Interim Results

30 September 2014

(UNG.L)

UNIVERSE GROUP plc

("Universe", the "Company" or the "Group")

INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2014

Universe Group plc (AIM:UNG.L), a leading developer and supplier of point of sale, payment and on-line loyalty systems, is pleased to announce its unaudited interim results for the six months to 30 June 2014.

Highlights

· Strong growth in revenues as offerings and customer base expand

· Completion of the integration of two acquisitions made last year

· Restructuring of the senior team to position for continued growth

· EBITDA before exceptional items stable at £1.19 million (2013: £1.21 million)* despite a major hardware roll-out being delayed to the second half of year

· Sustained high-level of investment in products and solutions

· Revenues up 33% to £8.78 million (2013: £6.59 million)

· Operating profit before exceptional items decreased to £0.43 million (2013: £0.75 million)*

· Profit before tax decreased to £0.23 million (2013: £0.72 million)

· Earnings per share of 0.09p (2013: 0.36p)

· Net cash inflow from operations of £0.73 million (2013: £1.06 million)

*Exceptional items of £0.11 million (2013: £nil) were recognised during the period.

Robert Goddard, Chairman of Universe, commented:

"During the first half of 2014 we made significant progress in establishing our refreshed product set in our chosen markets. We continue to build our product and solution portfolio in order to enhance our offering to existing customers, whilst continuing the drive to introduce our solutions to new customers.

The first six months of 2014 have seen us win significant new orders for the roll-out of new systems and these will be fulfilled in the second half of the year. In addition we have a strong pipeline of orders for our software products and consultancy services.

Our particular skills in loyalty programmes and systems integration are being clearly-demonstrated on a number of important projects secured in the period.

We look forward to strong trading in the second half of the year."

CHAIRMAN'S STATEMENT

Summary and introduction

I am pleased to report the Company's results for the six months ended 30 June 2014.

During the first half of 2014 we made significant progress in establishing our refreshed product and solution set in our chosen markets. We continue to build our product portfolio so as to strengthen our position with existing customers, whilst maintaining the drive to introduce our products to new customers. The first six months of 2014 have seen significant new orders for payment terminal roll-outs and these will be fulfilled in the second half of the year. In addition, we have a strong pipeline of work to deliver in respect of our software solutions and consultancy services and so expect a strong second half of 2014.

The work to integrate HTEC Retail Services ('HRS'), created after the late-2013 acquisition of the trade of Retail Service Team Limited, is now complete and we will see improved Group profitability as a result. We continue to examine acquisition opportunities but will only pursue those that are compelling in respect of both price and business logic.

Profit & loss account

Revenue for the six-month period improved by 33% to £8.78 million (2013: £6.59 million) and gross profit grew by 3% to £2.56 million (2013: £2.50 million). However, gross margin fell to 29.1% (2013: 37.9%). This was due to a number of factors, some of which are expected to reverse in the second half of this year.

They include:

· the significant investment into products over the last two years (and continuing this year) contributed to an increase in depreciation and amortisation of £0.27m but there was a lag in resulting revenue generation. These delays are now starting to unwind and we expect significant revenue from these products in the second half, and

· low margins on the project work that followed the acquisition of RST in 2013. We have significantly restructured this business over the last few months, reduced its cost base and terminated some of the low margin contracts. The business has now been fully absorbed into the main operating entity of the Group, HTEC Limited.

The two acquisitions last year led to the growth in administrative expenses to £2.13 million in the first half of this year (2013: £1.75 million); although the recent restructuring of HRS will reduce that figure going forward. The growth in depreciation and amortisation of £0.27 million accounted for over half of the decrease in operating profit before exceptional items to £0.43 million (2013: £0.75 million).

Earnings before interest, taxes, depreciation and amortisation ('EBITDA') were stable at £1.19 million (2013: £1.21 million) in the period. EBITDA is stated before an exceptional item of £0.11 million, which is recognised in relation to the restructuring of HRS and of the HTEC management team earlier in the year.

There was a small increase in finance costs to £0.10 million (2013: £0.04 million), with £0.04 million of this £0.06 million increase accounted for by the unwinding of the discounted cash flow value of the deferred consideration for the Indigo acquisition we made in mid-2013.

Products

The results of the extensive, two-year investment in product range enhancement have been well received by our customers and has strengthened our position with them.

We are delighted to have secured the opening phase of a multi-year renewal of the outdoor payment terminals by one of our existing supermarket clients. This project is underway currently and will be completed by year end.

Our new payment platform is in place with the same customer, and we have been investing to equip it with an accredited point to point encryption ('P2PE') solution. This will attract additional customers. Formal accreditation of our P2PE system is expected shortly and the first customer pilot sites will be installed immediately thereafter.

The acceptance of GemPAY as the petrol filling station industry's standard payment terminal continues. Following the recently-announced completion of the GemPAY roll-out for Valero we expect to complete further roll-outs of this product by year end.

Work on the further expansion of our largest on-line loyalty solution continues to generate an important source of revenue. A major refresh of the platform for this programme is expected to complete this year and we are working on further geographic expansion of the solution. The platform refresh involves significant investment under a contract extension signed last year. We are also working to extend the functionality of our loyalty offering for another major customer.

Balance sheet and cash flow

The balance sheet at the end of June reflects ongoing investment.

We have continued to upgrade our products, with £0.61 million invested in the first half of 2014. The loyalty platform refresh and the development of P2PE have been the main capital projects for 2014 and both of these are near completion. There was a modest amount of capital expenditure (£0.10 million) in the period.

The other significant balance sheet movement has been the settlement of the first tranche of deferred and contingent consideration due to the former shareholders of Indigo Retail Holdings Limited, acquired in May 2013. Payments of £0.06 million were made and ordinary shares valued at £0.4 million were issued.

Cash from operating activities at the half year fell to £0.73 million (2013: £1.06 million). This reduction was due to the unwinding of creditor balances in the year-end balance sheet and to the build-up of stocks in anticipation of hardware roll-outs scheduled for the second half of the year. Interest payments were up slightly, reflecting the purchase of assets funded by finance leases. These assets were deployed largely on the hardware refreshes undertaken over the past year and covering most of our mission-critical, customer-facing systems.

Market Developments

The Group's customers operate in highly competitive markets. Our major customers continue to invest in technology to help drive their performance and in turn we provide complementary, innovative products and services for them. Though there is continuing pressure on service margins, good opportunities remain for our involvement in significant customer projects.

There are signs of consolidation within the independent filling station sector. Recent acquisition activity among customers has provided us with significant work to integrate their systems. These projects provide pleasing examples of the Group's substantial expertise in systems integration.

Outlook

The first six months of this year were characterised by delays in getting customer go-ahead for planned projects. However it is pleasing to report that the product roll-outs expected in the first half of the year are now being delivered and that we have several significant software and services projects completing before the year end. These will help us to deliver in line with market expectations and underpins our optimism about future trading.

Robert Goddard

Chairman

30 September 2014

Universe Group plc

Condensed Statement of Total Comprehensive Income (unaudited)

for the 6 months ended 30 June 2014

Universe Group plc

Condensed Consolidated Balance Sheet (unaudited)

as at 30 June 2014

Universe Group plc

Condensed Consolidated Cash Flow Statement (unaudited)

for the six months ended 30 June 2014

Universe Group plc

Notes to Condensed Consolidated financial statements for six months ended 30 June 2014

1 The interim financial statements, which are unaudited, have been prepared on the basis of the accounting policies expected to apply for the financial year to 31 December 2014 and in accordance with the recognition and measurement principles of International Financial Reporting Standards (IFRSs) as endorsed by the European Union. The accounting policies applied in the preparation of these interim financial statements are consistent with those used in the financial statements for the year ended 31 December 2013.

The interim financial statements do not include all of the information required for full annual financial statements and do not comply with all the disclosures in IAS 34 'Interim Financial Reporting'. Accordingly, whilst the interim statements have been prepared in accordance with IFRSs, they cannot be construed as being in full compliance with IFRSs.

2 The financial information for the year ended 31 December 2013 does not constitute statutory accounts as defined in section 434 of the Companies Act 2006. A copy of the statutory accounts for that year has been delivered to the Registrar of Companies. The auditors' report on those accounts was not qualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006.

3 The Directors believe the Group is well placed to manage its business risks successfully. The Group's forecasts and projections, taking account of reasonably possible changes in trading conditions show that the Group should be able to operate within the level of its facilities. After making enquiries the Directors have a reasonable expectation that the Group will have adequate resources to continue in operational existence for the foreseeable future (being a period of at least 12 months from the date of this report). Accordingly they continue to adopt the going concern basis in preparing the interim condensed financial statements.

4 The half year results were neither audited nor reviewed by the auditors. The interim financial information has been prepared on the basis of accounting policies set out in the Group's statutory accounts for the year ended 31 December 2013.

5 Operating profit and EBITDA before exceptional items.

6 Earnings per share is calculated by reference to the results and the weighted average of 213,502,097 shares in issue during the period (H1 2013: 191,530,626, FY 2013: 201,536,105). Diluted earnings per share is calculated by reference to the results and the weighted average of 238,092,401 shares in issue during the period (H1 2013: 194,143,126, FY 2013: 214,083,996). The number of shares in issue at 30 June 2014 was 220,281,758.

7 Segment information

6 months ended 30 June 2014

6 months ended 30 June 2013

Year ended 31 December 2013

8 Cash flows from operations

9 Copies of the interim report will be available from the Company's head and registered office: Southampton International Park, George Curl Way, Southampton, SO18 2RX, and on the Company's website, www.universeplc.com.