Real Good Food PLC Disposal (9598Z)

TIDMRGD

RNS Number : 9598Z

Real Good Food PLC

06 September 2018

6 September 2018

Real Good Food plc

(or "the Group")

Disposal

Real Good Food plc announces that it has completed the sale of Haydens Bakery Limited ("Haydens") to Bakkavor Group plc ("Bakkavor"), for a consideration of GBP12m, payable by means of a cash payment of GBP9.6m and the assumption by the buyer of GBP2.4m of third-party debt.

The cash funds received will be used to reduce the Group's indebtedness, first settling the lending secured against Haydens' assets (GBP2.3m), then repaying in full the outstanding term loan with the Group's bankers (GBP1.3m). The balance of GBP6.0m will be split between funding the Group's working capital requirements and the potential repayment of external shareholder debt.

Haydens bakes premium tarts, pies and crumbles, Danish pastries, sweet buns, yum yums and doughnuts and sells principally to major retail customers, and operates a same day consolidation service for one of its major customers. Haydens has been part of Real Good Food plc since the Group's inception in 2003. Given the complementary nature of Haydens' to Bakkavor's core business, the Board believes that, in line with its turnaround plan and focus on its core assets, there is greater value for the Group's shareholders through this disposal to Bakkavor than through continued ownership.

In the Group's financial year ended 31 March 2017, Haydens (excluding the Chantilly Patisserie business which is not a part of this transaction) contributed GBP31.3m of revenue, and broke even at profit before tax, closing that year with net liabilities of GBP0.8m. In the past 18 months, there has been significant investment in Haydens and the Group therefore expects to incur an accounting loss for the Group on disposal in the region of GBP0.5m, and a resulting write down of parent company reserves at 31 March 2018 in the region of GBP10.2m. The significant investment made in plant and equipment was, however, one of the clear attractions to Bakkavor in its acquisition of Haydens. This disposal of a non-core asset allows management and the Board to focus on the profitable assets elsewhere in the Group.

Publication of final results

The Group expects to issue its final results for the year ended 31 March 2018 before the end of September 2018.

Hugh Cawley, Chief Executive, said:

"This disposal marks an important next step in the restructuring and performance improvement of Real Good Food and is line with our turnaround plan for the Group. Given the sizeable areas of common interest, we believe that Haydens and its staff will prosper better in partnership with Bakkavor."

Enquiries:

 
 Real Good Food plc                                     Tel: 0151 541 3790 
  Hugh Cawley, Chief Executive 
  Harveen Rai, Finance Director 
 
 finnCap Limited (Nomad and Broker)                     Tel: 020 7220 0500 
  Matt Goode / Carl Holmes / James Thompson 
  (Corporate Finance) 
 
    MHP Communications (Financial PR)                   Tel: 020 3128 8100 
     Reg Hoare / Katie Hunt                                   rgf@mhpc.com 
 About Real Good Food 
  Real Good Food plc is a diversified food business serving a number 
  of market sectors including retail, manufacturing, foodservice 
  and export. The Company 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).

The information communicated in this announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No. 596/2014.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact rns@lseg.com or visit www.rns.com.

END

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September 06, 2018 02:01 ET (06:01 GMT)

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