UK bakery and ingredients group Real Good Food has cut its full-year operating profit guidance by half under a new finance director after a review expected to lead to audit adjustments related to inter-company trading and consolidation.
The company said in a statement today (29 August) that EBITDA is anticipated to be in the region of GBP1m (US$1.3m) for the year to 31 March, instead of the GBP2m announced on 1 August.
Earlier in August, the company secured a GBP2m overdraft facility from Lloyds Bank to shore up its short-term working capital, with two major shareholders, Napier Brown Holdings and Omnicane, each putting GBP1m into an account as security. However, investment firm Downing said then it had elected not to subscribe to the second tranche of loan notes of GBP1.5m on which it had an option following its original investment in the business on 29 June.
In today’s statement, Real Good Food said NB Ingredients, Omnicane and certain funds managed by Downing have confirmed that they will, “if required, provide additional funds to support the company’s working capital requirements”.
“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,” the statement noted. “The board is in discussions with its bankers to vary certain conditions of this facility to reflect the company’s recent and anticipated trading.”
On 8 August, the company announced executive chairman Pieter Totté had resigned and stepped down from the board. It said then that non-executive director Pat Ridgwell assumed the role of interim chairman until a permanent candidate could be appointed. Christopher Thomas, another non-executive director, took on the role of executive director. Finance director David Newman also left the board and former Aryzta executive Harveen Rai was appointed to replace Newman from 14 August.