Real Good Food plc, (AIM: RGD) the diversified food business, today announces its half year results for the six months ended 30 September 2019.
· Revenue from continuing operations increased by 7% to £32.4 million (2018: £30.4 million)
· Underlying adjusted EBITDA* from continuing operations increased 201% to £2.8 million (2018: £0.9 million)
- Reflecting strong growth in Food Ingredients and cost savings across the Group
· Significantly reduced loss before tax of £2.5 million (2018: loss of £9.1 million)
· Net debt at 30 September 2019 of £39.9 million (30 September 2018: £29.9 million; 31 March 2019: £35.7 million), being principally comprised of shareholder loans. The September 2018 net debt balance includes the sale proceeds from Hayden's of £12 million
· New £8.9 million credit facility secured in August 2019 with Leumi ABL Ltd, enabling the Group to reduce the level of shareholder debt by £4.5m
- Intention to move towards a more normalised and simplified capital structure as the Group continues to improve its profitability and cash flow
Operational highlights of the year to date:
· Further strengthening of the Board and senior management team with the appointments of:
- Steve Moon as Chief Executive of Cake Decoration in August
- Gail Lumsden as independent Non-Executive Director in October
- Paul Richardson as Executive Director in October
· Continued progress in line with strategy of developing two core, profitable businesses:
- Food ingredients (Brighter Foods) - 77% increase in underlying adjusted EBITDA to £2.5 million (2018: £1.4 million) reflected significant growth with new and existing customers and benefit of recent investment in additional capacity
- Cake Decoration (Renshaw) - underlying adjusted EBITDA reduced to £0.6 million (2018: £1.3 million) due to short term challenges in its retail market and operational issues, despite good progress with its turnaround
Current trading and outlook
· Trading remains in line with our expectations for the year in both divisions:
- Food Ingredients is well-placed to capitalise on its unique capabilities to meet the growing demand for production capacity within the snack bars sector
- Cake Decoration sales are in line with expectations, with a major improvement programme launched focussed on developing strategic partnerships with customers and distributors and driving operational improvements
* Underlying adjusted EBITDA represents earnings before depreciation, amortisation, impairments, significant items, finance costs and tax.
Mike Holt, Non-executive Chairman, said:
"The Group has made significant progress over the past six months, especially within Food Ingredients where capacity has doubled and is almost fully utilised with strong order intake and commitments from both new and existing customers. Whilst Cake Decoration has had a difficult period, its new Chief Executive has launched a major improvement programme focussed on developing strategic partnerships with customers and distributors and driving fundamental operational improvements, the benefits of which are beginning to come through.
The Group now has two core businesses with clear growth strategies, and the leadership and resources to deliver upon them. With a lower cost base in place and the Group's improving performance increasingly evident, the Board is confident of delivering further progress in the second half and beyond."