Real Good Food Share Discussion Threads

[spaceparallax] 25/2/2014 13:29

I don't see RGD facing receivership in the near future, unless their lenders start to get twitchy and can call upon repayment clauses.

[cockneyrebel] 25/2/2014 13:18

Felix - RGD is a distribution co. They not only have no control over the price they pay, they also are at the mercy of retailers that tighten the screw when the going gets tough. All they simply do re baking ingredients is up the business with the likes of Dr Otker until RGD crack and cut their prices. So they are squeezed from both ends.

Omni now have a large enough stake to lever RGD into buying sugar from them rather than ABF. Does Totte do that or go back to ABF with his tail between his legs? And what sort of business relationship do you have after taking your main suppliers to the OFT? I'd say ABF will be looking at RGD's balance sheet, the losses the make this year and starting to think they want paying promptly or up front which will hurt RGD's cashflow imo. Cashflow isn't RGD's greatest asset.

Omni buying today is just them making sure they have a big enough stake to make sure they get RGD when it goers into receivership imo.

All imo/dyor etc.

CR

[felix99] 25/2/2014 12:46

yes - but they only got another 2m odd of shares to buy before they have to make a bid so the share support operation might be restricted going forward

[graham1ty] 25/2/2014 12:46

Looks like Ominicane supporting the price. They have invested so heavily in the PT story, they have to protect their investment.......by buying more.....

[spaceparallax] 25/2/2014 12:18

Is that a further increase by Omnicane?

[spaceparallax] 25/2/2014 09:51

Over the years that I've read his posts I'd say that CR generally makes sense. Sadly 140.... it doesn't fit your rose tinted view here. Beware, you may get badly burned.

[typo56] 24/2/2014 21:11

Watch out for the other C word - Covenants.

[felix99] 24/2/2014 20:21

I would take note of tired old broker 140661 - he knows the trade well and is one of the best investors you will find on these boards.

Good luck to you but have to say your faith is more than blind and regardless of what you say shareholders are entirely dependent on what crumbs PT and Omnicane decide to throw at them. RGD is clearly a business that has little control over pricing or its markets and it only makes money when its markets decide to prove favourable.

With regard to your analysis you probably haven't factored in the legal costs of fighting this case which will not be cheap and the significant effects of the dispute could be anything as it stands.

I find it strange that if the only BS issue is that they have to pay BS "high price" surely PT can quantify the effect on profits that are going to be felt now for the full year. Or can he not forecast a month ahead?

Even if RGD eventually win some minor victory out of BS they still have to get from A to B and I would hazard a guess that some fund raising will be needed before then given the "significant effects of the BS dispute".

[cockneyrebel] 24/2/2014 18:44

Err Haydens - a big user of sugar. Their costs will have just risen if they are supplied via Napier purchasing as you would expect. So the whole business will be affected imo.

This really is a grubby little business. Totte only bolted all these other pieces onto his Haydens cake business I the hope that scale of purchase would bring down overall costs. He's never managed it. He couldn't organise a bun fight in a cake shop.

Meanwhile, no matter what bull Totte keeps trucking out you see the sun shining out of his fat Scandinavian blow hole 140661.

The names you called me for pointing out the things that were wrong here - don't you think I'm owed an apology?

CR

[140661] 24/2/2014 18:08

tiredoldbroker, for your benefit I have copied the third quarter trading update from January which comments on the improvements at Renshaws/Haydens and RW Scotts:

"At Renshaw, the investment in sales and marketing is now beginning to pay dividends and we anticipate reporting a significant increase in EBITDA for the year. Sales growth has been experienced in UK retail while export initiatives are also showing positive signs with our business in Brussels now fully operational and the Renshaw brand launched in the US with a bespoke range of products.

R&W Scott has now recruited a full commercial team and is ready to drive a series of added value product launches over the next 18 months. The first of these, a range of premium desert sauces, is now on sale in retail while a number of b2b opportunities have been identified across all product sectors. EBITDA will be similar to last year as the business absorbs the increase in overhead which is required to meet its long term ambitions.

EBITDA at Haydens is anticipated to increase YOY as sales continue to grow and the remodeling of the bakery enables improved labour utilisation. The customer base continues to broaden and the commercial team has been expanded to reflect this."

I accept this does not quantify the increase but I believe it will be substantial at Renshaws. In last years accounts the Renshaws business showed an ENITDA of £4.952m down from £5.56m the previous year so mu guess at £6m is only just up on the prior years performance. I know from speaking with PT that he is confident Renshaws is about to enter a phase of rapid growth hence my suggested £7m for the following year which I suspect could easily be understated. If as suggested by the trading update above the performance of Haydens is about to come through then EBITDA estimate of £1m is not in my opinion unreasonable. at Garrets the historic EBITDA figures have shown £2.1m and £2.7m so a £2m forecast for next year is unreasonable given a new experienced management team has just been recruited.

We then come to the big unknown which is how the BS dispute will be resolved. Having completed the new sugar handling facility at Immningham I suggest its fair to assume RGD plan on importing much more sugar moving forward. I have seen figures suggesting BS might only be supplying a quarter of RGD;s sugar in two years. So longer term BS are less of a factor. In the short term there will be an impact and at this stage we don't know how significant. However, RGD have the support of Omnicane who have taken their shareholding from nothing two years ago to 27%. Omnicane invested in RGD as they saw strategic merit, a major part of which was supplying RGD with sugar. This opportunity is fast approaching and it will be Omnicane's interests for RGD to have a profitable sugar business. So even if BS are able to play dirty with RGD its unlikely to impact on RGD for more than a year. On the other hand, RGD believe they have a very strong case against BS and the recent fines in Europe show the Regulators will not stand for bad practices. In a scenario where RGD win their battle with BS we might then see a major fine for BS and a payment to RGD in compensation and a pricing structure moving forward which is attractive to RGD.

Spacep has congratulated shareholders who have stuck with PT and he is right as when PT took over the CEO's role the share price was sub 5p so in 4 years he has done a great deal for shareholders. I don't call this failure but others might. In conclusion, none of us PI's knows whether RGD will win its battle with BS. If it does then shareholders should do extremely well over the next few years, if not the shares will under perform for a period but the outlook a year out will still be positive and the institutions who have been buying today will still do well. AIMHO.

[spaceparallax] 24/2/2014 17:30

A rather feeble rebound from last weeks sharp dip - I wouldn't be surprised to see more sellers taking advantage of this mini-recovery. Unless there's a significant change of performance or outlook, I could see this dipping to the mid to late 30s.

I do admire the tenacity of some holders despite the continued failure of PT to deliver - they are clearly brave punters not averse to risk.

[tiredoldbroker] 24/2/2014 17:00

140661 there's a problem with your numbers. Apart from the fact that there's no solid basis for your suggestion of better EBITDA from the divisions of RGD other than Napier Brown, you're trying to suggest that the market cap looks modest by comparison, without first moving from EBITDA by division to the prospective pre tax for the group.

If you look at the numbers for the 12mo to 31 Mar 2013 on RGD's own website, and add up the EBITDA by division, you get to £12.592m. But by the time that you get to Group EBITDA, it's just £10.466m, presumably because of central overheads. And after depreciation, pension costs and financing costs on £25m of net debt, a PBT of £6.765m. That's a lot of the EBITDA by division vanished by the time we get to where it matters.

Group EBITDA in H1 of the current year was down 27% and net debt was I think £31.8m, and they clearly have some bigger issues to deal with in their sugar business than they were talking about just a few weeks ago. On 4 Feb they said they'd issue a trading update in April; by just 21 Feb they had to 'fess up about the sugar problem. They said:

"The short term impact on Napier Brown's and Garrett Ingredients' results of this action by BS is significant and will inevitably be reflected in the Group's full year results for the year to 31 March 2014 and in the following financial year."

My feeling is that this is not much more right now than a bet on British Sugar losing the case or climbing down, and that could take some time to be determined. A good case for investment can't be made by totting up an optimistic EBITDA forecast for the other parts of the group, and simply comparing that to the mkt cap without adjusting for all the other costs which need to be taken into account, and for the need to service debt and pensions without a contribution from Napier Brown. And in particular, your suggestion of £2m from Garrett looks shall we say, a bit toppy. In fact, a lot toppy.

[cockneyrebel] 24/2/2014 13:02

Look, if you hold your hand out to a dog a number of times and it bites you are you really going to hold your hand out again and expect a lick you instead?

I just love the fact that there's so many mug punters in the market will to throw money at the likes of RGD even when the place is on fire - just goes to show there's plenty of money about to transfer from the stupid to those with a modicum of sanity and savvy imo.

CR

[steffyloveshares] 24/2/2014 12:53

video interview

Real Good Food waits on pricing decision

Pieter Totté, Chairman of Real Good Food Company (LON:RGF), tells Proactiveinvestors that the pricing dispute the company has with British Sugar is moving to the Competition Markets Authority and could well work out in RGF's favour. Other parts of the business continue to fare well.

[tiredoldbroker] 24/2/2014 12:16

I thought the company was saying not long ago that it wasn't reliant on any one supplier of sugar..... ? In which case, why the spat with ABF?

[140661] 24/2/2014 12:15

I spoke to PT on Friday and in total he had covered 80% of the shareholder base. In summary he made the following observations:
1. he was surprised BS had taken such an entrenched position as he and his advisors believe RGD have an excellent case and the costs to BS if they lose could be very substantial. However, having now taken this stance this represents an opportunity for RGD to put in place a sound pricing structure going forward which should be for the benefit of RGD moving forward.
2. the rest of the Group is performing well and he sees Renshaws in particular moving into a period of high growth. Renshaws is currently the main profit driver of the group at present.

My read on recent events is that PT was very surprised and disappointed by BS actions and clearly this will have an impact on this years performance. However, having taken this stance, RGD intend to use this to achieve a long term deal which will secure them sensible margins moving forward. In addition, with Immingham now on stream and his deal with Omnicane coming ever closer the groups reliance on BS will diminish substantially over the next two years.

Assuming Renshaws makes around £6m EBITDA this year increasing to £7m plus next year, Haydens moving into profitability in the current year and around £1m plus next year, Garrets historically achieving profits of £2m plust, hen the foundations for the group are strong. The one remaining battle they face is with BS and should they win they will have a highly profitable business.

At today's price the group is valued at circa £32m, potentially very cheap. GLAH.

[graham1ty] 24/2/2014 11:48

I am staggered the price is not weaker. There are enough people who hate this company anyway and this must be the last straw for many. Debt is horrible, the future is uncertain.

What is odd is that PT must be doing the rounds now, reassuring his ( few) institutions. But that has been the one thing he has been rubbish at: actually talking to shareholders. But unless he is is explaining what this actually means, who on earth is buying and pushing the price back above 50p ??

[tonyfabrizi] 24/2/2014 11:34

Typo I suspect the Company is now engaged in a political war with BS so they will be pushing the boat out on the detrimental impact on NB. The TS confirmed that the other parts of the group are doing well. The key business in terms of profitability is Renshaws and that it appears to be doing exceptionally well.

[typo56] 24/2/2014 11:12

Does it matter if ABF are abusing their position or not? Even if they are it will take ages to settle, during which time the cash pressure at RGD will surely bite?

Pricing dispute threatens city sugar firm

A pricing dispute is threatening the existence of sugar distributor Napier Brown, its Liverpool-based parent company Real Good Food Company claimed today.



No mention of the new hub at Immingham coming to the rescue.

[tonyfabrizi] 24/2/2014 10:54

I have just reread the T/S from Friday and feel posters here are being unfair on the Company. It seems ABF are abusing their dominant position and this is not only against RGD but also the consumer. I wish RGD luck in their battle. Does anyone know what is likely if RGD do win? Would BS have to pay RGD compensation?

[tiredoldbroker] 24/2/2014 10:14

Typo, I think you're right: "in addition to" - in which case, it goes beyond greed into a new category of its own!