Volvere Share Discussion Threads

[dsct] 29/5/2019 16:24

The tender offer is at 1290p and official spread is 1150p/1300p - an 11.5% spread !!! Although the 'real' spread seems to be a slightly better 1190p/1275p.

I did mention in March that it would be nice to know what they were looking to do with the £30M+ cash, and at least we know what is happening to half.

I sold 20% of my holding in March at just under 1070p, but at least someone else is enjoying the subsequent profit on those :o) VLE is still my largest holding at over 10% of my folio.

With regards to the recent discussion on here re Shire Foods:

I'm more than pleased that they've not just 'splashed-the-cash' on any potential turnaround, and see benefits for them either buying add-ons to Shire for the economies of scale etc., or for the move into a different sector so they're not reliant on the food-processing industry. Which of those two is the better, is anyone's guess, but I'll leave my faith in VLE :o)

I doubt I'll be selling any into the tender-offer.

[simso] 29/5/2019 15:50

I think our share price has closed at a peak of £11.50 mid on 5 separate occasions since November 18...and looks like we should close at an all time high tonight.

[zoolook] 29/5/2019 15:46

It’s a longer tender period than normal and a decent price making it a bit trickier to decide what to do. Currently feel I want to stay fully invested. Not sure.

[simso] 29/5/2019 15:42

As legendary commentator Sid Waddell said: "One word for that. 'Magic Darts' "

[yamaha865] 29/5/2019 15:20

Wow...nice. mixed feelings in a way, if it was a lower price that would retain more value for remaining shareholders. Have to figure out whether to participate

[rivaldo] 29/5/2019 15:16

RNS - up to £16.6m buyback at 1290p :o))

[rivaldo] 28/5/2019 12:37

Around £75,000 of shares traded so far today. This is almost becoming a liquid share :o))

It'll be interesting to see what happens if/when VLE make their next acquisition.

In some cases a cash pile is seen as a dead weight on a share price. For the first time VLE are in a position to make a really meaty acquisition. Given the Landers' disposition I doubt they'll spend more than say £10m on a single acquisition, but hopefully this level of spend would still excite the market given the potential multiples on offer from the Landers' track record.

The defensive aspect of the currently almost £37m cash pile would obviously reduce, but I'd have thought the former would outweigh the latter. We might even see the share price start to rise nearer to parity with the true NAV.

[zoolook] 26/5/2019 09:21

I’ve yet to sell a single Volvere share and as stated it’s 30% of my portfolio value.

I thank you for your points on this thread overcoming my initial confusion about Volvere and leading me to be comfortable about being overweight and making it my best investment ever.

Until it approaches a reasonable sum of parts valuation I’ve no intention of selling down. In fact I’ve recently toyed with the idea of topping up. Hardly bearish about Volvere, just food manufacturing as a sector.

I’m not going to post any more on the subject as it seems that whilst trying to be clear what Im saying is misinterpreted.

[eezymunny] 26/5/2019 07:38

My word people can be miserable and bearish for no good reason.

There are so many companies to be bearish about why not be optimistic about a company that has delivered the goods in spades for 20 years?

[zoolook] 25/5/2019 23:36

The feature that makes it different that I was alluding to is it’s moat / barriers to entry. Any business that lacks that is inevitability going to have low margins if not now then sometime soon. Yes you need good management to exploit the potential of a good moat but if you haven’t got one then you can’t make a silk purse out of a sows ear.

I’m not pointing out anything radical by saying that food manufacturing isn’t a high quality business to be in. That’s not to say that money can’t be made in it but you’ll always be on the back foot with a contract based business with a monopolistic customer base, volatile commodity prices, lack of control of minimum wage labour costs and potential hygiene/health risks. It’s a hard space to operate in. There are easier business sectors to make money. That’s all I’m saying.

Fortunately the Landers aren’t in it for the long term though Shire has been on their books a long time. The latest update suggests them hanging on to Shire for a while longer and bolting in complementary businesses and having economies of scale.

Personally I would be happier with an acquisition that makes them more diversified. I am willing to hang on and see but being a proxy investor in food manufacture doesn’t excite me greatly. I hope the Landers haven’t fallen in love with Shire.

[cockerhoop] 25/5/2019 21:46

As we both know Games Workshop was languishing before Kevin Rountree took over leadership of the company - nobody suggested selling plastic models to geeks & goths in the computer age was an attractive sector to be in. He's revitalised the Warhammer experience by providing what the customers were crying out for. Good management in action - traits which the Landers share ;-)

[zoolook] 25/5/2019 21:00

The conversation was about the food manufacturing sector in general. Shire specifically I’m sure will be developed and sold on for good money. I only say that because of the Landers proven good judgement. If Shire was a stand-alone listed business I would be less interested in it as an investment. Volvere as an investment is attractive because the market cap is not far short of its cash and the Landers make good decisions. Shire might be a good business compared to its peers in the food manufacturing sector but it sure ain’t no Games Workshop ;-)

[cockerhoop] 25/5/2019 20:16

Zoolook,

You could argue that there's been sector headwinds in Car Retail over the last 3 years - it hasn't stopped the Landers doing exceptional business with Impetus.

They've a record of being great allocators of capital over many years in a variety of sectors - I imagine due to the difficulties the food sectors faces, distressed assets with a clear turnaround path are more readily available.

[eezymunny] 25/5/2019 12:44

Of course zoolook. It was just the dismissal of the food sector that made me laugh. Just look at Beyond Meat and see how it can be as daft as any other sector:)

[zoolook] 25/5/2019 09:33

There is a difference In sure you are aware of but I’m going to spell it out anyway :-) as Shire is further down the ‘food chain’

Nestle is mainly a brands marketing and distribution business. They could in theory outsource their food manufacture (to the likes of Shire) and maintain that turnover and potentially the profitability depending how efficiently they do it in-house. The customer would be none the wiser.

[eezymunny] 25/5/2019 09:22

Nestle. Turnover c £72 billion. Pretax profit c. £10billion. Food n beverages. Rubbish business to be in.

VLE have a ways to go to catch up... :)

[rivaldo] 24/5/2019 10:56

Commentary today from Graham Neary, who is rightly full of praise for the Sira sale, and from memory has VLE as his largest holding. I'm not a subscriber, so it would be useful if someone could post the remainder of the text from this part available for free:



"Some great news from Volvere last night.

I appreciate the fact that they released it after 6pm, so we had plenty of time to digest it last night. It would be wonderful if more companies did this, wouldn't it? I don't think there's a rule which says that announcements have to be released at 7am!

Anyway. the news is that Volvere has raised £2.55 million (£3 million before bonuses to executives and transaction costs) from the sale of Sira Defence, its small CCTV software subsidiary. The buyer is a large company called NICE.

The multiples achieved by Volvere on exit really astound me. Sira earned revenues of £300k and PBT of £60k last year. Selling it for £3 million tells me that Sira must have developed into a very high-quality business over the years, with a lot of potential, and/or that Volvere is particularly good at finding buyers for its subsidiaries.

You might remember that Volvere's previous disposal generated £31 million (gross), for a consulting company which generated PBT of £3.3 million in the prior year. The multiples for that transaction were impressive, but the Sira multiples are on another level.

The return on investment is also quite good. The RNS yesterday says that Sira was purchased for "£0.005 million". Scrolling back through the archives, the RNS from 2006 says that £30k was the purchase price for Sira and its sister company.

A couple of working capital loans have been extended over the years but the ROI is spectactular whichever way you look at it."

[penpont] 24/5/2019 09:08

Simon Thompson update in IC yesterday:

The midas touch of Volvere’s (VLE:1,160p) founders, Jonathan and Nick Lander, shone like a beacon in the Aim-traded investment company’s latest annual results. In their respective roles of chief executive and finance director, the Landers invest in distressed and undervalued businesses with a view to turning them around and exiting at a hefty profit. They have a mightily impressive track record – Volvere’s book value per share has increased at a compound annual growth rate of 17 per cent since the company listed its shares, at 100p, on Aim in December 2002.

They certainly surpassed themselves last year, delivering a 90 per cent increase in the company’s net asset value (NAV) per share to 1,250p, driven by last autumn’s disposal of its largest investment, Impetus Automotive, a provider of consulting services to the automotive sector (‘Bargain Shares: On the M&A beat’, 22 October 2018). The company received net proceeds of £26.1m from that sale, representing 21 times the £1.25m capital Volvere originally invested in March 2015. Even after returning £6m to shareholders, the company still posted a record NAV of £40.4m, which includes a bumper net cash pile of £32.1m (1,000p a share) to target new acquisition opportunities with.

An improved financial performance from Leamington Spa-based food manufacturing business, Shire Foods, a company in which Volvere holds an 80 per cent stake, more than justifies the £6.9m carrying value of that investment. Shire’s pre-tax profit rose by a third to £854,000 on revenue of £18.3m in 2018. Volvere also owns a small software firm, Sira Defence, that develops products to help the police use CCTV effectively, which is in the books for £60,000.

Volvere’s shares have risen by 162 per cent on an offer-to-bid basis since I advised buying, at 419p, in my 2016 Bargain Shares portfolio and with the Lander’s scouring the market for their next turnaround situation, I would recommend running profits.

[eezymunny] 24/5/2019 09:00

Yes simso, it would make a great case study for market inefficiency. Actually my own view is that VLE tends to be priced below it's true worth because there are just sooooo many thicko PI's and there's no liquidity for instis. Absolutely wonderful for those of us that keep a close eye on progress :)

[simso] 24/5/2019 08:31

After this deal, VLE will have cash of £36.65m (£11.75/share)

Even if we value Shire on a very low multiple of 5 * 2018 Earnings (£850k Gross, £700k net), add the Freehold of £2.6m, then deduct minority interest and assume a 10% Bonus for the Landers...then Shire would be worth £4.5m (£1.50 a share).

Net working capital is positive c£1m (32p a share)

That would give a total value £42.1m...or £13.50 a share. That is using the lowest valuation for Shire I could think of...and also that valuation gives nothing for arguably the greatest asset...the Lander's proven ability to multibag every investment they have made to date.

[eezymunny] 23/5/2019 23:02

The clueless morons selling this at 15% below tangible book since results will be wincing in the morning I imagine. Durrr....

SIRA a 600 bagger? That's what I call a result!

[rivaldo] 23/5/2019 22:47

Wow, a very pleasant surprise. A great result - £3m for a company making just £60k PBT on £390k turnover :o))

Congrats to the Landers. If anyone ever doubted their acumen then this is yet another reason to think again.

Who knows, perhaps we'll be wrong footed once more with the sale of Shire. Or perhaps an acquisition.

Very happy to continue to hold for the foreseeable future in the knowledge that my shares could not be in safer hands.

[yamaha865] 23/5/2019 21:30

That should mean total cash of £34.1 at YE + £2.55m- £36.55m

Valuation of Shire? Well £0.85m pbt, but with I remember reading a third production line coming on stream, perhaps cautiously that could mean an additional 30% PBT- £1.15m or say £0.95m PAT. Put on a PE of 10, times 80% Volvere stake= £7.6m

Totals £44.15m or £14.15 a share. Hopefully see some more chunky share buy backs and an acquisition or two and this one could keep going!

[jg88721] 23/5/2019 19:47

that is an excellent result. now for an acquisition ...
(EM, lol, before CAKE could sell cakes it had to make them)

[hpcg] 23/5/2019 18:15

Cracking. Until mid last year I had been valuing at nothing, but when sales appeared I had put a nominal £1mm into the NAV. In the results out yesterday Sira + Shire was listed as a combined £6.3mm.