Sales lower than expectations.

Following an improving trend in like-for-like (LFL) sales in Q3 2017, LFL sales during October, November and the all-important Christmas period were volatile and weaker than expected.

Unaudited LFL sales for the half year ended 29 December 2017 were 6.2% lower than the prior corresponding period. Underlying weakness in LFL sales coupled with the planned reduction in franchise conversions has produced an unaudited EBITDA result of $3.6 million. Underlying EBITDA reported in the prior corresponding period was $6.3 million.

The reduction in franchise conversions and softer underlying trading performance will necessitate further impairment of goodwill and intangibles. The non-cash impairment of goodwill and intangibles is expected to be $75 million before tax. Should this impairment be recognised in the financial report for the half year ended 29 December 2017, the company expects to report a net loss after tax of around $59 million.

The unaudited results also include a positive free cash flow result and continued reduction in net debt at 29 December 2017 to $16.2 million, down from $18.3 million in the previous corresponding period and down from $16.5 million as at 30 June 2017.

Godfreys CEO, Jason Gowie will release a strategic update on the business later this month when the company releases its half-year results.