26th Sep 2011 07:00
NARS
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
("Nationwide", "the Company" or "the Group")
Unaudited Half Year Results
for the six months ended 30 June 2011
Nationwide provides automotive crash repair and accident administration services principally to the UK insurance industry. With a national network of accident repair centres and a fleet of mobile vans located across England, Scotland and Wales, it is the largest dedicated provider of accident repair services in the UK.
Key Points
·; Strong profit* growth - reflects continuing progress with expansion strategy, now in second year
- presence in fleet and retail markets developing alongside core insurance market
·; Revenue up 6% to £92.3m (2010: £87.2m)
·; Gross profit margin maintained at 46% (2010: 46%)
·; Underlying* profit before tax up by 16% to £3.5m (2010: £3.0m)
Statutory profit before tax of £3.0m (2010: £3.0m)
·; Non-recurring items of £514,000 (2010: credit of £23,000)
·; Underlying* earnings per share up 22% to 6.1p (2010: 5.0p)
Statutory earnings per share maintained at 5.1p (2010: 5.1p)
·; Strong operating cash flows of £3.0m (2010: £3.3m)
·; Net cash at 30 June 2011 of £7.29m (2010: £8.15m)
·; Interim dividend of 1.9p (2010: 1.8p)
*before non-recurring items
Michael Marx, Chairman, commented,
"We are now in the second year of our three year growth plan and, as the Group's results for the first half of the year indicate, progress towards its objectives has been good. Underlying profit before tax has risen by 16% to £3.5m for the six months to 30 June 2011, with revenues increasing by 6% to £92.3 million over the same period.
The results show the continuing steady progress we are making to develop our core insurance market and, while sensibly leveraging our infrastructure and systems to build sales in non-insurance funded markets, especially fleet and retail, where our presence is relatively low currently.
While we expect current economic conditions to create some challenges, we believe that the Group is well positioned for the remainder of the year and remain very positive about the Group's long term prospects."
Enquiries:
Nationwide Accident Repair Services plc | Michael Wilmshurst, Chief Executive David Loftus, Finance Director | T: 01993 701 720 | ||
Biddicks | Katie Tzouliadis/ Sophie McNulty | T: 020 3178 6378 | ||
Arbuthnot Securities | James Steel/ Adam Lloyd | T: 020 7012 2000 |
CHAIRMAN'S & CHIEF EXECUTIVE'S STATEMENT
Introduction
We are now in the second year of our three year growth plan and, as the Group's results for the first half of the year indicate, progress towards its objectives has been good. Underlying profit before tax has risen by 16% to £3.5m for the six months to 30 June 2011, with revenues increasing by 6% to £92.3 million over the same period.
The results show the continuing steady progress we are making to develop our core insurance market, while sensibly leveraging our infrastructure and systems to build sales in non-insurance funded markets, where our market penetration is relatively low currently. We are especially focused on developing our presence in the fleet and retail markets, which together generate £1.4 billion of vehicle repairs in the UK, accounting for a third of the value of all repair jobs every year.
The Group's revenues from the fleet sector increased by 28% over the six months, with retail sales rising by 72%, and there remains strong potential for further growth in both these markets as we continue to implement our growth plan. In our core insurance-funded market, despite difficult market conditions as overall insurance claims volumes declined, we have still seen some growth. This sector, worth approximately £3.7 billion per annum and accounting for two thirds of the value of the crash repair market, remains our principal target market. We see considerable growth opportunities here over time as insurers continue to consolidate their supply chains to secure both operational and cost benefits.
The efficient management of workflows remains a key area for us. It helps us both to maintain our market-leading service levels and proposition of Quality, Value, Speed and Service, and to enhance profitability. The launch of our upgraded mobile repair capability last year has been instrumental in helping us to strengthen Nationwide's offering in all our marketplaces and to complete light vehicle repairs more efficiently.
The Group's balance sheet remains strong, with net cash of £7.29 million. This leaves us well placed to continue to invest in the Group's operations for further expansion and we expect to make further progress against our growth plan.
Financial Results
For the six months to 30 June 2011, revenues increased by 6% to £92.33 million (2010: £87.25 million). Operating profit before non-recurring items rose by 5% to £3.4m (2010: £3.2m), with gross profit margin maintained at 46% (2010: 46%). Underlying profit before tax improved by 16% to £3.5 million (2010: £3.0 million). After accounting for non-recurring items, the statutory profit before tax was £3.0 million (2010: £3.0 million). Non-recurring items totalled £514,000 (2010: credit of £23,000) and relate principally to the centralisation of Group finance and administration functions to one site in Bristol and the closure of a non-core site in Bournemouth. Underlying earnings per share were 6.1p, an increase of 22% on the same period last year (2010: 5.0p). Statutory earnings per share were maintained at 5.1p (2010: 5.1p).
Dividend
The Board is pleased to declare an interim dividend of 1.9p (2010: 1.8p) which will be paid on 4 November 2011 to shareholders on the register at the close of business on 7 October 2011.
Trading Overview
As indicated above, we continue to achieve good progress with our three year growth plan.
During the first half, volumes from our core insurance-funded market were up marginally. This is particularly pleasing in the light of an insurance marketplace that is currently experiencing a reduction in vehicle claims. We expect this trend to persist in the current economic climate. We have close relationships across the motor insurance industry and work hard to ensure we are aligned with our insurance customers' needs, based upon our core proposition of Quality, Value, Speed and Service.
Our fleet sales grew by 28% in the first half of the year to £10.1 million, with new business from a number of fleet operators, including West Mercia Police, Burnt Tree, the UK's largest independent rental and contract hire company, and Norfolk County Council. Retail sales increased significantly, albeit from a smaller base, rising by 72% to £5.0m compared to the first half of last year. We have invested in marketing and strengthened our teams in order to enhance our prospects in these markets and it is pleasing to see the benefits coming through.
Sales growth across our markets has also been supported by the expansion of our mobile offering. In late summer 2010, we launched our enhanced mobile repair proposition, which offers light repairs faster and more conveniently for customers at almost any location of their choice and expanded our mobile fleet. Revenues from our mobile offering increased by 58% to £3.8 million compared to the first half of 2010. This service is attractive to our core insurance market as well as the fleet and retail markets, as demonstrated by the contract wins with Hastings Insurance Services and Avis, which are now delivering work for Nationwide's Motorglass service in line with our expectations.
We took the decision to centralise our finance and central administration function into one office in Bristol in the first half of 2011. While this has incurred one-off non-recurring expenditure, we anticipate that it will reduce costs in 2012 as well as improve administrative efficiency for both our customers and suppliers.
Nationwide's integrated offering creates both operational and competitive advantage for the Group. From a market perspective, we have extended the range and scope of our services to offer a one-stop shop. This means that as well as undertaking repairs (both at our bodyshops and 'off-site' via our mobile fleet), our call centres can manage the 'first notification of loss' process, claims handling, the identification of repair work required (i.e. triaging), the deployment of work and the provision of courtesy cars. We anchor efficiency across our operations through a common IT platform. This 'integrated' model enables us to handle repairs as effectively as possible and our recent investment in the development of our mobile repair capability improves efficiency further.
We intend to make additional investment in our mobile repair capacity during the second half, which will help to support further growth.
Outlook
Nationwide has made progress with its growth plans in the first half and we are well placed to build on this success. We see opportunities to grow our market share in both our core insurance market, where we currently account for approximately a 5% market share, and in our newer non-insurance funded markets of fleet and retail. Our integrated offering positions us to take advantage of this potential. In addition, our cash generative model and strong balance sheet, with net cash of £7.29 million, underpins both our ongoing investment in our business and dividend policy.
Following the UK Ministry of Justice's recent announcement that it will ban the payment of personal injury referral fees, it is relevant to note that Nationwide's business model is not reliant on this form of income. In fact, we believe that the ruling may create further opportunities for us to secure work based on our overall capability.
While we expect current economic conditions to create some challenges, we believe that the Group is well positioned for the remainder of the year and remain very positive about the Group's long term prospects.
Unaudited Consolidated Statement of Comprehensive Income For the six months ended 30 June 2011 |
Unaudited |
Unaudited |
Audited | |
6 months | 6 months | 12 months | ||
to 30 Jun | to 30 Jun | to 31 Dec | ||
2011 | 2010 | 2010 | ||
Notes | £'000 | £'000 | £'000 | |
Revenue | 2 | 92,330 | 87,245 | 172,251 |
Cost of sales | (49,760) | (46,733) | (90,901) | |
Gross profit | 42,570 | 40,512 | 81,350 | |
Distribution costs | (24,838) | (22,840) | (46,492) | |
Administrative expenses | (14,330) | (14,407) | (28,335) | |
Share option charge | (24) | (48) | (98) | |
Operating profit before non-recurring items | 3,378 | 3,217 | 6,425 | |
Non-recurring items - administrative costs | 6 | (514) | 23 | (5) |
Operating profit | 2,864 | 3,240 | 6,420 | |
Finance income | 7 | 114 | 2 | 5 |
Finance costs | 7 | - | (214) | (391) |
Profit before tax | 2,978 | 3,028 | 6,034 | |
Income tax expense | 8 | (772) | (831) | (1,550) |
Profit for the period | 2,206 | 2,197 | 4,484 | |
Other comprehensive income | - | - | - | |
Total comprehensive income for the period | 2,206 | 2,197 | 4,484 | |
Attributable to: | ||||
Equity holders of the parent | 2,206 | 2,197 | 4,484 | |
Earnings per share | ||||
Basic | 9 | 5.1p | 5.1p | 10.4p |
Diluted | 9 | 5.1p | 5.1p | 10.4p |
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 2011 |
Unaudited |
Unaudited |
Audited | |
30 Jun | 30 Jun | 31 Dec | ||
2011 | 2010 | 2010 | ||
Notes | £'000 | £'000 | £'000 | |
Assets | ||||
Non‑current assets | ||||
Goodwill | 7,768 | 7,768 | 7,768 | |
Property, plant and equipment | 3 | 12,368 | 10,491 | 12,066 |
Pension and other employee assets | 4 | 10,458 | 9,101 | 9,589 |
30,594 | 27,360 | 29,423 | ||
Current assets | ||||
Inventories | 2,468 | 2,428 | 3,148 | |
Trade and other receivables | 28,422 | 23,031 | 27,322 | |
Cash and cash equivalents | 7,293 | 8,151 | 7,459 | |
38,183 | 33,610 | 37,929 | ||
Total assets | 68,777 | 60,970 | 67,352 | |
Liabilities | ||||
Non‑current liabilities | ||||
Long-term provisions | - | 45 | 40 | |
Deferred tax liabilities | 2,791 | 2,200 | 2,621 | |
2,791 | 2,245 | 2,661 | ||
Current Liabilities | ||||
Short-term provisions | - | 16 | 31 | |
Trade and other payables | 34,041 | 28,928 | 33,800 | |
Current tax payable | 531 | 644 | 164 | |
34,572 | 29,588 | 33,995 | ||
Total liabilities | 37,363 | 31,833 | 36,656 | |
Net assets | 31,414 | 29,137 | 30,696 | |
Equity | ||||
Equity attributable to the shareholders of the parent | ||||
Share capital | 5 | 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 | 13,693 | 11,416 | 12,975 | |
Total equity | 31,414 | 29,137 | 30,696 | |
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 2011 |
Capital |
Share | ||||
Share | redemption | premium | Reval | Retained | ||
Capital | reserve | account | reserve | earnings | Total | |
£'000 | £'000 | £'000 | £'000 | £'000 | £'000 | |
Balance at 1 January 2010 | 5,400 | 1,209 | 11,104 | 8 | 10,596 | 28,317 |
Share option charge | - | - | - | - | 48 | 48 |
Dividend paid | - | - | - | - | (1,425) | (1,425) |
Transactions with owners | - | - | - | - | (1,377) | (1,377) |
Profit for the six month period | - | - | - | - | 2,197 | 2,197 |
Other comprehensive income | - | - | - | - | - | - |
Total comprehensive income for the period | - | - | - | - | 2,197 | 2,197 |
Balance at 30 June 2010 | 5,400 | 1,209 | 11,104 | 8 | 11,416 | 29,137 |
Share option charge | - | - | - | - | 50 | 50 |
Dividend paid | - | - | - | - | (778) | (778) |
Transactions with owners | - | - | - | - | (728) | (728) |
Profit for the six month period | - | - | - | - | 2,287 | 2,287 |
Other comprehensive income | - | - | - | - | - | - |
Total comprehensive income for the period | - | - | - | - | 2,287 | 2,287 |
Balance at 31 December 2010 | 5,400 | 1,209 | 11,104 | 8 | 12,975 | 30,696 |
Share option charge | - | - | - | - | 24 | 24 |
Dividend paid (note 10) | - | - | - | - | (1,512) | (1,512) |
Transactions with owners | - | - | - | - | (1,488) | (1,488) |
Profit for the six month period | - | - | - | - | 2,206 | 2,206 |
Other comprehensive income | - | - | - | - | - | - |
Total comprehensive income for the period | - | - | - | - | 2,206 | 2,206 |
Balance at 30 June 2011 | 5,400 | 1,209 | 11,104 | 8 | 13,693 | 31,414 |
The accompanying notes form an integral part of these financial statements.
Unaudited Consolidated Cash Flow Statement For the six months ended 30 June 2011 |
Unaudited |
Unaudited |
Audited |
6 months | 6 months | 12 months | |
to 30 Jun | to 30 Jun | to 31 Dec | |
2011 | 2010 | 2010 | |
£'000 | £'000 | £'000 | |
Operating activities | |||
Profit for the period | 2,206 | 2,197 | 4,484 |
Adjustments to arrive at operating cash flow | |||
Net finance costs | (1) | (2) | (5) |
Depreciation | 1,162 | 1,027 | 2,144 |
Profit on sale of property, plant and equipment | - | - | (820) |
Taxation recognised in profit or loss | 772 | 831 | 1,550 |
Changes in inventories | 680 | (111) | (831) |
Changes in trade and other receivables | (1,100) | 429 | (3,862) |
Changes in provisions | - | - | 37 |
Changes in trade and other payables | 241 | (641) | 4,230 |
Movement in pension fund asset | 431 | 848 | 1,661 |
Share option scheme charge | 24 | 48 | 98 |
Outflow from pension obligations | (1,300) | (1,300) | (2,600) |
Outflow from provisions | (71) | (56) | (83) |
Net cash flow from operating activities | 3,044 | 3,270 | 6,003 |
Tax paid | (235) | (409) | (1,187) |
2,809 | 2,861 | 4,816 | |
Investing activities | |||
Additions to property, plant and equipment | (2,514) | (1,556) | (4,325) |
Proceeds from the disposal of property, plant and equipment | 1,050 | - | 897 |
Interest received | 1 | 2 | 5 |
(1,463) | (1,554) | (3,423) | |
Financing activities | |||
Dividend paid | (1,512) | (1,425) | (2,203) |
(1,512) | (1,425) | (2,203) | |
Net decrease in cash and cash equivalents | (166) | (118) | (810) |
Cash and cash equivalents at beginning of period | 7,459 | 8,269 | 8,269 |
Cash and cash equivalents at end of period | 7,293 | 8,151 | 7,459 |
The accompanying notes form an integral part of these financial statements.
Notes to the Unaudited Interim Statement
For the six months ended 30 June 2011
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 2010, except as noted below.
These unaudited interim statements for the period ended 30 June 2011 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 2010, 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 2010 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.
There are a number of other accounting standards that have become effective in the current period. However, there is no material impact on the financial statements for the interim period.
2. Segment analysis
The Group operates three main business segments, Nationwide Crash Repair Centres ("NCRC"), Network Services and Mobile Division (which incorporates Motorglass and Mobile Repairs). The segments are identified by their distinct functions within the Group, being site based vehicle repairs, accident administration and mobile vehicle repairs respectively. NCRC is the core business and comprises a dedicated network of repair centres across England, Scotland and Wales. Network Services provides accident administration services to insurance companies and fleet operators, in the main deploying work to Nationwide Crash Repair Centres Limited, while the Mobile Division provides mobile repairs, glass and air-conditioning 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.
The revenues and net result generated by the three business segments are summarised as follows:
NCRC | Network Services |
Mobile Division |
Total | |
6 months to 30 June 2011 | £'000 | £'000 | £'000 | £'000 |
Revenue from external customers | 81,048 | 8,125 | 3,157 | 92,330 |
Inter-segment revenues | - | 9,632 | 739 | 10,371 |
Total revenue | 81,048 | 17,757 | 3,896 | 102,701 |
Profit before tax | 2,498 | 143 | 337 | 2,978 |
Total Assets | 60,825 | 6,347 | 1,605 | 68,777 |
6 months to 30 June 2010 | ||||
Revenue from external customers | 78,369 | 7,224 | 1,652 | 87,245 |
Inter-segment revenues | - | 7,932 | 722 | 8,654 |
Total revenue | 78,369 | 15,156 | 2,374 | 95,899 |
Profit/(Loss) before tax | 3,306 | (91) | (187) | 3,028 |
Total Assets | 54,527 | 5,127 | 1,316 | 60,970 |
12 months to 31 December 2010 | ||||
Revenue from external customers | 155,217 | 13,519 | 3,515 | 172,251 |
Inter-segment revenues | - | 16,563 | 1,286 | 17,849 |
Total revenue | 155,217 | 30,082 | 4,801 | 190,100 |
Profit/(Loss) before tax | 6,693 | 311 | (970) | 6,034 |
Total Assets | 59,815 | 5,776 | 1,761 | 67,352 |
3. Additions and disposals of property, plant and equipment
Plant, Equipment | ||||
6 months to 30 June 2011 | Land | Buildings | and Computers | Total |
£'000 | £'000 | £'000 | £'000 | |
Carrying amount at 1 January 2011 | 643 | 4,318 | 7,105 | 12,066 |
Additions | 245 | 1,686 | 583 | 2,514 |
Disposals | (245) | (805) | - | (1,050) |
Depreciation | - | (229) | (933) | (1,162) |
Carrying amount at 30 June 2011 | 643 | 4,970 | 6,755 | 12,368 |
6 months to 30 June 2010 | ||||
Carrying amount at 1 January 2010 | 248 | 3,949 | 5,765 | 9,962 |
Additions | - | 482 | 1,074 | 1,556 |
Depreciation | - | (204) | (823) | (1,027) |
Carrying amount at 30 June 2010 | 248 | 4,227 | 6,016 | 10,491 |
Year to 31 December 2010 | ||||
Carrying amount at 1 January 2010 | 248 | 3,949 | 5,765 | 9,962 |
Additions | 395 | 801 | 3,129 | 4,325 |
Disposals | - | (15) | (62) | (77) |
Depreciation | - | (417) | (1,727) | (2,144) |
Carrying amount at 31 December 2010 | 643 | 4,318 | 7,105 | 12,066 |
4. 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 2011 will be £2.6m. This disclosure is in respect of the defined benefit section of the Fund only. The Company made contributions of £1,300,000 (2010: £1,300,000) to the defined benefit scheme during the six month period to 30 June 2011 and £2,600,000 in the year to 31 December 2010. The defined benefit scheme was closed for future accruals on 31 July 2006 with active members transferred to a new defined contribution section of the scheme.
The Company has opted to amortise all actuarial gains and losses above the corridor (10% of the greater of assets and liabilities) over a term of 15 years.
A full actuarial valuation of the scheme was carried out as at 31 December 2010 and has been updated to 30 June 2011 by a qualified independent actuary.
30 Jun 2011 | 30 Jun 2010 | 31 Dec 2010 | ||
The major assumptions used by the actuary were (in nominal terms): | % | % | % | |
Discount rate | 5.70 | 5.60 | 5.60 | |
Rate of increase to pensions in payment | 3.00 | 3.00 | 3.00 | |
RPI Inflation assumption | 3.40 | 3.10 | 3.30 | |
CPI Inflation assumption | 2.70 | n/a | 2.60 | |
Assumed life expectancies on retirement at age 65 are: | ||||
30 Jun 2011 | 30 Jun 2010 | 31 Dec 2010 | ||
Current Pensioners | Current Pensioners | Current Pensioners | ||
Retiring today: | Males | 21.2 | 21.1 | 21.1 |
Females | 23.8 | 23.7 | 23.7 | |
30 Jun 2011 | 30 Jun 2010 | 31 Dec 2010 | ||
Future Pensioners | Future Pensioners | Future Pensioners | ||
Retiring today: | Males | 20.9 | 20.8 | 20.8 |
Females | 23.5 | 23.4 | 23.4 | |
Retiring in 20 years time: | Males | 22.8 | 22.7 | 22.7 |
Females | 25.4 | 25.3 | 25.3 | |
The assumptions used in determining the overall expected return of the scheme have been set with reference to yields available on government bonds and appropriate risk margins. The pre and post retirement mortality assumptions use the AC00 (Ultimate) and S1PA tables respectively. The SAPS S1 series of mortality tables were published by the Continuous Mortality Investigation Bureau in October 2008 and are based on the mortality of defined-benefit pension schemes. The "AC00" tables are based on the mortality experience of life assurance policyholders. The "S1PA" tables are based on the mortality experience of pension annuity policyholders.
30 Jun 2011 | 30 Jun 2010 | 31 Dec 2010 | ||||
% | £'000 | % | £'000 | % | £'000 | |
Equities | 8.7% | 40,584 | 8.8% | 31,881 | 8.5% | 39,723 |
Bonds | 5.0% | 13,204 | 4.9% | 13,261 | 4.9% | 13,220 |
Property | 8.7% | 4,653 | 8.8% | 4,473 | 8.5% | 4,570 |
Other | 4.0% | 2,357 | 3.9% | 2,802 | 3.9% | 1,793 |
Total market value of assets | 60,798 | 52,417 | 59,306 | |||
Present value of defined obligations (funded plans) | (73,444) | (77,337) | (73,366) | |||
Present value of unfunded obligations | (12,646) | (24,920) | (14,060) | |||
Unrecognised actuarial losses | 23,104 | 34,021 | 23,649 | |||
Net asset in balance sheet | 10,458 | 9,101 | 9,589 | |||
Actual return on assets in period | 1,446 | (1,085) | 5,781 | |||
Reconciliation of opening and closing balances of the present value of the defined benefit obligations
6 months | 6 months | 12 months | |
to 30 Jun | to 30 Jun | to 31 Dec | |
2011 | 2010 | 2010 | |
£'000 | £'000 | £'000 | |
Benefit obligation at beginning of period | 73,366 | 73,195 | 73,195 |
Interest cost | 2,009 | 2,185 | 4,331 |
Actuarial (gain)/(loss) | (677) | 2,695 | (2,145) |
Benefits paid | (1,254) | (738) | (2,015) |
Balance at end of period | 73,444 | 77,337 | 73,366 |
Reconciliation of opening and closing balances of the fair value of plan assets
6 months | 6 months | 12 months | |
to 30 Jun | to 30 Jun | to 31 Dec | |
2011 | 2010 | 2010 | |
£'000 | £'000 | £'000 | |
Fair value of scheme assets at beginning of period | 59,306 | 52,940 | 52,940 |
Expected return on scheme assets | 2,122 | 1,971 | 3,940 |
Actuarial (loss)/gain | (676) | (3,056) | 1,841 |
Contributions by employers | 1,300 | 1,300 | 2,600 |
Benefits paid | (1,254) | (738) | (2,015) |
Assets at end of period | 60,798 | 52,417 | 59,306 |
The amounts recognised in the statement of comprehensive income are:
6 months | 6 months | 12 months | |
to 30 Jun | to 30 Jun | to 31 Dec | |
2011 | 2010 | 2010 | |
£'000 | £'000 | £'000 | |
Current service cost | - | - | - |
Interest on obligation | 2,009 | 2,185 | 4,331 |
Expected return on assets | (2,122) | (1,971) | (3,940) |
Actuarial loss recognised in period | 544 | 634 | 1,270 |
Curtailments and settlements | - | - | - |
431 | 848 | 1,661 | |
Charged to: | |||
Administrative costs | 544 | 634 | 1,270 |
Finance costs | - | 214 | 391 |
544 | 848 | 1,661 | |
Credited to: | |||
Finance income | (113) | - | - |
431 | 848 | 1,661 |
History of scheme assets, obligations and experience adjustments
30 Jun 2011 | 31 Dec 2010 | 31 Dec 2009 | 31 Dec 2008 | 31 Dec 2007 | |
£'000 | £'000 | £'000 | £'000 | £'000 | |
Present value of defined benefit obligations | (73,444) | (73,366) | (73,195) | (60,131) | (65,040) |
Fair value of scheme assets | 60,798 | 59,306 | 52,940 | 43,668 | 54,733 |
Deficit in scheme | (12,646) | (14,060) | (20,255) | (16,463) | (10,307) |
Experience adjustments arising on scheme liabilities | (677) | (2,145) | 11,285 | (6,983) | (8,042) |
Experience item as a % of scheme liabilities | (1%) | (3%) | 15% | (12%) | (12%) |
Experience adjustments arising on scheme assets | (676) | 1,841 | 5,400 | (16,019) | (207) |
Experience item as a % of scheme assets | (1%) | 3% | 10% | (37%) | 0% |
5. Equity
30 June 2011 | 30 June 2010 | 31 December 2010 | ||||
Shares | £'000 | Shares | £'000 | Shares | £'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 |
Of the 20,802,780 shares authorised, but not issued, 4,262,861 are reserved for issue in respect of the share options.
Share options
Number of | Exercise | Exercise | ||
shares | price | Period | ||
M A Wilmshurst | Approved | 25,751 | £1.165 | 2009-16 |
Unapproved | 2,217,860 | £1.11 | 2009-16 | |
D J Loftus | Approved | 25,751 | £1.165 | 2009-16 |
Unapproved | 1,096,055 | £1.11 | 2009-16 | |
S D G Thompson | Approved | 25,751 | £1.165 | 2009-16 |
Unapproved | 871,693 | £1.11 | 2009-16 | |
4,262,861 |
All the above options were issued on 4 July 2006 and no additional share options have been issued since this date. In total, £24,000 of employee compensation expense has been included in the consolidated statement of comprehensive income for the six month period to 30 June 2011 and £98,000 in the year to 31 December 2010. The corresponding credit is taken to shareholders' funds. 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.
The following have been factored into the model:
Exercise prices of £1.11 and £1.165, expected volatility of 25%, dividend yield of 3.00%, equivalent risk free rate of return being the rate of return on zero-coupon Government bonds with a term equal to the expected life assumptions.
The Company's assumptions regarding the volatility of its shares have been based on a review of market and competitors' volatility.
The Group's objectives when managing capital are:
• to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and
• to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.
The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.
6. Non-recurring items
6 months | 6 months | 12 months | |
to 30 Jun | to 30 Jun | to 31 Dec | |
2011 | 2010 | 2010 | |
£'000 | £'000 | £'000 | |
Site closure costs | (257) | (470) | (513) |
Centralisation costs | (208) | - | - |
Redundancy costs | (49) | (135) | (337) |
Profit on assets destroyed in fire | - | 628 | 845 |
(514) | 23 | (5) |
The site closure costs of £257k in 2011 relate to a provision for the closure of the Bournemouth branch that was announced in June 2011. The closure costs of £470k in the 6 months to June 2010 related to the closure of the Kidderminster site and the costs of £513k in the 12 months to December 2010 have arisen due to a provision for the disposal of the Croydon property lease.
The centralisation costs of £208,000 relate to a provision for redundancy costs in relation to the centralisation of the Group's finance and administration staff in Bristol.
In 2009, the Company suffered two fires at its sites in Manchester (August 2009) and Norwich (September 2009). The Group's insurers accepted liability. Both claims have now been fully settled, covering both the loss of assets and business interruption (lost profits). The Norwich site reopened in May 2010 and a profit on disposal of assets of £167k was recognised in 2010 (6 months to June 2010: £143k). The Manchester site was fully operational in July 2010 and a profit on disposal of assets of £678k was recognised in 2010 (6 months to June 2010: £485k).
7. Finance income and finance costs
6 months | 6 months | 12 months | |
to 30 Jun | to 30 Jun | to 31 Dec | |
2011 | 2010 | 2010 | |
£'000 | £'000 | £'000 | |
Finance income | |||
Pension costs (note 4): | |||
- interest on obligation | (2,009) | - | - |
- expected return on assets | 2,122 | - | - |
Interest receivable on bank balances | 1 | 2 | 5 |
114 | 2 | 5 | |
Finance costs | |||
Pension costs (note 4): | |||
- interest on obligation | - | 2,185 | 4,331 |
- expected return on assets | - | (1,971) | (3,940) |
- | 214 | 391 |
8. Tax expense
6 months | 6 months | 12 months | |
to 30 Jun | to 30 Jun | to 31 Dec | |
2011 | 2010 | 2010 | |
£'000 | £'000 | £'000 | |
Current tax: | |||
UK corporation tax | 602 | 743 | 1,128 |
Adjustments in respect of prior years | - | - | (87) |
602 | 743 | 1,041 | |
Deferred tax: | |||
On share options | 1 | (6) | (20) |
Movement relating to pension asset (IAS 19) | 130 | 36 | 167 |
Temporary differences origination and reversal | 39 | 58 | 362 |
170 | 88 | 509 | |
Income tax expense | 772 | 831 | 1,550 |
9. Earnings per share
Basic earnings per share
The basic earnings per share has been calculated using the net profit attributable to the shareholders of the Company of £2,206,000 for the six month period (2010: £2,197,000) (12 months to 31 December 2010: £4,484,000).
The weighted average number of outstanding shares used for the basic earnings per share amounted to 43,197,220 (2010: 43,197,220) (12 months to 31 December 2010: 43,197,220).
Diluted earnings per share
The diluted earnings per share has been calculated using the net profit attributable to the shareholders of the Company of £2,206,000 (2010: £2,197,000) (12 months to 31 December 2010: £4,484,000).
The weighted average number of outstanding shares used for the diluted earnings per share amounted to 43,197,220 (2010: 43,197,220) (12 months to 31 December 2010: 43,197,220) and assumes the exercise of all the share options detailed in note 5 since the date they were granted and the average market price of £0.99. 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 | |
2011 | 2010 | 2010 | |
£'000 | £'000 | £'000 | |
Profit before tax (as stated) | 2,978 | 3,028 | 6,034 |
Non-recurring items | 514 | (23) | 5 |
3,492 | 3,005 | 6,039 | |
Tax expense (as stated) | (772) | (831) | (1,550) |
Tax effect on non-recurring items | (103) | 6 | (1) |
Profit after tax after non-recurring items | 2,617 | 2,180 | 4,488 |
Underlying earnings per share | 6.1p | 5.0p | 10.4p |
10. Dividends
In June 2011, the Company paid a dividend of £1,512,000 to its equity shareholders. This comprised a final dividend in respect of 2010 of 3.50p per share. The directors have declared an interim dividend of 1.9p per share (2010:1.8p), which will be paid on 4 November 2011 to shareholders on the register at the close of business on 7 October 2011.
Related Shares:
NARS.L