Real Good Food chief executive Hugh Cawley has said the business will look back on the last financial year with “little pride or satisfaction”.
The business has today (28 September) reported a £23.2m operating a loss in the year to 31 March 2018, compared to a £5.6m loss the year before. However, revenue increased by 20%, from £107.7m to £129.8m.
As previously predicted by Real Good Food (RGF) adjusted EBITDA fell, from a profit of £1.4m to a loss of £2.6m.
The results follow a troubled period for the business including the exit of founder and executive chairman Pieter Totté, and the announcement it would be improving its corporate governance and reporting after admitting standards had been below those investors “might reasonably expect”.
RGF issued a series of profit warnings since then, and bosses have looked to turn the business around by raising funding and selling off parts including Garrett Ingredients and Haydens Bakery. RGF still owns cake decorating business Renshaw, Chantilly Patisserie and Brighter Foods.
“A simple, clear objective and a turnaround strategy has been articulated and is well under way, focusing on core assets,” stated the results.
“Losses reflect the recognition of asset values and historic disruption caused by an intense period of ambitious investment, which led to an inflated overhead base. Profitability was also affected by rising raw material costs and increased competition, exacerbating the impact of poor financial control of central costs.”
Changes to the business included the appointment of Hugh Cawley as CEO in January this year, and the business said £2.8m has been taken out of annualised central costs since new management took control.
“New management and a refreshed board have brought rigour to corporate governance, accounting practices and commercial discipline over the period,” said RGF.
“The company is now properly financed for the longer term, providing a platform to maximise earnings while also looking to optimise shareholder value, including, where appropriate, through managed disposals of constituent businesses.”
Cawley said last year was one “which we will look back on with little pride or satisfaction”.
“However, since the start of 2018, we have begun to take many of the remedial actions to turn around performance, continuing these steps beyond the financial year end.”
He added that the business was seeing the benefits of eliminating bank debt, reduced costs and a greater focus on its continuing businesses.
"At the moment, underlying trading is in line with our modest expectations for the year, although the Christmas trading period remains a critically important one for Renshaw especially.
“Overall, the performance of, and prospects for, what is now a smaller and more focused group, have improved considerably."