Universe Group plc (LON:UNG), a leading developer and supplier of point of sale, payment and on-line loyalty systems, announced today its unaudited interim results for the six months to 30th June 2018.
Highlights
· Revenues up 6.3% to £9.25 million (H1 2017: £8.70 million)
· Adjusted EBITDA £0.98 million (H1 2017: £0.96 million)
· Operating profit £0.17 million (H1 2017: £0.22 million)
· Earnings per share 0.06p (H1 2017: 0.11p)
· Net cash inflow from operations up at £1.98 million (H1 2017: £1.32 million)
· The delivery of plans in payments and loyalty has been pleasing, although the completion of next generation EPOS products for the convenience sector was delayed until the current quarter
· Recent developments include the investment in hiring a new Sales and Marketing Director in June and a Chief Technology Officer this month
Andrew Blazye, Non-Executive Chairman of Universe Group plc, commented:
“We are pleased to report that revenues across the Group’s activities for the first half show growth on the same period last year, that we have secured important existing contracts and won new customers and remain cash generative with a strong backbone of recurring revenue. We have continued to invest in the business with key hires and product development which has impacted short-term profit growth but with clear benefits for the longer term.
The Group is therefore overall in robust health and well positioned in the market. We are, as previously stated, also a second half weighted business, dependent on a small number of high value projects with lengthy sales cycles. The above considerations, and that our convenience sector EPOS product has become available to the market later than expected, leads us at this stage to expect sales for the year to be consistent with those of the previous financial year.
We are confident that the early actions we’ve taken in the marketplace mean we are well positioned for growth in 2019 and beyond.”
CHAIRMAN’S STATEMENT
Financial Results
We report below the Company’s results for the six months ended 30 June 2018.
Revenues for the first half were up 6.3% to £9.25 million (H1 2017: £8.70 million) with the increase coming across all revenue streams in the business.
Whilst revenues are up on the comparative figures for 2017 and profits broadly in line, as in the prior year, results for the full year are again expected to be heavily weighted towards the second half.
The increase in revenue has come from all areas of the business but in particular, software licences and hardware revenues were up 21.1% to £1.29 million (H1 2017: £1.06 million) following the completion of the rollout of our next generation Gempay 3 payment terminal across our existing customer base, which started in the second half of 2017. We have now installed over 1,500 Gempay 3 terminals and have opportunities to significantly increase this number across new customers. Consultancy and licence maintenance revenues were up 11.2% to £1.96 million (H1 2017: £1.77 million), data services revenues were up 2.8% to £2.04 million (H1 2017: £1.98 million) and services and installation revenues up 1.7% to £3.95 million (H1 2017: £3.89 million).
This improved revenue performance resulted in increased gross profits of £4.34 million (H1 2017: £4.16 million) but was accompanied by a small drop in gross margin to 46.9% (H1 2017: 47.8%) due to the change in sales mix towards lower margin hardware sales.
Administrative expenses rose 5.8% to £4.17 million (H1 2017: £3.94 million) reflecting a £0.30 million increase in expensed research and development spend on our next generation retail systems offset by a £0.07 million reduction in other administrative expenses. Expensed research and development for the period was £1.69 million (H1 2017: £1.39 million) which is in line with the expense in the second half of 2017 of £1.55 million.
Earnings before interest, taxes, share-based payments, depreciation and amortisation (‘adjusted EBITDA’) was £0.98 million (H1 2017: £0.96 million).
Operating profit was £0.17 million (H1 2017: £0.22 million).
Net finance expense was £0.04 million (H1 2017: £0.05 million).
The underlying tax charge for the period was £0.00 million (H1 2017: credit £0.01 million).
Earnings per share for the period were 0.06p (H1 2017: 0.11p).
Balance sheet and cash flow
The balance sheet at 30 June 2018 remains strong. Net current assets were £4.10 million (31 December 2017: £4.64 million) and non-current liabilities were £0.85 million (31 December 2017: £0.91 million).
Investment in the core business continued with capitalised development costs of £0.82 million (H1 2017: £0.69 million, H2 2017: £0.73 million) focused on our next generation of retail systems.
Capital expenditure in the period was £0.23 million (H1 2017: £0.26 million).
Cash flow from operating activities in the half year was £1.98 million (H1 2017: £1.32 million) with the cash generated largely reinvested into the business as product development, capital expenditure or debt repayment. Cash balances at 30 June 2018 were £3.37 million compared to £2.89 million at 31 December 2017.
Outlook
We are pleased to report that revenues across the Group’s activities for the first half show growth on the same period last year, that we have secured important existing contracts and won new customers and remain cash generative with a strong backbone of recurring revenue. We have continued to invest in the business with key hires and product development which has impacted short-term profit growth but with clear benefits for the longer term.
The Group is therefore overall in robust health and well positioned in the market. We are, as previously stated, also a second half weighted business, dependent on a small number of high value projects with lengthy sales cycles. The above considerations, and that our convenience sector EPOS product has become available to the market later than expected, leads us at this stage to expect sales for the year to be consistent with those of the previous financial year.
We are confident that the early actions we’ve taken in the marketplace mean we are well positioned for growth in 2019 and beyond.
Andrew Blazye
Non-Executive Chairman
19 September 2018
