Conviviality posts solid interims, sees extra benefits from acquisition

Half-year results from off-licence group Conviviality showed solid underlying growth in the retail business and plenty of encouraging signs from recently acquired wholesaler Matthew Clark.

Group sales of £252m in the 27 weeks to 1 November were a 38% improvement on the equivalent period the year before, with earnings before interest, tax, depreciation and amortisation up 43% to £6.5m.

Earnings per share were 3% higher at 3.8p and there was a 5% increase in the dividend to 2.1p per share.

Chief executive Diana Hunter said the integration of Matthew Clark was well ahead of schedule, with a new organisational structure in place and negotiations to deliver the buying synergies now expected to deliver "significantly ahead of plan", benefiting the next financial year and onwards.

In the retail arm, mainly under the Bargain Booze brand, comparable sales growth was 0.8%, with like-for-like retail sales down 1.3% and a flat EBITDA performance as franchisees maintained average profitability levels.

A net 50 stores are expected to open in the full year.

At Matthew Clark, revenue from the 7 October acquisition completetion to 1 November climbed 2.7% to £60.6m, with EBITDA up 10% to £2.1m.

Since the deal completed, 841 new outlets have been signed up, an increase of 27% on the same period last year.

Analysts at Investec upgrade 2017 forecast PBT by circa 6% and 2018 by circa 5%, and see upside risk.

"Realisation of synergies and continued delivery in core businesses should drive a re-rating, in our view," they added.

WH Ireland raised estimates by 2.2% and 1.1% respectively and said it saw further upside for the shares in 2016.