Half Year Results

9th Sep 2008 07:00



NARS

9 September 2008

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

("Nationwide" or "the Company")

Half Year Results 

for the Six Months to 30 June 2008

Nationwide provides automotive crash repair and accident administration services to the UK insurance industry. With a national network of accident repair centres located across England, Scotland and Wales employing over 2,200 people, it is the largest dedicated provider of accident repair services in the UK. 

Financial summary

	2008	2007
Revenue	£88.3m	£75.9m
Operating profit	£3.8m	£3.3m
Profit before tax	£3.9m	£3.4m
Earnings per share	6.4p	5.6p
Results under IAS 19 (nonߛcorridor)
Operating profit	£4.1m	£3.8m
Profit before tax	£4.2m	£4.0m
Earnings per share	6.9p	6.4p

Key Points 

 

Michael Marx, Chairman, commented, 

"We are pleased with the progress the business has made over the first half of the year. Our twin track approach of developing the business both organically and by acquisition continues to deliver results. The Directors remain confident that the business is well positioned for ongoing growth."

  Enquiries:

Nationwide Accident Repair Services plc	Michael Wilmshurst, Chief Executive David Loftus, Finance Director	T: 020 7448 1000 today Thereafter: 01993 701720
Biddicks	Katie Tzouliadis/ Sophie Lane	T: 020 7448 1000
Arbuthnot Securities	James Steel/ Alasdair Younie	T: 020 7012 2000

  NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CHAIRMAN'S STATEMENT

Introduction

We are pleased to report Nationwide's half year results for the six months to 30 June 2008. Nationwide continues to consolidate its position as the UK's largest dedicated provider of accident repair services and the results are in line with our robust growth expectations. The strength of our contract base and additional capacity leaves us well positioned for growth.

Financial overview

Sales over the six months grew to £88.3m, representing a 16% increase on last year (2007: £75.9m) and reflecting the additional contractual volumes secured in 2007. Profit before tax for the period rose to £3.9m, a 14% increase on the same period last year (2007: £3.4m) with earnings per share increasing by 14% to 6.4p (2007: 5.6p). Our Balance Sheet remains strong with net cash at 30 June 2008 of £4.6m.

The Company has adopted IAS 19, the 'corridor approach' for its pension obligations. However, in order to provide shareholders with financial results which can be compared to other companies, results under IAS 19 (non-corridor) are also shown. Under IAS 19 (non-corridor), profit before tax increased by 5% to £4.2m (2007: £4.0m) and earnings per share increased by 8% to 6.9p (2007: 6.4p).

Dividend

We maintain our progressive dividend policy which broadly reflects the growth of earnings over time. We will, therefore, be declaring an interim dividend of 1.7p per share, which represents an increase of 13% on last year (2007: 1.5p). The dividend will be paid on 3 November 2008 to shareholders on the register at the close of business on 3 October 2008.

Trading overview

The business enjoyed a good first half as the new contracts and volume extensions agreed last year began to generate the revenues and profitability anticipated. These included the new wins we secured Zenith and the additional volumes we gained with Norwich Union, AXA and Zurich. We have also increased our retail sales at our sites and continue to develop this new aspect of our business. During the period, we acquired an additional four bodyshops in Bristol, Gravesend in Kent, Scunthorpe in Lincolnshire, and, Redruth in Cornwall. More recently, we acquired a new site at Kettering in Northamptonshire. These acquisitions further extend our capacity and service capability. 

 Our Network Services Division, which provides accident management services to motor insurers and fleet operators, has enjoyed a successful six months and we see good potential to develop this business further, particularly in our Mobile Glass Replacement and Mobile Vehicle Repair offerings.

Outlook

We are pleased with the progress the business has made over the first half of the year. Our twin track approach of expanding the business both organically and by acquisition continues to deliver results. There remains further scope to increase efficiency within our existing business. The Directors remain confident that the business is well positioned for ongoing growth.

Michael Marx

Chairman

  NATIONWIDE ACCIDENT REPAIR SERVICES PLC

Unaudited Consolidated Income Statement

For the six months ended 30 June 2008

		Unaudited	Unaudited	Audited
		6 months	6 months	12 months
		to 30 Jun	to 30 Jun	to 31 Dec
		2008	2007	2007
	Notes	£'000	£'000	£'000
Sales revenue		88,342	75,880	151,947
Cost of sales		(47,156)	(41,109)	(81,360)
Gross profit		41,186	34,771	70,587
Distribution costs		(22,242)	(18,901)	(38,858)
Administrative expenses		(15,036)	(12,434)	(24,872)
Share option charge		(120)	(120)	(240)
Operating profit		3,788	3,316	6,617
Finance income	4	142	146	237
Finance costs	4	(36)	(37)	(39)
Profit for the period before tax		3,894	3,425	6,815
Tax expense	5	(1,101)	(912)	(1,744)
Net profit for the period		2,793	2,513	5,071
Earnings per Share
Basic	6	6.4p	5.6p	11.3p
Diluted	6	6.3p	5.1p	11.0p

  NATIONWIDE ACCIDENT REPAIR SERVICES PLC

Unaudited Consolidated Balance Sheet 

As at 30 June 2008

		Unaudited	Unaudited	Audited
		30 Jun	30 Jun	31 Dec
		2008	2007	2007
	Notes	£'000	£'000	£'000
Assets
Nonߛcurrent
Goodwill		7,595	6,300	7,038
Property, plant and equipment		8,897	7,843	8,100
Pension and other employee assets	2	6,422	4,541	5,273
		22,914	18,684	20,411
Current
Inventories		2,608	2,273	2,591
Trade and other receivables		30,042	21,445	26,545
Cash and cash equivalents		4,592	5,167	5,152
		37,242	28,885	34,288
Total assets		60,156	47,569	54,699
Equity
Equity attributable to the shareholders
Share capital	3	5,400	5,609	5,578
Capital redemption reserve		2,959	1,000	1,271
Share premium account		9,354	11,104	10,864
Revaluation reserve		8	8	8
Retained earnings		7,355	5,692	7,426
Total equity		25,076	23,413	25,147
Liabilities
Non-current
Provisions		50	438	125
Deferred tax liabilities		1,506	707	1,002
		1,556	1,145	1,127
Current
Provisions		5	44	14
Trade and other payables		32,929	21,750	27,380
Current tax liabilities		590	1,217	1,031
		33,524	23,011	28,425
Total liabilities		35,080	24,156	29,552
Total equity and liabilities		60,156	47,569	54,699

  NATIONWIDE ACCIDENT REPAIR SERVICES PLC

Unaudited Consolidated Statement of Changes in Equity

For the six months ended 30 June 2008

		Capital	Share
	Share	redemption	premium	Revaluation	Retained
	capital	reserve	account	reserve	earnings	Total
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2007	5,609	1,000	11,104	8	4,226	21,947
Income for the six month period	-	-	-	-	2,513	2,513
Total recognised income and expense for the period	-	-	-	-	2,513	2,513
Share option charge	-	-	-	-	120	120
Dividend paid	-	-	-	-	(1,167)	(1,167)
Balance at 30 June 2007	5,609	1,000	11,104	8	5,692	23,413
Income for the six month period	-	-	-	-	2,558	2,558
Total recognised income and expense for the period	-	-	-	-	2,558	2,558
Share buyback	(31)	271	(240)	-	(271)	(271)
Share option charge	-	-	-	-	120	120
Dividend paid	-	-	-	-	(673)	(673)
Balance at 31 December 2007	5,578	1,271	10,864	8	7,426	25,147
Income for the six month period	-	-	-	-	2,793	2,793
Total recognised income and expense for the period	-	-	-	-	2,793	2,793
Share buyback	(178)	1,688	(1,510)	-	(1,688)	(1,688)
Share option charge	-	-	-	-	120	120
Dividend paid	-	-	-	-	(1,296)	(1,296)
Balance at 30 June 2008	5,400	2,959	9,354	8	7,355	25,076

  NATIONWIDE ACCIDENT REPAIR SERVICES PLC

Unaudited Consolidated Cash Flow Statement

For the six months ended 30 June 2008

		Unaudited	Unaudited	Audited
		6 months	6 months	12 months
		to 30 Jun	to 30 Jun	to 31 Dec
		2008	2007	2007
	Notes	£'000	£'000	£'000
Operating activities
Profit for the period before tax		3,894	3,425	6,815
Adjustments	8	3,464	(2,260)	(296)
Outflow from pension obligations		(1,274)	(1,221)	(2,465)
Outflow from provisions		(84)	(200)	(201)
Tax paid		(1,038)	(240)	(963)
		4,962	(496)	2,890
Investing activities
Additions to property, plant and equipment		(1,513)	(537)	(1,796)
Proceeds from the disposal of businesses		-	-	432
Proceeds from the disposal of property, plant and equipment		3	888	930
Acquisition of businesses - cost		(992)	(599)	(2,362)
Interest received		-	146	237
		(2,502)	(102)	(2,559)
Financing activities
Dividend paid	7	(1,296)	(1,167)	(1,840)
Purchase of own shares		(1,688)	-	(271)
Interest paid		(36)	-	-
		(3,020)	(1,167)	(2,111)
Net decrease in cash and cash equivalents		(560)	(1,765)	(1,780)
Cash and cash equivalents at beginning of period		5,152	6,932	6,932
Cash and cash equivalents at end of period		4,592	5,167	5,152

  NATIONWIDE ACCIDENT REPAIR SERVICES PLC

Notes to the Unaudited Interim Statement

For the six months ended 30 June 2008

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 2007.

The financial information set out in these interim accounts does not constitute statutory accounts as defined in section 240 of the Companies Act 1985. The figures for the year ended 31 December 2007 have been extracted from the statutory financial statements which have been filed with the Registrar of Companies. The auditors' report on those financial statements was unmodified.

2. Pension and other employee assets/obligations

The Group operates a defined benefit scheme and a defined contribution pension scheme in the UK which offers both pensions in retirement and death benefits to members. Since 1 January 2002 the defined benefit scheme has been closed to new members. The assets of the schemes are administered by trustees independent of the Group. The Company made contributions of £1,274,000 (2007: £1,221,000) to the defined benefit scheme during the six month period to 30 June 2008 and £2,465,000 in the year to 31 December 2007. The defined benefit scheme was closed for future accruals on 31 July 2007 with active members transferred to a new defined contribution section of the scheme.

The Group has opted to amortise all actuarial gains and losses above the corridor (10% of the greater of assets and liabilities) over the future working lifetime of the active membership.

A full actuarial valuation of the defined benefit scheme was carried out as at 31 December 2005 and was updated to 30 June 2008 by a qualified independent actuary. 

	30 Jun	30 Jun	31 Dec
	2008 %	2007 %	2007 %
The major assumptions used by the actuary were (in nominal terms):
Rate of increase in salaries	n/a	n/a	n/a
Rate of increase in pensions - accrued pre 5 April 1997	3.0	3.0	3.0
Rate of increase in pensions - accrued post 5 April 1997	3.75	2.85	3.15
Discount rate	6.8	6.1	6.1
Inflation assumption	3.75	3.10	3.15

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 A92 and PA92 tables respectively.

  

	30 Jun	30 Jun	31 Dec
	2008	2007	2007
	£'000	£'000	£'000
Total market value of assets	50,518	54,645	54,733
Present value of defined obligations (funded plans)	(61,946)	(63,725)	(65,040)
Present value of unfunded obligations	(11,428)	(9,080)	(10,307)
Unrecognised actuarial losses	17,850	13,621	15,580
Net asset in balance sheet	6,422	4,541	5,273

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
	2008	2007	2007
	£'000	£'000	£'000
Benefit obligation at beginning of period	65,040	70,928	70,928
Interest cost	1,971	1,905	3,786
Actuarial gain	(4,222)	(8,346)	(8,042)
Benefits paid	(843)	(762)	(1,632)
Balance at end of period	61,946	63,725	65,040

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
	2008	2007	2007
	£'000	£'000	£'000
Fair value of scheme assets at beginning of period	54,733	50,360	50,360
Expected return on scheme assets	2,113	1,868	3,747
Actuarial (loss)/gain	(6,759)	1,958	(207)
Contributions by employers	1,274	1,221	2,465
Benefits paid	(843)	(762)	(1,632)
Assets at end of period	50,518	54,645	54,733

  The amounts recognised in the income statement are:

	6 months	6 months	12 months
	to 30 Jun	to 30 Jun	to 31 Dec
	2008	2007	2007
	£'000	£'000	£'000
Interest on obligation	1,971	1,905	3,786
Expected return on assets	(2,113)	(1,868)	(3,747)
Actuarial loss recognised in period	267	511	1,020
	125	548	1,059
Charged to:
Administration expenses	267	511	1,020
Finance income	(142)	-	-
Finance costs	-	37	39
	125	548	1,059

Effect on profitability: comparison between IAS19 (corridor) and IAS19 (non-corridor)

	6 months	6 months	12 months
	to 30 Jun	to 30 Jun	to 31 Dec
	2008	2007	2007
	£'000	£'000	£'000
Operating profit before non recurring items as stated	3,788	3,316	6,617
Add back actuarial loss recognised under IAS 19 (corridor)	267	511	1,020
Operating profit under IAS 19 (non-corridor)	4,055	3,827	7,637
Finance income	142	146	237
Finance costs	(36)	(18)	(39)
Profit before tax under IAS 19 (non-corridor)	4,161	3,955	7,835
Tax expense as stated	(1,101)	(912)	(1,744)
Deferred tax IAS 19 (corridor) reversed	322	202	316
Deferred tax under IAS 19 (non-corridor)	(396)	(361)	(777)
Profit after tax under IAS 19 (non-corridor)	2,986	2,884	5,630

  3. Equity

	30 June 2008		30 June 2007		31 December 2007
	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	44,872,220	5,609	44,622,220	5,578

On 15 January 2008 the Company purchased 975,000 of its own shares at a price of 120p per share and 450,000 shares on 25 January 2008 at a price of 115p per share. All shares purchased have been cancelled.

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, £120,000 of employee compensation expense has been included in the consolidated income statement for the six month period and £240,000 in the year to 31 December 2007. 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.

  4. Finance income and finance costs 

	6 months	6 months	12 months
	to 30 Jun	to 30 Jun	to 31 Dec
	2008	2007	2007
	£'000	£'000	£'000
Finance income
Interest receivable on bank balances	-	146	237
Pension costs (note 2):
- interest on obligation	(1,971)	-	-
- expected return on assets	2,113	-	-
	142	146	237
Finance costs
Interest payable on bank balances	36	-	-
Pension costs (note 2):
- interest on obligation	-	1,905	3,786
- expected return on assets	-	(1,868)	(3,747)
	36	37	39

5. Income tax expense

	6 months	6 months	12 months
	to 30 Jun	to 30 Jun	to 31 Dec
	2008	2007	2007
	£'000	£'000	£'000
Current tax:
United Kingdom corporation tax at 28.5% (2007: 30%)	775	890	1,624
Adjustments in respect of prior years	(178)	-	(197)
	597	890	1,427
Deferred tax:
Movement relating to pension asset	322	202	422
Deferred tax resulting from reduction in tax rate	-	-	(78)
On share options	(34)	(34)	(67)
Timing differences origination and reversal	216	(146)	40
	1,101	912	1,744

  6.  Earnings per share and dividends

Basic earnings per share

The basic earnings per share has been calculated using the net profit attributable to the shareholders of the Company of £2,793,000 for the six month period (2007: £2,513,000) (12 months to 31 December 2007: £5,071,000).

The weighted average number of outstanding shares used for the basic earnings per share amounted to 43,331,561 (2007: 44,872,220) (12 months to 31 December 2007: 44,864,001). This number takes into account the share buybacks that occurred on 15 January 2008 and 25 January 2008 as detailed in note 3.

Diluted earnings per share

The diluted earnings per share has been calculated using the net results attributable to the shareholders of the Company of £2,793,000 (2007: £2,513,000) (12 months to 31 December 2007: £5,071,000).

The weighted average number of outstanding shares used for the diluted earnings per share amounted to 44,381,802 (2007: 49,135,081) (12 months to 31 December 2007: 49,135,081) and assumes the exercise of all the share options detailed in note 3 since the date they were granted and the average market price of £1.47. This number takes into account the share buybacks that occurred on 15th January 2008 and 25 January 2008 as detailed in note 3.

7. Dividends

In June 2008, the Company paid a dividend of £1,296,000 to its equity shareholders. This comprised a final dividend in respect of 2007 of 3.0p per share. The Directors declare an interim dividend of 1.7p per share, which will be paid on 3 November 2008 to shareholders on the register at the close of business on 3 October 2008.

8. Cash flow statement

The following nonߛcash flow adjustments have been made to the preߛtax result for the year to arrive at operating cash flow:

	6 months	6 months	12 months
	to 30 Jun	To 30 Jun	to 31 Dec
	2008	2007	2007
	£'000	£'000	£'000
Adjustments:
Movement in pension fund asset - IAS19	125	547	1,059
Share option scheme charge	120	120	240
Depreciation	1,151	1,208	2,225
Changes in inventories	(17)	275	(43)
Changes in trade and other receivables	(3,497)	(955)	(5,155)
Changes in trade and other payables	5,549	(2,960)	2,670
Changes in provisions	-	-	(342)
Profit on sale of businesses	-	-	(165)
Profit on sale of property, plant and equipment	(3)	(349)	(548)
Finance income	-	(146)	(237)
Finance charges	36	-	-
Total	3,464	(2,260)	(296)

ENDIR BUGDCGGGGGII

---

Related Shares:

NARS.L