would be materially lower than the prior corresponding period. This 1H18 underperformance indicated that full-year net profit after tax (NPAT) growth would also be materially lower than guidance provided on 29 August 2017 of 6% NPAT growth. RFG's share price fell a further $0.67 (approximately 25%).

On 28 February 2018, RFG's securities were placed in a trading halt pending the release of its 1H18 results on 2 March 2018. In those results RFG disclosed a series of very large asset impairments, a dramatic deterioration in the financial performance of its franchise brands and plans for closure of 160-200 stores by the end of FY19. By the close of trade on 5 March, RFG's share price had fallen $0.75 (approximately 36.5%).

Cause of Action

The class action to be conducted by Phi Finney McDonald on behalf of aggrieved shareholders of RFG will allege that RFG contravened its continuous disclosure obligations and engaged in misleading or deceptive conduct throughout the Relevant Period, by concealing from shareholders the material risks to the financial sustainability of its franchise model, and by providing future earnings guidance in August 2017 that lacked reasonable grounds.

The proposed claim period commences on 18 April 2017 and concludes on 28 February 2018, inclusive. Further details about the proposed claim can be obtained by contacting IMF using the details below.

How much will it cost to be part of the class action?

The class action is being run on a no win - no pay basis, with all costs fully underwritten by IMF. If you sign a funding agreement with IMF, you will not have to pay any fees unless the claims are successfully resolved. IMF will pay the other side's legal costs if the class action is unsuccessful.

Current stage of case

Open to sign-up; Pre-proceedings.

If you wish to participate in the class action, please ensure that you sign up either by completing the online sign-up steps or by requesting an Information Pack from IMF using the contact details below.

How do I sign up?

To sign up, you can do so by clicking on the "Sign up" button below. Alternatively, you can contact the IMF Client Liaison Team by email on [email protected] or free call 1800 016 464.