RGD.L Regulatory News (RGD)

The Real Good Food Company plc (AIM: RGD) 

Trading Update

The Real Good Food Company plc ("the Group"), owns the largest independent non-refining distributor of sugar in Europe (Napier Brown) and is a supplier of dairy ingredients ("Garrett"), bakery ingredients (Renshaw) and a manufacturer of sweet bakery products (Haydens) for a range of major retail customers.

During the six months to 24 June 2011, the Group has continued to achieve improved operational performance, with increased volumes in sugar, dairy and bakery ingredients year-on-year, and steps taken to deal effectively with the difficulties in the sugar supply chain, where prices remain high and material in short supply. Overall Sales increased by 21% to £110.0m (2010: £90.7m), while Group profitability, at EBITDA level, rose to £2.7m (2010: £0.6m).

Commodity cost increases year-on-year, along with additional stock levels at Renshaw and Napier Brown to support growth plans, have increased working capital in the business to £39.3m (2010: £33.0m). This has been the key driver behind an increase in overall borrowings to £31.9m (2010: £28.3m), although there is likely to be some easing of stock levels following the key fourth quarter trading period. The growth in earnings has significantly improved debt cover and the Group remains comfortably within its banking covenants.

At Napier Brown, a new marketing team has begun evaluating the potential for further developing the Whitworths brand within sugar. Following extensive consumer research, the first range of innovative new products, targeting the growing home baking market, will be on supermarket shelves this autumn, with further initiatives planned in 2012.

Launch of new Renshaw-branded products is well under way, with "Snip and Swirl" Icings first to market, and now available in selected retailers, sugar-craft outlets and wholesalers. The full range will be launched at the end of this month, with a progressive roll-out to all major outlets before the year end. Advertising campaigns in both the trade and consumer food press will be launched shortly.At Haydens, the new distribution facility is now fully operational and is already helping drive an improved performance year-on-year. Implementation of the recovery plan remains broadly on track, although the business is experiencing higher than expected commodity costs, and some delay in the factory modernisation programme.

Pieter Totté, Executive Chairman, comments:

"During the second half of 2011 our management teams will remain focussed on the key challenges of extending the Renshaw brand in retail, expanding the Whitworth speciality sugar range, widening product offering at Garrett's and improving operational performance at Haydens. Based on the progress we have made over the past six months, I am confident that the Group is on course to meet market expectations for the year."

1 August 2011

The Group expects to announce interim results for the six months to June 2011 in late September.

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