RNS No 3379n
SAVE GROUP PLC
2 September 1997
SAVE GROUP PLC
HALF YEAR RESULTS TO 30 JUNE 1997
Save Group PLC, ("Save") the UKs largest independent petrol
retailer, which operates the Save brand of petrol filling
stations, announces half year results for the six months to
30 June 1997.
Key Points:
* Turnover reduced 16% to #203.7m (1996: #242.1m) due to
the continuing price war. During May to August 1997,
Save showed a return to growth in volume.
* Profit before tax of #4.0m ahead of last year by 6% and
in line with market expectations (1996: #3.78m).
* Earnings per share increased 17% to 4.1p (1996: 3.5p)
and dividend maintained at 3.2p with dividend cover
increasing to 1.3x (1996: 1.1x)
* Gross margins improved by pursuing Saves strategy of
maintaining price and allowing volumes to fall.
* Saves market position strengthened further by the
proposed acquisition of Gulf UK by Shell and the
continued closure of competitors sites
Commenting on future prospects, James Frost, Chairman said:
"I am confident that our strategy and ability to react
quickly to events will enable us to continue to participate
profitably in the market as it changes. Whilst the current
state of the downstream market makes predicting the results
for the year as a whole very difficult, if not impossible, I
do believe that our earnings will not be materially
different from market expectations."
Chairman's statement
I am pleased to report results ahead of last year and in
line with market expectations .....
Financial results for first half of 1997
30.6.97 30.6.96
#000 #000 %
Turnover 203733 242090 - 15.8
Profit before interest
and tax 6359 5686 +11.8
Profit before tax 4008 3772 +6.3
Earnings per share 4.1p 3.5p +17.1
Dividend per share 3.2p 3.2p -
Cover 1.3x 1.1x -
The decrease in turnover is due to the fact that Price
Watch, which commenced in January 1996 in the UK as a whole,
did not fully impact on sales until April 1996. Trading for
January and February 1996 being largely unaffected because
of the lag effect and the impact for March being mainly on
margins before we reversed our policy to one of premium
pricing.
Profits for the half year to end June 1997, which show an
increase of some 11.8% before interest and tax, hide the
true performance when compared with the comparative half
year. Last year included a one-off contribution of around
#2m from unleaded four star (LRG) sales before the
Chancellor removed the tax benefit in May 1996.
Once again the tax charge has been reduced by using a part
of the unused capital allowances.
Net gearing at end June 1997 was principally affected by the
revised Budget date of 2 July 1997. Pre budget stocking
both on the company owned sites and the privately owned
dealer sites left indebtedness of some #66m compared with
#55m at end December 1996. We would expect this to be
reversed by the year end with indebtedness at that time
being around or marginally below that of last year.
The Group's balance sheet
30.6.97 30.6.96
#'000 #'000
Fixed Assets 192720 190843
Current Assets 22051 14541
Trade Creditors 36041 38178
Other Liabilities 1830 2046
Bank (Gross) 66821 55885
NET ASSETS 110079 109275
UK Industry Commentary
Largely due to the Price Watch campaign, some 1,500 petrol
filling stations closed in 1996. Closures have continued
during 1997 and I would expect a similar number to go this
year. The number of site closures in the past 10 years and
the average volume per site nationally are as follows:
% Average road
No of sites decrease fuel sales %
(litre) increase
1987 20,197 - 1,545,273 -
1988 20,016 0.9 1,660,108 7.4
1989 19,756 1.3 1,751,421 5.5
1990 19,465 1.5 1,818,276 3.8
1991 19,247 1.1 1,828,729 0.6
1992 18,549 3.6 1,922,473 5.1
1993 17,969 3.1 1,994,172 3.7
1994 16,971 5.5 2,087,239 4.7
1995 16,244 4.3 2,146,313 2.8
------------------------------------------------------------
1996- Price
Watch
UK 14,748 9.2 2,459,675 14.6
1997- Price
Watch
UK 13,248 10.2 2,820,424 14.7
10 year
movement -34% +83% -
Apart from the massive number of site closures since Price
Watch started there have also been, as expected, changes in
the numbers of suppliers and including:
Mobil Oil merged with BP
Gulf Oil - just announced to be acquired by Shell
Charringtons (Power) - acquired by Total
Phoenix Petroleum - acquired by Total
3D Petroleum - acquired by Total
MOCO Petroleum and other changes
The OFT has been asked to review the Petrol Retail Market
and will report at the end of the year. The restructuring
is self evident but what has not been so obvious is the
extent to which suppliers have been selling petrol at a
loss. For example: the gross margin for unleaded petrol,
this is the national average pump price less the Platts
price (spot market price) excluding VAT, in June 1996 it was
1.5p per litre and in June 1997 it was 4.6p per litre.
These figures have to pay for the retailer's margin,
delivery to site and all of the suppliers' costs. The total
margin needs to go back to the 7-8ppl being achieved before
Price Watch started for the major suppliers to make money.
Current trading and prospects
Sales of road fuel nationally for the period January to
April 1997 are up by 3% over the similar period for 1996.
This would, coupled with the anticipated site closures,
translate for the year into an average increase per site of
some 14.7%. Two thirds of this being made up of diesel
sales and the remaining one third petrol sales.
Sales at the Save company owned sites during the first half
year, which included Price Watch, showed the expected trend
with January, February and March 1997 being 20% down over
the same period for 1996. As stated above the full impact
of Price Watch did not hit sales volumes until April 1996.
April on April showed a virtually unchanged position but for
each of the months May, June, July and August 1997 Save
showed growth in volumes. Our present competitive stance is
still slightly out of line with the market but I would
expect substantial volume increases when we are able to
profitably maintain a competitive position on a permanent
basis. Our market share on our company owned sites based on
1997 so far, including agency diesel sales, is some 725
million litres per annum or around 2% of the UK market.
This excludes all sales to third party dealers supplied from
our wholesaling division.
In the past it has been the demise of the privately owned
dealer sites who have been the main casualties of Price
Watch, it is now the suppliers to those sites who are most
vulnerable. Particularly those whose number of company
owned sites represents too low a percentage of their
refining capacity and where they are too dependent on the
dealer market which is contracting at an ever faster rate.
It is the solid base volume of the Save company owned sites,
currently some 2% but which I am confident will grow back to
between 3% and 4% after the expiration of Price Watch, that
makes Save so unique unencumbered as it is by an under
utilised refinery.
There has been much recent press comment about the position
of Save as a result of the Shell/Gulf proposals, ie the
acquisition by Shell of the 194 company owned sites and the
256 dealer supply contracts (as at 31 December 1996) and
other related parts but excluding the Gulf refinery at
Milford Haven and the Gulf head office at Cheltenham. The
Daily Telegraph said "Analysts expressed surprise that Shell
had bought Gulf UK instead of Save, which is widely regarded
as having better sites" and The Times said: "Save's share of
sales has declined sharply, as its chairman, James Frost,
has deliberately sacrificed volume in a largely successful
attempt to protect margins. A better guide to its true
worth is still its market share before the price war of 4
per cent, or roughly twice the size of the Gulf business."
There are to my mind three good reasons why Shell should
want to take out Gulf:
1 It increases Shell's market share to around the 20%
level.
2 It closes down the Gulf refinery .... which is not
shared with anyone else, reducing but not eliminating
refinery over capacity in the UK.
3 With the top three players, Shell, Esso and BP, having
around 60% of the total UK market and the supermarkets
some 25% very little is left for the other refiners
with their under utilised refineries to increase their
market share.
In all, this puts Save in a very strong position for the
future.
I am confident that our strategy and ability to react
quickly to events will enable us to continue to participate
profitably in the market as it changes. Whilst the current
state of the downstream market makes predicting the results
for the year as a whole very difficult, if not impossible, I
do believe that our earnings will not be materially
different from market expectations.
29 August 1997
GROUP PROFIT AND LOSS ACCOUNT
for the six months ended 30 June 1997
Unaudited
Six months Six months Year
ended ended ended
30.6.97 30.6.96 31.12.96
#000 #000 #000
Notes
Turnover 2 203,733 242,090 429,692
Cost of Sales (187,843) (225,000) (392,452)
---------- -------- ---------
15,890 17,090 37,240
Distribution costs (8,463) (9,644) (20,068)
Administrative expenses (3,350) (4,185) (7,566)
Other operating income 2,282 2,425 4,736
---------- --------- ---------
(9,531) (11,404) (22,898)
---------- -------- ---------
Operating profit 6,359 5,686 14,342
---------- --------- --------
Net interest (2,351) (1,914) (3,972)
---------- --------- --------
Profit on ordinary
activities
before taxation 2 4,008 3,772 10,370
Tax on profit on
ordinary activities 3 (200) (493) 1,726
---------- -------- --------
Profit on ordinary
activities
after taxation 3,808 3,279 12,096
Dividends 4 (3,004) (3,004) (6,665)
---------- -------- ---------
Profit retained 804 275 5,431
---------- -------- ---------
Earnings per share 5 4.1p 3.5p 12.9p
Dividend per share 3.2p 3.2p 7.1p
---------- -------- ---------
There were no recognised gains and losses other than the
profit for the period.
GROUP BALANCE SHEET
as at 30 June 1997
Unaudited
At 30.6.97 At 31.12.96
#000 #000
Fixed assets
Tangible 192,720 190,843
---------- ----------
Current assets
Stocks 11,847 9,319
Debtors 9,394 4,466
Cash at bank and in hand 810 756
---------- ----------
22,051 14,541
---------- ----------
Current liabilities
Creditors: amounts falling
due within one year
Bank loans and overdrafts 23,821 7,885
Other creditors 36,041 38,178
---------- ---------
59,862 46,063
---------- ---------
Net current liabilities (37,811) (31,522)
Total assets less current
liabilities 154,909 159,321
Creditors: amounts falling
due after more than one year
Bank loans 43,000 48,000
Provisions for liabilities
and charges 1,830 2,046
---------- --------
110,079 109,275
---------- --------
Capital and reserves
Called up share capital 23,467 23,467
Share premium account 66,626 66,626
Revaluation reserve 285 285
Profit and loss account 19,701 18,897
---------- ---------
Shareholders funds 110,079 109,275
---------- ---------
SUMMARISED GROUP CASH FLOW STATEMENT
for the six months ended 30 June 1997
Unaudited
Six months Six months Year Year
ended ended ended ended
30.6.97 30.6.97 31.12.96 31.12.96
#000 #000 #000 #000
Net cash (outflow)
/inflow from operating
activities after
restructuring costs
(note 6) (3,040) 6,557
Returns on investments
and servicing of finance
Net interest paid (2,328) (4,343)
-------- ---------
Net cash outflow from
returnson investments
and servicing of finance (2,328) (4,343)
Net Corporation taxation
paid (430) (1,242)
Capital expenditure and
financial investment
Purchase of tangible
fixed assets (2,332) (6,636)
Sale of tangible fixed
assets 252 374
------- -------
Net outflow from capital
expenditure
and financial investment (2,080) (6,262)
-------- -------
Equity dividend paid (3,004) (6,571)
Financing
Increase in bank loans 8,500
-------
Net cash inflow from financing 8,500
-------
Decrease in cash (10,882) (3,361)
------- -------
Decrease in cash
Cash at 30 June 1997
(31 December 1996) (16,011) (5,129)
Cash at 1 January 1997
(1 January 1996) (5,129) (1,768)
------- ------
Net cash outflow 10,882 3,361
------- ------
NOTES TO THE INTERIM RESULTS
Unaudited
The comparative figures for the year ended 31 December 1996
have been extracted from the Groups latest published
accounts which contain an unqualified audit report and which
have been filed with the Registrar of Companies.
1. Basis of Accounting
The interim results have been prepared under the
historical cost convention modified to include the
revaluation of certain freehold and investment properties
and adopting the accounting policies set out in the
statutory accounts for the Group for the year ended 31
December 1996.
2. Segmental analysis
Turnover Profit before tax
Six months Year Six months Year
ended ended ended ended
30.6.97 31.12.96 30.6.97 31.12.96
#000 #000 #000 #000
Retailing of petroleum
products 181,249 332,091 5,266 12,522
Wholesaling of
petroleum products 22,389 97,349 552 875
Sales promotion schemes 1,573 3,281 490 942
Property services 27 84 51 3
Less: inter-company
turnover (1,505) (3,113) - -
------- ------ ------ ------
203,733 429,692 6,359 14,342
Net interest payable (2,351) (3,972)
------ ------ ------- -------
203,733 429,692 4,008 10,370
------- ------- ------ -------
Net expenses of the parent undertaking have been allocated
to the divisions in arriving at the profit before tax
shown above.
3. Taxation
The taxation (charge)/credit is based on the profit for
the six months and is made up as follows:
Six months Year
ended ended
30.6.97 31.12.96
#000 #000
Corporation tax at 32% (1996: 33%) (200) 1,718
Deferred tax - 8
------ ------
(200) 1,726
------ ------
The taxation charge has been reduced by #1m (year ended 31
December 1996 #4.3m) as a result of timing differences on
accelerated capital allowances on which deferred tax has
not been provided.
The Group has not taken credit for capital allowances in
these financial statements of #5.5m (year ended 31
December 1996 #5.5m). This amount has been carried
forward as a credit for future periods leaving a current
total pool for capital allowances of approximately #29.1m
(31 December 1996: #32.5m).
At 30 June 1997 the Company had approximately #1m (1996:
#1m) realised capital losses available for carry forward.
4. Dividend
The interim dividend of 3.2 pence per share will be paid
on 7th January 1998 to shareholders on the register at the
close at business on 5th December 1997. The 1996 interim
dividend was paid on 3rd January 1997 to shareholders on
the register at the close of business on 3rd December
1996.
5. Earnings per share
The calculation of earnings per share for the six months
ended 30 June 1997 and 30 June 1996 is based on the profit
on ordinary activities after taxation of #3,808,000 and
#3,279,000 respectively and on 93,866,758 ordinary shares
of 25p each, being the weighted average number of ordinary
shares in issue. The earnings per share for the year
ended 31 December 1996 is as shown in the 1996 Annual
Report and is based on the profit on ordinary activities
after taxation of #12,096,000 and 93,866,758 ordinary
shares of 25p each, being the weighted number of shares in
issue during that year.
6. Net cash (outflow)/inflow from operating activities
Six months Year
ended ended
30.6.97 31.12.96
#000 #000
Operating profit 6,359 14,342
Depreciation and amortisation 428 844
Profit on sale of fixed assets (225) (152)
Movement on redemption fund 7 (165)
(Increase)/decrease in stocks (2,528) 3,763
(Increase)/decrease in debtors (4,123) 3,525
(Decrease) in creditors (2,735) (13,913)
-------- --------
Net cash (outflow)/inflow from
operating activities (2,817) 8,244
Restructuring costs (223) (1,687)
-------- -------
Net cash (outflow)/inflow
from operating activities (3,040) 6,557
-------- -------
A copy of the Interim Report will be sent to shareholders on
9 September 1997.
Further copies are available from the Company Secretary,
Save Group PLC, Walton Lodge, Walton Street, Aylesbury,
Buckinghamshire, HP21 7QY.
Contact:
Save Group PLC Tel: 01296 436661
R. James Frost, Chairman
John Murgatroyd, Group Finance DirectorTel: 01296 395951
Charles Ryland/Tim Anderson
Buchanan Communications Ltd Tel: 0171 466 5000
END
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