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Universal Salvage (UVS)

  Print      Mail a friend       Annual reports

Tuesday 05 December, 2000

Universal Salvage

Interim Results

Universal Salvage PLC
5 December 2000

                              UNIVERSAL SALVAGE PLC

                        Vehicle salvage and services group


  * Pre-tax profit increased by 9.6% to £2.8m (1999: £2.6m)

  * Gross margin improved from 19.0% to 21.8%

  * Earnings per share increased 10.8% to 7.2p per share (1999: 6.5p per

  * Turnover decreased by 3.9% to £40.8m (1999: £42.4m)

  * Interim dividend increased to 1.1p (1999: 1.0p)

  * Excellent progress in improving service levels for:

Motor insurance customers:

  * introduction of on-line salvage management system, StatUS, enabling more
    efficient processing of vehicles & cost savings. System now adopted by
    majority of customers & expected to play key role in attracting new

Auction bidder & retail customers:

  * website upgraded, enabling remote bidding & improved information on
    upcoming auctions and salvage vehicles - site now achieving over 2.2m '
    hits' per month

    Motor manufacturer customers:

  * trial of vehicle processing unit to de-pollute and crush low value
    vehicles successfully completed - now to be extended to all branches. To
    form key element in developing the service for End of Life Vehicles (ELV)

    Commenting, Chairman, Alexander Foster, said,

    'I am delighted to report a further improvement in the Group's
    profitability. We have made considerable progress in our two core
    objectives of improving the Group's operating efficiency and enhancing the
    service levels we offer our customers.

    'The Board is confident that the second half will see continued progress
    and this will be reflected in our future results.'


    Universal Salvage plc     Martin Hynes, chief executive Tel: 020 7448 1000

    Biddick Associates          Katie Tzouliadis            Tel: 020 7448 1000



I am delighted to report a further improvement in the Group's profitability
for the first six months of this financial year. Operating profit for the six
months grew by 14.5% to £3.0m (1999: £2.6m) and profit before tax rose to £
2.8m (1999: £2.6m), an increase of 9.6%. Basic earnings per share for the
period has grown by 10.8% to 7.2p (1999: 6.5p). Net assets at 28 October stood
at £18.3m (1999: £15.2m) and net borrowings totalled £4.2m (1999: £5.4m),
representing gearing of 23.1% (1999: 35.3%). The improved profitability is
particularly pleasing since it has been generated against the background of a
significant decline in motor insurance claims during the period. This has
resulted in turnover declining by 3.9% in the half year compared to the
corresponding six months last year.

The ongoing development of the services that the Group offers is reflected in
an improved gross profit of £8.9m (1999: £8.1m) achieved over the six months
to 28 October 2000. This represents a gross margin of 21.8% compared with
19.0% for the same period last year and demonstrates the success we have
achieved in enhancing the Group's quality of earnings.


The Board is pleased to declare an increased interim dividend of 1.1p per
share (1999:1.0p). This will be paid on 6 February 2001 to shareholders on the
register at the close of business on 8 January 2001.


The first six months of the year have seen considerable headway being made in
developing the Group's infrastructure. The two core objectives are to continue
to improve both the operating efficiency of the Group and the service levels
we offer our customers.

We are working closely with our insurance customers to remove cost from the
claims process. The successful introduction of StatUS, our on-line extranet
salvage management system, which most of our insurance customers have now
adopted, is central to this. We believe that the ability to resolve disputes
and queries directly with insurers through StatUS, and the recent introduction
of an enhanced version of StatUS, will enable us to widen its user base
significantly. As part of our service offering, StatUS has been a key
component in the new contracts we have gained over the period. We expect the
benefits of these new contracts to flow through in the final quarter of this
financial year.

We are always examining new distribution channels through which vehicles can
be sold. Our Internet website, which was launched in
September 1999, is aimed at our auction and retail customer base. During the
period under review, considerable efforts have been made in upgrading and
improving the efficiency of our website as well as making it easier to use.
Over the last few months, the average number of individual users has exceeded
13,000 per month, with over 2.2 million monthly 'hits' on the site. We
anticipate that this usage will increase considerably as a number of new
initiatives come on stream over the next few months. Our core IT processes
provide the link between StatUS and our website. These are currently being
upgraded to ensure that we have a modern and flexible system for handling
these important aspects of the business. The benefits of these changes will
start to be felt over the final quarter of the financial year.

Universal Select, the recycled parts locator business that was purchased in
April 2000, has been restructured and integrated into the business. Universal
Select forms a key part of the additional customer benefits package that we
will be introducing during the coming months.

We continue to improve the operational efficiency of each branch, with
particular emphasis on enhancing vehicle throughput at all sites. Considerable
advances have been made in developing a set of standards applicable to all the
branches and vehicle presentation has been one area that has benefited
directly from this initiative. Adding as much value as possible to the vehicle
and offering it to a wide audience of potential buyers in good condition have
been contributory factors in further improving the gross margin. This has been
assisted by the implementation of a number of successful engineering
inspection trials for insurance customers that are now being replicated across
the whole Group. We continue the move to a fee based income structure, with
these inspections forming part of the service offering to all customers.

The vehicle processing unit introduced at our Corby site, which de-pollutes
and crushes low value vehicles, has proved to be very successful. The concept
has won two industry environmental awards during the six months and is now
being rolled out to all branches. This is a key element in developing our
service for End of Life Vehicles (ELV), which we are able to provide to motor
manufacturers and other interested clients.

We continue to invest in our transport fleet. The number of transporters has
been expanded to 127 vehicles at the end of October 2000, improving the
overall capacity and efficiency of our fleet and further improving our levels
of service.

We announced during the period that we are in the process of marketing our
Redbourn site to new potential buyers, following the cessation of negotiations
with Berkeley Homes. We are confident of reaching an acceptable deal, and
meanwhile the site will be put to good use for vehicle storage during our busy
winter months.


I am delighted to confirm that Jonathan Cook joined the Board as Group finance
director on 1 September 2000. Jonathan was previously finance director of PTS
Group plc.


The marketplace within which Universal Salvage operates has changed
significantly over the last few years. We believe this rate of change will
accelerate in the near future as the implications of the Government's Vehicle
Crime Reduction Action Team (VCRAT) drive out less scrupulous salvage
operators. In addition, the implementation of the European Union ELV
legislation will force further change on both the physical handling of
vehicles and the data transmission regarding all vehicles designated as ELV.
Universal Salvage has contributed significantly to the development of both
these important issues and welcomes the changes that they will bring, not only
in setting acceptable industry standards, but also in expanding the market in
which we operate.

These opportunities are all based around our core services of handling damaged
vehicles, disposing of them in a regulated manner, and providing both
statutory and management information to insurers and manufacturers at each
stage of the process. Our efforts in making this process more effective,
transparent and easy to use, result in more clients using the Group for the
handling of their vehicle salvage. The Group has continued to successfully
develop its auction customer numbers and aims to introduce a package of
measures over the next few months that will deliver increased added value to
all customers of Universal Salvage.

The further enhancement of our service would not be possible without the hard
work of all of our staff. On behalf of the Board, I would like to thank them
for their continuing efforts to grow the business.

The Board is confident that the second half of the financial year will see
continued progress in improving the service offered by the Group and this will
be reflected in our future results.

Alexander N Foster


5 December 2000

                                                6 months  6 months   12 months
                                                   to        to         to

                                                 28 Oct   30 Oct    29 April
                                                  2000    1999      2000
                                        Note    £'000       £'000      £'000
Turnover                                         40,813    42,449     87,623
Cost of sales                                   (31,907)  (34,367)   (70,375)
Gross profit                                     8,906      8,082     17,248
Administrative expenses                         (6,166)    (5,704)   (11,995)
                                                 2,740      2,378      5,253
Other operating income                            211        199        439
Operating profit                                 2,951      2,577      5,692
Profit on sale of properties                       -         97         107
Interest receivable                                1         51         53
Interest payable                                 (125)      (145)      (306)
Profit before tax                            2   2,827      2,580      5,546
Taxation                                     3   (876)      (824)     (1,691)
Profit after tax                                 1,951      1,756      3,855
Dividends                                    4   (294)      (269)      (942)
Retained profit                                  1,657      1,487      2,913
Earnings per ordinary share (pence) -       5    7.2p       6.5p       14.3p
Earnings per ordinary share (pence) -       5    7.0p       6.4p       13.7p
Dividend per ordinary share (pence)              1.1p       1.0p       3.5p

                                                 As at   As at        As at

                                                  28     30 Oct   29 April 2000
                                                  Oct     1999
                                            Note £'000   £'000        £'000
Fixed assets
Intangible fixed assets                           -        -           90
Tangible fixed assets                          23,259    20,026      22,000
Investments                                      336       -            -
Current assets
Stock                                           2,643    2,782        3,327
Debtors                                         3,983    4,893        4,009
Cash                                              9        7            8
                                                6,635    7,682        7,344
Creditors: amounts falling due within one      (9,253)  (9,533)     (10,369)
Net current liabilities                       (2,618)   (1,851)      (3,025)
Total assets less current liabilities         20,977     18,175      19,065
Creditors: amounts falling due after one
                                              (2,631)   (2,901)      (2,389)
Provision for liabilities and charges            (21)     (50)        (21)
                                                18,325   15,224      16,655
Capital and reserves
Called up share capital                         2,693    2,691        2,691
Share premium                                     92       76          81
Capital redemption reserve                        30       30          30
Revaluation reserve                             4,232    4,232        4,232
Profit and loss account                         11,278   8,195        9,621
Shareholders' funds                           6 18,325   15,224      16,655

                                                        6       6    12 months
                                                     months  months     to
                                                       to      to
                                                                     29 April
                                                     28 Oct  30 Oct    2000
                                                      2000    1999
                                                Note  £'000   £'000    £'000
Net cash inflow from operating activities          7  3,018   3,328    8,249
Returns on investment and servicing of finance
Interest received                                       1      51       53
Interest paid                                         (128)   (104)    (301)
Interest element of finance lease rentals              (3)     (5)      (8)
Net cash outflow from returns on investment and
servicing of finance
                                                      (130)   (58)     (256)
Corporation tax paid                                  (242)     -      (504)
Capital expenditure
Payments to acquire tangible fixed assets            (1,723) (2,964)  (5,641)
Receipts from sales of tangible fixed assets            -      747      784
Purchase of own shares                                (336)     -        -
                                                     (2,059) (2,217)  (4,857)
Acquisitions and disposals
Payments to acquire trades or businesses                -       -      (100)
Equity dividends paid                                 (671)   (242)    (511)
Net cash (outflow)/inflow before financing            (84)     811     2,021
Issue of share capital                                 13       -        5
Capital element of finance lease rental                (7)    (59)     (66)
Bank and other loans taken out/

(repaid)                                               248    (493)   (1,790)
Net cash inflow/(outflow) from financing               254    (552)   (1,851)
Increase in cash                                   8   170     259      170

as at 28 October 2000
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 year
ended 29 April 2000. 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. Full year figures have been
extracted from the Annual Report and Accounts for that year which received an
unqualified audit opinion and have been filed with the Registrar of Companies.
2. Continuing activities
All items dealt with in arriving at profit on ordinary activities before
taxation relate to continuing activities.
3. Taxation
Taxation has been provided at an anticipated effective rate of 31% (1999: 32%).
4. Dividend
It has been proposed that an interim dividend of 1.1 pence per share will be
paid on

6 February 2001 to shareholders registered on 8 January 2001.
5. Earnings per share
Earnings per share has been calculated on the profit on ordinary activities

after taxation divided by the weighted average number of shares of 26,911,195

(1999: 26,905,427) in issue during the period. The number of shares in issue as

28 October 2000 was 26,925,643.
Diluted earnings per share is based on the profit for the period and all
dilutive potential ordinary shares.
6. Reconciliation of movement in shareholders' funds
                                  6 months to   6 months to     12 months to

                                  28 Oct 2000   30 Oct 1999     29 April 2000
                                     £'000         £'000            £'000
Opening shareholders' funds         16,655        13,737           13,737
Retained profit for the period       1,657         1,487            2,913
Issue of ordinary share capital       13             -                5
Closing shareholders' funds         18,325        15,224           16,655

    7. Reconciliation of operating profit to net cash inflow from continuing
    operating activities

                                          6 months to 6 months to 12 months to

                                          28 Oct 2000 30 Oct 1999 29 April 2000
                                             £'000       £'000        £'000
Operating profit                             2,951       2,577        5,692
Depreciation of tangible fixed assets         778         451         1,000
Loss on disposal of fixed assets              16           -           186
Decrease in stock (net of vehicles            444         948          354

transferred from fixed assets)
(Increase)/decrease in debtors               (220)       1,230        2,115
Decrease in creditors                        (951)      (1,878)      (1,098)
Net cash inflow from operating activities    3,018       3,328        8,249
8. Reconciliation of net cash flow to movements in net debt
                                             6 months to  6 months   12 months
                                                             to         to
                                             28 Oct 2000   30 Oct    29 April
                                                            1999       2000
                                                £'000      £'000       £'000
Increase in cash in the period                   170        259         170
Cash outflow from repayment of lease              7          59         66
Cash (inflow)/outflow from (increase)/
decrease in bank loans and mortgages
                                                (248)       493        1,790
Movement in net debt                            (71)        811        2,026
Opening debt                                   (4,161)    (6,187)     (6,187)
Closing debt                                   (4,232)    (5,376)     (4,161)
9. Analysis of closing debt
                               6 months to    6 months to       12 months to

                               28 Oct 2000    30 Oct 1999      29 April 2000
                                  £'000          £'000             £'000
Cash at bank and in hand            9              7                 8
Bank overdraft                   (1,390)        (1,469)           (1,559)
Finance leases                     (50)           (64)              (57)
Bank loans and mortgages         (2,801)        (3,850)           (2,553)
                                 (4,232)        (5,376)           (4,161)
10. Interim Report
Copies of this Interim Report will also be available from the Company Secretary
at the registered office of Universal Salvage plc: Acrey Fields, Woburn Road,
Wootton, Bedfordshire MK43 9EJ. Tel: 01234 762283. Fax: 01234 762204



We have been instructed by the company to review the financial information set
out on pages 4 to 8 and 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 and applicable United
Kingdom accounting standards. The Listing Rules 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 in the United Kingdom by the Auditing Practices Board and with our
profession's ethical guidance. A review consists principally of making
enquiries of the group's 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 control and verification of assets, liabilities
and transactions. It is substantially less in scope than an audit performed in
accordance with 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.

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 six months
ended 28 October 2000.

Arthur Andersen

Chartered Accountants

3 Victoria Square

Victoria Street

St Albans



5 December 2000


a d v e r t i s e m e n t