TIDMUNG
RNS Number : 1411M
Universe Group PLC
13 September 2012
UNG.L
UNIVERSE GROUP PLC
("Universe", the "Company" or the "Group")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2012
DIRECTORATE CHANGE
Universe, which develops and supplies leading payment and
on-line loyalty systems, is pleased to announce its unaudited
interim results for the six months to 30 June 2012.
Highlights
-- Significantly improved results reflect benefits of
restructuring completed in 2011 by new management team
-- Revenues up 6% to GBP6.0 million (2011: GBP5.7 million)
-- Operating profit before exceptional items* increased 88% to GBP526,000 (2011: GBP280,000)
-- Profit before taxation and exceptional items* almost tripled
to GBP404,000 (2011: GBP135,000)
-- Profit before taxation of GBP404,000 (2011: loss of GBP235,000)
-- EBITDA up 31% to GBP950,000 (2011: GBP726,000)
-- Earnings per share of 0.35p (2011: loss of 0.20p)
-- Net cash inflow from operations of GBP1,355,000 (2011: GBP374,000)
* exceptional items nil in 2012 (2011: GBP370,000)
Robert Goddard, Chairman of Universe, commented:
"We are pleased that the restructuring and realignment of the
Company, completed in 2011, is beginning to bear fruit, as
evidenced by the revenue growth and improved profitability that we
are reporting today. Pre-exceptional operating profit in the period
increased by 88% and profit before tax on the same basis almost
tripled.
Following the recent successful placing, we now have in place a
strong platform for growth in both our traditional markets and new
related markets. The Company has launched a number of initiatives
designed to drive profitable growth and we are confident that we
can deliver further improvements in performance."
For further information:
Universe Group plc
Robert Goddard, Chairman
Stephen McLeod, Chief Executive
Officer
Bob Smeeton, Chief Financial
Officer +44 (0)2380 689 510
finnCap
Stuart Andrews / Henrik Persson
(corporate finance)
Tom Jenkins / Simon Starr (corporate
broking) +44 (0) 20 7220 0500
Biddicks
Katie Tzouliadis +44 (0) 20 3178 6378
Sophie McNulty
CHAIRMAN'S STATEMENT
Introduction
I am pleased to report results for the six months ended 30(th)
June 2012. These show the benefits of the significant changes the
new management team have made to the Group since mid-2011. The
improvements we have made to the Group's organisational and
operational effectiveness have resulted in a growth in sales and a
significant reduction in expenses. Together, these have helped
deliver a sharp improvement in operating profitability and a return
to a profit before tax. Excluding exceptional items (of which there
were none in this period but GBP370k in the same period last year),
profit before tax has almost tripled to GBP404k. For the remainder
of this Statement comparative period profit measures are stated
before exceptional items unless otherwise noted.
The recent completion of the GBP1,675k (gross) equity placing in
August, together with the potential for a further GBP200k term loan
which may be drawn upon in the near future, will enable the Group
to accelerate the programme to refresh and re-equip its product
set. We believe that these measures will enhance our
competitiveness and profitability in our traditional petrol
forecourt market as well as positioning us to address a wider
retail environment.
The new funds will also strengthen the balance sheet and give
the Group access to more--favourable banking terms.
Profit & loss account
Revenue for the six-month period improved by 6% to GBP6,019k
(2011: GBP5,659k) and gross profit grew by 3.8% to GBP2,026k.
Reflecting the mix of business in the period, margins showed a
slight reduction year-on-year to 33.7% (2011: 34.5%).
The growth in revenue and the reduction in expenses resulted in
operating profits increasing by 88% to GBP526k (2011: GBP280k) and
profit before tax nearly tripling to GBP404k (2011: GBP135k).
The main source of the improved profit was the Solutions
Division where revenue increased by 11% to GBP5,367k (2011:
GBP4,827k). This contributed to a 4% improvement in gross profit
and, combined with an 11% reduction in direct operating expenses,
resulted in a 40% increase in the segmental profit to GBP827k
(2011: GBP592k). The growth in revenue is partly due to the first
stages of an equipment renewal programme for one of our major
supermarket clients together with a growing pipeline of work for
our on-line loyalty solution from an existing customer. Both
programmes will continue throughout the second half of 2012.
Losses in the Manufacturing Division were reduced by almost a
third to GBP158k, from GBP208k in 2011. This was achieved as a
result of the volume of work for the Solutions business and is
despite a 22% reduction in external sales, caused by the timing of
call-off orders in the previous year. The strong pipeline of
intercompany work will continue in the second half of 2012 and the
improving demand seen in the last quarter from external customers
is likely to produce better results by the year end. As we have
previously reported, the Board continues to review the strategic
options for this business segment. It is also important to note
that Manufacturing overheads of GBP117k contain an appropriate
proportion of the unavoidable overall property and administrative
costs of the Group.
Central costs increased to GBP143k (2011: GBP104k) although this
was mainly due to the recognition of a GBP44k (2011: GBP9k) share
option charge in respect of awards made earlier in the year.
Overall, the Group achieved an operating profit of 8.7% of
sales. This compares with 4.9% for the first six months of 2011 and
7.1% for the whole of that year, which demonstrates the pleasing
progress that has been made in restoring profitability to the core
business.
Earnings before interest, taxes, depreciation and amortisation
increased by 31% to GBP950k (2011: GBP726k) in the period.
Interest costs reduced to GBP122k (2011: GBP145k) and will
reduce further in the second half following the retirement in
August of GBP950k of debt.
Balance sheet and cash flow
In summary, the balance sheet at the end of June reflects the
improved trading performance, stronger cash generation and, as set
out below, the investments made in strengthening of our data centre
capabilities.
Capital expenditure of GBP526k was incurred in the period as we
upgraded our data centre hardware to ensure compliance with the
latest Payment Card Industry ("PCI") standards and to accommodate
the expansion of managed solutions and services. Of the GBP526k
expenditure, GBP465k has been funded by finance leases at interest
rates of 8%. Capitalisation of product development was limited to
GBP127k as our development team worked on the specific customer
deployment phases for the GemPAY terminal and the expansion of our
existing on-line loyalty programmes.
We began strategically important product development projects in
the latter part of the period and these will continue throughout
the remainder of 2012.
The recently completed fundraising allows us to plan more
confidently and in certain areas, to accelerate the completion of
those projects to enable the capture of already-identified market
opportunities.
Cash from operating activities at the half year increased
significantly to GBP1,355k (2011: GBP374k). This was partly as a
result of significant payments in advance which were being held as
deferred income in the balance sheet. These prepayments will be
released to income in the second half of the year, which will
impact upon the conversion of EBITDA to operating cash.
The strong cash generation has allowed a winding down of the
invoice discounting facility that previously had provided much of
our short-term working capital requirements. As a result,
borrowings due within one year stood at GBP521k at the end of the
period compared to GBP1,137k at the same time last year and
comprised monthly repayments due on term loans and finance leases.
Since the reporting date, the Group has been able to retire GBP950k
of expensive debt. The recent equity placing together with the
asset finance arrangements available to the Group have left
Universe with a significantly improved funding structure.
Directorate Change
The Board would like to take this opportunity to announce the
departure of Non-executive Director, John Scholes, from the
Company. Following 12 months of profitable trading and the recent
successful placing, John feels that this is an appropriate moment
to step down from the Board. The Board thanks him for his
commitment and long service to the Company and wishes him well in
his many other endeavours. He remains a significant and supportive
shareholder of the Company.
Outlook
The Board is pleased with the progress the Company is making and
Universe's enhanced trading, improved cash-generation and
strengthened balance sheet provide a very solid platform for
on-going growth, both in its traditional markets as well as in
adjacent and complementary areas.
As we have previously indicated, the Board believes that the
skills developed by the Group in serving the very demanding petrol
station forecourt industry equip it well to address other retail
markets. Early stage planning is now underway to exploit selected
growth opportunities and we are currently engaging with existing
and prospective customers towards this end. The Directors are
confident that the Group will continue to improve its performance
and remain optimistic about the prospects for the full year.
Robert Goddard
Chairman
13(th) September 2012
Universe Group plc
Condensed Statement of Total Comprehensive Income
(unaudited)
for the 6 months ended 30(th) June 2012
Six months Six months Year ended
ended ended 31(st)
30(th) 30(th) December
June 2012 June 2011 2011
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 6,019 5,659 12,082
Cost of sales (3,993) (3,707) (8,113)
------------ ------------ -----------
Gross profit 2,026 1,952 3,969
Administrative expenses excluding
exceptional items (1,500) (1,672) (3,106)
Exceptional items - (370) (1,641)
------------ ------------ -----------
Administrative expenses (1,500) (2,042) (4,747)
Operating profit/(loss) 526 (90) (778)
Operating profit/(loss) is analysed
as:
Operating profit before exceptional
items 526 280 863
Exceptional items - (370) (1,641)
526 (90) (778)
------------------------------------------- ------------ ------------ -----------
Finance costs (122) (145) (289)
Profit/(loss) before taxation 404 (235) (1,067)
Taxation - - 33
------------
Profit/(loss) for the period attributable
to equity shareholders 404 (235) (1,034)
Earnings/(loss) per share pence pence pence
Basic and diluted (see note 7) 0.35 (0.20) (0.90)
------------ ------------ -----------
Condensed Consolidated Statement of
Changes in Equity (unaudited)
At start of period 11,627 12,642 12,642
Total comprehensive expense for the
period 404 (235) (1,034)
Share based payments 44 9 19
------------ ------------ -----------
At end of period 12,075 12,416 11,627
------------ ------------ -----------
Universe Group plc
Condensed Consolidated Balance Sheet (unaudited)
as at 30(th) June 2012
31(st)
30(th) 30(th) December
June 2012 June 2011 2011
GBP'000 GBP'000 GBP'000
Fixed assets
Goodwill 10,916 12,150 10,916
Development costs 728 866 704
Property, plant and equipment 1,863 1,968 1,658
------------ ------------ ----------
13,507 14,984 13,278
------------ ------------ ----------
Current assets
Inventories 1,026 1,023 832
Trade and other receivables 2,467 2,248 2,223
Cash and cash equivalents 734 317 410
------------ ------------ ----------
4,227 3,588 3,465
------------ ------------ ----------
Total assets 17,734 18,572 16,743
------------ ------------ ----------
Current liabilities
Trade and other payables (3,536) (3,277) (2,615)
Tax liabilities (335) (335) (335)
Short term borrowings (521) (1,137) (1,071)
(4,392) (4,749) (4,021)
Non current liabilities
Medium term borrowings (1,267) (1,407) (1,095)
Total liabilities (5,659) (6,156) (5,116)
------------ ------------ ----------
Net assets 12,075 12,416 11,627
------------ ------------ ----------
Equity
Share capital 5,735 5,735 5,735
Share premium account 10,753 10,753 10,753
Other reserves 2,269 3,503 2,269
Translation reserve (225) (225) (225)
Profit and loss account (6,457) (7,350) (6,905)
Total equity 12,075 12,416 11,627
------------ ------------ ----------
Universe Group plc
Condensed Consolidated Cash Flow Statement (unaudited)
for the six months ended 30(th) June 2012
Six months Six months Year ended
ended ended 31(st)
30(th) 30(th) December
June 2012 June 2011 2011
GBP'000 GBP'000 GBP'000
Net cash flows from operating activities
(see note 9)
Net cash flows from continuing activities 1,477 443 1,003
Interest paid (122) (145) (289)
Tax received - 76 128
------------ ------------ -----------
Net cash inflow from operating activities 1,355 374 842
------------ ------------ -----------
Cash flows from investing activities
Purchase of property, plant & equipment (61) (37) (128)
Expenditure on product development (127) (286) (303)
Proceeds from sale of property, plant
& equipment - - 133
------------ ------------ -----------
Net cash outflow from investing activities (188) (323) (298)
------------ ------------ -----------
Cash flow from financing activities
Repayment of obligations under finance
leases (205) (165) (404)
Repayment of borrowings (638) (77) (199)
New loans raised - 146 107
------------ ------------ -----------
Net cash outflow from financing (843) (96) (496)
------------ ------------ -----------
Increase/(decrease) in cash and cash
equivalents 324 (45) 48
Cash and cash equivalents at beginning
of period 410 362 362
Cash and cash equivalents at end of
period 734 317 410
------------ ------------ -----------
Universe Group plc
Notes to Condensed Consolidated financial statements for six
months ended 30(th) June 2012
1 The annual financial statements of the company for the year
ended 31(st) December 2011 were prepared in accordance with
International Financial Reporting Standards (IFRSs). The condensed
set of financial statements has been prepared using accounting
policies consistent with International Financial Reporting
Standards. The same accounting policies, presentation and methods
of computation are followed in the condensed set of financial
statements as applied in the Group's latest annual audited
financial statements. While the financial figures included in this
interim report have been computed in accordance with IFRSs
applicable to interim periods, this interim report does not contain
sufficient information to constitute an interim financial report as
that term is defined in IAS 34. The IFRSs that will be effective in
the financial statements for the year to 31(st) December 2012 are
still subject to change and to the issue of additional
interpretation(s) and therefore cannot be determined with
certainty. Accordingly, the accounting policies for that annual
period that are relevant to this interim financial information will
be determined only when the IFRS financial statements are prepared
at 31(st) December 2012.
2 The financial information for the year ended 31(st) December
2011 does not constitute statutory accounts as defined in section
434 of the Companies Act 2006. A copy of the statutory accounts for
that year has been delivered to the Registrar of Companies. The
auditors' report on those accounts was not qualified and did not
contain statements under section 498 (2) or (3) of the Companies
Act 2006.
3 Losses from exceptional items in the six months ended 30(th)
June 2011 were in respect of reorganisation costs of GBP370k.
Losses from exceptional items in the year ended 31(st) December
2011 were in respect of reorganisation costs (GBP407k) and goodwill
impairment (GBP1,234k).
4 The Directors believe the Group is well placed to manage its
business risks successfully despite the current uncertain economic
outlook. The Group's forecasts and projections, taking account of
reasonably possible changes in trading conditions show that the
Group should be able to operate within the level of its facilities.
After making enquiries the Directors have a reasonable expectation
that the Group will have adequate resources to continue in
operational existence for the foreseeable future. Accordingly they
continue to adopt the going concern basis in preparing the interim
condensed financial statements.
5 The half year results were neither audited nor reviewed by the
auditors. The interim financial information has been prepared on
the basis of accounting policies set out in the Group's statutory
accounts for the year ended 31(st) December 2011.
6 Operating profit and EBITDA before exceptional items
Six months Six months Year ended
ended ended 31(st)
30(th) 30(th) December
June 2012 June 2011 2011
GBP'000 GBP'000 GBP'000
Revenue 6,019 5,659 12,082
Cost of sales (3,993) (3,707) (8,113)
------------ ------------ -----------
Gross profit 2,026 1,952 3,969
Administrative expenses excluding
exceptional items (1,500) (1,672) (3,106)
Exceptional items - (370) (1,641)
------------ ------------ -----------
Operating profit 526 (90) (778)
Add back:
Exceptional items - 370 1,641
------------ ------------ -----------
Operating profit before exceptional
items 526 280 863
Add back:
Depreciation 296 266 556
Amortisation 128 180 359
EBITDA before exceptional items and
discontinued operations 950 726 1,778
------------ ------------ -----------
7 Earnings per share is calculated by reference to the results
and the weighted average of 114,704,539 shares in issue during the
period. The number of shares in issue at 30(th) June 2012 was
114,704,539.
6 months 6 months Year ended
ended 30(th) ended 30(th) 31(st)
June 2012 June 2011 December
p p 2011
p
Basic and diluted earnings/(loss)
per share 0.35 (0.20) (0.90)
--------------- --------------- -----------
8 Segment information
6 months ended 30(th) June 2012
Solutions CEM Total
GBP'000 GBP'000 GBP'000
Revenue 5,367 652 6,019
---------- --------- ---------
Gross profit 2,067 (41) 2,026
Operating expenses (1,240) (117) (1,357)
---------- --------- ---------
Operating profit/(loss) before
corporate costs 827 (158) 669
Unallocated corporate costs (143)
---------
Operating profit before exceptional
items 526
Exceptional items -
Finance costs (122)
Taxation -
---------
Profit for the period from continuing
activities 404
=========
6 months ended 30(th) June 2011
Solutions CEM Total
GBP'000 GBP'000 GBP'000
Revenue 4,827 832 5,659
---------- --------- ---------
Gross profit/(loss) 1,984 (32) 1,952
Operating expenses (1,392) (176) (1,568)
---------- --------- ---------
Operating profit/(loss) before
corporate costs 592 (208) 384
Unallocated corporate costs (104)
---------
Operating profit before exceptional
items 280
Exceptional items (370)
Finance costs (145)
Taxation -
---------
Loss for the period from continuing
activities (235)
=========
Year ended 31(st) December 2011
Solutions CEM Total
GBP'000 GBP'000 GBP'000
Revenue 10,457 1,625 12,082
---------- --------- ---------
Gross profit 4,012 (43) 3,969
Operating expenses (2,371) (358) (2,729)
---------- --------- ---------
Operating profit/(loss) before
corporate costs 1,641 (401) 1,240
Unallocated corporate costs (377)
---------
Operating profit before exceptional
items 863
Exceptional items (1,641)
Finance costs (289)
Taxation 33
---------
Profit for the period from continuing
activities 1,034
=========
9 Cash flows from operations
Six months ended 30(th) Six months ended 30(th) Year ended 31(st) December
June 2012 June 2011 2011
GBP'000 GBP'000 GBP000
Continuing operations
Cash flows from operating
activities
Operating profit/(loss) 526 (90) (778)
Depreciation and
amortisation 424 446 915
Impairment of goodwill - - 1,234
Share based payments 44 9 19
---------------------------- ---------------------------- ----------------------------
994 365 1,390
Movement in working
capital:
(Increase)/decrease in
inventories (194) 201 392
(Increase)/decrease in
receivables (244) (468) (462)
Increase/(decrease) in
payables 921 345 (317)
---------------------------- ---------------------------- ----------------------------
Net cash flow from
operating activities 1,477 443 1,003
---------------------------- ---------------------------- ----------------------------
10 Post balance sheet events
At a General Meeting on 16(th) August 2012 the Group completed a
placing of 72,826,087 ordinary shares at 2.3 pence each. Net
proceeds of GBP1,572k were raised to fund the Group's
development.
On 24(th) August 2012 the Group repaid the outstanding balance
of GBP750k on the term loan provided by the Group's bankers.
On 31(st) August 2012 the Group repaid the outstanding balances
on the Directors loans provided by John Scholes and Malcolm Coster.
The total amount repaid was GBP200k.
On 12(th) September 2012 John Scholes resigned from the Universe
Board of Directors.
11 Copies of the interim report will be available from the
Company's head and registered office: Southampton International
Park, George Curl Way, Southampton, SO18 2RX, and on the Company's
website, www.universeplc.com.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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