Real Good Food PLC (LON:RGD) says after a corporate crash diet its remaining two divisions, cake decoration and food ingredients, are on course for “modest” targets for the current year.
Central costs were slashed by £1.3mln in the year to 31 March and further reductions have been made in the current year, said chief executive Hugh Cawley, adding that his cutting of corporate fat has produced “two divisions with clearly articulated objectives and defined strategies to accomplish those objectives”.
“We believe we now have the leadership, the senior management and the resources capable of delivering a further uplift in performance from both businesses, and a substantially lower central cost base more fit for purpose.”
He said the focus remained on continuing to improve results and reduce net debt, which was trimmed to £35.7mln from £37.8mln.
Fatter losses
For the past year, revenue from continuing businesses declined 3% to £61.6m and losses before tax almost tripled to £26.1mln, with the biggest factor being an £18.7mln goodwill write-down “to reflect the value today of the continuing businesses”, with £4.4mln of finance costs, £4.7mln of depreciation, amortisation and significant items, and a £0.3mln fine from the London Stock Exchange for breaches of AIM rules.
Food ingredients revenues were squeezed by a short-term sales restriction as work was done to increase capacity “to accommodate significant growth in the future”, while cake decoration, which owns the Renshaw and Rainbow Dust Colours brands, was affected by the loss of a significant customer which more than offset growth elsewhere in the division.
In the current year, Cawley said, “current trading from the two remaining, robust and profitable businesses is in line with our modest expectations for the year”.
Real Good Food shares, having crashed more than 80% over the past three and a half years, were down another 10% to 6.5p on Friday morning.