Real Good Food seeks new funding after £6.7M loss
Despite revenue climbing 30% to £63.6M during the first half of last year, the company said substantial additional funding would be required over the year ahead for working capital and investment needed to implement the group’s growth plan.
While the key Christmas trading period had proved “largely satisfactory”, the manufacturer’s interim chairman Pat Ridgwell admitted the first six months of last year had proved “an extremely difficult period for the company”.
‘Extremely difficult period for the company’
Net debt reached £35.8M by September 30 2017, compared with £14.3M on the same date in 2016.
The group’s three major shareholders – NB Ingredients, Omnicane International Investors, and funds managed by Downing – continued to back the business and had provided additional funds to support working capital requirements, in the form of loan notes of £3M.
“The provision of these funds is designed to relieve pressure on cash availability over the coming months whilst longer term funding arrangements are put in place, and helps support the board's preparation of the group's interim results on a going concern basis,” according to the financial statement.
‘Relieve pressure on cash availability’
The group hoped to have new financial arrangements in place later this month.
Ridgwell repeated predictions, first made in October, that earnings before interest, tax, depreciation and amortisation for the 2018 financial year (FY) would fall below previous expectations. He expected earnings to be about break-even, with an overall loss before tax.
Despite strong sales performance across all divisions, profits were significantly below the previous year, due to increased costs, partly linked to delays in major investment projects, said the company.
The business had implemented overhead and other cost savings initiatives and was developing plans to ensure that revenue growth translated into increased profits and shareholder value. Ridgwell added:“We have sound businesses in the group with good management teams and we anticipate the recent investments starting to deliver in FY 2019.”
Meanwhile, Christopher Thomas had relinquished his position as the group’s executive director from January 1 2018 and had become non-executive deputy chairman.
He was succeeded in the role by Hugh Cawley.
