Liverpool / UK. (rgf) British Real Good Food Company PLC (RGF) provided the following update on trading for its financial year ending 31 March 2021 to coincide with its AGM for the year ended 31 March 2020 which was held this week.
The Group delivered revenues to the end of August of GBP 27.0 million, 28 percent lower than the first five months of last year due to the impact Covid-19. However, sales in August were only 7 percent lower than the same month of last year as the impact of the Covid-19 pandemic abated with the limited lifting of restrictions. Both businesses are now close to full employment albeit shift patterns have changed to accommodate social distancing requirements and, as yet, less than full demand. Within the last couple of weeks, Brighter Foods sales have seen an improvement with new orders being taken from customers in the slimming and weight control markets as clubs, which are classified as «Organized Events», have restarted.
To the end of August, pre-tax losses were GBP 3.8 million compared to pre-tax losses of GBP 1.9 million for the same period last year. It is worth noting that this period tends to be loss-making as inventories build, ahead of the peak trading period between September to December.
Sales for the first five months were down 32 percent compared to last year, but the business remained profitable and cash generative demonstrating its resilience and lean and flexible cost base. As expected, revenues were impacted by the restrictions on social gatherings and the move to working from home across the country which affected the entire «food on the go» market. However, the business has seen a recovery in demand in the last few weeks and anticipates sales being c.5 percent ahead of prior year for the second half of the year and as a result is expecting to be back to near full capacity by year-end, assuming no new major Covid-19 set-back. Product innovation remains a key strength, and the business has launched 17 new products this year and a further 27 new products have trial and / or launch dates agreed in the near future, including new products with new customers (48 new products were launched last year).
Sales were 25 percent lower than last year through to the end of August, the main impact of the Covid-19 crisis being felt within the UK Wholesale market and European sales while the UK Retail market held-up reasonably well. Demand is recovering and the Board expects that sales for the remainder of the year will be at similar levels to last year. Progress continues to be made within Renshaw to become less dependent on the maturing sugar paste and marzipan markets; new product launches have been made with several major UK Retailers, including Waitrose and Marks + Spencer. Marks + Spencer is a new customer for the business, and a new frostings range has been launched within the Wholesale sector. Both the Commercial and the New Product Development teams have been strengthened to accelerate further progress in these areas and to support improved customer service.
At 31 August 2020, total net debt was GBP 45.8 million compared to GBP 44.7 million at 31 March 2020. This includes GBP 29.6 million of investor loans and GBP 13.6 million of convertible loan notes which are due for repayment in May 2021. The Company continues to trade with the support of its major shareholders and Loan Note holders and new terms are being discussed.
The value of the first put option by the minority shareholders of Brighter Foods has been agreed, and the Board and minority shareholders of Brighter Foods are aligned in their desire to maximize shareholder value for this business.
Full Year Results
The Group intends to release its Annual Accounts and Report for the year ended 31 March 2020 during the last week of November 2020, and by then the Board expects that the extent of the recovery from the Covid-19 crisis, or any second wave, will be better understood. At this juncture, both businesses are experiencing an upturn in demand and anticipate further recovery in the coming months with the Group trading modestly ahead of the Board’s «Covid» budget expectations.
Mike Holt, Chairman commented: «Whilst our businesses have been affected by the ongoing Covid-19 crisis, both Brighter Foods and Cake Decorations are experiencing recoveries in their respective markets. Despite the outlook remaining uncertain pro tem, it is encouraging that both businesses have gained new customers and agreed new product launches.»
All figures noted above in this update are unaudited, unless otherwise stated.