Real Good reveals profits slump
BAKERY ingredients business The Real Good Food Company has seen its pre-tax profit slide into the red after paying out almost £2m in refinancing and restructuring costs.
Pre-tax profit tumbled 77% to £890,000 from £3.97m the previous year, but that figure becomes a pre-tax loss of £421,000 when exceptional costs are included.
In January, the company moved its headquarters to Liverpool and consolidated its Renshaw and Napier Brown Foods businesses into one ingredients business.
A re-financing of the group in the summer incurred break costs with its previous lender and the release of prepaid loan arrangement fees totalling £800,000; the merger of the sugar and bakery ingredients divisions into Renshawnapier combined with earlier restructuring costs totalled £800,000; and around £200,000 has also been set aside as an increase in an onerous lease provision.
The company said that despite the one off costs of the move, the results of the reorganisation are expected to be cash neutral during the current financial year, and to produce annualised cost savings of around £800,000.
Pieter Totté, chairman of The Real Good Food Company, said: “During the course of 2008, we continued to experience very difficult trading conditions, which deteriorated more significantly in the final quarter. Margins were continually under pressure from raw materials, fuel inflation and a very competitive market place.
“The board looks forward to the rest of the year, and anticipates the benefits of its restructuring programme and low interest rate charges to deliver a result, which we anticipate will be reflected in an improved financial performance over the prior year.”
Total Group sales fell by 5.4% to £219m for the year to the end of December 2008, from £231.1m a year earlier, and the company said this was principally due to a 7% fall in revenues in its sugar division, adding that it continued to be affected by the uncertainty created as the EU sugar regime undergoes reform.
Mr Totté said the division’s trading in 2009 had been in line with expectations. He added: “The development of this new business is progressing in line with our plans and expectations, and we are beginning to see the benefits that we envisaged during the strategic review.”
The company also announced that its chief financial officer Lee Camfield has resigned but will stay with the company until late summer, and that Mike McDonough, currently commercial finance director, will take up the role of group finance director.
