Trading and COVID-19 Update

28 April 2020

Universe Group plc

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

TRADING AND COVID-19 UPDATE

NOTICE OF RESULTS

Universe Group plc (AIM: UNG.L), a leading developer and supplier of retail management solutions, payment and loyalty systems, provides an update on the 2019 financial outturn, the impact of COVID-19 on current trading, together with a notice of results for the year ended 31 December 2019.

Results for Year Ended 31 December 2019

The Company expects, subject to audit, the performance for the year ended 31 December 2019 to be in line with expectations with revenues of £22.4 million (2018: £19.9 million) and adjusted EBITDA of £3.9 million (2018: £2.6 million). The net cash balance (excluding the impact of IFRS 16) at 31 December 2019 was £2.9 million (31 December 2018: £1.9 million).

The Company will provide more detail at the time of announcing its results for the year ended 31 December 2019, which is expected to be on 21 May 2020. The annual report will also detail certain non-cash, exceptional impairment and amortization expenses that the Company has chosen to recognize following the retirement of certain legacy R&D projects following unification of the development roadmap after the acquisition of Celtech in April 2019.

Current Trading Update and the Impact of COVID-19

We are continually assessing the impact of COVID-19 on trading in the current year in terms of both profits and cash. Having benefitted from a good performance in 2019, we started the year with £6.4 million of gross cash, alongside undrawn bank facilities of a further £1.5 million. This was followed by solid Q1 2020 trading which was in line with budget.

As we have entered a more restrictive stage of the COVID-19 pandemic, we continue to focus our resources on ensuring that we help keep the country running. It is important to note that all our customers are retailers of vital supplies, being food, drink and/or fuel. We have no exposure to retailers of any other goods. We are proud of the way our people have transitioned to many, very different, working environments and we issue regular updates both externally to customers and internally to employees, setting out the actions we are taking in relation to the crisis. 

It is encouraging that the Group has a revenue pipeline for this year that indicates already completed revenues of £5.2 million in Q1, with further revenues of £16.8 million visible through existing recurring and repeatable revenue contracts and the order book. In the current context, the Group are mindful that the final value, terms and timing of delivery of the order book, remain subject to ongoing discussions.

Nevertheless, because of the current market disruptions, the Group is prudently assuming that some non-critical work planned for customers in this financial year will be delayed by them until the crisis passes, quite possibly for a period lasting into next year. As noted above, it is difficult to estimate these possible delays until there is greater clarity regarding the duration of public lockdowns. New sales to new retail customers are also unlikely until the situation improves, but equally, material customer losses are not expected. In that light, cash conservation measures to protect the business, including the furloughing of some staff, have been put in place.

We are working closely with the Petrol Retailers Association, the Association of Convenience Stores and the UK Government through the Department for Business, Energy and Industrial Strategy. In mid-March we were designated an "essential service provider" by the Government. Accordingly, we have aligned our focus with the changing needs of our customers and the overall national infrastructure, given our responsibility to assist in keeping the highest priority retail sites functioning.

Regarding support in the marketplace, we have been successful in maintaining material service levels for customers. In doing this, we have managed to reduce personal contact with the general public, in order to protect our customers' staff, consumers in store and our field engineers. These measures are enabling our field engineers to attend any sites that may have significant operational issues, on an ongoing basis. As part of this, the engineers have temporarily postponed the processing of ad hoc hardware and software upgrades, as well as new installations that are not deemed to be critical in nature, although some of our scheduled major upgrades will still go ahead. All postponed work will be rescheduled when restrictions lift sufficiently.

The full integration of the Celtech business, now completed, gives us the best-of breed product set we have been working towards. Furthermore, the trust of our customers has rewarded us with a number of large, strategic contract wins which will benefit 2020 and beyond. Following successful trials commenced last year, we also expect to sign a major multi-year contract for payment services with a new customer which is set to begin to generate revenues later in the year.

Jeremy Lewis, Chief Executive of Universe Group plc, commented:

"The safety and well-being of our employees and customers is of vital importance and we continue to do everything possible to support them during this challenging time. As an essential service provider to our customers, all of whom retail food, drink and fuel to the nation, we continue to play our part in helping to keep vital outlets open across the country.

"The future development of the COVID-19 pandemic and its total impact on the economy is hard to forecast with any certainty. We take some comfort from the fact that our customers provide essential, daily required goods, that we entered this year with sound cash resources and that we have a material pipeline of recurring and on order revenues to execute."

This announcement contains inside information for the purposes of Article 7 of EU Regulation 596/2014.

For further information:

Universe Group plc                                                                       T:  +44  2380 689 510

Andrew Blazye, Non-Executive Chairman

Jeremy Lewis, Chief Executive Officer

Daryl Paton, Chief Financial Officer

finnCap                                                                                                                        T: +44 20 7220 0500

Stuart Andrews / Henrik Persson (Corporate Finance)

Richard Chambers (Corporate Broking)

IFC Advisory                                                                                                                T: +44  20 3934 6630

Tim Metcalfe / Graham Herring / Florence Chandler

About Universe Group plc:

Universe provides some of the world's leading retailers with retail management solutions, payment and loyalty systems.  The Group's solutions are based on its own proprietary software and are offered out of the cloud on a software as a service model processing over 15 billion transactions every year. For further information, please see www.universe-group.co.uk