RNS Number:9914S
Nationwide Accident Repair Srvs PLC
15 March 2007
NARS.L
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
("Nationwide", the "Company" or "the Group")
Preliminary Results for the year to 31 December 2006
Nationwide provides automotive crash repair and accident administration services
to the UK insurance industry. With a national network of accident repair centres
located across England, Scotland and Wales employing over 2,100 people, it is
the largest dedicated provider of accident repair services in the UK. The
Group's customer base includes insurance companies such as Royal & Sun Alliance,
Norwich Union, Equity Red Star and Zurich and fleet operators such as DHL.
Financial summary
2006 2005
Sales #151.2m #139.6m
Operating profit after non-recurring items #2.2m #7.8m
Profit before tax after non-recurring items #2.4m #7.3m
Earnings per share after non-recurring items 3.1p 14.5p
Underlying results
Operating profit before non-recurring items #5.8m #4.0m
Profit before tax before non-recurring items #5.9m #3.5m
Earnings per share before non-recurring items 9.0p 5.5p
Underlying results under FRS 17
Operating profit before non-recurring items #7.0m #5.3m
Profit before tax before non-recurring items #7.2m #4.6m
Earnings per share before non-recurring items 11.0p 7.2p
Highlights
* Strong underlying results - Profit before tax before non recurring items
up 67% to #5.9m
* Successful flotation on AiM in July 2006
* Strong balance sheet with net cash at year end of #6.9m (2005: #4.1m)
* Closure of defined benefit pension scheme to future accruals
* Proposed final dividend of 2.6p per share
* Acquisition of the business of Aquilo Motor Services in December 2006-
enhances existing accident management operation
* Post year end acquisitions of bodyshops in Llandudno and Lincoln
Michael Marx, Chairman, commented,
"We are very pleased with these results, which reflect the importance we place
on offering customers a first class service and on running our operations and
systems effectively.
We believe that the Group's national coverage, economies of scale and customer
service give us a competitive advantage when competing for business. We continue
to pursue our twin track approach of improving our existing businesses whilst
carefully exploring additional opportunities for growth through acquisition."
Enquiries:
Nationwide Michael Wilmshurst, Chief Executive T: 020 7448 1000 today
Accident Repair David Loftus, Finance Director Thereafter: 01993 701 720
Services plc
Biddicks Katie Tzouliadis/ Zoe Biddick T: 020 7448 1000
Arbuthnot James Steel/ Alasdair Younie T: 020 7012 2000
Securities
CHAIRMAN'S STATEMENT
Introduction
We are pleased to report Nationwide's maiden preliminary results following the
Company's successful admission to AiM in July 2006. Results for the year are
very encouraging and demonstrate the progress we are making in developing the
Group.
Financial Overview
Sales for the twelve months ended 31 December 2006 increased by 8% to #151.2m
(2005: #139.6m), operating profit before non-recurring items rose by 42% to
#5.8m (2005: #4.0m) and profit before tax before non-recurring items rose by 67%
to #5.9m (2005: #3.5m). Operating profit after non-recurring costs relating to
the flotation and the payment of certain contractual bonuses, was #2.2m (2005:
#7.8m); profit before tax was #2.4m (2005: #7.3m) and basic earnings per share
were 3.1p (2005: 14.5p). Excluding non-recurring items, earnings per share are
9.0p (2005: 5.5p), an increase of 64%.
The Company adopts IAS 19, the "corridor approach", for its pension obligations.
However in order to provide shareholders with financial results which are
comparable with other companies, results under FRS 17 are also shown. Under FRS
17, operating profit before non-recurring items rose by 33% to #7.0m (2005:
#5.3m), underlying profit before tax improved by 55% to #7.2m (2005: #4.6m) and
underlying earnings per share rose by 53% to 11.0p (2005: 7.2p).
The Group's cash position remains strong, with net cash at 31 December 2006 of
#6.9m (2005:#4.1m).
Dividend
As set out in the Company's AiM Admission Document, the Directors intend to
pursue a progressive dividend policy which broadly reflects the growth in
underlying earnings over time and Group prospects. The Directors are
recommending the payment of a final dividend of 2.6p per share in respect of the
year to 31 December 2006. Subject to approval at the Annual General Meeting,
this will be paid on 21 May 2007 to shareholders on the register at the close of
business on 20 April 2007. Ordinarily, over the course of a financial year,
final dividends are expected to represent two-thirds of the total annual
dividend.
Trading Overview
As our results indicate, trading over the year as a whole was very good and
reflects the efficiency of our operations and systems, and the strength of our
service offering. As expected, the second half, which incorporates the holiday
months of July, August and December, was seasonally quieter than the first half
but in line with management expectations.
Strategy
In the Company's Admission Document, we outlined our aspirations to become the
accident repair services supplier of choice to the UK insurance market. We
believe that the Group's national coverage, economies of scale and customer
service give us a competitive advantage when competing for business. We continue
to pursue our twin track approach of improving our existing businesses whilst
carefully exploring additional opportunities for growth through acquisition.
Michael Marx
Chairman
CHIEF EXECUTIVE'S REPORT
Introduction
2006 was a good year for Nationwide with the successful admission to trading on
AiM in July, the acquisition of the business of Aquilo Motor Services in
December, an increase in our underlying profit and the development of our longer
term objectives.
Crash Repair Market
The accident repair market in which we operate continues to consolidate. This
consolidation is mainly driven by three factors:
1. Insurance companies are finding the cost and burden of dealing with hundreds
of privately owned companies, on differing IT platforms and working to
differing standards and systems, increasingly onerous.
2. The economies of scale and the use of integrated IT systems are enabling
groups to operate more effectively and requiring less direct 'management' by
insurers on a case by case basis.
3. Advances in vehicle technology and the need to repair vehicles in an
environmentally responsible manner necessitate continued financial
investment. A significant number of existing repairers operating in the
sector are not in a position to make the investment required.
Our core business is the repair of damaged vehicles at our bodyshops throughout
the UK. We will continue to acquire sites as opportunities arise and since the
year end we have acquired bodyshop businesses in Llandudno (January 2007) and
Lincoln (March 2007). We also continuously work on opportunities to further
improve and grow our existing operations. Our management information, supported
by a robust IT platform, enables us to identify and implement operational
improvements much quicker than some our competitors and we continue to leverage
this advantage.
Network Services
Our Network Services division is a support operation that enables fleets and
insurers to opt for a single point of contact or 'one stop shop', should they
wish to do so. We continue to grow in this area and our acquisition of the
business of Aquilo Motor Services in December 2006 has proved a useful addition
to the Group. Based in Northwich, Cheshire Aquilo operates a 24 hour contact
centre offering a comprehensive motor claims management service including
emergency and roadside assistance and engineering services.
This acquisition has a number of strategic benefits including:
1. It increases our capacity and expertise in the call centre handling of
drivers involved in an accident and given our number as the first point of
contact. This process is known in the industry as 'FNOL' or first
notification of loss.
2. It enables us to increase our IT platform's scope (in particular with regard
to claims handling), making it easier for insurance companies and fleet
customers to work with us.
3. It enables us, where appropriate, to direct work 'captured' by this process
into our own repair centres increasing their efficiency.
Mobile Solutions
Launched in 2005, our Mobile Solutions division, a van based service that offers
specialist glass work, air conditioning and electronic diagnostic services,
continues to grow.
Summary
In summary, the bodyshop market continues to consolidate, our financial
performance is in line with expectations and our balance sheet is strong. We
will continue to expand our bodyshop capacity and improve our efficiency, and
our support division is growing.
Michael Wilmshurst
Chief Executive
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED INCOME STATEMENT
For the year to 31 December 2006
2006 2005
Restated
Notes #'000 #'000
Sales revenue 151,192 139,554
Cost of sales (80,905) (74,827)
------------------------
Gross profit 70,287 64,727
Distribution costs (37,347) (34,876)
Administrative expenses (27,063) (25,808)
Share option charge (120) -
------------------------
Operating profit before non
recurring items 5,757 4,043
Non recurring items 2 (3,542) 3,750
------------------------
Operating profit 2,215 7,793
Finance income 3 169 379
Finance costs 3 (14) (873)
------------------------
Profit for the period before tax 2,370 7,299
Tax expense 4 (978) (789)
------------------------
Net profit for the period 1,392 6,510
------------------------
Earnings per Share
Basic 5 3.1p 14.5p
Diluted 5 3.0p 14.5p
------------------------
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED BALANCE SHEET
At 31 December 2006
2006 2005
Notes #'000 #'000
Assets
Non-current
Goodwill 5,821 4,648
Property, plant and equipment 8,933 9,718
Pension and other employee assets 6 3,867 1,991
-------------------------
18,621 16,357
-------------------------
Current
Inventories 2,548 2,767
Trade and other receivables 20,490 22,162
Cash and cash equivalents 6,932 4,114
-------------------------
29,970 29,043
-------------------------
Total assets 48,591 45,400
-------------------------
Equity
Equity attributable to the
shareholders
Share capital 7 5,609 5,609
Capital redemption reserve 1,000 1,000
Share premium account 11,104 11,104
Revaluation reserve 8 8
Retained earnings 4,226 2,714
-------------------------
Total equity 21,947 20,435
-------------------------
Liabilities
Non-current
Provisions 508 480
Deferred tax liabilities 685 343
-------------------------
1,193 823
-------------------------
Current
Provisions 174 216
Trade and other payables 24,710 23,311
Current tax liabilities 567 615
-------------------------
25,451 24,142
-------------------------
Total liabilities 26,644 24,965
-------------------------
Total equity and liabilities 48,591 45,400
-------------------------
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year to 31 December 2006
Share Capital Share Reval. Retained Total
Capital Redemption Premium Reserve Earnings
Reserve Account
#'000 #'000 #'000 #'000 #'000 #'000
Balance at 1 Jan 2005 5,609 1,000 11,104 8 1,204 18,925
Income for the period - - - - 6,510 6,510
Dividend paid - - - - (5,000) (5,000)
-----------------------------------------------------
Balance at 31 Dec 2005 5,609 1,000 11,104 8 2,714 20,435
Share option charge - - - - 120 120
Income for the period - - - - 1,392 1,392
-----------------------------------------------------
Balance at 31 Dec 2006 5,609 1,000 11,104 8 4,226 21,947
-----------------------------------------------------
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED CASH FLOW STATEMENT
For the year to 31 December 2006
2006 2005
#'000 #'000
Operating activities
Profit for the period before tax 2,370 7,299
Adjustments (note 8) 6,293 (1,622)
Outflow from pension obligations (2,860) (2,582)
Outflow from provisions (156) (215)
Tax paid (684) (113)
----------------------
4,963 2,767
----------------------
Investing activities
Additions to property, plant and equipment (1,653) (2,424)
Proceeds from the disposal of property,
plant and equipment 101 208
Acquisition of businesses - cost (762) (4,665)
Acquisition of businesses - debt acquired - (799)
Interest received 169 379
----------------------
(2,145) (7,301)
----------------------
Financing activities
Dividend paid - (5,000)
Proceeds from disposal of preference
shares - 4,750
----------------------
- (250)
----------------------
Net increase/(decrease) in cash and
cash equivalents 2,818 (4,784)
Cash and cash equivalents at
beginning of period 4,114 8,898
----------------------
Cash and cash equivalents at end of period 6,932 4,114
----------------------
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
NOTES TO THE PRELIMINARY STATEMENT
1. BASIS OF PREPARATION
This preliminary statement has been prepared on the same basis and using the
same accounting policies as used in the audited financial statements for the
year ended 31 December 2005 except that IAS 33, Earnings per share and IFRS 2,
Share based payments have been applied for the first time.
This preliminary statement does not constitute statutory accounts as defined in
section 240 of the Companies Act 1985. The figures for the year ended 31
December 2005 have been extracted from the statutory financial statements which
have been filed with the Registrar of Companies. The auditors' report on those
financial statements was unmodified.
2. NON RECURRING ITEMS
2006 2005
Restated
#'000 #'000
Flotation costs 683 -
Non recurring bonuses 2,859 1,000
Profit on sale of fixed asset investments - (4,750)
-----------------
Total 3,542 (3,750)
-----------------
The Accounts include non-recurring bonuses payable on admission to AiM totalling
#2,859,000. Of this amount #2,407,000 was payable to Troy Solutions Limited, a
company where Mr M A Wilmshurst is a director and #400,000 was paid to Mr D J
Loftus. The flotation costs relate to the AiM listing on 4 July 2006. The
#1,000,000 non-recurring bonus paid in 2005 was included within Administration
expenses in the 2005 Accounts, hence the 2005 comparatives have been restated to
classify this as a non-recurring item.
3. FINANCE INCOME AND FINANCE COSTS
2006 2005
#'000 #'000
Finance Income
Interest receivable on bank balances 169 379
------------------
Finance Costs
Pension costs:
- interest on obligation 3,262 3,344
- expected return on assets (3,248) (2,471)
------------------
14 873
------------------
4. TAX EXPENSE
2006 2005
#'000 #'000
Current Tax:
United Kingdom corporation tax at 30% (2005: 30%) 636 591
Adjustments in respect of prior years - -
------------------
636 591
Deferred Tax:
Movement relating to pension asset (IAS 19) 563 (200)
Timing differences origination and reversal (221) 398
------------------
978 789
------------------
5. EARNINGS PER SHARE
Basic earnings per share
The basic earnings per share has been calculated using the net results
attributable to the shareholders of the Company of #1,392,000 (2005:
#6,510,000).
The weighted average number of outstanding shares used for the basic earnings
per share amounted to 44,872,220 (2005: 44,872,220). This number takes into
account the share split that became effective on 4 July 2006.
Diluted earnings per share
The diluted earnings per share has been calculated using the net results
attributable to the shareholders of the Company of #1,392,000 (2005:
#6,510,000).
The weighted average number of outstanding shares used for the diluted earnings
per share amounted to 46,974,453 (2005: 44,872,220) and assumes the exercise of
all the share options detailed in note 7 since the date they were granted. This
number takes into account the share split that became effective on 4 July 2006.
Underlying earnings per share
The underlying earnings per share has been calculated as follows:
2006 2005
#'000 #'000
Profit before tax (as stated) 2,370 7,299
Non recurring items 3,542 (3,750)
--------------------
5,912 3,549
Tax expense (as stated) (978) (789)
Tax effect on non recurring items (888) (300)
--------------------
4,046 2,460
--------------------
Adjusted earnings per share 9.0p 5.5p
--------------------
The weighted average number of outstanding shares used for the underlying
earnings per share amounted to 44,872,220 (2005: 44,872,220). This number takes
into account the share split that became effective on 4 July 2006.
Underlying earnings per share (FRS 17 basis)
The underlying earnings per share on an FRS 17 basis has been calculated as
follows:
2006 2005
#'000 #'000
Operating profit before non recurring items
under FRS 17 7,026 5,269
Finance Income 169 379
Finance costs under FRS 17 (7) (1,004)
-------------------
Underlying Profit before tax under FRS 17 7,188 4,644
Tax expense as stated (978) (789)
Deferred tax IAS 19 reversed 563 (200)
Deferred tax under FRS 17 (946) (129)
Tax effect on non recurring items (888) (300)
-------------------
4,939 3,226
-------------------
Adjusted earnings per share 11.0p 7.2p
-------------------
The weighted average number of outstanding shares used for the underlying
earnings per share amounted to 44,872,220 (2005: 44,872,220). This number takes
into account the share split that became effective on 4 July 2006.
6. PENSION AND OTHER EMPLOYEE ASSETS/OBLIGATIONS
The Group operates a defined benefit scheme and a defined contribution pension
scheme in the UK which offers both pensions in retirement and death benefits to
members. Since 1st January 2002 the defined benefit scheme has been closed to
new members. The assets of the schemes are administered by trustees independent
of the Group. The Company made contributions of #2,860,000 (2005: #2,582,000) to
the defined benefit scheme during the year. The defined benefit scheme was
closed for future accruals on 31 July 2006 with active members transferred to a
new defined contribution section of the scheme. The Company has agreed with the
trustees of the pension scheme to make annual contributions of approximately
#2.3 million (increasing annually by the Retail Price Index) with a view to
eradicating the Scheme Specific Funding deficit over a period of approximately
7.5 years.
The Group has opted to amortise all actuarial gains and losses above the
corridor (10% of the greater of assets and liabilities) over the future working
lifetime of the active membership. A full actuarial valuation of the defined
benefit scheme was carried out as at 31 December 2005 and was updated to 31
December 2006 by a qualified independent actuary.
IAS 19 2006 2005 2004
The major assumptions used by the actuary were
(in nominal terms):
Rate of increase in salaries n/a 3.3% 3.5%
Rate of increase in pensions - accrued pre 5 April 1997 3.0% 3.0% 3.0%
Rate of increase in pensions - accrued post 5 April 1997 2.85% 2.65% 2.85%
Discount rate 5.4% 5.0% 5.4%
Inflation assumption 2.85% 2.65% 2.85%
The assumptions used in determining the overall expected return of the scheme
have been set with reference to yields available on government bonds and
appropriate risk margins.
The assets in the scheme and the expected rate of return were:
Long-term Long-term Long-term
rate of rate of rate of
return return return
expected Value expected Value expected Value
2006 2006 2005 2005 2004 2004
#'000 #'000 #'000
Equities 8.1% 34,525 8.0% 29,340 7.5% 18,763
Bonds 4.8% 9,341 4.4% 9,493 5.0% 18,800
Property 8.1% 6,400 8.0% 5,454 -
Other 3.3% 94 3.0% 232 3.6% 38
-------- -------- --------
Total market value of
assets 50,360 44,519 37,601
Present Value of
defined obligations
(funded plans) (70,928) (65,552) (61,984)
-------- -------- --------
Present value of
unfunded obligations (20,568) (21,033) (24,383)
Unrecognised actuarial
losses 24,435 23,024 27,039
Net asset in balance
sheet 3,867 1,991 2,656
-------- -------- --------
Actual return on
assets in period 4,719 5,584 3,394
-------- -------- --------
Reconciliation of opening and closing balances of the present value of the
defined benefit obligations
2006 2005 2004
#'000 #'000 #'000
Benefit obligation at beginning of year 65,552 61,984 56,822
Service cost 613 1,148 1,160
Interest cost 3,262 3,344 3,125
Contributions by scheme members 212 328 328
Actuarial loss 3,351 323 1,954
Curtailments and settlements (611) - -
Benefits paid (1,451) (1,575) (1,405)
-------------------------------
Balance at end of year 70,928 65,552 61,984
-------------------------------
Reconciliation of opening and closing balances of the fair value of plan
assets
2006 2005 2004
#'000 #'000 #'000
Fair value of scheme assets at beginning of
year 44,519 37,601 32,735
Expected return on scheme assets 3,248 2,471 2,153
Actuarial gain 972 3,113 1,270
Contributions by employers 2,860 2,581 2,520
Contributions by scheme members 212 328 328
Benefits paid (1,451) (1,575) (1,405)
---------------------------
Asset at end of year 50,360 44,519 37,601
---------------------------
The amounts recognised in the income statement are:
2006 2005
#'000 #'000
Current service cost 613 1,148
Interest on obligation 3,262 3,344
Expected return on assets (3,248) (2,471)
Curtailments and settlements (611) -
Actuarial loss recognised in year 969 1,226
-------------------
985 3,247
-------------------
Charged to:
Administration expenses 971 2,374
Finance costs 14 873
-------------------
985 3,247
-------------------
History of scheme assets, obligations 2006 2005 2004
and experience adjustments #'000 #'000 #'000
Present value of defined benefit
obligations (70,928) (65,552) (61,984)
Fair value of scheme assets 50,360 44,519 37,601
--------------------------
Deficit in scheme (20,568) (21,033) (24,383)
--------------------------
Experience adjustments arising on scheme
liabilities 3,351 323 1,954
Experience item as a % of scheme
liabilities 5% 0% 3%
Experience adjustments arising on scheme
assets 972 3,113 1,270
Experience item as a % of scheme assets 2% 7% 3%
Effect on profitability: comparison between IAS 19 and FRS 17
2006 2005
#'000 #'000
Operating result before non recurring items as
stated 5,757 4,043
Add back actuarial loss recognised under IAS 19 969 1,226
Additional curtailment gain under FRS 17 300 -
-------------------
Operating result before non recurring items under
FRS 17 7,026 5,269
Non recurring items (3,542) 3,750
-------------------
Operating result under FRS 17 3,484 9,019
Finance income 169 379
Finance costs under FRS 17 (7) (1,004)
-------------------
Profit before tax under FRS 17 3,646 8,394
Tax expense as stated (978) (789)
Deferred tax under IAS 19 reversed 563 (200)
Deferred tax under FRS 17 (946) (129)
-------------------
Profit after tax under FRS 17 2,285 7,276
-------------------
The Profit before tax and non recurring items under FRS 17 in 2006 was #7,188k
(2005 #4,644k).
Effect on total equity: comparison between IAS 19 and FRS 17
2006 2005
#'000 #'000
Total equity as stated under IAS 19 21,947 20,435
Less IAS 19 asset (3,867) (1,991)
Add back IAS 19 deferred tax provision 1,160 597
FRS 17 deficit (20,088) (20,796)
Deferred tax asset under FRS 17 6,026 6,239
------------------
Total equity under FRS 17 5,178 4,484
------------------
7. EQUITY
Share Capital
2006 2005
Shares #'000 Shares #'000
Authorised
Ordinary shares of 12.5 p
(25p) each 64,000,000 8,000 32,000,000 8,000
-------------------------------------------------
Issued and fully paid
Ordinary shares of 12.5p
(25p) each 44,872,220 5,609 22,436,110 5,609
-------------------------------------------------
On 31 May 2006 each of the Ordinary Shares of 25p each was sub-divided into two
ordinary Shares of 12.5p each.
Share Options
The following options were issued on 4th July 2006:
No. of Exercise Exercise
Shares Price eriod
M A Wilmshurst Approved 25,751 #1.165 2009-16
Unapproved 2,217,860 #1.11 2009-16
D J Loftus Approved 25,751 #1.165 2009-16
Unapproved 1,096,055 #1.11 2009-16
S D G Thompson Approved 25,751 #1.165 2009-16
Unapproved 871,693 #1.11 2009-16
-----------
4,262,861
-----------
8. CASH FLOW STATEMENT
The following non-cash flow adjustments have been made to the pre-tax result for
the year to arrive at operating cash flow:
2006 2005
Adjustments: #'000 #'000
Movement in pension fund asset- IAS19 985 3,247
Share option scheme charge 120 -
Depreciation 2,407 2,538
Changes in inventories 219 (252)
Changes in trade and other receivables 2,949 (1,630)
Changes in trade and other payables (360) (499)
Changes in provisions 142 125
Profit on sale of property, plant and equipment - (22)
Finance Income (169) (379)
Profit on sale of fixed asset investments - (4,750)
------------------
Total 6,293 (1,622)
------------------
9. FINANCIAL STATEMENTS
The audited financial statements will be posted to shareholders on 2 April 2007
and will be available from the registered office of Nationwide Accident Repair
Services plc at 17A Thorney Leys Park, Witney, Oxfordshire, OX28 4GE.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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