Renshaw owner Real Good Food reduces expected earnings for second time

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Haydens and Renshaw owner Real Good Food (RGF) has further reduced its earnings expectations.

At the end of a tumultuous month that has seen its share price crash and the departure of founder Pieter Totté, RGF today (29 August) announced that its earnings for the financial year ended 31 March 2017 would be £1m.

This is half the figure suggested by the business earlier this month, which was itself around £3m lower than previously forecast (see timeline below).

The latest figure follows a review undertaken by RGF this month that has been led by new finance director Harveen Rai, who was previously chief financial officer at Arzyta UK Holdings.

She replaced David Newman, who left the business at the same time as Totté.

Lloyds Bank had already agreed to provide the company with an overdraft facility of up to £2m, with RGF shareholders Napier Brown Holdings and Omnicane Limited each putting up £1m as security.

Real Good Food today said major shareholders NB Ingredients Ltd, Omnicane and certain funds managed by Downing LLP have confirmed they will provide additional funds to support working capital requirements if required.

“The company’s banking facility is subject to customary terms, conditions and covenants which are tested quarterly, with the next date at which the company’s banking covenants will be tested being 30 September 2017,” said RGF today. “The board is in discussions with its bankers to vary certain conditions of this facility to reflect the company’s recent and anticipated trading.”

RGF expects to announce its final results for the year ended 31 March 2017 on 29 September 2017.

Real Good Food timeline

1 August:

RGF announces earnings for 2017 will be £2m, around £3m lower than previously forecast, and that profits in 2018 would be lower than expected.
RGF also reveals that payments for consultancy services made to executive chairman Pieter Totté and non-executive director Peter Salter had not been disclosed in transaction notes for accounts in 2014 to 2016, but had been accounted for.
Salter, chairman of RGF audit and remuneration committees, resigns.

8 August:

Founder and executive chairman Pieter Totté resigns and steps down from the board with immediate effect.
Non-exec director Pat Ridgwell becomes interim chairman, while non-exec director Christopher Thomas becomes executive director.
Finance director David Newman is replaced by Harveen Rai, but remains with the company for a changeover period.
New non-executive director Hugh Cawley joins the board to head RGF’s audit committee, while non-exec director Judith Mackenzie becomes head of the remuneration committee.

16 August

Real Good Food secures a £2m overdraft facility with Lloyds Bank after a re-forecasting exercise finds a “short-term working capital requirement” as the business builds up stock ahead of Christmas and proceeds with previously announced investment programmes at Renshaw and Haydens.

29 August