Preliminary Results

RNS Number : 9038I

Nationwide Accident Repair Srvs PLC

22 March 2010

 

 

NARS

22 March 2010

 

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

("Nationwide", "the Company" or "the Group")

 

Preliminary Results for the year ended 31 December 2009

 

Nationwide provides automotive crash repair and accident administration services principally to the UK insurance industry. With a national network of accident repair centres located across England, Scotland and Wales employing over 2,300 people, it is the largest dedicated provider of accident repair services in the UK.

 

Key Points

 

§ Very creditable performance in challenging market conditions

- reduced insurance claims across the industry

- decrease in higher margin, light cosmetic repair work as consumers deferred spend

 

§ Revenue of £170.9m (2008: £179.3m) - but significant change in sales mix

 

§ Gross profit margin increased to 46.9% (2008: 46.5%)

- after strong turnaround in margins in H2 as benefits of actions implemented in H1 came through

 

§ Profit before tax before non-recurring items: £5.4m (2008: £7.8m)

Profit before tax after non-recurring items: £5.1m (2008: £7.1m)

 

§ Earnings per share before non-recurring items: 8.9p (2008: 12.8p)

Earnings per share after non-recurring items: 8.4p (2008: 11.6p)

 

§ Strong balance sheet with net cash up 53% at year end to £8.3m (2008: £5.4m)

 

§ Final dividend of 3.3p per share recommended, maintaining total for the year at 5.0p (2008: 5.0p)

 

§ Continuing penetration of motor insurance marketplace

- major RSA contract extended and new name insurance wins

 

§ New three year growth plan in place - supported by £1m investment in 2010

- build non-insurance work, especially in Retail and Fleet markets

- launch of 'mobile restore' unit, offering light repairs at customers' premises

- launch of 'motorglass' unit, providing specialist glass repair skills

- drive further operational efficiencies

 

§ Board views prospects positively

 

 

Michael Marx, Chairman, commented,

 

"Trading conditions over 2009 were some of the toughest the automotive repair industry has seen in recent times. Many smaller insurance repairs left our marketplace as insurance policy excesses rose, consumers tightened spending and the volume of insurance claims reduced. Against this backdrop, results for the year are very creditable and demonstrate the strengths of our industry leading business systems and processes, which have enabled us to manage a volatile work flow effectively. 

 

We do not expect market conditions in 2010 to improve materially over last year. However, as the UK's largest dedicated provider of accident repair services, the group is well-positioned to trade well and to execute its planned growth. We intend to invest some £1m in the current financial year, over and above our normal business development spend, to support our expansion plans, which have the objective over the next three years of broadening Nationwide's customer base and developing new income streams. Alongside this, we will continue to build our insurance customer business and to leverage further operational efficiencies.

 

The business is underpinned by a strong balance sheet and good cash flow and, looking ahead, we are encouraged by the growth opportunities available to Nationwide and view long term prospects positively."

 

 

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

 

  

 

Chairman's Statement

 

Introduction

 

Trading conditions in 2009 were some of the toughest the automotive repair industry has seen in recent times. Many smaller insurance repairs left our marketplace as insurance policy excesses rose, consumers tightened spending and the volume of insurance claims reduced. Overall, I am pleased to report that the Group negotiated these challenges effectively and after a difficult first half, Nationwide's performance strengthened in the second half as the management's prompt actions took effect.

 

Against this backdrop, results for the year are very creditable and demonstrate the strengths of our industry-leading business systems and processes, which have enabled us to manage a volatile work flow effectively.

 

Nationwide's financial position continues to be very strong. The Group generates good cash flows, has no borrowings and at the year end, its net cash position stood at £8.3m, substantially higher than at the same point last year.

 

We are pleased to recommend the payment of a final dividend which maintains the total dividend for the year at last year's level.

 

Financial Results

 

Revenues for the year ended 31 December 2009 of £170.9m showed a 5% decrease on last year (2008: £179.3m). This partly reflected the reduction in insurance claims evident over the year. More significantly in terms of profitability, the sales mix also changed as consumers responded to the economic downturn and we saw a marked drop in smaller cosmetic repair work, which typically offers higher margins. As we reported at the half year, this change in the sales mix impacted gross margins in the first half, reducing profitability by some £2.1m. Following management actions, I am pleased to report that gross margins in the second half of the year recovered strongly, moving from 44.3% in the first half to 50.0% in the second half. This six percentage point improvement represents a very strong turnaround and meant that the gross margin for the year improved to 46.9%, from 46.5% in 2008.

 

The statutory profit before tax (after non-recurring items) was £5.1m against £7.1m in 2008. Of this £2.0m decline, £1.3m is attributable to an increase in the IAS19 pension charge, which rose significantly, from £209,000 in 2008 to £1.553m in 2009. This higher level of charge is likely to be maintained in 2010. The profit before tax before non-recurring items was £5.4m (2008: £7.8m) and earnings per share before non-recurring items were 8.9 pence (2008: 12.8 pence).

 

The Group continues to generate very strong cash flows and Nationwide's balance sheet remains robust, with nil borrowings and net cash of £8.3m at 31 December 2009, some 53% higher than at the same point last year (2008: £5.4m). This increase in the Group's net cash position reflects our focus on improving working capital management.

Dividend

 

The Board is pleased to recommend a final dividend of 3.3 pence per share (2008: 3.3 pence per share), which maintains the total dividend for the year at last year's level of 5.0 pence per share (2008: 5.0 pence per share). Subject to shareholder approval at the Annual General Meeting on 15 June 2010, the final dividend will be paid to shareholders on the register at the close of business on 28 May 2010.

 

Trading Overview

 

It was a difficult year. The sharp and rapid drop in smaller repair work was a marked feature in the first half, with consumers avoiding non-essential insurance repairs. The volume of repair jobs also fell year on year, with the work flow harder to predict than usual on a localised basis. While trading conditions in the second half of the year did not ease, there was a clear improvement in the Group's profitability as the measures we took in the first half, to protect and restore margins, yielded results.

 

A large part of the management's ability to manage volatile trading conditions successfully derives from Nationwide's national scale and unrivalled operating systems, which are underpinned by a single IT platform. Our technology and systems enable us to manage our national network of bodyshops, call centres and mobile repair fleet in an integrated manner for commercial and competitive advantage. We believe that there is scope to drive further operational efficiencies throughout the business and this remains a focus in 2010.

 

It is pleasing to report that we were able to grow our market share over the year, expanding our relationship with RSA and signing new insurance customers as well as new fleet customers.

 

Our initiative to expand outside the insurance market into the retail sector (where consumers pay for vehicle repairs rather than insurers) continued to demonstrate good growth over the year. We are now investing more significantly to develop our retail sales and as part of this investment, we will be making appointments to our senior management team and expanding our mobile repair fleet.

 

Outlook

 

We do not expect market conditions in 2010 to improve materially over last year. However, as the UK's largest dedicated provider of accident repair services, the group is well-positioned to trade well and to execute its planned growth. We intend to invest some £1m in the current financial year, over and above our normal business development spend, to support our expansion plans, which have the objective over the next three years of broadening Nationwide's customer base and developing additional income streams. Alongside this, we will continue to build our insurance customer business and to leverage further operational efficiencies.

 

The business is underpinned by a strong balance sheet and good cash flow and, looking ahead, we are encouraged by the growth opportunities available to Nationwide and view long term prospects positively.

 

 

Michael Marx

Chairman

 

  

Chief Executive's Report

 

Introduction

 

In a testing year, with reduced insurance claims and a decrease in higher margin, light-damage repair work, I am pleased to report that the business has performed robustly. Nationwide continues to generate high levels of cash and profits and our dividends are comfortably supported by earnings.

 

I am especially encouraged by the recovery in the Group's gross margins in the second half of the year as the actions we took to manage the downturn delivered the anticipated benefits. Managing work flow efficiently through our bodyshops is important in protecting gross margins and our IT and integrated operations, which include accident management call centres and a mobile repair fleet alongside our national network of bodyshops, are key to this. We aim to lead our industry in service levels and customer satisfaction and our focus on internal efficiency also helps us to do this.

 

The overall accident repair market is substantial and, according to market analysts, generates five million repair opportunities per year. This equates to a market spend in excess of £5 billion. As our current market share is modest, the opportunity to increase our market penetration remains exciting. Currently, our core repair customers are motor insurers and over the next three years, we aim to broaden our customer base outside the insurance marketplace, targeting consumers as well as fleet operators. At the same time, we will continue to develop our insurance relationships and to capitalise on operational efficiencies.

 

Operations and Customer Relations

 

The accident repair market is mature and price sensitive. Operating in such markets requires a methodical, measured approach to both continuous business improvement and to acquisitions. In 2009, as well as managing the downturn, our focus was on business improvement and integrating previously acquired sites. The six sites we acquired in 2008, Scunthorpe, Gravesend, Redruth, Bristol, Kettering and Perth, demonstrate the enhanced returns that can be generated by the Nationwide model. In 2008, these sites incurred aggregate losses of £230,000; by contrast, in 2009, the same sites cumulatively contributed £273,000 to Group profits. This process of looking for 'continuous improvement in performance' is a key part of our culture and across our network of over 70 bodyshops, we see significant scope to continue to raise performance levels to the benefit of both customers and the business.

 

Our Operational Team focuses on delivering our customers:-

·; Quality

·; Value

·; Speed

·; Service

 

Our 2009 Customer Satisfaction Survey, which annually contacts approximately 17,000 customers, shows that the overall satisfaction of our customers has increased to a record 87%, from 85% last year. The same customers rated the "quality of the repair" at 93%, reinforcing our confidence that we deliver in this important area. The integrity of our vehicle repairs is important to all of our customers and to support this, in 2009, we took the decision to implement, where appropriate, the industry's recently adopted British Standards Institution Kitemark Standard (PAS 125). This standard allows us to verify and demonstrate independently the integrity of our repairs and equipment, the quality of components used and the skill and competence of our team. At the time of writing, out of a total of 637 approved sites in the UK, 66 are Nationwide bodyshops, representing some 10% of the total.

 

Value remains more difficult to quantify. Insurance companies are, by nature, price sensitive and our ability to offer value remains a key factor in our continued success. The 2009 account renewals and wins suggest that we continue to offer value and the recently released average repair cost data confirms that we remain competitive.

 

The speed and the efficiency with which we repair our customers' vehicles is important to both car owners who naturally want their vehicle repaired and returned speedily and to insurers who can often mitigate claim costs by rapid settlement and repair. Our "cycle time" (key to key) measures the time taken to complete a repair, from the day we receive a vehicle on site to the day it is returned to the customer. In 2009, this cycle time increased marginally, from 12.5 days in 2008 to 12.7 days. This increase is partially attributable to the slightly larger types of repair we carried out in the period but remains an area we can further improve. We believe that our planned expansion of our currently small Mobile Restore operation (enabling off-site repairs at customers' premises), will assist in the achievement of this objective, as will the planned operational improvements at our sites.

 

Offering a high level of customer service remains at the heart of our offer and a key focus for us all. The average satisfaction level confirms that we continue to improve in this area. It remains our objective to be a trusted and reliable provider of automotive related services whether it be to insurers, fleet operators or retail consumers.

 

2009 also saw the continued development of our Fast Fit+ offer, which provides MOTs and other "bolt on" services, such as exhausts and tyres. Currently, Fast Fit+ is being offered on a pilot basis at two of our sites, at Kettering and Leicester. The move has given us significant market knowledge and it remains a potential area for further expansion.

 

Our national network of 72 wholly-owned operational sites, linked by a single IT platform, offers us unique capability in a highly fragmented marketplace. This industry leading capability continues to prove attractive to existing and new customers. As a result, 2009 saw the renewal and expansion of our relationship with RSA as well as new contracts with Equity Light Commercial Vehicles, Broker Direct, Newline Insurance and BSM.

 

Network Services

 

Network Services provides our national network of sites with important support. Key to this support is its accident management service, which captures new repair business for us and, critically, also enables us to deploy repair work across our bodyshops in an efficient manner. Our ability to direct work flow into our national branch network continues to offer us considerable market advantage.

 

Network Services also manages our Mobile Restore and Mobile Solutions operations. Mobile Restore currently operates a small fleet of vans which are able to complete certain kinds of repair work 'off-site' at customers' premises or other preferred locations. Typically this repair work comprises light cosmetic damage, such as scratches, dents and scuffs. We have now finalised our three year growth plans for this business and will be launching a 'business-to-consumer offer', branded as 'mobile restore' in the early summer. This business is targeting, in particular, the 'retail' market, which we broadly define as those repairs not paid for by insurers. The retail market is estimated at £540 million and is currently growing, partly as a result of increased excesses passed on by insurers. In 2009, our retail sales generated £5 million of revenues and the major part of this was achieved "on-site" i.e. at our bodyshops. We are very confident that the scope for us to increase our penetration of the retail market through our 'mobile restore' operations and our bodyshop network is significant.

 

Our Mobile Solutions operations focus on glass, electronic and air-conditioning related repairs, which require specialist equipment and skills. Originally established as a shared resource for our bodyshops, this unit has potential for growth and we have established a three year plan for the business. As part of our growth strategy, we have refined and enhanced its offer and in the early summer, we will be re-branding and launching it as 'motorglass'.

 

Leading the development of both 'mobile restore' and 'motorglass' will be Steve Thompson, one of our Executive Directors. We will be strengthening our operational team to support the growth plans of both businesses.

 

Looking Ahead

 

Nationwide has a sound balance sheet and its model is highly cash generative.

 

Our unique operating platform gives us considerable advantages in a market in which we can significantly increase our penetration. In the medium term, our objectives are:-

 

·; to continue to improve our operations, increasing our ability to offer value, service, quality and speed to the benefit of our customers and our shareholders;

 

·; to increase our share in the motor insurance company repair market and

 

·; to identify and secure additional, and for us, largely new market opportunities in the fleet and retail market.

 

We are assuming that the economy will remain challenging but are confident that the Group is well placed for medium term growth.

 

 

Michael Wilmshurst

Chief Executive

 

  

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year to 31 December 2009

 

		2009	2008
	Notes	£'000	£'000
Revenue		170,890	179,337
Cost of sales		(90,681)	(95,857)
Gross profit		80,209	83,480
Distribution costs		(46,647)	(46,933)
Administrative costs		(27,544)	(28,822)
Share option charge		(169)	(240)
Operating profit before non-recurring items		5,849	7,485
Non-recurring items - Administrative costs	2	(307)	(750)
Operating profit		5,542	6,735
Finance income	3	5	325
Finance costs	3	(490)	(8)
Profit before tax		5,057	7,052
Income tax expense		(1,440)	(2,030)
Profit for the period		3,617	5,022
Other comprehensive income		-	-
Total comprehensive income for the period		3,617	5,022
Attributable to:
Equity holders of the parent		3,617	5,022
Earnings per Share
Basic	4	8.4p	11.6p
Diluted	4	8.4p	11.5p

 

 

 

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2009

 

		2009	2008
	Notes	£'000	£'000
Assets
Non‑current assets
Goodwill		7,768	7,752
Property, plant and equipment		9,962	9,811
Pension and other employee assets	5	8,649	7,619
		26,379	25,182
Current assets
Inventories		2,317	2,678
Trade and other receivables		23,460	29,500
Cash and cash equivalents		8,269	5,395
		34,046	37,573
Total assets		60,425	62,755
Liabilities
Non‑current liabilities
Long-term provisions		86	86
Deferred tax liabilities		2,112	1,678
		2,198	1,764
Current Liabilities
Short-term provisions		31	4
Trade and other payables		29,568	33,728
Current tax payable		311	568
		29,910	34,300
Total liabilities		32,108	36,064
Net assets		28,317	26,691
Equity
Equity attributable to the shareholders of the parent
Share capital	6	5,400	5,400
Capital redemption reserve		1,209	1,209
Share premium account		11,104	11,104
Revaluation reserve		8	8
Retained earnings		10,596	8,970
Total equity		28,317	26,691

 

 

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2009

 

	Share	Capital	Share	Revaluation	Retained	Total
	capital	redemption	premium	reserve	earnings
		reserve	account
	£'000	£'000	£'000	£'000	£'000	£'000
Balance at 1 January 2008	5,578	1,031	11,104	8	7,426	25,147
Share buyback	(178)	178	-	-	(1,688)	(1,688)
Share option charge	-	-	-	-	240	240
Dividend paid	-	-	-	-	(2,030)	(2,030)
Transactions with owners	(178)	178	-	-	(3,478)	(3,478)
Profit for the year	-	-	-	-	5,022	5,022
Other comprehensive income	-	-	-	-	-	-
Total comprehensive income for the year	-	-	-	-	5,022	5,022
Balance at 31 December 2008	5,400	1,209	11,104	8	8,970	26,691
Share option charge	-	-	-	-	169	169
Dividend paid	-	-	-	-	(2,160)	(2,160)
Transactions with owners	-	-	-	-	(1,991)	(1,991)
Profit for the year	-	-	-	-	3,617	3,617
Other comprehensive income	-	-	-	-	-	-
Total comprehensive income for the year	-	-	-	-	3,617	3,617
Balance at 31 December 2009	5,400	1,209	11,104	8	10,596	28,317

 

 

 

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED CASH FLOW STATEMENT

For the year to 31 December 2009

 

		2009	2008
		£'000	£'000
Operating activities
Profit for the year		3,617	5,022
Adjustments to arrive at operating cash flow:
Net finance costs		(5)	8
Depreciation		1,828	2,303
(Profit)/loss on sale of property, plant and equipment (incl. non recurring items)		(211)	35
Taxation recognised in profit or loss		1,440	2,030
Changes in inventories		361	(87)
Changes in trade and other receivables		6,040	(2,955)
Changes in trade and other payables		(4,176)	6,369
Changes in provisions		60	-
Movement in pension fund asset - IAS 19		1,553	209
Share option scheme charge		169	240
Outflow from pension obligations		(2,582)	(2,555)
Outflow from provisions		(33)	(49)
Net cash flow from operating activities		8,061	10,570
Tax paid		(1,263)	(1,817)
		6,798	8,753
Investing activities
Additions to property, plant and equipment		(2,088)	(2,788)
Proceeds from the disposal of property, plant and equipment		319	273
Acquisition of businesses - cost		-	(2,269)
		(1,769)	(4,784)
Financing activities
Dividend paid		(2,160)	(2,030)
Interest received / (paid)		5	(8)
Purchase of own shares		-	(1,688)
		(2,155)	(3,726)
Net increase in cash and cash equivalents		2,874	243
Cash and cash equivalents at beginning of year		5,395	5,152
Cash and cash equivalents at end of year		8,269	5,395

 

 

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

NOTES TO THE PRELIMINARY STATEMENT

 

1. BASIS OF PREPARATION

 

This preliminary statement has been prepared under the historical cost convention. The accounting policies have remained unchanged from the previous year, except with regard to IAS 1 and IFRS 8.

 

This preliminary statement does not constitute statutory accounts as defined in sections 434 - 436 of the Companies Act 2006. The figures for the year ended 31 December 2008 have been extracted from the statutory financial statements which have been filed with the Registrar of Companies. The statutory accounts for each of the two years to 31 December 2009 and 31 December 2008 received audit reports, which were unqualified and did not contain statements under section 498 (2) or (3) of the Companies Act 2006 or section 237 (2) or (3) of the Companies Act 1985.

 

2. non recurring itemS -Administrative costs

 

	2009	2008
	£'000	£'000
Bad debt provision for debtor in administration	-	(750)
Amounts recovered against above 2008 bad debt	171	-
Profit on Norwich assets destroyed in fire	200	-
Kidderminster closure costs	(186)	-
Redundancy costs	(492)	-
	(307)	(750)

 

During the year, the company suffered two fires at its sites in Manchester (August 2009) and Norwich (September 2009). The Group's insurers have accepted liability for the respective claims, which cover the loss of assets and business interruption (lost profits).

Included within Trade and other receivables as at 31 December 2009 is an amount of £1,336k which relates to amounts claimed under the policy. This is after taking into account an interim payment from the insurers of £675k that was received in December 2009.

The Norwich site is planned to reopen in April 2010 and since the insurance proceeds could be reliably measured, a profit of £200k has been recognised. The profit has arisen as the insurance proceeds of £300k are in settlement of fixed assets with a net book value of £100k. The gain on the Manchester site could not be reliably measured, as the site is not expected to be operational until July 2010 and insurance recoveries were not reasonably certain.

 

3. FINANCE INCOME AND FINANCE COSTS

 

	2009	2008
	£'000	£'000
Finance income
Interest receivable on bank balances	5	-
Pension costs
Interest on obligation	-	3,911
Expected return on assets	-	(4,236)
	5	325
Finance costs
Interest payable on bank balances	-	8
Pension costs
Interest on obligation	3,842	-
Expected return on assets	(3,352)	-
	490	8

 

  

 

4. EARNINGS PER SHARE

 

Basic earnings per share

Basic earnings per share has been calculated using the net results attributable to the shareholders of the Company of £3,617,000 (2008: £5,022,000). The weighted average number of outstanding shares used for basic earnings per share amounted to 43,197,220 (2008: 43,264,023).

 

Diluted earnings per share

Diluted earnings per share has been calculated using the net results attributable to the shareholders of the Company of £3,617,000 (2008: £5,022,000). The weighted average number of outstanding shares used for diluted earnings per share amounted to 43,197,220 (2008: 43,672,070) and assumes that none of the share options would be exercised given the average market price of £0.90.

In the current year due to the average market price of £0.90, the share options are not included in the dilutive earnings per share calculation. In 2008, the average market price was £1.23 and on this basis, the dilutive effect on weighted average sharesat this price was 408,047.

 

Underlying earnings per share

The underlying earnings per share has been calculated as follows:

	2009	2008
	£'000	£'000
Profit before tax (as stated)	5,057	7,052
Non-recurring items	307	750
	5,364	7,802
Tax expense (as stated)	(1,440)	(2,030)
Tax effect on non-recurring items	(86)	(214)
	3,838	5,558
Adjusted earnings per share	8.9p	12.8p

 

5. 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 £2,583,000 (2008: £2,555,000) to the defined benefit scheme during the year. The defined benefit scheme was closed for future accruals on 31 July 2006, with active members transferred to a new defined contribution section of the scheme. In 2010, the Company agreed with the trustees of the pension scheme to make annual contributions of £2.6 million and the contribution is expected to be £2.6m in the year to 31 December 2010. This was agreed with a view to eradicating the Scheme Specific Funding deficit over a period of approximately nine years.

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 2008 and was updated to 31 December 2009 by a qualified independent actuary.

 

IAS 19	2009	2008	2007	2006
	%	%	%	%
The major assumptions used by the actuary were (in nominal terms):
Rate of increase in salaries	n/a	n/a	n/a	n/a
Rate of increase in pensions - accrued pre 5 April 1997	3.0	3.0	3.0	3.0
Rate of increase in pensions - accrued post 5 April 1997	3.50	2.70	3.15	2.85
Discount rate	6.0	6.5	6.1	5.4
Inflation assumption	3.50	2.70	3.15	2.85

 

  

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. The 1992 series of mortality tables were published by the Continuous Mortality Investigation Bureau and are based on mortality data from life assurance companies over the years 1991 to 1994 inclusive. The "A92" tables are based on the mortality experience of life assurance policyholders. The "PA92" tables are based on the mortality experience of pension annuity policyholders

 

The assets in the scheme and the expected rate of return were:

	2009		2008		2007		2006
	Long term rate of return expected	Value £'000	Long term rate of return expected	Value £'000	Long term rate of return expected	Value £'000	Long term rate of return expected	Value £'000
Equities	9.2%	33,940	9.6%	26,575	8.5%	37,044	8.1%	34,525
Bonds	5.2%	12,776	5.2%	9,668	5.3%	9,664	4.8%	9,341
Property	9.2%	4,212	9.6%	4,378	8.5%	6,055	8.1%	6,400
Other	4.2%	2,012	4.2%	3,047	4.3%	1,970	3.3%	94
Total market value of assets		52,940		43,668		54,733		50,360
Present value of defined obligations (funded plans)		(73,195)		(60,131)		(65,040)		(70,928)
Present value of unfunded obligations		(20,255)		(16,463)		(10,307)		(20,568)
Unrecognised actuarial losses		28,904		24,082		15,580		24,435
Net asset in balance sheet		8,649		7,619		5,273		3,867
Actual return on assets in period		8,752		(11,783)		3,540		4,719

The overall expected rates of return were determined by the Directors of the Group, with the advice of their actuarial advisers. The expected return available on equities has been taken as the dividend yield on the FTSE Actuaries All Share Index plus real dividend growth of 2.1% plus price inflation.

 

Reconciliation of opening and closing balances of the present value of the defined benefit obligations

 

	2009	2008	2007	2006
	£'000	£'000	£'000	£'000
Benefit obligation at beginning of year	60,131	65,040	70,928	65,552
Service cost	-	-	-	613
Interest cost	3,842	3,911	3,786	3,262
Contributions by scheme members	-	-	-	212
Actuarial (gain)/loss	11,284	(6,983)	(8,042)	3,351
Curtailments and settlements	-	-	-	(611)
Benefits paid	(2,062)	(1,837)	(1,632)	(1,451)
Balance at end of year	73,195	60,131	65,040	70,928

 

   

 

Reconciliation of opening and closing balances of the fair value of plan assets

 

	2009	2008	2007	2006
	£'000	£'000	£'000	£'000
Fair value of scheme assets at beginning of year	43,668	54,733	50,360	44,519
Expected return on scheme assets	3,352	4,236	3,747	3,248
Actuarial gain/(loss)	5,400	(16,019)	(207)	972
Contributions by employers	2,582	2,555	2,465	2,860
Contributions by scheme members	-	-	-	212
Benefits paid	(2,062)	(1,837)	(1,632)	(1,451)
Asset at end of year	52,940	43,668	54,733	50,360

 

The amounts recognised in the income statement are:

 

	2009	2008
	£'000	£'000
Current service cost	-	-
Interest on obligation	3,842	3,911
Expected return on assets	(3,352)	(4,236)
Curtailments and settlements	-	-
Actuarial loss recognised in year	1,063	534
	1,553	209
Charged to:
Administration expenses	1,063	534
Finance income	-	(325)
Finance costs	490	-
	1,553	209

 

History of scheme assets, obligations and experience adjustments

 

	2009	2008	2007	2006	2005
	£'000	£'000	£'000	£'000	£'000
Present value of defined benefit obligations	(73,195)	(60,131)	(65,040)	(70,928)	(65,552)
Fair value of scheme assets	52,940	43,668	54,733	50,360	44,519
Deficit in scheme	(20,255)	(16,463)	(10,307)	(20,568)	(21,033)
Experience adjustments arising on scheme liabilities	11,285	(6,983)	(8,042)	3,351	323
Experience item as a % of scheme liabilities	15%	(12%)	(12%)	5%	0%
Experience adjustments arising on scheme assets	5,400	(16,019)	(207)	972	3,113
Experience item as a % of scheme assets	10%	(37%)	0%	2%	7%

 

  

6. EQUITY

Share capital

	2009			2008
	Shares	£'000		Shares	£'000
Authorised
Ordinary shares of 12.5p (2007: 12.5p) each	64,000,000	8,000		64,000,000	8,000
Issued and fully paid
Ordinary shares of 12.5p (2007: 12.5p) each	43,197,220	5,400		43,197,220	5,400

 

Of the 20,802,780 shares authorised, but not issued, 4,262,861 are reserved for issue in respect of the share options

 

Share Options

		Number of	Exercise	Exercise
		Shares	price	Period
M A Wilmshurst	Approved	25,751	£1.165	2009-16
	Unapproved	2,217,860	£1.11	2009-16
D J Loftus	Approved	25,751	£1.165	2009-16
	Unapproved	1,096,055	£1.11	2009-16
S D G Thompson	Approved	25,751	£1.165	2009-16
	Unapproved	871,693	£1.11	2009-16
		4,262,861

 

All the above options were issued on 4 July 2006 and no additional share options have been granted since this date.

In total, £169,000 of employee compensation expense has been included in the consolidated statement of comprehensive income for 2009 (2008: £240,000). The corresponding credit is taken to shareholders' funds. No liabilities were recognised due to share based transactions.

 

Each Director has been granted two transfers 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.

 

7. FINANCIAL STATEMENTS

 

The audited financial statements will be posted to shareholders on 26 April 2010 and along with this announcement will be available from the registered office of Nationwide Accident Repair Services plc at 17A Thorney Leys Park, Witney, Oxfordshire, OX28 4GE and on the Company's website, www.narsplc.com

This information is provided by RNS

The company news service from the London Stock Exchange