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Universe Grp. (UNG)

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Thursday 29 September, 2011

Universe Grp.

Half Yearly Report

RNS Number : 1176P
Universe Group PLC
29 September 2011
 

29th September 2011

 

UNIVERSE GROUP PLC

("Universe", the "Company" or the "Group")

 

INTERIM RESULTS FOR THE 6 MONTHS ENDED 30th JUNE 2011

 

Universe (UNG.L), the AIM-listed retail and loyalty systems provider, announces its unaudited interim results for the six months to 30th June 2011.

 

 

Highlights

·    Operating profit before exceptional items of £280,000 (2010:  £398,000) on stable revenues of £5.7 million (2010: £5.7 million)

·    Loss before taxation of £235,000 (2010: profit of £76,000)*

·    Loss per share 0.20p (2010: loss of 0.51p)**

·    EBITDA of £726,000 (2010: £890,000)*

·    Net cash inflow from operations of £374,000 (2010: £165,000)

 

* comparative stated before a loss from discontinued operations of £665,000

**comparative stated after a loss from discontinued operations of £665,000

 

Robert Goddard, Chairman of Universe, commented:

 

"The introduction of new management has enabled a fresh view to be taken of the company's capabilities and how best to deploy them.

 

The recent rationalisation has improved cash flow from trading and will enable additional investment in product upgrades.

 

In addition to reducing cost, the recent organisational changes will provide an improved framework for identifying and driving performance"

 

 

 

For Further Information:

 


Universe Group plc  

Stephen McLeod, Chief Executive Officer

Bob Smeeton, Chief Financial Officer

 

023 8068 9510

Allenby Capital Limited

Brian Stockbridge

Dan Robinson

 

020 3328 5656

 

 

 



CHAIRMAN'S STATEMENT

 

Board level changes to the management of the Group have been the most significant events of the last 6 months.  I am pleased to have been appointed Chairman since joining the Group in May 2011 and was delighted to welcome Stephen McLeod to the Group in June, as Chief Executive Officer.  Thanks are due to John Scholes for his tenure and his continued support, and to Paul Cooper, Stephen's predecessor.

 

Significant changes have already been made to the internal structure of the Group, and its main operating subsidiary, HTEC Limited. The business has been re-organised into a core 'Solutions' business and a Manufacturing business. Divisional comparative information has been restated to reflect this restructuring.

 

Overall turnover was level at £5,659,000 (2010: £5,650,000).  However, within that figure two contract terminations in 2010 have been replaced by new business, mainly within the Contract Electronics Manufacturing area. This change in sales mix contributed to a reduction in gross margin to 34.5% (2010: 39.3%) and reduced gross profit to £1,952,000 (2010: £2,219,000).  While an 8% reduction in administrative overheads helped to reduce the impact of this margin drop, operating profit before exceptional items fell to £280,000 (2010: £398,000).  Restructuring has led to an exceptional charge of £370,000 being recognised in the period, mainly as a result of management changes and headcount reductions.

 

In the Solutions business, turnover fell back slightly from £4,953,000 in 2010 to £4,827,000. The revenue impact of the termination of an overseas loyalty systems contract in 2010 has largely been recovered by new client activity. Profit for this business area fell to £592,000 (2010: £640,000).  The launch of GemPAY, our new payment and loyalty terminal, has been very well received by existing and potential customers and is an encouraging sign for the rest of 2011. Additional data services have been sold to our existing customers and are in the process of being implemented.

 

The Manufacturing business saw a 19% growth in sales.  However the end of life of a contract in 2010 and the resulting change in business mix has had an adverse impact on profitability.  The relatively high fixed costs inherent in this business meant that a gross loss of £32,000 (2010: profit of £78,000) was recorded. The challenge for the manufacturing business is to continue its growth such that increased volume will offer economies of scale advantages and so generate additional divisional profit. Manufacturing continues to provide petrol forecourt products to the Solutions business, and remains an important component of the Group.   

 

The Group has reported an operating profit before exceptional items of £280,000 (2010: £398,000). Exceptional costs have been provided for, leading to an operating loss of £90,000 (2010: profit of £222,000). The Group will start to benefit from a reduced cost base in the second half of this year. With a reasonably strong order book I am confident of an improved performance in the second half of 2011.

 

An EBITDA of £726,000 (2010: £890,000) is reported for the period which is sufficient to cover interest costs of £145,000 (2010: £146,000), software development expenditure of £286,000 (2010: £162,000) and scheduled debt repayments.

 

In the 6 months ended 30 June 2011 net debt, comprising debt less cash, increased to £2,227,000, from £1,990,000 million at the year end. Bank debt is now being repaid over a 5 year term. Finance lease creditors increased by £284,000 over the 6 month period as we renewed some of the development IT infrastructure and expanded our data centre to provide enhanced services to an existing customer. These services will commence in the second half of 2011.

 

The Board is confident that the recent management changes, a focus on driving client delivery, an improving order book and a significantly reduced cost base will together quickly lead to improved operational performance.

 

 

Finally, but certainly not least we want to recognise the commitment, loyalty and professionalism of Universe's team-members.  Their dedication to providing first class service to our customers has been conspicuous and is much appreciated.

 

 

 

 

 

Robert Goddard

Chairman

29th September 2011

 

 



Universe Group plc

 

Condensed Statement of Total Comprehensive Income (unaudited)

for the 6 months ended 30th June 2011

 


Six months ended 30th June 2011

£'000


Six months ended 30th June 2010

£'000



Year ended 31st December 2010

£'000

Continuing operations






Revenue

5,659


5,650


11,292

Cost of sales

(3,707)


(3,431)


(6,719)







Gross profit

1,952


2,219


4,573

Administrative expenses excluding exceptional items

(1,672)


(1,821)


(3,765)

Exceptional items

(370)


(176)


(230)







Administrative expenses

(2,042)


(1,997)


(3,995)







Operating (loss)/profit

(90)


222


578

Operating  (loss)/profit is analysed as:






Operating profit before exceptional items

280


398


808

Exceptional items

(370)


(176)


(230)








(90)


222


578

Finance costs

(145)


(146)


(311)







(Loss)/profit before taxation

(235)


76


267







Taxation

-


-


80

(Loss)/profit for the period from continuing activities

(235)


76


347

Discontinued operations

Loss from discontinued activities

 

 

-


 

 

(665)


 

 

(1,241)

Loss for the period attributable to equity shareholders

(235)


(589)


(894)







Other comprehensive expense - translation differences

-


(2)


(6)







Total comprehensive expense for the period attributable to equity shareholders

(235)


(591)


(900)







Loss per share

pence


pence


pence







Basic and diluted (see note 7)

(0.20)


(0.51)


(0.78)







Condensed Consolidated Statement of Changes in Equity (unaudited)












At start of period

12,642


13,536


13,536

Total comprehensive expense for the period

(235)


(591)


(900)

Share based payments

9


-


6

At end of period

 

12,416


12,945


12,642



Universe Group plc

 

Condensed Consolidated Balance Sheet (unaudited)

as at 30th June 2011

 

 


 

30th June 2011

£'000


 

30th June 2010

£'000


31st December 2010

£'000







Fixed assets






Goodwill

12,150


12,150


12,150

Development costs

866


917


760

Property, plant and equipment

1,968


2,796


1,909

 

 

14,984


15,863


14,819







Current assets






Inventories

1,023


1,385


1,224

Trade and other receivables

2,248


2,184


1,856

Cash and cash equivalents

317


118


362

 

 

3,588


3,687


3,442







Total assets

18,572


19,550


18,261







Current liabilities






Trade and other payables

(3,277)


(3,340)


(2,932)

Tax liabilities

(335)


(330)


(335)

Short term borrowings

(1,137)


(1,461)


(965)








(4,749)


(5,131)


(4,232)







Non current liabilities






Medium term borrowings

(1,407)


(1,474)


(1,387)







Total liabilities

(6,156)


(6,605)


(5,619)







Net assets

12,416


12,945


12,642







Equity






Share capital

5,735


5,735


5,735

Equity reserve

-


110


-

Share premium account

10,753


10,753


10,753

Other reserves

3,503


3,503


3,503

Translation reserve

(225)


(221)


(225)

Profit and loss account

(7,350)


(6,935)


(7,124)







Total equity

12,416


12,945


12,642









Universe Group plc

 

Condensed Consolidated Cash Flow Statement (unaudited)

for the six months ended 30th June 2011

 

 


Six months ended 30th June 2011

£'000


Six months ended 30th June 2010

£'000


Year ended 31st December 2010

£'000







Net cash flows from operating activities (see note 10)












Net cash flows from continuing activities

443


266


1,586

Net cash flows from discontinued activities

-


90


(199)







Interest paid

(145)


(191)


(356)

Tax received

76


-


25

Net cash inflow from operating activities

374


165


1,056







Cash flows from investing activities






Disposal of subsidiary undertakings

-


-


289

Purchase of property, plant & equipment

(325)


(357)


(587)

Purchase of intangible fixed assets

(286)


(162)


(318)

Proceeds from sale of property, plant & equipment

-


-


4

Net cash outflow from investing activities

(611)


(519)


(612)







Cash flow from financing activities






Repayment of obligations under finance leases

(165)


(214)


(389)

Repayment of borrowings

(77)


(719)


(1,192)

New loans raised

434


262


354

Net cash inflow/(outflow) from financing

192


(671)


(1,227)







Decrease in cash and cash equivalents

(45)


(1,025)


(783)

Cash and cash equivalents at beginning of period

362


1,145


1,145

Exchange differences

-


(2)


-







Cash and cash equivalents at end of period

317


118


362









Universe Group plc                                                                                                                                         

                                                                                                                                                             

Notes to Condensed Consolidated financial statements for six months ended 30th June 2011                                                                                                                                          

                                            

1        The annual financial statements of the company for the year ended 31st December 2010 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 December 2011 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 31st December 2011.

 

2     The financial information for the year ended 31st December 2010 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 30th June 2010 and 2011 and the year ended 31st December 2010 were in respect of reorganisation costs. 

 

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 31st December 2010.   

 

6     Operating profit and EBITDA before exceptional items and discontinued operations

 

 


Six months ended 30th June 2011

£'000


Six months ended 30th June 2010

£'000


Year ended 31st December 2010

£'000







Revenue

5,659


5,650


11,292

Cost of sales

(3,707)


(3,431)


(6,719)

Gross profit

1,952


2,219


4,573







Administrative expenses excluding exceptional items

(1,672)


(1,821)


(3,765)

Exceptional items

(370)


(176)


(230)

Operating profit before discontinued operations

(90)


222


578

Add back:






Exceptional items

370


176


230

Operating profit before exceptional items and discontinued operations

280


398


808

Add back:






Depreciation

266


236


484

Amortisation

180


256


565







EBITDA before exceptional items and discontinued operations

726


890


1,857

 

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 30th June 2011 was 114,704,539.

      


6 months ended 30th June 2011

p


6 months ended 30th June 2010

p


Year ended

31st December 2010

p

Basic and Diluted Earnings Per Share






(Loss)/earnings per share from continuing activities

(0.20)


0.07


0.30

Loss per share from discontinued activities

-


(0.58)


(1.08)

Loss per share attributable to ordinary shareholders

(0.20)


(0.51)


(0.78)

 

 

8     Segment information

 

6 months ended 30th June 2011


Solutions £'000


CEM

£'000


Total

£'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)

 

 

6 months ended 30th June 2010


Solutions £'000


CEM

 £'000


Total

£'000

Revenue

4,953


697


5,650

Gross profit

2,141


78


2,219

Operating expenses

(1,501)


(181)


(1,682)

Operating profit/(loss) before corporate costs

640


(103)


537

Unallocated corporate costs





(139)

Operating profit before exceptional items





398

Exceptional items





(176)

Finance costs





(146)

Taxation





-

Profit for the period from continuing activities





76

 

 

Year ended 31st December 2010

 


Solutions £'000


CEM

 £'000


Total

£'000

Revenue

10,077


1,215


11,292

Gross profit

4,466


107


4,573

Operating expenses

(3,033)


(365)


(3,398)

Operating profit/(loss) before corporate costs

1,433


(258)


1,175

Unallocated corporate costs





(367)

Operating profit before exceptional items





808

Exceptional items





(230)

Finance costs





(311)

Taxation





80

Profit for the period from continuing activities





347

 

 

 

9        Discontinued Activities

 

On 23rd July 2010 the Group sold its interest in JetSet Wash Systems Limited.

 

The comparative income statements have been restated to reflect the composition of discontinued activities at the latest balance sheet date.

 

The results of discontinued activities, comprising the Jet Set business unit, included within the Consolidated Statement of Total Comprehensive Income were as follows;

 


Six months ended 30th June 2011

£'000


Six months ended 30th June 2010

£'000


Year ended

31st December 2010

£'000







Revenue

-


1,020


1,173

Cost of sales and administrative expenses

-


(1,174)


(1,606)

Loss before exceptional items

-


(154)


(433)

Exceptional items - reorganisation costs

-


(4)


-

Exceptional items - impairment of goodwill

-


(462)


(462)

Finance charges

-


(45)


(45)

Loss on disposal

-


-


(207)

Loss from discontinued activities

-


(665)


(1,147)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10      Cash flows from operations

 

 

 

Six months ended 30th June 2011

£'000


Six months ended 30th June 2010

£000


Year ended 31st December 2010

£000

Continuing operations






Cash flows from operating activities






Operating (loss)/profit

(90)


222


578

Depreciation and amortisation

446


492


1,049

Share based payments

9


-


6


365


714


1,633







Movement in working capital:






Decrease/(increase) in inventories

201


(109)


(112)

(Increase)/decrease in receivables

(468)


652


616

Increase/(decrease) in payables

345


(991)


(551)

Net cash flow from operating activities

443


266


1,586

 

Discontinued operations






Cash flows from operating activities






Operating loss

-


(620)


(1,196)

Depreciation and amortisation

-


126


145

Impairment of goodwill

-


462


462

Impairment of other debtors

-


-


94

Loss on disposal of subsidiary

-


-


207


-


(32)


(288)







Movement in working capital






Increase in inventories

-


(7)


(12)

Decrease in debtors

-


224


276

Decrease in creditors

-


(95)


(175)

Net cash flow from operating activities

-


90


(199)

 

 

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
 
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