2 Dec 2008 07:00
The Real Good Food Company plc
Pre-close trading update
The Real Good Food Company plc (Symbol: RGD) is an AIM-listed food Group, comprising three operating divisions: sugar, baking ingredients and bakery
Stephen Heslop, Chief Executive Officer, makes the following comments on current trading:
"Further to our previous trading update in September, we have seen a continued deterioration in the economic climate in the UK. These conditions have affected all of our trading divisions to varying degrees.
"Within our Sugar division, Napier Brown Foods, revenues have suffered from reduced sales to our customers in the industrial sector, as they continue to feel the effects of reducing consumer spending; consequently, we now expect our revenues to be 7-9% behind last year.
"Margins have seen a recovery in the industrial sector, from the lows seen in quarter 3. Whilst this is very encouraging and points to a longer-term recovery in profits, the retail market has become very competitive and this is adversely affecting our overall position
"Within Renshaw, our Bakery Ingredients division, performance is in line with our expectations. The trend towards increased home baking has aided sales into retailers, which has offset reducing volumes to the manufacturing sector.
"Our Bakery division, Haydens Bakeries, has incurred one-off costs in developing new foodservice lines. In conjunction with the customer, the business has taken a number of steps to address these issues and arrest the losses on these lines. Sales to our two principal retail customers continue to reflect their reduced trading.
"Whilst the business benefits from its new banking arrangements, with interest based upon base rates rather than Libor, the group will, under international accounting standards have to provide for a fair value charge of £0.4m at the end of the year, to reflect a number of interest rate swaps due to the recent falls in Libor.
"Taking all these factors into account, the Group now expects that its results for the year to 31 December will show a profit before taxation of around £0.5m.
"The economic outlook for 2009 remains uncertain and the competitive pricing in retail is expected to continue. However, we have already seen a recovery in industrial sugar margins in the last quarter of 2008 and expect them to continue during 2009.
"The business remains profitable and cash generative going forward and is preparing itself for the challenges that lie ahead. As part of a series of cost reduction initiatives, the Group is relocating its London Head Office function to its Liverpool manufacturing site."
2 December 2008
Enquiries:
| The Real Good Food Company plc | Tel: 020 7335 2500 |
| Stephen Heslop, Chief Executive Officer | |
| Lee Camfield, Chief Financial Officer | |
| Shore Capital | Tel: 020 7408 4090 |
| Guy Peters | |
| College Hill | Tel: 020 7457 2020 |
| Gareth David |
Note to EditorS
The Group's three operating divisions are:
Sugar: incorporating Napier Brown Foods, the UK's largest independent, non-refining, distributor of sugar supplying a range of sugar and dry ingredients to the retail, foodservice and industrial sectors;
Baking Ingredients: incorporating Renshaw, a leading manufacturer of marzipans, ready to roll icings, baking chocolate and jam, supplying major cake manufacturers, high street bakers and retailers;
Bakery: incorporating Hayden's Bakeries and Seriously Scrumptious: produces chilled and ambient premium patisserie and dessert products to retail grocery customers.
Further information about the Group is available via the website: www.realgoodfoodplc.com