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Real Good Food (RGD) has sold R&W Scott to the jam maker’s management team in a deal worth £3.95m.
It’s the third sell-off by the food business since April, after Garretts and Haydens, together raising £17.8m, including £10.1m received in cash, £0.5m deferred and £7.2m as assumed third-party debt.
The disposals have helped transform the group’s finances in 2018, eliminating term debt with the bank and providing working capital for continuing general requirements and growth, according to Real Good Food.
The company said the offer from R&W Scott’s management team presented the best route to maximising value from the business while disposing of a non-core asset. It meant Real Good Food could focus on growing CAKE Decoration and Brighter Foods, the two main continuing profitable businesses now comprising the majority of the Group.
The £3.95m consists of £1.50m payable in cash, £0.5m deferred and an assumed debt of £2.45m.
“This disposal, alongside those of Haydens and Garretts, marks a significant milestone in the turnaround and performance improvement programme of Real Good Food,” said the group’s chief executive Hugh Cawley.
“We are now able to focus on the core continuing businesses, Brighter Foods and Cake Decoration, with no bank term loan and a fully funded growth plan.
“Overall, through the actions of the last twelve months, the performance of, and prospects for, what is now a smaller and more focused group, have improved considerably. The company now has a solid platform from which to maximise earnings and look to optimise shareholder value.”
The news came as Real Good Food announced its half-year results for the six months to 30 September, with revenue at £30.4m, down 4.8% from £31.9m in 2017.
The group made an underlying adjusted EBITDA profit of £0.9 million, compared to a £0.4 million loss in 2017, and a loss before tax of £9.1m, including a £6.3m goodwill impairment charge. In 2017 the loss before tax was £3.4m.
The firm said trading remained in line with expectations for the year.
“The first half saw significant, progressive corporate activity, including further restructuring of the group to focus on our two core divisions, Cake Decorations and Food Ingredients,” said Cawley. “At the same time, the underlying performance of these continuing operations improved, reflecting the cost savings made.
“The performance of these continuing operations remains in line with our modest expectations for the year. Overall, the board remains confident, but far from complacent, in the future prospects for the group, and reiterates that the performance of, and prospects for, what is now a smaller and more focused group, have improved considerably.”
Morning update
Greencore (GNC) has opened a tender offer to return up to £509m to shareholders, first announced on 4 December, with a price per ordinary share of 195p.
The price represents a premium of 17.5% on the closing price of 166p per ordinary share on 19 December 2018 and a premium of 11.9% on the volume weighted average price over the previous month.
The maximum number of ordinary shares that can be acquired under the tender offer is 261,025,641, representing approximately 37% of Greencore’s issued ordinary share capital on 19 December.
The tender offer opens today and will close at 1.00pm on 29 January 2019, with cash payments expected no later than 7 February 2019.
If the capital return target of £509m is not reached, Greencore intends to return the balance to shareholders by way of a special dividend.
The FTSE 100 plunged 1.5% to 6,660pts in early morning trading, its lowest level since September 2016, after US Federal Reserve hiked US interest rates last night.
Greencore (GNC) was one of only a handful of risers, after its tender offer this morning, up 3.7% to 172.1p.
Fallers included Fevertree Drinks (FEVR), down 3.1% to 2,141p, and Coca-Cola (KO), down 2.5% to 2,354p.
Morrisons (MRW) dropped 2.1% to 218p, Tesco (TSCO) dropped 1.7% to 189.7p, and Sainsbury’s (SBRY) fell 1.5% to 263.1p. Ocado (OCDO) was also among the fallers, down 1.5% to 766.4p.
Yesterday in the city
The FTSE 100 recovered slightly after a tumultuous few days, rising 1% to 6,766pts. It followed a fall of 1.1% to 6,701p on Tuesday and another drop of 1.1% during Monday’s trading.
Among those helping to boost it was Glaxosmithkline (GSK), which rose 3.8% to 1,503p after its announcement yesterday of plans to merge its consumer health unit with that of rival drugs giant Pfizer, creating a joint venture with almost £10bn in annual sales.
Unilever (ULVR) rose by just 0.1% to 4,215p after yesterday announcing its acquisition of Dutch meat alternative brand The Vegetarian Butcher for an undisclosed sum.
Sainsbury’s (SBRY) rose 0.7% to 267.1p while Morrisons (MRW) jumped 0.9% to 222.6p. Tesco (TSCO) ended the day 0.6% down at 192.9p, despite jumping 1.4% in early morning trading.
Other notable climbers included Cranswick (CWK), up 1.7% to 2,682p, Majestic Wine (WINE), up 3.6% to 255.5p, A.G. Barr (BAG), up 2.2% to 805p, Greencore (GNC), up 1.9% to 166p, and Britvic (BVIC), up 1.9% to 816p.
Fallers included Marks and Spencer (MKS), down 0.5% to 252.5p, Restaurant Group (RTN), down 1.1% to 146.9p, British American Tobacco (BAT), down 0.9% to 2,550.5p, WH Smith (SMWH), down 1.5% to 1,718p, and Hotel Chocolat (HOTC), down 1.8% to 275p, following a 4.3% drop on Tuesday.
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