Outside a Renshaw facility

Source: Real Good Food

Cake decoration specialist Real Good Food (RGF) has secured an additional £2.5m in funding to support its turnaround.

The business, which owns Renshaw and Rainbow Dust Colours, is undertaking a “radical reform” to reduce costs and protect revenue as it faces what it previously called a ‘very challenging and loss-making year’ ahead. This is due to ‘unprecedented increases’ in raw material and energy costs which ‘continue unabated and pose significant challenges’, it reported in its September trading update.

Turnaround measures include price re-sets and improvements in manufacturing efficiency. Successful implementation of the plan is expected to return between £2m and £4m in EBITDA.

“We are delighted that new funding has been secured to support the radical reform of RGF which is intended to reduce costs, protect revenues and preserve the inherent value of the Group,” said executive chairman Mike Holt.

“With support from both customers and employees, we are making good progress on the required reforms and several major customers have already agreed to significant price re-sets. We are confident that the right actions are being put in place to return the business to sustainable profitability and being cash generative.”

Real Good Food was making progress with revenue up 8.3% to £40.4m for the year ended 31 March 2022, and net debt significantly reduced partly owing to the sale of Brighter Foods which was bought by The Hut Group in April 2021.

The new funding is being provided by Hilco Private Capital for a term of twelve months and supplements the existing £6.3 million facility with Leumi ABL.

“I am particularly pleased that Leumi ABL continues to support the Group and that Hilco has provided the new funds required. I would also like to thank our suppliers for their forbearance over recent months pending this funding being secured,” Holt added.