TIDMSVEN
RNS Number : 4476Q
S-Ventures PLC
18 October 2023
THIS ANNOUNCEMENT CONTAINS INSIDE INFORMATION FOR THE PURPOSES
OF THE MARKET ABUSE REGULATION (EU) 596/2014 WHICH FORMS PART OF UK
LAW BY VIRTUE OF THE EUROPEAN UNION (WITHDRAWAL) ACT 2018 ("UK
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SUCH INSIDE INFORMATION, AS PERMITTED BY UK MAR. UPON THE
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THEREFORE CEASE TO BE IN POSSESSION OF INSIDE INFORMATION.
S-Ventures PLC
("S-Ventures" or the "Group")
Proposed Fundraise and Trading Update
S-Ventures (AQSE: SVEN), the company investing in brands across
the natural, wellness and food-tech categories, has commenced a
fundraising process intended to raise no less than GBP2.5m (before
expenses) (the "Minimum Amount") and provides an update on trading.
As indicated in previous announcements, the Group requires
supplementary external funding to support business operations. The
fundraise would be used to support GBP1.25m of working capital
requirements to accelerate progress, consolidate costs, and deliver
efficiencies. A further GBP1.25m is required for the payment of
deferred consideration, principally relating to the acquisition of
Juvela.
Background to Proposed Fundraise
As published on 1 July 2023 in the Group's 2022 annual report
and consolidated financial statements, a combination of factors
including inflationary headwinds, higher interest costs and losses
from Lizza Gmbh necessitated that additional funds would be
required for working capital purposes. This need persisted,
notwithstanding significant corporate actions taken to drive
profitability including the restructuring of Pulsin and the closure
of Lizza GmbH.
As further announced on 5 July 2023, S-Ventures stated that it
was trading on monthly positive EBITDA but expected to consider
further capital raising.
Since 5 July 2023, the Group has continued to focus on potential
efficiency savings and has appointed a new CFO, Stephen Argent ,
who is overseeing the management of accounting and financial
controls, including the consolidation of central overheads and the
integration of specific functions within the Group.
Accordingly, the Board today announces that it is launching a
fundraise of a minimum of GBP2.5m and reviewing a range of sources
of capital (both debt and equity) to support the fundraise. It has
taken the decision to announce this ahead of the completion of the
fundraise to garner maximum attention due to the liquidity for
small-cap equities such as S-Ventures being exceptionally low.
By announcing the proposed fundraising in this announcement,
this information is now available to the public, providing the
Group with a simpler and quicker way to approach potential
investors. Any primary issuance of shares will be made by way of a
placing in addition to a potential broker offer to facilitate the
participation of existing shareholders and other qualified
investors with an opportunity to participate on the same basis as
the investors in the placing. If an equity raise is undertaken,
certain members of the Board have indicated their intention to
participate in the raising of equity capital.
S-Ventures' existing market capitalisation presents several
challenges, particularly in the current market environment. These
issues include limited liquidity in the trading of shares, which
can lead to higher price volatility and difficulty attracting
institutional investors. S-Ventures has also had difficulty
accessing capital markets for financing, making it challenging to
fund existing operations and growth . Additionally, compliance with
regulatory requirements can also be disproportionately burdensome,
consuming resources that the Board believes could be better
allocated elsewhere.
Trading Update
Ahead of the announcement of its 2023 results ("FY23 Estimate"),
scheduled for release in February 2024, S-Ventures provides the
following unaudited trading update (the "Trading Update"):
-- Total gross revenues for the year ended 30 September 2023 are
expected to be at least GBP16.9m (2022: GBP8.6m) after Juvela's
contribution of GBP6.9m which was acquired in December 2022
-- Net debt as at 30 September 2023 is expected to be
approximately GBP6.8m including a Director's loan of GBP0.6m.
Subject to audit, early indications are that EBITDA, excluding
the closed German subsidiary losses, should be in excess of
GBP500,000. This represents a considerable turnaround from the
losses of our first 2 years' trading. The final audited figures
will include an impairment review.
To further enhance profitability and cash generation, we are
strategically focusing on streamlining our operations. This
involves consolidating central overheads and integrating specific
functions within both Pulsin and Juvela. By combining these key
operational elements, we aim to realise significant cost savings,
thereby strengthening our financial position. This approach
underscores our commitment to delivering sustainable growth whilst
maintaining the highest standards of product quality and customer
service.
Turning to the performance of our four core businesses:
Juvela
Manufacturer of gluten-free and free-from products from its
factory in Pontypool, Wales. Juvela has been manufacturing
gluten-free food for people diagnosed with coeliac disease for over
25 years.
-- Revenue of GBP6.9m in FY23 since acquisition in December 2022
Pulsin
Plant-based nutrition company in plant-based nutrition
technology, manufacturing and sales, with a focus on healthy
protein bars, nutritional snacks and keto bars.
-- Revenue of GBP7.4m in FY23
-- Revenue flat year on year.
Purely
A healthy snacking brand, offering a premium plantain crisp
product, Purely Plantain Chips, in the UK and certain international
markets.
-- Revenue of GBP0.4m in FY23
-- Revenue growth of c.1% since FY22
Market Rocket
D2C Agency specialising in Amazon, TikTok Shop and own website.
Proprietary tech platform/set of processes that connect multiple
marketplaces over API.
-- Revenue of GBP2.7m in FY23
-- Annualised revenue growth of c.200% since FY22
For further information, please contact:
S-Ventures plc
Scott Livingston (Chief Executive
Officer) +44 (0) 1932 400 224
Stephen Argent (Chief Financial
Officer)
VSA Capital, AQSE Corporate
Adviser and Broker:
Richard Kauffer
Matt Harker +44 (0) 20 3005 5000
Appendix
Basis of preparation
The FY23 Estimate has been prepared on a basis consistent with
the Group's accounting policies which are in accordance with IFRS.
These policies are consistent with those applied in the preparation
of the Group's annual results for the year ended 30 September
2022.
Assumptions
The FY23 Trading Update is based on the assumptions listed
below:
-- There will be no material changes to existing prevailing
macroeconomic, regulatory or political conditions in the markets
and regions in which the Group operates.
-- There will be no material adverse events (internal or
external to the Group) that will have a significant impact on the
Group's financial performance.
-- There will be no material impact on stakeholder relationships
arising from the Strategic Review.
-- There will be no material change in the Group's market share
or conversion rates as a result of the recently introduced price
increase, or other market factors.
Directors' confirmation
The Directors have considered the FY23 Trading Update and
confirm that it has been properly compiled on the basis of the
assumptions set out above and the basis of the accounting used is
consistent with the Group's accounting policies.
Disclaimer
This Trading Update is for information only and shall not
constitute an offer or solicitation of an offer to buy or sell
securities, nor shall there be any sale or purchase of securities
in any jurisdiction in which such offer, solicitation or sale would
be unlawful prior to registration or qualification under the
securities laws of any such jurisdiction.
It is solely for use at a Trading Update and is provided as
information only. This Trading Update has been produced by
S-Ventures Plc in order to provide general information on the
business of the Group and may be subject to material updates,
revision and further amendment.
This Trading Update does not constitute, or form part of, a
prospectus relating to the Group, nor does it constitute or contain
any invitation or offer to any person to underwrite, subscribe for,
otherwise acquire, or dispose of any shares in the Group or advise
persons to do so in any jurisdiction, nor shall it, or any part of
it, form the basis of or be relied on in any connection with any
contract or commitment whatsoever.
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