REG - Volvere PLC - Trading Update and Notice of Final Results

VolvereAnnouncement

16/03/2021 07:05

RNS Number : 3286S
  
Volvere PLC
  
16 March 2021
  
 

 
16 March 2021
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 2020.  All data in this announcement is unaudited, although the comparative information for the year ending 31 December 2019 has been extracted from audited data for that year.  
In February 2020, the Group acquired the business and assets of Indulgence Patisserie Limited ("Indulgence"), a frozen desserts manufacturer.  This, along with Shire Foods Limited ("Shire"), the Group's frozen pastry products manufacturer, comprise the Group's trading operations.
In October 2020, the Group raised approximately £9.7 million through a share placing (net of associated expenses of £0.3 million).
Financial Performance
The Group expects to report revenue from continuing operations of approximately £30.81 million (2019: £23.04 million) and an overall loss before tax of £0.53 million (2019: profit before tax of £3.18 million, stated after a profit arising from discontinued operations of £3.1 million). The costs of the share placing have been charged directly to reserves.
Operating Businesses 
Shire Foods
Shire, in which Volvere has an 80 per cent. holding, grew revenues by approximately 18% to £27.2 million (2019: £23.04 million) and achieved a profit before tax, intra-group interest and management charges* of approximately £1.81 million (2019: £1.38 million).  Profit before tax was £1.61 million (2019: £1.18 million) - with the difference being intra-group interest and management charges.
The performance of Shire was outstanding, achieving record revenues and profits during our period of ownership. Especially pleasing was the progress made with the Naughty Vegan brand (for which we have some sweet products launching in 2021 made by Indulgence).
COVID-19 restrictions impacted negatively on foodservice sales but this was more than offset by growth in the retail channel.  The proportion of foodservice sales (net of rebates) to total sales fell from 12.2% in 2019 to 9.7% in 2020.  Foodservice will recover as the education and hospitality sectors in the UK reopen, however this may reduce retail sales as fewer people eat at home.  
We continue to invest in site capacity and in early 2021 commissioned another manufacturing line to supply future anticipated revenue growth.  
Indulgence Patisserie Limited
The Group acquired Indulgence on 7 February 2020, purchasing the business and assets following the seller's administration for approximately £1.25 million plus costs of approximately £0.10 million.  Indulgence manufacturers premium frozen cakes, cheesecakes and other desserts from its site in Colchester, UK.
For the period 7 February - 31 December 2020 Indulgence generated revenues of £3.62 million and incurred a loss before tax of £1.00 million.  The Group has funded the initial purchase, working capital and trading losses by way of intra-Group loans.
Indulgence had traditionally focussed on supplying the foodservice sector (mainly outside of the UK), along with some UK retail business.  The pandemic, coupled with uncertainty due to the administration of the former owner, not surprisingly has impacted revenues.  We have, however, been working hard to increase our retail offering and to build new relationships with customers in the UK foodservice sector, through increased innovation and improved customer engagement.  We are also investing in new plant to increase productivity and the breadth of products we can offer.
The outlook for Indulgence in the short term is dependent principally on the reopening of foodservice channels in the UK and Europe.  We believe the quality of the company's products and the work we are doing behind the scenes to improve the customer experience, will continue to present new opportunities for the company over time.
Group Net Assets per Share and Net Assets
The Group expects to report year-end consolidated net assets per share (excluding non-controlling interests) of approximately £13.29 (31 December 2019: £13.85; 30 June 2020: £13.29) and Group net assets of approximately £36.10 million (31 December 2019: £26.99 million; 30 June 2020: £26.02 million).
Of the Group net assets, cash represented approximately £23.71 million (31 December 2019: £19.32 million; 30 June 2020: £16.11 million).
The increase in the Group's net assets and corresponding cash movements reflect the placing in October 2020, the positive trading in Shire, offset by central costs, capital expenditure in new plant, the purchase of Indulgence and the associated working capital movements.
Current Trading and COVID-19
The lockdown in the UK and Europe has continued to impact materially on foodservice sales in Indulgence.  Whilst both Shire and Indulgence have experienced staff absences due to COVID-19, we have been able to minimise any impact on customer deliveries by managing inventory levels proactively.
Revenues in the early part of 2021 for Shire are ahead of the same period in 2020 and we are hopeful that this will continue.  As noted above, Indulgence stands to benefit from the re-opening of the hospitality sector and from an expected greater penetration of the retail market later in 2021.
More generally the number of companies in financial distress has not been as high as we might have expected. However, we believe this is due to the continuance of government support schemes - which may soon be withdrawn. At that point, we expect there will be a greater focus on balance sheet quality. The strength of the Group's balance sheet puts it in a position to be able to exploit the opportunities that we think will arise in the coming months. In the interim, we seek to continue to deliver growth and increased profitability in our food businesses. 
Our staff have had to adapt to changing working practices in response to the pandemic and shown much resilience in continuing working whilst other sectors were closed.  We are grateful to them for their hard work and commitment.
* 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 2020 on or around 28 May 2021.
This announcement contains inside information for the purposes of the UK Market Abuse Regulation and the Directors of the Company are responsible for the release of this announcement.
 
For further information:
Volvere plc 
Jonathan Lander, CEO                                                           Tel: +44 (0) 1926 335700
www.volvere.co.uk                             
 
Cairn Financial Advisers LLP (Nominated Adviser)
Sandy Jamieson/James Lewis                                               Tel: + 44 (0) 207 213 0880
 
Canaccord Genuity Limited (Joint Broker)                        Tel: + 44 (0) 207 523 8000
Bobbie Hilliam/Alex Aylen/Georgina McCooke
 
Hobart Capital Markets LLP (Joint Broker)
Lee Richardson                                                                       Tel: + 44 (0) 207 070 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 270 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.

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