RGD.L Regulatory News (RGD)

The Real Good Food Company plc (AIM: RGD)

Third Quarter 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).

Third Quarter trading activity - from 1 October to 31 December 2013 - proved to be mixed in what were challenging market conditions for the food sector. Three of our businesses (Renshaw, R&W Scott and Haydens) recorded EBITDA growth year-on-year, but we continued to be affected by the well-publicised dramatic reduction in sugar market prices. We have made good progress in addressing this with a number of new supply sources secured in the past three months and we see sugar margins being fully restored during the course of 2014.

The Group will provide a further update on trading in April.

Divisional Commentary

Napier Brown's sales, following this year's main contract season, have increased significantly in both the industrial and retail sectors. The new listings for the Whitworths brand have come into effect and utilisation at the Normanton packing facility has increased substantially. Commissioning of the new site at Immingham is virtually complete and will enable the business to utilise new sources of sugar more cost effectively which is critical to our future business model. Trading has inevitably been impacted by the reduction in sugar prices, but we are confident that the steps we have taken to mitigate against this will restore margins to previous levels during 2014.

At Garrett Ingredients trading has been also been affected by the instability in the sugar market and while contribution from Dairy ingredients showed growth in the early part of the year, recent market conditions have been challenging. This and some increased costs associated with a management re-organisation will impact this year's performance. We are very pleased, however, to have successfully recruited a new, experienced management team and believe that we now have the structure in place to deliver our growth plans.

At Renshaw, the investment in sales and marketing is now beginning to pay dividends and we anticipate reporting a significant increase in EBITDA for the year. Sales growth has been experienced in UK retail while export initiatives are also showing positive signs with our business in Brussels now fully operational and the Renshaw brand launched in the US with a bespoke range of products.

R&W Scott has now recruited a full commercial team and is ready to drive a series of added value product launches over the next 18 months. The first of these, a range of premium desert sauces, is now on sale in retail while a number of b2b opportunities have been identified across all product sectors. EBITDA will be similar to last year as the business absorbs the increase in overhead which is required to meet its long term ambitions.

EBITDA at Haydens is anticipated to increase YOY as sales continue to grow and the remodeling of the bakery enables improved labour utilisation. The customer base continues to broaden and the commercial team has been expanded to reflect this.

Pieter Totté, Executive Chairman, comments:

"The investments which we have made in increased sales and marketing resources were designed to transform our businesses from being manufacturing-led to market-led and underpin our growth strategy.

"It is pleasing to see that this strategy is now beginning to bear fruit: volumes are showing good growth in Napier, Renshaw and at Haydens, while we have now recruited sales and marketing teams to deliver similar momentum at R&W Scott and Garrett Ingredients.

"The instability in the sugar market is giving us short term challenges but our strategic plans in this market remain sound and we are encouraged by the support being given to us by customers who recognise the valuable role we play in the market."

4 February 2014

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