Profits downgraded but still growing FY16E, FY17E
​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.
Real Good Food operates in three markets, being cake decoration, food ingredients and premium bakery. Co.'s cake decoration division manufactures, sells and supplies cake decorating products and ingredients through its Renshaw, Renshaw Europe, Renshaw Americas, and Rainbow Dust Colours units. Co.'s food ingredients division manufactures and supplies a range of food ingredients from bagged sugar and dairy powders to chocolate coatings and jams through its units: R&W Scott, Garrett Ingredients, and Brighter Foods. Co.'s premium bakery division manufactures and supplies cakes and desserts to the retail and foodservice sectors through its business units Haydens, and Chantilly Patisserie.
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