Year to forget for Real Good Food Group
Troubled food products company Real Good Food announced substantial losses in its annual figures today.
Bosses at the Liverpool-based firm said it is not a year they could be proud of.
Earlier this month (September) the firm announced the disposal of its Haydens Bakery arm for £12m to reduce company debt.
Revenues for the year to March 31, increased by 20% from £107.7m to £129.8m.
However, pre-tax losses widened significantly from a £6.236m loss last year, to £25.167m this year.
The company said the losses reflect the recognition of asset values and historic disruption caused by an intense period of ambitious investment, which led to an inflated overhead base.
It claimed that profitability was also affected by rising raw material costs and increased competition, exacerbating the impact of poor financial control of central costs.
Chief executive Hugh Cawley, who was appointed in January this year, explained: “These significant losses arose from a number of issues.
“There was uncontrolled growth in the infrastructure and overhead base of the businesses and head office, in anticipation of significant, unprecedented and unrealised growth in revenues.
“It can be argued that these arose from a blurring of focus on the commercial imperatives of the businesses as sizeable capital investments were implemented in less than perfectly managed projects.
“We were also affected by the macro-economy with a variety of unfavourable movements in external influences, including commodity prices, exchange rates and litigation.
“Our inflexible and monolithic inability to adapt to these macro changes exacerbated an already complex situation.”
He added: “Change was required and the current board has embraced the radical change and discipline necessary for a turnaround.
“In line with our review of corporate governance, we also appraised the accounting practices of the recent past and, of necessity, have subsequently made a variety of adjustments.”
Today’s statement reported that, since a new management team took control, around £2.8m has been taken out of annualised central costs.
It said: “New management and a refreshed board have brought rigour to corporate governance, accounting practices and commercial discipline over the period.
“The company is now properly financed for the longer term, providing a platform to maximise earnings while also looking to optimise shareholder value, including, where appropriate, through managed disposals of constituent businesses.”
Presenting today’s figures, Mr Cawley said: “Last year was one which we will look back on with little pride or satisfaction.
“However, since the start of 2018, we have begun to take many of the remedial actions to turn around performance, continuing these steps beyond the financial year end.
“Moreover, we can now see the benefits of these actions in terms of having eliminated term bank debt, much reduced costs and a greater focus on our continuing businesses, all of which provide cause for optimism for the future.”
He added: “At the moment, underlying trading is in line with our modest expectations for the year, although the Christmas trading period remains a critically important one, for Renshaw especially.
“Overall, the performance of, and prospects for, what is now a smaller and more focused group, have improved considerably.”
Real Good Food focuses on three main markets: Cake Decoration (Renshaw and Rainbow Dust Colours), Food Ingredients (R W Scott and Brighter Foods) and Premium Bakery (Chantilly Patisserie).
