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Universal Salvage (UVS)

  Print      Mail a friend       Annual reports

Tuesday 05 December, 2006

Universal Salvage

Interim Results

Universal Salvage PLC
05 December 2006

                             UNIVERSAL SALVAGE PLC

                         ('Universal' or 'the Company')

                                Interim Results
                      for the 26 weeks to 28 October 2006

Universal manages the collection and disposal of vehicles (typically
accident-damaged or of low-value) for a broad range of clients, principally
motor insurers but also major car retailers, motor manufacturers, local and
public authorities and private car owners. The Company disposes of vehicles
through weekly physical and internet auction sales and authorised recycling

                                   Key Points

•         Business continues to make significant progress
            -   Three major new contracts signed
            -   Auction prices and scrap prices remain strong

•         Revenue increased by 28% to £32.6m (2005: £25.4m)

•         Gross profit increased by 27% to £6.1m (2005: £4.8m)

•         Administrative expenses reduced by 8% to £4.9m (2005: £5.3m)

•         Operating profit of £1.2m (2005: operating loss of £0.5m)

•         Profit before tax of £0.9m (2005: loss before tax of £0.7m)

•         Earnings per share of 1.8p (2005: loss per share 2.6p)

•         Net borrowings reduced by 60% to £2.2m (2005: £5.5m)

•         Gearing reduced to 13% (2005: 39%)

•         Net assets increased by 21% to £17.1m (2005: £14.1m)

•         Outlook for year-end continues to be encouraging

Commenting on the results, Chairman, Alexander Foster, said,

'I am pleased to report that the Interim Results are further evidence of the
Company's return to profitability and growth. The first half results reflect
higher auction and scrap prices and also our reduced cost base.

We are now entering our busy time of year when the incidence of motor insurance
claims rises due to winter weather and longer nights. Consequently, we expect
vehicle volumes to increase.

With new contracts coming on stream and the expectation of continuing good
trading conditions, we have the structure and people in place to continue to
grow the business and increase profitability.'


Universal Salvage plc     Avril Palmer-Baunack, Chief Executive     T: 020 7448 1000 (today)
                          Andrew Somerville, Group Finance Director Thereafter: 01234 762283

Biddicks                  Katie Tzouliadis                          T: 020 7448 1000

26 weeks to 28 October 2006


I am pleased to report that the Interim Results covering the 26 weeks to 28
October 2006 are further evidence of the Company's return to profitability and


The Group generated operating profits for the 26 weeks to 28 October 2006 of
£1.2 million against last year's operating loss of £0.5m. The profit before tax
was £0.9 million (2005: loss before tax of £0.7 million). Earnings per share
were 1.8p against a loss per share of 2.6p in 2005. These results were achieved
on a 28% increase in turnover to £32.6 million (2005: £25.4 million). The gross
profit rose by 27% to £6.1 million (2005: £4.8 million). Administrative expenses
reduced by 8% to £4.9 million (2005: £5.3 million). The Board is not proposing
an interim dividend.

The Group remains highly cash generative with net cash from operating activities
in the period of £2.2 million (2005: £0.5 million). Net borrowings have
decreased substantially to £2.2 million (2005: £5.5 million). This represents
gearing of 13% (2005: 39%). As at 28 October 2006, net assets stood at £17.1
million (2005: £14.1 million).


The Group continues to make significant progress. We have a defined strategy and
experienced management in place to grow the business. Whilst vehicle salvage is
our core competence we are considering related areas within the automotive
services sector and expect to make progress with these initiatives during 2007.

The first half results have been helped by strong auction results and the
present high price of scrap. The benign weather conditions over the summer and
autumn lowered the incidence of motor insurance claims and had the effect of
reducing vehicle volumes; this created a shortage of supply which enhanced our
auction returns. Operationally, the mix of physical vehicle auctions and
internet auctions is working well and has helped to reduce our cost base.

Our focus on sales and marketing has been a major factor in growing the business
and increasing profit. During the first half of the year, we signed three new
contracts with insurance companies to provide salvage management and disposal
services. These were with Highway Insurance Company Limited, Liverpool Victoria
Insurance Limited and Nemwil Holdings (which owns Link Insurance Company Limited
and Zenith Insurance PLC).

Our appointment as joint supplier by Highway Insurance commenced in May this
year and therefore a substantial proportion of the benefits of this new contract
will accrue in our trading results for the current financial year. However, the
full benefits of the exclusive contracts we signed with Liverpool Victoria and
Link/Zenith, both of which started in early November 2006, will have a bigger
impact in the next financial year, although there will be some contribution to
this year's final results. I am also pleased to report that we renewed our
contract with Admiral Insurance Services. We are continuing to develop our
relationships and key salvage contacts in the motor insurance sector.

In May, we sold our small site at Staughton Moor in Cambridgeshire, for £0.25 
million, realising a profit on sale of £0.1 million.  Of the Group's remaining 
eight sites, totalling some 150 acres of storage and auction facilities, seven 
sites are in use and our Corby site is leased to a third party.


The first half results reflect higher auction and scrap prices and also our
reduced cost base. We are now entering our busy time of year when the incidence
of motor insurance claims rises due to winter weather and longer nights.
Consequently, we expect vehicle volumes to increase but prices at auction of
salvage vehicles may come down from current levels. Nonetheless, with increased
volumes we expect our turnover to grow and our operating margins to be
maintained. With new contracts coming on stream and the expectation of ongoing
good trading conditions, we have the structure and people in place to continue
to grow the business and increase profitability.

Alexander N Foster
4 December 2006

Group Income Statement (Unaudited)       26 weeks to   26 weeks to  52 weeks to
26 weeks to 28 October 2006               28 October    29 October     29 April
                                                2006          2005         2006
                                    Note          £m            £m           £m

Revenue                                         32.6          25.4         56.4

Cost of sales                                  (26.5)        (20.6)       (45.6)

Gross profit                                     6.1           4.8         10.8

Administrative expenses              2          (4.9)         (5.3)       (10.1)

Operating profit/(loss)                          1.2          (0.5)         0.7

Finance costs                       2,3         (0.3)         (0.2)        (0.5)

Profit/(loss) before taxation                    0.9          (0.7)         0.2

Taxation                            2,4         (0.4)            -          0.5

Profit/(loss) after taxation
attributable to equity shareholders              0.5          (0.7)         0.7

Earnings/(loss) per Ordinary share
- basic                              5           1.8p         (2.6)p       2.4p
Earnings/(loss) per Ordinary share
- diluted                            5           1.8p         (2.6)p       2.3p

All operations of the Group are continuing throughout all periods and no
material operations were acquired.

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

Group Balance Sheet (Unaudited)                 At            At           At
As at 28 October 2006                   28 October    29 October     29 April
                                              2006          2005         2006
                                    Note        £m            £m           £m

Non current assets
Property, plant and equipment                 21.0          22.1         21.2
Intangible assets                              0.1           0.1          0.1
Trade and other receivables                    0.1           0.1          0.1
                                              21.2          22.3         21.4

Current assets                                       
Assets held for resale                           -           0.2            -
Inventories                                    2.8           2.0          3.3
Trade and other receivables                    3.5           3.4          2.8
Cash and cash equivalents                      0.3           0.2          1.8
                                               6.6           5.8          7.9

Current liabilities
Financial liabilities                         (0.1)            -         (0.1)
Trade and other payables                      (6.5)         (5.6)        (6.0)
Current tax liabilities                       (0.2)         (0.7)        (0.2)
Provisions                                       -          (0.1)        (0.1)
                                              (6.8)         (6.4)        (6.4)

Net current (liabilities)/assets              (0.2)         (0.6)         1.5

Total assets less current                
liabilities                                   21.0          21.7         22.9

Non current liabilities
Financial liabilities                         (2.4)         (5.7)        (5.9)
Deferred tax liabilities                      (1.3)         (1.7)        (1.0)
Other non current liabilities                 (0.2)         (0.2)        (0.2)
                                              (3.9)         (7.6)        (7.1)

Net assets                                    17.1          14.1         15.8

Shareholders' equity
Ordinary shares                                2.8           2.8          2.8
Share premium                                  1.4           1.2          1.3
Other reserves                                 3.1           3.2          3.0
Revenue reserves                               9.8           6.9          8.7

Total equity                        6         17.1          14.1         15.8

Group Cash Flow Statement                26 weeks to   26 weeks to  52 weeks to
(Unaudited)                               28 October    29 October     29 April
26 weeks to 28 October 2006                     2006          2005         2006
                                    Note          £m            £m           £m

Cash flow from operating activities
Cash generated from operations       7           2.3           0.8          2.5
Interest paid                                   (0.1)         (0.3)        (0.5)
Taxation paid                                      -             -         (0.7)
Net cash from operating activities               2.2           0.5          1.3

Cash flows from investing
Purchase of property, plant and 
equipment                                       (0.4)         (0.4)        (0.6)
Receipt for potential sale of site                 -           0.2          0.2
Proceeds from sale of property,
plant and equipment                              0.3            -           1.0
Net cash used in investing             
activities                                      (0.1)         (0.2)         0.6

Cash flows from financing
Net proceeds from issue of Ordinary
share capital                                    0.1             -          0.1
Finance lease principal payments                (0.1)            -            -
Repayment of borrowings                         (3.6)         (0.1)        (0.2)

Net cash used in financing               
activities                                      (3.6)         (0.1)        (0.1)

Net (decrease)/increase in cash and
cash equivalents                                (1.5)          0.2          1.8

Opening cash and cash equivalents                1.8             -            -

Closing cash and cash equivalents                0.3           0.2          1.8


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 52 weeks
to 29 April 2006.

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 on page 11. Figures for the 52 weeks to 29 April 2006 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

These interim financial statements have been prepared in accordance with the
Listing Rules of the Financial Services Authority. They have not been prepared
in accordance with IAS 34 'Interim Financial Reporting'.

IFRS currently in issue are subject to ongoing review and endorsement by the
European Commission, as well as possible amendment by the IASB, and therefore
are subject to possible change. Further standards or interpretations may also be
issued that could be applicable for the full year consolidated financial
statements. These potential changes could result in the need to change the basis
of accounting or presentation of certain financial information from that
presented in this document.

2. Exceptional items

The following items were classified as exceptional during previous periods and
were included within the figures shown on the face of the income statement:

                               26 weeks to    26 weeks to       52 weeks to
                                28 October     29 October          29 April
                                      2006           2005              2006

                                        £m            £m                 £m
Administrative expenses                  -          (0.1)              (0.2)
Interest payable                         -          (0.1)              (0.1)
Taxation                                 -             -               (0.1)
Income statement charge                  -          (0.2)              (0.4)

3. Finance costs

                                26 weeks to   26 weeks to      52 weeks to
                                 28 October    29 October         29 April
                                       2006          2005             2006

                                         £m            £m               £m
Bank loans and overdrafts              (0.1)         (0.1)            (0.4)
Bank facility fees                     (0.2)         (0.1)            (0.1)
                                       (0.3)         (0.2)            (0.5)

4. Taxation

The taxation charge in the income statement comprises the following:

                              26 weeks to      26 weeks to      52 weeks to
                               28 October       29 October         29 April
                                     2006             2005             2006
                                       £m               £m               £m

Deferred tax charge on
revalued land and buildings             -                -             (0.1)
Chargeable gain on disposal   
of site                              (0.1)               -                -
Deferred tax on utilisation
of brought forward tax losses 
and other temporary 
differences                          (0.3)               -              0.6
Total taxation (charge)/      
credit                               (0.4)               -              0.5

Of the taxation charge in the period, £0.3m relates to movement in the deferred
tax provision and is therefore not a cash cost to the Group. A further £0.1m of
the taxation charge in the period relates to the chargeable gain on disposal of
the Staughton Moor site which, under current tax legislation, is not eligible
for offset against the Group's available brought forward tax losses.

5. Earnings/(loss) per share

Basic earnings/(loss) per share has been calculated on the profit after taxation
for the period of £0.5m, compared to a loss after taxation for the 26 weeks to
29 October 2005 of £0.7m, divided by the weighted average number of Ordinary
shares in issue during the period, excluding shares held by the Universal
Salvage plc 2000 Employees' Share Trust, which have been treated as cancelled.

The number of shares in issue at 28 October 2006, excluding shares held by the
Universal Salvage plc 2000 Employees' Share Trust, was 28,225,233 (2005:

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

6. Reconciliation of movement in equity shareholders' funds and movements in

                              26 weeks to      26 weeks to      52 weeks to
                               28 October       29 October         29 April
                                     2006             2005             2006
                                       £m               £m               £m

Opening shareholders' equity         15.8             14.8             14.8

Share premium movement
Proceeds from issued shares           0.1                -              0.1

Other reserves movement
Deferred tax on revalued land
and buildings                         0.1                -              0.1
Cash flow hedges - fair value
gains in period                         -                -              0.1

Revenue reserves movement
Share options - value of
employee services                     0.2                -                -
Equity reserve - value of
warrant issued to The Royal 
Bank of Scotland plc                  0.4                -                -
Profit/(loss) after tax for   
the period                            0.5             (0.7)             0.7

Closing shareholders' equity         17.1             14.1             15.8

7. Reconciliation of operating profit/(loss) to cash generated from operations

                              26 weeks to      26 weeks to      52 weeks to
                               28 October       29 October         29 April
                                     2006             2005             2006
                                       £m               £m               £m

Operating profit/(loss)               1.2             (0.5)             0.7
Depreciation of property,
plant and equipment                   0.8              0.9              1.7
Profit on disposal of
property, plant and equipment           -                -             (0.3)
Decrease/(increase) in    
inventories                           0.5              0.7             (0.4)
(Increase)/decrease in        
receivables                          (0.7)             0.1              0.7
Increase/(decrease) in trade
and other payables                    0.5             (0.4)             0.1
Cash generated from operations        2.3              0.8              2.5

8. Analysis of closing net debt

                              26 weeks to      26 weeks to      52 weeks to
                               28 October       29 October         29 April
                                     2006             2005             2006
                                       £m               £m               £m

Cash and cash equivalents             0.3              0.2              1.8
Finance leases                       (0.5)            (0.1)            (0.4)
Bank loans                           (2.0)            (5.6)            (5.6)
                                     (2.2)            (5.5)            (4.2)

9. 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

Acrey Fields, Woburn Road, Wootton, Bedfordshire MK43 9EJ.
Tel: 0870 458 9210 Fax: 01234 762204



We have been instructed by the Company to review the financial information for
the 26 weeks ended 28 October 2006 which comprises Group interim balance sheet
as at 28 October 2006 and the related Group interim statements of income and
cash flows for the 26 weeks then ended and related 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

Directors' responsibilities

The Interim Report, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors. The Listing Rules
of the Financial Services Authority 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.

This Interim Report has been prepared in accordance with the basis set out in
note 1.

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 management and applying analytical
procedures to the financial information and underlying financial data and, based
thereon, assessing whether the disclosed accounting policies have been applied.
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 and therefore provides a lower level of assurance. 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
into whose hands it may come save where expressly agreed by our prior consent in

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 ended
28 October 2006.

PricewaterhouseCoopers LLP
Chartered Accountants
4 December 2006


(a) The maintenance and integrity of the Universal Salvage plc web site is the
responsibility of the Directors; the work carried out by the auditors does not
involve consideration of these matters and, accordingly, the auditors accept no
responsibility for any changes that may have occurred to the Interim Report
since it was initially presented on the web site.

(b) Legislation in the United Kingdom governing the preparation and
dissemination of financial information may differ from legislation in other 

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