Last checked at 9 Apr 2020 07:00
9 April 2020
Volvere plc
(the "Group" or "Volvere")
Trading Update and Notice of Final Results
Volvere plc (AIM: VLE), the growth and turnaround investment company, is pleased to provide the following trading update for the financial year ended 31 December 2019. All data in this announcement is unaudited, including the comparatives for the year ending 31 December 2018, which have re-presented audited data after excluding the results of discontinued operations (being Sira Defence & Security Limited).
At the end of 2019, the sole trading business was Shire Foods Limited ("Shire"), the Group's frozen pastry products manufacturer. In February 2020, the Group acquired the business and assets of Indulgence Patisserie Limited ("Indulgence"), a frozen desserts manufacturer.
Financial Performance
The Group expects to report revenue from continuing operations of approximately £23 million (re-presented 2018: £18.3 million) and an overall profit before tax of £3.1 million, stated after a profit arising from discontinued operations of £3.1 million (re-presented 2018: loss £2.5 million). Excluding the profit from discontinued operations, the Group therefore achieved a breakeven result (re-presented 2018: loss £2.5 million), which was in line with the underlying result for 2018 (since the loss for that year was stated after incentive payments of approximately £2.5 million relating to a further discontinued business sold in 2018).
Operating Businesses - Shire Foods
Shire, in which Volvere has an 80 per cent. holding, grew revenues by approximately 26% to £23 million (2018: £18.3 million) and achieved a profit before tax, intra-group interest and management charges* of approximately £1.29 million (2018: £0.85 million). Profit before tax was £1.09 million (2018: £0.65 million) - with the difference being intra-group interest and management charges.
We are pleased with the growth achieved in 2019, which came principally from a deepening of relationships with existing customers, resulting in wider distribution and broader product ranges. We continue to invest in site capacity and in 2020 have committed to invest a further £0.4 million in an additional manufacturing line.
Group Net Assets per Share and Net Assets
The Group expects to report increased year-end consolidated net assets per share (excluding non-controlling interests) of approximately £13.82 (31 December 2018: £12.50) and Group net assets of approximately £26.9 million (31 December 2018: £40.4 million). Of the Group net assets, cash represented approximately £19.3 million (31 December 2018: £34.1 million). The reduction in the Group's net assets and cash is principally as a result of share repurchases totalling £16.6 million in the 2019 (2018: £6.1 million), largely effected through the tender offer announced in May 2019.
Current Trading and COVID-19
The Group's trading businesses are both food manufacturers and, as a result, have an important part to play during the current COVID-19 pandemic.
In the first quarter of 2020 there has been an uplift in sales made to our retail customers when compared with the comparable period of 2019. However, it is too early to say whether this will be sustained and ultimately translate into higher sales for the Group for the year overall. In both Shire and Indulgence there are foodservice customers from whom we have seen a downturn in orders.
In the case of Shire, foodservice represented about 12.53% of sales in 2019. We have some debt and stock exposure to those customers but at this time we expect that, once the pandemic restrictions are eased, normal trading will resume.
In Indulgence, foodservice previously represented a larger part of sales, but as we are actively rebuilding that business, historical sales are less important. More generally, since the acquisition date, we have been working to improve customer and supplier relationships, increasing teamwork and investing in new systems - and whilst we have been encouraged on a number of fronts, there is still work to be done.
At the present time we have not seen material staff absences from illness and at both companies we have put in place mitigating measures to try to reduce the risk of internal contagion. Whilst those measures are modestly affecting our short-term capacity, we are still achieving an encouraging level of output and, for the most part, meeting customer demand.
Irrespective of the current pandemic, the Group is in a strong financial position, with significant cash resources and committed to the long-term future of both Shire and Indulgence.
* profit before intra-group interest and management charges is considered to be a relevant, useful interpretation of the trading results of the business such that its performance can be understood on a basis which is independent of its ownership by the Group.
Notice of Final Results
Volvere expects to announce its full year results for the year ended 31 December 2019 on or around 29 May 2020.
This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.
For further information:
Volvere plc
Jonathan Lander, CEO Tel: +44 (0) 20 7634 9707
www.volvere.co.uk
Cairn Financial Advisers LLP (Nominated Adviser)
Sandy Jamieson/James Lewis Tel: + 44 (0) 20 7213 0880
Hobart Capital Markets LLP (Broker)
Lee Richardson Tel: + 44 (0) 20 7070 5691
Notes to editors:
Volvere plc (AIM: VLE), is a growth and turnaround investment company. The Group's current trading businesses are involved in food manufacturing. The Group currently employs approximately 230 people.
For further information, please visit www.volvere.co.uk.
Forward-looking statements:
This announcement may contain certain statements about the future outlook for Volvere plc. Although the directors believe their expectations are based on reasonable assumptions, any statements about future outlook may be influenced by factors that could cause actual outcomes and results to be materially different.