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...and another £10,000 buy just reported at 1535p.
There must be a seller in the background as this type of liquidity is unusual for VLE, but it shouldn't take long to clear, and the keen buying is good to see.
Nice £15,400 buy at 1540p sneakily reported after the close last night.
Likely due to the reopening of cafes, pubs, restaurants etc, with the gradual reopening of stadium and mass attendance evets etc now on the horizon too - all of these will benefit food service sales for Shire Foods and Indulgence Patisserie.
Online you cannot buy a single share, whereas you can sell 2,500 shares at 1444p - above the mid-price!
Hmmmm...something in the air?
Https://qualitysharesurfer.com/2021/03/26/weather-proofing/
"Volvere
Volvere is an interesting business, quite unlike any of my other investments. It is essentially an investment vehicle that invests in small undervalued and distressed businesses and then tries to turn them around before selling them again. I’ve been aware of Volvere for a long time, have been to several investor presentations over the years and many of the other private investors I know have invested. I’ve always seen the attraction but have eschewed it up till now, preferring to stick to my favoured hunting ground in more growth-oriented quality businesses.
Volvere is very small (only £36m market cap). It owns two operating businesses at the moment, Shire Foods (Volvere owns 80%) and Indulgence Patisserie, both in food production. However, most of Volvere’s assets (about £24m) are currently held as cash. With so much of its assets in cash my normal framework for assessing the quality of prospective investments is less relevant. I see an investment in Volvere as essentially a bet on two things: a) that you are getting good value on Volvere’s existing investments and b) more importantly, that Volvere is going to invest the cash pile it is sitting on wisely.
There is not a huge amount of information to go on (at least without some serious digging), but it seems pretty clear regardless that Shire and Indulgence are collectively worth quite a bit more than the £(11-12)m of market capitalisation they account for. Shire was a beneficiary of the pandemic, growing revenues by 18% to £27.2m in 2020 and making £1.6m in profit before tax. Volvere seems to have had quite a bit of success in turning around Shire since it acquired it and its revenues have been consistently growing for several years. Profits have not been growing quite as much but it seems that this is partly due to the costs of imported ingredients being inflated by a weaker pound. This seems promising as the pound has strengthened a lot more recently. Indulgence, which is more geared towards foodservice, has suffered from the pandemic. It is much smaller than Shire with £3.6m in revenues and a loss before tax of £1m in 2020. Of course, Volvere’s business is to ‘turn around’ Indulgence and return it to profitability. I have no idea how successful Volvere will be in doing so and consequently how much Indulgence is worth but it seems that Shire on its own is sufficient to make Volvere’s overall valuation relative to its current assets seem cheap.
Assessing whether Volvere is going to do something useful with its large pile of cash is largely a question of faith in the management. This is not something I typically feel well-equipped to judge, but I am reassured by Volvere’s track record. At least I am very reassured that they are not going to do something stupid, as they have historically been very cautious in making investments. The investments they have made have have tended to be very successful.
etc"
Iceland are trialling a new convenience store format called Swift, which if successful "could soon start appearing in cities and towns across the UK".
The more stores the better as regards VLE:
Https://inews.co.uk/news/consumer/iceland-swift-convenience-stores-food-shopping-amazon-fresh-916200
Graham Neary will have updated here about VLE yesterday since it's been his largest holding for a while from memory - anyone got access (his spelling isn't very reassuring though!)?
Https://cube.investments/reasurringly-quiet-at-my-largest-holding/
"Reasurringly quiet at my largest holding
Graham Neary
March 17, 2021"
The trading statement is out - to quote, these are "outstanding" results from Shire Foods. Which they are.
- PBT is at £1.81m, up from £1.38m
- a new production line is being installed "to supply future anticipated revenue growth"
- 2021 revenues are ahead of last year
Indulgence made a £1m loss post-acquisition, which explains the overall group loss. VLE's management should this year improve matters greatly with the improved retail offering, the return of food service sales and the start of sales via Shire Foods of new sweet products.
VLE have £23.7m cash against the £34.7m m/cap and £36m net assets. VLE's 80% of Shire is looking like it's really coming to fruition now.
OT : posted again - the original post seems to have disappeared! Apologies if it reappears....
The trading statement is out - to quote, these are "outstanding" results from Shire Foods. Which they are.
- PBT is at £1.81m, up from £1.38m
- a new production line is being installed "to supply future anticipated revenue growth"
- 2021 revenues are ahead of last year
Indulgence made a £1m loss post-acquisition, which explains the overall group loss. VLE's management should this year improve matters greatly with the improved retail offering, the return of food service sales and the start of sales via Shire Foods of new sweet products.
VLE have £23.7m cash against the £34.7m m/cap and £36m net assets. VLE's 80% of Shire is looking like it's really coming to fruition now.
...and another £15,050 purchase at 1505p today, with a subsequent 30p price rise.
Around £15,000 of buys in two trades today, including a £10,000 buy just reported, in this lightly traded stock.
There have usually been trading updates in March (last year April), so not long to wait.
The food producers seem to be doing very well, CWK being the latest yesterday.
Very interesting. Sounds to me like they are finally opening the shop and saying we're ready to start looking and we're good at what we do: but we want the right business and we're no pushover. It's been a long wait! If I wasn't already in here heavily I would look at now as a good time to come in.
Good find Rivaldo and many thanks for sharing.
"There’s always a first time, but we have never failed.
We don’t have a portfolio approach. We don’t just buy 10 businesses and hope six of them will make it, and I think that gives us a competitive edge.
What M&A opportunities do you see in 2021?
I see it as a year of two halves. The first half will be terrible, generally, both in terms of people’s ability to live normally and in terms of profitability for companies that are in the leisure sector – restaurants and foodservice. It will take months to reach the point of herd immunity with Covid-19 vaccination. So, it’s probably going to be second half before we start to see normality coming back.
In the second half of the year, banks will start to look at their portfolio and see who can afford to repay, and who cannot, and we’ll see companies in financial distress – many of them in food manufacturing and foodservice.
Lander tells me that Volvere is cautiously optimistic about the M&A landscape in the coming months. He believes there will be a pool of investment opportunities, but transactions need to be decided carefully.
“I think there are more interesting opportunities for businesses that don’t just sell to restaurants, but deliver food to schools, to hospitals, and to workplaces, for example,” says Lander, noting many of them may have reduced demand, but it can come back up more quickly than restaurants. “There’s no doubt there is distress in the foodservice sector, and that is providing opportunities for us,” he concludes.
Date published: 21 January 2021"
"Aldi and Lidl, for example, don’t have an online delivery service like Tesco, but because these supermarkets are growing so much, they’re still doing very well, and sales were good for us.
What is the strategy to turn around Indulgence Patisserie?
When we bought Indulgence, the company was primarily a foodservice business – and we all know how terrible Covid-19 has been for this sector. So, the recovery has taken longer.
With Indulgence, we’ve been introducing the business to our supermarket clients, and that’s the strategy, not to rebuild the restaurant side of the business.
What’s the secret sauce Volvere has to turn underperforming businesses around?
It’s a combination of things. If the business has been in financial difficulty for a while, it often has a very stretched balance sheet – lots of debt. So, typically, we use an insolvency technique to remove the debt, either via administration or company voluntary arrangement.
But there are subtle things we do, too. We sometimes change the management team, but generally, we have worked with the existing team. But most of the work is on improving financial information.
Some companies don’t know if they are making or losing money, don’t know whether some products are loss-making or are profitable because their financial information is very poor. So we improve that.
We support the company with its clients. We like to think that we stand with our companies in front of the customers. We go and see customers with them, and when a pitch is made for a new line, we are there, too.
And we move people around within the group. It saves money, but it also improves people’s careers and ambitions. They enjoy more of what they’re doing because they’ve got multiple companies to work with. And that’s something we’ll do more as we buy more businesses.
Are you open to selling the businesses in your portfolio?
We never say never, so it depends. We would sell everything that we have at the right price. But our current thinking is that there’s more value to be made by growing them, and that’s our current plan. I want to grow a much bigger food business within Volvere.
What competition looks like in your side of business?
Competition is very limited in the turnaround area. This business requires a very specialist skill – there are two or three people who do it. I think we’re the only one who could say that we have never failed. We’re quite careful about the businesses we buy.
And there’s very little competition for us because we’re not doing £50 million to £100 million transactions like traditional private equity houses. They don’t play in our area of buying loss-making companies – that immediately rules out almost everybody.
How do you pitch your interest in the business to a company?
If I’m pitching to a company that’s in difficulty, I say we’re not looking just to do a quick deal and flip a coin; if we decide to buy into you, we’ll invest in you, and I can show that we’
"Following Shire’s acquisition, Volvere has focused on looking for companies in the food industry and Lander admits that frozen is a particular area of interest. “We also look at businesses in the chilled and ambient segment, but our first choice is frozen,” he says.
A decade has passed since Lander got his hands on a food business for the first time, and the expertise he has acquired about the sector becomes apparent during the conversation. Lander talks about getting better margins, retail sales rotation, and customer relations with ease.
Volvere: Frozen food focus
Lander says he’s interested in frozen food companies for several reasons – products are cheaper to produce, goods have a long shelf life without adding preservatives, and the uptake of frozen food products is on an upward trend. He also argues that the quality of manufacturing and the consumers’ perception of frozen food is changing for the better.
“The perception of frozen food in the UK, and possibly in other countries as well, was of being low-quality, cheap food, not fresh, so not good for you – but that’s an outdated view,” he says. “The other wrong view on frozen food is that it’s only suitable for pizzas. Consumers used to see frozen only for vegetables – peas for example. However, this view is also changing – you now see frozen ready-meals, pies, and prepared vegetables, all chopped and ready for cooking.”
Lander believes the variety of frozen food in the marketplace is changing, driven by supermarkets like Iceland in the UK, which almost entirely sells frozen products.
“Frozen food is also cheaper than chilled and ambient,” says Lander. “It’s cheaper partly because of the perception we talked about earlier, but also because it’s cheaper to make,” he says.
Lander explains that manufacturers make money when they can do long production runs – a week’s production of one product can be stored frozen in a warehouse until it’s sold and then distributed to the client. He argues this method is also better for retailers because the longer shelf life means supermarkets throw away less food.
“Frozen manufacturing makes the business more efficient, so you can offer products to supermarkets at a lower price,” he says, noting this way margins are higher. “Some of the benefits of the lower cost of manufacturing is passed on to supermarkets, and thus to customers.”
The onset of Covid-19 hasn’t been good for anybody, but shifting consumer behaviour has impacted positively in the frozen category. In the UK, appliance firm AO.com reported a 200% spike in freezer sales in March, leading to a shortage of the equipment by July – and supermarket sales of frozen food in the 12 weeks to June surged by 19.4% – a whopping sales increase of £285 million.
How did Shire manage to make a profit amid the restrictions of Covid-19?
Shire did well because of the increase in supermarket sales. The business does have a food service component, but it’s quite small – less than 5%.
Subscriber-only, but you can get a free 30-day trial....some very interesting stuff, particularly as regards building up the food side further and about how little competition VLE have in their sub-sector of company acquisitions/turnarounds.
And JL's comment that “We expect that sales in 2020 will be higher” is about as bullish as we can expect given the usual cautious tone :o))
httPs://nutritioninvestor.com/people_ni/jonathan-lander-volvere/
""Jonathan Lander | Volvere
The chief executive of the growth and turnaround investment company in London wants to build a portfolio of food businesses and says frozen is the winning category
Buying and selling companies for a living is a risky business, but Jonathan Lander, chief executive of Volvere, has made it work for him for years – 18 to be precise. “We’ve never failed in any turnaround we’ve done,” he tells me. Lander adds that he founded the company with his brother in December 2002, and his words convey a sense of pride. “We have either bought a business and made it profitable and sold it, or bought it and made it profitable and kept it.” The latter has been the approach of choice since the acquisition of frozen pastry manufacturer Shire in 2011 – and the deal marked the beginning of Volvere’s food portfolio.
“We didn’t know anything about food manufacturing, but we liked the management team, the factory, the food category Shire was in, and gradually worked with the management team to build it back up again,” says Lander.
Lander emphasises that Volvere invests in companies in distress in any sector, but also in any company or business that’s not in distress but which complements the existing portfolio. “That’s what we did with [the acquisition] of Indulgence Patisserie – it was not in distress, but complementary to Shire.” Headquartered in Colchester, Indulgence joined Volvere’s portfolio in February last year.
Volvere – the past tense of the Latin word meaning turned around – entered the market through an IPO on the London Stock Exchange that raised £3 million. The initial idea was to invest the proceeds in buying companies in financial difficulty. “With £3 million you can’t do very much,” says Lander, noting the danger that companies that fail to keep running smoothly may, in fact, not be great businesses.
Over the first few years, Volvere bought and sold typically one business at a time. Lander says the company couldn’t afford to do more deals because the acquired businesses were loss-making or underperforming for a long period. “We gradually built capital, buying and selling businesses typically within three years,” explains Lander.
Volvere invested about £500,000 in the deal with Shire Foods – and now owns 80% of the business. The company reported a 26% revenue increase in the 2019 financial year to £23 million, and £1.38 million profit – up 62% compared with the previous year. “We expect that sales in 2020 will be higher,” says Lander."
There's some pressure building here - another early tick up today, and now a further £7k of buys just reported at the full 1520p offer price.
Stock is evidently still very scarce - someone bought just 250 shares at 1450p, and that was enough to push the price up 50p this morning....
Looks like stock is scarce - three small-ish buys totalling 775 shares have pushed the price up 50p, and the last buyer paid the full 1450p offer price.
Interesting to see the updated major shareholder list, which now includes heavyweights like Lombard Odier, Miton and Canaccord/Hargreave Hale.....
Lombard Odier 281,480 10.94%
Jonathan Edward Lander • 240,037 9.33%
Canaccord Genuity 187,114 7.27%
Burgan Bank 178,500 6.94% (apparently Kuwait's second largest bank)
Nicholas Paul Lander • 131,947 5.13%
Premier Miton 100,380 3.9%
FG Nominees 81,946 3.19%
David Buchler • 45,000 1.74%
Canaccord have today declared a 7.28% stake in VLE, or 187,114 shares:
Https://uk.advfn.com/stock-market/london/volvere-VLE/share-news/Volvere-PLC-Holdings-in-Company/84080557
It's taken them a while - they achieved it via the placing on 13th November! I see that Hargreave Hale have 6.51% and Canaccord Wealth the remaining 0.77%.
Well, it's been another very satisfactory year for VLE since it started the year at 1120p or so.
The current lockdown and restaurant closures should once again benefit Shire's food sales overall, with much increased retail sales offsetting the much smaller negative effect on foodservice sales. This effect should be magnified given that H2 is by far the better half for Shire's sales and profitability.
2021 should continue in the same vein, with acceleration from (1) the new range of and growth in vegan products, (2) the restructuring of Indulgence and (3) the synergies from the combining of Shire's and Indulgence's operations as above.
And here's hoping it won't be too long before VLE find another tasty acquisition to turn around.
I came across this from last week - it seems that VLE's Naughty Vegan and Indulgence have now combined forces for vegan cheesecake and desserts....
I liked Graham Neary's comment beneath the picture re looking forward to being valued similarly to Beyond Meat at a price/sales ratio of 20 times :o))
Https://twitter.com/ExpectingValue/status/1334557608477421577
"#VLE // Volvere
Well, here is the start of the Shire Foods / Indulgence Patisserie synergy... curious to see if they manage to get a Morrisons listing for this, too - which would be a real sign of the strength of the combined business
(PS: the whole range is really excellent)"
Https://www.facebook.com/n8ughtyvegan/photos/a.1487921171379775/1561672057338019/
VLE should benefit from the second lockdown in their seasonally much better H2, with more people eating at home during the day, particularly given the cold weather. In addition - and this has been mentioned previously by VLE - the schools are staying open this time, which will benefit Shire's food service sales.