S-Ventures remaining alert and open to opportunities that strategically fit (AQSE:SVEN)

S-Ventures plc (AQSE:SVEN) Chief Executive Officer Scott Livingston caught up with DirectorsTalk to discuss the acquisition of Juvela, the synergies with their other brands, the progress of their other brands and what investors can expect from the group in 2023.

Q1: S-Ventures recently announced the acquisition of Juvela, could you start by telling us a bit about the company and what it does?

A1: It’s a free-from bread and bakery factory in Wales that’s been making, for the retail and pharmaceuticals channels for many many years, a range of gluten free breads and rolls and mixes. They use very specific and very clever methods of how to basically replicate taste and offering a healthier alternative to a growing number of celiacs and people who choose gluten free as a lifestyle choice.

They have a very sophisticated operation in Wales, they’ve been established a long time and we’re really looking forward to working with the team there, with Joe the MD and Steve the Finance Head, and building it.

Q2: Are you able to take us through some of the terms of the acquisition?

A2: It was a cash and shares deal, we have 5 million shares which represents a healthy percentage of S-Ventures, we welcome Hero as an investor into our business. There was an element of case which we did use some leverage from Shorebrook Bank so we paid £6.5 million cash up front and then there’s a deferred payment of £1.5 million that’s due at the end of next year.

It’s a staged deal which allows us to manage it and we’re very grateful to Shorebrook for supporting us in this transaction. It was for 100% of the business.

Q3: Why did you think Juvela would be a good fit for you and can you talk about the synergies between Juvela and the group’s existing brands?

A3: We have Lizza in Frankfurt, in Germany, which is a similar brand which is basically making gluten free products including pizza bases and other types of products, same sort of distribution channels, same sort of products.

So, the synergies between the two to help each other and basically cross fertilise customer bases and channels across the two different demographics is a really interesting opportunity. We’ve obviously then got the chance to streamline and centralise and there’s varying degrees of technology on either side where both can help each other more efficient, both can help each other with taste and formulation and basically how to improve at a faster rate.

There’s then a lot of synergies with the rest of the group where we’re looking to grow Juvela into additional territories and channels and we’re also looking to launch their products into new channels plus our own brands into their channels so cross fertilisation with pharmacy and retail channels.

Q4: The group has a portfolio of brands across the natural, wellness and food tech categories. Could you just remind us of those brands and their products and how they’re progressing?

A4: So, we’ve done quite a number of deals over the first few years of existence.

We obviously acquired Pulsin which is a snacking protein keto fibre bar and powders range which is gaining decent new distribution and growing fast in the UK, we’re also now expanding into Europe. We use Lizza in Frankfurt as our European hub and that’s trading very successfully and more and more stock is going out there to service that market.

We have Purely Plantain Chips business, in fact myself and Steph, the MD of Purely, we were in Ecuador a few weeks ago seeing the farmers and supply chain, that’s growing and we’re gaining more distribution.

Livia’s is gaining traction and Ohso we still have, obviously we’ve got Market Rocket the tech team which is growing and Market Rocket also acquired a PPC agency recently and a PR agency so they’re expanding their offering which is obviously excellent for our own internal brands too. We remain a big customer of our own business.

We still obviously have headwinds like everybody else, there have been challenges; ingredient supplies, labour supply costs, it’s been difficult but we’re very proud that we’ve done the amount of deals that we’ve done and we’re very proud of the ‘strategicness’ of these deals and how well they fit.

Q5: Finally, what can investors expect from S-Ventures in 2023?

A5: So, we remain nimble and flexible and alert and we will remain opportunistic and should acquisition targets and opportunities come along, we will obviously be looking at them. There is a more than usual list of opportunities on the smaller side which we think we will more than likely slow down with and look for more strategic. We also think we might have a year of consolidation where we focus on what we’ve got and focus on building our existing brands.

We remain sensitive to market forces, Ukraine doesn’t seem to be going away, we still have inflationary pressures so we’re planning a more defensive strategy than an offensive strategy but we’re building a really solid base and that base will be ready to really enjoy the upswing that will ultimately come.

Whether it comes in 2023, we don’t know but we’re proud of what we’ve built, we’ve built it solidly and well, we’ve been quite careful with the risks we’ve taken and we’re very conscious of the environment that we’re in and all of the troubles that everyone is facing. So, we won’t be on the attack attack acquisition mode but we are remaining alert and open if there are opportunities that really strategically fit with us, where we can centralise manufacturing and centralise a lot of the other core costs and divisions.

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