1 May 2014 07:00
The Real Good Food Company plc (AIM: RGD)
Pre-close Trading Update
The Real Good Food Company plc ("the Group" or "RGFC") is a diversified food group, which owns Napier Brown (Europe's biggest non-refining sugar distributor) as well as Renshaw and R&W Scott (bakery ingredients), Garrett Ingredients (dairy ingredients) and Haydens Bakery (patisserie and desserts).
In its Trading Update on 22 February 2014, the Group gave details of a serious dispute with British Sugar, which will have a significant impact on the Group's results for the 12 months ending 31 March 2014. On the basis that this remains unresolved, the Group expects EBITDA to be approximately £3.3m for this period. The Group expects Net Debt for the period to be approximately £31.5m, which is lower than our previous expectations and reflects an improvement in working capital control.
The impact of the British Sugar dispute was felt by the Napier Brown and Garrett Ingredients businesses and masks good progress across the rest of the Group where Renshaw and Haydens both recorded significant Y-O-Y EBITDA growth.
A complaint against British Sugar is with the Competition and Markets Authority (CMA). The Group will shortly be responding to their questions and requests for information. While confident of its complaint, the Group remains unable to be definite on a timetable for the resolution of the dispute with British Sugar.
The Group has been encouraged by the support it has received from many of its customers and continues to take steps to mitigate the short term impact though this will continue to be felt at least until September 2014, the end of the current sugar marketing year.
Longer term we are working on new competitive and sustainable supply sources and the successful commissioning of our Sugar Hub import facility near Immingham is already proving valuable in this respect.
Meanwhile the other Group businesses are in good shape and focused on their growth plans. Investment in commercial resources, particularly at R&W Scott and with the setting up of a new business based in Brussels, Real Good Food Europe, is already delivering sales growth, while the turnaround at Haydens is making good progress.
Executive Chairman Pieter Totte comments:
"It is a pity that our results will be dominated by the dispute with British Sugar, as we continue to make good progress on our strategic plans elsewhere within the Group. We believe strongly that the CMA needs to act, in order to maintain a competitive structure in the UK sugar market, particularly with the impending ending of production quotas in 2017. Meanwhile, we will not be diverted from our long term plans, both in sugar and across the other business, all of which offer exciting growth opportunities."
1st May 2014
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