In Real Good Food’s latest trading update, the cake decorating manufacturer announced it has managed to secure a UK£500,000 short-term leaning from Downing and Omnicane Investors, two of its main shareholders and loan note holders.
The funding supports the additional funding of £2.5 million secured from Hilco Private Capital in November 2022, where the main challenge was on effects felt following the war in Ukraine, as the cost of ingredients rose and households felt the pressure, cutting back on spending.
The company has said the new loan notes will be rapid in October 2023 as part of refinancing of debt when its current Hilco facility becomes due for repayment on 18 November 2023.
The company noted in its half year results announcement on 16 December 2022 that market conditions were very challenging due to a combination of rising costs and lower revenues. As a result, it implemented a radical reform programme which reportedly is progressing well.
Real Good Food’s main focus is on improving manufacturing efficiency and balancing capacity to meet levels of demands, but revenue in the final quarter of 2022 was lower than expected as consumer demand and confidence were knocked by speculation of a recession in the early months of 2023.
As a consequence, the company expects to report a loss for the year ending 31 March 2023, following losses in both the first half and second half of the year, but expects a significant improvement in the new financial year.
“Market conditions remain as challenging as when we last reported in December 2022,” said Mike Holt, Executive Chairman. “However, our internal reform programme is progressing well and, without relying on a market upturn, the Board expects the Group to be both EBITDA profitable and cash generative in the new financial year. After a tough start to 2023, we are beginning to see early signs of some improvement in demand, particularly within B2B and Wholesale markets.”
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