13th Sep 2006 07:01
Nationwide Accident Repair Srvs PLC13 September 2006 NATIONWIDE ACCIDENT REPAIR SERVICES PLC ("Nationwide" or "the Group") Maiden Interim Results for the six months to 30 June 2006 Nationwide provides automotive crash repair and accident administration servicesto the UK insurance industry. With a network of 69 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. TheGroup's customer base includes insurance companies such as Royal & Sun Alliance,Norwich Union, Equity Red Star and Zurich and fleet operators such as DHL. Financial highlights +-------------------------------------+-------------+------------+| | 6 months to| 6 months to|| | 30 June 2006|30 June 2005|+-------------------------------------+-------------+------------+|Sales | £78.7m| £66.6m|+-------------------------------------+-------------+------------+|Operating profit | £0.1m| £7.8m|+-------------------------------------+-------------+------------+|Profit before tax | £0.1m| £7.6m|+-------------------------------------+-------------+------------+|Earnings per share | 0.2p| 15.9p|+-------------------------------------+-------------+------------+| | | |+-------------------------------------+-------------+------------+|Underlying results | | |+-------------------------------------+-------------+------------+|Operating profit before non-recurring| £3.6m| £3.1m||items | | |+-------------------------------------+-------------+------------+|Underlying profit before tax* | £3.7m| £2.8m|+-------------------------------------+-------------+------------+|Underlying earnings per share* | 6.2p| 5.3p|+-------------------------------------+-------------+------------+| | | |+-------------------------------------+-------------+------------+|Underlying results under FRS 17 | | |+-------------------------------------+-------------+------------+|Operating profit before non-recurring| £4.1m| £3.7m||items | | |+-------------------------------------+-------------+------------+|Underlying profit before tax* | £4.2m| £3.4m|+-------------------------------------+-------------+------------+|Underlying earnings per share* | 6.9p| 6.2p|+-------------------------------------+-------------+------------+* Before non-recurring items Operational highlights • Successful flotation on AiM in July 2006 • Benefits of 2005 acquisition of Gemini coming through • Gross margins maintained despite inflationary pressure • Closure of defined benefit pension scheme to future accruals • Payment of final dividend expected, subject to trading results • Board remains quietly confident that full year results will be in line with expectations Michael Marx, Chairman, commented, We are pleased to report Nationwide's maiden interim results following theGroup's successful admission to AiM in July this year. Results for the sixmonths to 30 June 2006 demonstrate that Nationwide continues to make encouragingprogress. We remain quietly confident that, subject to normal trading conditions, our fullyear results will be in line with expectations and we remain on course torecommend our first final dividend to shareholders, which would become payablein May 2007. We believe that the Group's national coverage, economies of scale and customerservice give us a competitive advantage when competing for business. We continueto pursue our twin track approach of improving our existing businesses whilstcarefully exploring additional opportunities for growth through acquisition." Enquiries: Nationwide Accident Repair Michael Wilmshurst, T: 020 7448 1000 todayServices plc Chief Executive Thereafter: 01993 701 720 David Loftus, Finance Director Biddicks Katie Tzouliadis/ T: 020 7448 1000 /Zoe Biddick CHAIRMAN'S STATEMENT Introduction We are pleased to report Nationwide's maiden interim results following theGroup's successful admission to AiM in July this year. Results for the sixmonths to 30 June 2006 demonstrate that Nationwide continues to make encouragingprogress and we look forward to a satisfactory outcome for the year. Financial Overview Sales for the six month period increased by 18% to £78.7m against £66.6m lastyear and operating profit before non-recurring items rose by 18% to £3.6m from£3.1m. Operating profit after non-recurring costs relating to our flotation andthe payment of certain contractual bonuses, was £0.1m (2005: £7.8m): profitbefore tax was £0.1m (2005: £7.6m) and earnings per share was 0.2p (2005:15.9p). The Company adopts IAS 19, the "corridor approach", for its pension obligations.However in order to provide shareholders with financial results which arecomparable with other companies, results under FRS 17 are also shown. Under FRS17, operating profit before non-recurring items rose by 11% to £4.1m from £3.7m.Underlying profit before tax improved by 23% to £4.2m from £3.4m last year andunderlying earnings per share rose by 11% to 6.9p (2005: 6.2p). The Group's cash position remains strong, with net cash at 30 June 2006 of£8.5m. These encouraging results reflect both the benefit of our acquisition of GeminiAccident Repair Centres in July 2005 and our ability to maintain margins. Geminigenerated sales of £8.6m and operating profit of £0.4m in the first half.Excluding the effect of acquisitions and closures, sales increased by 8%. Grossmargins were maintained at 47% despite inflationary pressures. The Group'sdefined benefit scheme was closed for future accruals on 31 July 2006 withactive members transferred to a new defined contribution section of the scheme. Dividend As set out in the AiM Admission document, the Directors intend to pursue aprogressive dividend policy which broadly reflects the growth in underlyingearnings over time and Group prospects, based on a dividend cover of 2.5 to 3times. It is anticipated that a final dividend in respect of the current yearwill be recommended to shareholders, for payment in May 2007. Ordinarily, overthe course of a financial year, final dividends are expected to representtwo-thirds of the total annual dividend. Trading Our crash repair centres primarily service major UK insurance companies and itis our intention to position the Group as the accident repair services supplierof choice for the UK insurance industry with scope to grow the business bothorganically and by acquisition. The potential for growth by acquisition is goodsince the crash repair market is highly fragmented, with nearly half the totalnumber of bodyshops owned by small businesses, and the market is graduallyconsolidating as smaller operators come increasingly under pressure. In the second half of last year, we purchased Gemini Accident Repair Centres.This added another 11 repair centres, primarily in the West Midlands, Afterclosing one loss-making Gemini site, this increased the total number of ourbodyshops to 69. The acquisition was the largest we have completed to date andthe sites have now been successfully integrated into the Nationwide network. Aspart of the integration process, we put in place the Nationwide operating model.Crucially, this includes our bespoke software systems, which help to ensure thatthe Group's best practice procedures are consistently applied across all sites.It is pleasing to see the improving contribution from these sites since theirintegration. We continue to improve the measurement of the operational performance of each ofour sites through the development of our centralised IT systems. This assists usboth from a financial perspective, in helping us to improve operational andadministrative efficiency, and from a customer perspective, since achieving highcustomer satisfaction levels helps to drive the continued success and growth ofthe business. Notably, these systems enable us to supply our key customers withmanagement information, thus deepening our business relationships. The softwarealso enables us to monitor customer satisfaction levels and to reward successaccordingly. We remain active in cultivating our relationships with motor insurers both at alocal and national level and we are particularly encouraged by substantialincreases in sales with both Zurich and R&SA as we develop new operating modelswith both of these customers. The strengthening of these important relationshipshas enabled us to reduce our exposure to lower margin business elsewhere. Eightof our sites are dedicated to carrying out repairs on an exclusive basis for R&SA, with the motor insurer providing, in turn, a minimum monthly level ofbusiness to these eight sites. In line with our culture of staff development, we are pleased to note that thisyear our Nationwide apprentice programme has attracted over 50 new young peopleto join our Group with a view to developing their careers with us. Prospects Looking forward to the trading outturn for the second half of this year, itshould be noted that, historically, our first half tends to be our strongertrading period. This is because results for the second half include the holidaymonths of July and August as well as a shortened working period during December.That being said, we remain quietly confident that, subject to normal tradingconditions, our full year results will be in line with expectations and weremain on course to recommend our first final dividend to shareholders, payablein May 2007. We believe that the Group's national coverage, economies of scale and customerservice give us a competitive advantage when competing for business. We continueto pursue our twin track approach of improving our existing businesses whilstcarefully exploring additional opportunities for growth through acquisition. Michael Marx, Chairman NATIONWIDE ACCIDENT REPAIR SERVICES PLCUNAUDITED INTERIM CONSOLIDATED INCOME STATEMENT For the six month period to 30 June 2006 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 Dec 2006 2005 2005 Notes £'000 £'000 £'000 Sales revenue 78,740 66,634 139,554Cost of sales (41,751) (35,322) (74,827) ------------------------------------ Gross profit 36,989 31,312 64,727 Distribution costs (19,015) (16,574) (34,876)Administrative expenses (14,325) (11,638) (25,808) ------------------------------------Operating profit before non 3,649 3,100 4,043recurring itemsNon recurring items 8 (3,542) 4,750 3,750 ------------------------------------Operating profit 107 7,850 7,793Finance income 4 83 174 379Finance costs 4 (49) (436) (873) ------------------------------------ Profit for the period before tax 141 7,588 7,299 Tax expense 5 (64) (446) (789) ------------------------------------ Net profit for the period 77 7,142 6,510 ------------------------------------ Earnings per Share 6 0.2p 15.9p 14.5p ------------------------------------ NATIONWIDE ACCIDENT REPAIR SERVICES PLCUNAUDITED INTERIM CONSOLIDATED BALANCE SHEET At 30 June 2006 Unaudited Unaudited Audited 30 June 30 June 31 Dec 2006 2005 2005 Notes £'000 £'000 £'000AssetsNon-currentGoodwill 4,648 - 4,648Property, plant and equipment 9,030 8,899 9,718Pension and other employee assets 2 1,380 1,513 1,991 ------------------------------ 15,058 10,412 16,357 ------------------------------CurrentInventories 2,626 2,226 2,767Trade and other receivables 21,984 21,755 22,162Cash and cash equivalents 8,548 15,348 4,114 ------------------------------ 33,158 39,329 29,043 ------------------------------Total assets 48,216 49,741 45,400 ============================== 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 2,791 8,346 2,714 ------------------------------Total equity 20,512 26,067 20,435 ------------------------------ LiabilitiesNon-currentProvisions 534 341 480Deferred tax liabilities 160 80 343 ------------------------------ 694 421 823 ------------------------------CurrentProvisions 163 281 216Trade and other payables 26,370 22,638 23,311Current tax liabilities 477 334 615 ------------------------------ 27,010 23,253 24,142 ------------------------------Total liabilities 27,704 23,674 24,965 ------------------------------ Total equity and liabilities 48,216 49,741 45,400 ------------------------------ NATIONWIDE ACCIDENT REPAIR SERVICES PLCUNAUDITED INTERIM CONSOLIDATED STATEMENT OF CHANGES IN EQUITY For the six month period to 30 June 2006 Share Capital Share Reval. Retained Total Capital Redemption Premium Reserve Earnings Reserve Account £000 £000 £000 £000 £000 £000 Balance at 1 Jan 2005 5,609 1,000 11,104 8 1,204 18,925 Income for the 6 mth period - - - - 7,142 7,142 ----------------------------------------------------- Balance at 30 June 2005 5,609 1,000 11,104 8 8,346 26,067 Loss for the 6 mth period - - - - (632) (632) Dividend Paid - - - - (5,000) (5,000) ----------------------------------------------------- Balance at 1 Jan 2006 5,609 1,000 11,104 8 2,714 20,435 Profit for the 6 mth period - - - - 77 77 -----------------------------------------------------Balance at 30 June 2006 5,609 1,000 11,104 8 2,791 20,512 ----------------------------------------------------- NATIONWIDE ACCIDENT REPAIR SERVICES PLCUNAUDITED INTERIM CONSOLIDATED CASH FLOW STATEMENT For the six month period ended 30 June 2006 Unaudited Unaudited Audited 6 months to 6 months to 12 months to 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000Operating activitiesProfit for the period before tax 141 7,588 7,299Adjustments (note 7) 2,275 (2,244) 634Changes in inventories 141 (114) (252)Changes in trade and other receivables 178 (4,345) (1,630)Changes in trade and other payables 3,059 2,276 (499)Changes in provisions 148 (66) 125Outflow from pension obligations (480) (480) (2,582)Outflow from provisions (147) (98) (215)Tax paid (385) - (113) ------------------------------------ 4,930 2,517 2,767 ------------------------------------ Investing activitiesAdditions to property, plant and equipment (600) (1,026) (2,424)Proceeds from the disposal ofproperty, plant and equipment 21 35 208Acquisition of businesses - cost - - (4,665)Acquisition of businesses - debt acquired - - (799)Interest received 83 174 379 ------------------------------------ (496) (817) (7,301) ------------------------------------ Financing activitiesDividend paid - - (5,000)Proceeds from disposal of preference shares - 4,750 4,750 ------------------------------------ - 4,750 (250) ------------------------------------ Net increase/(decrease) in cash and cash equivalents 4,434 6.450 (4,784)Cash and cash equivalents at beginning of period 4,114 8,898 8,898 ------------------------------------Cash and cash equivalents at end of period 8,548 15,348 4,114 ------------------------------------ NATIONWIDE ACCIDENT REPAIR SERVICES PLC NOTES TO THE UNAUDITED INTERIM ACCOUNTS 1. BASIS OF PREPARTION 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 2005 except that IAS 33, Earnings per share has beenapplied for the first time. 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 2005 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 £480,000 (2005: £480,000) to thedefined benefit scheme during the six month period to 30 June 2006 and£2,582,000 in the year to 31 December 2005. 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 2006 by a qualified independentactuary. IAS 19------ 30 June 30 June 31 Dec 2006 2005 2005The major assumptions used by the actuarywere (in nominal terms):Rate of increase in salaries 3.4% 3.4% 3.3%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 2.75% 2.75% 2.65%Discount rate 5.5% 5.1% 5.0%Inflation assumption 2.75% 2.75% 2.65% 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 2006 30 June 2005 31 Dec 2005 £'000 £'000 £'000Total market value of assets 45,613 40,239 44,519Present Value of defined obligations (funded plans) (61,704) (66,753) (65,552) --------------------------------------- Present value of unfunded obligations (16,091) (26,514) (21,033) Unrecognised actuarial losses 17,471 28,027 23,024 ---------------------------------------Net asset in balance sheet 1,380 1,513 1,991 ======================================= 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 2006 2005 2005 £'000 £'000 £'000 Benefit obligation at beginning of year 65,552 61,984 61,984 Service cost 558 574 1,148Interest cost 1,619 1,652 3,344Contributions by scheme members 163 167 328Actuarial (gain) / loss (5,497) 3,063 323Benefits paid (691) (687) (1,575) --------------------------------Balance at end of year 61,704 66,753 65,552 -------------------------------- 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 2006 2005 2005 £'000 £'000 £'000 Fair value of scheme assets at beginning of year 44,519 37,601 37,601Expected return on scheme assets 1,570 1,216 2,471Actuarial gain/(loss) (428) 1,462 3,113Contributions by employers 480 480 2,581Contributions by scheme members 163 167 328Benefits paid (691) (687) (1,575) --------------------------------Asset at end of year 45,613 40,239 44,519 -------------------------------- The amounts recognised in the income statement are: 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000Current service cost 558 574 1,148Interest on obligation 1,619 1,652 3,344Expected return on assets (1,570) (1,216) (2,471)Actuarial loss recognised in year 484 613 1,226 ---------------------------------- 1,091 1,623 3,247 ----------------------------------Charged to:Administration expenses 1,042 1,187 2,374Finance costs 49 436 873 ---------------------------------- 1,091 1,623 3,247 ---------------------------------- Effect on profitability: comparison between IAS19 and FRS 17: 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000Operating profit before non recurring items as stated 3,649 3,100 4,043Add back actuarial loss recognised under IAS 19 484 613 1,226 ----------------------------------Operating result before non recurring items under FRS 17 4,133 3,713 5,269Non recurring items (3,542) 4,750 3,750 ----------------------------------Operating result under FRS 17 591 8,463 9,019Finance Income 83 174 379Finance costs under FRS 17 (34) (494) (1,004) ----------------------------------Income before tax under FRS 17 640 8,143 8,394 Tax expense as stated (64) (446) (789)Deferred tax IAS 19 reversed (183) (343) (200)Deferred tax under FRS 17 34 189 (129) ----------------------------------Income after tax under FRS 17 427 7,543 7,276 ---------------------------------- Effect on total equity: comparison between IAS19 and FRS 17: 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000Total equity as stated 20,512 26,067 20,435Less IAS 19 asset (1,380) (1,513) (1,991)Add back IAS 19 deferred tax provision 414 454 597FRS 17 deficit (15,823) (23,023) (20,796)Deferred tax under FRS 17 4,747 6,907 6,239 ------------------------------Total equity under FRS 17 8,470 8,892 4,484 ------------------------------ 3. EQUITY Share Capital 30 June 2006, 30 June 2005 and 31st December 2005 Shares £'000AuthorisedOrdinary shares of 25p each 32,000,000 8,000 ------------------------------- Issued and fully paidOrdinary shares of 25p each 22,436,110 5,609 ------------------------------- On 4 July 2006 each of the ordinary shares of 25p each were divided into twoOrdinary Shares of 12.5p each. Following such division there were 44,872,220issued and fully paid Ordinary Shares. Share Options The following options were issued on 4 July 2006: 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 ----------- 4. FINANCE INCOME AND FINANCE COSTS 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2006 2005 2005Finance Income £'000 £'000 £'000Interest receivable on bank balances 83 174 379 --------------------------------Finance CostsPension costs (see note 2):- interest on obligation 1,619 1,652 3,344- expected return on assets (1,570) (1,216) (2,471) -------------------------------- 49 436 873 -------------------------------- 5. INCOME TAX EXPENSE 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2006 2005 2005Current Tax: £'000 £'000 £'000United Kingdom corporation tax at 30% (2005:30%) 247 334 591Adjustments in respect of prior years - - - -------------------------------- 247 334 591Deferred Tax:Movement relating to pension asset (IAS 19) (183) (343) (200)Timing differences origination and reversal - 455 398 -------------------------------- 64 446 789 -------------------------------- 6. EARNINGS PER SHARE AND DIVIDENDSBasic earnings per shareThe basic earnings per share has been calculated using the net profitattributable to the shareholders of the Company of £77,000 for the six monthperiod (2005: £7,142,000) (12 months to 31 December 2005: £6,510,000). The weighted average number of outstanding shares used for the basic earningsper share amounted to 44,872,220 (2005: 44,872,220). This number takes intoaccount the share split that became effective on 4 July 2006. 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 2006 2005 2005 £'000 £'000 £'000Profit before tax (as stated) 141 7,588 7,299Non recurring items 3,542 (4,750) (3,750) -------------------------------- 3,683 2,838 3,549 --------------------------------Tax expense (as stated) (64) (446) (789)Tax effect on non recurring items (858) - (300) -------------------------------- 2,761 2,392 2,460 -------------------------------- Adjusted earnings per share 6.2p 5.3p 5.5p -------------------------------- The weighted average number of outstanding shares used for the basic earningsper share amounted to 44,872,220 (2005: 44,872,220). This number takes intoaccount the share split that became effective on 4 July 2006. 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 2006 2005 2005 £'000 £'000 £'000Operating profit before non recurring items under FRS 17 (see note 2) 4,133 3,713 5,269Finance Income 83 174 379Finance costs under FRS 17 (34) (494) (1,004) -------------------------------Underlying Profit before tax under FRS 17 4,182 3,393 4,644Tax expense as stated (64) (446) (789)Deferred tax IAS 19 reversed (183) (343) (200)Deferred tax under FRS 17 34 189 (129)Tax effect on non recurring items (858) - (300) ------------------------------- 3,111 2,793 3,226 ------------------------------- Adjusted earnings per share 6.9p 6.2p 7.2p ------------------------------- The weighted average number of outstanding shares used for the basic earningsper share amounted to 44,872,220 (2005: 44,872,220). This number takes intoaccount the share split that became effective on 4 July 2006. DividendsDuring 2005, the Company paid dividends of £5,000,000 to its equityshareholders. 7. 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 2006 2005 2005Adjustments: £'000 £'000 £'000Movement in pension fund asset- IAS19 1,091 1,623 3,247Depreciation 1,275 1,073 2,538Profit on sale of property, plant and equipment (8) (16) (22)Finance Income (83) (174) (379)Profit on sale of fixed asset investments - (4,750) (4,750) --------------------------------Total 2,275 (2,244) 634 -------------------------------- 8. NON RECURRING COSTS 6 mths to 6 mths to 12 mths to 30 June 30 June 31 Dec 2006 2005 2005 £'000 £'000 £'000Flotation costs (683) - -Non recurring bonuses (2,859) - (1,000)Profit on sale of fixed asset investments - 4,750 4,750 -------------------------------Total (3,542) 4,750 3,750 ------------------------------- The costs relating to the flotation on AiM on 4 July 2006 of £683,000 have beenincluded in these Interim Accounts. In addition, as noted in paragraph 8.10 partIV of the Admission document, the Interim Accounts include non-recurring bonusestotalling £2,859,000. Of this amount £2,407,000 was payable to Troy SolutionsLimited, a company where Mr M A Wilmshurst is a director and £400,000 was paidto D.J. Loftus. 9. SUBSEQUENT EVENTS On 4 July 2006, Nationwide Accident Repair Services plc was admitted to AiM. 10. COPIES OF INTERIM REPORT AND FINANCIAL STATEMENTS The Interim Report and Financial Statements will be sent to shareholders by theend of September 2006. Further copies will be available to the public, free ofcharge at the Group's registered office, 17A Thorney Leys Park, Witney,Oxfordshire OX28 4GE for at least one month thereafter. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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