Real Good Food Company

Background

Real Good Food plc is a diversified food business serving a number of market sectors including retail, manufacturing, wholesale, foodservice and export.

The company focuses on three main markets: cake decoration (Renshaw and Rainbow Dust Colours), food ingredients (Garrett Ingredients and R&W Scott) and premium bakery (Haydens).

Real Good Food Europe sells and distributes Real Good Food company products in continental Europe.

Investment Notes

Real Good Food’s focus is towards premium product segments and routes to market via specialists who bring premium pricing opportunities. This includes focus on supporting the various brands, the costs of which have always been included in our forward estimates. However, Monday’s update is negative in that the 2.9% (year to March 2015 continuing businesses) EBITA margins are now estimated to rise to only 3.2% in FY16, before (we estimate) rising in FY17E. We reduce FY16E PBT from £5.2m to £2.7m, suspending FY17E. March 2016 we estimate net £2m debt.