4th Jul 2006 07:00
Nationwide Accident Repair Srvs PLC04 July 2006 Nationwide Accident Repair Services plcNARS Nationwide Accident Repair Services plc ("the Company") Admission to AIM • Share dealings in Nationwide, the largest dedicated provider of accident repair services in the UK, begin on AIM today. • Nationwide is placing 15,765,766 Ordinary Shares at 111p per share on behalf of existing shareholders, who will retain 65 per cent. of the issued Ordinary Shares following Admission. Arbuthnot Securities Limited is acting as the Group's Nominated Adviser and Broker. • At the Placing Price, Nationwide's market capitalisation will be approx. £50m. • Nationwide operates a network of 69 accident repair centres located across England, Scotland and Wales, providing accident repair services to UK motor insurers and fleet operators. • Nationwide's customer base includes insurance companies such as R&SA, Norwich Union, Equity Red Star and Zurich and fleet operators such as DHL. • In the year to 31 December 2005, Nationwide generated turnover of £140.0m and an operating profit, before non-recurring items, of £4.0m. • The crash repair market is highly fragmented with an estimated total of 6,717 bodyshops in the UK, nearly half of which are owned by small businesses, operating from a single site or small number of sites.* • The UK crash repair market is gradually consolidating and as the largest dedicated supplier of accident repair services, Nationwide is well placed to play a major role in the ongoing consolidation of the market. Michael Wilmshurst, Chief Executive, commented, "We have worked hard over the last few years to improve the performance of thebusiness and believe that by continuing to focus on our customers' needs, we canachieve our goal of becoming the accident repair services supplier of choice tothe UK insurance industry. Admission to AIM represents an important step in the growth of our business andwe look forward to the future with confidence." * according to the 2005 Bodyshop Magazine survey Enquiries: Nationwide Accident Michael Wilmshurst, Chief Executive T: 01993 701 720Repair Services plc David Loftus, Finance Director Biddicks Katie Tzouliadis/ Zoe Biddick T: 020 7448 1000 Arbuthnot Securities James Steel/ Alasdair Younie T: 020 7012 2000 PLACING STATISTICS Placing Price 111pNumber of existing Ordinary Shares being placed on behalfof Existing Shareholders 15,765,766Number of Ordinary Shares in issue on Admission 44,872,220Percentage of the Company's issued share capital beingplaced pursuant to the Placing 35 per cent.Market Capitalisation on Placing Price £49.8 million INTRODUCTION Nationwide provides automotive crash repair and accident administration servicesto the UK automotive insurance industry. With a network of 69 accident repaircentres located across England, Scotland and Wales, employing over 2,100 people,it is the largest dedicated provider of accident repair services in the UK. TheGroup's customer base includes insurance companies such as R&SA, Norwich Union,Equity Red Star and Zurich and fleet operators such as DHL. Nationwide's strategy is to become the accident repair services supplier ofchoice to the UK insurance industry. The Board intends to effect this strategythrough continued organic growth and further selective acquisitions. The crashrepair market remains fragmented but is gradually consolidating. The Directorsbelieve that consolidation is being driven by the opportunity to achieve greatereconomies of scale, the ability to manage capacity within a chain of sites andthe increasing regulatory burden. The Directors believe that Admission will benefit the Company by raising itsprofile amongst existing and potential customers and assist the Group in winningand retaining customer contracts and business. Furthermore, it will allowmanagement and employees to invest in the Company and enable the Group toincentivise its senior management through participation in the Nationwide ShareScheme. HISTORY The Company was formerly known as Perry Group plc and is the holding company ofa group which has been operating in the motor industry since 1908 when thefounder, Harold Perry, started the Capital Screen and Hood Company. Harold PerryMotors subsequently listed on the Official List in 1972. Until 1994, the Companywas primarily involved in motor retail and after-sales. Between 1993 and 1994, the Group set up the Nationwide crash repair chain of UKaccident repair centres (bodyshops). In the five years that followed, both themotor dealer business and the bodyshop business developed within theirrespective markets and by 1998, Nationwide had increased its bodyshop network to50. In 2001, the Group's operations were scaled down through the sale of thefranchised motor-dealer business (Perrys Motor Sales). Following the sale of themotor-dealer business the Company changed its name to Nationwide Accident RepairServices plc. In April 2002, Guinness Peat Group plc ("GPG") and J O Hambro Capital ManagementLimited ("JOHCM") acting on behalf of certain of its investment managementclients completed a takeover of Nationwide, in the process delisting the Companyfrom the Official List. Michael Wilmshurst, who had been advising GPG and JOHCMthroughout the takeover process, was formally appointed Chief Executive of theGroup in May 2002. In January 2003, David Loftus was appointed Finance Directorand the head office was moved from Hertford to Witney, Oxfordshire. At the time of the takeover in 2002, Nationwide had a large number ofunderperforming sites which were incurring significant losses. Since 2002,management has sold or closed a number of loss-making sites and implementedsystems and controls to improve the performance of the remaining sites andmonitor them more effectively. This strategy has resulted in increasedprofitability for the Group as a whole for the three years ended 31 December2005. This increase in profitability has been achieved both organically, withinvestment in staff, equipment and premises, and through selective acquisitions.Nationwide has acquired 16 sites since 2002, including Gemini, which operated anetwork of 11 bodyshops, primarily in the West Midlands. BUSINESS OPERATIONS Nationwide provides automotive crash repair and accident administration servicesto insurance companies and car fleet operators, with the core business beingNCRC, a chain of 69 crash repair centres. NCRC accounted for approximately 95per cent. of the Group's turnover for the year ended 31 December 2005.Nationwide also operates NWS, a dedicated accident administration service centre NCRCNCRC comprises the Group's core business. NCRC currently operates a chain of 69bodyshops divided into five geographical regions in England, Scotland and Wales.NCRC's bodyshops provide repair facilities principally to the UK insuranceindustry as well as a number of fleet operators Eight of the Group's sites carry out repair works exclusively for R&SA pursuantto the R&SA Contracts. In repairing damaged vehicles, NCRC primarily sells labour hours, paint andparts. Labour rates are generally negotiated and agreed with each customerindependently. The insured vehicle is assessed by NCRC and a repair estimate is normallyprepared using one of two estimating systems, Audatex or Glassmatix, which areindustry standard. The output can be sent to insurance companies electronicallyand is often supported by photographic images of the damaged vehicle. Insurancecompany engineers normally review and, if appropriate, approve the estimate.Once a repair is deemed viable and is authorised, the repair process commences.An internal quality control form is signed off at each stage of the repairprocess. Nationwide provides vehicle owners with a vehicle repair tracking facility onthe Group's website. The Group also utilises a bespoke software programme forrecording and managing all operational data relating to each stage of theprocess providing management with timely and detailed information on theperformance of individual sites and employees. NWSNWS provides accident administration services to a number of insurancecompanies, such as Equity Red Star, and to fleet operators such as DHL. NWSoffers a dedicated call centre service, 24 hours per day, 365 days per year,that provides the first point of contact for drivers reporting an accident. TheNWS call centre currently handles approximately 250 to 350 calls per day. Whenever possible and practicable, NWS passes the repair business to NCRCdepending on NCRC's capacity and the location of the accident. Failing this, thebusiness is outsourced to an approved third party repairer. NWS charges bothNCRC and third party repairers a referral fee on a per vehicle basis for allrepairs referred to them. THE MARKET The UK crash repair market is a distinct segment of the UK automotiveaftermarket together with servicing, replacement and repair of mechanical andother parts, tyres and consumables and accessories. Independent research byDatamonitor on the United Kingdom Automotive Aftermarket published in December2005 estimated that revenues (excluding labour) for the UK automotiveaftermarket were approximately £7.8 billion in 2005 of which approximately 30per cent. related to crash repairs. According to the 2005 Bodyshop Magazine survey, there were a total of 6,717individual bodyshops in the UK at the end of 2004. Approximately 48 per cent. ofthese sites were owned by small businesses operating either on a single site, orfrom a small number of satellite sites. The crash repair market remains highlyfragmented but is gradually consolidating. The Directors believe that consolidation is being driven by the opportunity toachieve greater economies of scale and the ability to manage capacity within achain of sites. The Directors believe that the increasing regulatory burden,including the need for ongoing investment to comply with regulatory changes, isanother factor driving industry consolidation. As the largest dedicated supplierof accident repair services in the UK, the Directors believe that the Group willcontinue to play a major role in the ongoing consolidation of the market. GROWTH STRATEGY Nationwide's strategy is to become the accident repair services supplier ofchoice to the UK insurance industry. The Board intends to effect this strategythrough continued organic growth and further selective acquisitions. FINANCIAL INFORMATION The following summary of the financial information of the Group for the threefinancial periods ended 31 December 2005 and the three months ended 31 March2006 has been extracted from the historical financial information on Nationwideset out in the Admission Document: Three months Year ended Year ended Year ended ended 31 December 31 December 31 December 31 March 2005 2004 2003 2006 £'000 £'000 £'000 £'000 Sales revenue 40,953 139,554 123,686 118,932Gross profit 19,098 64,727 56,266 53,206Operating profit 2,100 7,793 2,680 1,683Profit before tax 2,115 7,299 2,017 1,465Total equity 22,094 20,435 18,925 16,727 Under FRS 17Profit before tax 2,362 8,394 3,159 2,499Total equity 6,316 4,484 (2) (2,626) Note 1: The financial information for the year ended 31 December 2005 includes anon-recurring fee of £1 million and exceptional administrative profits of £4.75million (2004: £0.2 million) (2003: £0.6 million). The 2003 audited accountshave been restated under IFRS. Note 2: Nationwide adopted IFRS as at 31 December 2005 and the financialinformation set out above for the three years ended 31 December 2005 is statedunder IFRS. CURRENT TRADING AND PROSPECTS Trading in the first quarter of the current financial year has been ahead ofDirectors' expectations and better than the corresponding quarter for the yearended 31 December 2005. However, it should be noted that historically the firstquarter of each year is the best performing quarter and is not necessarilyrepresentative of performance in the remaining three quarters. The Directorsbelieve that Nationwide has considerable scope for further growth and that theGroup is well placed to exploit the current market consolidation opportunitiesthat exist. Consequently, the Directors view the Group's future with confidence. THE BOARD Michael Marx, Non-executive Chairman, aged 59. Michael was appointedNon-executive Chairman in June 2006. He is currently Executive Deputy Chairmanand Finance Director of Development Securities plc. Michael is a Fellow of theInstitute of Chartered Accountants in England and Wales and a member of the UKListing Authority Advisory Committee. He is also a non-executive director ofFIBI Bank (UK) PLC and was Finance Director and Commercial Director of HeronInternational plc from 1981 to 1994. Michael Wilmshurst, Chief Executive, aged 46. Michael has extensive automotivesector experience, with TWR, HR Owen and European Motor Holdings. At HR Owen,aged 31, he was head of the luxury division including Rolls Royce, Jaguar,Ferrari and Land Rover. After European Motor Holdings, he set up Troy in 2000and formally joined Nationwide in May 2002, having been an active member of theteam that took the Company private. David Loftus, Finance Director, FCA, MBA, BA (Hons), aged 45. David joinedNationwide in January 2003 as Finance Director. After qualifying as a charteredaccountant with Spicer & Pegler (now part of Deloitte) he spent four years as anaudit manager. In 1990, he joined Brunel Holdings plc (formally BM Group plc) asgroup accountant and from 1996 until 2002, when the business was sold, he wasFinance Director. Stephen Thompson, Executive Director, aged 33. Stephen has extensive multi-siteexperience in the automotive sector. He was appointed director for Silver ShieldWindscreens, and a divisional director for KwikFit. After that he was acommercial managing director for Phones4U Ltd. He joined Nationwide in January2005, since when he has been responsible for developing NWS and MobileSolutions, and became a director of Nationwide in June 2006. Jeremy Brade, Non-executive Director, aged 45. Jeremy was appointedNon-executive Director in May 2002. Jeremy is a director of J O Hambro CapitalManagement Limited and a partner of North Atlantic Value LLP where he managesEuropean and US private equity investments. Mark Butcher, Non-executive Director, aged 48. Mark was appointed Non-executiveDirector in May 2002. Mark is a director of GPG (UK) Holdings plc and Senior UKInvestment Manager of Guinness Peat Group plc, where he manages a significantproportion of that company's investments. Lady Judge, Non-executive Director, aged 59. Lady Judge was appointedNon-executive Director in June 2006. Lady Judge is a lawyer and internationalbanker and is currently Deputy Chairman of Friends Provident Public LimitedCompany, and of the Financial Reporting Council and a director of various otherpublic and private companies. Previously she was a Commissioner of the USSecurities and Exchange Commission, and a director of News International plc andof Samuel Montagu & Co. Ltd. DEFINITIONS "Admission" the admission of the Ordinary Shares to trading on AIM becoming effective in accordance with the AIM Rules"AIM" the market of that name operated by London Stock Exchange"AIM Rules" the rules of AIM governing admission to and the operation of AIM for AIM companies and their nominated advisers as published by London Stock Exchange from time to time in relation to AIM traded securities"Board" or "Directors" directors of the Company"DHL" Deutsche Post World Net"Existing Shareholders" the Shareholders immediately prior to Admission"Gemini" Gemini Accident Repair Centres Limited"Group" the Company and all or any of its subsidiaries"IFRS" International Financial Reporting Standards"Mobile Solutions" the business carried on by Mobile Vehicle Repairs Limited (being a member of the Group)"Nationwide" the Company and, where the context requires, all and any of its subsidiaries"NCRC" Nationwide Crash Repair Centres Limited (being a member of the Group)"Norwich Union" Norwich Union, a subsidiary of Aviva plc"NWS" Network Services (Nationwide) Limited (being a member of the Group)"Nationwide Share Scheme" the Company's share scheme"Official List" the Official List of the UK Listing Authority"Ordinary Shares" the 44,872,220 ordinary shares of 12.5p each in the capital of the Company each as sub-divided from ordinary shares of 25p each by a resolution of the Company passed on 31 May 2006, and conditional on Admission and "Ordinary Share" shall be construed accordingly"Placing" the conditional placing by Arbuthnot on behalf of the Selling Shareholders of the Sale Shares pursuant to the Placing Agreement"Placing Agreement" the conditional agreement dated 29 June 2006 between the Company, the Directors, the Selling Shareholders and Arbuthnot, relating to the Placing"R&SA" Royal & SunAlliance Insurance plc"R&SA Contracts" the agreements between R&SA and NCRC dated 8 November 2004 and between R&SA and Gemini dated 15 November 2004"Sale Shares" the 15,765,766 Ordinary Shares to be sold pursuant to the Placing Agreement"Selling Shareholders" the Shareholders who are selling Ordinary Shares in the Placing pursuant to the Placing Agreement"Shareholders" holders of Ordinary Shares"UK" the United Kingdom of Great Britain and Northern Ireland"Zurich" Zurich Financial Services AG ENDS This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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