Profit warning at Real Good Food
Baking ingredients business Real Good Food which recently announced a £7m investment into its Renshaw’s manufacturing plant in Liverpool, has issued a warning profits will be half of what was expected.
The company has also admitted that some payments made to certain directors for consultancy services had not been separately disclosed in the related party transaction notes to its previously published audited annual report and accounts for FY 2014, FY 2015 and FY 2016.
These are believed to amount to £250,000 to Pieter Totté and £25,000 to Peter Salter in FY 2014, £358,000 and £20,000 respectively in FY 2015 and £1.21m to Pieter Totté in FY 2016.
The London-based company said two substantial anticipated claims relating to its sugar purchase agreements have not yet materialised and it will not meet its previously forecast profit figures.
Meanwhile, the board says that “certain development costs”, which had previously been capitalised in its full year 2017 accounts, should have been “more appropriately expensed”.
It expects the total of these adjustments and further accrued expenses will have the effect of reducing the anticipated EBITDA to approximately £2m for FY 2017.
“Following the recent injection of expansion capital (£15m) announced on June 29, 2017, the board has undertaken a full re-forecasting exercise for the year ending March 31, 2018,” a statement said. “The investment projects funded by the expansion capital are now proceeding to plan and being well received by customers.
“As the injection of expansion capital was agreed about three months later than anticipated this has resulted in some delay in the implementation of these projects, particularly at Renshaw.
“This, combined with slightly softer trading conditions in Q1, has adversely affected the board’s expectations for the financial year ending March 31, 2018 with the result that EBITDA is now anticipated to be approximately £2.3m lower than previously expected.
“However, the anticipated benefits of these projects remain robust and are expected to be fully realised in the financial year ending March 31, 2019.”
The company now expects to announce final results for the year ended March 31, 2017 at the end of August 2017.
