Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
I had a quick look through the Half-year Report. It looks to me like they are closing Indulgence down. They've stopped production at the moment so I'm not sure if the staff are on furlough being paid or have been made redundant. I wouldn't be surprised if production doesn't restart and Indulgence is wound-down or absorbed into Shire Foods. Once you've stopped production it can sometimes be hard to restart it.
I'm not quite sure why Indulgence wasn't merged in with Shire Food (Leamington Spa) immediately after acquisition and production moved to Shire. Indulgence wouldn't have needed to be rebuilt like a start-up then as it would just have become part of Shire's existing operations (piggy-backing on Shire's well established systems and processes). Maybe there wasn't room at the Leamington site or some other factors made that unattractive at the time?
Anyway, it could have been a big acquisition that went awry rather than a tiddler like Indulgence. Valuable experience learned for the board of directors.
So we are now trading below the value of cash - debt + working capital.
That makes us very cheap if you believe two things…
1. The net value of the two operations is more than zero.
2. The cash in the bank will be used to make a value accretive acquisition.
Personally I believe both of those things to be true and will be adding when money becomes available.
Anyone see that Finsbury Food update yesterday? Apparently they are looking to make acquisitions.
How about we offer them Shire at a decent price if they promise to take Indulgence with them!?
Yep, I hope things should look up from here.
I think the Indulgence acquisition has been a bit underwhelming but COVID was probably a big factor in that. I've always thought that buying business out of administration can be a bit of a double-edged sword. They are in administration for a reason and that might not just be due to back luck. Anyway, I don't know the full details so I shouldn't really express an opinion.
I take a lot of comfort from the fact that Volvere seem very cautious about what acquisitions they make. There must have been 100's of business which have landed on the Landers' desks (sorry) over the past couple of years that have been rejected. A fool and his money are soon parted and so patience and self-control is something I value very highly.
Just caught up here as away at Mello and elsewhere at the end of last week.
Shire's results were excellent. This is now a sizeable company, with revenues up 13% at £30.6m and PBT up 18% to £2.14m. The vegan range is doing really well and gets very good reviews AFAICS. The business has navigated all the current supply chain and labour issues extremely well to date.
With Shire, £21.09m cash and 1349p of net assets VLE's value relative to its share price looks in good shape.
It's such a shame that Indulgence was bought in Feb'20 right at the onset of the pandemic. The consolation is that only £1.25m was spent in taking it out of administration, but I would never have expected that £5.6m of loan monies would need to be made available to them.
Hopefully this year Indulgence will finally show some improvement with European economies now fully open, at least enough to offset any cost and logistics difficulties.
And of course some acquisition news would be welcome and a nice catalyst.....
I went in my local Morrisons the other day and had a look at Volvere's own Nasty Vegan brand in the frozen food section. Quite a lot of the boxes had come open. Not a good look. I thought we'd just invested in a new packing machine? Maybe we need better glue.
A very substantial buyback yesterday - £242,000 via 21,000 shares at 1152p. That's £622,000 in the last few days....
Https://uk.advfn.com/stock-market/london/volvere-VLE/share-news/Volvere-PLC-Transaction-in-Own-Shares/87510402
For the record another almost £60,000 of shares bought back at 1190p - that's around £380k in total in the last few days:
Https://www.investegate.co.uk/volvere-plc--vle-/rns/transaction-in-own-shares/202203080700069408D/
Sizeable share buybacks occurring - yesterday's of £226,000 at 1222p means almost £319,000's worth in two days:
Https://uk.advfn.com/stock-market/london/volvere-VLE/share-news/Volvere-PLC-Transaction-in-Own-Shares/87444939
Interesting post Vbig. The key point here imo is that VLE have transformed Shire into an extremely valuable business which now makes £2.1m PBT per annum - as you say, VLE know what they're doing. They're already in the best-performing supermarket chains - Lidl, Aldi etc - and are growing alongside those chains as they expand.
VLE were extremely unfortunate with timing in buying Indulgence just before the pandemic hit, so their plans were delayed/stymied for some time - but even so they've managed to increase sales nicely, and there are obvious synergies with Shire. This year will hopefully see a major improvement in Indulgence's margins and results as well as sales.
I can't wait to sell my holding in this one. I am disappointed with the focus on "food manufacturing" (and I think they mean frozen food) which I'd always thought of as a low margin, high volume, relatively capital and/or labour intensive business. Frozen food also tends to be bought by lower income households so the consumers are very price sensitive. Also, if you want to sell your own branded-stuff then distribution means getting into supermarkets. Lots of red flags.
Also, I think they go their fingers burned with the purchase of Indulgence. They said in the last RNS it was basically a rebuild from the ground-up scenario. Lots of management time taken up for a business that has only £5m sales. They basically got it for free but it still doesn't look like it was worth the hassle to me.
However, I guess they have experience with Shire Foods so they should know what they are doing.
Great to see buybacks starting again, and with a sizeable £92,700 buy at 1236p - well above the current 1220p offer price:
Https://uk.advfn.com/stock-market/london/volvere-VLE/share-news/Volvere-PLC-Transaction-in-Own-Shares/87430495
The trading update is out, and imo it's surprisingly good as regards Shire given all the supply chain challenges we know about (and which are listed today).
Shire's revenues are up 13% to £30.6m, and PBT is up a whopping 18% to £2.14m. This is now a considerable and proven business.
Indulgence saw revenues up a decent 21%, but it's still making a £1m loss. With the economy returning to normal hopefully VLE's investment will start to pay off this year.
The cash pile is at £21.9m against the £29m m/cap, with £13.53 of net assets per share.
JL says the the environment for acqiring is improving and he's looking for "food manufacturing" companies to buy. A case of patience here and hopefully one day waking up to game-changing news......
Further to the news of Aldi's expansion, this is from today's Daily Mail - good news for VLE's Shire Foods:
Https://www.thisismoney.co.uk/money/markets/article-10237615/Lidl-plans-1-100-stores-UK-2025.html
"Lidl plans 1,100 stores across Britain by 2025 after boosting staff pay and raking in billions of pounds in sales during the pandemic
Lidl has updated its store growth plans to 1,100 across the country by 2025
German-based discount supermarket still plans to have 1,000 stores by 2023
Lidl's sales jumped 12% to £7.7bn in the year to the end of February, figures show
Rival discount supermarket Aldi also has plans to boost its store numbers
By Jane Denton For Thisismoney
Published: 09:32, 24 November 2021
"Bosses at the German-based discount supermarket said they expect to reach their target of having 1,000 stores by 2023, and set a new target for 1,100 sites by 2025."
"The German grocer currently has over 880 stores across the country, having already opened 55 new outlets since the start of this year. In total, the grocer will open 240 new supermarkets."
Big Shire Foods client Aldi is opening 15 new stores before the end of this year, and 100 new stores over the next two years:
Https://www.dailymail.co.uk/money/markets/article-10160511/Aldi-opening-15-new-UK-stores-end-year.html?ns_mchannel=rss&ns_campaign=1490&ito=1490
Nice £27,000 buy just now of 2,000 shares at the full 1350p offer price.
Another signal from the Landers - a meatier one this time in buying back around £32,000 of shares via 2,500 shares at 1260p:
Https://uk.advfn.com/stock-market/london/volvere-VLE/share-news/Volvere-PLC-Transaction-in-Own-Shares/86260107
VLE have bought back 1,000 shares at 1260p - this is the first buyback for a year.
Hopefully a signal from the Landers that the share price is now cheap enough again to take advantage of....
Https://uk.advfn.com/stock-market/london/volvere-VLE/share-news/Volvere-PLC-Transaction-in-Own-Shares/86235073
Good H1 results today, with both Shire and Indulgence improving very nicely year on year.
Net assets (with no goodwill/intangibles) are £36.9m against a £33.2m m/cap, including £23m cash and £9.7m properties and plant.
The continuing businesses are essentially valued at nothing (actually negatively).
Yet with the big H2 seasonality, Shire looks like making between £2.5m-£3m PBT this year, even with a limited impact from the rising costs we all know about.
Indulgence will likely make a small loss this year, but is obviously on the right track now, especially if it can gain "mid-tier" ranges as suggsted today and increases its cheesecake range sales via Shire.
Plus there's more optimism about acquisition opportunities turning up with the end of the givernment support schemes:
https://uk.advfn.com/stock-market/london/volvere-VLE/share-news/Volvere-PLC-Half-year-Report/86074859
The moves up yesterday and today on relatively light volumes hopefully indicate that the seller(s)/profit-takers are now out.
The spread remains relatively attractive at present at 1300p-1350p compared to the usual 100p or so.
The current 1350p offer price is less than the NAV per share at 31/12/20 of 1365p (which is all tangible NAV).
So anyone buying at these prices are not only buying at less than tangible NAV, but they're also effectively getting the trading businesses of Shire Foods and Indulgence Pattiserie for free (since there's no value for these businesses in the NAV except their tangible assets)!
There was a useful summary of the AGM from a poster elsewhere:
"The deal flow seemed steady and they made 3-5 offers in the last 12 months which was comparable to the year before. At least one was a complementary food business and another was a niche listed industrial business with an ageing Board and it sounded like that deal wasn’t entirely dead. With furlough and rent and rates holidays coming to an end they thought opportunities will significantly increase as Boards will be forced to confront going concern issues. Much optimism about “Naughty Vegan” and if I heard it right Nick Lander is a vegan. Meeting lasted little more than 20 minutes."
Are they waiting for a crash?
The AGM is soon, on 28th June, and for the record shareholders can register for a video conference call via Microsoft Teams post-AGM and submit questions:
Https://uk.advfn.com/stock-market/london/volvere-VLE/share-news/Volvere-PLC-Changes-to-2021-AGM-Arrangements/85422588
Some very interesting posts on LinkedIn in the last 3 weeks - the new Vegan range is now being stocked in Heron Foods and Boots as well as Morrisons. These have around another 320 shops between them.
Plus "lots more exciting launches planned" in the next 12-18 months......
Https://www.linkedin.com/in/darren-gilbert-b27b3528/detail/recent-activity/
"Great to see our growing Naughty Vegan range on the shelves at Morrisons, Booths and Heron Foods.
Lots more exciting launches planned over the next 12/18 months."
"Very exciting week for us at Naughty Vegan. Our amazing new vegan cheesecakes have launched nationwide in Morrisons and you can now buy our pastries at Heron Foods - on special offer!"
"The Naughty Vegan family is growing!
Our amazing dairy free cheezcakes will be launching with Morrisons next week!
Caramel Crunch and Cheeky Chocolate will also be available for foodservice in packs of 12."
"We are less than two weeks away from launching our new cheezcakes in Morrisons - Caramel Crunch and Cheeky Chocolate. Not that I’m biased, but they are delicious! You don’t have to be vegan to enjoy these, they just happen to not contain dairy ??
Super excited to see Naughty Vegan growing and we have a lot more to come…."
There's a thorough review of VLE's results here by Graham Neary. VLE is his largest holding, and he strikes me as quite a cautious investor, so the conclusion below is pleasing to read:
Https://cube.investments/cube-report-28-may-annual-results-at-my-top-holding/
"I am happy to continue backing management to find investment opportunities, when they arise. It is reasonable, I think, to believe that there will be an economic fallout which involves businesses with decent underlying value needing to be recapitalised over the next 1-2 years.
We should never forget why the management at Volvere are so rare, and why their performance has been so good over so many years: they truly believe that no deal is better than a bad deal! (sorry!)
Unfortunately, 2020 failed to produce an increase in Volvere’s NAV per share: it reduces from £13.85 to £13.65. But we’ve come a long way: this was only £5.69 in 2015!
Balance sheet net assets are £35.1 million after deducting minority interests. Of this, £23.7 million is the cash I previously mentioned.
With a market cap of just £36 million, the enterprise value is a paltry £12 million. For this, you get a small cakes and dessert manufacturer, an up-and-coming vegan brand that is now in a major supermarket chain, and a food manufacturing business that owns its land and buildings and just earned underlying pre-tax profits of £1.8 million!
I’m nervous to say it, but… I think Volvere might once again be undervalued."
Shire is trading terrifically well - revenues up 18% to £27.2m and PBT up 31% to £1.81m.
The freehold property has been revalued up to £3.75m, from the prior book value of £2.43m. I note that VLE now own another freehold property in Indulgence worth almost another £1m.
The Group also now own £5.3m of plant and machinery as well as a net £4.7m of freehold property, i.e £10m of tangible fixed assets.
Net assets of £37.18m compare to the £36m/cap - before incorporating any valuation of Shire Foods or Indulgence.
Indulgence has had a lot of loan monies put in, but the improved performance in H2 was notable, with a huge increase in revenues and a good reduction in losses. The return of the foodservice sector should being about a big further improvement this year (and for Shire Foods too).
With a £23m cash pile, the Landers must be licking their lips at the many businesses which should become available as government support measures end.
As lockdown ends and foodservice gets back to normal we should see some diminished-capital food supply companies get into trouble as their working capital needs expand.
I see a happy-hunting ground ahead for Volvere over the next year.
Very pleased that the Company management are very patient and not trigger-happy. A fool and his shareholder's money are soon parted.