Conviviality makes dividend a double as acquisitions put fizz in profits

Alcoholic drinks retailer and wholesaler Conviviality doubled its interim dividend after after its acquisitions last year more than tripled first-half sales and almost quadrupled profits.

As the integration continued of wholesalers Matthew Clark, acquired in October 2015, and Bibendum, bought in May 2016, the six months to 30 October saw the AIM-listed group generate £782.5m revenue, which was up 211% on the same period the prior year.

These additions put the company in an "unrivalled position", said chief executive Diana Hunter, who added that the group continued to trade in line with expectations for the full year.

"Across the UK we have access to over 25,000 restaurants, hotels, bars; over 700 franchise retail outlets; approximately 400 independent specialists and events and we serve major multiple supermarkets drawing from over 10,000 alcohol [stock-keeping units] sourced globally from specialist producers and brand owners."

With the higher sales and gross margins expanded to 12.5% from 10%, adjusted profit before tax surged 295% to £15.4m. Reported PBT was up 285% to £7.4m.

Adjusted earnings per share rose 142% to 9.2p and, even though there was a £9.2m free cash outflow, the half-year dividend was doubled to 4.2p, which directors expect to represent roughly one third of the anticipated full year dividend.

Net debt was up to £138.4m from £86m last May, with leverage at 2.19 times adjusted EBITDA compared to bank covenants of 2.50.

Management restructured during the period to create three customer-facing business units: Conviviality Direct, Conviviality Retail and Conviviality Trading, which Hunter said each provided "unrivalled range, expert service and advice to meet their customer needs whilst providing our suppliers with unmatched access to routes to market across both the on and off trade".

The results, she said, demonstrated the company's "competitive advantage, the broad customer base we have developed and the robust nature of Conviviality as the UK's leading drinks wholesaler, distributor and solution provider", with the recent acquisitions leaving it "well positioned in its market with a resilient business model that provides unique positioning for its suppliers and customers".