TIDMUNG
RNS Number : 5259B
Universe Group PLC
04 April 2013
AIM: UNG
Universe Group PLC
("Universe", the "Group" or the "Company")
Final results for the year ended 31 December 2012
Universe Group PLC (AIM: UNG), a leading developer and supplier
of payment and on-line loyalty systems, today announces its audited
results for the year ended 31 December 2012.
Highlights
-- Strong results following introduction of new management team in 2011
-- Sales from continuing operations up 13% to GBP11.9m (2011: GBP10.5m)
-- Operating profit on continuing operations up 27% to GBP1.23m (2011: GBP0.96m)*
-- PBT on continuing operations up 47% to GBP1.01m (2011: GBP0.69m)*
-- EBITDA up 19% to GBP2.15 million (2011: GBP1.82 million)*
-- Statutory retained profit of GBP0.82 million (2011: loss of GBP1.03 million)**
-- Basic EPS from continuing operations more than doubled to 0.71p (2011: 0.30p)
-- Net cash inflow from operations up almost 2.5x to GBP2.08m (2011: GBP0.84m)
-- Equity placing at 2.3p per share raised GBP1.53 (net) and loan notes raised GBP0.2m
-- Net debt at 31 December 2012 almost eliminated, at GBP19,000 (2011: GBP1.76m)
-- Sale of Manufacturing Division in December 2012 - completed repositioning of the Group
-- Major investment programme commenced to refresh and enhance product offering
-- Solid platform established for continued progress in 2013
* From continuing operations (2011: Before exceptional costs of
GBP0.38 million comprising restructuring costs).
** 2011 figure stated after exceptional costs of GBP1.64 million
mainly comprising goodwill impairment of GBP1.23 million and
restructuring costs of GBP0.41 million.
Unless specified otherwise, all references to operating profit
and profit before tax throughout this announcement exclude the
current and prior year losses from discontinued operations.
Robert Goddard, Chairman of Universe, commented:
"These results are Universe's first full financial year of
trading under the new management team and I am delighted that they
show double digit growth in sales, operating profit and profit
before tax from continuing operations. In addition, a successful
fundraising in August strengthened the Group's balance sheet and
enabled us to commence a major investment phase to develop our
product offering.
We are now in a transformational phase involving the acquisition
and development of new products to equip the Company to better
address its existing markets and move into new ones."
For further information:
Universe Group plc
Robert Goddard, Chairman
Stephen McLeod, Chief Executive Officer +44 (0)2380 689
Bob Smeeton, Chief Financial Officer 510
finnCap
Stuart Andrews / Henrik Persson (corporate
finance)
Tom Jenkins / Simon Starr (corporate
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Katie Tzouliadis
Alex Shilov +44 (0)20 3178 6378
Report of the Chairman and the Chief Executive
Introduction
We are pleased to present the results of Universe's first full
financial year of trading since we were appointed respectively as
Chairman and Chief Executive in May 2011.
Results from continuing operations show double digit growth in
sales, operating profit and profit before tax. This encouraging
trading performance was accompanied by a successful fundraising
during August. Taken together, these factors have strengthened the
Group's balance sheet and enabled acceleration of our investment in
a number of exciting projects.
Turnaround of the business was largely complete by early 2012
and the loss-making Manufacturing Division was sold in December.
This completed the Group's restructuring to become a more
profitable and much more focused managed software and services
business.
We are now in a transformational phase involving the acquisition
and development of new products to equip the Company to better
address its existing markets and move into new ones.
Financial Results
As stated above, the Group's Manufacturing Division was disposed
of in the year. Accordingly, it is treated as a discontinued
operation in the reporting of the results for the year to 31
December 2012 and in the comparative information. All the following
references are in relation to the continuing operations of the
Group unless otherwise stated.
Profit and loss
Sales from continuing operations for the year to 31 December
increased by 13% to GBP11.9m against the prior period (2011:
GBP10.5m). The Group finished the year strongly, with sales in the
second half of GBP6.5m, 21% ahead of the first half. Whilst there
was some pressure on margins in our service operations, the Group
won significant incremental project work from its customers in
2012. Project work boosted turnover in the second half, although an
element of this was at a lower gross margin than normally would be
expected. These factors are reflected in the Group's profit margin
for the year which was 37%, down slightly against 38% achieved in
2011.
Notwithstanding this, operating profit on continuing operations
for the year increased to GBP1.23m, up 27% on the prior year (2011:
GBP0.96m). After reduced finance costs of GBP0.22m, which were 22%
down on the prior year (2011: GBP0.28m), profit before tax on
continuing operations showed a 47% increase year-on-year to
GBP1.01m (2011: GBP0.69m). This improvement illustrates the
fundamental strength of the business.
The Group continues to benefit from brought forward tax losses
and profit after tax rose to GBP0.82m (2011: loss of GBP1.03m). The
2012 result included losses of GBP0.19m from discontinued
activities. Basic earnings per share from continuing operations
more than doubled to 0.71 pence from 0.30 pence in 2011.
Cashflow and financing
EBITDA grew by 19% to GBP2.15m (2011: GBP1.82m). This supported
a substantial increase in net cash inflow from operating activities
which was GBP2.08m (2011: GBP0.84m).
August 2012 saw the placing of equity at 2.3 pence per share,
raising GBP1.53m after expenses. The placing was oversubscribed and
attracted some new institutional investors alongside existing
shareholders. In November, we also issued GBP0.2m of loan notes. We
see these successful fundraisings in difficult macroeconomic
conditions as strong endorsement of both the fundamental strength
of the Group and the strategic plans for the business.
The purpose of these fundraisings was primarily to enable
investment in already-identified growth opportunities, particularly
in projects to develop the Group's capabilities in payment and
loyalty transaction processing, as well as enhancing our data
centre. We invested GBP0.76m of the proceeds into our products
during the year, and used finance leases to fund the GBP0.95m
upgrade of the data centre.
Together with the enhanced cash flow from trading, a proportion
of the new money has allowed the repayment of some bank loans and
loans from directors. Consequently, at the year end the Group had a
small net debt balance of GBP19,000. This contrasts with a net debt
balance of GBP1.76m at the end of 2011 and leaves us in a strong
position to invest in the business in 2013 and beyond.
Strategy & Business Model
We will position the Group for ongoing profitable growth by
investing in skilled resource and in our product offering. Most
important will be the creation of a complementary set of
leading-edge products that will drive growth within our existing
market and support our planned expansion in new related sectors. At
the same time, we will add to our development and marketing teams.
This will help to accelerate our product development, speed to
market and customer service. We expect the financial benefits of
this strategy to start to show through towards the end of 2013 and
into 2014. Whilst the Board believes that this strategy will
achieve best value for shareholders, it will not necessarily
maximise short-term profit.
We see three broad stages in our product development and growth
plan. The first is the refreshing and revitalising of existing
products. This process, which we commenced in the second half of
2011, is now nearing completion. The second builds on this by
marketing our upgraded portfolio to customers in our existing
markets. This process has already started with both new and
existing customers. The third stage is to enhance and extend our
product portfolio in order to give us additional leverage in our
existing markets and to enable us to enter adjacent markets. We
will enter this third stage towards the end of 2013.
Not all new product development will be in-house. Where elements
of our overall package are available from third parties and are of
sufficient quality and/or where the required speed to market
dictates it, we will buy in product platforms and customise them by
incorporating our own value-adding software.
We shall develop further our already strong service culture and
use it to deliver what customers need and cooperate with them
closely to anticipate and help deliver their future needs.
Business & Product Development
In the second half of 2011, our principal task was to
restructure the Group, focus it on its core strengths and thereby
establish a firm platform from which to move forward. With that
process largely completed at the beginning of 2012, our emphasis
since then has been on product development and strengthening the
teams so as to achieve profitable and sustainable growth in the
medium to longer term. The objectives we set ourselves in 2012 were
to upgrade our data centre hardware, continue to refresh our
existing products and to introduce complementary new products. We
are pleased to report that we have made very good progress with
these objectives and the introduction of new products will continue
into the coming year and beyond.
As well as positioning the Company for growth in its existing
markets, we have been active in building the product sets needed to
penetrate adjacent markets. This programme centres around
Universe's core market-leading payment and loyalty systems and our
data centre.
Investment over the first half in our data centre hardware has
ensured that this key element is fully compliant with the latest
Payment Card Industry standards and able to accommodate the
intended expansion of managed solutions and services.
Around mid-year, we began strategically important product
development projects to refresh and enhance our core payment and
loyalty products. The management of these projects involves the
creation of rigorous product 'roadmaps' aimed at ensuring that our
development work reflects both customer needs and our commercial
objectives, including timely delivery. Simultaneously, we are
enhancing the skills of our development team so as to better meet
future needs.
An especially important milestone in 2012 was the launch of our
new payment terminal, "GemPAY". This new higher-performance payment
terminal is being offered initially as an upgrade to customer sites
with the existing Gemini models and we expect it to boost hardware
sales in 2013.
Using the same hardware platform as "GemPAY", "GemPOINTS" is a
scalable and secure stand-alone loyalty solution. The upgraded
product is now being rolled out to existing customers.
During the year, we also started development work on a new
generation outdoor payment terminal, which will be available in
2013. It will offer enhanced features on a new,
readily-customisable and future-proofed hardware platform, and will
be applicable to a wide range of retail environments.
Another very significant product development during 2012 was the
upgrade of our electronic funds transfer processing capability. We
invested GBP0.54m in this during 2012 and will be developing
further enhancements in 2013.
In order to support our development work, we took on additional
staff and we intend to add further specialists in 2013.
The recent appointment of a new Sales and Marketing Director
marked the start of the expansion and redirection of our sales
teams so as to meet higher performance targets and promote the
enhanced product range.
Staff
The Group continues to benefit from the skills and dedication of
its staff. They have delivered high quality product development and
excellent levels of customer service. We would like to extend our
thanks to all staff for their hard work and efforts during the
year. It is recognised and much appreciated.
Summary & Outlook
The Group has undergone significant change since the second half
of 2011 and 2012 has been a transformational year during which the
Group has put in place new products and enhancements and extensions
to existing ones. This work will progress at an accelerated pace in
2013 as we move to complete the Group's overall offering and at the
same time start to position ourselves in new markets.
The new product offering will include our new market-leading
outdoor payment terminal, enhanced in-store payment terminals and
an upgraded loyalty package, each of which will integrate with our
new platform for electronic funds transfer. The Board believes that
this unmatched package will be very attractive for existing and new
customers within the petrol forecourt sector and also to adjacent
markets, where there has already been an encouraging level of
interest, although the timing of take-up is uncertain.
The high level of project work enjoyed during 2012 is unlikely
to be repeated in the new financial year although the Group has
already booked some business of this type and identified a number
of additional good opportunities.
Accordingly, whilst the rate of progress in 2013 may not be as
strong as that achieved in 2012, we do expect to see some measure
of year-on-year improvement. This is despite the revenue investment
in products and markets that is designed to secure sustainable
profitable growth in future years.
We believe that the Group's strong current trading and healthy
balance sheet, when combined with the benefits of the last 12
months of product revitalisation, provide a solid platform to
further advance the strategy for the Group to become a leading
player in the provision of managed payment and loyalty services to
the retail industry.
Robert Goddard, Chairman
Stephen McLeod, Chief Executive Officer
3 April 2013
Consolidated Statement of Total Comprehensive Income
For the year ended 31 December 2012
2011 2011
Pre-exceptional Exceptional 2011 Total
2012 items items GBP'000
GBP'000 GBP'000 GBP'000
Continuing operations
Revenue 11,851 10,457 - 10,457
Cost of sales (7,484) (6,445) - (6,445)
Gross profit 4,367 4,012 - 4,012
Administrative expenses (3,140) (3,048) (378) (3,426)
Operating profit/(loss) 1,227 964 (378) 586
Finance costs (215) (275) - (275)
Profit/(loss) before taxation 1,012 689 (378) 311
Taxation - 33
Profit for the period from
continuing operations 1,012 344
Discontinued operations
Loss from discontinued operations (192) (1,378)
Total comprehensive income
and expense attributable to
equity holders 820 (1,034)
Earnings per ordinary share
- basic and diluted
From continuing operations 0.71p 0.30p
From discontinued operations (0.13)p (1.20)p
Earnings per share - basic
and diluted 0.58p (0.90)p
Comparative information has been restated to reflect the
discontinued operation, as set out in note 7.
Consolidated Statement of Changes in Equity
For the year ended 31 December 2012
Capital
Share redemption Merger reserve Translation Profit Total
capital reserve Share premium on acquisition reserve and loss equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January 2011 5,735 - 10,753 3,503 (225) (7,124) 12,642
Reserves transfer - - - (1,234) - 1,234 -
Total comprehensive
expense for the
year attributable
to equity shareholders - - - - - (1,034) (1,034)
Share based payments - - - - - 19 19
At 1 January 2012 5,735 - 10,753 2,269 (225) (6,905) 11,627
Share reorganisation (4,588) 4,588 - - - - -
Issue of share
capital 728 - 947 - - - 1,675
Expenses of share
issue - - (149) - - - (149)
Total comprehensive
income for the
year attributable
to equity shareholders - - - - - 820 820
Share based payments - - - - - 105 105
At 31 December
2012 1,875 4,588 11,551 2,269 (225) (5,980) 14,078
Consolidated Balance Sheet
As at 31 December 2012
2012 2011
GBP'000 GBP'000
Non-current assets
Goodwill 10,916 10,916
Development costs 1,209 704
Property, plant and equipment 1,805 1,658
13,930 13,278
Current assets
Inventories 544 832
Trade and other receivables 2,839 2,223
Cash and cash equivalents 1,134 410
4,517 3,465
Total assets 18,447 16,743
Current liabilities
Trade and other payables (2,878) (2,615)
Current tax liabilities (338) (335)
Borrowings (318) (1,071)
(3,534) (4,021)
Non-current liabilities
Borrowings (835) (1,095)
Total liabilities (4,369) (5,116)
Net assets 14,078 11,627
Equity
Share capital 1,875 5,735
Capital redemption reserve 4,588 -
Share premium 11,551 10,753
Merger reserve 2,269 2,269
Translation reserve (225) (225)
Profit and loss account (5,980) (6,905)
Total equity 14,078 11,627
Consolidated Cash Flow Statement
For the year ended 31 December 2012
2012 2011
GBP'000 GBP'000
Cash flows from operating activities:
Net cash flow from operating activities
* Continuing operations 2,370 1,050
* Discontinued operations (51) (47)
Interest paid (241) (289)
Tax received - 128
Net cash inflow from operating activities 2,078 842
Cash flows from investing activities:
Purchase of property, plant & equipment (216) (128)
Expenditure on product development (756) (303)
Proceeds from sale of fixed assets 52 133
Net cash outflow from investing activities (920) (298)
Cash flow from financing activities:
Proceeds from issue of shares 1,526 -
Repayments of obligations under finance leases (539) (404)
Repayment of borrowings (1,621) (199)
New borrowings entered into 200 107
Net cash outflow from financing (434) (496)
Increase in cash and cash equivalents 724 48
Cash and cash equivalents at beginning of
year 410 362
Cash and cash equivalents at end of year 1,134 410
Comparative information has been restated to reflect the
discontinued operation, as set out in note 7.
Notes
1. General Information
The financial information set out in this document does not
constitute the Company's statutory accounts for 2011 or 2012.
Statutory accounts for the years ended 31 December 2011 and 31
December 2012 have been reported on by the Independent Auditors.
The Independent Auditors' Reports on the Annual Report and
Financial Statements for each of 2011 and 2012 were unmodified, did
not draw attention to any matters by way of emphasis and did not
contain a statement under 498(2) or 498(3) of the Companies Act
2006.
Statutory accounts for the year ended 31 December 2011 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2012 will be delivered to the Registrar
in due course, and will be available from the Company's registered
office at George Curl Way, Southampton International Park,
Southampton, SO18 2RX and from the Company's website
www.universeplc.com.
The financial information set out in these preliminary results
has been prepared using the recognition and measurement principles
of International Accounting Standards, International Financial
Reporting Standards and Interpretations adopted for use in the
European Union (collectively Adopted IFRSs). The accounting
policies adopted in these preliminary results have been
consistently applied to all the years presented and are consistent
with the policies used in the preparation of the statutory accounts
for the period ended 31 December 2011. The principal accounting
policies adopted are unchanged from those used in the preparation
of the statutory accounts for the period ended 31 December
2011.
2. Operating Profit and EBITDA before exceptional items and discontinued activities
2012 2011
GBP'000 GBP'000
Revenue 11,851 10,457
Cost of sales (7,484) (6,445)
Gross profit 4,367 4,012
Administrative expenses (3,140) (3,048)
Exceptional items - (378)
Operating profit 1,227 586
Add back: exceptional items - 378
Operating profit before exceptional items and
discontinued operations 1,227 964
Add back:
Depreciation 568 473
Amortisation 251 359
Share based payments 105 19
Adjusted EBITDA 2,151 1,815
3. Segment information
The Group now has only one business segments, 'HTEC Solutions'.
All material operations and assets are in the UK.
Solutions Corporate Total
2012 2012 2012
GBP'000 GBP'000 GBP'000
Revenue - all external 11,851 - 11,851
Gross profit 4,367 - 4,367
Segment expenses (2,617) (523) (3,140)
Operating profit 1,750 (523) 1,227
Unallocated items:
Finance costs (215)
Taxation -
Profit for the year from continuing
operations 1,012
Solutions Corporate Total
2011 2011 2011
GBP'000 GBP'000 GBP'000
Revenue - all external 10,457 - 10,457
Gross profit 4,012 - 4,012
Segment expenses (2,671) (377) (3,048)
Segment result 1,341 (377) 964
Unallocated items:
Exceptional items (see note
4) (378)
Finance costs (275)
Taxation 33
Profit for the year from continuing
operations 344
Comparative information has been restated to reflect the
discontinued operation, as set out in note 7. In 2011 GBP300,000 of
central overheads were charged to the discontinued operation. As
these costs will not be eliminated as a result of the disposal,
they have been reclassified as segmental expense within the
Solutions segment.
4. Exceptional items - Continuing operations
2012 2011
GBP'000 GBP'000
Group restructuring costs - 378
==================== ======================
5. Earnings per share
The calculation of the basic and diluted loss per share is based
on the following data:
2012 2011
GBP'000 GBP'000
Profit from continuing operations including
other comprehensive expense 1,012 344
Loss from discontinued operations (192) (1,378)
Profit/(loss) for the purposes of basic and
diluted earnings per share being net profit/(loss)
attributable to equity holders of the parent 820 (1,034)
Number Number
'000 '000
Number of shares
Weighted average number of ordinary shares for
the purposes of basic earnings per share 141,965 114,705
Weighted average number of ordinary shares for
the purposes of diluted earnings per share 141,965 114,705
At the year end the Group had in issue 187,530,626 ordinary
shares of 1p each (2011: 114,704,539 ordinary shares of 5p
each).
6. Cash flows from operations
Group
2012 2011
GBP000 GBP000
Continuing operations
Cash flows from operating activities
Profit before tax 1,012 311
Depreciation and amortisation 819 832
Share based payments 105 19
Interest payable 215 275
2,151 1,437
Movement in working capital:
Decrease in inventories 288 392
Increase in receivables (335) (462)
Increase /(decrease) in payables 266 (317)
2,370 1,050
Discontinued operations
Cash flows from operating activities
Loss before tax (192) (1,378)
Depreciation and amortisation 72 83
Goodwill impairment - 1,234
Loss on disposal of fixed assets 43 -
Interest payable 26 14
(51) (47)
Material non-cash transactions
During the year the Group entered into GBP947,000 (2011:
GBP310,000) of finance leases for plant and equipment. These
transactions are not reflected above.
7. Discontinued Activities
On 20 December 2012 the Group sold the trade and fixed assets of
its Contract Electronic Manufacturing business for a total
consideration of GBP65,000. The incoming funds (net of costs) of
GBP52,000 were added to the Group's working capital.
The comparative income statement and cash flow statement have
been restated to reflect the composition of the discontinued
activities at the latest balance sheet date.
8. Report and Accounts
Copies of the Annual Report and Accounts will be sent to
shareholders in May 2013 and copies will also be available, free of
charge, from the Company's registered office at George Curl Way,
Southampton SO18 2RX and from the Company's website,
www.universeplc.com.
9. Annual General Meeting
The Company's Annual General Meeting is scheduled for 25 June
2013, notice of which will be sent to shareholders next month.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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