Liverpool / UK. (rgf) British Real Good Food Company PLC (RGF), the food manufacturing business specialising in cake decoration, announces its final results for the year ended 31 March 2023:
- Revenue decreased by 19.8 percent to GBP 32.4 million (2022: GBP 40.4 million) due to macroeconomic headwinds.
- Ebitda loss of GBP 4.8 million (2022: GBP 0.2 million profit) reflected reduced gross margins and operating leverage.
- Loss before tax was GBP 9.0 million (2022: GBP 19.0 million loss, including GBP 16.1 million goodwill impairment).
- Additional GBP 2.5 million revolving credit facility secured from Hilco Private Capital in November 2022 and GBP 0.55 million in short-term shareholder loans (from Downing and Omnicane) on 06 April 2023 to support the Group’s radical reform programme.
- Total net debt increased to GBP 31.2 million (2022: GBP 25.5 million).
- Volumes were about 26 percent lower year-on-year, the most severe reductions being US sales (32 percent lower) and sales into Europe (22 percent lower). The reductions were market driven rather than customer losses.
- Key input costs continued to rise during the year with costs on average being 30 percent higher. The impact on the business was partly mitigated with prices to customers being increased, averaging 21 percent with increases ranging between 5 percent and 34 percent (overall in-year impact being 10.6 percent). Limited availability of key ingredients across the sector also affected performance.
- The impact of reduced volumes and the lag effect of passing cost increases through to customers reduced gross margins from 39.9 percent to 33.3 percent; margins in the current year are better and continue to improve (currently 35.9 percent).
- A radical reform programme, which was launched in September 2022 to return the business to profitability, is almost complete and tracking in line with expectations. To date, circa GBP 8.0 million of price resets, efficiency gains and cost savings have been secured for FY24.
- Evidence based rebranding of Renshaw fondant to «just roll with it» was launched in September 2022, making products more accessible to all customers whilst launching new products and diversifying into complementary products.
Current trading and outlook
- Market conditions remain challenging albeit the self-help improvements made since September 2022 have been transformational.
- New management in place to continue to drive the radical reform programme.
- After five months of trading in FY24, demand is higher than last year and despite sales being broadly the same due to cash constraints, Ebitda is better.
- The Group has recently agreed terms for a 12-month extension of the Hilco loan facility through to 18 November 2024. The facility is being renewed at GBP 2.3 million. A further announcement will be made in due course.
- The Board expects to issue the Group’s half year results to 30 September and an update on current trading in December 2023
Executive Chair’s commentary
Executive Chair Mike Holt: «Market conditions remain challenging; we are however starting to see volumes in some segments beginning to slowly rebuild and we are gradually trading our way into a better place as the busier autumn season kicks in. The radical reform programme we have implemented over the last year has been transformational and, with new management now in place, the Group is well positioned to make further gains, particularly in manufacturing efficiencies, sales, and customer focus. We have recently agreed a loan extension with Hilco which provides a more secure platform to continue our journey to sustainable and satisfactory profitability.»