Real Good Food swings to FY profit but revenues drop

In the year to the end of March, the company generated a statutory pre-tax profit of £12.9m compared to a loss of £3.5m the year before.

The disposal of Napier generated a profit of £9.1m and helped reduce net debt from £30.1m to £5.1m.

However, revenue was much weaker, falling to £113.7m from £232.9m the previous year. The company attributed this to unprecedented commodity price deflation, particularly in sugar and dairy and said both these markets experienced record low levels of prices.

Sugar was hit not only by weak world prices but also in Europe ahead of the ending of quotas in 2017, while dairy, where quotas have already ended, was affected by the Russian export ban.

Executive Chairman Pieter Totté said: “The hugely successful disposal of Napier Brown transformed our balance sheet and has enabled us to begin a strategy of investing in our core markets. We have spent the time since reviewing our strategy, clarifying our focus and restructuring the business accordingly.

The company said it has now restructured into three pillar markets: cake decoration, food ingredients and premium bakery, with the objective of building scale and strategic positions in each of these through organic growth, targeted investment and bolt-on acquisitions.

Real Good Food said the outlook for the food industry remains challenging but trading in the first three months of the year been satisfactory and the company is confident that it is in a good position to build three strong businesses.

At 1245 BST, shares were down 12.4% to 31.10p.