"What next for AIM-listed mainly alcoholic drinks wholesaler/retailer LSE:CVR: Conviviality? It's best-known for the Bargain Booze and Wine Rack retail chains, and ventured into supplying bars and restaurants with the 2015 purchase of Matthew ..."
The recent HMRC introduction of AWRS to try and eradicate the duty evaded stocks in certain sectors of the wholesale trade, could benefit the Bargain Booze Franchises which would flow into stronger sales for CVR.
I think they are a good hold, and Majestic too could benefit, IMHO.
I hold both of these stocks and happy to put them in the bottom draw .
BPR (potential IHT relief) is a useful factor even if not a geriatric, nor potentially liable for IHT....me in both cases at the minute. The reason, it's a bit like ISA's when they first came out - it's not the immediate benefit but the benefit down the line after all the years growth. ISA's (or PEPs as they then were) were no real use to me back in the 80s when they were launched, but they sure as heck are now!
Even if CVR are only kept for 2-3 years then proceeds from the sale can be recycled within 3 years into other potential BPR stocks so potentially shielding them immediately from IHT without having to wait 2 years.
That's the way IHT ISAs work from the likes of Hargreaves Hale, Unicorn etc
Todays results are generally very good, the thing that I like is the interim divi is increased 100% and reflects a likely 1/3 payout for the year (making 12.6p ish) WHILE still looking a divi cover of 2X.
12.6p would give yield of 4.85% vs 3.6% for the last year. The main downside is a pretty hefty PE, so glad I was a buyer at around 200p.
If I wasn't waiting for a market pullback I would consider this a weak buy currently.......divis into the pot until then
Xmas crazy prices are here and will have a definite compression of sales and margin for Bargain Booze this Xmas, litres of spirits @:£15 , bottles at £10, and 3 cases of beers for £20 or less, are all well below industry costs.
The On trade Mathew Clark business could help cushion the retail side, as the on trade sector always does well at Xmas .
The drinks supplier, which was bought by Conviviality Retail in May this year in a deal worth £60 million, reported group turnover up 21% in the 12 months to 31 March 2016, to £271m, compared to £223.8m the previous year. This included around five months trading of the PLB Group, following the merger in October 2014, it noted, but prior to the acquisition by Conviviality.
Profit before tax rose to £5,8m marking excellent progress from the £2m loss reported last year, and the company directors attributed to the dedication, excellence and talent of its team.
Gross profit was up 25% to £34.1m, it noted, due to an increase in the groups gross margin to 12.6%.
The enlarged group, saw a rise in operating costs, but reported that these represented a smaller proportion this year than last only 10% of sales compared to 11.1% last year highlighting savings made across the group. However net debt also rose to £17.8m, up from £15.2m the year before due to the financing of the PLB deal.
The accounts also showed that seven directors left the company on 20 May, the date that Conviviality purchased the entire share capital in the company, with three others also stepping down during the year.
Conviviality Retail, which now controls around 8% supply of the UK on-trade in addition to its off-trade accounts, its CEO Diana Hunter claimed, reported a transformational year in May, after seeing group sales up 137% in the 12 months.
Market analysts Shore Capital have since said the company was an increasingly attraction proposition for both suppliers and customers, given its increased scale, expertise and footprint.
"At the final results in July, management stated that it was very confident in the outlook for the business and this was reflected in the 14% increase in the dividend, as well as increased guidance on synergies following the transformational acquisitions of Matthew Clark and Bibendum. Since then, we expect that confidence has not changed and our view remains that the risks still lie to the upside in terms of more synergies emerging over time. The size and clout of CVR in the UK drinks market is not fully reflected in the valuation and the shares continue to trade at a significant discount to the peer group." - Zeus Capital via Research Tree
based on two analysts covering the company, its annual EPS is expected to be £0.18 or £0.21 by April 2018 http://bit.ly/1WDQYYS, seems to be a great opportunity if it reaches anyway near those estimates
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