RNS Number:1050Q
Save Group PLC
30 August 2000


PART 1

      
Contact: Save Group PLC               Tel: 01296 395 951
         R. James Frost, Chairman
         John Murgatroyd, Group Finance Director
         Buchanan Communications      Tel: 020 7466 5000
         Charles Ryland / Catherine Miles


                       SAVE GROUP PLC
                              
     Interim Results for the 27 weeks ended 29 June 2000


Save Group plc ("Save"), the UK's largest independent petrol
retailer, which operates the Save and Blue Chip brands of
petrol filling stations, announces its Interim Results for
the 27 weeks ended 29 June 2000.

Chairman's statement

I report on the results for the 27 weeks ended 29 June 2000,
which  show  an  increase in turnover of 17%  and  operating
profit of 30% with a reduction in net debt of 21%.

Financial results for 27                            
weeks ended               June 2000  June 1999      %
29 June 2000 (1999 - 26    #'000       #'000      change    
weeks)
                                                      
Turnover (exc. VAT)      235,752     201,486       17
Operating Profit           4,136       3,188       30
Profit before tax          1,202         970       24
EPS                         1.2p        1.0p       20
Dividend                     -           -         -
                                                      
Bank  loans and           47,964      60,399      (21)
overdrafts - Gross

Half year review

Trading  performance during the period  has  improved  by  a
satisfactory  30%,  whilst, compared with  June  1999,  bank
loans  and  overdrafts have gone down by a very  significant
#12.4m.

We  have seen a certain amount of customer resistance to the
numerous  price  increases in road fuel  that  have  been  a
feature of this year to date. Whilst in June 1999 the  price
of  a litre of unleaded petrol was 69.9p, one year later, in
June 2000, it was 85.3p representing an increase of 15.4p  a
litre  or  22%.  Road  fuel  is fundamentally  an  inelastic
commodity,   that   is  why  successive   governments   keep
increasing  the tax, and therefore the consumer will  adjust
to the higher prices even if it takes a little while because
public transport is not a serious alternative.

I  am  pleased  to report that your Company has outperformed
the national figures for sales as follows:

    2000  January to March  National -  0.9%  Save +0.9%
          January to June   National -  1.6%  Save -0.8%

Apart from tax increases, crude oil has risen from a low  of
$9.45 a barrel in December 1998 to some $32 a barrel in  mid
August   2000,  an  increase  of  240%.  So  long  as   OPEC
artificially restricts production, crude prices will  remain
high.

It  is  not the petrol station that is responsible  for  the
higher prices. It is OPEC and the government. Although it is
so often the petrol station staff who catch the wrath of the
customers.

Gearing, or the amount of bank loans and overdrafts, has  to
be  kept under strict control at all times and even more  so
when an industry is going through a period of very intensive
price pressure. I am, therefore, very pleased to report that
total  bank loans and overdrafts are considerably down  from
#60.399m on 24 June 1999 to #47.964m at 29 June 2000.  These
figures  compare with the #105m of facilities taken  out  at
the  time of the acquisition of the Burmah business in 1995.
These  1995 facilities have now expired; being for a 5  year
term  they have been counted as current facilities  for  the
past  12 months, and as such, have been more expensive  than
fixed  term  facilities. We continue  to  explore  the  best
option  having  regard to the Group's  requirements  in  the
short to medium term. Any new arrangements will need to have
regard to the corporate activity mentioned later.

In  view  of  the desire to continue the strict controls  on
borrowing,  and the corporate activity mentioned  next,  the
directors  have  decided  that any decision  on  a  dividend
should prudently await the final results.

Corporate activity

I  wrote  to members, and put out a statement to  the  Stock
Exchange on the 12 July 2000, to say that due to the  sudden
and  sharp increase in the share price, I should report that
the  Company had received a number of approaches, which  may
or  may not lead to an offer for the Company. I went  on  to
say  that an announcement was not to be expected in the near
future.

All  I can say, at this time, is that discussions with  more
than one party are continuing.

All  the  discussions the Company has had have been  at  the
other  party's  instigation and indicate that  other  people
consider  your  Company  to be good  value  whether  for  an
industry purpose or otherwise. We will continue to  have  an
open mind, being prepared to discuss all options in the best
interest of members and will make a further announcement  as
and when appropriate.

Trading prospects

LPG  or auto gas - On 22 August 2000 The Times reported that
new  research carried out by Harvard University's Centre for
Risk Analysis had concluded that cars powered by gas may  be
far  more  hazardous  to  health  than  previously  thought.
Studies  have found that gas powered vehicles produce  large
amounts of so called ultra-fine particles, pollutants linked
with  breathing difficulties, lung cancer and heart attacks.
It goes on to say that health experts believe that the finer
the  particles the greater the health risk, with  ultra-fine
ones  reaching deeper into the lungs. Your Company does  not
as yet sell LPG or auto gas and has no immediate plans to do
so.

Industry  margins, that is from FOB low to national  average
pump  prices,  reached a 5 year high in  the  week  ended  3
August  2000 of 7.9p per litre for unleaded. Thus  returning
to  levels last seen prior to the Esso Price Watch  campaign
that  started in Scotland and the North East of  England  in
September  1995.  After 5 long years of  price  war,  sanity
returned   to  the  UK  downstream  market  with  even   the
supermarkets  acting  as  though  profit  on  the  forecourt
actually mattered.

Then  came  the  Dump  the Pump campaign.  A  campaign  by
misguided  individuals  who thought  they  could  cause  the
government to reduce taxes, on fuel, if motorists  boycotted
forecourts. The impact on sales, or at least our sales,  was
nil.  However, I do believe that consumer resistance to  the
ever  increasing  prices, stoked up by  the  Dump  the  Pump
Campaign and supported by one particular national newspaper,
could  have  been instrumental in causing  a  fall  in  pump
prices just 3 days before the day for action by campaigners.
Once  one  supermarket felt compelled to reduce prices,  the
media  went round all the other supermarkets to put pressure
on  them  to  follow. Which supermarket could afford  to  be
singled  out  by  not  following? The  reduction  nationwide
became inevitable.

Within  days  of  the fall in pump prices crude  oil  prices
soared.  Thereby reducing margins back to the  lower  levels
seen  earlier this year. Prices will have to increase again,
it  is  not profiteering by the petrol station, but a result
of actions taken by the oil producers and the government.

It  may take a little time to regain the confidence built up
in  the  two months prior to the Dump the Pump hype but  the
industry has shown, by the graph, a willingness to return to
the  normal margins prior to the 1995 levels, when the  Esso
Price Watch campaign started, for the first time in 5 years.
This  uncertainty makes predicting the outcome for the  year
as  a  whole  impossible. However,  it  is  clear  from  the
unsolicited approaches that have been made to us that a  lot
of  other people also think that the future is brighter than
at any time over the past 5 years.


R James Frost
Chairman

25 August 2000


MORE TO FOLLOW
IR PUUWPRUPUGMB
Starvest (LSE:SVE)
Historical Stock Chart
From Jun 2024 to Jul 2024 Click Here for more Starvest Charts.
Starvest (LSE:SVE)
Historical Stock Chart
From Jul 2023 to Jul 2024 Click Here for more Starvest Charts.