Real Good Food: issues another profit warning

Liverpool / UK. (rgf) 2017 British Real Good Food Company PLC (RGF) provides the following update on trading. Sales during the early part of the Christmas trading quarter were largely satisfactory. Performance in the last few weeks of the year however was materially below the Company’s expectations, largely owing to disappointing performance in UK grocery retail and de-stocking in overseas markets.

In addition, the Board is currently undertaking a review of the various balance sheets of the Group companies in order to ensure that their accounting treatments are consistent across the Group and accord with good practice.

As a result of this review and of a re-forecast exercise within all the operating businesses, allied to the poorer than expected trading late in 2017 and early in 2018, the Company now expects the out-turn for the year to be an Ebitda loss of up to 3.5 million GBP.

Looking more widely at the prospects for the Company, there are clear signs that the considerable investment made throughout the Group in the past eighteen months is beginning to yield benefits. A turnaround plan has been formulated and is now in the process of being implemented by the new management team to reverse the negative performance trend and to begin to deliver the sort of returns that investors should more reasonably expect over the medium term.

In addition to this, the Company continues to improve its corporate governance and internal reporting and accounting processes and procedures. The Company has also appointed BDO LLP as its new auditors.

The Company’s major shareholders, who are represented on the Board, remain fully committed and supportive of the turnaround plan and its implementation. The major shareholders have again stated their willingness, for instance, to bridge any short-term funding needs should a solution for the identified funding requirement not be in place as anticipated by the end of the first quarter. The majority of the Group’s debt already sits with the major shareholders; save for the asset-backed funding, borrowings from the Group’s primary lender now comprise just 1.75 million GBP of amortising term loan.

The Board believes that each of the Company’s three divisions hold good market positions and have valuable prospects and individual worth.