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Real Good Food plc (AIM: RGD)

Real Good Food plc acquires Rainbow Dust Colours Ltd for an initial £4 million

Real Good Food plc is a diversified food business, serving a number of market sectors including retail, manufacturing, wholesale, foodservice and export. The Group is a major distributor of sugar in the UK through its Napier Brown subsidiary, and manufactures a wide range of baking ingredients, jams and sweet bakery products. Its brands include Whitworths Sugar, Renshaw and R&W Scott.

Real Good Food plc ("RGF") is delighted to announce that it has completed the acquisition of Rainbow Dust Colours Ltd. ("Rainbow Dust"), a specialist supplier of cake decorating products to the sugarcraft industry, including coloured edible glitters, dusts, sprinkles and food paints.

RGF is paying an initial £4 million, with an additional cash consideration of up to £3.5m in the form of an earn-out based on gross margin achieved in the 12 months following completion of the acquisition. The initial consideration has been satisfied in cash, funded by a new banking facility with Lloyds Bank Plc.

The two founder directors of Rainbow Dust, Gary Brown and Carol Brown, will be joining RGF and will continue to run it as a standalone business within the RGF portfolio.

Rainbow Dust employs 28 people and operates out of a manufacturing site near Preston in Lancashire. For the 12 months to 31 July 2014 Rainbow Dust reported turnover of £3.3 million and achieved a trading profit before tax of £1.7m. As at 31 July 2014, it had gross assets of £4.9m.

There are considerable synergies between Rainbow Dust and RGF's successful baking ingredients business, Renshaw, and the acquisition is expected to bring mutual benefits to the two businesses, particularly in developing new products, driving growth in exports and opening up new sales channels.

RGF is delighted that the existing management team has agreed to stay with the business to maintain continuity and work with RGF to realise growth opportunities. RGF envisages no effect on jobs at Rainbow Dust, although the headcount may increase in line with growth plans.

Pieter Totté, Executive Chairman, comments:

"The increasing popularity of cake decoration has become a global phenomenon. We are excited by the growth prospects which this market offers and we will look to build on the knowledge and expertise which both Renshaw and Rainbow Dust possess to become a world leader in the sector. This acquisition is the first of a number of initiatives designed to refocus our corporate strategy and deliver increased shareholder value."

20 January 2015

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