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| Share Name | Share Symbol | Market | Stock Type |
|---|---|---|---|
| Conviviality | CVR | London | Ordinary Share |
| Price Change | Price Change % | Share Price | Last Trade
|
|
|---|---|---|---|---|
| 0.00 | 0.00% | 101.20 | 01:00:00 |
| Open Price | Low Price | High Price | Close Price | Previous Close |
|---|---|---|---|---|
| 101.20 |
| Top Posts |
|---|
Posted at 04/4/2018 18:17 by electrick “The Conviviality Direct businesses had gross revenues of GBP1,219 million and adjusted EBITDA of GBP51.3 million (pre central costs)(2) . Gross assets are approximately GBP230 million.“£102mm of bank debt to be serviced over a 12 month period for a purchase of £1 ( nominal price paid) This looks like a bargain for C&C Group plc ... a little surprised the only saw an uplift of 11% in their share price today. Phenomenal impact on their revenues and as someone already pointed ou a company who it is hoped can gain synergies through a thorough review and application of integration with their business. Of course they also pick up the employee liabilities and any cost savings may involve redundancies but it will be interesting to see over the next year whether it can be turned into a strong profit centre for CCR. May have to have a tickle on CCR in the coming weeks Presume the tax liability sits with CVR as no mention of this in the release. Ugly for CVR. Great for CCR |
Posted at 02/4/2018 16:05 by kingston78 Tiger, You have my sympathy for losing money on CVR. I don't think anyone at CVR intended to mislead. Generally speaking, Plc directors tend to glorify the positives and suppress the negatives. This is PR. They want the share price stays up and their remuneration stay high. I would say that credit should be given when credit is due; it should not be taken for granted. A company would not exist without support from its shareholders. Directors should treat everyone with respect and act professionally.Whilst I would not divulge details about myself, I just want to say that I know accounting and finance intimately. It is clear to me that the quality of the accounts personnel and control, review and reporting at CVR was lacking. They didn't know the business well enough to spot obvious errors. They didn't have a robust financial modelling and planning process. I could imagine that accounting information was late and not up to date. Accordingly, their series of closely timed announcements were conflicting and the figures were deteriorating based on the same underlying data, which were being updated. Forget about the FD for a minute. A good Financial Controller would have had all the up to date financial information up his (her) sleeves and reported to the FD and the Board every week and every month. That would have raised the alarm bell several months back to enable the Board to have addressed the problems earlier. Good financial control and management is essential for all businesses, big or small. More often than not, I pay more attention to the strength of the Balance Sheet and Cash Flow than the Profit and Loss Account (or trading statement). A company with a sound financial footing can weather a storm whereas a weak company which apparently trades profitably may collapse spectacularly without warning. Beware of companies growing by acquisition using debt finance. Its good fortune does not last for long, as economic cycles are now very short (every ten years or so there is now a financial crisis). |
Posted at 24/3/2018 16:10 by york investor thanks nanorisk , I agree there is trading risk now for the business, however I dont believe customers will intentionally hold back paying CVR what they owe (that would just be bad for there business in the long run) and likewise large suppliers have given there support to CVR, again not in there long term interest for CVR to fail.Some smaller suppliers may ask for payment up front but you are only talking relatively small amounts. The main thing is getting the placing and offer through. |
Posted at 16/3/2018 20:17 by typo56 russell250, I took a look at what happened at HUR.By 'earlier this year' do you mean financial year? If you mean the fund raising last July, it looks like they were able to get out of the pre-emptive offer to all shareholders because the share price in the open market had fallen below the 32p offer price. I'm not sure that's unreasonable as it wouldn't have been a productive use of time or money. Have you read Resolutions 14 and 15 from the CVR 2017 AGM that I posted earlier? I've been told that my comprehension skills are poor, but it reads to me like CVR would have to make a pre-emptive offer to all shareholders. Given the urgency they might try and do it the same way as HUR, doing the placing first and promising to look after the other shareholders later. As with HUR, it might not happen if the price in the open market ends up lower than the placing price, but if that happens the placees have been stuffed haven't they, rather than the ordinary PIs? |
Posted at 16/3/2018 16:10 by masurenguy Graham Neary's view todayConviviality (LON:CVR) (suspended) "Conviviality has confirmed that it is working on "the possibility" of an equity fundraising, to fund its VAT payment. Given that its existing lenders were already maxed out, and probably unimpressed by the company's ability to make cash flow projections, this has seemed the most likely outcome. To its credit, it did succeed in cancelling today's dividend payment, saving £8m. That relieves some of the pressure - I was penciling in a 50p placing price, but that is looking a bit pessimistic now. Of course, this is purely speculation on my part: it all depends on the hunger of existing shareholders, and the demand for new shares. It's impossible to tell where the demand for more shares will find equilibrium against forthcoming supply (this is why dilution is so risky for existing shareholders - you have no idea how bad the dilution is going to be). Funding could happen at almost any level. The irony is that Conviviality paid out nearly £20m in dividends last year, and is now scrambling to find £22m from somewhere. Even before this VAT débâcle Hopefully, trading will continue as normal with suppliers and customers, and the problems will not become any more serious. As the company itself said regarding this year's forecasts. To the extent that the current situation creates operational difficulties, this may negatively impact the adjusted EBITDA range. If and when the shares resume trading, I would remain very cautious about getting involved. I've been a sceptic for quite some time not just on Conviviality's valuation but also on its strategy. The former is likely to be reset at a more realistic level, but we still don't have any evidence that a more prudent strategy will be pursued in future. |
Posted at 15/3/2018 14:07 by s1zematters Here he is ramping CVR just before suspension...BTW simpleton, Unless you are licensed by the FCA recommending shares to others is unlawful! W1NDJAMMER - 13 Mar 2018 - 13:10:27 - 10109 of 10172 Centrica broker notes 2013/14 - CNA Nortic it might be worth flipping a few into CVR WJ. |
Posted at 14/3/2018 18:49 by galatea99 Invoice discounting does, I believe, cost about 1.25% of the value of the invoices being discounted, I can't remember where I saw that figure quoted, sorry. That would be quite a chunk out of nett margin so CVR may prefer to use it sparingly, as they appear to do. It would seem to be an available solution or part of the solution where CVR are today, although a very expensive one. There ought to be cheaper solutions available, perhaps? |
Posted at 14/3/2018 17:57 by tsmith2 see hereCurrent position - fully drawnThe Company is fully drawn under its term loans and revolving credit facilityThe last Annual Report shows facilities (provided by a consortium of RBS, HSBC, and Barclays) as at 30 April 2017, as follows;Term loan of £95.8mRevolving credit facility (i.e. an overdraft) of £30m + £15m accordion facilityThere is also a £130m receivables facility (i.e. invoice discounting) - let's ignore this for the moment, as it's outside the scope of the bank covenants (since it is secured on CVR's sales invoices)The term loan will have had repayments made by CVR since 30 April 2017, of £1.25m on 31 May 2017, £6,361k on 29 Oct 2017, which will have reduced the term loan to £88.2m. There will also be interest charges of about 10.5 months to add to that, which is charged at LIBOR + 2.5%, so I make that roughly £2.4m, so by my rough calculations, the term loan probably currently stands at c.£90.6m. The next repayment is £6,631k, due on 29 April 2018, assuming that the banking arrangements are unchanged from the last Annual Report, where I got the above info.Forecast debt - the company says this today;... covenant net debt at 29 April 2018 is expected to be approximately 113.0 million (which excludes any amount drawn down under the Company's invoice discounting facility).This seems to tie in with my estimates above of £45m RCF facility (including the accordion) + c. £90.6m term loan = £135.6m, less say 3 days receivables cash in transit of £23.1m, which I've estimated at about £7.7m per day - based on £2bn VAT-inclusive sales p.a., divided by 260 working days p.a.) = £112.5m - which is only £0.5m away from what the RNS says. So I've therefore sense-checked the company's £113m estimate of covenant debt as at 29 April 2018 as being correct. Actually, thinking about it, since those calculations are based on the group having already maxed out its covenant facilities, covenant debt can't go any higher! (unless they exceed their overdraft limit, which the bank would probably prevent, by rejecting BACS runs that would breach the limit.Working backwards from the 2.5 times Net Debt: EBITDA covenant, and the maximum facilities less cash of £113m, this means that EBITDA would have to drop to below £45.2m to breach this covenant. The current estimate is about £56m, but if serious disruption to trade occurs due to the current funding crisis, then EBITDA could plunge, and trigger a breach of bank covenants later this year. So again, time is very much of the essence, they need to get the short-term funding crisis resolved in days, rather than weeks, in my view.Invoice discounting facility - historically, CVR seems to have drawn down relatively little of this facility, which is perplexing. With a large trade receivables book (of £184.2m in last Annual Report - as at 30 April 2017), then surely CVR could relieve the pressure on its maxed-out, and relatively small overdraft, by drawing down more heavily on its £130m invoice discounting facility - which, crucially, lies outside the scope of the bank covenants, so is better (i.e. safer) debt to incur. Unfortunately, today's announcement does not state how much headroom the company has on that particular facility. |
Posted at 14/3/2018 16:09 by mbdx7em21 this is pukka proper analysis.There is more disastrous news today for shareholders in this distributor of mainly alcoholic drinks. I bought some yesterday, unfortunately, after being reassured by a broker note saying that the situation re bank covenants was alright. In fairness, the broker can only report what the company tells him. So if the company doesn't know what's going on, then nor will the broker's analyst. Director buys - the Directors genuinely didn't seem to know that trouble was brewing. This is evidenced by 5 Directors collectively spending about £583k buying shares at around 300p on 5 Feb 2018 - that's only just over 5 weeks ago. Since then the share price has dropped by two-thirds, and will probably drop considerably more when it returns from suspension. The share has been "temporarily" suspended. An announcement came out at 09:55 today; Further Update Further to the announcements made by Conviviality Plc on 8 March 2018 and 13 March 2018, the Company yesterday identified a payment due to HM Revenue & Customs of approximately 30.0 million which falls due for payment on 29 March 2018 and which has not been accrued for within its short term cash flow projections. This has created a short term funding requirement. What can I say? It's total incompetence. The finance department at CVR seems to have lost control of the budgeting process, and now cashflow management as well. Heads will need to roll - I think the CEO has to go, once this funding crisis has been resolved. The FD is relatively new, having joined CVR on 30 Oct 2017. In my view that is plenty of time to have got the budgeting & cashflow processes under proper control. So in my view, serious question marks hang over the new FD's competence too. Trading could be adversely affected by this funding crisis; The Company's announcement on 13 March 2018 confirmed an expected range of adjusted EBITDA of between 55.3 million and 56.4 million. To the extent that the current situation creates operational difficulties, this may negatively impact the adjusted EBITDA range. So clearly this funding crisis needs to be resolved quickly, before it does serious damage to the business. Obviously, customers will carry on buying product, because in the short term it doesn't matter to a customer if the vendor is in financial difficulties. The problem lies with suppliers. If trade credit insurance is withdrawn, then they may decide not to take on the credit risk themselves, and could refuse to send in any more goods to CVR. If that can't be resolved quickly, then CVR would run out of inventories, and that's it, the business is gone. So time is very much of the essence, in this type of situation. Banking covenants - the company is currently in compliance with its banking covenants; The Company is currently in compliance with its banking covenants. The next covenant test date is 29 April 2018. What are the bank covenants? The Company is subject to two banking covenants (i) for covenant debt (which excludes any amount drawn down under the Company's invoice discounting facility) to be less than 2.5 times the last 12 months adjusted EBITDA, and (ii) adjusted EBITDA to be at least 4 times the net financial charge. Current position - fully drawn The Company is fully drawn under its term loans and revolving credit facility The last Annual Report shows facilities (provided by a consortium of RBS, HSBC, and Barclays) as at 30 April 2017, as follows; Term loan of £95.8m Revolving credit facility (i.e. an overdraft) of £30m + £15m accordion facility There is also a £130m receivables facility (i.e. invoice discounting) - let's ignore this for the moment, as it's outside the scope of the bank covenants (since it is secured on CVR's sales invoices) The term loan will have had repayments made by CVR since 30 April 2017, of £1.25m on 31 May 2017, £6,361k on 29 Oct 2017, which will have reduced the term loan to £88.2m. There will also be interest charges of about 10.5 months to add to that, which is charged at LIBOR + 2.5%, so I make that roughly £2.4m, so by my rough calculations, the term loan probably currently stands at c.£90.6m. The next repayment is £6,631k, due on 29 April 2018, assuming that the banking arrangements are unchanged from the last Annual Report, where I got the above info. Forecast debt - the company says this today; ... covenant net debt at 29 April 2018 is expected to be approximately 113.0 million (which excludes any amount drawn down under the Company's invoice discounting facility). This seems to tie in with my estimates above of £45m RCF facility (including the accordion) + c. £90.6m term loan = £135.6m, less say 3 days receivables cash in transit of £23.1m, which I've estimated at about £7.7m per day - based on £2bn VAT-inclusive sales p.a., divided by 260 working days p.a.) = £112.5m - which is only £0.5m away from what the RNS says. So I've therefore sense-checked the company's £113m estimate of covenant debt as at 29 April 2018 as being correct. Actually, thinking about it, since those calculations are based on the group having already maxed out its covenant facilities, covenant debt can't go any higher! (unless they exceed their overdraft limit, which the bank would probably prevent, by rejecting BACS runs that would breach the limit. Working backwards from the 2.5 times Net Debt: EBITDA covenant, and the maximum facilities less cash of £113m, this means that EBITDA would have to drop to below £45.2m to breach this covenant. The current estimate is about £56m, but if serious disruption to trade occurs due to the current funding crisis, then EBITDA could plunge, and trigger a breach of bank covenants later this year. So again, time is very much of the essence, they need to get the short-term funding crisis resolved in days, rather than weeks, in my view. Invoice discounting facility - historically, CVR seems to have drawn down relatively little of this facility, which is perplexing. With a large trade receivables book (of £184.2m in last Annual Report - as at 30 April 2017), then surely CVR could relieve the pressure on its maxed-out, and relatively small overdraft, by drawing down more heavily on its £130m invoice discounting facility - which, crucially, lies outside the scope of the bank covenants, so is better (i.e. safer) debt to incur. Unfortunately, today's announcement does not state how much headroom the company has on that particular facility. What happens next? The Company has engaged PwC to assist it in its forthcoming discussions with HM Revenue & Customs and its key stakeholders including its lending banks, credit insurers, suppliers and other creditors, as well as to determine the potential impact of any resulting funding requirement on the Company's adjusted EBITDA expectation and compliance with its banking covenants. Following preliminary advice received from PwC, whilst there can be no guarantee, the Board believes this short term funding requirement will be satisfactorily resolved. To me this seems nonsensical - it's a sledgehammer to crack a nut. In this situation, what the CEO/Chairman should be doing, is ringing round its biggest Institutional shareholders, and do a quick discounted placing for £30m, to get them out of trouble. If they were to offer say 60m new shares at 50p each, I'm sure there would be plenty of takers. Better still, do an accelerated book build, and get the whole thing sorted in a couple of days. If they do that, there wouldn't be any need to have further discussions with various stakeholders, the situation would have been quickly fixed. My opinion - it's quite clear that this business has incompetent management, who need to be cleared out, once the current funding crisis is sorted. The fundamental problem here is not the bank covenants. It's rather that the overdraft facility is too small for what the company needs in the short term, to make this £30m payment to HMRC. Therefore the quickest solution would be to persuade the bank to extend the overdraft by £30m, to give the company breathing space to raise some fresh equity, and to relax the covenants until the fundraising is done. Of course, PwC will love to string out the whole process, as it means lucrative fees for them. It would be much better to send PwC packing, and instead get the house broker to do a very fast, underwritten discounted placing. Then once the financial position has been stabilised, the company could do another equity fundraising, with pre-emption rights, a Rights Issue, so that existing shareholders could also participate, and the balance sheet completely secured. (by the way, I don't charge for my advice to the company, unlike PwC). EDIT: a friend has just messaged me, to make the excellent point that the bank (and potential equity investors) probably insisted on sending in PwC to review the books, before agreeing to extend further credit or new shares. I should have thought about that before criticising management for bringing in PwC. That was a rather daft oversight, since I've personally been in a situation where the bank insisted on the company calling in a firm of accountants to review the books. Banks also can use these reports as justification for withdrawing credit, if the investigating accountants paint a negative picture. End of edit These are fundamentally sound businesses, in my opinion, and the amounts involved here are not huge. So this financial crisis really should be fairly straightforward to solve - if the company had competent management. The trouble is, they clearly don't have competent management. Anyway, I hope they manage to resolve matters quickly. Being a holder of the shares, since yesterday afternoon, I'm braced for a loss of at least 50% on the price I paid. Thankfully my position sizing rules mean that I never take large positions in companies with a lot of debt. So the likely losses here for me, even if it goes bust, which I think is unlikely, won't be disastrous. Another solution to short term funding issues, is to get your credit controller on the phone to the biggest customers, and offer them a 1% discount early payment discount, to settle everything on the account early. So if say £50m in customer invoices could be paid more quickly, then that would buy some breathing space, at a relatively small cost of £0.5m. - paul scott. |
Posted at 14/3/2018 12:58 by s1zematters does it get more hilarious and farcical than this, the Chief Financial officer spends £100k on shares days before it comes to light that he is not aware of a £36 mill tax bill that the company do not have the cash to pay??Monty python esc board at CVR Zero headroom fully drawn down debt-This looks like it could actually be heading for administration. Will Anheuser-Busch InBev, SABMiller, Heineken International, and Carlsberg Group supply CVR now? Doubtful!!! |
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