AGM Statement & Trading Update
31 October 2023
Real Good Food plc
("RGF" or "the Group")
AGM Statement and Trading Update
Ahead of its Annual General Meeting to be held later this morning, Real Good Food plc (AIM: RGD), the food manufacturing business specialising in cake decoration, announces a trading update for its current financial year (ending 31 March 2024) to date.
After a slow start to the year as we anticipated, the Group is trading well as it starts its busy seasonal third quarter in the lead up to Christmas. The benefit from the successful implementation of the Group's radical programme of reform is tangible and is expected to boost profitability in the coming months.
For the first six months to 30 September 2023, revenues were 2% up overall to £16.1m compared to the same period in the prior year (H1 23: £15.9m), reflecting the benefits of our pricing actions, albeit volumes were down circa 10% due to weak market conditions and exiting low margin sales. Revenues in August and September were £1.0m ahead of the same months last year at £5.9m. Going into the second half, revenues in October are expected to be circa £4.6m, 6% above October 2022.
More importantly, the unaudited EBITDA loss was much reduced at £0.7m for the period (H1 23: £2.3m loss). Gross margins, at 35.9% compared to 34.4% H1 last year, and 33.3% for FY23 full year, continue to improve due to price resets, more effective pass through of cost inflation (which continues) and self-help gains from improved cost efficiency. After distribution costs, margins were 26.6% for H1 compared to 22.3% H1 last year.
As previously stated, performance during H1 was constrained by supply issues and cash constraints, which the business is trying to resolve and we remain on track to deliver circa £8.0m of price resets, efficiency gains and cost savings for FY24. The Board therefore anticipates reporting a significant turnround for the full year with EBITDA in the region of £1.0m (FY 23: £5.8m loss) with an exit run rate of £3m to £4m EBITDA.
The Group continues to finalise its agreement with Hilco Private Capital for a twelve-month extension to its loan agreement with them and a further announcement will be made once the documentation has been completed.
The Board expects to issue the Group's half year results to 30 September 2023 and an update on current trading in December 2023.
Mike Holt, Executive Chair commented:
"We have made substantial progress since this time last year when the Group was really struggling. The radical reform programme has delivered significant benefits and recent senior management changes have also made a real difference. JF Renshaw is back on form and continuing to improve its performance. We are now focused on getting the Group to a sustainable annual EBITDA level of £4m plus moving forward.
We thank our suppliers for their patience, and we are working hard to achieve best-in-class service and product for our customers despite the challenging market conditions."
Real Good Food plc
Mike Holt, Executive Chair
Tel: 0151 541 3790
Cavendish Capital Markets Ltd (Nomad and Broker)
Carl Holmes / Abigail Kelly (Corporate Finance)
Tel: 020 7220 0500
MHP (Financial PR)
Reg Hoare / Katie Hunt
Tel: 020 3128 8793