News blog

Universe Group

BY: Andrew Hore |
POSTED: 29/04/2009 |

Universe Group reduced its reported loss for 2008.

The retail and loyalty systems provider increased its revenues by 26% to £16.6m while the loss was reduced from £1.88m to £484,000. However, underlying profits before exceptional restructuring costs fell from £533,000 to £143,000. That masks a good second half after a first half loss. Capitalised product development spending was reduced from £650,000 to £569,000.

The lack of finance held back progress and there are still signs of capital spending being deferred by customers. Net debt was £3.16m at the end of 2008. Part of this debt figure was due to the company having to finance the roll out of JetSet jet wash equipment. This business is starting to generate cash which will help to reduce the debt.

Universe had breached banking covenants with HBOS but these were waived. The company should be able to keep within the new covenants.

The strongest part of the business was the petrol forecourt solutions division. More than one-third of all UK forecourts use the company’s systems. The online loyalty business should return to profit this year as the global loyalty scheme for a US oil company is rolled out.

Manufacturing revenues fell by one-fifth because business was lost to China. Costs have been cut and management hopes to return the division to profit. Growth is coming from the installation of outdoor payment terminals.

House broker Arbuthnot forecasts a profit of £1.6m for 2009. Given the company’s failure to meet the 2008 profit forecast, which was £1.3m profit at this time last year, it needs to show that it can make progress towards that 2009 forecast before it is taken seriously.

At 2.875p a share, up 0.625p on the day, Universe is valued at £3.3m. The shares are trading on three times prospective 2009 earnings.

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