20 April 2022

Real Good Food plc

("RGF" or "Group")

Year End Trading Update

Real Good Food plc (AIM:RGD) today provides the following update on trading for its financial year ended 31 March 2022.

Trading update

Revenue for the year ended 31 March 2022 was £40.5m, an increase of 9.0% on last year, but below the pre-pandemic prior year. Adjusted EBITDA was just under £0.7m compared to £0.2m in FY21, equating to an expected, much reduced, Loss before tax of £2.8m (2021: Loss before tax £6.1m). Overall, this performance is below that which the Board had anticipated exiting the half year.

Unaudited numbers:

*Continuing operations comprise JF Renshaw and Rainbow Dust Colours; excludes Brighter Foods Limited which was sold on 11 May 2021.

** Excludes goodwill impairment charges.

As previously reported, the Group performed strongly in H1 reporting revenue and EBITDA well ahead of prior year and back to pre-Covid levels (H1 FY20). However, revenues during Q3 (October - December 2021), the Group's seasonally busiest period, were disappointing and well below expectations due to severe shortages and erratic deliveries of key ingredients and services, compounded by high absence rates because of the Omicron variant; inevitably this affected the Group's ability to fulfil customer orders and the business continued to work closely with customers during this difficult period.

Trading in Q4 and in the first weeks of our new financial year continued to be impacted by these shortages and absences, whilst significant input cost increases have also dragged profitability down. RGF will continue to focus its efforts on products that are profitable and pass these unprecedented cost increases (in sugar, palm oil, energy, packaging and transport) through to its customers, but there is a lag effect of a few months. Overall, revenue in H2 was 7% lower than the prior year. Adjusted EBITDA for H2 was marginally positive (FY21: £0.8m).

Net debt as at 31 March 2022 was £25.3m (2021: £48.6m), a reduction of £23.3m during the year. The sale of Brighter Foods Limited on 11 May 2021, for cash proceeds to the Group of £35.6m, enabled £23.1m to be repaid to Loan Note Holders and £8.5m to be paid into the pension scheme to fully fund it on an ongoing basis. Cash from operations showed a net inflow of £0.3m. 

Outlook

Given the challenging environment in terms of both cost and demand pressures, the Board is focused on reducing complexity and waste, other cost saving projects and selective new product launches to make the business as competitive as possible. With a significant milestone due in 2023 relating to the repayment of borrowings, the Group is focused on improving performance to meet these obligations.

Mike Holt, Executive Chairman commented:

"The last few months have been very difficult due to a number of issues relating to costs, supply chain and unavoidable staff absences leading to our performance for the financial year just ended being worse than we had hoped. The unprecedented cost increases being experienced by all businesses are being passed through to our customers but there is a timing lag which is impacting profitability. The Group is determined to hunker down, control costs and protect revenues, and has the support of its Loan Holders and major shareholders to navigate this difficult time."

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