TIDMNARS
RNS Number : 3123S
Nationwide Accident Repair Srvs PLC
23 September 2014
AIM: NARS
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
("Nationwide", "the Company" or "the Group")
Unaudited Half Year Results
for the six months ended 30 June 2014
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 management expectations and show significant year-on-year progress
-- Revenue increased by 13.7% to GBP90.0m (2013: GBP79.1m)
- Howard Basford and Exway acquisitions performed well,
contributing combined revenues of GBP10.1m (2013: nil)
- insurance and fleet volumes up significantly
-- Gross margin up two percentage points to 36.2% (2013: 34.2%)
-- Underlying (1) PBT up 86% to GBP2.5m (2013: GBP1.4m)
- Statutory PBT after non-recurring costs and amortisation of
intangibles of GBP0.02m (2013: GBP1.35m)
-- Underlying (1) EPS up 91% to 4.4p (2013: 2.3p). Statutory
loss per share of 0.4p (2013: EPS of 2.3p)
-- Continuing good levels of cash generation
-- Interim dividend maintained at 1.0p per share (2013: 1.0p per share)
-- Post period end acquisition of Gladwins for GBP9.5m develops
Group's regional presence in the East of England
-- Two major contracts agreed with AXA UK (in June 2014) and
Allianz Insurance plc (in September 2014)
- worth total of c. GBP20m pa
-- Positive outlook - Group is well placed for continued growth
Notes: 1. 'Underlying' is calculated before non-recurring items
and amortisation of intangibles.
Michael Marx, Chairman, commented,
"We are very pleased to report a substantial improvement in the
underlying trading results of the Group. These encouraging results
show the combined benefits of increased volumes, improved
operational efficiencies and economies of scale. The two
acquisitions we have made, Exway in July 2013 and Howard Basford in
February 2014, have performed well, contributing to both volumes
and enhanced efficiencies. We are also very pleased to see
continuing progress in fleet sales, which grew by 22% and now
comprise 25% of Group revenues.
We are confident that in continuing to develop our regional
presence as well as our integrated national range of automotive
services, we will not only enhance our customer proposition but
also our trading performance. We remain positive about the outlook
for the Group over the remainder of the year and beyond as we
execute our growth strategy."
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 & CHIEF EXECUTIVE'S STATEMENT
Introduction
We are very pleased to report a substantial improvement in the
underlying trading results of the Group, which show underlying
profit before tax up 86% to GBP2.5m (2013: GBP1.4m) and underlying
earnings per share up 91% to 4.4p (2013: 2.3p).
These encouraging results were helped by the measures we put in
place to improve operational efficiencies in the second half of
2013 and from increased volumes in both insurance and fleet
business. There was organic growth, especially in fleet revenues
which rose 22% over the corresponding period, and our two recent
acquisitions made contributions in line with management
expectations.
The integration of Exway, the bodyshop chain based in the South
West of England which we acquired in July 2013, has been
successful. Our second recent acquisition, in February 2014, of
Howard Basford Ltd, which operates bodyshops in the North West,
also performed well in the period. Last week, we announced the
acquisition of Derek Gladwin Ltd ("Gladwins") for a total net cash
consideration of GBP9.5m including freehold properties of GBP4.0m.
Gladwins is a leading provider of crash repair services in the East
of England and, like our previous acquisitions, its purchase is in
line with our strategy to expand selectively in territories
providing competitive advantage for our customers as well as
delivering economies of scale and work flow efficiencies alongside
our plans to build our presence in the insurance, fleet and retail
markets. We are delighted to welcome the Gladwins team to
Nationwide and look forward to the positive development
opportunities our enlarged presence in the East of England will
offer. The acquisition of Gladwins is anticipated to be earnings
enhancing in the first full year following the acquisition.
We were pleased to announce two major contract agreements. In
June, we signed a contract extension with AXA UK and, in early
September, we signed a new contract with Allianz Insurance plc.
Each contract is worth an estimated GBP10m per annum and supports
the Group's trading performance in the current financial year and
beyond.
We remain focused on generating economies of scale and efficient
work flows on a regional and national basis to enhance
profitability. The broadening of our complementary automotive
service range together with improving economic conditions positions
the Group to generate growth both organically and through further
acquisitions.
Financial Results
During the six months to 30 June 2014, Group revenue of GBP90.0m
(2013: GBP79.1m) included GBP7.1m relating to Howard Basford and
approximately GBP3.0m from Exway. Insurance revenue, which
comprises 73% (2013: 74%) of the Group's activities, grew by 12% to
GBP65.5m (2013: GBP58.3m) with an organic gain in market share
being complemented by new and enhanced customer relationships from
Howard Basford and Exway. Fleet revenue growth, which was almost
entirely organic, of 22% to GBP22.2m (2013: GBP18.2m) now
represents 25% of the Group's activities (2013: 23%). Retail sales
of GBP2.3m (2013: GBP2.7m) represent approximately 2% of the
Group's activities (2013: 3%) and, although they represent a small
component of the Group's revenue, we have plans to extend our
presence in this market.
Overall gross margin increased by two percentage points to 36.2%
(2013: 34.2%), reflecting the execution of our strategy to balance
regional capacity with demand alongside operational efficiencies
and economies of scale. The underlying operating profit margin also
increased to 3.3% from 2.4%.
Underlying profit before tax increased by 86% to GBP2.5m (2013:
GBP1.4m), or around 60% excluding the effect of the Howard Basford
acquisition. Earnings per share, adjusted for non-recurring items
and amortisation of intangibles, grew by 91% to 4.4p (2013:
2.3p).
Non-recurring costs and amortisation of intangibles of GBP2.5m
(2013: nil) were incurred, as anticipated, due to acquisition fees
(GBP0.3m) and amortisation of intangibles (GBP0.7m) arising from
recent acquisitions, together with the closure costs of three sites
(GBP1.3m) and alignment of glass costs (GBP0.2m). Statutory profit
before tax was GBP0.02m (2013: GBP1.35m) and the statutory loss per
share was 0.4p (2013: earnings per share of 2.3p).
The Group continues to generate good cash flows. Net cash at 30
June 2014 of GBP3.1m (30 June 2013: GBP5.0m; 31 December 2013:
GBP6.3m) was in line with our expectations following the net cash
outflow of GBP4.3m relating to the acquisition of Howard Basford,
GBP1.3m of pension deficit contributions and GBP1.0m of cash
expended on sites previously closed.
Dividend
The Board is declaring an interim dividend of 1.0p (2013: 1.0p)
per share, which will be paid on 7 November 2014 to shareholders on
the register at close of business on 10 October 2014.
Acquisitions
In February 2014, we completed the acquisition of North West
based Howard Basford, the eighth largest independent bodyshop chain
in the UK, comprising eight fixed sites and also providing mobile
repair and mobile tyre services. The initial net cash consideration
and fees of GBP4.3m produced revenue of GBP7.1m and underlying
profit before tax of more than GBP0.2m during the post-acquisition
period to 30 June 2014. Further contingent consideration of up to
GBP1.75m is payable in cash and dependent on the attainment of
certain performance criteria. The acquisition, which is performing
as anticipated, is highly complementary to the Group's operations
and is providing a significantly enhanced presence in this region,
with the prospect of economies of scale and efficient work flows as
well as other benefits.
We are also pleased to have completed the acquisition of
Gladwins on 17 September 2014 for a total net cash consideration of
GBP9.5m including freehold properties with a value of GBP4.0m.
Gladwins operates from eight locations in the East of England and
was the eleventh largest independent bodyshop chain in the UK. The
acquisition is anticipated to be earnings enhancing during the
first full year following the acquisition. It complements
Nationwide's existing operations and presents opportunities for
economies of scale and efficiencies of work flow that can offer
competitive advantage for our customers.
Review of Operations by Business Segment
Nationwide Crash Repair Centres ("NCRC")
NCRC's revenue of GBP77.1m (2013: GBP67.6m) includes revenues
from Howard Basford and Exway, and represents 76% of the Group's
activities. Comprising 74 bodyshops (2013: 60), a mobile repair
fleet, a Rapid Repair facility and two Fast Fit Plus vehicle
service centres, NCRC provides services to the insurance, fleet and
retail markets on a local and national basis.
Gross margins for NCRC strengthened to 38.5% during the period
(2013: 36.1%) helped by the continued focus on ensuring that
vehicle damage is remedied through repair in preference to parts
replacement and by our enhanced ability to balance capacity with
demand on a regional basis.
The benefits of successfully integrating the acquired Exway
operations continued to flow through in the first half of 2014. Our
strategy of balancing capacity with demand has been augmented
through the closure of three sites during this period together with
the acquisition of Howard Basford's eight sites.
Customer satisfaction is a key objective for NCRC as, of course,
it is across all of the Group's operations. During the first six
months of 2014 the satisfaction level, as measured by independent
telephone surveys, increased to 87.3% (2013: 85.6%) and for our
flexible and fast mobile repair service this measure was 95.0%.The
average duration of repair has also reduced to 10.06 days (2013:
10.66 days) "key to key" (time taken from receipt of vehicle). Full
cycle time from notification of the claim has slowed to 16.77 days
(2013: 15.83 days) partially due to the delays caused by parts
suppliers and on occasion the delay incurred whilst awaiting
clarity over liability.
Network Services
Our accident management services business segment operates a 24
hour call service and deploys vehicle damage work to NCRC and an
approved network of repairers. In addition, Network Services
receives first notification of loss on vehicles, handles claims,
organises replacement vehicles, provides engineering services and
facilitates salvage.
As Network Services plays a key role in the control of work flow
to NCRC sites, to assist with the balancing of capacity with
demand, the mix of their total revenue between that undertaken by
NCRC and that by the approved network has a significant effect on
Network Services' profitability. During the first half of 2014
revenue generated from sub-contracting to our approved network grew
by 14% to GBP9.6m (2013: GBP8.4m), while sales generated from work
deployed into NCRC decreased by GBP3.7m to GBP10.6m (2013:
GBP14.3m). Total revenue for the Network Services business segment
therefore reduced to GBP20.2m (2013: GBP22.7m) although gross
profit increased to GBP2.2m (2013: GBP2.0m), reflecting the greater
proportion of Network Services activity being generated through the
approved network.
Glass Division
Revenue growth of 5% to GBP3.7m (2013: GBP3.6m) was achieved by
our specialist fleet of vans for automotive glass repair and
replacement. However an adverse mix of work away from our overnight
deployment service resulted in gross profit being maintained at
GBP0.7m (2013: GBP0.7m).
Market Overview and Strategy
The economic cycle is beginning to enter a recovery period and
private motor vehicle miles travelled is now rising and acting as a
counterbalance to factors such as advances in vehicle technology
and traffic management systems, which have been behind the secular
downward trend in motor claims frequency. While, as we have
reported previously, there remains some scope for UK bodyshop
capacity to reduce, some regions are already beginning to see a
rebalancing of supply in line with demand.
Insurance and fleet customers require solutions which deliver
quality, value, service and speed; alongside flexibility and good
management information on a national scale with local coverage.
Many traditional repairers and 'virtual' facilitators are unable to
directly satisfy these markets with a sustainable solution. We have
a customer focussed, efficient, transparent and integrated approach
supported by strong information technology designed to deliver
competitive advantage for our customers on a regional and national
basis. We continue to work hard to ensure that our offering and
service levels remain market-leading.
The retail market presents a further opportunity for growth as
integrity, brand awareness and digital capture progressively become
differentiators for successful market participants.
Our strategy is to extend the Group's share of the insurance
market, further penetrate the fleet market and increase our retail
presence. We aim to provide our customers with a competitive
advantage through an expanding range of integrated automotive
services on a national scale with regional focus. The fragmented
nature of the market participants, the structural challenges faced
by many of our competitors and our position as a market leader will
continue to present opportunities for the Group to develop, both
organically and through acquisitions.
Outlook
Progress during 2014 has been encouraging with the operational
initiatives and acquisitions made in the second half of last year
and first half of this year continuing to make a positive
impact.
We are confident that by continuing to develop our regional
presence alongside an integrated national range of automotive
services, we will deliver further economies of scale and
efficiencies of work flow which will in turn complement our
customer proposition and deliver enhanced performance.
The Board remains focused on creating shareholder value through
both income and growth, and views prospects for the second half and
beyond positively.
Michael Marx Michael Wilmshurst
Chairman Chief Executive
Unaudited Consolidated Statement of Comprehensive
Income
For the six months ended 30 June 2014
Unaudited Unaudited Audited
6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
2014 2013 2013
Notes GBP'000 GBP'000 GBP'000
------------------------------------------------------------ ------ ------------ ------------ -----------
Revenue 2 89,996 79,129 156,621
Cost of sales (57,401) (52,047) (100,586)
------------------------------------------------------------ ------ ------------ ------------ -----------
Gross profit 32,595 27,082 56,035
Distribution costs (18,097) (15,681) (32,214)
------------------------------------------------------------ ------ ------------ ------------ -----------
Administrative costs (11,505) (9,504) (19,635)
Amortisation of intangible assets (702) - (212)
Non-recurring administrative costs 3 (1,792) - (2,747)
------------------------------------------------------------ ------ ------------ ------------ -----------
Total administrative costs (13,999) (9,504) (22,594)
------------------------------------------------------------ ------ ------------ ------------ -----------
Operating profit 499 1,897 1,227
Finance costs 4 (478) (545) (1,079)
------------------------------------------------------------ ------ ------------ ------------ -----------
Profit before tax 21 1,352 148
Income tax expense 5 (204) (340) (342)
------------------------------------------------------------ ------ ------------ ------------ -----------
(Loss)/profit for the year attributable
to equity holders of the parent (183) 1,012 (194)
------------------------------------------------------------ ------ ------------ ------------ -----------
Other comprehensive income
Items that will not be reclassified subsequently
to profit or loss
Defined benefit plan actuarial (losses)/gains (1,348) (94) 2,648
Tax on other comprehensive income 270 (278) (1,211)
------------------------------------------------------------ ------ ------------ ------------ -----------
Other comprehensive income (1,078) (372) 1,437
Total comprehensive income for the period (1,261) 640 1,243
------------------------------------------------------------ ------ ------------ ------------ -----------
Attributable to:
Equity holders of the parent (1,261) 640 1,243
------------------------------------------------------------ ------ ------------ ------------ -----------
Earnings per share
Basic 6 (0.4p) 2.3p (0.5p)
Diluted 6 (0.4p) 2.3p (0.5p)
------------------------------------------------------------ ------ ------------ ------------ -----------
All activities of the Group are classed as continuing.
The accompanying notes form an integral part of these financial
statements.
Unaudited Consolidated Statement of Financial
Position
As at 30 June 2014 Unaudited Unaudited Audited
30 Jun 30 Jun 31 Dec
2014 2013 2013
Notes GBP'000 GBP'000 GBP'000
----------------------------------------- ------ ------------ ------------ ----------
Assets
Non--current assets
Intangible assets 8 12,129 6,266 6,654
Property, plant and equipment 9 10,068 9,064 10,012
Deferred tax asset 3,175 5,425 3,570
----------------------------------------- ------ ------------ ------------ ----------
25,372 20,755 20,236
----------------------------------------- ------ ------------ ------------ ----------
Current assets
Inventories 2,752 2,373 2,807
Trade and other receivables 24,989 21,422 20,190
Current tax receivable 16 - 822
Cash and cash equivalents 3,196 5,006 6,265
----------------------------------------- ------ ------------ ------------ ----------
30,953 28,801 30,084
----------------------------------------- ------ ------------ ------------ ----------
Total assets 56,325 49,556 50,320
----------------------------------------- ------ ------------ ------------ ----------
Liabilities
Non--current liabilities
Long-term provisions 771 889 979
Pension fund deficit 19,281 22,135 18,706
----------------------------------------- ------ ------------ ------------ ----------
20,052 23,024 19,685
----------------------------------------- ------ ------------ ------------ ----------
Current liabilities
Short-term provisions 1,341 533 995
Short-term borrowings 95 - -
Trade and other payables 36,966 25,913 29,687
Current tax liabilities - 304 -
----------------------------------------- ------ ------------ ------------ ----------
38,402 26,750 30,682
----------------------------------------- ------ ------------ ------------ ----------
Total liabilities 58,454 49,774 50,367
----------------------------------------- ------ ------------ ------------ ----------
Net liabilities (2,129) (218) (47)
----------------------------------------- ------ ------------ ------------ ----------
Equity
Equity attributable to the shareholders
of the parent
Share capital 11 5,400 5,400 5,400
Capital redemption reserve 1,209 1,209 1,209
Share premium account 11,104 11,104 11,104
Revaluation reserve 8 8 8
Retained earnings (19,850) (17,939) (17,768)
----------------------------------------- ------ ------------ ------------ ----------
Total equity (2,129) (218) (47)
----------------------------------------- ------ ------------ ------------ ----------
The accompanying notes form an integral part of these financial
statements.
Company Number 966807
Unaudited Consolidated Statement of Changes in Equity
For the six months ended 30 June
2014
Capital Share
Share redemption premium Reval Retained
Capital reserve account reserve earnings Total
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 - - - - (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 (note 7) - - - - (1,555) (1,555)
--------------------------------- -------- ----------- -------- -------- --------- --------
Transactions with owners - - - - (1,555) (1,555)
--------------------------------- -------- ----------- -------- -------- --------- --------
Profit for the six month period - - - - 1,012 1,012
Other comprehensive income - - - - (372) (372)
--------------------------------- -------- ----------- -------- -------- --------- --------
Total comprehensive income
for the period - - - - 640 640
--------------------------------- -------- ----------- -------- -------- --------- --------
Balance at 30 June 2013 5,400 1,209 11,104 8 (17,939) (218)
Dividend paid (note 7) - - - - (432) (432)
--------------------------------- -------- ----------- -------- -------- --------- --------
Transactions with owners - - - - (432) (432)
--------------------------------- -------- ----------- -------- -------- --------- --------
Loss for the six month period - - - - (1,206) (1,206)
Other comprehensive income - - - - 1,809 1,809
--------------------------------- -------- ----------- -------- -------- --------- --------
Total comprehensive income
for the period - - - - 603 603
--------------------------------- -------- ----------- -------- -------- --------- --------
Balance at 31 December 2013 5,400 1,209 11,104 8 (17,768) (47)
Dividend paid (note 7) - - - - (821) (821)
--------------------------------- -------- ----------- -------- -------- --------- --------
Transactions with owners - - - - (821) (821)
--------------------------------- -------- ----------- -------- -------- --------- --------
Loss for the six month period - - - - (183) (183)
Other comprehensive income - - - - (1,078) (1,078)
Total comprehensive income
for the period - - - - (1,261) (1,261)
--------------------------------- -------- ----------- -------- -------- --------- --------
Balance at 30 June 2014 5,400 1,209 11,104 8 (19,850) (2,129)
--------------------------------- -------- ----------- -------- -------- --------- --------
The accompanying notes form an integral part of these financial
statements.
Unaudited Consolidated Cash Flow Statement Unaudited Unaudited Audited
For the six months ended 30 June 2014 6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
2014 2013 2013
GBP'000 GBP'000 GBP'000
--------------------------------------------------------- ---------- ---------- ----------
Operating activities
(Loss)/profit for the period (183) 1,012 (194)
Adjustments to arrive at operating cash flow
Other comprehensive income (1,078) (372) 1,437
Net finance expense 48 11 43
Depreciation 1,341 1,130 2,260
Amortisation of intangible asset 702 - 212
(Profit)/loss on sale of property, plant and equipment
(incl. non-recurring items) (18) 25 32
Impairment of I.T System (non-recurring item note
3) - - 354
Deferred tax on pension deficit (270) 277 1,211
Taxation recognised in profit or loss 204 340 342
Changes in inventories 471 221 (18)
Changes in trade and other receivables (2,193) (275) 1,127
Changes in trade and other payables 2,301 1,189 4,917
Changes in provisions 1,130 - 1,637
Movement in pension fund liability 1,875 737 (1,392)
Outflow from pension obligations (1,300) (1,300) (2,600)
Outflow from provisions (992) (510) (1,595)
--------------------------------------------------------- ---------- ---------- ----------
Net cash flow from operating activities 2,038 2,485 7,773
Tax received/(paid) 507 (735) (1,134)
--------------------------------------------------------- ---------- ---------- ----------
2,545 1,750 6,639
Investing activities
Acquisition of Howard Basford business (3,983) - -
Acquisition of Exway business - - (1,732)
Additions to property, plant and equipment (1,064) (606) (2,056)
Proceeds from the disposal of property, plant and
equipment 321 357 373
(4,726) (249) (3,415)
--------------------------------------------------------- ---------- ---------- ----------
Financing activities
Repayment of obligations under finance leases (19) - -
Dividend paid (821) (1,555) (1,987)
Interest paid (48) (11) (43)
(888) (1,566) (2,030)
--------------------------------------------------------- ---------- ---------- ----------
Net (decrease)/increase in cash and cash equivalents (3,069) (65) 1,194
Cash and cash equivalents at beginning of period 6,265 5,071 5,071
--------------------------------------------------------- ---------- ---------- ----------
Cash and cash equivalents at end of period 3,196 5,006 6,265
--------------------------------------------------------- ---------- ---------- ----------
Analysis of net cash/(debt)
Cash and cash equivalents 3,196 5,006 6,265
Short term borrowings:
Finance lease obligations (95) - -
----------------------------- ------ ------ ------
Net cash 3,101 5,006 6,265
----------------------------- ------ ------ ------
The accompanying notes form an integral part of these financial
statements.
Notes to the Unaudited Interim Statement
For the six months ended 30 June 2014
1. Basis of preparation
The unaudited interim accounts have 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 2013.
These unaudited interim statements for the period ended 30 June
2014 have been prepared in accordance with IAS 34, Interim
Financial Reporting. They do not include all of the information
required for full annual financial statements and should be read in
conjunction with the consolidated financial statements of the Group
for the year ended 31 December 2013, which have been prepared in
accordance with IFRS.
The financial information set out in these interim accounts does
not constitute statutory accounts as defined in section 434 of the
Companies Act 2006. The figures for the year ended 31 December 2013
have been extracted from the statutory financial statements which
have been filed with the Registrar of Companies. The auditor's
report on those financial statements was unmodified.
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 Glass (which incorporates Motorglass and 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 the Glass
segment provides 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 Services Glass Total
6 months to 30 June GBP'000 GBP'000 GBP'000 GBP'000
2014
---------------------------- -------- ----------------- -------- --------
Revenue from external
customers 77,098 9,571 3,327 89,996
---------------------------- -------- ----------------- -------- --------
Inter-segment revenues 53 10,580 411 11,044
---------------------------- -------- ----------------- -------- --------
Total revenues 77,151 20,151 3,738 101,040
---------------------------- -------- ----------------- -------- --------
Depreciation 1,222 64 55 1,341
----------------------------
(Loss)/profit before
tax (528) 418 131 21
Amortisation of intangible
assets (702) - - (702)
Non-recurring items 1,611 - 181 1,792
Underlying profit before
tax 1,966 418 131 2,515
---------------------------- -------- ----------------- -------- --------
Total assets 47,714 5,520 3,091 56,325
---------------------------- -------- ----------------- -------- --------
Additions to non-current
assets 1,048 - 16 1,064
---------------------------- -------- ----------------- -------- --------
6 months to 30 June GBP'000 GBP'000 GBP'000 GBP'000
2013
Revenue from external
customers 67,566 8,362 3,201 79,129
Inter-segment revenues - 14,290 354 14,644
Total revenues 67,566 22,652 3,555 93,773
Depreciation 1,001 64 65 1,130
Profit before tax 773 391 188 1,352
Amortisation of intangible - - - -
assets
Non-recurring items - - - -
Underlying profit before
tax 773 391 188 1,352
Total assets 39,015 8,079 2,462 49,556
---------------------------- -------- ----------------- -------- --------
Additions to non-current
assets 560 - 46 606
---------------------------- -------- ----------------- -------- --------
12 months to 31 December GBP'000 GBP'000 GBP'000 GBP'000
2013
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 37,540 9,813 2,967 50,320
---------------------------- -------- -------- -------- --------
Additions to non-current
assets 1,709 294 53 2,056
---------------------------- -------- -------- -------- --------
3. Non-recurring items
6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
2014 2013 2013
GBP'000 GBP'000 GBP'000
------------------------------------- ----------- ----------- ----------
Site closure costs (1,333) - (2,123)
Release of closure provision 80 - 126
Asset impairment - - (354)
Employee settlements (93) - (229)
Exway acquisition fees - - (167)
Auto Think Limited acquisition fees (265) - -
Glass cost adjustments (181) - -
(1,792) - (2,747)
------------------------------------- ----------- ----------- ----------
The site closure costs of GBP1,333k (2013: GBP2,123k) include
additional provision for future rental commitments, dilapidations
and costs in relation to closed sites. Three sites were closed in
2014.
The release of GBP80k of the closure provision to non-recurring
items in 2014 (2013: GBP126k) followed the negotiation of an exit
from the lease commitments at the previously closed Wednesbury
site.
In 2013, 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 GBP93k in 2014 (2013: GBP229k) arose
principally following the integration of acquisitions.
Professional fees in respect of the acquisition of Auto Think
Limited in 2014 were GBP265k (2013: costs associated with the
acquisition of Exway were GBP167k).
The Glass cost adjustments of GBP181k arose in WICS and relate
to the change from cash accounting for this business.
4. Net finance costs
6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
2014 2013 2013
GBP'000 GBP'000 GBP'000
----------------------------------- ----------- ---------- ----------
Interest payable on bank balances (48) (11) (43)
----------------------------------- ----------- ---------- ----------
Pension costs (note 10):
Interest expense (2,100) (2,031) (4,027)
Interest income 1,670 1,497 2,991
----------------------------------- ----------- ---------- ----------
(478) (545) (1,079)
----------------------------------- ----------- ---------- ----------
5. Tax expense
6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
2014 2013 2013
GBP'000 GBP'000 GBP'000
----------------------------------------- ----------- ---------- ----------
Current tax:
United Kingdom corporation tax at
22.0% (2013: 23.5%) 204 307 81
Adjustments in respect of prior periods - - (501)
----------------------------------------- ----------- ---------- ----------
204 307 (420)
Deferred tax:
Movement relating to pension asset
(IAS 19) 155 (148) 269
Temporary differences origination
and reversal (155) 181 312
Losses carried forward - - 181
204 340 342
----------------------------------------- ----------- ---------- ----------
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 (GBP183,000) for
the six month period (2013: GBP1,012,000 net profit) (12 months to
31 December 2013: (GBP194,000) net loss). The weighted average
number of outstanding shares used for the basic earnings per share
amounted to 43,197,220 (2013: 43,197,220) (12 months to 31 December
2013: 43,197,220).
Diluted earnings per share
The diluted earnings per share has been calculated using the net
loss attributable to the shareholders of the Company of
(GBP183,000) for the six month period (2013: GBP1,012,000 net
profit) (12 months to 31 December 2013: (GBP194,000) net loss). The
weighted average number of outstanding shares used for the basic
earnings per share amounted to 43,197,220 (2013: 43,197,220) (12
months to 31 December 2013: 43,197,220).
In the current year due to the average market price of GBP0.69,
the share options are not included in the dilutive earnings per
share calculation. In the six month period to 30 June 2013 the
average market price was GBP0.70 (12 months to 31 December 2013:
GBP0.65) 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:
6 months 6 months 12 months
to 30 Jun to 30 Jun to 31 Dec
2014 2013 2013
GBP'000 GBP'000 GBP'000
------------------------------------------ ----------- ----------- ----------
Profit before tax (as stated) 21 1,352 148
Amortisation of intangible assets 702 - 212
Non-recurring items (note 3) 1,792 - 2,747
2,515 1,352 3,107
Tax expense (as stated) (204) (340) (342)
Tax effect on amortisation of intangible
assets (140) - (42)
Tax effect on non-recurring items (265) - (515)
------------------------------------------ ----------- ----------- ----------
1,906 1,012 2,208
------------------------------------------ ----------- ----------- ----------
Underlying earnings per share 4.4p 2.3p 5.1p
------------------------------------------ ----------- ----------- ----------
7. Dividends
In June 2014, the Company paid a dividend of GBP820,700 to its
equity shareholders. This comprised a final dividend in respect of
2013 of 1.9p per share. The directors have declared an interim
dividend of 1.0p per share (2013:1.0p), which will be paid on 7
November 2014 to shareholders on the register at the close of
business on 10 October 2014.
8. Intangible assets
6 months to 30 June 2014 Goodwill Customer Total
relationships
GBP'000 GBP'000 GBP'000
-------------------------------------------------- --------- --------------- --------
Cost or valuation:
1 January 2014 7,946 482 8,428
Acquisition of Auto Think Limited (see note 12) 1,942 4,235 6,177
30 June 2014 9,888 4,717 14,605
-------------------------------------------------- --------- --------------- --------
Accumulated impairment
1 January 2014 1,562 212 1,774
Amortisation of intangible in year - 702 702
30 June 2014 1,562 914 2,476
-------------------------------------------------- --------- --------------- --------
Net book value at 30 June 2014 8,326 3,803 12,129
-------------------------------------------------- --------- --------------- --------
6 months to 30 June 2013
------------------------------------- ------ ----- ------
Cost or valuation:
1 January 2013 and 30 June 2013 7,828 - 7,828
------------------------------------- ------ ----- ------
Accumulated impairment
1 January 2013 and 30 June 2013 1,562 - 1,562
Net book value at 30 June 2014 6,266 - 6,266
------------------------------------- ------ ----- ------
12 months to 31 December 2013
------------------------------------- ------ ----- ------
Cost or valuation:
1 January 2013 7,828 - 7,828
Additions 118 - 118
Acquisition of Exway - 482 482
31 December 2013 7,946 482 8,428
------------------------------------- ------ ----- ------
Accumulated impairment
1 January 2013 1,562 1,562
Amortisation of intangible in year - 212 212
31 December 2013 1,562 212 1,774
------------------------------------- ------ ----- ------
Net book value at 31 December 2013 6,384 270 6,654
------------------------------------- ------ ----- ------
Cost or valuation:
1 January and 31 December 2012 7,828 - 7,828
Accumulated Impairment
1 January and 31 December 2012 1,562 - 1,562
Net book value at 31 December 2012 6,266 - 6,266
------------------------------------- ------ ----- ------
8. Intangible assets (continued) 6 months 6 months 12 months
to 30 June to 30 June to 31 Dec
Net book value comprises: 2014 2013 2013
GBP'000 GBP'000 GBP'000
Business of Gemini Accident Repair Centres
acquired in July 2005 3,719 3,719 3,719
Business of Aquilo Motor Services acquired
in December 2006 1,481 1,481 1,481
Businesses acquired in 2007 543 543 543
Businesses acquired in 2008 523 523 523
Businesses acquired in 2013 149 - 388
Business of Auto Think Limited acquired
in February 2014 (note 12) 5,714 - -
12,129 6,266 6,654
------------------------------------------------ ------------- ------------- ------------
On 15 February 2014 the Group acquired Auto Think Limited, the
holding company of Howard Basford Limited ("Howard Basford"). The
fair value of consideration for the acquisition was GBP6,225,000
comprising GBP4,475,000 cash and GBP1,750,000 contingent
consideration.
9. Property, plant and equipment
Plant, equipment,
motor vehicles
Land Buildings vehicles & computers Total
6 months to 30 June 2014 GBP'000 GBP'000 GBP'000 GBP'000
-------------------------------- -------- ---------- --------------------- --------
Cost:
1 January 2014 643 9,084 24,768 34,495
Additions - 40 1,024 1,064
Additions by acquisition - 57 579 636
Disposals - (250) (386) (636)
-------------------------------- -------- ---------- --------------------- --------
30 June 2014 643 8,931 25,985 35,559
-------------------------------- -------- ---------- --------------------- --------
Accumulated depreciation:
1 January 2014 - 4,230 20,253 24,483
Disposals - - (333) (333)
Charge for the year - 362 979 1,341
-------------------------------- -------- ---------- --------------------- --------
30 June 2014 - 4,592 20,899 25,491
-------------------------------- -------- ---------- --------------------- --------
Net book value at 30 June
2014 643 4,339 5,086 10,068
-------------------------------- -------- ---------- --------------------- --------
6 months to 30 June 2013
Carrying amount at 1 January
2013 643 4,477 4,850 9,970
Additions - 17 589 606
Disposals - (374) (8) (382)
Depreciation - (279) (851) (1,130)
-------------------------------- -------- ---------- --------------------- --------
Carrying amount at 30 June
2013 643 3,841 4,580 9,064
-------------------------------- -------- ---------- --------------------- --------
Year to 31 December 2013
Carrying amount at 1 January
2013 643 4,477 4,850 9,970
Additions - 606 1,450 2,056
Additions by acquisition - 770 235 1,005
Disposals - (374) (31) (405)
Depreciation - (625) (1,635) (2,260)
Impairment of asset (note
3) - - (354) (354)
-------------------------------- -------- ---------- --------------------- --------
Carrying amount at 31 December
2013 643 4,854 4,515 10,012
-------------------------------- -------- ---------- --------------------- --------
10. 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, annual contributions to the Fund since the year
beginning 1 January 2013 are GBP2.6m. This disclosure is in respect
of the defined benefit section of the Fund only.
A full actuarial valuation of the scheme was carried out as at
31 December 2012 and has been updated to 30 June 2014 by a
qualified independent actuary. The major assumptions used by the
actuary were (in nominal terms) as follows:
30 Jun 2014 30 Jun 2013 31 Dec 2013
% % %
--------------------------------------- --------------- ------------- -------------------
Discount rate 4.40 4.70 4.60
Pension increases - fixed 3.00 3.00 3.00
Pension increases - 5% LPI 3.25 3.20 3.35
Pension increases -2.5% LPI 2.50 2.50 2.50
RPI rate of inflation 3.25 3.20 3.35
CPI rate of inflation 2.25 2.50 2.35
--------------------------------------- --------------- ------------- -------------------
Assumed life expectancies on retirement at age 65 are:
30 Jun 2014 30 Jun 2013 31 Dec 2013
Current Current Current Pensioners
Pensioners Pensioners
----------------- ------------------------ ------------ ------------ -------------------
Retiring today: Males 21.5 21.4 21.3
Females 24.1 24.0 23.9
------------------------------------------ ------------ ------------ -------------------
30 Jun 2014 30 Jun 2013 31 Dec 2013
Future Pensioners Future Pensioners Future Pensioners
----------------------- --------- ------------------ ------------------ ------------------
Retiring today: Males 21.2 21.1 21.1
Females 23.8 23.7 23.7
Retiring in 20 years'
time: Males 23.0 23.0 23.0
Females 25.6 25.5 25.5
--------------------------------- ------------------ ------------------ ------------------
The assets in the scheme were:
Value at Value at Value at
30 Jun 2014 30 Jun 2013 31 Dec 2013
GBP'000 GBP'000 GBP'000
-------------------------------------------------- -------------- -------------- --------------
UK Equities 15,797 23,061 15,530
Overseas Equities 38,945 23,420 37,264
Corporate Bonds 16,418 15,038 16,030
Cashflow Matching Bonds 598 - 544
Property - 4,637 -
Alternatives 1,795 - 1,756
Insured Annuities 767 737 749
Other 1,544 1,196 1,500
-------------------------------------------------- -------------- -------------- --------------
75,864 68,089 73,373
-------------------------------------------------- -------------- -------------- --------------
The actual return on assets over the period was 2,794 3,918 9,470
-------------------------------------------------- -------------- -------------- --------------
Present value of defined benefit obligation:
Deferred members 60,213 58,963 57,414
Pensioner members 34,165 30,524 33,916
Insured Pensioners 767 737 749
Funded plans 95,145 90,224 92,079
--------------
Total 95,145 90,224 92,079
--------------
Present value of unfunded obligations: 19,281 22,135 18,706
--------------
Unrecognised actuarial gains/(losses) - - -
-------------------------------------------------- -------------- -------------- --------------
Net liability in statement of financial position (19,281) (22,135) (18,706)
================================================== ============== ============== ==============
Reconciliation of opening and closing balances of the present
value of the defined benefit obligations
30 Jun 2014 30 Jun 2013 31 Dec 2013
GBP'000 GBP'000 GBP'000
--------------------------------------- ------------ ------------ ------------
Benefit obligation at beginning
of period 92,079 87,151 87,151
Service cost 97 109 220
Interest expense 2,100 2,031 4,027
Actuarial loss arising from
changes in financial assumptions 2,508 2,549 3,884
Actuarial gain arising from
experience on the plan's liabilities (36) (34) (53)
Benefits paid (1,603) (1,582) (3,150)
Inclusion of insured annuities - - -
Benefit obligation at end of
period 95,145 90,224 92,079
--------------------------------------- ------------ ------------ ------------
10. Pension and other employee assets/obligations (continued)
Reconciliation of opening and closing balances of the fair value
of plan assets
30 Jun 2014 30 Jun 2013 31 Dec 2013
GBP'000 GBP'000 GBP'000
--------------------------------- ------------ ------------ ------------
Fair value of plan assets at
beginning of period 73,373 64,453 64,453
Interest income 1,670 1,497 2,991
Return on plan assets excluding
interest income 1,124 2,421 6,479
Contributions by employer 1,300 1,300 2,600
Benefits paid (1,603) (1,582) (3,150)
Benefit asset at end of period 75,864 68,089 73,373
--------------------------------- ------------ ------------ ------------
The amounts recognised in the statement of comprehensive income
are:
30 Jun 2014 30 Jun 2013 31 Dec 2013
GBP'000 GBP'000 GBP'000
--------------------------------- ------------ ------------ ------------
Current service cost 97 109 220
Net interest on the net defined
benefit liability 430 534 1,036
Total expense 527 643 1,256
--------------------------------- ------------ ------------ ------------
Charged to:
Administration expenses 97 109 220
Finance costs 430 534 1,036
--------------------------------- ------------ ------------ ------------
527 643 1,256
--------------------------------- ------------ ------------ ------------
Remeasurements recognised in the statement of comprehensive
income are:
30 Jun 30 Jun 31 Dec
2014 2013 2013
GBP'000 GBP'000 GBP'000
-------------------------------------------------- --------- --------- ---------
Remeasurements recognised at the beginning of
the period (32,593) (26,717) (26,717)
Actuarial loss arising from changes in financial
assumptions (2,508) (2,549) (3,884)
Actuarial loss arising from experience on the
plan's liabilities 36 34 53
Return on plan assets excluding interest income 1,124 2,421 6,479
Remeasurements recognised at the end of the
period (33,941) (26,811) (24,069)
-------------------------------------------------- --------- --------- ---------
Deferred tax on actuarial loss 270 (278) (1,211)
-------------------------------------------------- --------- --------- ---------
Cumulative gains and (losses) recognised in
other comprehensive income (33,671) (27,089) (25,280)
-------------------------------------------------- --------- --------- ---------
10. Pension and other employee assets/obligations (continued)
History of scheme assets, obligations and experience
adjustments
30 Jun 2014 30 Jun 2013 31 Dec 2013
GBP'000 GBP'000 GBP'000
---------------------------------- ------------ ------------ ------------
Present value of defined benefit
obligations 95,145 90,224 92,079
Fair value of scheme assets 75,864 68,089 73,373
---------------------------------- ------------ ------------ ------------
Deficit in scheme (19,281) (22,135) (18,706)
---------------------------------- ------------ ------------ ------------
Experience adjustments arising
on scheme liabilities 2,472 2,515 3,831
Experience item as a % of scheme
liabilities 3% 3% 4%
Experience adjustments arising
on scheme assets 1,124 2,421 6,479
Experience item as a % of scheme
assets 1% 4% 9%
---------------------------------- ------------ ------------ ------------
11. Equity
30 June 2014 30 June 2013 31 December 2013
--------------------- ---------------------
Shares GBP'000 Shares GBP'000 Shares GBP'000
-------------------------- ----------- -------- ----------- -------- ----------- --------
Authorised
Ordinary shares of 12.5p
each 64,000,000 8,000 64,000,000 8,000 64,000,000 8,000
-------------------------- ----------- -------- ----------- -------- ----------- --------
Issued and fully paid
Ordinary shares of 12.5p
each 43,197,220 5,400 43,197,220 5,400 43,197,220 5,400
-------------------------- ----------- -------- ----------- -------- ----------- --------
Share options
Number Number Exercise Exercise
of share of share price Period
options options
2014 2013
---------------- ------------ ---------- ---------- --------- ---------
M A Wilmshurst Approved 25,751 25,751 GBP1.165 2009-16
Unapproved 1,096,055 1,096,055 GBP1.11 2009-16
S D G Thompson Approved 25,751 25,751 GBP1.165 2009-16
Unapproved 422,973 422,973 GBP1.11 2009-16
----------------------------- ---------- ---------- --------- ---------
1,570,530 1,570,530
----------------------------- ---------- ---------- --------- ---------
All the above options were issued on 4 July 2006 and no
additional share options have been issued since this date.
No liabilities were recognised due to share based
transactions.
Each Director has been granted two tranches of options. The
first tranche is not subject to any vesting conditions and the
second tranche is subject to achievement of a Total Shareholder
Return performance condition. Under both tranches, vested options
can be exercised at any time between the third and tenth
anniversary of the date of the grant.
In 2011, the Company entered into incentive arrangements with M
A Wilmshurst and S D G Thompson providing for contingent cash
bonuses of up to GBP1,033,835 and GBP403,096 respectively, subject
to continued employment, in the event of a change of control of the
Company prior to 31 December 2014, linked to the price at which any
change of control occurred. These arrangements formed part of a
review of strategic options which has now been completed. No
consideration was given for the grant of these arrangements.
12. Business combinations
Provisional Analysis of assets and liabilities acquired
On 15 February 2014 the Group acquired Auto Think Limited, the
holding company of Howard Basford Ltd ("Howard Basford"). The
addition of Howard Basford is highly complementary to the Group's
existing operations and provides a significantly enhanced presence
in the North West region, with the prospect of economies of scale
and flow as well as other efficiencies. It also helps to increase
the Group's presence in its target markets of insurance, fleet and
retail. 100% of the voting rights were acquired. Howard Basford is
a leading provider of crash repair services in the North West of
England. The fair value of consideration for the acquisition is
GBP6,225,000 comprising GBP4,475,000 cash and GBP1,750,000
contingent consideration. Transactions costs associated with the
acquisition and expensed to the Consolidated Statement of
Comprehensive Income in 2014 were GBP265,000.
Book Fair Value Fair Value
Value Adjustments on
Acquisition
GBP'000 GBP'000 GBP'000
------------------------------- --------- ------------- -------------
Intangible assets 138 4,097 4,235
Property, plant and equipment 568 68 636
Trade and other receivables 2,835 (229) 2,606
Inventories 416 - 416
Cash and cash equivalents 492 - 492
Finance lease obligations (114) - (114)
Trade and other payables (2,589) (639) (3,228)
Current tax liability (198) 103 (95)
Deferred tax 54 (719) (665)
Net assets acquired 1,602 2,681 4,283
------------------------------- --------- ------------- -------------
Goodwill 1,942
Consideration paid 6,225
------------------------------- --------- ------------- -------------
Satisfied by
Cash 4,475
Contingent consideration 1,750
Total purchase consideration 6,225
---------------------------------------- -------
Net cash flow on acquisition
Cash consideration paid 4,475
Cash acquired (492)
Cashflow on acquisition 3,983
----------------------------------- -------
Fair value adjustments
On acquisition of Auto Think Limited, 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 Howard Basford. This intangible asset was valued using the
excess earnings method at GBP4,235,000. These customer
relationships are being amortised over a period of five years
which, in accordance with IAS 38, reflects the pattern of benefits
from these relationships. A GBP726,000 credit to deferred tax has
been made to record the liability arising on these intangible
assets.
Contingent consideration of GBP1,750,000 is payable in 2015
subject to certain performance criteria being attained.
Goodwill of GBP1,942,000 represents the excess of the purchase
price over the fair value of the net tangible and intangible assets
acquired. The goodwill arising on the acquisition is largely
attributable to the synergies anticipated to be associated with
being part of the enlarged Group.
13. Distribution to shareholders and further information
The interim report will be available for the public on the
Group's website (www.narsplc.com) and from the Group's registered
office, 17 Thorney Leys Park, Witney, Oxon, OX28 4GE. Further
information regarding the activities of the Group, including a copy
of the interim presentation, is also available on the Group's
website.
This information is provided by RNS
The company news service from the London Stock Exchange
END
IR PGUUABUPCGMP
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