Real Good Food buys sugar supplier

Related tags Bakery Generally accepted accounting principles

In a move to secure its supplier base for its bakery operations and
expand its business, the UK's Real Good Food Company (RGFC) said
yesterday it would buy Napier Brown Foods, a sugar group, for
£67.7min stock.

According to a research report by Numis, a financial analyst, Real Good Food is on a well-planned strategy for growth. The company wants to expand its presence in the UK market and build purchasingand selling power in a consolidating market.

"With a defined business plan to leverage sales and returns across the business through selected acquisitions, the company looks well placed to improve further on the highly attractivegrowth picture that we forecast,"​ Numis stated.

The company started in February 2003 as a food buyout group. The company is currently made up of four businesses that trade in fish processing, cakes, patisserie and sandwiches. Its large retail customers include Waitrose and Marks and Spencer.

Napier Brown had a turnover of £270m and a pre-tax profit of £3.12m in the financial year ended 3 April. The stock transaction values Napier Brown at about £67.74m.

"This transaction will significantly increase our critical mass and will provide us with the opportunity to build The Real Good Food Company plc into a major force in the food sector in theyears ahead"​, said the company's chairman, Pieter Totte.

RGFC reported a turnover of £44.6m for the 16 months ended 31 December 2004, a gross profit of £12.7m and an operating loss of £656,000. Overall debt levels at the end of 2004 were £9m,compared to £1.1m at the 31 August 2003. The increase reflects the purchase of Five Star Fish. The company had turnover of £28.8m when Five Star Fish is excluded. Five Star Fish generated £15.8m inturnover.

For the financial year the company reported Haydens sales rose by about 20 per cent, while Five Star Fish sales rose 10 per cent. Haydens improved its profitability in the second half of 2004.Meanwhile trading at Cool Fresh improved following the restructuring of the business.

The financial year was changed to 31 December to bring the company's accounts in line with those of Five Star Fish.

The company's bakery division includes Haydens Bakeries, which makes pastries and desserts, and Seriously Scrumptious, which makes special-occasion cakes. The company's Coolfresh division makessandwiches.

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