Real Good Food feels the pain of ‘poor governance’
Baking ingredients business Real Good Food, which has a major facility in Liverpool and which issued a profit warning in August shortly before its founder and chairman quit, has undergone a turbulent financial year in which its business has nosedived into a pre-tax loss of £6.4m from a profit of nearly £13m.
Management changes, including the departure of founder Pieter Totté and director Peter Salter, who have been criticised by the company for taking behind-closed-doors consultancy payments out of the company.
Although full-year revenue was up 8% from £100.4m to £108.2m, gross profits went down 1% from 26.7m to £26.4m.
EBITDA also fell from £5m to £1.2m leading to an operating loss of £5.8m (2016: operating profit of £2.1m).
Other factors negatively affecting the company included a delay in passing on raw material price inflation post-Brexit vote and a significant sugar trading dispute which was unresolved during the financial year.
There increases in overheads and costs as part of a growth plan and there was “poor control of central costs”.
Net debt at March 31 was £16.2m (2016: £5m).
Executive director Chris Thomas said: “Real Good Food has recently experienced a period of substantial management change at the executive leadership and board level as well as challenging trading conditions.
“These management changes have principally been instigated following the recognition that the financial performance of the business during the reported period was substantially below the level that might reasonably have been anticipated.
“Poor corporate governance and controls were also identified and are being addressed.
He added: “The board remains confident in the future prospects for the cmpany.
“With new leadership, a commitment to improve the Group’s financial controls and corporate governance, the board believes the business is now well positioned to capitalise on the investment being made to improve profitability and cashflow over the coming years for the benefit of all shareholders.”
