Real Good Food PLC Trading Statement (2722U)
23 Octobre 2017 - 8:00AM
UK Regulatory
TIDMRGD
RNS Number : 2722U
Real Good Food PLC
23 October 2017
For immediate release: 23rd October 2017
Real Good Food plc
("the Company" or "Real Good Food")
Trading Statement
Real Good Food Plc (AIM:RGD) gives the following update on
trading ahead of its AGM to be held at 11.00 at the Real Good Food
Development Centre, 61 Stephenson Way, Wavertree Technology Park,
Liverpool, on Thursday 26(th) October, 2017.
The new management team has spent the last ten weeks undertaking
a comprehensive review of the Company's operations to begin the
process of rebuilding profitability.
Each of the Company's three divisions is experiencing good sales
growth. For the first six months of the current trading year
("H1"), revenues are up 6% year on year in Cake Decoration, up 10%
in Premium Bakery and up 28% in Food Ingredients on a like-for-like
basis and excluding the contribution of Brighter Foods, which was
acquired during the current financial year.
Total sales growth in H1 has therefore been encouraging, up 13%
on the previous year on a like for like basis and up 20% including
Brighter Foods. This revenue growth, however, is not currently
being translated into greater profitability where H1 performance
has been disappointing compared to the Board's previous
expectations, particularly in September. The issues being
experienced include increased commodity prices from both exchange
rate issues and supply restrictions as well as the disruption to
production during the installation of the additional production
capacity at Haydens and Renshaw creating inefficiencies.
Although the Premium Bakery division has demonstrated revenue
growth in the first half, margins are considerably below previous
expectations, as a result of commodity price increases (especially
butter) as well as labour inefficiencies and materials wastage
during a period of extensive and disruptive site re-development and
investment. The new investments at Haydens are progressing and new
customer orders are being processed well. The management team is
now focused to ensure that the necessary returns on this investment
can be made in the future. Elsewhere the Cake Decoration and Food
Ingredients divisions were also behind the Board's expectations in
September and in H1 as a whole. These divisions are currently
undergoing a full review of overheads.
In addition, it is recognised that Group and Head Office costs
have been too high and these are also subject to a comprehensive
review, part of which will result in moving the Head Office from
London to Wavertree, Liverpool. The Company has also experienced
significant additional costs from professional advisers as a result
of needing to respond to its Corporate Governance and regulatory
shortcomings.
The Board had previously expected the Company would produce
EBITDA of approximately GBP6.5m in the year to 31 March 2018.
Following a review of the Company's performance in H1 from its
latest monthly management accounts, the Board has decided to take a
more prudent view of its anticipated performance in the second half
of the year ("H2"). As a result of this more prudent view the Board
now expects a materially reduced level of EBITDA in H2 and also
therefore in the year to 31 March 2018 as a whole. The Board now
expects that the Company will report a loss before tax for the year
to 31 March 2018. The Board will give further guidance when it
reports its Interim results for the six months ended 30(th)
September 2017 (expected to be in early December 2017) when it will
have better visibility of the Company's most important trading
period which it is just entering and runs until Christmas.
As previously indicated in the Company announcement of 29 August
2017, the Company's three largest shareholders (NB Ingredients,
Omnicane International Investments and certain funds managed by
Downing LLP, the "Major Shareholders") remain committed to support
the business and have indicated their willingness to provide
additional funding to support the Company's working capital
requirements if required. The Company has recently agreed new
banking covenants with its primary lender. Should it be, in light
of the Board's revised expectations, that the current banking
covenants come under pressure, the support from the Major
Shareholders would extend to ensuring the facilities are
maintained.
The Board believes each of its three divisions hold strong
market positions and have good prospects. It is conscious of the
high levels of investment which have been made and the need to
deliver shareholder value and is developing a clear plan of action
to achieve returns on these investments which it anticipates will
be seen from 2018/19.
-Ends-
The information communicated within this announcement is deemed
to constitute inside information as stipulated under the Market
Abuse Regulations (EU) No. 596/2014. Upon the publication of this
announcement, this inside information is now considered to be in
the public domain.
ENQUIRIES:
Real Good Food plc
Chris Thomas, Executive Director Tel: 020 38573900
Harveen Rai, Finance Director
Andrew Brown, Marketing Director
finnCap Ltd (Nomad and Broker)
Matt Goode Tel: 020 7220 0500
Carl Holmes
Belvedere Communications (PR)
John West Tel: 020 3567 0510
Kim van Beck
About Real Good Food plc
Real Good Food plc is a diversified food business serving a
number of market sectors including retail, manufacturing,
wholesale, foodservice and export. The Group focuses on three main
markets: Cake Decoration (Renshaw, Rainbow Dust Colours), Food
Ingredients (Brighter Foods, Garrett Ingredients and R&W Scott)
and Premium Bakery (Haydens and Chantilly Patisserie).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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