Ambitious booze wholesaler and retailer Conviviality (CVR:AIM) is in demand, the shares frothing up 9.4% to 194.75p on the delivery of strong full-year profits growth, a positive dividend surprise as well as news the integration of two major acquisitions is running ahead of plan.

Shares urged readers to take a look at the Bargain Booze-to-Wine Rack chain owner ahead of finals covering the 53 weeks to 1 May, identifying potential for earnings upgrades and a positive update on balance sheet deleveraging.


Today's statement duly delivers, revealing a 124% surge in adjusted pre-tax profits to £21.7 million and net debt of £86.1 million, driven higher by October's transformational takeover of drinks wholesaler Matthew Clark, coming in below consensus expectations.

Staying a buyer with a 290p 12-month price target, broker N+1 Singer upgrades its earnings per share estimates for the years to April 2017 and 2018 by 2% and 3% respectively to 21.2p and 24.8p.

There's also a higher-than-anticipated 14% hike in the dividend to 9.5p, reflecting Conviviality's strong free cashflow and management's confidence in the outlook for an enlarged group with the strength to withstand any consumer slowdown following Brexit.

'We look to the year ahead with a stronger and more resilient business able to thrive in uncertain economic times,' insists CEO Diana Hunter, adding 'it is our intention to continue to deliver against our integration plan during the year, ensuring the benefits are realised from our transformational acquisitions.'

The £200 million Matthew Clark deal turned Conviviality, previously best known as a franchised off-licence and convenience retailer, into the UK's biggest independent delivered drinks wholesaler and distributor, able to provide soft drinks and alcohol to its own retail estate as well as to thousands of pubs, hotels and restaurants.

Web chart - CONVIVIALITY - July 16

Since the year-end, Conviviality has completed the complementary acquisition (20 May) of wine, spirit and beer distributor Bibendum for an enterprise value of £60 million. Funded with the help of a £32 million placing, Bibendum expands its wholesaling expertise into new markets and channels; specifically, it has strengthened Conviviality’s capabilities in old world and premium wines and deepens its presence in London and the South East, where Bibendum boasts a valuable book of high quality, loyal customers.

Issue Date: 18 Jul 2016