2nd Sep 2013 07:00
Conviviality Retail Plc
("Conviviality" or "the Company")
Acquisition of Wine Rack
Conviviality Retail Plc (AIM: CVR), one of the UK's largest franchised off-licence chains which listed on AIM at the end of July, is pleased to announce that on 30 August 2013 it entered into an agreement to acquire the entire issued share capital of L. C. L. Enterprises Limited ("L.C.L") for a total consideration of £1.65 million in cash. Trading as Wine Rack, a retailer of wine, spirits, tobacco and related products, L.C.L operates 22 stores, predominantly in Greater London.
The Company's Admission Document set out Conviviality's ongoing strategy which included increasing its focus on its wine offering as well as penetrating further into the South of England from its heartland in the North West and considering acquisitions in complementary market segments to assist growth in mid-affluent catchment areas. The acquisition of Wine Rack is consistent with that strategy.
The Board believes that the purchase of Wine Rack will enable the Company to enhance its presence in the South of England, as well as further broadening its wine offering in many of its existing stores and gaining a further fascia with a strong brand and customer following.
Wine Rack
Wine Rack is a retailer of wine, spirits, tobacco and related products with 22 stores, predominantly in the Greater London area.
The current Wine Rack business was acquired by its management in November 2009 who have grown the existing stores, expanding the business from 13 outlets to its current portfolio of 22 stores and developed an e-commerce platform.
Wine Rack's extensive range of wines and spirits has won numerous awards and plaudits. The Directors are confident that the quality of both Wine Rack and Conviviality's ranges will develop further by leveraging the increased buying power of the enlarged group and the experience of Susan McCraith, Master of Wine (who is a consultant to Conviviality) to deliver value to Wine Rack and Conviviality's respective loyal customer bases.
The Board believes that there is an opportunity to roll out a greater number of Wine Rack sites, both in the South and in other parts of the country. Both new and existing stores will benefit from combining the Wine Rack brand with Conviviality's greater buying power, marketing expertise and logistics experience.
It is currently the intention that the Company will maintain ownership of the existing Wine Rack stores and that the existing store teams and Ron Booker, the Regional Operations Manager, will remain with the business. Conviviality expects to offer the opportunity to franchise the format in the future and it is also intended that additional franchised stores will open using the Wine Rack brand.
In its audited accounts for the year ended 31 March 2013, Wine Rack generated revenues of £11.28 million, EBITDA of £0.395 million and a profit before tax of £0.18 million. Net assets as at 31 March 2013 were £0.48 million. At completion Wine Rack had no bank or other forms of loan indebtedness.
Terms of the Acquisition
The consideration for the acquisition of Wine Rack is £1.65 million in cash and is being settled out of the cash resources of the Company.
Diana Hunter, Chief Executive Officer, Conviviality Retail Plc, commented:
"Wine Rack fits perfectly with our stated strategy, outlined when we floated on AIM.
"This acquisition accelerates our expansion into the wine market, provides the Company with additional expertise that will benefit our Franchisees and increases our footprint in the South of England, including adding scale in the important London market. We are looking forward to welcoming the current store teams and Ron Booker to Conviviality and we look forward to taking the Wine Rack brand from strength to strength with their involvement.
"The combination of greater buying power for Wine Rack and increased wine market expertise for Conviviality make this acquisition a positive move for all concerned."
2 September 2013
Enquiries:
Conviviality Retail PLC | |
Diana Hunter, Chief Executive Officer | Tel: 01270 614 700 |
Zeus Capital |
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John Goold (Institutional Sales) | Tel: 020 7533 7727 |
Nick Cowles/Andrew Jones (Corporate Finance) | Tel: 0161 831 1512 |
College Hill | Tel: 020 7457 2020 |
Matthew Smallwood |
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Justine Warren |
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Conviviality Retail