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except for just 70k shares, which hopefully they will buy back anyway. There are only 1.9m shares in issue now, and VLE has £20.5m of cash.
Excluding the Landers' shares, almost 30% of the other shares in issue were tendered (around 644k shares) - higher than I'd imagined would be the case. Perhaps Andrew Cohen and the like tendered quite a few.
There can't be many shares available for sale out there post-tender, so hopefully any interesting news like a new acquisition or a sale of Shire at some point will meet with a good reaction.
Gailes5, I did tender some, but still have a large holding. The management are top-notch - I have every faith that they will do something worthwhile with the cash pile.
Glad to see others are considering sticking with current position. I’m a very small holder on this stock value about £2k currently. Given their record I think I will stay for the MT/LT. I too would not know where to better place the funds anyway.
In response to mjb I don’t know what to do! I have quite a decent holding in an illiquid company but the track record is so good i am tempted to stick with them. I haven’t worked out the figures, too lazy, but would guess the buy back price is below asset value and could be a decent discount if a more optimistic view is taken of Shire.
If I surrendered a large percentage of my shares I wouldn’t have a clue what to reinvest in, anything is likely to be more risky than Volv. Not very helpful comments I admit and I am sure we would all like to see what Rivaldo thinks.
I am defiantly holding on to all my shares in this company. I can see huge potential here just look at past history.
Given the way that this company has performed since I first bought in (Feb 2017), I am tempted to ignore the tender offer and hang on to my shares for the foreseeable future. I would be interested to know what others are likely to do though.
Up to £16.6m buyback at 1290p :o))
Around £75,000 of shares traded so far today. This is almost becoming a liquid share :o))
It'll be interesting to see what happens if/when VLE make their next acquisition.
In some cases a cash pile is seen as a dead weight on a share price. For the first time VLE are in a position to make a really meaty acquisition. Given the Landers' disposition I doubt they'll spend more than say £10m on a single acquisition, but hopefully this level of spend would excite the market given the potential multiples on offer from the Landers' track record.
The defensive aspect of the currently almost £37m cash pile would obviously reduce, but I'd have thought the former would outweigh the latter. We might even see the share price start to rise nearer to parity with the true NAV.
Commentary today from Graham Neary, who is rightly full of praise for the Sira sale, and from memory has VLE as his largest holding. I'm not a subscriber, so it would be useful if someone could post the remainder of the text from this part available for free:
Https://www.stockopedia.com/content/small-cap-value-report-fri-24-may-2019-vle-iqe-478286/
"Some great news from Volvere last night.
I appreciate the fact that they released it after 6pm, so we had plenty of time to digest it last night. It would be wonderful if more companies did this, wouldn't it? I don't think there's a rule which says that announcements have to be released at 7am!
Anyway. the news is that Volvere has raised £2.55 million (£3 million before bonuses to executives and transaction costs) from the sale of Sira Defence, its small CCTV software subsidiary. The buyer is a large company called NICE.
The multiples achieved by Volvere on exit really astound me. Sira earned revenues of £300k and PBT of £60k last year. Selling it for £3 million tells me that Sira must have developed into a very high-quality business over the years, with a lot of potential, and/or that Volvere is particularly good at finding buyers for its subsidiaries.
You might remember that Volvere's previous disposal generated £31 million (gross), for a consulting company which generated PBT of £3.3 million in the prior year. The multiples for that transaction were impressive, but the Sira multiples are on another level.
The return on investment is also quite good. The RNS yesterday says that Sira was purchased for "£0.005 million". Scrolling back through the archives, the RNS from 2006 says that £30k was the purchase price for Sira and its sister company.
A couple of working capital loans have been extended over the years but the ROI is spectactular whichever way you look at it."
VLE now have £36.65m net cash - compared to a £35.8m m/cap. Plus Shire must be worth £6m at minimum, or say 200p per share. Then there's the £2.6m freehold property in Shire to add on.
In other words, there's substantial upside from here even without any new acquisitions.
Thx to you too Gailes5. I tend to post on quite lonely threads as most on LSE don't seem to like profitable, well-run companies trading on cheap valuations! Take a look at HMLH and RTC for example - now there's two REALLY boring, slightly illiquid companies at extremely cheap valuations.
Firstly I join Ages in thanking you for your always helpful contributions to this rather lonely BB.
When I was reading about the sale but before I got to the end I was guessing that 1M would be a very reasonable result!
The Launders are quite good!!! Where now? Without knowing them the obvious would be to sell Shire and liquidate the company or reverse into a bigger entity which needs cash. I suppose it depends on how ambitious they are.in any event well worth staying on board for the ride, the downside is virtually zero.
Wow, a very pleasant surprise. A great result - £3m for a company making just £60k PBT on £390k turnover :o))
Congrats to the Landers. If anyone ever doubted their acumen then this is yet another reason to think again.
Who knows, perhaps we'll be wrong footed once more with the sale of Shire. Or perhaps an acquisition.
Very happy to continue to hold for the foreseeable future in the knowledge that my shares could not be in safer hands.
Cheers Agesilaus, appreciated. I share your thoughts re the food sector. However, if anyone can make things work it's the Landers.
If VLE can buy a complementary business, they can reduce overheads by sharing with Shire and extract whatever production and other synergies there are.
Above all, VLE have managed to increase Shire's turnover by over 50% since the start of 2015 via Aldi, Lidl, Iceland etc. They can utilise their contacts with these growing chains to the benefit of the acquired entity.
Rivaldo
Once again thanks for your posts on VLE. I realise that interaction is at a minimum but rest assured these posts are always read and most appreciated.
I too noted the comment on potential acquisitions in the food sector but I must admit I'm slightly concerned at this. VLE admits itself that margins are under pressure in this sector, despite the increased revenue. (Reasonably) substantial investment would appear to have been necessary to slightly grow these revenues. The 5 year trading data certainly points to that fact where over that period revenues have increased 50% but profit has dropped by the same. I realise these figures lay bare the effects on margin through sterling's devaluation and rising costs but it's still a concern.
Would buying more companies, in an industry which is often subject to downward pressures as a result of supermarket wars, the best way to generate profits? I'm not so sure.
As you have frequently mentioned, at least the share price is underpinned by the cash reserves so downside is limited. I'm just not sure how much upside potential there will be now, especially if they are more likely to make acquisitions in the food manufacturing sector.
Results out - £34.1m cash and £12.50 per share of net assets:
Https://uk.advfn.com/stock-market/london/volvere-VLE/share-news/Volvere-PLC-Final-Results/79969366
As already flagged really. Perhaps the most interesting line for long-term shareholders is:
"We continue to look at targets in all sectors but, in particular, we believe there is an opportunity to build a larger group of food businesses, leveraging our competencies in this area."
I also note that most of the 2018 investment in Shire was funded via external debt rather than using VLE's own funds. The comment about being at the heart of their customers' business "over the longer term" perhaps suggests that Shire will be retained for a while yet, especially given the remark about building a larger group, but I'm sure this wouldn't rule out an opportunistic sale at the right time.
For the record, current m/cap - £35.1m.
Cash pile at 31/12/18 - £34.1m (presumably more now). Plus £2.9m retention on the Impetus disposal to be received March'20. Plus Shire Foods. Plus Sira Defence.
Well over £100,000 of shares traded yesterday and today. Very brisk by VLE's usual standards.
VLE's main trading subsidiary Shire Foods featured on Supermarket Secrets last night on BBC1.
Part of a long segment about the hard work that Iceland have put into making palm oil-free pies, and interviewing the guy at Shire who's put this into practice.
Not particularly revelatory in itself, but good to see Shire at the forefront of these latest advances, which might bring them new business from other retailers wanting to cut down on palm oil.
Looking around, you could tell where Shire's investment has gone - lots of shiny, new-looking machinery and production lines.
Found one of Sira Defence's new-ish partnerships - here's news dated 21/2/19 from Xenario UK, specialists in digital asset management:
Http://xenariouk.com/xenario-blog/2018/11/28/cctv-transcode-and-transfer-to-a-fotoware-dam
The IC's Simon Thompson is still backing VLE - this was posted yesterday:
Https://www.investorschronicle.co.uk/comment/2019/03/25/bargain-shares-on-a-tear/
"Viva Volvere
In a pre-close trading update, Aim-traded investment company Volvere (VLE:1,200p), a constituent of my market beating 2016 Bargain Shares Portfolio, has announced that its net asset value per share surged by 89 per cent to 1,248p in 2018.
As I noted when I last updated the investment case (‘Bargain shares: On the M&A beat’, 22 October 2018) after the company announced the disposal of its largest investment, Impetus Automotive, a provider of consulting services to the automotive sector, the sale would produce eye-watering returns for Volvere’s shareholders. In fact, the company has received net proceeds of £26.1m for its 83 per cent stake in Impetus, a thumping premium to the £4.8m carrying value of the investment and 21 times the £1.25m capital Volvere originally invested in March 2015. This also highlights the midas touch of Volvere’s founders, Jonathan and Nick Lander, who have the respective roles of chief executive and finance director, to successfully invest in distressed and undervalued businesses with a view to turning them around and exiting at a hefty profit.
The disposal leaves Volvere’s balance sheet is a rude state of health. Net cash of £34.1m equates to 1,093p a share, which means that the company’s 80 per cent stake in Leamington Spa-based food manufacturing business, Shire Foods, and a small software firm Sira Defence that develops products to help the police use CCTV effectively, are effectively in the share price for around 100p share, or £3.1m. That seems harsh given that Shire has just reported a pre-tax profit of £0.79m, up 23 per cent year-on-year, and Sira has entered into a number of reseller partnerships that are “expected to make a contribution in 2019 and beyond.”
True, Volvere’s shares are at an all-time high and have risen by 150 per cent on an offer-to-bid basis since I advised buying, at 419p, in my 2016 Bargain Shares Portfolio. However, given the Landers mightily impressive track record – Volvere’s book value per share has increased at a compound annual growth rate of 17 per cent since the company listed its shares, at 100p, on Aim in December 2002 – then they are still worth backing and I would run your profits ahead of news on the next turnaround situation they plan to invest in. Volvere’s annual results will be announced on Friday, 24 May 2019. Run profits."
Gailes5, I agree that on paper the spread is silly, but in practice investors can trade well within the spread - the buy today is at 1173p for example.
fwyburd has posted elsewhere an excellent additional summary of Jon Lander's presentation - I hope he doesn't mind me copying it here:
Https://www.stockopedia.com/content/small-cap-value-report-wed-20-march-2019-iqe-459743/
"Re: Volvere (LON:VLE) (I hold)
I attended Jonathan Lander's excellent presentation yesterday at a Blackthorn event in London.
In summary the net assets of £40.3m equate to @12.48 per share; cash of 34m equate to £10.95 per share. The balance sheet valuations of SIRA and Shire foods are at cost (£30K and £0.54m respectively). Shire made a PBT of 0.8m which conservatively should value it at 4.6m today. With the extra line they are putting in (from 2 to 3) profits should increase by a third and their product developments sounds very sensible (vegan; vegetarian; healthy pies). Might be opportunities to supply the major supermarkets although Lidl, Aldi and Iceland are alreary clients. It also sounds like they've learnt a lot about the industry which suggested to me he would contemplate more food manufacturing acquisitions.
SIRA sounds fascinating as it has unique IP for CCTV feed harmonisation (ability to convert multiple sources of CCTV imagery into one feed). Revenues currently £300K with 80 police forces around the world buying their services but they have been pushing IP licensing globally in 2018 and expect sales to ramp up in 2019 albeit from a very low base.
He recognises they have too much cash but will never pay a dividend (unless they have large underlying dependable revenues which they don't have at the moment); rather he prefers to buy back shares as its also better from a tax point of view. He said they might look at public transactions but will never compromise his goal of 17% compound growth yoy which they have achieved over the past 17 years.
As ever he was entertaining, transparent and straight forward.
cheers
Francis"
Many thanks for your report, much appreciated. The outlook for our two businesses is certainly looking more promising. If they were to sell Shire reasonably soon they will be so stuffed with cash that they will either have to totally liquidate the company, agree a reverse take over or make a significant investment, larger than any done before.
I agree the shares are cheap but the huge spread puts off potential new investors.
Here's my notes from VLE's presentation last Tuesday at Blackthorn Focus FYI....
GENERAL
- it would apparently cost £10m to build Shire's factory from scratch. Food for thought re the potential sale price for Shire......
- VLE prefer to acquire businesses with revenues between £10m-£100m, suggesting that they're open to purchasing larger businesses. No sector restrictions, prefer people businesses
- 30% IRR is minimum requirement
- VLE have "too much cash", so more share buybacks are on the cards
- this was the first time I've ever seen JL so optimistic and forthcoming about Sira Defence
- VLE might consider buying in the quoted co/PLC market (which they've done before with NMT)
SHIRE
- Shire has a 50,000 sq ft factory in Leamington Spa, with 160+ employees. They supply frozen (NOT chilled) pies/pastries to Lidl, Aldi and Iceland, and Morrisons to a smaller extent with party food
- party food represent a new product launch in 2018, alongside other launches like peppered steak, beef & vegetable, hunters chicken and veggie options like mushroom, stilton & cranberry, caramelised onion & goat's cheese, curried cauliflower & kale etc, for which input costs will of course be lower....
- Shire are concentrating on new healthy and vegan/meat-free/vegetarian lines
- the new third production line will be funded by extremely cheap bank finance directly to Shire, not with VLE's core cash pile. It should grow Shire's profits by "quite a lot"....adding another £9m of revenues to the existing £18m+
- Shire's principal competitor is Green Isle, owned by the huge Chicken King operation (as Pukka Pies do mainly chilled). Shire are probably the largest player...and are looking to expand into the larger supermarkets. Though of course Shire are already supplying the fastest growing UK supermarkets...
SIRA
- is now "the provider of the UK industry standard universal digital CCTV viewer"
- almost all its £300k revenues are recurring
- JL is "confident in 2019 we'll see the fruits of" new international partnerships
- used by over 80 police forces worldwide
- has unique IP
Mildly surprised they are not higher given that the asset value per share is higher than the share price. That would imply that the market is placing zero (or negative) value on the companies ability to make money by turning around these assets. That doesn't seem to be supported by history. First bought in here in Feb 2016, so I am somewhat up on my initial (small) investment, but would like to see more! I guess that's the risk with sparsely trading "micro-cap" shares.
As predicted, the trading statement is out today:
- 1248p net assets per share, including a £34.1m cash pile (against a £33m m/cap)
- Shire Foods increased core PBT to £0.79m. The prognosis sounds more encouraging than I hoped, with customer growth and new product lines. They're throwing significant investment at Shire - I trust their judgement, but any sale price will have to be quite significant for decent profit over the acquisition price and subsequent investment
- even Sira is looking promising, with a £60k PBT, and "a number of reseller partnerships were signed in the period, which are expected to make a contribution in 2019 and beyond"
- the overall group profit was affected by £2.5m of Impetus sale bonus payments. Frankly these are large, but we have to accept that they're well deserved - if it hadn't been a multibagger then no bonuses would have been due
The core value of the cash pile plus Shire Foods (including the £2.6m freehold property) plus Sira remains quite a way above the current share price, and much more so once that cash starts getting reinvested.
As predicted, the trading statement is out today:
- 1248p net assets per share, including a £34.1m cash pile (against a £33m m/cap)
- Shire Foods increased core PBT to £0.79m. The prognosis sounds more encouraging than I hoped, with customer growth and new product lines. They're throwing significant investment at Shire - I trust their judgement, but any sale price will have to be quite significant for decent profit over the acquisition price and subsequent investment
- even Sira is looking promising, with a £60k PBT, and "a number of reseller partnerships were signed in the period, which are expected to make a contribution in 2019 and beyond"
- the overall group profit was affected by £2.5m of Impetus sale bonus payments. Frankly these are large, but we have to accept that they're well deserved - if it hadn't been a multibagger then no bonuses would have been due
The core value of the cash pile plus Shire Foods (including the £2.6m freehold property) plus Sira remains quite a way above the current share price, and much more so once that cash starts getting reinvested.
Anyone going tomorrow?