SVE Starvest Plc

RNS No 1742a
SAVE GROUP PLC
2 June 1999


Contacts:  James Frost
           Save Group                01296 436661
           Charles Ryland
           Buchanan Communications   0171 466 5000


                     SAVE GROUP PLC
                 Chairman's AGM Statement
                            
The oil industry, in which Save operates, has continued
to change substantially since crude oil prices started to
collapse in 1998.  These changes are important background
to our business in the UK and to the recent improvements
in Save's results and prospects.

Internationally, the changes are the major oil companies'
mergers  and  planned mergers - Exxon and Mobil,  BP  and
Amoco  and  Arco,  Total and Fina  and  Repsol  with  the
Argentine  national oil company.  Press  reports  suggest
that Texaco and Chevron may be added to the list.

Nationally, to Save's benefit, we have the after  effects
of   Esso's   Price  Watch  campaign  as  well   as   the
international changes.

As  I  have reported before, Price Watch helped to reduce
the total number of petrol stations in the UK from 17,000
in  1995  to just 13,000 now, mostly from the closure  of
marginal private dealer sites.  In addition, some of  the
better  dealer  sites  have also  been  acquired  by  the
majors.   As  a result, the remaining 7,000 dealer  sites
(that  is some 50% of all sites) only sell around 10%  of
all road fuel volume.  This market is, therefore, all but
dead   and,  more  importantly,  will  not  provide   the
historical   outlet  for  the  majors   excess   refinery
production.

The  integrated  oil  companies have  refineries.   Their
production  can be sold to their own sites (producing  an
extra  margin), sold to dealers (at a more modest margin)
or  on  the  spot market (or to purchasers  such  as  the
supermarkets and Save which deal on the spot market).  As
the dealer category continues its decline, the ability to
sell  through  their own sites become  the  only  way  to
increase  profit from these refineries.   So,  which  oil
companies do I believe refine significantly more  product
in  the  UK  than they sell through their own  sites  and
therefore  have to sell increasing volumes  to  the  spot
market?  All, except Esso.

Save, with its 400 sites, (8% of all company owned sites)
with  no  ties and no associated refinery is in a  unique
position.

In  UK petrol retailing, market conditions have continued
with  the  progress which had recently been made  at  the
time of my statement in March.

By  way  of  recap,  Esso's  2 pence  per  litre  voucher
promotion  (I  believe the last intensive  leg  of  Price
Watch)  brought prices and margins down for 3 months  and
ended in January.  This should have signalled price rises
and  margin  restoration.  Unfortunately Tesco  and  Asda
drew  other  players in to their private battle,  causing
gross  profit  margins for the industry to  be  virtually
eliminated  and  Save to price up again  to  protect  its
margins  at the expense of volume.  As I reported  in  my
statement,  Save's  first quarter was, therefore,  barely
profitable.   By the end of March, however,  price  rises
started to restore the whole industry's margins and  Save
was  able to commence becoming more competitive again and
to earn a more satisfactory gross margin.

I  hope  and  believe that, with that quarter  over,  the
industry has learnt that seeking to take an advantage  in
the  market will provoke disproportionate retaliation and
that  customers  will also realise that they  will  start
paying  for  the cheap petrol they have enjoyed  for  the
last three years.

I  believe  that  a number of factors have  arisen  which
could  benefit  the  industry as  a  whole  and  Save  in
particular:-

-    The significant price and margin rises which started
     in mid March and have generally stuck.

-    The  supermarkets' main business (but  specifically
     not  their petrol businesses) have been referred by
     the OFT.

-    An earlier OFT report should  result  in  the
     supermarkets' petrol retailing costs (in  the  form  of
     business rates) rising by around 1p per litre next year.

-    The  OFT is expressing concern over possible excess
     non petrol profits of motorway service areas.

-    Crude oil prices appear to be slipping back as the
     OPEC agreed production cutbacks are being increasingly
     undermined; this not only increases downstream margins
     but  adds  to  pressure on the oil companies' upstream
     profitability.

Save's  trading volumes in the year to date are ahead  of
1997 although, as a result of the first quarter's pricing
up,  about  5%  behind 1998.  I am, however,  pleased  to
report that the latest week's sales this year are in line
with  the  increased equivalent sales in 1998 and,  in  a
stable  market,  I  anticipate  this  progress,  and  the
resultant cash generation, continuing.

I have said that we made no profits in the first quarter.
The  second quarter is, however, producing profits  at  a
growing  rate  despite the periodic  stock  losses  (from
falling  crude prices) which only translate  into  margin
gains  in  subsequent weeks (if prices remain unchanged).
I  currently  anticipate that the profits for  the  first
half  will be between #1m and #2m.  The Board is keen  to
re-establish  a  dividend programme and will  review  the
position  with  the half year results  in  the  light  of
trading conditions.

In  summary,  after  the  already reported  poor  opening
quarter, I am encouraged by both margins and the trend in
volumes  in  the second quarter so far.  The outlook  for
the industry's future is also better than for some years.

R. James Frost, Chairman                      2 June 1999

END


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