News blog
Universe Group
- BY: Andrew Hore |
- POSTED: 12/08/2009 |
A change in sales mix and keeping down costs helped Universe Group to improve margins in the six months to June 2009.
Revenues fell from £7.86m to £7.35m but gross margins improved from 28% to 32%. Cost cutting led to one-off costs of £366,000 and there will be more costs in the second half.
Stripping out one-off costs, Universe swung from a loss of £382,000 in the first half of 2008 to a profit of £292,000 in the latest half year.
Net debt was £2.06m at the end of June 2009. Cash generated from operations and a reduction in working capital helped cut borrowings in the six month period. This cash is mainly required to pay back borrowings.
The Universe Data Systems business returned to profit in the latest period. That is thanks to a loyalty systems contract with a major oil company.
Petrol Forecourt Systems is the biggest revenue and profit contributor but both were lower in the period. New projects are being deferred.
The manufacturing business is still losing money but the exit from low margin contracts continues. The JetSet car wash business is growing its revenues but still not making a profit. More sites need to be opened but the lack of finance is slowing growth. Even so, the losses should end during the second half.
At 3.5p a share, up 0.625p on the day, Universe is valued at £4.01m.
Arbuthnot has forecast profits of £360,000 for 2009. That appears achievable even though contracts are still being delayed. The shares are trading on 14 times prospective 2009 earnings.
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