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Ryan Chellingworth: Thank you, everyone, for standing by. Welcome to the Retail Food Group First Half 2026 Results Presentation. [Operator Instructions] I will now hand over the conference to Peter George, Executive Chairman of Retail Food Group.
Peter George: Good morning and thank you for joining the Retail Food Group first half presentation. My name is Peter George, and I'm the Executive Chairman of RFG. I'm joined today by Ryan Chellingworth, who is the Group's Chief Financial Officer. Ryan was appointed CFO on the 1st of January this year, having previously served as Deputy CFO. He is a chartered accountant with over 25 years experience domestically and in the U.K., including as Group Treasurer at EML Payments. Ryan brings a strong blend of financial fundamentals and commercial acumen, and I'm confident he'll make a significant contribution to RFG's next phase. Today, we'll be providing an update on the first half business performance, financial results for the period, the outlook for the balance of the financial year and recent trading, and then we will open up to questions. RFG remains Australia's largest multi-brand retail food franchise manager. We own and manage 10 brands with a global footprint of over 1,200 trading outlets across 29 countries, including over 690 outlets in Australia. We also manufacture and distribute high-quality pies from our Sunshine Coast bakery and roast and distribute coffee from our Sydney Roastery, and we hold the exclusive license to establish Firehouse Subs in Australia. As we move forward, our focus is on building our core brands by concentrating our resources and investment under the strategic framework that will be detailed today. Turning to Slide 5 and the key messages from today's presentation. First half was a period of mixed conditions. Consumer sentiment remains subdued, particularly across shopping center exposed categories and our earnings declined as previously guided. However, the results also provided insight into the opportunities moving forward as we focus on transformation and enhancing the network. Across our core brands network sales rose 0.8%. Same-store sales were up 0.2% and average weekly sales grew by 0.9%. These metrics demonstrate improving network quality and underlying brand resilience even as the total number of stores declined through the exit of low-performing and noncore outlets. Further progress has been made on the company store strategy reset with 70% of the 50 targeted transitions or exits now either agreed or complete. The refinancing announced on the 3rd of February provides balance sheet certainty and scope to further execute our strategic priorities. Today, we are also outlining a transformation program built around 3 pillars: cost rationalization, operational enhancement and structural alignment. This program is designed to right size the organization, consolidate our Southeast Queensland offices to our Robina headquarters, remove process inefficiencies, improve supply chain and field team effectiveness and ensure brand-aligned leadership. These actions will deliver material cost savings, will improve franchise partner support and position the business for sustainable earnings growth. Our growth opportunities remain central to the longer-term earnings story and will continue to be pursued with disciplined investment. First Firehouse Subs restaurant is planned for launch in the fourth quarter of this financial year. Our Turkiye international hub is now operational, and we continue to focus on sustainable network expansion for Beefy's Pies. Turning to Slide 6. At the headline level, domestic network sales were $254.6 million, down 1% on the prior corresponding period with domestic same-store sales growth of 0.2%. Growth in Crust and Beefy's offset softer conditions across the shopping center exposed categories. Domestic outlets ended the period at 693, which was down 29 from the number at June 2025 as we exited low-performing sites and progressed the company store strategy reset. These actions have resulted in improved network quality, and we are seeing the benefits through improved average weekly sales across the remaining stores. Underlying revenue declined 1% as higher Beefy's revenue was more than offset by cycling the $2.7 million in nonrecurring insurance proceeds and $0.6 million in deferred franchise-related income recognized in the prior corresponding period. Underlying EBITDA declined 43% to $9.2 million within the $9 million to $10 million guidance range provided to the market a couple of weeks ago. The decline reflected several factors, lower gross margin on slower-than-expected ramp-up of the newer Beefy's stores, compressed coffee margins where the group chose to maintain wholesale pricing to support franchise partners through the difficult trading conditions, absorbing higher green coffee bean costs and finally, delays in the commissioning of the new international supply hub in Turkiye. Looking at the network results in more detail. Core Brands, as we said, delivered network sales growth of 0.8% and same-store sales growth of 0.2%, driven by continued strength in Beefy's and Crust as customer count improved and competitor discounting in the pizza category eased. Improving network quality was evidenced by core brand average weekly sales rising 0.9%. During the period, we opened 22 new outlets across our core brands, offset by the closure of low-performing stores and the exit of sites as part of the company's store strategy reset. Within the coffee, cake, bakery segment, Gloria Jean's and Donut King traded in line with the challenging conditions flagged at the AGM in November. The Glorange refresh and premium product innovation continue to provide positive support, which I will cover shortly. In QSR, Crust delivered same-store sales growth of 2.2%, building on the momentum that we saw in the fourth quarter of last financial year when network sales returned to growth. Beefy's continued to perform well with same-store sales growth of 4.6%. RFG's immediate priority is improving core brand network sales and operational efficiency, which will maximize value for both our franchise partners and our shareholders. This involves 3 areas of focus: first, operational improvements to enhance our service delivery to franchise partners; second, procurement and supply chain initiatives to improve buying and reduce input costs; and third, a back-to-basics marketing strategy, targeting core customers and driving foot traffic. The goals of these focus areas is to increase network sales across core brands and improve store level profitability for franchise partners. As we've previously highlighted, RFG does well when its franchise partners do well. Early proof points of this strategy are encouraging with core brand same-store sales growth of 0.2%, average weekly sales up 0.9% and the current year cost reduction run rate of $1.2 million to $1.8 million already achieved. We will also have seen further Glorange store refresh success, which I'll discuss on the next slide. As previously disclosed, following the conclusion of the potential divestment review process, the Board has decided to retain Brumby's Bakery as a core CCB brand. While the process attracted considerable interest from multiple parties, we were not convinced that the options available would be in the best interest of shareholders, franchisees or team members at this time. Brumby's remains profitable and is an important contributor to the group's performance. We are currently developing strategies to support and grow the Brumby's network, and we will share these in due course. Our key medium-term growth opportunities, Firehouse Subs, international and Beefy's will continue to be supported by disciplined investment, and I will address each of these later in this presentation. The transformation program sets out the practical actions that will allow us to execute against our strategic priorities structured under 3 pillars. The first is cost rationalization. We are rightsizing the business to align with expected revenue growth. This includes consolidation of our Southeast Queensland offices to our single headquarters in Robina and reducing management layers to improve speed of decision-making. The second is operational enhancement. We are identifying and addressing process inefficiencies, improving supply chain and field team effectiveness and simplifying internal processes. The end goal is faster, better support for our franchise partners. The third pillar is structural alignment. We are improving our core business units with brand-aligned leadership, better operational alignment across brands and more effective use of centralized support functions. These pillars have clear measurable outcomes that will deliver $1.2 million to $1.8 million in cost savings during FY '26 that we have previously disclosed, targeting to increase to $5.7 million to $7 million of annualized cost savings during FY '27. They will support our focus on increasing core brands store numbers over time, and they underpin our goal to improve RFG profitability. Crucially, these initiatives are designed to be mutually beneficial for RFG and our franchise partners. The Gloria Jean's refresh. The Gloria Jean's Glorange format continues to demonstrate encouraging performance. Sales of the refurbished Glorange outlets in Goulburn and Robina are up 31% and 25% on the prior corresponding period. Our new store at GJ Shepparton is trading at 24% above the Gloria Jean's network average, excluding the drive-thru sites. Five further Glorange refreshes are planned for the second half, which will provide additional data points to validate the format at scale. Beyond the physical store format, we're also refreshing the broader Gloria Jean's market approach and improving the in-store customer experience. The combination of a modernized store environment, improved product offering and targeted marketing is designed to reenergize this brand for its next chapter. Brand innovation continues to drive customer engagement and network sales growth across our portfolio. Donut King's premium Christmas program lifted campaign performance 15% versus the prior corresponding period with the premium donut category advancing 14% following the Pistachio and Biscoff campaigns. This continues the strong Donut King premium range trend we highlighted at the AGM. Crust rolled out 5 new summer flavors generating over $1 million in additional product sales. This follows the success of the meat deluxe collection, which delivered $1.3 million in incremental sales in FY '25. Crust continues to benefit from its position as a QSR sector leader, topping the Fonto December quarter customer satisfaction scores across pizza brands. Gloria Jean's launched a collaboration with Pistachio Papi in September 2025, building on earlier global brand collaborations and extending the brand's relevance into new beverage occasions. Beefy's Pies. Since our acquisition of 9 Beefy's Pies stores in December 2023, we've delivered 7 new outlets and consistent network sales growth. In the first half of this year, the brand delivered 19% network sales growth and 4.6% same-store sales growth. Average weekly sales across the network were $28,000, while the 7 newer stores averaged $15,000, which is 70% of the non-highway network average and was below our expectations. The newer store performance is, therefore, what we are focusing on near-term for this brand, operational and marketing improvements to lift new store ramp-up and ensure sustainable growth as we expand beyond the Sunshine Coast. Recent innovation includes the Aussie Roast Lamb Pie with over 15,000 units sold since November. This type of product-led innovation is important in driving trial and repeat purchases in new markets. International represents another important medium-term growth opportunity. Our Turkiye hub is now operational, improving service levels and purchasing compliance by positioning supply closer to our master franchise partners and unlocking road freight options across the region. This is a meaningful structural improvement that will support margin and growth for our international franchise network. We appointed a Head of International in September last year, and we are reviewing incentive structures for international franchise partners to encourage store growth in key regions. International trading outlets stood at 528 at the end of the period, effectively flat on the prior 6 months. Firehouse Subs. Further progress has been made towards RFG's Australian launch of Firehouse Subs. During the half, we advanced the selection of key suppliers, progressed stores design finalization and develop marketing launch plans with agency support. Under the terms of our 20-year development agreement with Restaurant Brands International, we have a target to open 15 company-operated restaurants in the first 3 years and have a right to commence sub-franchising from year 4 with a target of 165 stores over 10 years. We continue to target the first Firehouse Subs restaurant opening in the fourth quarter of this financial year in Southeast Queensland. Turning to the company store reset. As announced in August, alongside our FY '25 results, 50 of our 65 company-operated stores were identified for sale or exit with the remaining 15 to be retained. The retained portfolio is concentrated in Beefy's Pies, which we will continue to operate as company stores to drive brand expansion, along with Gloria Jean's and one Donut King outlet. At the end of February 2026, 70% of the 50 targeted outlets have now been transitioned, agreed for sale, exited or closed. In the first half, the stores identified for sale or exit recorded a post-AASB 16 loss of $1.2 million and a cash outflow of $2.1 million, inclusive of lease costs. This strategic reset remains central to improving RFG's cash flow profile and network quality. As transitions take effect in the second half, we expect the associated cash outflows to reduce, contributing to an improvement in group cash flow. I'll now hand over to Ryan to walk through the financial results in more detail.
Ryan Chellingworth: Thank you, Peter, and good morning, everyone. Turning to Slide 17, which outlines the P&L for first half 2026. Underlying revenue declined 1% on the prior corresponding period. Higher company store revenue from Beefy's and the full period contribution from CIBO Espresso helped offset the cycling of 2 one-off items in the prior period, $2.7 million in insurance recovery proceeds and $0.6 million in deferred franchise income. Gross margins were pressured by higher coffee bean costs, which the group chose to absorb rather than pass on to franchise partners given the challenging trading conditions. A wholesale coffee price increase will take effect from March 2026, which combined with better buying of green coffee beans is expected to support gross margin improvements in the second half. Underlying EBITDA and NPAT declined as a result of the above, together with a reduction in lease impairment benefits relative to the prior period, which we have previously flagged. Whilst company store costs increased from the new Beefy's stores and the CIBO full period impact, we did see a reduction in corporate overhead costs due to a reduction in bad debt expense, insurance costs, recruitment fees and occupancy costs. On Slide 18, we reconcile underlying to statutory EBITDA with detailed reconciliations including in the appendix on Slides 27 and 28. Key reconciliation items include company store lease provisions, company store trading results for outlets identified for sale or exit, marketing fund timing differences and growth horizon investment costs relating to Firehouse Subs and international hub establishment. Statutory NPAT for the period was $2 million, a reduction from $7.3 million in the PCP for the reasons outlined on Slide 17. Moving to Slide 19. The CCB division accounts for 72% of RFG's domestic network sales, contributing a greater share of EBITDA due to the vertical integration of coffee and pies. CCB same-store sales were resilient, down 0.4% though declining customer count and noncore outlet closures drove network sales 2.4% lower in difficult trading conditions, particularly in shopping centers. Positively, average weekly sales rose 1.7% and average transaction value increased 4%, indicating improved network health among continuing stores. Underlying segment EBITDA declined 47% to $7.5 million, reflecting compressed coffee margins, the cycling of one-off revenue adjustments across insurance proceeds and deferred franchise income and a lower contribution from lease impairment releases relative to the prior corresponding period. Turning to QSR on Slide 20, which accounts for 28% of domestic network sales. Key trading metrics across QSR improved over the period. Network sales were up 2.8% and same-store sales grew 1.6% with customer count, average weekly sales and average transaction value all rising. We opened 4 new Crust outlets during the half and the easing of aggressive competitor discounting that had previously impacted the pizza category supported growth for the brand. Crust had deliberately chosen not to participate in a price war to protect franchise partner profitability and was able to capitalize through a continued focus on value for the customer. Underlying segment EBITDA declined due to the cycling of lease and bad debt provision releases in the prior corresponding period. Moving to Slide 21 and our operating cash flow. Our operating cash flow declined by $9.9 million versus the prior corresponding period. This reflects several factors. First, the cycling of the one-off benefits in the PCP, including insurance proceeds and debt recoveries. Second, lower gross profit from the decision to maintain wholesale coffee pricing to support franchise partners and a lower contribution from Beefy's. Third, noncore cash outflows, including those relating to the setup of the international hub and Firehouse Subs preparatory costs. And fourth, company store cash outflows, which are expected to reduce in second half 2026 as transitions and exits take effect. We expect a meaningful improvement in operating cash flow in second half 2026, driven by the wholesale coffee price increase from March, cost-out benefits and the progressive reduction in company store outflows following the store exit and transitions in the first half 2026. On Slide 22, we include the balance sheet. We ended first half 2026 with $16.7 million of cash, which includes $11.3 million of restricted cash relating to marketing funds, bank guarantees and Firehouse Subs commitments. Working capital increased modestly due to seasonal timing and inventory positioning through the holiday period. Lease-related assets and liabilities reduced as company store exits progressed. At first half 2026, we had drawn borrowings of $32.5 million under our previous debt facility. Post period end, we completed the refinancing of a new $41.2 million facility with WH Soul Pattinson maturing 31st of August 2027. This facility provides for an additional $7.5 million drawdown to support our strategic priorities. Moving to Slide 23. The debt refinancing delivers balance sheet certainty and supports the company's strategic priorities. Our capital allocation framework is now focused on 5 areas: first, core brand operational efficiency and targeted marketing to drive network sales; second, the cost-out program across the 3 pillars Peter outlined, which directly supports cash flow improvement; third, maintaining appropriate liquidity to execute our strategic priorities; fourth, the initial Firehouse subs rollout funded within the new facility; and fifth, leveraging the Turkiye hub to support growth in our international franchise network. With that, I will hand back to Peter to discuss our FY '26 outlook.
Peter George: Thank you, Ryan. For FY '26, we continue to guide underlying EBITDA of $20 million to $24 million. This guidance implies a meaningful improvement in the second half relative to the first half, which is underpinned by several drivers that we have discussed today. Macro conditions remain challenging, and our market will stay tightly -- marketing will stay tightly focused on core customers and value-driven propositions. In the first 8 weeks of calendar 2026, core brand network sales were down 5.5% versus the prior corresponding period, primarily reflecting customer count impacts within the CCB division from outlet closures. Over the same period, core brand same-store sales declined 0.2%, demonstrating continued brand resilience in a challenging environment. Looking at the key drivers for the second half. Gross margin is expected to improve as the wholesale coffee price increase takes effect from March, combined with better green bean purchasing and improved international coffee trading. Cost-out initiatives are underway and expected to deliver $1.2 million to $1.8 million of savings in the second half with the full year FY '27 benefit expected to reach $5 million to $7 million. International growth will be supported by the go-live of the Turkiye hub and incentive programs for master franchise partners. Company store cash outflows are expected to reduce as transition benefits take effect. Beefy's will focus on brand expansion outside the Sunshine Coast and on lifting the performance of the 7 newer stores for operational and marketing improvements. And Firehouse Subs remains on track for a fourth quarter '26 opening with the refinancing providing the funding runway for the initial rollout. Before opening to questions, I'd like to take this opportunity to thank our franchise partners and team members for their commitment through what has been a challenging period. Our franchise network is the heart of this business and the actions we are taking are designed first and foremost to improve their outcomes. I'd also like to thank our shareholders for their continued support as we execute the transformation and growth agenda. While near-term earnings have been impacted by a number of factors, the strategic foundations we are building, notably a leaner cost base, stronger core brands and a compelling growth horizon in Firehouse Subs and international position RFG well for sustainable value creation. We'll now move to questions. As a reminder, if you wish to ask a question please enter it into the webinar chat.
Ryan Chellingworth: Moving to the questions. So we've had some come through prior to the webinar, and there's some that have come through since the webinar started. First question: What is being done to modernize and bring back the Bakery division? Why has it not competed with other bakeries taking market share?
Peter George: Well, I think it's -- since COVID, it's been fairly stable. It hasn't competed with some of the other bakery chains for reasons probably related to the allocation of capital to other areas of priority. But it is -- as we said earlier, we've decided to retain the asset, and we will come to the market with details of its strategic future in the near-term.
Ryan Chellingworth: The second question that's come through from the chat, it's come through from Ling Zhang. Could you please let us know the result of the revised corporate store strategy, especially the results for cash flow in the first half 2026? I'm happy to take that one. So as we noted in the presentation, we have 70% of the 50 company stores, we have either transitioned to franchise partners. We have agreed sales in place or we've exited or closed. From a cash flow perspective, we saw cash outflows of $2.1 million in the first half 2026, which we expect to improve through the second half as those store transitions take effect. The next questions come from Ken Wagner. How many Firehouse stores do you expect to have at the end of FY '27?
Peter George: We have a contractual commitment for 15 stores in 3 years. The 3 years is probably running about 6 months behind schedule for a number of reasons, access to appropriate sites. We took a while to get the supply chain for the ingredients put in place. So by the end of 2027, I would expect we'd have somewhere around half of the 15 stores in place.
Ryan Chellingworth: Second question from Ken. Assuming Glorange works, how quickly can you roll it out to the rest of the Gloria Jean's stores?
Peter George: Well, we're confident that it will work. We need to give it a fairly rigorous trial period, though, because we do in this industry, often see a honeymoon effect of a refurb of the store, then it comes back to its original sales performance. In order to encourage franchisees to invest the money in refurbishing, we have to have fairly compelling proof. So once that compelling proof is available, which I think it will be in the near future, the rest of the network will be refurbished in accordance with the requirements of the franchisee and the landlord, but it will take probably 2 to 3 years for the whole network to be transformed.
Ryan Chellingworth: Next question from Ken. How material is the international business in terms of EBITDA?
Peter George: Yes. Right now, it's not immaterial. It contributes $2.5 million of the total, so it's about 10%. There is significant upside potential though out of the new supply chain initiatives that were put in place recently, we were missing a lot of revenue because they weren't buying coffee office because of the inefficiency of providing that out of Australia and Dubai. So we think its potential in the long-term is to be much more significant, probably somewhere around the 20% of earnings level.
Ryan Chellingworth: Okay. Next question comes from Larry Gandler. With regards to the debt facility, does RFG expect the facility to be fully drawn by the end of financial year 2026?
Peter George: Yes.
Ryan Chellingworth: Second question from Larry. What have early demand indications or what early demand indications can you discuss about Firehouse Subs? Has the company -- is the company building consumer anticipation?
Peter George: The answer to that is, yes. We've done extensive taste testing and that's universally come back very positive. The proposition is that these are much higher quality products than the main competitor offers. The price differential is not great. There are a few added extras such as availability of fries, which our main competitor doesn't offer. And further down the track, the angle of the Firehouse foundation will come into play.
Ryan Chellingworth: Okay. We'll just pause there for one moment while we wait for any more questions to come through. On the basis that we don't have any further questions coming through, that concludes today's presentation. Thank you, everyone, for joining in, and have a good day.