Real Good Food Company posts pre-tax loss but improves profitability

22-Sep-2021 - Last updated on 22-Sep-2021 at 11:22 GMT

Real Good Food has clawed its way back from pre-tax losses of £20.1m in 2019-2020 to £3.5m in the latest financial year

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Speciality cake and baking ingredients manufacturer Real Good Food Company claims to have faced down the challenges of COVID-19, narrowing pre-tax losses considerably to just £3.5m.

The company said it launched 66 new products across the financial year to 31 March 2021 generating revenue from this across the year of an estimated £1.6m and secured an important new blue-chip customer. In addition, there were a further 413 new products in various stages of development.

In his statement within the firm's annual financial report, executive chairman Mike Holt, who was reappointed to his role in October 2020, said: "In particular, the management team is leveraging our heritage brand through new and exciting product innovation and customer service. New product launches have been made with Marks and Spencer, Tesco, Asda, Aldi and more recently with Lidl."

The company revealed that it had improved year-on-year frosting revenues by 17%, following investment in its soft icing plant in this growing market.

Pre-tax loss

The business posted a pre-tax loss of £3.5m for the year to the end of March compared with a £20.1m loss a year earlier. Revenue from continuing businesses fell 9.5% to £37.3m in a year affected by the COVID-19 crisis

Real Good Food reported strong single digit revenue growth for the financial year ending 31 March 2020, driven by progress at its cake decorating business JF Renshaw and food ingredients operation Brighter Foods.

The company sold its Brighter Foods snack bar division to The Hut Group in May for £43m to cut debt and concentrate on cake decoration.

Challenges

"The group has coped with the challenges of COVID and has continued to improve underlying profitability," said Holt. "In addition, the debt burden was halved following the successful sale of Brighter Foods. Renshaw and Rainbow Dust Colours, our two remaining businesses, continue to improve their performance, and after a good start to the year, prospects are encouraging."

In the financial report, executive chairman Mike Holt added: "The group's continuing businesses claimed £1.2m (continuing and discontinued businesses: £1.7m) under the Government's Job Retention Scheme and at its peak 254 employees (48% of staff) were on furlough."

In 2016 Real Good Food issued a profit warning after it claimed a company restructure had resulted in a short-term negative impact on margins.