Liverpool / UK. (rgf) British Real Good Food Company PLC announced in August the final results for the year ending 31st March 2015. Highlights:
- Transformational disposal of Napier Brown shortly after year end; repositioning the business away from the volatile sugar market
- Continuing Group has positive cash balances and is cash generative and profitable, creating strong financial platform to facilitate future growth
- Successful acquisition and integration of Rainbow Dust Colours
- Growth in gross profit, Ebitda and operating profit in Continuing Operations
- Continued strong growth in sales and profitability at Renshaw
- Successful turnaround at Haydens Bakery driven by operating focus and product innovation
- Three complementary business areas each with strong and established management teams and operational strategies to achieve organic growth
Pieter Totté, Executive Chairman, comments: «The total Group figures for last year were dominated by the market issues in sugar which impacted both Napier Brown and Garrett Ingredients. Elsewhere performance has been strong, with Renshaw and Haydens in particular growing both sales and profitability. Importantly, the Group excluding Napier Brown grew its operating profit from 2.7 million GBP to 3.2 million GBP. Net debt was well controlled at 30 million GBP at the balance sheet date and following the sale of Napier Brown, the business now has significant positive net cash balances».
«Trading in the early months of the new financial year within our continuing businesses has begun well and with the funds from the sale of Napier Brown being received in May we are now in a position to fast-track some of the investment opportunities. This will include spend on jam, sauce and pie-filling capability at R+W Scott; infrastructure at Haydens to support its growth; and increased capacity at the Renshaw site in Liverpool. We will also look at potential bolt-on acquisitions which will help build our presence in our chosen markets, but only where there is a sensible financial and operational investment case. Overall, the business is in good shape and we look forward with great optimism».
Real Good Food PLC is a diversified food business serving a number of market sectors including retail, manufacturing, wholesale, foodservice and export. The Company focuses on three main markets: cake decoration (Renshaw, Rainbow Dust Colours), food ingredients (Garrett Ingredients and R+W Scott) and premium bakery (Haydens).
Overview
The sale of our Napier Brown sugar business is a transformational event for the Group. Our strategy had always been to invest more in the business to make it a strong strategic asset. Since the decision by the European Commission to end production quotas it became obvious that aligning closely with a producer would be central to a successful strategy for Napier Brown. This was reaffirmed when it became clear that the competition authorities no longer felt able to give Napier Brown any protection as a non-refining independent player in the sugar market.
The sale process took many months but there was interest from a number of parties and ultimately the sale price demonstrated the strength of the business which we had built with its strong UK route to market; the retail packing facilities at Normanton; and the investment in the new Sugar Hub import facility at Stallingborough. It is also a tribute to the knowledge and experience of all the team at Napier Brown and I am pleased that they can look forward to an exciting future as part of Europe’s second largest sugar group.
The total Group figures for last year were dominated by the market issues in sugar which impacted both Napier Brown and Garrett Ingredients. The first half of the year, as previously indicated, was badly affected by the problems associated with the British Sugar dispute and while this was resolved from the start of the new sugar year (the second half of the fiscal year) the sharp fall in sugar market prices made trading conditions very tough. Despite this, Napier Brown returned to profitability. Elsewhere performance has been strong, with Renshaw and Haydens in particular growing both sales and profitability.
Importantly, the Group excluding Napier Brown grew its operating profit from 2.74 million GBP to 3.12 million GBP. Net debt was well controlled at 30 million GBP at the balance sheet date and following the sale of Napier Brown, the business now has significant positive net cash balances.
Future plans
The new Group is a smaller entity, but has a much stronger financial base to grow from and has a clear strategy for development. We are now focused on three core market sectors: cake decoration, food ingredients and premium bakery. The ongoing business is debt free, profitable and cash generative and this will enable us to invest appropriately both in our existing businesses and potentially to acquire complementary businesses in our chosen sectors.
Cake decoration is an attractive added value market both in the UK and in terms of exports. While it operates within the food sector, it also shares a number of characteristics with the growing recreational leisure and fashion markets and this insight will dictate how we continue to build our presence and market share. The acquisition of Rainbow Dust Colours Limited earlier this year is a prime example of our strategy in action. It is a business which offers several hundred product lines to meet changing market needs and prides itself on customer service and product innovation.
Food Ingredients is a much broader sector and we will choose carefully where we can add value. At Garrett Ingredients the focus is on the SME sector for commodity ingredients (sugar and milk powders) but this service will be increasingly supplemented by higher added value products such as dairy mixes and emulsifiers. At Renshaw and R+W Scott the sale of ingredients (sugarpaste, marzipan, chocolate coatings, jams and sauces) is always accompanied by «application» support for the customer as we recognise that it is the performance of the end product that is all important.
Finally, the recent success of Haydens has demonstrated how added value can be achieved in the bakery sector. With the bakery sector moving from commodity to premium, Haydens is well-placed to grow and we will investigate further how we can continue this without moving away from the core skills we have developed.
To support all these three sectors and ensure that we lead in our markets, we are establishing a new Development Centre in Liverpool which will house a number of Group employees, in particular resources for product innovation and a world-class training facility for cake decorating. Moving these employees away from the Renshaw site at Crown Street, as well as giving greater clarity to that operation, will enable Renshaw to configure the site to meet its growth plans. This is an exciting project which, as well as saving some costs on infrastructure at Renshaw, will enable us to develop leadership in our chosen markets.
I would like to mention one further Group initiative which has been extremely successful. We have undertaken a Leadership Development programme across all our businesses which has been met with universal approval by all those involved. I believe strongly that having the right teams of people in each business, properly trained and properly motivated, is fundamental to our success and we will continue to ensure that employee training has a high priority across all our businesses. Our performance is a tribute to the hard work and enthusiasm of all our colleagues and I would like to thank them.
Management Changes
Following the announcement that the Group Finance function is to move to the London Head Office and the subsequent resignation of Mike McDonough as Group Finance Director, a new structure for the finance team is being developed and a further announcement will be made in due course. Mike McDonough will remain available over the coming months to provide support as required. The Board would like to thank him for his contribution to the Group and wishes him every success in his future career.
Outlook
Trading in the early months of the new financial year within our continuing operations has begun well and with the funds from the sale of Napier Brown being received in May we are now in a position to fast-track some of the investment opportunities we had previously identified. This will include spend on jam, sauce and pie-filling capability at R+W Scott; infrastructure at Haydens to support its growth; and increased capacity at the Renshaw site in Liverpool. We will also look at potential bolt-on acquisitions which will help build our presence in our chosen markets, but only where there is a sensible financial and operational investment case. Overall, the business is in great shape and we look forward with great optimism.
