13th Sep 2007 07:01
Nationwide Accident Repair Srvs PLC13 September 2007 NARS.L NATIONWIDE ACCIDENT REPAIR SERVICES PLC ("Nationwide" or "the Company") Interim Results for the Six Months to June 2007 Nationwide provides automotive crash repair and accident administration servicesto the UK insurance industry. With a national network of accident repair centreslocated across England, Scotland and Wales employing over 2,100 people, it isthe largest dedicated provider of accident repair services in the UK. Key Points 2007 2006Sales £75.9m £78.7mOperating profit after non-recurring items £3.3m £0.1mProfit before tax after non-recurring items £3.4m £0.1mEarnings per share after non-recurring items 5.6p 0.2p Underlying resultsOperating profit before non-recurring items £3.3m £3.6mProfit before tax before non-recurring items £3.4m £3.7mEarnings per share before non-recurring items 5.6p 6.2p Underlying results under FRS 17Operating profit before non-recurring items £3.8m £4.1mProfit before tax before non-recurring items £4.0m £4.2mEarnings per share before non-recurring items 6.4p 6.9p • Proposed interim dividend of 1.50p per share • Strong balance sheet with net cash at period end of £5.2m (2006: £8.5m) • Strategic decision to decline the renewal of a contract offered on commercially unattractive terms. Volumes have been more than replaced on an annualised basis • Good growth in insurance customer base including additional volumes with: - Hastings Direct worth over £15m per annum - Norwich Union worth over £20m per annum • Accident management business, Aquilo, acquired December 2006 performing well • Acquisition of new bodyshops in Llandudno and Lincoln in period - contract to purchase site in Matlock, Derbyshire in place • Directors remain confident of future prospects for the business Michael Marx, Chairman, commented, "Results for the first half of the year are in line with our expectations andleave us well positioned for a satisfactory outcome for the year. Lookingfurther ahead, we remain positive about prospects. We continue with ourtwin-track approach to growth and believe there are good opportunities both toacquire and to develop the business organically." Enquiries: Nationwide Michael Wilmshurst, Chief Executive T: 020 7448 1000 todayAccident Repair David Loftus, Finance Director Thereafter: 01993 701 720Services plc Biddicks Katie Tzouliadis T: 020 7448 1000 Arbuthnot James Steel T: 020 7012 2000Securities CHAIRMAN'S STATEMENT Introduction We are pleased to report Nationwide's interim results. Results for the periodare in line with our expectations and leave the Company well positioned for asatisfactory outcome for the year. The Directors remain confident of futureprospects for the business. Financial Overview As anticipated, sales over the six months to 30 June 2007 are marginally lowerthan the equivalent period last year at £75.9 million (2006: £78.7 million) andthe operating profit before non-recurring items of £3.3 million reflects aslight reduction on last last's result (2006: £3.6 million) but is in line withour expectations. Although operating profit after non-recurring items hasincreased considerably from £107,000 in 2006 to £3.3 million in 2007, thisincrease is more reflective of the one-off costs incurred last year with regardto our Initial Public Offering. After non-recurring items, the profit for theperiod is £3.4 million against £141,000 last year and earnings per share are5.6p against 0.2p last year. The Company's balance sheet remains very strong,with £5.2 million net cash at period end and we continue to manage ourdistribution and administration costs effectively. Dividend It is our intention to continue to pursue a progressive dividend policy whichbroadly reflects the growth in earnings over time and we will, therefore, berecommending an interim dividend of 1.5p per share for payment in November 2007. Trading Review The business enjoyed a good first quarter. The volume reduction in the secondquarter was due to our strategic decision, based on the contract terms on offer,not to renew Nationwide's contract with Royal Bank of Scotland. This has alreadybeen more than replaced by substantial new agreements, for example, the HastingsDirect agreement is worth in excess of £15 million per annum. We remain focusedon securing new contracts that will enable us to leverage scale and operationalefficiency to the benefit of our shareholders and customers and I am pleased toreport that the Company is now also repairing additional volumes for NorwichUnion Insurance and expects to sign a three year contract, which once fully inplace, will contribute an additional £20 million of sales per year. Over theperiod, we acquired two new repair sites, at Llandudno and Lincoln in Januaryand March and these are integrating well. Our accident management division is performing well, with the Aquilo business,which we acquired in December 2006, contributing to the division's success. Outlook We continue to pursue our twin track approach of developing the business bothorganically and via acquisition. There is good scope both to secure additionalinsurance company contracts and to leverage further efficiencies within ourexisting businesses. Additionally, we continue to consider suitable acquisitionsand currently expect to complete the purchase of a further bodyshop in Matlock,Derbyshire at the end of September. Further discussions are in hand regardingother site acquisitions. The Directors remain confident that the business is well positioned for ongoinggrowth. Michael MarxChairman NATIONWIDE ACCIDENT REPAIR SERVICES PLCUNAUDITED INTERIM CONSOLIDATED INCOME STATEMENTFor the six month period to 30 June 2007 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 Dec 2007 2006 2006 Notes £'000 £'000 £'000 Sales revenue 75,880 78,740 151,192Cost of sales (41,109) (42,432) (80,905) ------------------------------------Gross profit 34,771 36,308 70,287 Distribution costs (18,901) (19,015) (37,347)Administrative expenses (12,434) (13,644) (27,063)Share option charge (120) - (120) ------------------------------------Operating profit before non recurring items 3,316 3,649 5,757Non recurring items 9 - (3,542) (3,542) ------------------------------------Operating profit 3,316 107 2,215Finance income 4 146 83 169Finance costs 4 (37) (49) (14) ------------------------------------Profit for the period before tax 3,425 141 2,370 Tax expense 5 (912) (64) (978) ------------------------------------Net profit for the period 2,513 77 1,392 ------------------------------------ Earnings per Share 6Basic 5.6p 0.2p 3.1p ------------------------------------Diluted 5.1p 0.2p 3.0p ------------------------------------ NATIONWIDE ACCIDENT REPAIR SERVICES PLCUNAUDITED INTERIM CONSOLIDATED BALANCE SHEETAt 30 June 2007 Unaudited Unaudited Audited 30 June 30 June 31 Dec 2007 2006 2006 Notes £'000 £'000 £'000AssetsNon-currentGoodwill 6,300 4,648 5,821Property, plant and equipment 7,843 9,030 8,933Pension and other employee 2 assets 4,541 1,380 3,867 ----------------------------- 18,684 15,058 18,621 -----------------------------CurrentInventories 2,273 2,626 2,548Trade and other receivables 21,445 21,984 20,490Cash and cash equivalents 5,167 8,548 6,932 ----------------------------- 28,885 33,158 29,970 ----------------------------- Total assets 47,569 48,216 48,591 ----------------------------- EquityEquity attributable to theshareholdersShare capital 3 5,609 5,609 5,609Capital redemption reserve 1,000 1,000 1,000Share premium account 11,104 11,104 11,104Revaluation reserve 8 8 8Retained earnings 5,692 2,791 4,226 -----------------------------Total equity 23,413 20,512 21,947 ----------------------------- LiabilitiesNon-currentProvisions 438 534 508Deferred tax liabilities 707 160 685 ----------------------------- 1,145 694 1,193 -----------------------------CurrentProvisions 44 163 174Trade and other payables 21,750 26,370 24,710Current tax liabilities 1,217 477 567 ----------------------------- 23,011 27,010 25,451 -----------------------------Total liabilities 24,156 27,704 26,644 ----------------------------- Total equity and liabilities 47,569 48,216 48,591 ----------------------------- NATIONWIDE ACCIDENT REPAIR SERVICES PLCUNAUDITED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the six month period to 30 June 2007 Share Capital Share Reval. Retained Total Capital Redemption Premium Reserve Earnings Reserve Account £000 £000 £000 £000 £000 £000 Balance at 1 Jan 2006 5,609 1,000 11,104 8 2,714 20,435 Income for the 6 mth period - - - - 77 77 -------------------------------------------------------Balance at 30 June 2006 5,609 1,000 11,104 8 2,791 20,512 Share option charge - - - - 120 120 Income for the 6 mth period - - - - 1,315 1,315 ------------------------------------------------------- Balance at 1 Jan 2007 5,609 1,000 11,104 8 4,226 21,947 Share option charge - - - - 120 120 Income for the 6 mth period - - - - 2,513 2,513 Dividend paid - - - - (1,167) (1,167) -------------------------------------------------------Balance at 30 June 2007 5,609 1,000 11,104 8 5,692 23,413 ------------------------------------------------------- NATIONWIDE ACCIDENT REPAIR SERVICES PLCUNAUDITED INTERIM CONSOLIDATED CASH FLOW STATEMENTFor the six month period ended 30 June 2007 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000Operating activitiesProfit for the period before tax 3,425 141 2,370Adjustments (note 8) (2,260) 5,801 6,293Outflow from pension obligations (1,221) (480) (2,860)Outflow from provisions (200) (147) (156)Tax paid (240) (385) (684) ------------------------------------- (496) 4,930 4,963 -------------------------------------Investing activitiesAdditions to property, plant and equipment (537) (600) (1,653)Proceeds from the disposal ofproperty, plant and equipment 888 21 101Acquisition of businesses (599) - (762)Interest received 146 83 169 ------------------------------------- (102) (496) (2,145) ------------------------------------- Financing activitiesDividend paid (1,167) - - ------------------------------------- (1,167) - - ------------------------------------- Net (decrease) / increase in cash and cash equivalents (1,765) 4,434 2,818Cash and cash equivalents at beginning of period 6,932 4,114 4,114 -------------------------------------Cash and cash equivalents at end of period 5,167 8,548 6,932 ------------------------------------- NATIONWIDE ACCIDENT REPAIR SERVICES PLCNOTES TO THE UNAUDITED INTERIM ACCOUNTS 1. BASIS OF PREPARATION The unaudited interim accounts have been prepared on the same basis and usingthe same accounting policies as used in the audited financial statements for theyear ended 31 December 2006. The financial information set out in these interim accounts does not constitutestatutory accounts as defined in section 240 of the Companies Act 1985. Thefigures for the year ended 31 December 2006 have been extracted from thestatutory financial statements which have been filed with the Registrar ofCompanies. 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 pensionscheme in the UK which offers both pensions in retirement and death benefits tomembers. Since 1 January 2002 the defined benefit scheme has been closed to newmembers. The assets of the schemes are administered by trustees independent ofthe Group. The Company made contributions of £1,221,000 (2006: £480,000) to thedefined benefit scheme during the six month period to 30 June 2007 and£2,860,000 in the year to 31 December 2006. The defined benefit scheme wasclosed for future accruals on 31 July 2006 with active members transferred to anew defined contribution section of the scheme. The Group has opted to amortise all actuarial gains and losses above thecorridor (10% of the greater of assets and liabilities) over the future workinglifetime of the active membership. A full actuarial valuation of the defined benefit scheme was carried out as at31 December 2005 and was updated to 30 June 2007 by a qualified independentactuary. 30 June 30 June 31 Dec 2007 2006 2006The major assumptions used by the actuarywere (in nominal terms):Rate of increase in salaries n/a 3.4% n/aRate 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 2.85% 2.75% 2.85%Discount rate 6.1% 5.5% 5.4%Inflation assumption 3.10% 2.75% 2.85% The assumptions used in determining the overall expected return of the schemehave been set with reference to yields available on government bonds andappropriate risk margins. 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000Total market value of assets 54,645 45,613 50,360Present Value of defined obligations (funded plans) (63,725) (61,704) (70,928) ------------------------------Present value of unfunded obligations (9,080) (16,091) (20,568) Unrecognised actuarial losses 13,621 17,471 24,435 ------------------------------Net asset in balance sheet 4,541 1,380 3,867 ------------------------------ Reconciliation of opening and closing balances of the present value ofthe defined benefit obligations 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 Benefit obligation at beginning of period 70,928 65,552 65,552 Service cost - 558 613Interest cost 1,905 1,619 3,262Contributions by scheme members - 163 212Actuarial (gain) / loss (8,346) (5,497) 3,351Curtailments and settlements - - (611)Benefits paid (762) (691) (1,451) ----------------------------------Obligations at end of period 63,725 61,704 70,928 ---------------------------------- Reconciliation of opening and closing balances of the fair value of planassets 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000 Fair value of scheme assets at beginning of period 50,360 44,519 44,519 Expected return on scheme assets 1,868 1,570 3,248Actuarial gain/(loss) 1,958 (428) 972Contributions by employers 1,221 480 2,860Contributions by scheme members - 163 212Benefits paid (762) (691) (1,451) --------------------------------Assets at end of period 54,645 45,613 50,360 -------------------------------- The amounts recognised in the income statement are: 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000Current service cost - 558 613Interest on obligation 1,905 1,619 3,262Expected return on assets (1,868) (1,570) (3,248)Curtailments and settlements - - (611)Actuarial loss recognised in period 511 484 969 --------------------------------- 548 1,091 985 ---------------------------------Charged to:Administration expenses 511 1,042 971Finance costs 37 49 14 --------------------------------- 548 1,091 985 --------------------------------- Effect on profitability: comparison between IAS19 and FRS 17: 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000Operating profit before non recurring items as stated 3,316 3,649 5,757Add back actuarial loss recognised under IAS 19 511 484 969Additional curtailment gain under FRS 17 - - 300 ---------------------------------Operating result before non recurring items under FRS 17 3,827 4,133 7,026Non recurring items - (3,542) (3,542) ---------------------------------Operating result under FRS 17 3,827 591 3,484Finance Income 146 83 169Finance costs under FRS 17 (18) (34) (7) ---------------------------------Income before tax under FRS 17 3,955 640 3,646Tax expense as stated (912) (64) (978)Deferred tax IAS 19 reversed 202 (183) 563Deferred tax under FRS 17 (361) 34 (946) ---------------------------------Income after tax under FRS 17 2,884 427 2,285 --------------------------------- Effect on total equity: comparison between 30 June 30 June 31 DecIAS19 and FRS 17: 2007 2006 2006 £'000 £'000 £'000Total equity as stated 23,413 20,512 21,947Less IAS 19 asset (4,541) (1,380) (3,867)Add back IAS 19 deferred tax provision 1,362 414 1,160FRS 17 deficit (8,940) (15,823) (20,088)Deferred tax under FRS 17 2,682 4,747 6,026 ---------------------------------Total equity under FRS 17 13,976 8,470 5,178 --------------------------------- 3. EQUITY Share Capital 30 June 2007, 30 June 2006 and 31st December 2006 Shares £'000AuthorisedOrdinary shares of 12.5p each 64,000,000 8,000 ----------------------------- Issued and fully paidOrdinary shares of 12.5p each 44,872,220 5,609 ----------------------------- Share Options No of Exercise Exercise Shares Price PeriodM A Wilmshurst Approved 25,751 £1.165 2009-16Unapproved 2,217,860 £1.11 2009-16D J Loftus Approved 25,751 £1.165 2009-16Unapproved 1,096,055 £1.11 2009-16S D G Thompson Approved 25,751 £1.165 2009-16Unapproved 871,693 £1.11 2009-16 ---------- 4,262,861 ---------- All the above options were issued on 4 July 2006 4. FINANCE INCOME AND FINANCE COSTS 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2007 2006 2006Finance Income £'000 £'000 £'000Interest receivable on bank balances 146 83 169 -------------------------------Finance CostsPension costs (see note 2):- interest on obligation 1,905 1,619 3,262- expected return on assets (1,868) (1,570) (3,248) ------------------------------- 37 49 14 ------------------------------- 5. INCOME TAX EXPENSE 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2007 2006 2006Current Tax: £'000 £'000 £'000United Kingdom corporation tax at 30% (2006:30%) 890 247 636Adjustments in respect of prior years - - - ------------------------------- 890 247 636 -------------------------------Deferred Tax:Movement relating to pension asset (IAS 19) 202 (183) 563Timing differences origination and reversal (180) - (221) ------------------------------- 912 64 978 ------------------------------- 6. EARNINGS PER SHARE AND DIVIDENDS Basic earnings per shareThe basic earnings per share has been calculated using the net profitattributable to the shareholders of the Company of £2,513,000 for the six monthperiod (2006: £77,000) (12 months to 31 December 2006: £1,392,000). The weighted average number of outstanding shares used for the basic earningsper share amounted to 44,872,220 (2006: 44,872,220) (12 months to 31 December2006: 44,872,220). Diluted earnings per shareThe diluted earnings per share has been calculated using the net resultsattributable to the shareholders of the Company of £2,513,000 (2006:£77,000) (12months to 31 December 2006: £1,392,000). The weighted average number of outstanding shares used for the diluted earningsper share amounted to 49,135,081 (2006: 44,872,220) (12 months to 31 December2006: 46,974,453),and assumes the exercise of all the share options detailed in note 3 since the date they were granted. Underlying earnings per shareThe underlying earnings per share has been calculated as follows: 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000Profit before tax (as stated) 3,425 141 2,370Non recurring items - 3,542 3,542 ---------------------------------- 3,425 3,683 5,912Tax expense (as stated) (912) (64) (978)Tax effect on non recurring items - (858) (888) ---------------------------------- 2,513 2,761 4,046 ---------------------------------- Adjusted earnings per share 5.6p 6.2p 9.0p ---------------------------------- The weighted average number of outstanding shares used for the basic earningsper share amounted to 44,872,220 (2006: 44,872,220) (12 months to 31 December2006: 44,872,220). Underlying earnings per share (FRS 17 basis)The underlying earnings per share on an FRS 17 basis has been calculated asfollows: 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000Operating profit before non recurring items under FRS 17 (see note 2) 3,827 4,133 7,026Finance Income 146 83 169Finance costs under FRS 17 (18) (34) (7) -------------------------------Underlying Profit before tax under FRS 17 3,955 4,182 7,188Tax expense as stated (912) (64) (978)Deferred tax IAS 19 reversed 202 (183) 563Deferred tax under FRS 17 (361) 34 (946)Tax effect on non recurring items - (858) (888) ------------------------------- 2,884 3,111 4,939 ------------------------------- Adjusted earnings per share 6.4p 6.9p 11.0p ------------------------------- The weighted average number of outstanding shares used for the basic earningsper share amounted to 44,872,220 (2006: 44,872,220) (12 months to 31 December2006: 44,872,220). 7. DIVIDENDS In May 2007, the Company paid dividends of £1,167,000 to its equityshareholders. 8. CASH FLOW STATEMENT The following non-cash flow adjustments have been made to the pre-tax result forthe year to arrive at operating cash flow: 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2007 2006 2006Adjustments: £'000 £'000 £'000Movement in pension fund asset- IAS19 547 1,091 985Share option scheme charge 120 - 120Depreciation 1,208 1,275 2,407Changes in inventories 275 141 219Changes in trade and other receivables (955) 178 2,949Changes in trade and other payables (2,960) 3,059 (360)Changes in provisions - 148 142Profit on sale of property, plant and equipment (349) (8) -Finance Income (146) (83) (169) -------------------------------Total (2,260) 5,801 6,293 ------------------------------- 9. NON RECURRING COSTS 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2007 2006 2006 £'000 £'000 £'000Flotation costs - (683) (683)Non recurring bonuses - (2,859) (2,859) --------------------------------Total - (3,542) (3,542) -------------------------------- The costs relating to the flotation on AIM on 4 July 2006 of £683,000 wereincluded in the 2006 Interim Accounts. In addition, as noted in paragraph 8.10part IV of the Admission document, the 2006 Interim Accounts includenon-recurring bonuses totalling £2,859,000. Of this amount £2,407,000 waspayable to Troy Solutions Limited, a company where Mr M A Wilmshurst is adirector and £400,000 was paid to D.J. Loftus. 10. COPIES OF INTERIM REPORT AND FINANCIAL STATEMENTS The Interim Report will be sent to shareholders by the end of September 2007.Further copies will be available to the public, free of charge at the Group'sregistered office, 17A Thorney Leys Park, Witney, Oxfordshire OX28 4GE. 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