Losses deepen to £32m at struggling food ingredients firm
Losses increased to £32m at struggling food ingredients firm Real Good Food.
Pre-tax losses from continuing business amounted to £26.1m, compared to losses of £9.1m last year.
Last year the company sold Garrett Ingredients, Haydens Bakery, R&W Scott and Chantilly Patisserie as part of a turnaround plans.
Revenues fell by 3.4% to £61.6m at Real Good Food over the last 12 months.
The fall in revenue at the Liverpool firm was partly due to the loss of a major customer but the firm says its turnaround plan is starting to have an effect on trading.
Earlier this week Real Good Food announced it had negotiated an extension in loan repayments agreements until May 2021.
The business released its full results this morning and revealed it also paid a £300,000 fine relating to failings n corporate governance.
The Food Ingredients saw a reduction of £900,000 in revenue and Cake Decoration’s sales were down by £1.2m.
Cake Decoration was affected by the loss of one significant customer more than offset the revenue growth accomplished elsewhere within the division.
Over the last two accounting periods, significant costs have been incurred due to the turnaround of the business.
Adjusted EBITDA was £1.9m compared to a loss of £300,000 in the prior year, despite the 3.4% decline in revenue.
Central costs have been reduced during the year by £1.3m but goodwill has been impaired by £18.7m to reflect the value today of the continuing businesses.
Net debt at 31 March 2019 stood at £35.7 million being predominantly shareholder loans, of which £9.6m is in the form of convertible loan notes.
During the year, Garrett Ingredients, Haydens Bakery, R&W Scott and Chantilly Patisserie were sold, with total cash proceeds of £18 million, utilised in debt reduction and working capital.
And a £300,000 fine has been paid following AIM Disciplinary Notice relating to failings of corporate governance.
Current trading is in line with the board’s modest expectations.
Chief executive Hugh Cawley said: “After a very difficult period in the Group’s history and a great deal of corporate activity, Real Good Food now comprises two divisions, with clearly articulated objectives and defined strategies to accomplish those objectives.
“We believe we now have the leadership, the senior management and the resources capable of delivering a further uplift in performance from both businesses, and a substantially lower central cost base more fit for purpose.
“In the new financial year to date, current trading from the two remaining, robust and profitable businesses is in line with our modest expectations for the year.
“The group remains focused on continuing to improve its results and on reducing net debt, as well as continuing to support the business’s strategy and thereby to increase shareholder value and returns.”