The Haydens and Renshaw owner today said trading had been “largely satisfactory” in the early part of the Christmas period, but fell below expectations in the last few weeks of the year due to a “disappointing performance in UK grocery retail and de-stocking in overseas markets”.
As a result of this, and an ongoing review and re-forecast of the group’s finances, Real Good Food (RGF) said it now expects the year to bring an EBITDA loss of up to £3.5m.
Although the company had warned in December that EBITDA for the 2018 financial year would be below previous expectations, it had said it would be “in the region of break-even”, with an overall loss before tax.
The latest warnings follow a troubled period for the business that included a shake-up of its board and an overhaul of its corporate governance procedures (see timeline below). While the company’s revenue rose 30% year on year to £63.6m in the six months ending 30 September 2017, it made a £6.7m pre-tax loss.
RGF has made investments, including a £15.5m spend on Renshaw and Haydens and, today (31 January), said there were “clear signs that the considerable investment made throughout the group in the past 18 months is beginning to yield benefits”.
“A turnaround plan has been formulated and is now in the process of being implemented by the new management team to reverse the negative performance trend and to begin to deliver the sort of returns that investors should more reasonably expect over the medium term.”
The company added it was continuing to improve its corporate governance and internal reporting and accounting processes and procedures.
RGF, which last month revealed it had secured further funding, said its major shareholders remained committed to the turnaround plan.
“The major shareholders have again stated their willingness, for instance, to bridge any short-term funding needs should a solution for the identified funding requirement not be in place as anticipated by the end of the first quarter.”
RGF added that its board believed each of the company’s divisions held good market positions and had “valuable prospects and individual worth”.