TIDMRGD
RNS Number : 1303J
Real Good Food PLC
08 April 2020
08 April 2020
Real Good Food plc
("RGF" or "the Group")
Year End Trading and COVID-19 Update
Real Good Food Plc (AIM:RGD) today provides the following update
on trading for its financial year ended 31 March 2020 and the
impact of COVID-19.
Summary
-- Revenues were broadly in line with the Board's expectations
although performance was impacted in March due to COVID-19
-- Adjusted EBITDA is broadly in line with expectations, and better than prior year
-- The Board expects there to be a material impact on revenues
in the first quarter of the new financial year and potentially
thereafter
-- The Group's manufacturing sites remain open and are supplying
customers with product in line with reduced levels of demand
-- The Company remains well supported by its major shareholders and funders
Trading in the year ended 31 March 2020
The Group is pleased to confirm for the year ended 31 March 2020
that revenues were up by c 9% to c GBP67m on prior year. Adjusted
EBITDA was up on prior year by 178% to c.GBP5.4m and has benefited
from further reductions in head office costs.
Brighter Foods revenues were up year on year by 67%, securing a
new contract with a global customer, that started in January of
this year whilst benefiting from continued organic growth with
existing customers. Brighter started producing products on its new
production line and efficiencies were delivered in line with
expectations.
Cake Decoration has come under pressure owing to the declining
market for sugar paste (c.-14.7%) [1] and marzipan (-2.1%).
However, frostings are a growing market and the business is well
placed in this segment following recent investment. Revenues in the
US and Europe are broadly in line with expectations; Cake
Decorations has reduced overheads by c11% and will continue to
review its cost base during FY21.
Financial expectations noted above are subject to the completion
of year-end financial close and audit processes.
COVID-19 Impact
Overall, the Board expects there to be a material impact on
sales at least in the first quarter of the new financial year due
to COVID-19.
Priority - business continuity
Our priority is the safety of our staff whilst still supplying
our customers with the highest quality product. We are following
all government guidelines, with most back-office staff now working
from home and full risk assessments completed in terms of social
distancing at our manufacturing sites. The recent IT upgrade at
Renshaw's has enabled home working and the ability to hold virtual
meetings with our international customers and colleagues (Brighter
was already well invested in this area). In light of lower demand,
production planning is being reviewed in consultation with
customers to rationalise the products we are making.
RGF has a robust crisis management plan that we have been
implementing including taking actions to mitigate risks. For
example, when the pandemic first appeared in China, we reviewed our
suppliers in China and sourced alternatives in Europe, ensuring
adequate production cover.
The impact on the sectors we serve can be summarised as
follows:
-- the manufacturing sector is likely to be able to maintain or grow sales
-- the wholesale sector has had a downturn due to its customers
in the restaurant and leisure sectors having to close premises
-- the retail sector has focused on filling shelves with
'essential' products, and has changed some order patterns, whilst
rationalising some niche products and colours
Turning to the impact on our divisions, this may be summarised
as follows:
Brighter Foods
-- its snack bars have significant sales into the 'food on the
go' and service station sectors and therefore the current
restrictions on travel are impacting these sales
-- the nutritionally controlled and diet sector is also facing
challenges and therefore there are expected to be lower stock
requirements
-- overall Brighter is operating in line with demand and is in
close contact with its customer base to ensure forecasts are in
line with production
Renshaws
-- revenues impacted in both France and Netherlands where it has a high proportion of activity
-- revenues in America although lower are holding up relatively well so far
-- Renshaws has furloughed nearly half of its employees, giving
the business a lower cost base, to offset some of the decline in
sales
Funding - measures we are taking to conserve cash
We are working to prepare the business for varying levels of
revenues and have modelled the effects of these, whilst reviewing
all the measures we can take to ensure that the Company exits this
period with a sustainable business model for the future. We have
close working relationships with our major shareholders and funders
who remain supportive.
In common with other companies, RGF is reviewing all options to
mitigate the impact of the reduced sales. For example, Cake
Decorations is utilising the government job retention programme and
has furloughed c.140 staff across all functions, for an initial
period of three weeks.
The first priority is conserving cash, and we are using or
considering a number of measures including the funding of our
debtors; furloughed employees assistance from the government; the
delay of discretionary capital expenditure and review of other
discretionary costs; deferred payment of VAT; and deferring
payments of rent and rates in agreement with our landlords and
councils.
Mike Holt, Non-Executive Chairman commented:
"We are grateful to our staff and stakeholders as we work
together through this challenging period. The budgets we were
signing off just a short time ago are now being updated to include
all the measures we are taking to ensure that the Group has a
sustainable business going forward. We believe the food industry is
resilient and that Real Good Food is well placed within the
segments we serve and given the quality of our products and
operations."
The information communicated in this announcement contains
inside information for the purposes of Article 7 of the Market
Abuse Regulation (EU) No. 596/2014.
Enquiries:
Real Good Food plc Tel: 0151 541 3790
Mike Holt, Non-Executive Chairman
Maribeth Keeling, Finance Director
finnCap Limited (Nomad and Broker) Tel: 020 7220 0500
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 food manufacturing business serving several
market sectors including retail (own label and private label),
manufacturing and export. The Company has two businesses, Cake
Decoration (Renshaw and Rainbow Dust Colours) and Food Ingredients
(Brighter Foods), with leading brands in their chosen markets.
[1] Kantar data to Dec 19
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END
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