Real Good Food: Interim results for the first half 2016/2017

Liverpool / UK. (rgf) British Real Good Food Company PLC announced interim results for the six months ending 30 September 2016. 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 (Garrett Ingredients and R+W Scott) and Premium Bakery (Haydens and Chantilly Patisserie). The Company makes the majority of is profits in the second half of the year which includes the important Q3 trading period for Cake Decoration and Premium Bakery in particular in the run up to Christmas.

Interim Highlights

• Total Group sales grew by 5 percent to 49.0 million GBP (2015: 46.7 million GBP) driven primarily by the performance of the Premium Bakery division, alongside the successful integration of Chantilly to the Group
• Gross profit increased to 13.0 million GBP (2015: 12.5 million GBP), but impacted adversely by performance of Food Ingredients which struggled with volatile commodity pricing and adverse currency movements
• Total Group Ebitda (prior to significant items1) down by 0.8 million GBP from the previous year at 1.2 million GBP (2015: 2.0 million GBP) – due to increased expensed investment costs across the Group, primarily in the Development Centre and in the USA, which will drive future growth and operating efficiencies; also impacted by the performance of the Food Ingredients division, which suffered volatile commodity pricings.
• Group loss before tax of 0.2 million GBP (prior to significant items1) of 0.7 million GBP (2015: 0.2 million GBP)
• Substantial increase in actuarial losses of pension scheme of 3.3 million GBP over six months
• Proposed payment of first ever dividend in December 2016 with an interim payment of 0.04 Pence per share
• Key Q3 trading period in line with expectations to date.

(1) Significant items relate to management and restructuring costs of 0.3 million GBP and acquisition related costs of 0.4 million GBP.

Pieter Totté, Executive Chairman commented: «We have continued to make good progress on developing our growth strategies in each business division. With the exception of Garrett Ingredients where the dairy and sugar markets have continued to be difficult, exacerbated by recent currency fluctuations, trading performance has been broadly in line with the Board’s expectations. Our new Development Centre at Liverpool is beginning to pay dividends following a number of high profile customer visits and the opening of our own sales and warehousing operation in the US will enable significant sales growth from early 2017. At the same time we are finalising other investment plans at our sites in Liverpool and Devizes to improve our operational efficiency over the medium term».

Commenting on outlook and current trading he added: «Sales trends for the key third quarter are in line with expectations to date and we anticipate significant year on year growth in Ebitda in the second half. However, we face some challenges due to the recent weakening of sterling and increased raw material prices and the timing of price recovery. This, as well as the uncertainty in commodity pricing in particular at Garrett Ingredients, means that, while we expect our year end Ebitda to be ahead of last year, there is a risk that it could fall short of current market estimates».