Information  X 
Enter a valid email address

Universal Salvage (UVS)

  Print      Mail a friend       Annual reports

Thursday 04 December, 2003

Universal Salvage

Interim Results

Universal Salvage PLC
04 December 2003


                             UNIVERSAL SALVAGE PLC
                                INTERIM RESULTS
                      FOR THE 26 WEEKS TO 1 NOVEMBER 2003
                                   Key Points

   •Turnover of £22.8m

   •Loss before exceptionals of £1.6m

   •Loss before tax of £1.9m

   •Basic loss per share of 5.3p

   •Dividend of 1.2p per share reflecting Board's confidence in the outlook

   •First half results reflect:

    - decrease in motor insurance claims during long, dry summer
    - sharp fall in auction prices between July and early September
    - delayed start to certain new contracts

   •Second half will reflect:

    - seasonal improvement in volumes
    - recovery in vehicle auction prices from mid September
    - impact of new contracts (won across all business areas)
    - European End of Life Vehicle ('ELV') legislation beginning to take effect

   •First European ELV related contract signed - with Toyota (GB) PLC

Chairman, Alexander Foster, said,

' The long, dry summer and the timing of the commencement of certain new
contracts means that this financial year will see a large variation between
results for the first and second halves of the year. Our focused sales effort
continues to gain momentum across all parts of the business and we expect the
benefits to continue. The final introduction of the ELV legislation in early
2004 and the tightening of the environmental rules will enable the business to
push ahead and broaden our customer base. We now have established three core
business areas, all of which have significant potential for growth. The Board
remains positive about the medium-term prospects for the Group.'

Enquiries:

Universal Salvage plc:                     Tel: 020 7448 1000 today only
Martin Hynes, Chief Executive              Tel: 01234 762283 thereafter
Andy Somerville, Group Finance Director

Biddicks:
Katie Tzouliadis or Kathryn van der Kroft  Tel: 020 7448 1000


CHAIRMAN'S STATEMENT

Results

The Group's operating loss for the 26 weeks to 1 November 2003 was £1.7m (2002:
operating profit of £1.4m) and the loss before tax was £1.9m (2002: profit
before tax of £1.2m) on turnover of £22.8m (2002: £31.6m). Basic loss per share
was 5.3p (2002: earnings per share of 3.1p). Net assets decreased from £24.8m
last year to £22.1m at 1 November 2003. Net borrowings increased to £8.5m,
compared to £7.8m last year, representing gearing of 38.2% (2002: 31.6%).

As announced at our AGM, trading through the summer months was particularly hard
for the vehicle salvage industry. The long, dry summer reduced accident claims
for the major insurers by 15% to 25%. This reduction had a direct impact on the
number of total losses that Universal was instructed to collect. In addition,
selling prices achieved at auctions through July, August and the early part of
September fell sharply. A delay in the planned start of new insurance contracts
also reduced expected vehicle volumes.

Since the early part of September, I am pleased to report that collection
volumes have increased and prices achieved at auction have recovered to more
normal levels. We have also implemented a restructuring plan during the period
which will reduce overheads; however, the cost of this restructuring together
with exceptional legal costs amounted to £0.3m (2002: £0.3m).

Dividend

The Board is pleased to declare an interim dividend of 1.2p per share (2002:
1.2p per share), which will be paid on 15 January 2004 to shareholders on the
register on 19 December 2003. This reflects the Board's continuing confidence in
the underlying potential of the business and its prospects.

Business development

Our principal objectives continue to be those of rebuilding our core insurance
company business (accident-damaged/salvage vehicles), whilst at the same time
widening our customer base. Our on-going development into two new complementary
areas, End of Life Vehicles ('ELVs') and dealer part-exchange vehicles is
progressing very well. All three business areas have benefited over the last six
months from the dedicated sales teams allocated to them and the investment we
have made in IT, site infrastructure and equipment.

Accident-damaged/salvage vehicles

We started four new accident-damaged vehicle contracts during the period under
review and a fifth at the beginning of November. A sixth new contract started at
the beginning of December. The main benefit of these new contracts will be felt
in the second half since there is a lag of approximately two months between the
start of contracts and income generation.

Whilst the process of winning new business is not quick, the number of new
potential clients with whom Universal is in dialogue continues to grow. Insurers
are continuing to use the variety of 'added-value' services that Universal
offers, such as engineering, Total Loss Management, storage and logistics,
enabling them to take advantage of the significant savings these services offer
in processing claims.

The introduction of the new regulatory environmental standards, which are
discussed in more detail below, will have a significant impact on how the
salvage industry handles the worst-damaged total loss vehicles (those classified
as Category A or B, which are scrapped or broken up for parts). These vehicles
are designated 'premature ELVs' and will therefore be covered by the new
regulations. We are able to ensure that our insurance customers meet their new
obligations.

End of Life Vehicles ('ELVs') /abandoned cars

Our investment in decontamination and processing facilities at our sites has
enabled us to market our services to a wider range of non-insurance customers.
This area of our business is growing rapidly and during the period we signed
nine new contracts, including Luton Borough Council and Cheshire County Council.
The majority of this new business came on stream at the end of the second
quarter. The problem of abandoned cars is continuing to grow and we believe the
efficient and environmentally friendly solution we offer Local Authorities and
other potential customers will ensure that the proportion of abandoned cars that
we handle will expand significantly.

The disposal of an ELV in an environmentally acceptable manner is enshrined in
the incoming European ELV legislation. The first part of this European
legislation has now been ratified in the UK and became law on 3 November 2003.
It sets new standards for the handling of ELVs and will be enforced from 1
February 2004. The legislation also requires that a Certificate of Destruction
be issued at an Authorised Treatment Facility ('ATF') to the owner of the
vehicle and to the DVLA in order to de-register the vehicle. The second part of
the legislation covering ATFs will be published over the next month or so.

In addition to our own 11 licensed sites, Universal has formed a network of ATFs
in order to provide a solution to the motor manufacturers for their obligations
under the European ELV legislation.

We were pleased to announce at the end of November that we have secured a three
year contract with Toyota (GB) PLC to handle the disposal of its ELVs. With our
network of sites, national infrastructure and ability to provide an electronic
audit trail in the disposal process, we believe that our unique solution will
have wide appeal. We are currently in advanced discussions with other motor
manufacturers to provide a similar service.

Dealer part-exchange vehicles

The volume of dealer part-exchange vehicles we handle is growing well. We added
three new clients during the period and are now auctioning more vehicles for
existing customers. We are enhancing our ability to service this area of the
marketplace with the introduction of indoor auctions, which have just started at
Sandwich and Sandtoft. Further sites are being refurbished to facilitate indoor
auctions for both our total loss and dealer part-exchange vehicles. We have
recently won further contracts which will be starting over the next month. These
clients will be using both our logistics and auction facilities.

All the low value vehicles we sell for finance houses and motor dealer groups
are displayed on our website prior to auction sale, as well as driven through
the physical auction. If they do not sell, we decontaminate and crush them, so
fulfilling any obligations that the vendor may have under the ELV legislation.

Information technology

All three areas of our business have benefited by our continued investment in
IT. We have enhanced our website, www.universal-salvage.com and introduced more
functionality to our core salvage management system.

We are developing a secure link which will provide our insurance customers with
direct access into our systems. This significant step enables clients to use our
salvage management system in place of their own and Royal & SunAlliance
Insurance Plc will be the first of our insurance customers to take advantage of
this innovation.

Prospects

The long, dry summer and the timing of the commencement of certain new contracts
means that this financial year will see a large variation between results for
the first and second halves of the year. Our focused sales effort continues to
gain momentum across all parts of the business and we expect the benefits to
continue. The final introduction of the ELV legislation in early 2004 and the
tightening of the environmental rules will enable the business to push ahead and
broaden our customer base. We now have established three core business areas,
all of which have significant potential for growth. The Board remains positive
about the medium-term prospects for the Group.

Alexander N. Foster
Chairman
3 December 2003


GROUP PROFIT AND LOSS ACCOUNT
                                 26 weeks to   26 weeks to   53 weeks to
                                  1 November    26 October         3 May
                                        2003          2002          2003
                        Note           £'000         £'000         £'000

Turnover                             22,769        31,575         61,266

Cost of sales                       (17,896)      (23,264)       (46,390)
                                  ---------    ----------     ----------

Gross profit                          4,873         8,311         14,876

Administrative expenses              (6,550)       (6,887)       (13,899)
                                  ---------    ----------     ----------

Operating (loss)/profit              (1,677)        1,424            977

Interest receivable                      18             2              8
Interest payable                       (223)         (183)          (421)
                                  ---------    ----------     ----------

(Loss)/profit on
ordinary
activities before                    (1,882)        1,243            564
taxation

Tax on (loss)/profit on
ordinary
activities                    3         405          (378)          (260)      
                                  ---------    ----------     ----------
(Loss)/profit on
ordinary
activities after
taxation                             (1,477)          865            304

Dividends                     4        (334)         (324)          (687)
                                  ---------    ----------     ----------

Retained (deficit)/                  (1,811)          541           (383)
profit                            ---------    ----------     ----------

(Loss)/earnings per
Ordinary
share (pence) - basic         5        (5.3p)         3.1p           1.1p
(Loss)/earnings per
Ordinary
share (pence) - diluted       5        (5.2p)         3.1p           1.1p

Dividends per Ordinary
share
(pence)                                 1.2p          1.2p           2.5p

There are no recognised gains and losses for the current period and preceding
period other than the (loss)/profit shown above.


GROUP BALANCE SHEET
                                            At           At          At
                                    1 November   26 October       3 May
                                          2003         2002        2003
                             Note        £'000        £'000       £'000

Fixed assets
Tangible assets                         30,948        32,092     31,676
Investments                                651           651        651
                                    ----------    ---------- ----------
                                        31,599        32,743     32,327
                                    ----------    ---------- ----------

Current assets
Stock                                    2,146         3,499      2,121
Debtors                                  2,850         3,640      2,831
Cash at bank and in hand                    11             8         11
                                    ----------    ---------- ----------

                                         5,007         7,147      4,963

Creditors: amounts falling
due
within                                  (4,984)       (7,655)    (5,606)
one year                            ----------    ---------- ----------

Net current assets/                         23          (508)      (643)
(liabilities)                       ----------    ---------- ----------

Total assets less current               31,622        32,235     31,684
liabilities

Creditors: amounts falling
due after one year                      (8,463)       (6,250)    (6,694)

Provision for liabilities               (1,024)       (1,141)    (1,044)
and charges                         
                                    ----------    ---------- ----------

Net assets                              22,135        24,844     23,946
                                     ---------    ---------- ----------

Capital and reserves
Called up share capital                  2,811         2,807      2,811
Share premium                            1,151         1,129      1,151
Capital redemption reserve                  30            30         30
Revaluation reserve                      4,791         4,840      4,791
Profit and loss account                 13,352        16,038     15,163
                                     ---------    ---------- ----------

Equity shareholders' funds   6          22,135        24,844     23,946
                                     ---------    ---------- ----------


GROUP CASH FLOW STATEMENT
                               26 weeks to   26 weeks to   53 weeks to
                                1 November    26 October         3 May
                                      2003          2002          2003
                        Note         £'000         £'000         £'000

Net cash (outflow)/
inflow from
operating activities       7          (339)        3,221         6,466        
                                ----------    ----------    ----------
Returns on investments
and servicing of
finance
Interest received                       18             2             8
Interest paid                         (221)         (181)         (408)
Interest element of
finance lease rentals                    -            (1)           (2)
                                ----------    ----------    ----------
Net cash outflow from
returns on
investments and
servicing of finance                  (203)         (180)         (402)
                                ----------    ----------    ----------

Taxation                              (307)         (487)         (691)
Corporation tax paid
                                ----------    ----------    ----------

Capital expenditure and
financial investment
Payments to acquire
tangible fixed assets                 (549)       (3,184)       (4,591)
Receipt of grants
towards land
development                              -             -            20
Receipts from sales of
tangible
fixed assets                             -             -            28
Purchase of own shares
by the
Universal Salvage plc
2000                                     
Employees' Share Trust                   -          (319)         (319)
                                ----------    ----------    ----------
                                      (549)       (3,503)       (4,862)
                                ----------    ----------    ----------

Equity dividends paid                 (362)       (1,057)       (1,392)
                                ----------    ----------    ----------

Net cash outflow before
financing                           (1,760)       (2,006)         (881)
                                ----------    ----------    ----------

Financing
Issue of share capital                   -             -            26
Capital element of
finance lease
rental payments                         (9)           (9)          (18)
Bank and other loans
drawn-down                           1,769           858         1,302
                                ----------    ----------    ----------
Net cash inflow from                 1,760           849         1,310
financing                       ----------    ----------    ----------

(Decrease)/increase in     8             -        (1,157)          429
cash                            ----------    ----------    ----------

NOTES TO THE INTERIM FINANCIAL STATEMENTS
at 1 November 2003

1. Basis of preparation

The interim financial statements have been prepared on the basis of the
accounting policies set out in the Group's statutory accounts for the 53
weeks to 3 May 2003. The interim financial statements do not constitute
full statutory accounts and are unaudited. They have, however, been
reviewed by the auditors and their report is set out below. Figures for
the 53 weeks to 3 May 2003 have been extracted from the Annual Report
and Accounts for that period which received an unqualified audit opinion
and have been filed with the Registrar of Companies.

2. Profit and loss account

The loss for the period is after charging restructuring and exceptional
legal costs amounting to £0.3m (2002: £0.3m).

All items dealt with in arriving at profit on ordinary activities before
taxation relate to continuing activities.

3. Taxation

The tax relief available in respect of the loss for the 26 weeks to 1
November 2003 is restricted to the corporation tax paid in respect of
the 53 week financial period to 3 May 2003. Unrelieved losses of £41,000
are carried forward and are available to reduce the tax liability in
respect of future profits.

Taxation for the previous 26 weeks to 26 October 2002 was provided at an
anticipated effective rate of 30.5%.

4. Dividend

It has been proposed that an interim dividend of 1.2 pence per share
(2002: 1.2 pence per share) will be paid on 15 January 2004 to
shareholders registered on 19 December 2003.

5. (Loss)/earnings per share

(Loss)/earnings per share has been calculated on the loss on ordinary
activities after taxation for the period of (£1,477,000), compared to a
profit on ordinary activities after taxation for 2002 of £865,000,
divided by the weighted average number of Ordinary shares, excluding
shares held by the Universal Salvage plc 2000 Employees' Share Trust, of
27,861,873 (2002: 27,824,880) in issue during the period.

The number of shares in issue at 1 November 2003, excluding shares held
by the Universal Salvage plc 2000 Employees' Share Trust, was
27,861,873.

Diluted earnings per share is based on the (loss)/profit for the period
and all dilutive potential Ordinary shares.

6. Reconciliation of movement in equity shareholders' funds and movements in
reserves
                                     26 weeks to      26 weeks to          53 weeks to
                                      1 November       26 October                3 May
                                            2003             2002                 2003
                                           £'000            £'000                £'000

Opening equity shareholders'
funds                                     23,946           24,303               24,303

Issue of Ordinary share capital                -                -                   26

Retained (deficit)/profit after
tax and dividends for the
period                                    (1,811)             541                 (383)
                                       -----------      -----------          -----------
Closing equity shareholders'
funds                                     22,135           24,844               23,946
                                       -----------      -----------          -----------

7. Reconciliation of operating profit to net cash (outflow)/inflow from operating
activities

                                           26 weeks to       26 weeks to   53 weeks to
                                            1 November        26 October         3 May
                                                  2003              2002          2003
                                                 £'000             £'000         £'000

Operating (loss)/profit                         (1,677)            1,424           977
Depreciation of tangible fixed
assets                                           1,274             1,306         3,038
Loss/(profit) on disposal of
tangible fixed assets                                3                 -            (1)
(Increase)/decrease in stock                       (25)              685         2,107
(excluding transfers between
fixed assets and stock)
(Increase)/decrease in debtors                     (19)              712         1,521
Increase/(decrease) in creditors                   105              (906)       (1,176)
                                              ----------       -----------    ----------

Net cash (outflow)/inflow from
operating activities                              (339)            3,221         6,466

8. Reconciliation of net cash flow to movements in net debt

                                          26 weeks to       26 weeks to    53 weeks to
                                           1 November        26 October          3 May
                                                 2003              2002           2003
                                                £'000             £'000          £'000

(Decrease)/increase in cash in the
period                                              -            (1,157)           429
Cash outflow from repayment of
leases                                              9                 9             18
Cash inflow from increase in bank
and other loans drawn-down                     (1,769)             (858)        (1,302)
                                             ----------        ----------    -----------
Movement in net debt in period                 (1,760)           (2,006)          (855)
Opening net debt at start of period            (6,692)           (5,837)        (5,837)
                                             ----------        ----------    -----------

Closing net debt at end of period              (8,452)           (7,843)        (6,692)
                                             ----------        ----------    -----------

9. Analysis of closing net debt

                                              26 weeks to   26 weeks to    53 weeks to
                                               1 November    26 October          3 May
                                                     2003          2002           2003
                                                    £'000         £'000          £'000

Cash at bank and in hand                               11             8             11
Bank overdraft                                          -        (1,583)             -
Finance leases                                          -           (18)            (9)
Bank loans and committed overdraft                 (8,463)       (6,250)        (6,694)
                                                 ----------    ----------    -----------

                                                   (8,452)       (7,843)        (6,692)
                                                 ----------    ----------    -----------
10. Interim report

Copies of this Interim report will also be available from the Company
Secretary at the registered office of Universal Salvage plc, and on-line
at www.universal-salvage.com.
Acrey Fields, Woburn Road, Wootton, Bedfordshire MK43 9EJ.
Tel: 01234 766500 Fax: 01234 762204

INDEPENDENT REVIEW REPORT TO UNIVERSAL SALVAGE PLC

Introduction

We have been instructed by the company to review the financial
information which comprises the Group profit and loss account, Group
balance sheet at 1 November 2003, statement of Group cash flow,
comparative figures and associated notes. We have read the other
information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.

Directors' responsibilities

The Interim report, including the financial information contained
therein, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the interim
report in accordance with the Listing Rules of the Financial Services
Authority which require that the accounting policies and presentation
applied to the interim figures should be consistent with those applied
in preparing the preceding annual accounts except where any changes, and
the reasons for them, are disclosed.

Review work performed

We conducted our review in accordance with guidance contained in
Bulletin 1999/4 issued by the Auditing Practices Board for use in the
United Kingdom. A review consists principally of making enquiries of
Group management and applying analytical procedures to the financial
information and underlying financial data and, based thereon, assessing
whether the accounting policies and presentation have been consistently
applied unless otherwise disclosed. A review excludes audit procedures
such as tests of controls and verification of assets, liabilities and
transactions. It is substantially less in scope than an audit performed
in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do
not express an audit opinion on the financial information.

This report, including the conclusion, has been prepared for and only
for the company for the purpose of the Listing Rules of the Financial
Services Authority and for no other purpose. We do not, in producing
this report, accept or assume responsibility for any other purpose or to
any other person to whom this report is shown or in to whose hands it
may come save where expressly agreed by our prior consent in writing.

Review conclusion

On the basis of our review we are not aware of any material
modifications that should be made to the financial information as
presented for the 26 weeks to 1 November 2003.

PricewaterhouseCoopers LLP
Chartered Accountants
London
3 December 2003




                      This information is provided by RNS
            The company news service from the London Stock Exchange
 END
IR NKNKKOBDDQBK