Volvere set to swing to small profit for 2021

Growth and turnaround-focussed investor Volvere updated the market on its trading on Tuesday, reporting that it expected to report revenue from continuing operations of £35.58m for 2021, and an overall profit before tax of £0.07m, swinging from a loss of £0.55m in 2020.

The group's trading operations include Shire Foods, its 80%-owned frozen pastry products manufacturer, and Indulgence Patisserie, which was acquired in February 2020 and manufactures frozen desserts.

It said Shire performed “extremely well” in the period, and Indulgence made “steady, satisfactory” progress.

That was achieved despite both businesses facing “significant headwinds”, including labour, raw material and energy cost increases, and with suppliers - both materials suppliers and logistics partners - being at times unable to meet its requirements.

“However, with the flexibility and commitment of both staff and customers, we have been able to mitigate the effects of these challenges,” Volvere said in its statement.

It said Shire’s revenues increased 12.6% to a new high of £30.61m, with profit before tax, intra-group interest and management charges rising to £2.14m from £1.81m.

“During 2021 Shire provided operational and commercial support to Indulgence and this has resulted in some costs being recharged which would otherwise have been borne by Shire,” the directors noted.

Indulgence, meanwhile, achieved revenue of £4.97m, representing growth of 21%.

Its loss before tax, intra-group interest and management charges was stable at £1.01m, compared to £1.02m in 2020.

“During the year there was an increase in activity in the food service sector but, with many customers remaining affected by the pandemic restrictions, a return to normal trading was frustrated.

“However, the retail customer base grew substantially and we expect this will continue.

“During the year, we have invested in new plants and machinery and we have strengthened the management team.”

Volvere said it expected that the business' performance would improve in 2022, as it launched new products.

“The group has continued to fund the initial purchase, working capital and trading losses by way of intra-group loans.”

Volvere said it expected to report year-end consolidated net assets per share, excluding non-controlling interests, of £13.53, down from £13.65 year-on-year, and group net assets of £37.2m, in line with 2020.

Of its net assets, cash represented £21.87m, down from £23.71m a year earlier.

“The reduction in group cash principally reflects the positive trading in Shire, offset by central costs, capital expenditure in new plant and the trading losses at Indulgence.”

Looking at its current trading, Volvere said the challenges it experienced in 2021 around cost increases and labour availability were continuing, but it was “working hard” to protect margins and retain staff, while seeking growth opportunities in food manufacturing.

“More generally, we believe the environment for turnaround investing is improving and we continue to review targets for acquisition or investment.

“The group's high liquidity puts it in a strong position to capitalise on such opportunities.”

Volvere said it would announce its results for the year ended 31 December on 27 May.

At 1401 GMT, shares in Volvere were up 6.28% at 1,201p.