Food ingredients firm making progress in recovery process
Real Good Food, the struggling food ingredients firm based in Toxteth, reported better interim revenues, and reduced losses, today.
The firm said revenue from continuing operations increased by seven per cent to £32.4m, compared with £30.4m in 2018.
Pre-tax losses in the six months to September 30, were significantly reduced from £9.1m to £2.5m.
Net debt stood at £39.9m, against £29.9m at the same time last year, and £35.7m at March 31, 2019.
Real Good Food said this principally comprised of shareholder loans, and the September 2018 net debt balance includes the sale proceeds from the Hayden’s business of £12m.
A new £8.9m credit facility was secured in August 2019 with Leumi ABL, enabling the group to reduce the level of shareholder debt by £4.5m
It is the group’s intention to move towards a more normalised and simplified capital structure as it continues to improve its profitability and cash flow.
The group further strengthened its board and senior management team with the appointments of Steve Moon as chief executive of Cake Decoration in August, Gail Lumsden as independent non-executive director in October, and Paul Richardson as executive director in October.
The food ingredients, Brighter Foods, turnied in a 77% increase in underlying adjusted EBITDA to £2.5m, reflecting significant growth with new and existing customers and the benefit of recent investment in additional capacity.
Cake decoration business Renshaw produced a reduction in underlying adjusted EBITDA of £600,000 compared with £1.3m a year ago due to short term challenges in its retail market and operational issues, despite good progress with its turnaround.
Looking ahead, the group said trading remains in line with its expectations for the year in both divisions.
Food ingredients is well-placed to capitalise on its unique capabilities to meet the growing demand for production capacity within the snack bars sector, while cake decoration sales are in line with expectations, with a major improvement programme launched focused on developing strategic partnerships with customers and distributors and driving operational improvements.
Mike Holt, non-executive chairman, said: “The group has made significant progress over the past six months, especially within food ingredients where capacity has doubled and is almost fully utilised with strong order intake and commitments from both new and existing customers.
“Whilst cake decoration has had a difficult period, its new chief executive has launched a major improvement programme focused on developing strategic partnerships with customers and distributors and driving fundamental operational improvements, the benefits of which are beginning to come through.”
He added: “The group now has two core businesses with clear growth strategies, and the leadership and resources to deliver upon them.
“With a lower cost base in place and the group’s improving performance increasingly evident, the board is confident of delivering further progress in the second half and beyond.”
