Toxteth-based Real Good Food, which employs hundreds of people and exports its products all over the world, has been hit with a fine of £450,000 relating to a trading update in 2017. Tony McDonough reports
Liverpool food and cake decoration ingredients firm Real Good Food has been fined £450,000 by the London Stock Exchange in a ruling that saw its founder and former chairman come in for heavy criticism.
The Toxteth based business, which employs hundreds of people and exports its products all over the world, has been hit with the fine after the LSE identified “serious failings” in relation to a trading update in 2017.
Trading update
In the update, Dutch-born businessman Pieter Totté, founder of the business, told the markets that its profits that year would be between £5m and £5.4m. But he failed to reveal to advisors or investors that this forecast was dependent on the company winning a number of legal actions.
Real Good Food, which floated on the Alternative Investment Market (AIM) in 2005, has accepted the fine and censure from the LSE and the agreement of an early settlement means it will only have to pay £300,000.
Mr Totté, who the LSE said had presided over a “culture of poor decision making”, also failed to reveal share trades he made during a close period and did not disclose more than £2m of consultant fees and payments to its founder and a former director. He and two other directors resigned in 2017.
Overly dominant
In its ruling, the LSE said: “The company’s inadequate corporate governance facilitated a culture of poor decision making, and an overly dominant former chairman and directors who were allowed to go unchallenged.
“The board failed to assert sufficient control or prevent the former chairman and certain directors from exerting disproportionate influence. This contributed to a number of serious failures by the company to comply with its AIM Rules obligations.”
In its own statement, Read Good Food said: “The company regrets these breaches and fully understands and accepts the importance of sound corporate governance and complying with the AIM Rules.
“It has cooperated fully with the London Stock Exchange’s enquiry and, since the relevant events that led to the censure, the former chairman and two other directors have left the company.
“Announcing its intention in September 2017, the board has since undertaken significant remedial action, including enhancing the Company’s procedures, resources and controls, adopting new corporate governance and implementing new financial processes and procedures. This has included the appointment of a number of new board members.”