Real Good Food to sell Garretts to Kent Foods for £1.8m

AIM-listed Real Good Food has agreed the sale of the business and certain assets of its non-core trading business, Garretts, to Kent Foods for around £1.8m in cash.

The funds raised by the disposal, which is expected to complete later this month, will be used to reduce the group's indebtedness.

Garretts, which sources dairy, sugar and other specialist food ingredients and sells them to large, medium and small food manufacturers across the UK, has been part of Real Good Food since 2005.

But the company said on Friday that the business has more in common with Kent, whose skills and aptitude are better suited to managing its contracts, given Real Good Food's resources are being increasingly focused on serving the end consumer.

In the year ended 31 March 2017, Garretts contributed £21.3m of revenues and an operating loss of £0.9m. It had net assets of £1.9m as at 31 March 2017 and the group expects to report a modest loss on the disposal.

Chief executive Hugh Crawley said: "We are pleased to have agreed the sale of this small, non-core business as part of our plan to improve the group's performance."

At 1240 BST, the shares were up 2.7% to 15.40p.