News blog
Universe Group
- BY: Andrew Hore |
- POSTED: 18/08/2008 |
Universe Group slumped into loss in the first half of 2008.
The retail and loyalty systems provider increased its interim revenues by 26% to £7.9m but a £447,000 profit was turned into a £618,000 loss. The latest figure includes one-off costs of £136,000.
The new JetSet jet wash business, which contributed just over two-fifths of the increase in revenues, made start up losses of £183,000. There should be 1,000 units in place by the end of 2008.
The second half figures were always going to be more significant this year but the first half outcome was poor.
Software development costs of £258,000 were capitalised. The net increase in intangible assets was £125,000. Universe is investing in its data centre so that it can cope with increased business.
International oil company loyalty contracts were delayed.
New house broker Arbuthnot forecasts full year profits of £518,000 with a nil tax charge. That is well below the £1.3m forecast six months ago, but it looks optimistic especially as it is after non-recurring costs of £280,000.
The forecast seems to be partly reliant on a good contribution from the jet wash business. It includes an £832,000 gross profit contribution from this new business. If some of the delayed loyalty contracts come through then it will make it easier to achieve the Arbuthnot forecast.
There is no forecast software development cost capitalisation in Arbuthnot’s forecast of 2008 cash flow for the company. Yet there was £258,000 capitalised in the first half. Capital expenditure on tangible fixed assets is forecast at £400,000 which looks high. Maybe the software development costs that were capitalised in the first half are included in that. Net debt was £3.14m at the end of June but Arbuthnot suggests that it will be £1.5m at the end of 2008.
Realistically, even a small full year profit would be a good outcome.
At 4p a share, Universe is valued at £4.59m.
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