TIDMNARS
RNS Number : 8128E
Nationwide Accident Repair Srvs PLC
15 April 2014
NARS
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
("Nationwide", "the Company" or "the Group")
Preliminary Results
For the 12 months to 31 December 2013
Nationwide provides integrated automotive accident repair
management services to the UK insurance industry, fleet and retail
customers. It is the largest dedicated provider of accident repair
services in the UK.
Key Points
-- Results in line with revised expectations - significant improvement in H2 performance
-- Revenue of GBP156.6m (2012: GBP155.9m)
- insurance revenues down 3.9% to GBP111.5m - market share up
- good sales growth in fleet market - up 14.7% to GBP40.4m (now 26% of Group revenue)
- stable retail sales at GBP4.7m
-- Underlying (1) PBT of GBP3.1m (2012: GBP5.5m) / Statutory PBT of GBP0.1m (2012: GBP5.1m)
- H2 profitability up 29.8% over H1 - helped by measures to improve operational efficiency
- non-recurring costs and amortisation of intangibles of GBP3.0m (2012: GBP0.4m)
-- Underlying (1) EPS of 5.1p (2012: 9.9p) / Statutory EPS of (0.5)p (2012: 9.2p)
-- Good cash flows - net cash up to GBP6.3m (2012: GBP5.1m)
-- Proposed final dividend per share of 1.9p for total of 2.9p (2012: 3.6p, total 5.5p)
-- Strategy of expansion into complementary services continues to progress
-- Two acquisitions (one post period end) - Exway in South West
and Howard Basford in North West
- enhance operational efficiencies in these regions
- represent templates for further regional acquisitions
-- Bank facilities of GBP20m in place - supports growth plans
-- Encouraging start to new financial year - Group is well
placed with enhanced growth opportunities
Notes: 1. 'Underlying' is calculated before non-recurring items and amortisation of intangibles.
Michael Marx, Chairman, commented,
"The Group's performance in the second half of the year showed a
marked improvement, as expected, against a disappointing first half
performance. Underlying profitability in the second half increased
by 29.8% and the gross margin for the full year was ahead of last
year's result. This positive turnaround largely reflects the
measures we put in place to improve operational efficiencies. The
Group also continues to generate good cash flows and net cash at
GBP6.3m at the year end is higher than at the end of the prior
year.
The Group has made an encouraging start to 2014. Nationwide is
well-positioned and there are opportunities to build the business
both organically and by further strategic acquisitions.
We are confident that the operational, strategic and financing
measures that we have adopted are the catalyst for positive growth
during 2014 and beyond."
Enquiries:
Nationwide Accident Michael Wilmshurst, Chief T: 020 3178
Repair Services Executive 6378
plc
David Pugh, Group Finance (today)
Director
T: 01993 701720
KTZ Communications Katie Tzouliadis / Deborah T: 020 3178
Walter 6378
Westhouse Securities Antonio Bossi / Henry Willcocks T: 020 7601
6100
CHAIRMAN'S STATEMENT
Introduction
The Group's performance in the second half of the year showed a
marked improvement, as expected, against a disappointing first half
performance. Underlying profitability (i.e. excluding non-recurring
items and amortisation of intangibles) in the second half increased
by 29.8% and the gross margin for the full year was ahead of last
year's result. This positive turnaround largely reflects the
measures we put in place to improve operational efficiencies. The
Group also continues to generate good cash flows and net cash at
GBP6.3m at the year end is higher than at the end of the prior year
(2012: GBP5.1m).
Nationwide's strategy of expansion into complementary services
continues to make progress, with further growth in fleet sales,
mobile repairs and specialist glass replacement services. While
trading conditions remained tough for operators across the
industry, with motor claims frequency reduced, we have continued to
increase our share of the insurance market. As the market leader we
see clear growth opportunities which include acquisitions as well
as additional strategic initiatives that should increase Group
earnings and enhance our position. Our two recent acquisitions of
vehicle accident repair specialist groups, Exway based in the South
West of England and Howard Basford in the North West of England,
help to increase Nationwide's presence in its target markets and to
enhance operational efficiencies in these regions, improving return
on capital. They represent templates that the Group will look to
replicate in other regions across the UK. This is in addition to
organic initiatives to balance capacity with demand and generate
economies of scale and enhanced efficiency of work flows.
Looking ahead, the new financial year has started well and our
operational cash flow remains strong. We view ongoing prospects for
growth positively and are encouraged by the opportunities available
to Nationwide.
Financial Results
Group revenue for the year to 31 December 2013 was GBP156.6m
(2012: GBP155.9m) with growth in fleet sales more than offsetting
pressures in the insurance market. Insurance revenues decreased by
3.9% to GBP111.5m (2012: GBP116.0m) which was a strong performance
against other operators and represented a gain in market share.
Fleet sales grew by 14.7% to GBP40.4m (2012: GBP35.2m) and now
represent almost 26% of Group revenue. Retail sales were maintained
at GBP4.7m (2012: GBP4.7m).
The enhancements to operational efficiency during the second
half of 2013 resulted in an improvement in the gross margin to
35.8% for the full year (2012: 35.5%) after a gross margin of 34.2%
in the first half. Overhead costs were GBP3.3m higher at GBP51.8m
(2012: GBP48.5m) and included both increased expenses associated
with operating the bodyshops acquired with Exway during the second
half of 2013 and investment in resources. This resource investment
enables us to position our sales, operations and support functions
for the market consolidation and growth opportunities that are
available to the Group. The overhead cost of the corresponding
period was also net of customer payments which did not subsist
during 2013.
Underlying operating profit was GBP4.2m (2012: GBP6.8m), with
GBP1.7m of the decline attributable to the first six months (prior
to operational efficiencies implemented in the second half of the
year). Improved returns on pension scheme assets contributed to a
GBP0.2m favourable variance in net finance costs following which
underlying profit before tax was GBP3.1m (2012: GBP5.5m). Earnings
per share, adjusted for non-recurring items, amortisation of
intangibles and adjusted tax rate were 5.1p (2012: 9.9p).
Non-recurring costs and amortisation of intangibles of GBP3.0m
(2012: GBP0.4m) were incurred, as anticipated, and mainly related
to the reorganisation of our network in the South West following
the Exway acquisition to create a more efficient regional hub.
Eight locations were closed and some I.T. assets were impaired.
Statutory profit before tax for the year to 31 December 2013 was
GBP0.1m (2012: GBP5.1m) and the statutory loss per share was 0.5p
(2012: earnings per share of 9.2p).
Net cash at 31 December 2013 stood at GBP6.3m (2012: GBP5.1m)
and reflects the Group's strong control of working capital. A net
cash inflow for the year of GBP1.2m was generated even after the
GBP1.7m cash outflow relating to the acquisition of Exway, GBP2.6m
of pension deficit contributions and a GBP1.6m cash impact of
non-recurring items.
Dividend
In line with our review of the level of dividend payments,
announced in August 2013, the Board is recommending a final
dividend of 1.9p per share (2012: 3.6p per share) which, subject to
shareholder approval at the Annual General Meeting on 27 June 2014,
will be paid on 2 July 2014 to shareholders on the register at the
close of business on 6 June 2014. Together with the interim
dividend paid of 1.0p, this takes the total dividend for the year
to 2.9p per share (2012: 5.5p per share).
Strategy
Our target markets remain those of insurance, fleet and retail
and we see a significant opportunity to develop a broader and
deeper range of solutions for our customers. As we extend our
services and increase penetration in our target markets, there is
the opportunity for Nationwide to become the UK's leading
integrated automotive support service group.
Economies of scale and efficiency in the flow of work across the
Group are key drivers which will help to enhance returns. We plan
to deliver this through a combination of organic growth and
selective acquisitions. By balancing capacity with demand on a
geographical basis in the UK there are also opportunities for
Nationwide to facilitate competitive advantages for our
customers.
Acquisitions
The acquisition of Exway, purchased in July 2013, has enhanced
our operational efficiency in the South West and I am pleased to
report that Exway has performed in line with our original
expectations. The integration of this business has gone well and it
experiences high levels of customer satisfaction.
In February 2014, we completed the acquisition of North West
based Howard Basford Ltd, the eighth largest independent bodyshop
chain in the UK, comprising eight fixed sites and also providing
mobile repair and mobile tyreservices. The acquisition is highly
complementary to the Group's existing operations and provides a
significantly enhanced presence in this region, with the prospect
of economies of scale and efficient work flows as well as other
benefits.
Both these acquisitions have helped to increase Nationwide's
presence in its target markets and improve operational efficiencies
in these regions, enhancing return on capital. They represent
templates that the Group will look to replicate in other regions
across the UK.
Outlook
The Group has made an encouraging start to 2014. There are some
early indications that the economic cycle is beginning to enter a
recovery period. Although there is additional scope for UK bodyshop
capacity to reduce, some regions are already beginning to see a
rebalancing of supply in line with demand. Nationwide is
well-positioned and there are opportunities to build the business
both organically and by further strategic acquisitions.
We are confident that the operational, strategic and financing
measures that we have adopted are the catalyst for positive growth
during 2014 and beyond.
Michael Marx
Chairman
15 April 2014
CHIEF EXECUTIVE'S STATEMENT & OPERATING REVIEW
Introduction
In recent years operators in our industry have experienced
significant pressures and reflecting this, the number of providers
continues to fall. We have not been immune to these factors however
our work to improve our long term prospects, including the
progressive development of complementary services, together with
our strong focus on driving efficiencies, leaves the Group well
positioned for future growth.
We put in place a number of measures in the second half of 2013
to enhance Nationwide's performance and are pleased to see that
they contributed to significantly improved second half results. The
impact of these initiatives and actions are also evident within the
encouraging start made by the Group in 2014.
Our acquisition of Exway in July 2013 and subsequent purchase of
Howard Basford in February 2014 further strengthen our operations
and I would like to welcome both teams to the Group.
Market Overview
Our estimate of the size of the UK automotive repair market is
GBP3.5bn, which is a more conservative assessment than independent
research sources. Of this total, we estimate that approximately 60%
(GBP2.1bn) of the market is insurance funded, 26% (GBP0.9bn) is
fleet funded and 14% (GBP0.5bn) is retail funded.
As we have previously reported, the insurance funded vehicle
repair market has been declining in size for more than ten years,
with the reduction in motor claims frequency reflecting factors
such as advances in vehicle technology. The more recent economic
and financial downturn has exacerbated the trend. Reflecting these
challenging trading conditions, the number of operators has
diminished over recent years. Those operating in the non-fault
claims sector (not an area where Nationwide has sought to build a
presence) have also experienced additional regulation creating
further pressures. While there is still an oversupply of repair
capacity, some regions in the UK are already beginning to see a
rebalancing of supply in line with demand.
It is our view that the worst effects of the economic cycle are
behind us now and the slowing rate of decline in insurance-funded
repairs is evidence of this. The increase in new vehicle
registrations and the growth of the UK car parc (i.e. the total
number of vehicles) as well as the rise in miles travelled are all
positive indicators and many industry analysts are predicting work
volumes to stabilise in the near term. Nationwide's insurance
market positioning, with the strategic introduction of a wider
range of services including new solutions catering, for instance,
for the increase in the average age of vehicles on our roads, is
designed to ensure that we remain at the forefront of our industry
and can deliver commercial advantage to our customers.
Typically our insurance customers require a solution which
delivers quality, value, service and speed. In order to satisfy
this market demand, operators need to have a customer focused,
efficient, consistent, transparent and integrated approach
supported by strong information technology. We continue to work
hard to ensure that our offering and service levels remain
market-leading.
Fleet customers include vehicle hire companies, corporates and
SMEs. The fleet market represents a growth opportunity as customers
become increasingly proactive in deciding who they wish to partner
with in order to keep their vehicles on the road. Fleets will also
experience growth as the economic cycle moves into recovery. To
support their own business success, fleet customers require a
service which offers speed, flexibility, good management
information, value and a national coverage with local presence. For
this market an integrated automotive support service is
particularly attractive. Many traditional repairers are unable to
directly satisfy this market and larger 'virtual' facilitators
increasingly struggle to provide a sustainable solution which
offers competitive value and quality. It is our intention to
continue to penetrate this marketplace and the continued broadening
of our services helps to support our growth plans.
The retail market for vehicle repair during the past few years
has been affected by suppressed disposable incomes and at the same
time growing insurance claims policy excesses which have in part
derived from the growth in policy placement through web-based
aggregators. Trust, value and convenience have been the key
attributes of successful operators in this market. We anticipate
that the retail market will continue to present a growth
opportunity for Nationwide as transparency, brand awareness and
digital capture progressively become differentiators for successful
market participants.
Review of Operations by Business Segment
Nationwide Crash Repair Centres ('NCRC')
With external revenue of GBP133.8m (2012: GBP136.2m) NCRC is the
Group's largest business segment and has almost a 4% share of the
vehicle repair market. Year-on-year insurance revenue declined by
7.6% to GBP98.0m (2012: GBP106.1m) albeit this represented a very
robust performance in our sector and we increased the Group's
market share. Fleet sales grew by 22.8% to GBP31.2m (2012:
GBP25.4m) as we continued to penetrate this market. Our mobile
repair service, commercial ovens, integrated technology and
broadening range of mobility solutions help to provide the speed,
flexibility and information that fleet customers require. Retail
sales were maintained at GBP4.7m (2012: GBP4.7m).
NCRC's gross margin has increased from 36.6% to 37.3% year-
on-year. We addressed the first half performance pressures and
adverse work flow mix such that in the second half we delivered a
significant improvement. An important focus has been on ensuring
that damage is remedied through repair in preference to parts
replacement. A key performance indicator in this respect is that
our parts revenue exceeded labour sales by 18% in the first half of
2013 and this improved to 2% below labour sales for the second
half.
Managing economies of scale and flow of work across NCRC's sites
is critical and, in line with this, we announced the acquisition of
Exway in July 2013. Based in the South West, the business generates
annualised sales of around GBP6m. Over the remaining months of
2013, we integrated Exway's sales volumes and workforce with our
remaining operational sites to create a more effective solution for
the region. As part of the reorganisation, we closed six locations
in the region, the costs of which are reported as non-recurring
items.
Following the successful integration of the Exway business and
after arranging appropriate bank facilities we acquired Howard
Basford, a leading operator in the North West region at the
beginning of the new financial year. The acquisition of Howard
Basford gives us a significant presence in the North West and is
consistent with our strategy to increase Nationwide's presence in
the target markets of insurance, fleet and retail whilst balancing
capacity with demand on a regional basis.
Customer satisfaction levels, as measured by independent
telephone surveys which rate the overall NCRC quality of repair,
increased during 2013 to 85.39% (2012: 85.26%) for our fixed sites
and to 94.29% (2012: 92.37%) for mobile repairs. The speed of our
repair process has also improved further with a 'key to key' repair
time (time taken from receipt of vehicle) of 10.36 days (2012:
11.05 days) and a comparable 'full cycle' time (time taken from the
notification of claim) of 15.88 days (2012: 15.80 days). These
results include vehicles where the repair process is delayed by
contested liability cases or by lead time issues with parts
suppliers so extending repair times.
Network Services
Network Services is our 'upstream' accident management service
for insurance companies and fleets. Operating a 24 hour call centre
facility, the business is responsible for a number of services. It
receives first notification of loss on vehicles, deploys vehicle
damage work to NCRC and an approved network of repairers, handles
claims, organises courtesy and hire vehicles, provides engineering
services and facilitates salvage. Network Services' engineering
team bring additional value to the wider Group as does this
business's lead role in balancing deployments between NCRC and the
approved network of repairers.
Total revenue generated was GBP42.5m (2012: GBP39.1m). Work
undertaken by NCRC accounted for GBP26.2m (2012: GBP24.5m) of this
total and external revenue accounted for GBP16.3m (2012: GBP14.6m).
Overall insurance income has grown by 16.7% to GBP31.4m (2012:
GBP26.9m) as new customers took up our services assisted by
expansion of our capacity for call handling, engineering and
deployment. Fleet sales income decreased by 9.0% to GBP11.1m (2012:
GBP12.2m) which was a disappointment and followed reduced activity
levels with some customers. We currently manage the vehicle repairs
for only three of the top one hundred motor fleets by size in the
UK and our fleet sales team is focussed on developing relationships
across this market. Some of our success in this relationship
building is increasingly being reflected within our insurance
revenue growth as corporates direct their insured claims to
preferred repairers.
Network Services' gross margin varies in relation to the
transaction mix of its range of services, with profitability
increasing year-on-year to GBP4.6m (2012: GBP4.2m).
Motorglass
Motorglass operates a fleet of specialist vans for automotive
glass repair and replacement which is coordinated using the Group's
common I.T. platform.
Revenue grew by 20% to GBP7.2m (2012: GBP6.0m) helped by
insurance sales up by 37.9% and fleet sales showing a smaller
improvement of 3.2%. Gross profit increased by 16.6% to GBP1.4m
(2012: GBP1.2m) although our use of subcontractors slightly
suppressed gross margin to 19.3% (2012: 20.0%). We look forward to
continued growth from our efficient and integrated operating
platform.
Strategy and Outlook
The outlook for the Group is improving and the long term
opportunity is to significantly increase Group revenues through
growing our market share across the chosen markets of insurance,
fleet and retail. Our economies of scale and efficient management
of work flows provides competitive advantages for customers and
there is scope to augment these through carefully targeted
acquisitions.
Within the insurance market, we still only satisfy around 4% of
the overall UK demand and we see clear opportunities to enhance our
position. As repair capacity realigns against demand we are
identifying both regional and national opportunities to accelerate
the pace of consolidation in this market. This strategy is
supported by our stronger balance sheet and available funding.
Also, we remain focused on our industry-leading technology and
integrated service approach. These all contribute towards enhanced
economies of scale and flow of work and also bring significant
benefits to customers.
Our fleet sales account for 4% of the UK market share and the
Group's ongoing focus is to extend its mobile repair capability and
mobile glass operations to support our fixed site repair capability
and so provide a more flexible solution than many of our
competitors. Additionally, we plan to widen our complementary
service offering through a combination of organic developments and
acquisitions.
In the retail market, where our market share is less than 1%, we
have to date mainly sold to consumers whose vehicles have entered
our repair process as a result of an insurance-funded claim. We are
continuing to build and communicate our brand, develop matrix
pricing and extend our flexible serviceoffering, including mobile
repair and glass solutions. We have done well to establish a
presence in this market and now set our strategic targets at a
level to reflect the initiatives which we have already
commenced.
2014 has started well with the organic and acquisitive steps
taken last year continuing to make a positive impact. We remain
focused on generating further economies of scale and improved flow
of work benefiting both customers and the Group. Our combined
approach of organic development and acquisitions will help to
increase the Group's market share on both a regional and national
scale. We also intend to continue to extend our range of services
to support our growth plans. Whilst insurance market pressures
remain, we are confident that Nationwide will make increasing
progress in the short term, with the potential for considerable
additional growth.
Michael Wilmshurst
Chief Executive
15 April 2014
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2013
2013 2012
Notes GBP'000 GBP'000
Revenue 2 156,621 155,874
Cost of sales (100,586) (100,567)
--------------------------------------------------- ------ ------------------ ----------
Gross profit 56,035 55,307
Distribution costs (32,214) (30,606)
--------------------------------------------------- ------ ------------------ ----------
Administrative costs (19,635) (17,925)
Amortisation of intangible assets (212) -
Non-recurring administrative costs 3 (2,747) (376)
Share option charge - (13)
--------------------------------------------------- ------ ------------------ ----------
Total administrative costs (22,594) (18,314)
Operating profit 1,227 6,387
Finance costs 4 (1,079) (1,255)
--------------------------------------------------- ------ ------------------ ----------
Profit before tax 148 5,132
Income tax expense 5 (342) (1,148)
--------------------------------------------------- ------ ------------------ ----------
(Loss)/profit for the year attributable
to equity holders of the parent (194) 3,984
--------------------------------------------------- ------ ------------------ ----------
Other comprehensive income:
Items that will not be reclassified subsequently
to profit or loss
Defined benefit plan actuarial gains 2,648 2,185
Tax on other comprehensive income (1,211) (1,024)
--------------------------------------------------- ------ ------------------ ----------
Other comprehensive income 1,437 1,161
--------------------------------------------------- ------ ------------------ ----------
Total comprehensive income for the year 1,243 5,145
--------------------------------------------------- ------ ------------------ ----------
Attributable to:
Equity holders of the parent 1,243 5,145
--------------------------------------------------- ------ ------------------ ----------
(Loss)/earnings per share
Basic 6 (0.5p) 9.2p
Diluted 6 (0.5p) 9.2p
--------------------------------------------------- ------ ------------------ ----------
The accompanying notes form an integral part of these financial
statements.
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2013
2013 2012
Notes GBP'000 GBP'000
----------------------------------------- ------ --------- ---------
Assets
Non--current assets
Intangible assets 6,654 6,266
Property, plant and equipment 10,012 9,970
Deferred tax asset 3,570 5,736
20,236 21,972
----------------------------------------- ------ --------- ---------
Current assets
Inventories 2,807 2,594
Trade and other receivables 20,190 21,147
Current tax receivable 822 -
Cash and cash equivalents 6,265 5,071
----------------------------------------- ------ --------- ---------
30,084 28,812
----------------------------------------- ------ --------- ---------
Total assets 50,320 50,784
----------------------------------------- ------ --------- ---------
Liabilities
Non--current liabilities
Long-term provisions 979 1,207
Pension fund deficit 8 18,706 22,698
---------
19,685 23,905
----------------------------------------- ------ --------- ---------
Current liabilities
Short-term provisions 995 725
Trade and other payables 29,687 24,725
Current tax liabilities - 732
----------------------------------------- ------ --------- ---------
30,682 26,182
----------------------------------------- ------ --------- ---------
Total liabilities 50,367 50,087
----------------------------------------- ------ --------- ---------
Net (liabilities)/assets (47) 697
----------------------------------------- ------ --------- ---------
Equity
Equity attributable to the shareholders
of the parent
Share capital 5,400 5,400
Capital redemption reserve 1,209 1,209
Share premium account 11,104 11,104
Revaluation reserve 8 8
Retained earnings (17,768) (17,024)
----------------------------------------- ------ --------- ---------
Total equity (47) 697
----------------------------------------- ------ --------- ---------
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2013
Share Capital Share Revaluation Retained Total
capital redemption premium reserve earnings
reserve account
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Balance at 1 January 2012 5,400 1,209 11,104 8 (19,806) (2,085)
Share option charge - - - - 13 13
Dividend paid (see note 7) - - - - (2,376) (2,376)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Transactions with owners - - - - (2,363) (2,363)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Profit for the year - - - - 3,984 3,984
Other comprehensive income - - - - 1,161 1,161
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Total comprehensive income for the year - - - - 5,145 5,145
Balance at 31 December 2012 5,400 1,209 11,104 8 (17,024) 697
Dividend paid (see note 7) - - - - (1,987) (1,987)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Transactions with owners - - - - (1,987) (1,987)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Loss for the year - - - - (194) (194)
Other comprehensive income - - - - 1,437 1,437
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Total comprehensive income for the year - - - - 1,243 1,243
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Balance at 31 December 2013 5,400 1,209 11,104 8 (17,768) (47)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2013
2013 2012
GBP'000 GBP'000
------------------------------------------------------ --- -------- ---------
Operating activities
(Loss)/Profit for the year (194) 3,984
Adjustments to arrive at operating cash flow:
Other comprehensive income 1,437 1,161
Net finance expense 43 34
Depreciation 2,260 2,395
Amortisation of intangible asset 212 -
Loss/(profit) on sale of property, plant and
equipment (incl. non-recurring items) 32 (38)
Impairment of I.T. system (non-recurring item
note 3) 354 -
Deferred tax on pension deficit 1,211 1,024
Taxation recognised in profit or loss 342 1,148
Changes in inventories (18) (135)
Changes in trade and other receivables 1,127 6,966
Changes in trade and other payables 4,917 (11,015)
Changes in provisions 1,637 85
Movement in pension fund liability (1,392) (797)
Share option scheme charge - 13
Outflow from pension obligations (2,600) (2,600)
Outflow from provisions (1,595) (2,127)
----------------------------------------------------------- -------- ---------
Net cash flow from operating activities 7,773 98
Tax (paid)/received (1,134) 362
----------------------------------------------------------- -------- ---------
6,639 460
Investing activities
Acquisition of Exway business (1,732) -
Additions to property, plant and equipment (2,056) (1,024)
Proceeds from the disposal of property, plant
and equipment 373 50
(3,415) (974)
---------------------------------------------------------- -------- ---------
Financing activities
Dividend paid (1,987) (2,376)
Interest paid (43) (34)
----------------------------------------------------------- -------- ---------
(2,030) (2,410)
---------------------------------------------------------- -------- ---------
Net increase/(decrease) in cash and cash equivalents 1,194 (2,924)
Cash and cash equivalents at beginning of year 5,071 7,995
----------------------------------------------------------- -------- ---------
Cash and cash equivalents at end of year 6,265 5,071
----------------------------------------------------------- -------- ---------
NOTES TO THE PRELIMINARY STATEMENT
1. BASIS OF PREPARATION
The financial information set out in this report does not
constitute the Company's statutory accounts for the years ended 31
December 2013 or 2012 but is derived from those accounts. Statutory
accounts for 2012 have been delivered to the registrar of
companies, and those for 2013 will be delivered in due course. The
auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include reference to any matters to which
the auditors drew attention by way of emphasis without qualifying
their report and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
This preliminary statement has been prepared under the
historical cost convention. The accounting policies have remained
unchanged from the previous year.
2. Segment analysis
The chief operating decision maker, as defined by IFRS 8, has
been identified as the Executive Directors of Nationwide Accident
Repair Services plc. The information reported below is consistent
with the reports regularly provided to the Board of Directors. The
Group operates three main operating segments, Nationwide Crash
Repair Centres ("NCRC" which incorporates Mobile Repairs), Network
Services and Motorglass (which incorporates Windscreen Invoice
Control Service "WICS"). The segments are identified by their
distinct functions within the Group, being site-based repairs,
supported by mobile vehicle repairs, accident administration and
glass services respectively. NCRC comprises a dedicated network of
repair centres across England, Scotland and Wales. Network Services
provides accident administration services to insurance companies
and fleet operators, including deploying work to Nationwide Crash
Repair Centres Limited, while Motorglass and WICS provide glass,
air conditioning and auto-electronic services to the automotive
industry. The income and costs of the holding company are shown
within NCRC, which acts as the support function for the Nationwide
Crash Repair Centres bodyshops.
Intra-Group transactions with Network Services are accounted for
including VAT, as the segment is within a separate VAT group. All
intra-Group transactions are invoiced or recharged at cost.
The revenues and net result generated by the three business
segments are summarised as follows:
NCRC Network Motorglass Total
Services
Year to 31 December 2013 GBP'000 GBP'000 GBP'000 GBP'000
Revenue from external customers 133,809 16,303 6,509 156,621
--------------------------------- -------- ---------- ----------- --------
Inter-segment revenues 141 26,175 722 27,038
--------------------------------- -------- ---------- ----------- --------
Total revenues 133,950 42,478 7,231 183,659
================================= ======== ========== =========== ========
Depreciation 2,087 44 129 2,260
(Loss)/ profit before tax (757) 523 382 148
--------------------------------- -------- ---------- ----------- --------
Amortisation of intangible
assets 212 - - 212
--------------------------------- -------- ---------- ----------- --------
Non-recurring items 2,259 488 - 2,747
--------------------------------- -------- ---------- ----------- --------
Underlying profit before tax 1,714 1,011 382 3,107
--------------------------------- -------- ---------- ----------- --------
Total assets 38,858 8,465 2,997 50,320
--------------------------------- -------- ---------- ----------- --------
Additions to property, plant
and equipment 1,709 294 53 2,056
--------------------------------- -------- ---------- ----------- --------
Year to 31 December 2012
Revenue from external customers 136,106 14,601 5,167 155,874
--------------------------------- -------- ---------- ----------- --------
Inter-segment revenues - 24,482 829 25,311
--------------------------------- -------- ---------- ----------- --------
Total revenues 136,106 39,083 5,996 181,185
================================= ======== ========== =========== ========
Depreciation 2,135 130 130 2,395
Non-recurring items 376 - - 376
--------------------------------- -------- ---------- ----------- --------
Underlying profit before tax 4,633 515 360 5,508
--------------------------------- -------- ---------- ----------- --------
Total assets 41,694 6,307 2,783 50,784
--------------------------------- -------- ---------- ----------- --------
Additions to property, plant
and equipment 957 - 67 1,024
--------------------------------- -------- ---------- ----------- --------
2. Segment analysis (continued)
The Group is involved within three main areas of the market,
insurance, fleet and retail work. The revenues attributable to each
area are summarised as follows:
2013 2012
Group Revenue % of total Revenue % of total
GBP000 GBP000
----------------------- -------- ----------- -------- -----------
Insurance 111,558 71.2% 115,978 74.4%
----------------------- -------- ----------- -------- -----------
Fleet 40,410 25.8% 35,214 22.6%
----------------------- -------- ----------- -------- -----------
Retail 4,653 3.0% 4,682 3.0%
----------------------- -------- ----------- -------- -----------
Revenue from external
customers 156,621 155,874
======================= ======== =========== ======== ===========
3. Non-Recurring Administrative costs
2013 2012
GBP'000 GBP'000
------------------------------ -------- --------
Site closure costs (2,123) (933)
Release of closure provision 126 848
Asset impairment (354) -
Employee settlements (229) (291)
Exway acquisition costs (167) -
------------------------------ -------- --------
(2,747) (376)
------------------------------ -------- --------
The site closure costs of GBP2,123k (2012: GBP933k) include
additional provision for future rental commitments, dilapidations
and costs in relation to closed sites; provision against future
rental commitments, dilapidations and costs for three sites which
were closed following the acquisition of Exway; in October 2013 the
Kettering and Gravesend sites were mothballed and closed; property
provisions relating to two sites which were substantially vacant
during 2013; the relocation of the Network Services operations to
two new sites during the year.
The release of GBP126k of the closure provision to non-recurring
items in 2013 (2012: GBP848k) followed the negotiation of an exit
from the lease commitments at the previously closed Matlock
site.
A full fixed asset impairment review of the Voyager 2 system,
which is no longer used by Network Services (Nationwide) Limited,
was undertaken and an adjustment of GBP354k made in the year to
reflect fair values.
The employee settlements of GBP229k in 2013 (2012: GBP291k)
arose due to changes in the senior management of the Group and the
payment of compensation for loss of office.
Legal costs for the acquisition of Exway were GBP167k.
4. Finance Costs
2013 2012
GBP'000 GBP'000
----------------------------------- -------- --------
Interest payable on bank balances (43) (34)
----------------------------------- -------- --------
Pension costs (see note 8):
Interest expense (4,027) (3,924)
Interest income 2,991 2,703
----------------------------------- -------- --------
(1,079) (1,255)
----------------------------------- -------- --------
5. Tax expense
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Current tax:
United Kingdom corporation tax at 23.25%
(2012: 24.5%) 81 1,032
Adjustments in respect of prior years (501) 31
------------------------------------------------- --------- ---------
(420) 1,063
Deferred tax:
Movement relating to pension liability
(IAS 19) 269 278
Temporary differences origination and reversal 312 (601)
Losses carried forward 181 408
342 1,148
------------------------------------------------- --------- ---------
The tax assessed for the period is higher 2013 2012
(2012: lower) than the effective rate of GBP'000 GBP'000
corporation tax in the UK of 23.25% (2012:
24.5%). The differences are explained as
follows:
Profit for the year before tax 148 5,132
------------------------------------------------- --------- ---------
Profit on ordinary activities before tax
multiplied by effective rate of UK corporation
tax of 23.25% (2012: 24.5%) 34 1,257
Effect of: Adjustments in respect of prior
years 106 (206)
Re-measurement of deferred tax - change
in UK tax rate (16) 42
Effect of rate changes - change in UK
tax rate (28) (18)
Marginal rate adjustment (7) (5)
Items not deductible for tax purposes 253 78
Total tax charge for the year 342 1,148
------------------------------------------------- --------- ---------
6. EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share has been calculated using the net loss
attributable to the shareholders of the Company of GBP194,000
(2012: GBP3,984,000 profit). The weighted average number of
outstanding shares used for basic earnings per share amounted to
43,197,220 (2012: 43,197,220).
Diluted earnings per share
Diluted earnings per share has been calculated using the net
loss attributable to the shareholders of the Company of GBP194,000
(2012: GBP3,984,000 profit). The weighted average number of
outstanding shares used for diluted earnings per share amounted to
43,197,220 (2012: 43,197,220).
In the current year due to the average market price of GBP0.65,
the share options are not included in the dilutive earnings per
share calculation. In 2012, the average market price was GBP0.63
and similarly, due to the share options being anti-dilutive, the
diluted earnings per share is the same as the basic earnings per
share.
Underlying earnings per share
The underlying earnings per share has been calculated as
follows:
2013 2012
GBP'000 GBP'000
Profit before tax (as stated) 148 5,132
Amortisation of intangible assets 212 -
Non-recurring items (note 3) 2,747 376
------------------------------------------ -------- --------
3,107 5,508
Tax expense (as stated) (342) (1,148)
Tax effect on amortisation of intangible
assets (42) -
Tax effect on non-recurring items (515) (92)
------------------------------------------ -------- --------
2,208 4,268
========================================== ======== ========
Underlying earnings per share (basic
and diluted) 5.1p 9.9p
========================================== ======== ========
7. DIVIDENDS
During 2013, the Group paid dividends of GBP1,987,100 (2012:
GBP2,376,100) to its equity shareholders.
These comprised:
-- a final dividend in respect of 2012 of 3.6p per share paid in June 2013 (GBP1,555,100); and
-- an interim dividend in respect of 2013 of 1.0p per share paid in November 2013 (GBP432,000).
The Board is proposing a final dividend in respect of the
results for the year ended 31 December 2013 of 1.9p per share.
8. PENSION and other employee assets/obligations
The Company operates a funded pension scheme in the UK. The Fund
has both defined benefit and defined contribution sections. Since 1
January 2002 the Fund has been closed to new members. Active
members of the Fund ceased to accrue further benefits in the
defined benefit section on 31 July 2006. Under the current Schedule
of Contributions, contributions to the Fund for the year beginning
1 January 2013 will be GBP2.6m. These contributions are included
within the Company cashflow and pension deficit. This disclosure is
in respect of the defined benefit section of the Fund only.
In November 2012, the Group implemented a stated policy of
allocation of the pension liability across the Group. The liability
recognised by the Company at 31 December 2013 was GBP299,000 (2012:
GBP363,000).
A full actuarial valuation of the scheme was carried out as at
31 December 2011 by a qualified independent actuary. The major
assumptions used by the actuary were (in nominal terms) as
follows:
2013 2012
% %
-------------------------------------- ------------------- -------------------
Discount rate 4.60 4.70
Pension increases - fixed 3.00 3.00
Pension increases - 5% LPI 3.35 2.75
Pension increases -2.5% LPI 2.50 2.50
RPI rate of inflation 3.35 2.75
CPI rate of inflation 2.35 2.25
Assumed life expectancies Current Pensioners Current Pensioners
on retirement at
age 65 are:
--------------------------- --------- ------------------- -------------------
Retiring today: Males 21.4 21.3
Females 24.0 23.9
------------------------------------- ------------------- -------------------
Future Pensioners Future Pensioners
--------------------------- --------- ------------------- -------------------
Retiring today: Males 21.1 21.0
Females 23.7 23.6
Retiring in 20 years
time: Males 23.0 22.9
Females 25.5 25.5
------------------------------------- ------------------- -------------------
8. PENSION and other employee assets/obligations (continued)
The assets in the scheme were: Value at Value at Value at
31/12/2013 31/12/2012 31/12/2011
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ ------------
UK Equities 15,530 21,237 18,890
Overseas Equities 37,264 21,397 18,673
Corporate Bonds 16,030 15,233 13,093
Cashflow Matching Bonds 544 - -
Property - 4,636 4,704
Alternatives 1,756 - -
Insured Annuities 749 738 -
Other 1,500 1,212 1,796
--------------------------------------- ------------ ------------ ------------
73,373 64,453 57,156
--------------------------------------- ------------ ------------ ------------
The actual return on assets
over the period was 9,470 7,117 (1,860)
--------------------------------------- ------------ ------------ ------------
Present value of defined benefit
obligation:
Deferred members 57,414 55,912 55,857
Pensioner members 33,916 30,501 27,394
Insured Pensioners 749 738 -
Funded plans 92,079 87,151 83,251
Unfunded plans - - -
------------
Total 92,079 87,151 83,251
------------
Present value of unfunded
obligations: 18,706 22,698 26,095
------------
Unrecognised actuarial gains/(losses) - - -
--------------------------------------- ------------ ------------ ------------
Net liability in balance sheet (18,706) (22,698) (26,095)
======================================= ============ ============ ============
Reconciliation of opening and closing balances of the present
value of the defined benefit obligations
2013 2012
GBP'000 GBP'000
--------------------------------------- -------- --------
Benefit obligation at beginning of
period 87,151 83,251
Service cost 220 167
Interest expense 4,027 3,924
Actuarial loss arising from changes
in financial assumptions 3,884 2,015
Actuarial (gain)/loss arising from
experience on the plan's liabilities (53) 214
Benefits paid (3,150) (3,158)
Inclusion of insured annuities - 738
Benefit obligation at end of period 92,079 87,151
--------------------------------------- -------- --------
8. PENSION and other employee assets/obligations (continued)
Reconciliation of opening and closing balances of the fair value
of plan assets
2013 2012
GBP'000 GBP'000
------------------------------------------ -------- --------
Fair value of plan assets at beginning
of period 64,453 57,156
Interest income 2,991 2,703
Return on plan assets excluding interest
income 6,479 4,414
Contributions by employer 2,600 2,600
Benefits paid (3,150) (3,158)
Inclusion of insured annuities - 738
Benefit asset at end of period 73,373 64,453
------------------------------------------ -------- --------
The amounts recognised in the statement of comprehensive income
are:
2013 2012
GBP'000 GBP'000
----------------------------------------- -------- --------
Current service cost 220 167
Net interest on the net defined benefit
liability 1,036 1,221
Total expense 1,256 1,388
----------------------------------------- -------- --------
Charged to:
Administration expenses 220 167
Finance costs 1,036 1,221
----------------------------------------- -------- --------
1,256 1,388
----------------------------------------- -------- --------
Remeasurements recognised in the statement of comprehensive
income are:
2013 2012
GBP'000 GBP'000
-------------------------------------------- --------- ---------
Remeasurements recognised at the beginning
of the period (26,717) (27,878)
Actuarial loss arising from changes
in financial assumptions (3,884) (2,015)
Actuarial gain/(loss) arising from
experience on the plan's liabilities 53 (214)
Return on plan assets excluding interest
income 6,479 4,414
Remeasurements recognised at the end
of the period (24,069) (25,693)
-------------------------------------------- --------- ---------
Deferred tax on actuarial loss (1,211) (1,024)
-------------------------------------------- --------- ---------
Cumulative losses recognised in other
comprehensive income (25,280) (26,717)
-------------------------------------------- --------- ---------
8. PENSION and other employee assets/obligations (continued)
History of scheme assets, obligations and experience
adjustments
2013 2012
GBP'000 GBP'000
---------------------------------------------- --------- ---------
Present value of defined benefit obligations 92,079 87,151
Fair value of scheme assets 73,373 64,453
Deficit in scheme (18,706) (22,698)
Experience adjustments arising on scheme
liabilities 3,831 2,229
Experience item as a % of scheme liabilities 4% 3%
Experience adjustments arising on scheme
assets 6,479 4,414
Experience item as a % of scheme assets 9% 7%
---------------------------------------------- --------- ---------
This disclosure is in respect of the defined benefit section of
the Fund only.
Characteristics of the Fund and the risks associated with the
Fund
a) Information about the characteristics of the Fund
i. The Fund provides pensions in retirement and death benefits
to members. Pension benefits are linked to a member's final salary
at retirement (or leaving if earlier) and their length of service.
Since 31 July 2006 the Fund has been closed to future accrual.
ii. The Fund is a registered scheme under UK legislation and is
contracted out of the State Second Pension. The Fund is subject to
the scheme funding requirements outlined in UK legislation. The
last scheme funding valuation of the Fund was as at 31 December
2008 and revealed a deficit of GBP25.4m. In the recovery plan dated
22 March 2010 the Company agreed to pay contributions of GBP2.6m
each year with the view to eliminating the shortfall by 31 December
2018.
iii. The Fund was established from 1 April 1973 under trust and
is currently governed by the Fund's trust deed and rules dated 11
October 2011. The Trustees are responsible for the operation and
the governance of the Fund, including making decisions regarding
the Fund's funding and investment strategy in conjunction with the
Company.
b) Information about the risks of the Fund to the Company
The ultimate cost of the Fund to the Company will depend upon
actual future events rather than the assumptions made. Many of the
assumptions made are unlikely to be borne out in practice and as
such the cost of the Fund may be higher (or lower) than disclosed
In general, the risk to the Company is that the assumptions
underlying the disclosures, or the calculation of contribution
requirements are not borne out in practice and the cost to the
Company is higher than expected. This could result in higher
contributions required from the Company and a higher deficit
disclosed. This may also impact the Company's ability to grant
discretionary benefits or other enhancements to members.
More specifically, the assumptions not being borne out in
practice could include:
i. The return on the Fund's assets being lower than assumed,
resulting in an unaffordable increase in the required Company
contributions.
ii. Falls in asset values (particularly equities) not being
matched by similar falls in the value of liabilities.
iii. Unanticipated future changes in mortality patterns leading
to an increase in the Fund's liabilities. Future mortality rates
cannot be predicted with certainty. This is especially so bearing
in mind that the youngest Fund members could be expected to still
be alive in 60 years or more and it is not possible to reliably
predict what medical advances may or may not have occurred by this
time.
iv. The potential exercise (by members or others) of options
against the Fund, for example taking early retirement or exchanging
a portion of pension for a cash lump sum.
8. PENSION and other employee assets/obligations (continued)
c) Information about any amendments, curtailments and
settlements
There were no Fund amendments, curtailments or settlements
during the reporting period.
Expected future cashflows to and from the Fund
In accordance with the schedule of contributions and recovery
plan both dated 22 March 2010 the Company is expected to pay
contributions of GBP2.6m over the next accounting period. In
addition, the Company is expected to meet the cost of
administrative expenses and insurance premiums for the Fund. The
Fund's Pension Protection Levies are met from the Fund's
assets.
The liabilities of the Fund are based on the current value of
expected benefit payment cashflows to members of the Fund over the
next 60 to 70 years. The average duration of the liabilities is
approximately 19 years.
The Fund's investment strategy
The Fund's investment strategy is to invest broadly 75% in
return seeking assets (equities and property) and 25% in matching
assets (corporate bonds). This strategy reflects the Fund's
liability profile and the Trustees' and Company's attitude to risk.
As the Fund matures, the Trustees and the Company expect to
gradually reduce the proportion allocated to return seeking assets
and increase the proportion allocated to matching assets.
Sensitivity analysis
The results in these disclosures are inherently volatile,
particularly the figures shown on the balance sheet. The results
disclosures are dependent on the assumptions chosen by the
Directors. The table below shows the sensitivity of the balance
sheet position to changes in assumptions to illustrate this
volatility:
GBP'000 % change
------------------------------------ ------- --------- ------------
Liabilities as at 31 December 2013 92,079
Sensitivity to:
Discount rate -0.25% pa
(4.35% p.a.) 96,323 +4.5%
Inflation +0.25% pa 94,015 +2.1%
(RPI 3.60% pa / CPI 2.60% pa)
Mortality age rating -one year 94,784 +2.9%
Members assumed to experience the
life expectancy of
someone one year younger)
Cash commutation 98,537 +7.0%
(No allowance is made for members
to exchange pension for tax-free
cash on retirement)
9. BUSINESS COMBINATIONS
Provisional analysis of assets and liabilities acquired
On 23 July 2013 the Group acquired a 100% interest in the
business and assets of Exway Coachworks Limited ("Exway"). The
acquisition of Exway, which is a vehicle accident repair specialist
group headquartered in Torbay, allowed the Group to manage
economies of scale and flow of work across NCRC sites within the
South West. Of the original seven repair centres purchased, three
were subsequently closed or merged with existing NCRC sites. A full
impairment review was undertaken and the carrying value of fixed
assets adjusted accordingly. The fair value of consideration for
the acquisition was GBP1,732,000 comprising GBP1,732,000 in
cash.
Book Fair Value Fair Value
Value Adjustments on
Acquisition
GBP'000 GBP'000 GBP'000
-------------------------------------- -------- ------------- -------------
Intangible assets - 482 482
Freehold property 770 - 770
Other property, plant and equipment 361 (126) 235
Inventories 195 - 195
Trade and other receivables 170 - 170
Trade and other payables (45) - (45)
Deferred tax - (193) (193)
Net assets acquired 1,451 163 1,614
-------------------------------------- -------- ------------- -------------
Goodwill 118
Consideration paid 1,732
-------------------------------------- -------- ------------- -------------
Satisfied by
Cash 1,732
Total purchase consideration and
cashflow on acquisition 1,732
---------------------------------- ------
Transaction costs relating to the acquisition included within
the income statement were GBP167,000.
The goodwill of GBP118,000 arising from the acquisition is
attributable to the expected synergistic benefits expected from
combining the operations of Nationwide and Exway.
Due to the Exway business being integrated into the South West
region of Nationwide, it is not possible to separately identify the
trading results for 2013.
Fair value adjustments
On acquisition of Exway, all assets were fair valued and
appropriate intangible assets recognised following the principles
of IFRS3. A deferred tax liability related to these intangible
assets was also recognised. Management identified the main material
intangible asset as customer relationships acquired with Exway.
This intangible asset was valued using the excess earnings method
at GBP482,000. These customer relationships are being amortised
over a period of 12 months.
A GBP193,000 credit to deferred tax has been made to record the
liability arising on these intangible assets.
There were no contractual amounts receivable included within the
trade and other receivables balance of GBP170,000.
10. FINANCIAL STATEMENTS
The audited financial statements will be posted to shareholders
on 30 April 2014. This announcement and the preliminary results
presentation are available from the registered office of Nationwide
Accident Repair Services plc at 17 Thorney Leys Park, Witney,
Oxfordshire, OX28 4GE and on the Company's website,
www.nationwiderepairs.co.uk
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
FR QKQDBCBKDOQD
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