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Conviviality (CVR) has announced an equity placing to raise £125m in a bid to recapitalise the business – without which it said it was “unlikely” to be able to continue.

The announcement, after the stock market closed last night, said the placing would resolve overdue payments with creditors and return them to normalised trading terms.

It would settle tax payments and repay the company’s £30m revolving credit facility in its entirety as well as provide working capital headroom and fund costs associated with the work undertaken to recapitalise the business.

The company said its directors intended to make an open offer of up to the pound sterling equivalent of €5m (£4.4m), the maximum permitted without requiring the company to publish a prospectus under the EU Prospectus Directive, which would be made available to all existing Conviviality shareholders.

The open offer would allow those shareholders who could not participate in the placing to have the opportunity to invest, it said,

Assuming the placing was successful, the board would expect that the adjusted EBITDA for the year ending 29 April this year to be in the range of £45.5m to £46m and net debt to be below £100m.

For the financial year ending 28 April 2019, the board expected adjusted EBITDA to show modest growth compared to the expected outcome for the current financial year.

Conviviality said it remained compliant with existing banking covenants and it was in constructive discussions with its banks. The placing, if successful would reduce the amount of covenant debt ty £30m with the repayment and cancellation of the revolving credit facility.

It said the shares remained suspended until further notice.

Morning update

Second quarter profits have plunged at 2 Sisters Food Group owner Boparan Holdings in the second quarter, as the restructure of its protein business and the closure of its West Bromwich factory weighed on results.

Total sales during the 13 weeks to 27 January were up 2% to £849.7m, with like-for-like sales up 1.5% during the quarter.

However, there was a 71% plunge in operating profit from £19.4m back to £5.7m as operating margin dropped to just 0.7% from 2.3% in the corresponding period last year.

Profit after exceptional items, before interest and tax fell to £2.4m from £12.3m.

Like-for-like sales at its protein division in Q2 were up 3.1% to £569.6m. However, like-for-like operating profit was down by £13.5m over the period, with the business recording an operating loss of £9.0 in the quarter compared to a £4.5m profit last year.

The group said that year-on-year volume growth has been more than offset by the impact of the temporary Site D production suspension, and the inevitable time delay in securing price increases with customers.

It added that a consultation exercise is underway regarding the potential closure of three UK poultry sites as it seeks to consolidate its poultry operations around modern specialist manufacturing sites, which will improve the efficiency, transparency and reliability of our supply chain.

The group expects an improved performance in the second half of the year. It stated: “We are taking action across the business to address underperforming areas. Our change programme demonstrates the positive strategic moves we are making.

“This is being supplemented by our effects to drive through price increases across the business. We are already seeing improvements coming through in chilled and we can see clear evidence of further Branded recovery due in the second half of our financial year.”

Ranjit Singh, president of Boparan Holdings said: “During the second quarter we have delivered a solid top line revenue performance, but our near term profitability has been impacted by the major challenges we have faced during the period.

“We are focused on the basics, and the investments we are making provide a clear springboard to drive through meaningful and lasting change across the business.

“Despite the recent challenges in our UK poultry operations, our change programme is building on firm foundations, with strong core businesses; over 22,000 hard-working and dedicated employees and strong, long standing customer relationships. We will be working with renewed vigour with our customers and through our people to deliver what has always been at the heart of our business - delivering great quality food at competitive prices for our customers.”

COO Martyn Fletcher added: “In everything we do there is a relentless focus on delivering great quality, service and value to our customers.

“We have a clear and comprehensive improvement plan in place and are making good progress so far. There is more to do, but already we are seeing the impact of lots of small, but important changes we’re making at our production sites and across the company.”

Produce Investments (PIL), a leading operator in the fresh potato and daffodil sector, has bounced into the black in the first six months of its financial year, turning last year’s £1m loss into a £2.1m pre-tax profit on revenue up 1.6% from £79.3m to £80.6m.

The company said more collaborative supply agreements with major retail customers delivered expected benefits in its core fresh potato business, a new enterprise resource planning system was well embedded and was beginning to deliver efficiencies and it had enjoyed good potato volume growth which had continued into the second half.

The core fresh potato business continued to trade “very well”, enjoying good volume growth through both its packing facilities in Cambridgeshire and the Scottish Borders. Seed potato sales had also begun to regain momentum in the second half to date.

The storage and ripening technology business was on track to deliver increased sales in the second half, benefiting from investment in its facility in Holland to service customers throughout Europe. It was developing upgraded machine technologies and IT to support the growth of this business in the future.

This would allow it to operate in numerous produce sectors, expand its seed business, and increase its capabilities in the ripening of peppers and tomatoes.

Angus Armstrong, CEO, said the first half of the year had seen a marked improvement in the company’s profitability, driven by a combination of more collaborative relationships with its key retail partners, new business gains and the investment it had made in the business in recent years.

But the recent poor weather had resulted in a delay to the start of the planting season in Jersey and Rowe. “However, the board currently expects underlying trading profit for the full year to be broadly in line with its expectations,” he said.

Gross profit increased 7.8% to £27.5m (2016: £25.5m) as a result of the reduction in the cost of sales driven by lower potato prices. Administrative and other expenses were maintained broadly in line with the first half last year at £25.1m (£25.3m), resulting in a £2.1m uplift in operating profit to £2.4m (2016: £0.2m).

Reckitt Benckiser (RB) has announced it has ended discussions with Pfizer regarding its Consumer Healthcare business. Reckitt Benckiser CEO Rakesh Kapoor said: “Our priority remains organic growth, including the completion of the integration of Mead Johnson Nutrition and creating further value from reorganising into two new business units - Health and Hygiene Home.

“We always approach inorganic growth opportunities in a rigorous, disciplined, and financially responsible manner to ensure long term value creation for shareholders. An acquisition for the whole Pfizer consumer health business did not fit our acquisition criteria and an acquisition of part of the business was not possible.”

Science in Sport (SIS) has applied for 136,612 new shares of 10p each to be admitted to trading on AIM as consideration related to sponsorship services. Dealings in the new shares are expected to start on 27 March.

Fuller’s (FSTA) announced that Juliette Stacey had joined the brewer of London Pride as an independent non-executive director with immediate effect, replacing Lynn Fordham, chair of the audit committee who will stand down after the full-year results in June.

Stacey is chief executive of Mabey Holdings, a family-owned international bridge and engineering services specialist.

Suffolk brewer, distiller and pub company Adnams (ADB) has posted a plunge in full-year pre-tax profit from £5m to £1.5m on sales up 6.4% from £70.2m to £74.8m. Beer volumes climbed 9.1% and online sales 15%.

Jonathan Adnams, chairman said 2017 was a year of huge investment which came with “some inevitable disruption”, but the company delivered substantial change.

These included a £9.3m investment – “an exception amount by Adnams’ historic standards”. It was also installing dealocholisation equipment in its brewery and new computers systems.

“We continue to focus on what matters most. To deliver a service and product which allows us to stand out from the crowd. To grow the business when and where appropriate, answering increasing market demand. And above all to delight our new and loyal customers in everything we do.”

British American Tobacco (BATS) has reported a performance summary for 2017 this morning in which it said its aim was to double Next Generation Products revenue to £1bn in 2018 with the aim of delivering £5bn in NGP revenue by 2022.

On the markets this morning, the FTSE 100 is down 0.3% to 7,017.4pts.

Early risers include Wincanton (WIN), up 1.7% at 218.6p, Paypoint (PAY), up 0.3% at 815p and PZ Cussons (PZC), up 0.1% at 230.6p.

Fallers so far today include Compass Group (CPG), down 1.1% at 1,497.5p, Imperial Brands (IMB), off 1.2% at 2,301.5p, TATE & Lyle (TATE), down 1% at 533.8p and Dairy Crest (DCG), down 1.5% at 492.5p.

Yesterday in the City

The FTSE 100 gave up almost as much as it gained on Tuesday, closing down 0.3% at just below 7,039pts.

The European Union approved Bayer’s $66bn (£47bn) takeover of agrochemical company Monsanto conditional on various divestments.

Bestway Wholesale reported an 83% leap in full-year pre-tax profit to £23.2m, with symbol group Best-one helping to provide impetus. Revenue in the wholesale business amounted to £2.13bn in the year to June 2017 – a decrease of 2.2% compared with the corresponding period.

Estimates from the Labour Force Survey show that, between August to October 2017 and November 2017 to January 2018, the number of people in work and the number of unemployed people both increased, but the number of economically inactive people aged 16-64 decreased.

The Confederation of British Industry noted “another tentative sign of a return to real pay growth”, which alongside Tuesday’s report of a fall in inflation, pointed to an easing of the pressure on household incomes, it said.

Stocks on the up included Fevertree Drinks (FEVR), which closed 3.6% higher at 2,950p, PZ Cussons (PZC), up 2% at 230.4p and McColl’s (MCLS) up 2.2% at 235p. Science in Sport (SIS) closed up 0.3% at 73p following its full-year results.

Among the fallers were Majestic WINE (WINE), off 5.9% to close at 415p, Hotel Chocolat Group (HOTC), down 2.4p at 330p, Stock Spirits Group (STCK), dipped 5.3% to 239.5p and Ocado Group (OCDO) fell further –down 3.2% to 550p.

 

 

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