15th Mar 2007 07:01
Nationwide Accident Repair Srvs PLC15 March 2007 NARS.L NATIONWIDE ACCIDENT REPAIR SERVICES PLC ("Nationwide", the "Company" or "the Group") Preliminary Results for the year to 31 December 2006 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. 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 summary 2006 2005Sales £151.2m £139.6mOperating profit after non-recurring items £2.2m £7.8mProfit before tax after non-recurring items £2.4m £7.3mEarnings per share after non-recurring items 3.1p 14.5p Underlying resultsOperating profit before non-recurring items £5.8m £4.0mProfit before tax before non-recurring items £5.9m £3.5mEarnings per share before non-recurring items 9.0p 5.5p Underlying results under FRS 17Operating profit before non-recurring items £7.0m £5.3mProfit before tax before non-recurring items £7.2m £4.6mEarnings per share before non-recurring items 11.0p 7.2p Highlights • Strong underlying results - Profit before tax before non recurring items up 67% to £5.9m • Successful flotation on AiM in July 2006 • Strong balance sheet with net cash at year end of £6.9m (2005: £4.1m) • Closure of defined benefit pension scheme to future accruals • Proposed final dividend of 2.6p per share • Acquisition of the business of Aquilo Motor Services in December 2006- enhances existing accident management operation • Post year end acquisitions of bodyshops in Llandudno and Lincoln Michael Marx, Chairman, commented, "We are very pleased with these results, which reflect the importance we placeon offering customers a first class service and on running our operations andsystems effectively. 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 Michael Wilmshurst, Chief Executive T: 020 7448 1000 todayAccident Repair David Loftus, Finance Director Thereafter: 01993 701 720Services plc Biddicks Katie Tzouliadis/ Zoe Biddick T: 020 7448 1000 Arbuthnot James Steel/ Alasdair Younie T: 020 7012 2000Securities CHAIRMAN'S STATEMENT Introduction We are pleased to report Nationwide's maiden preliminary results following theCompany's successful admission to AiM in July 2006. Results for the year arevery encouraging and demonstrate the progress we are making in developing theGroup. Financial OverviewSales for the twelve months ended 31 December 2006 increased by 8% to £151.2m(2005: £139.6m), operating profit before non-recurring items rose by 42% to£5.8m (2005: £4.0m) and profit before tax before non-recurring items rose by 67%to £5.9m (2005: £3.5m). Operating profit after non-recurring costs relating tothe flotation and the payment of certain contractual bonuses, was £2.2m (2005:£7.8m); profit before tax was £2.4m (2005: £7.3m) and basic earnings per sharewere 3.1p (2005: 14.5p). Excluding non-recurring items, earnings per share are9.0p (2005: 5.5p), an increase of 64%. 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 33% to £7.0m (2005:£5.3m), underlying profit before tax improved by 55% to £7.2m (2005: £4.6m) andunderlying earnings per share rose by 53% to 11.0p (2005: 7.2p). The Group's cash position remains strong, with net cash at 31 December 2006 of£6.9m (2005:£4.1m). DividendAs set out in the Company's AiM Admission Document, the Directors intend topursue a progressive dividend policy which broadly reflects the growth inunderlying earnings over time and Group prospects. The Directors arerecommending the payment of a final dividend of 2.6p per share in respect of theyear to 31 December 2006. Subject to approval at the Annual General Meeting,this will be paid on 21 May 2007 to shareholders on the register at the close ofbusiness on 20 April 2007. Ordinarily, over the course of a financial year,final dividends are expected to represent two-thirds of the total annualdividend. Trading OverviewAs our results indicate, trading over the year as a whole was very good andreflects the efficiency of our operations and systems, and the strength of ourservice offering. As expected, the second half, which incorporates the holidaymonths of July, August and December, was seasonally quieter than the first halfbut in line with management expectations. StrategyIn the Company's Admission Document, we outlined our aspirations to become theaccident repair services supplier of choice to the UK insurance market. Webelieve 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 MarxChairman CHIEF EXECUTIVE'S REPORT Introduction2006 was a good year for Nationwide with the successful admission to trading onAiM in July, the acquisition of the business of Aquilo Motor Services inDecember, an increase in our underlying profit and the development of our longerterm objectives. Crash Repair MarketThe accident repair market in which we operate continues to consolidate. Thisconsolidation is mainly driven by three factors: 1. Insurance companies are finding the cost and burden of dealing with hundreds of privately owned companies, on differing IT platforms and working to differing standards and systems, increasingly onerous. 2. The economies of scale and the use of integrated IT systems are enabling groups to operate more effectively and requiring less direct 'management' by insurers on a case by case basis. 3. Advances in vehicle technology and the need to repair vehicles in an environmentally responsible manner necessitate continued financial investment. A significant number of existing repairers operating in the sector are not in a position to make the investment required. Our core business is the repair of damaged vehicles at our bodyshops throughoutthe UK. We will continue to acquire sites as opportunities arise and since theyear end we have acquired bodyshop businesses in Llandudno (January 2007) andLincoln (March 2007). We also continuously work on opportunities to furtherimprove and grow our existing operations. Our management information, supportedby a robust IT platform, enables us to identify and implement operationalimprovements much quicker than some our competitors and we continue to leveragethis advantage. Network ServicesOur Network Services division is a support operation that enables fleets andinsurers to opt for a single point of contact or 'one stop shop', should theywish to do so. We continue to grow in this area and our acquisition of thebusiness of Aquilo Motor Services in December 2006 has proved a useful additionto the Group. Based in Northwich, Cheshire Aquilo operates a 24 hour contactcentre offering a comprehensive motor claims management service includingemergency and roadside assistance and engineering services. This acquisition has a number of strategic benefits including: 1. It increases our capacity and expertise in the call centre handling of drivers involved in an accident and given our number as the first point of contact. This process is known in the industry as 'FNOL' or first notification of loss. 2. It enables us to increase our IT platform's scope (in particular with regard to claims handling), making it easier for insurance companies and fleet customers to work with us. 3. It enables us, where appropriate, to direct work 'captured' by this process into our own repair centres increasing their efficiency. Mobile SolutionsLaunched in 2005, our Mobile Solutions division, a van based service that offersspecialist glass work, air conditioning and electronic diagnostic services,continues to grow. SummaryIn summary, the bodyshop market continues to consolidate, our financialperformance is in line with expectations and our balance sheet is strong. Wewill continue to expand our bodyshop capacity and improve our efficiency, andour support division is growing. Michael WilmshurstChief Executive NATIONWIDE ACCIDENT REPAIR SERVICES PLCCONSOLIDATED INCOME STATEMENTFor the year to 31 December 2006 2006 2005 Restated Notes £'000 £'000 Sales revenue 151,192 139,554Cost of sales (80,905) (74,827) ------------------------ Gross profit 70,287 64,727 Distribution costs (37,347) (34,876)Administrative expenses (27,063) (25,808)Share option charge (120) - ------------------------Operating profit before non recurring items 5,757 4,043Non recurring items 2 (3,542) 3,750 ------------------------Operating profit 2,215 7,793Finance income 3 169 379Finance costs 3 (14) (873) ------------------------ Profit for the period before tax 2,370 7,299 Tax expense 4 (978) (789) ------------------------ Net profit for the period 1,392 6,510 ------------------------ Earnings per ShareBasic 5 3.1p 14.5pDiluted 5 3.0p 14.5p ------------------------ NATIONWIDE ACCIDENT REPAIR SERVICES PLCCONSOLIDATED BALANCE SHEETAt 31 December 2006 2006 2005 Notes £'000 £'000AssetsNon-currentGoodwill 5,821 4,648Property, plant and equipment 8,933 9,718Pension and other employee assets 6 3,867 1,991 ------------------------- 18,621 16,357 -------------------------CurrentInventories 2,548 2,767Trade and other receivables 20,490 22,162Cash and cash equivalents 6,932 4,114 ------------------------- 29,970 29,043 -------------------------Total assets 48,591 45,400 ------------------------- EquityEquity attributable to theshareholdersShare capital 7 5,609 5,609Capital redemption reserve 1,000 1,000Share premium account 11,104 11,104Revaluation reserve 8 8Retained earnings 4,226 2,714 -------------------------Total equity 21,947 20,435 ------------------------- LiabilitiesNon-currentProvisions 508 480Deferred tax liabilities 685 343 ------------------------- 1,193 823 -------------------------CurrentProvisions 174 216Trade and other payables 24,710 23,311Current tax liabilities 567 615 ------------------------- 25,451 24,142 -------------------------Total liabilities 26,644 24,965 -------------------------Total equity and liabilities 48,591 45,400 ------------------------- NATIONWIDE ACCIDENT REPAIR SERVICES PLCCONSOLIDATED STATEMENT OF CHANGES IN EQUITYFor the year to 31 December 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 period - - - - 6,510 6,510 Dividend paid - - - - (5,000) (5,000) ----------------------------------------------------- Balance at 31 Dec 2005 5,609 1,000 11,104 8 2,714 20,435 Share option charge - - - - 120 120 Income for the period - - - - 1,392 1,392 ----------------------------------------------------- Balance at 31 Dec 2006 5,609 1,000 11,104 8 4,226 21,947 ----------------------------------------------------- NATIONWIDE ACCIDENT REPAIR SERVICES PLCCONSOLIDATED CASH FLOW STATEMENTFor the year to 31 December 2006 2006 2005 £'000 £'000Operating activitiesProfit for the period before tax 2,370 7,299Adjustments (note 8) 6,293 (1,622)Outflow from pension obligations (2,860) (2,582)Outflow from provisions (156) (215)Tax paid (684) (113) ---------------------- 4,963 2,767 ---------------------- Investing activitiesAdditions to property, plant and equipment (1,653) (2,424)Proceeds from the disposal of property, plant and equipment 101 208Acquisition of businesses - cost (762) (4,665)Acquisition of businesses - debt acquired - (799)Interest received 169 379 ---------------------- (2,145) (7,301) ---------------------- Financing activitiesDividend paid - (5,000)Proceeds from disposal of preference shares - 4,750 ---------------------- - (250) ---------------------- Net increase/(decrease) in cash and cash equivalents 2,818 (4,784)Cash and cash equivalents at beginning of period 4,114 8,898 ----------------------Cash and cash equivalents at end of period 6,932 4,114 ---------------------- NATIONWIDE ACCIDENT REPAIR SERVICES PLCNOTES TO THE PRELIMINARY STATEMENT 1. BASIS OF PREPARATION This preliminary statement has been prepared on the same basis and using thesame accounting policies as used in the audited financial statements for theyear ended 31 December 2005 except that IAS 33, Earnings per share and IFRS 2,Share based payments have been applied for the first time. This preliminary statement does not constitute statutory accounts as defined insection 240 of the Companies Act 1985. The figures for the year ended 31December 2005 have been extracted from the statutory financial statements whichhave been filed with the Registrar of Companies. The auditors' report on thosefinancial statements was unmodified. 2. NON RECURRING ITEMS 2006 2005 Restated £'000 £'000Flotation costs 683 -Non recurring bonuses 2,859 1,000Profit on sale of fixed asset investments - (4,750) -----------------Total 3,542 (3,750) ----------------- The Accounts include non-recurring bonuses payable on admission to AiM totalling£2,859,000. Of this amount £2,407,000 was payable to Troy Solutions Limited, acompany where Mr M A Wilmshurst is a director and £400,000 was paid to Mr D JLoftus. The flotation costs relate to the AiM listing on 4 July 2006. The£1,000,000 non-recurring bonus paid in 2005 was included within Administrationexpenses in the 2005 Accounts, hence the 2005 comparatives have been restated toclassify this as a non-recurring item. 3. FINANCE INCOME AND FINANCE COSTS 2006 2005 £'000 £'000Finance IncomeInterest receivable on bank balances 169 379 ------------------ Finance CostsPension costs:- interest on obligation 3,262 3,344- expected return on assets (3,248) (2,471) ------------------ 14 873 ------------------ 4. TAX EXPENSE 2006 2005 £'000 £'000 Current Tax:United Kingdom corporation tax at 30% (2005: 30%) 636 591Adjustments in respect of prior years - - ------------------ 636 591Deferred Tax:Movement relating to pension asset (IAS 19) 563 (200)Timing differences origination and reversal (221) 398 ------------------ 978 789 ------------------ 5. EARNINGS PER SHARE Basic earnings per share The basic earnings per share has been calculated using the net resultsattributable to the shareholders of the Company of £1,392,000 (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. Diluted earnings per share The diluted earnings per share has been calculated using the net resultsattributable to the shareholders of the Company of £1,392,000 (2005:£6,510,000). The weighted average number of outstanding shares used for the diluted earningsper share amounted to 46,974,453 (2005: 44,872,220) and assumes the exercise ofall the share options detailed in note 7 since the date they were granted. Thisnumber takes into account the share split that became effective on 4 July 2006. Underlying earnings per share The underlying earnings per share has been calculated as follows: 2006 2005 £'000 £'000Profit before tax (as stated) 2,370 7,299Non recurring items 3,542 (3,750) -------------------- 5,912 3,549Tax expense (as stated) (978) (789)Tax effect on non recurring items (888) (300) -------------------- 4,046 2,460 -------------------- Adjusted earnings per share 9.0p 5.5p -------------------- The weighted average number of outstanding shares used for the underlyingearnings per share amounted to 44,872,220 (2005: 44,872,220). This number takesinto account 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: 2006 2005 £'000 £'000Operating profit before non recurring items under FRS 17 7,026 5,269Finance Income 169 379Finance costs under FRS 17 (7) (1,004) -------------------Underlying Profit before tax under FRS 17 7,188 4,644Tax expense as stated (978) (789)Deferred tax IAS 19 reversed 563 (200)Deferred tax under FRS 17 (946) (129)Tax effect on non recurring items (888) (300) ------------------- 4,939 3,226 ------------------- Adjusted earnings per share 11.0p 7.2p ------------------- The weighted average number of outstanding shares used for the underlyingearnings per share amounted to 44,872,220 (2005: 44,872,220). This number takesinto account the share split that became effective on 4 July 2006. 6. 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 1st January 2002 the defined benefit scheme has been closed tonew members. The assets of the schemes are administered by trustees independentof the Group. The Company made contributions of £2,860,000 (2005: £2,582,000) tothe defined benefit scheme during the year. 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 Company has agreed with thetrustees of the pension scheme to make annual contributions of approximately£2.3 million (increasing annually by the Retail Price Index) with a view toeradicating the Scheme Specific Funding deficit over a period of approximately7.5 years. 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 definedbenefit scheme was carried out as at 31 December 2005 and was updated to 31December 2006 by a qualified independent actuary. IAS 19 2006 2005 2004 The major assumptions used by the actuary were (in nominal terms): Rate of increase in salaries n/a 3.3% 3.5% 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 2.85% 2.65% 2.85% Discount rate 5.4% 5.0% 5.4% Inflation assumption 2.85% 2.65% 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. The assets in the scheme and the expected rate of return were: Long-term Long-term Long-term rate of rate of rate of return return return expected Value expected Value expected Value 2006 2006 2005 2005 2004 2004 £'000 £'000 £'000 Equities 8.1% 34,525 8.0% 29,340 7.5% 18,763 Bonds 4.8% 9,341 4.4% 9,493 5.0% 18,800 Property 8.1% 6,400 8.0% 5,454 - Other 3.3% 94 3.0% 232 3.6% 38 -------- -------- -------- Total market value of assets 50,360 44,519 37,601 Present Value of defined obligations (funded plans) (70,928) (65,552) (61,984) -------- -------- -------- Present value of unfunded obligations (20,568) (21,033) (24,383) Unrecognised actuarial losses 24,435 23,024 27,039 Net asset in balance sheet 3,867 1,991 2,656 -------- -------- -------- Actual return on assets in period 4,719 5,584 3,394 -------- -------- -------- Reconciliation of opening and closing balances of the present value of thedefined benefit obligations 2006 2005 2004 £'000 £'000 £'000Benefit obligation at beginning of year 65,552 61,984 56,822Service cost 613 1,148 1,160Interest cost 3,262 3,344 3,125Contributions by scheme members 212 328 328Actuarial loss 3,351 323 1,954Curtailments and settlements (611) - -Benefits paid (1,451) (1,575) (1,405) -------------------------------Balance at end of year 70,928 65,552 61,984 ------------------------------- Reconciliation of opening and closing balances of the fair value of planassets 2006 2005 2004 £'000 £'000 £'000Fair value of scheme assets at beginning of year 44,519 37,601 32,735Expected return on scheme assets 3,248 2,471 2,153Actuarial gain 972 3,113 1,270Contributions by employers 2,860 2,581 2,520Contributions by scheme members 212 328 328Benefits paid (1,451) (1,575) (1,405) ---------------------------Asset at end of year 50,360 44,519 37,601 --------------------------- The amounts recognised in the income statement are: 2006 2005 £'000 £'000Current service cost 613 1,148Interest on obligation 3,262 3,344Expected return on assets (3,248) (2,471)Curtailments and settlements (611) -Actuarial loss recognised in year 969 1,226 ------------------- 985 3,247 -------------------Charged to:Administration expenses 971 2,374Finance costs 14 873 ------------------- 985 3,247 ------------------- History of scheme assets, obligations 2006 2005 2004and experience adjustments £'000 £'000 £'000 Present value of defined benefit obligations (70,928) (65,552) (61,984)Fair value of scheme assets 50,360 44,519 37,601 --------------------------Deficit in scheme (20,568) (21,033) (24,383) -------------------------- Experience adjustments arising on scheme liabilities 3,351 323 1,954Experience item as a % of scheme liabilities 5% 0% 3%Experience adjustments arising on scheme assets 972 3,113 1,270Experience item as a % of scheme assets 2% 7% 3% Effect on profitability: comparison between IAS 19 and FRS 17 2006 2005 £'000 £'000Operating result before non recurring items as stated 5,757 4,043 Add back actuarial loss recognised under IAS 19 969 1,226Additional curtailment gain under FRS 17 300 - -------------------Operating result before non recurring items under FRS 17 7,026 5,269Non recurring items (3,542) 3,750 -------------------Operating result under FRS 17 3,484 9,019Finance income 169 379Finance costs under FRS 17 (7) (1,004) -------------------Profit before tax under FRS 17 3,646 8,394Tax expense as stated (978) (789)Deferred tax under IAS 19 reversed 563 (200)Deferred tax under FRS 17 (946) (129) -------------------Profit after tax under FRS 17 2,285 7,276 ------------------- The Profit before tax and non recurring items under FRS 17 in 2006 was £7,188k(2005 £4,644k). Effect on total equity: comparison between IAS 19 and FRS 17 2006 2005 £'000 £'000Total equity as stated under IAS 19 21,947 20,435Less IAS 19 asset (3,867) (1,991)Add back IAS 19 deferred tax provision 1,160 597FRS 17 deficit (20,088) (20,796)Deferred tax asset under FRS 17 6,026 6,239 ------------------Total equity under FRS 17 5,178 4,484 ------------------ 7. EQUITY Share Capital 2006 2005 Shares £'000 Shares £'000AuthorisedOrdinary shares of 12.5 p (25p) each 64,000,000 8,000 32,000,000 8,000 ------------------------------------------------- Issued and fully paidOrdinary shares of 12.5p (25p) each 44,872,220 5,609 22,436,110 5,609 ------------------------------------------------- On 31 May 2006 each of the Ordinary Shares of 25p each was sub-divided into twoordinary Shares of 12.5p each. Share Options The following options were issued on 4th July 2006: No. of Exercise Exercise Shares Price eriod M A Wilmshurst Approved 25,751 £1.165 2009-16 Unapproved 2,217,860 £1.11 2009-16D J Loftus Approved 25,751 £1.165 2009-16 Unapproved 1,096,055 £1.11 2009-16S D G Thompson Approved 25,751 £1.165 2009-16 Unapproved 871,693 £1.11 2009-16 ----------- 4,262,861 ----------- 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: 2006 2005Adjustments: £'000 £'000 Movement in pension fund asset- IAS19 985 3,247Share option scheme charge 120 -Depreciation 2,407 2,538Changes in inventories 219 (252)Changes in trade and other receivables 2,949 (1,630)Changes in trade and other payables (360) (499)Changes in provisions 142 125Profit on sale of property, plant and equipment - (22)Finance Income (169) (379)Profit on sale of fixed asset investments - (4,750) ------------------Total 6,293 (1,622) ------------------ 9. FINANCIAL STATEMENTS The audited financial statements will be posted to shareholders on 2 April 2007and will be available from the registered office of Nationwide Accident RepairServices plc at 17A Thorney Leys Park, Witney, Oxfordshire, OX28 4GE. This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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