TIDMUNG
RNS Number : 8502U
Universe Group PLC
12 April 2016
12 April 2016
AIM: UNG.L
Universe Group plc
("Universe", the "Group" or the "Company")
FINAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2015
Universe Group plc (AIM: UNG.L), a leading developer and
supplier of point of sale, payment and loyalty systems, is pleased
to announce today its audited results for the year ended 31
December 2015.
Highlights
Financial
-- Continued encouraging progress including landmark convenience store contract win
-- Total revenues of GBP20.33m (2014: GBP20.75m)
-- Gross profit up 4% to GBP6.74m (2014: GBP6.49m) reflecting change in revenue profile
-- Operating profit up 18% to GBP2.04m (2014: GBP1.73m)
-- Profit before tax of GBP1.68m (2014: GBP1.75m)
-- Profit after tax up 7% to GBP1.50m (2014: GBP1.41m)
-- Operating profit per share up 11% to 0.89p (2014: 0.80p)
-- Statutory basic EPS up 1.5% to 0.66p (2014: 0.65p)
-- Strong cash generation with net cash at year end up to GBP2.14m (2014: GBP0.24m)
Operational
-- Continued expansion within the convenience store sector
- major contract win with Conviviality Plc in October
- acquisition of Spedi in April extends convenience retail offering
- ongoing development of product offering
-- Two Board appointments (in May and September)
-- Board remains positive about growth prospects
Robert Goddard, Chairman of Universe, commented:
"We are pleased with the progress made over the year,
particularly in expanding our presence within the convenience store
sector, a key strategic focus.
Financial results show strong operating profit growth of 18% and
a significant increase in profit margins. This has been supported
by a combination of new product development and the winning of
major new contracts, including Conviviality plc, announced in
October 2015.
Universe remains well placed for further progress in 2016. We
will continue to develop our established position in the petrol
forecourt market and seek to achieve further strong growth in the
convenience store sector. At the same time, we will look for
opportunities to enter additional retail verticals. We will
continue to invest in the expansion of our product range and
services so as to further enhance our offering. We also expect to
tender for contracts with major new customers".
For further information:
Universe Group plc T: +44 2380 689
Robert Goddard, Chairman 510
Jeremy Lewis, Chief Executive
Officer
Bob Smeeton, Chief Financial
Officer
finnCap T: +44 2072 200
Stuart Andrews (corporate 500
finance)
Tony Quirke (corporate broking)
KTZ Communications T: +44 2031 786
378
Katie Tzouliadis
Viktoria Langley
Emma Pearson
CHAIRMAN'S STATEMENT
Introduction
The Group made encouraging progress during 2015, in particular
by expanding its presence in the convenience store market, a key
strategic focus. Results for the year show an 18% increase in
operating profit to GBP2.04m (2014: GBP1.73m), with operating
profit margins improving to 10% from 8%. This was achieved on total
revenues of GBP20.33m (GBP20.75m). While revenues reduced by 2%
year-on-year, this reflected our decision to cease a number of low
margin contracts late in 2014. The benefit is reflected in improved
gross profit margins, up to 33% from 31% in 2014, and an increase
in gross profit to GBP6.74m (2014: GBP6.49m).
The Group continues to generate strong cash flows from
operations, which increased by 15% to GBP3.42m. The balance sheet
remains strong, with net cash at the year-end up to GBP2.14m (2014:
GBP0.24m).
Looking ahead for 2016, Universe remains well-placed to make
further progress and we continue to consider opportunities for
growth.
Overview
As expected, sales over the year were weighted significantly
towards the second half, reflecting the timing of hardware and
software deployments. At GBP11.50m, second half sales were 30%
ahead of the first half and gross profit was 53% up.
A notable feature of the second half was the winning of a large
and prestigious contract with Conviviality Plc, the UK's largest
franchised off-licence and convenience store chain. This is a
significant endorsement of our strategy to extend the Group's
presence in the convenience store market. Secured after an
international competitive tender process, it also reflects the
strength of our proprietary product offering. Deployment of our
products began in January 2016 and continues to date, with the
roll-out of our system covering Conviviality's entire estate of
over 650 stores. As well as facilitating and managing sales
processing and secure payments, our software will also manage
online ordering and provide an extensive reporting suite.
The development of our product offering remains important to us
and we continued to invest across our products over the year. This
included the acquisition in April 2015 of Spedinorcon Limited
('Spedi'), a developer and supplier of advanced software for the
convenience store market. Spedi products are used across an
established estate of more than 1,500 convenience stores, mainly
across the Costcutter and Londis networks.
There will be further investment in our products in 2016. Our
plans include refinements to our loyalty platform, which will
provide a more modular solution, alongside a series of initiatives
to expand our existing product range. Our aim is to become a
'one-stop shop' for retail technology and we see this being
achieved through a combination of organic growth, bolt-on
acquisitions and collaboration with partners. We are pleased with
the increasing awareness of HTEC's products in the convenience
store market, which we intend to capitalise on over the coming
year.
The Board
The Board was strengthened with two new appointments over the
year. In September, we were delighted to welcome Baljit (Billy)
Tank as an Executive Director with responsibility for Group Sales
and Marketing. Billy joined the Group in 2013 with our acquisition
of Indigo Retail Holdings Limited, which he founded and led. In
May, we were pleased to appoint Andrew Blazye as a Non-executive
Director. Andrew has extensive knowledge of our core markets,
having over thirty years' experience in loyalty marketing, petrol
retailing and payments systems.
Staff
2015 was a busy year for the Group as we moved through the
phases of developing products, winning contracts and deploying new
solutions for customers. We would like to thank all our staff for
their hard work, creativity and dedication over the year. Their
efforts and skills underpin the Group's success in serving our
existing customers and winning new ones.
Summary and outlook
We made good progress in 2015, winning important contracts and
continuing to develop our product offering. The roll-out of
contracts won last year is now underway and we are working hard to
ensure their successful delivery.
We will further expand our presence in the convenience store
sector and continue to develop our well-established presence in the
petrol forecourt market. With our widened and enhanced product
suite and strong service offering, we believe that we are
well-placed to satisfy evolving customer needs in both markets. In
addition, we continue to explore new retail verticals and new
geographic markets. We will also invest in products and services
and thereby improve further our market position.
We are positive about our prospects for further growth and look
forward to another year of good progress.
Robert Goddard
Chairman
11 April 2016
Extracts from the Strategic Report
Principal activity
The Group designs, develops and supports point of sale, payment
and on-line loyalty solutions and systems for the UK petrol
forecourt and convenience store markets. These solutions can be
provided as a comprehensive, fully-managed offering or as discrete
products to complement a wider customer solution.
Universe's solutions are delivered via the Cloud into high
volume, real-time environments. Product innovation and high levels
of customer care are critical to the Group's success and we
continue to focus strongly on both areas.
Organisational overview
The Group's business is directed by the Board and managed by the
Executive Directors, led by Chief Executive, Jeremy Lewis. A senior
management team, comprising the Chief Executive, the Chief
Financial Officer, the Sales and Marketing Director and Senior
Executives, is responsible for Operations, Human Resources,
Development and Data Centres.
There are three Non-executive Directors.
The main operating entity is HTEC Limited.
Strategy and business plan
We continue to invest in our products and services to ensure
that they meet the current and anticipated needs of our
customers.
Our objective is to be the prime solutions partner to retailers,
supplying them with our market-leading, innovative systems for
point of sale, payment and loyalty operations. These systems are
real-time, mission-critical and data rich and our customers rely on
us to keep them trading at all times. Accordingly, effective and
efficient support from our data centre teams, engineer field force
and helpdesk professionals remains vital to what we do.
In 2015 we provided new and improved product offerings to our
existing customers and won new strategic accounts. We are targeting
further growth in both our established market of petrol forecourts
and in our newer market of convenience stores. In addition, the
possibility of entry into new market verticals and geographies is
under review.
A number of acquisition opportunities were considered during
2015 and we were pleased to complete the acquisition of Spedinorcon
Limited, a provider and developer of retail software, in April
2015. The business is now fully integrated into the Group.
Business and product development
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The need for business and product development is constant and so
2015 was another busy year. Examples of new developments in 2015
include our new Back Office System (Calisto), Head Office System
(Jupiter), advertising media screens (Iocaste) and point-to-point
payment encryption layer (Perseus). We expect further sales of this
enhanced product set in 2016 and beyond.
Financial review
Total sales for the year to 31 December 2015 decreased by 2% to
GBP20.33m (2014: GBP20.75m) with this reduction reflecting our
decision to cease some low margin service contracts inherited with
the acquisition of Retail Service Team in 2013. The benefit of
exiting these contracts can be seen in both the gross profit
result, which increased by 4% to GBP6.74m (2014: 6.49m) and the
gross margin improvement to 33% (2014: 31%).
Operating profit for the year increased by 18% to GBP2.04m from
GBP1.73m in 2014, with the operating margin increasing by 25% to
10% from 8%. The achievement of a 10% operating margin has been an
important target for the Group.
Net finance costs increased by GBP0.39m to GBP0.36m (2014:
income of GBP0.03m). This increase reflected a revision to the
estimated contingent consideration due in 2016 to the vendors of
Indigo (which was acquired in 2013), and results from our success
in the convenience store market. Consequently, a provision of
GBP0.22m released in 2014 was largely reversed in 2015. As a result
of these movements, profit before tax decreased by 4% to GBP1.68m
(2014: GBP1.75m).
Profit after tax rose by 7% to GBP1.50m (2014: GBP1.41m). The
tax charge reduced from GBP0.35m to GBP0.18m, partly as a result of
prior year credits that were recognised in 2015.
Basic and diluted earnings per share respectively increased by
1.5% to 0.66p (2014: 0.65p) and by 5% to 0.63p (2014: 0.60p).
However, with the year-on-year variations in finance expenses,
these measures do not provide a satisfactory indication of the
Group's progress in 2015. A better measure is operating profit per
share, which increased by 11% over the year to 0.89p (2014:
0.80p).
Cash flow and financing
Adjusted EBITDA rose by 13% to GBP3.91m (2014: GBP3.47m). This
supported a 15% increase in net cash inflow from operating
activities to GBP3.42m (2014: GBP2.96m).
We continued to invest in our products in 2015, spending
GBP0.61m on the development of our product portfolio (2014:
GBP1.15m). The main investment was into our new Jupiter, Calisto
and Iocaste products, which are attracting interest from existing
and prospective customers.
Cash inflow for the year increased by 21% to GBP1.32m (2014:
GBP1.09m) and net cash at 31 December 2015 stood at GBP2.14m (2014:
GBP0.24m).
Summary
As a software business operating in the fast-moving retail
environment, we have continued to prosper over the past three years
through focused product innovation and careful attention to
customer service. In 2015 we continued to build on our strong
presence in the petrol forecourt sector and have strengthened our
presence in the larger market of convenience stores. A combination
of customer expansion and a broadening product portfolio means that
we are confident that the pleasing progress that the Group has been
made so far can be continued.
Jeremy Lewis
Chief Executive Officer
11 April 2016
Consolidated Statement of Total Comprehensive Income
For the year ended 31 December 2015
2015 2014
GBP'000 GBP'000
Continuing operations
Revenue 20,327 20,749
Cost of sales (13,591) (14,261)
Gross profit 6,736 6,488
Administrative expenses (4,698) (4,760)
Operating profit 2,038 1,728
Finance income 10 220
Finance expense (373) (195)
Profit before taxation 1,675 1,753
Taxation (175) (345)
Profit and total comprehensive
income for the year 1,500 1,408
Earnings per ordinary share
Basic earnings per share 0.66p 0.65p
Diluted earnings per share 0.63p 0.60p
Consolidated Statement of Changes in Equity
For the year ended 31 December 2015
Capital Merger Profit
Share redemption Share reserve Translation and Total
capital reserve premium on acquisition reserve loss equity
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
At 1 January
2014 2,115 4,588 12,381 2,269 (225) (4,604) 16,524
Profit and
total
comprehensive
income for
the year - - - - - 1,408 1,408
Issue of share
capital 88 - 335 - - - 423
Share based
payments - - - - - 107 107
------------- ------------- ------------- ------------- ------------- ---------- -----------
At 31 December
2014 2,203 4,588 12,716 2,269 (225) (3,089) 18,462
At 1 January
2015 2,203 4,588 12,716 2,269 (225) (3,089) 18,462
Profit and
total
comprehensive
income for
the year - - - - - 1,500 1,500
Issue of share
capital 110 - 346 - - - 456
Share based
payments - - - - - 122 122
At 31 December
2015 2,313 4,588 13,062 2,269 (225) (1,467) 20,540
Consolidated Balance Sheet
As at 31 December 2015
2015 2014
GBP'000 GBP'000
Non-current assets
Goodwill and other intangible assets 14,075 14,121
Development costs 2,367 2,382
Property, plant and equipment 2,217 2,466
18,659 18,969
Current assets
Inventories 881 1,406
Trade and other receivables 4,296 4,221
Cash and cash equivalents 3,380 2,064
8,557 7,691
Total assets 27,216 26,660
Current liabilities
Trade and other payables (4,445) (5,138)
Current tax liabilities (248) (188)
Borrowings (478) (477)
Deferred consideration (6) (597)
Contingent consideration (414) (103)
(5,591) (6,503)
Non-current liabilities
Borrowings (763) (1,350)
Contingent consideration (58) (87)
Deferred tax (264) (258)
(1,085) (1,695)
Total liabilities (6,676) (8,198)
Net assets 20,540 18,462
Equity
Share capital 2,313 2,203
Capital redemption reserve 4,588 4,588
Share premium 13,062 12,716
Merger reserve 2,269 2,269
Translation reserve (225) (225)
Profit and loss account (1,467) (3,089)
Total equity 20,540 18,462
Consolidated Cash Flow Statement
For the year ended 31 December 2015
2015 2014
GBP'000 GBP'000
Cash flows from operating activities:
Profit before tax 1,675 1,753
Depreciation and amortisation 1,747 1,630
Share based payments 122 107
Net finance expense/(income) 363 (25)
3,907 3,465
Movement in working capital:
Decrease/(increase) in inventories 525 (281)
(Increase)/decrease in receivables (8) 2
Decrease in payables (768) (96)
Interest paid (127) (124)
Tax paid (109) (4)
Net cash inflow from operating
activities 3,420 2,962
Cash flows from investing activities:
Acquisition of subsidiary undertakings (309) (57)
Purchase of property, plant &
equipment (640) (243)
Expenditure on product development (612) (1,146)
Net cash outflow from investing
activities (1,561) (1,446)
Cash flow from financing activities:
Proceeds from issue of shares 56 23
Loan repayments (120) -
Repayments of obligations under
finance leases (479) (453)
Net cash outflow from financing (543) (430)
Increase in cash and cash equivalents 1,316 1,086
Cash and cash equivalents at
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beginning of year 2,064 978
Cash and cash equivalents at
end of year 3,380 2,064
Notes
1. General Information
The financial information set out in this document does not
constitute the Company's statutory accounts for 2014 or 2015.
Statutory accounts for the years ended 31 December 2014 and 31
December 2015 have been reported on by the Independent Auditors.
The Independent Auditors' Reports on the Annual Report and
Financial Statements for each of 2014 and 2015 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 2014 have been
filed with the Registrar of Companies. The statutory accounts for
the year ended 31 December 2015 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 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 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 2014. The principal accounting policies adopted are
unchanged from those used in the preparation of the statutory
accounts for the period ended 31 December 2014.
2. Turnover analysis
2015 2014
GBP'000 GBP'000
Hardware and software licences 5,470 4,801
Service and installations 6,909 8,048
Data services 3,601 3,409
Consultancy and software maintenance 4,347 4,491
20,327 20,749
3. Operating Profit and adjusted EBITDA
2015 2014
GBP'000 GBP'000
Revenue 20,327 20,749
Cost of sales (13,591) (14,261)
Gross profit 6,736 6,488
Administrative expenses (4,698) (4,760)
Operating profit 2,038 1,728
Add back:
Depreciation 903 812
Amortisation 844 818
Share based payments 122 107
Adjusted EBITDA 3,907 3,465
4. Segment information
The Group has only one business segment, 'HTEC Solutions'. All
material operations and assets are in the UK.
Solutions Corporate Total
2015 2015 2015
GBP'000 GBP'000 GBP'000
Revenue - all external 20,327 - 20,327
Gross profit 6,736 - 6,736
Segment expenses (4,018) (680) (4,698)
Segment operating profit 2,718 (680) 2,038
Unallocated items:
Finance income (363)
Taxation (175)
Profit for the year 1,500
Solutions Corporate Total
2014 2014 2014
GBP'000 GBP'000 GBP'000
Revenue - all external 20,749 - 20,749
Gross profit 6,488 - 6,488
Segment expenses (4,138) (622) (4,760)
Segment operating profit 2,350 (622) 1,728
Unallocated items:
Finance costs 25
Taxation (345)
Profit for the year 1,408
5. Earnings per share
The calculation of the basic, diluted and operating earnings per
share is based on the following data:
2015 2014
GBP'000 GBP'000
Profit for the purposes of basic
and diluted earnings per share being
net profit attributable to equity
holders of the parent 1,500 1,408
Add back/(deduct) net finance charge/(income) 363 (25)
Add back taxation charge 175 345
Profit used for operating profit
per share 2,038 1,728
2015 2014
Number Number
'000 '000
Number of shares
Weighted average number of ordinary
shares for the purposes of basic
earnings per share and operating
profit per share 227,996 216,914
Weighted average number of ordinary
shares for the purposes of diluted
earnings per share 238,023 232,814
At the year end the Group had in issue 231,286,435 ordinary
shares of 1p each (2014: 220,281,758 ordinary shares of 1p
each).
6. Material non-cash transactions
During the year the Group entered into GBP13,000 (2013:
GBP687,000) of finance leases for plant and equipment.
During the year the Group settled GBP400,000 of deferred
consideration arising on the acquisition of Indigo Retail Holdings
Limited in 2013 by issuing ordinary shares in the Company.
These transactions are not reflected in the cash flow
statement.
7. Report and Accounts
Copies of the Annual Report and Accounts will be sent to
shareholders in May 2015 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.
8. Annual General Meeting
The Company's Annual General Meeting is scheduled for 28 June
2016, 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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