Losses widen at food ingredients firm but recovery in sight
Real Good Food, the food ingredients firm based in Toxteth, has seen revenues drop and losses increase as it battles with the impact of the Coronavirus pandemic.
In an update on trading for its financial year ending March 31, 2021, the group delivered revenues to the end of August of £27m, 28% lower than the first five months of last year due to the impact COVID-19.
However, sales in August were only 7% lower than the same month of last year as the impact of the COVID-19 pandemic abated with the limited lifting of restrictions.
The company said within the last couple of weeks, food ingredients division Brighter Foods sales have seen an improvement with new orders being taken from customers in the slimming and weight control markets as clubs have restarted.
To the end of August, pre-tax losses were £3.8m compared to pre-tax losses of £1.9m for the same period last year.
“It is worth noting that this period tends to be loss-making as inventories build, ahead of the peak trading period between September to December”, the company said.
Its food ingredients business Brighter Foods reported sales for the first five months down 32% compared to last year, but the business remained profitable and cash generative.
Revenues were impacted by the restrictions on social gatherings and the move to working from home across the country which affected the entire “food on the go” market. However, the business has seen a recovery in demand in the last few weeks and anticipates sales being c.5% ahead of prior year for the second half of the year and as a result is expecting to be back to near full capacity by year-end, assuming no new major COVID-19 set-back.
In its cake decorations business, sales were 25% lower than last year through to the end of August, the main impact of the COVID-19 crisis being felt within the UK Wholesale market and European sales while the UK Retail market held-up reasonably well.
At 31 August 2020, total net debt was £45.8m compared to £44.7m at 31 March 2020. This includes £29.6m of investor loans and £13.6m of convertible loan notes which are due for repayment in May 2021.
The group said it intends to release its annual accounts and report for the year ended 31 March 2020 during the last week of November, which by then it said expects that the extent of the recovery from the COVID-19 crisis, or any second wave, will be better understood.
Mike Holt, chairman, said: “Whilst our businesses have been affected by the ongoing COVID-19 crisis, both Brighter Foods and Cake Decorations are experiencing recoveries in their respective markets. Despite the outlook remaining uncertain pro tem, it is encouraging that both businesses have gained new customers and agreed new product launches.”