Volvere Share Discussion Threads

[ih_433513] 10/6/2017 16:57

Volvere recommendation below



Volvere (LSE: VLE) is Latin for “to turn about,” so it is fitting that this human-capital turnaround specialist makes this trio of turnaround speciailust. The company is run and owned by brothers Jonathan and Nicholas Lander, the CEO and CFO/COO respectively. Combined, the brothers own 39% of the company.

The brothers have spent their lives working in people-driven sectors like Law. These sectors often get a bad rap from investors because any competitive advantage is tied to the members of staff, who can easily defect to a rival, become demotivated, or retire.

The Landers love these businesses precisely because everyone else hates them. Typically, Volvere is approached by banks or the management teams of struggling businesses, placing it in a strong negotiating position.

The sheer number of businesses on offer allows management to be choosy, typically only indulging in one or two deals a year. By buying distressed businesses and fixing them up, the company has compounded book value at 14.4% p.a since 2002 for a total increase of 513%.

How? The process goes a little like this. The Landers identify a single-digit P/E company, which is often penniless or nearly so, pays down debts, injects cash, incentivises staff, then hopefully reaps the rewards of a successful turnaround.

Right now, Volvere is valued pretty much at book value, which means the market is placing no value on the Landers’ proven ability to create shareholder value. This looks too cheap to me, so the shares could be worth a second look.

[rivaldo] 06/6/2017 15:14

Ah - Melf, your £23m cash could be spot on then by the end of this year. And if VLE sell Shire and its property then £30m++++......

[melf] 06/6/2017 14:25

Riv....I was assuming the cash balance by year end 31.12.17 would have increased by c£3m to c£23. Maybe that is slightly optimistic but I'm sure it won't be too far away.

[rivaldo] 06/6/2017 14:14

Melf, VLE had £20m cash at the year end. Your conclusion still applies though! I can't believe anyone is selling on these fundamentals, but I suppose there'll always be profit-taking in times of market volatility.

[r1singson] 06/6/2017 14:06

Everybody vote labour.Get rid of greedy tories just in it for the billionaire owners that back them.Save our NHS otherwise it's your kids paying for everything we got free. Vote for the sake of the elderly and the less well off in our society.

[spob] 06/6/2017 12:54

6m






1 Year






5 Year

[rivaldo] 05/6/2017 16:20

Melf, it may be that VLE have taken onto their books a block of 150 employees who were previously employed by the "large automotive manufacturer"? I assume VLE/Impetus can perform this work much more efficiently than the probably bloated large auto company, making the extra workload much more profitable as they say.

[melf] 05/6/2017 15:14

Just reading the results RNS again....in particular:

"As part of a plan to widen Impetus's service offering the company has, with effect from April 2017, assumed responsibility for the management and delivery of a large automotive manufacturer's learning and development activities in the UK. As a result, Impetus now employs almost 400 people (an increase of approximately 150 compared to March 2017) and we expect Impetus' financial contribution to increase further this year as a result"

Reading this, it appears they've recruited 150 people in the last couple of months....can that be correct? I am assuming this is a typo and should read "March 2015" when the company was acquired.

[glawsiain] 05/6/2017 10:03

Here's the summary para:

"Of course, other investors have recognised the value on offer which is why the shares have run up to 780p to value the company's equity at £31.8m, or a 22 per cent premium to the last reported book value of £26m. Effectively, net of cash on the balance sheet, the three above businesses are being valued at £14.8m in total. That's hardly a stretched valuation as it equates to only two times their combined book value and little over five times their aggregate pre-tax profis of £2.8m before accounting for inter-company management charges. Run profits."

[rivaldo] 05/6/2017 09:21

Jamtomorrow, Simon Thompson evidently mentioned VLE positively in his article last week about Bargain Shares, but I don't subscribe so don't have the narrative:

[jamtomorrow2] 02/6/2017 20:35

So was there nothing in Investors Chronicle?

[tudes100] 02/6/2017 01:24

Nice little pullback yesterday enabled me to double my holding. Looking to build a decent sized stake and hold long term, 15% CAGR is absolutely fine by me :)

[simso] 31/5/2017 16:52

thanks Melf

[melf] 31/5/2017 16:31

Simso....have a look at the posts following 2407. As Rivaldo mentioned, the cash pile has been discussed several times on here.

[rivaldo] 31/5/2017 13:39

RNS - the AGM will be on 29th June in London. Anyone going? They're usually well worth attending for anyone wanting to ask questions and have a lengthy chat about the business:



Simso, the question of what VLE will do with the £20m cash pile has been mulled over a number of times here! Personally I believe that if it was a good deal then the Landers would approve spending say £8m-£10m or so on one acquisition. This would be easily their biggest acquisition to date.

With Impetus and Shire both maturing and needing less attention (and Sira too), either the Landers may feel now is the time for a fourth investee company or (hopefully) Shire might be sold off soon.

[simso] 31/5/2017 10:58

Rivaldo - thanks for clarifying about the Treasury Management. Having read back through the last six years Statements, the return on cash has been variable. If I take a crude "average" cash for each year as halfway between opening and closing Cash + Instruments, the performance has varied between 7.4% return (2011) down to less than 1% (2016 and 2014). The average return is 3.6% over the six years, which would equate to c£700k on a Cash Balance of £20m.

I am relatively new to the company and have invested over the last three months. The striking feature is that all the deals they have done appear to have involved paying a small amount for a business which is heavily cash constrained, and achieving a very fast payback on capital outlay. Having £20m on the Balance Sheet seems a huge amount, given the typical scale of deals they have previously liked to do. I wonder what their aspirations for that Cash are, and whether they aspire to do a much bigger deal somewhere if the right opportunity comes along, and passes their obviously rigourous criteria?

[modform] 30/5/2017 09:50

Mr market is starting to wake up to the potential of VLE

[plentymorefish] 30/5/2017 09:21

Crikey, it's only a few days ago I was harrumphing about paying 650p!....:)

[rivaldo] 30/5/2017 09:13

Simso, this extract from the results makes things crystal clear. Firstly, VLE utilise active treasury management in respect of the cash pile. In the past this has been extremely successful on the whole, though 2016 was not so. Secondly, the subsidiaries act as independent entities in terms of cash flows.

Incidentally, there is no broker coverage at all. The Landers do not believe in throwing money at unnecessary expenditure on promotion, in the belief that the share price will look after itself. Which - over time - it certainly has!

"Whilst continuing to review and assess further investments in trading activities, the Group had significant cash on hand and has continued with active treasury management in response to prevailing low interest rates. This strategy achieved investment revenues and other gains totalling £0.16 million (2015: £0.59 million). The Group realised all such investments in late 2016 at a loss (before income), of approximately £0.02 million.

The Group's net finance expense was £0.11 million (2015: £0.12 million). In spite of the Group's significant cash balances, individual Group trading companies utilise leverage where appropriate, and without recourse to the remaining Group."

[simso] 30/5/2017 08:50

There are no broker forecasts I can see, but would imagine that our current year expectation must be £2.5m-£3m of PBT, especially given Impetus contract win which seems to have scaled up that business considerably. Assuming cash £22m - £23m on the balance sheet, then the Market Cap of £30m looks light, even after last week's rise. The only question I would have is around interest earned and paid, which seemed to net out to nothing in the 2016 numbers....and that seems poor with a £20m cash pile. Does anyone understand what they try and do with that cash in terms of treasury management, in order to make a return, and whether last year was an aberration when they made no money on the cash?

[rivaldo] 30/5/2017 08:46

Nice start - and still plenty of upside.

[piedro] 29/5/2017 13:40

FWIW ...


[data from annual reports]

[melf] 27/5/2017 20:17

Lol Topvest....is this a wind up?