TIDMNARS
RNS Number : 9249K
Nationwide Accident Repair Srvs PLC
22 April 2015
AIM: NARS
22 April 2015
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
("Nationwide", "the Company" or "the Group")
Preliminary Results
For the 12 months to 31 December 2014
Nationwide provides integrated automotive accident repair
management services to the UK insurance industry, fleet and retail
customers. It is the largest dedicated provider of accident repair
services in the UK.
Key Points
-- Agreement reached on terms of a recommended cash acquisition
for the Group by Canaveral Bidco Limited (The Carlyle Group),
announced on 1 April 2015
-- Results in line with management expectations - improved
performance reflects benefits of organic growth, operational
efficiency improvements and acquisitions
-- Revenue of GBP187.0m (2013: GBP156.6m) - acquisitions contributed GBP21.9m
- insurance revenues up 24.7% to GBP139.1m - market share up
- fleet market revenues up 8.2% to GBP43.7m
- retail sales at GBP4.2m (2013: GBP4.7m)
-- Underlying (1) PBT of GBP5.3m (2013: GBP3.1m) / Statutory PBT of GBP1.3m (2013: GBP0.1m)
- separately identified items and amortisation of intangibles of GBP4.0m (2013: GBP3.0m)
-- Gross margin of 36.7% (2013: 35.8%)
-- Underlying (1) EPS of 9.4p (2013: 5.1p) / Statutory EPS of 1.6p (2013: 0.5p loss)
-- Strong underlying (1) cash flow and working capital
management contributing to a net cash balance at 31 December 2014
of GBP1.5m (31 December 2013: GBP6.3m)
-- Two acquisitions completed, Howard Basford (in February) and Gladwins (in September)
- enhance operational efficiencies in North West and East of England
- represent templates for further regional acquisitions
-- Two major contract agreements signed - with AXA UK and Allianz Insurance plc
-- Post period end acquisition of Seward Accident Repair Centres
Limited in the South of England
Notes:
1. 'Underlying' is calculated before separately identified items
and amortisation of intangibles.
Michael Marx, Chairman, commented,
"These improved results are in line with management expectations
and reflect the benefits of the three acquisitions we have made,
organic growth and the measures put in place to improve operational
efficiencies from the second half of 2013.
On 1 April, we announced that agreement had been reached with
Carlyle on the terms of a recommended cash offer for Nationwide.
This recommended offer is subject to further approvals, including
by Nationwide shareholders and a copy of the announcement published
on 1 April can be found at www.narsplc.com. Further information
will be posted to shareholders in due course."
Enquiries:
Nationwide Accident Michael Wilmshurst, Chief T: 020 3178 6378 (today)
Repair Services Executive T: 01993 701720
plc David Pugh, Group Finance
Director
KTZ Communications Katie Tzouliadis T: 020 3178 6378
Westhouse Securities Antonio Bossi / Henry Willcocks T: 020 7601 6100
CHAIRMAN'S STATEMENT
Introduction
On 1 April 2015, the Board of Nationwide and the Board of
Canaveral Bidco Limited ("CSP Bidco") announced that that an
agreement had been reached on the terms of a recommended cash
acquisition by CSP Bidco of the entire issued and to be issued
ordinary share capital of Nationwide. CSP Bidco is an indirect
wholly owned subsidiary of CSP III AIV (Cayman) L.P., a limited
partnership fund affiliated with Carlyle Strategic Partners III,
L.P, managed by its investment adviser, Carlyle Investment
Management L.L.C.. The recommended cash offer is subject to further
approvals, including by Nationwide shareholders. A copy of the
announcement published on 1 April can be found at www.narsplc.com
and further information will be posted to shareholders in due
course.
Results for the year to 31 December 2014 show improvement
year-on-year. Revenue increased by 19% to GBP187.0m, with
underlying profit before tax up 71% to GBP5.3m and underlying
earnings per share up 84% to 9.4p. These results reflect both the
benefits of the three acquisitions we have made, organic growth and
the measures put in place to improve operational efficiencies from
the second half of 2013.
Our acquisitions performed in line with management expectations.
The integration of Exway, the bodyshop chain based in the South
West of England acquired in July 2013, has been successful. Our
second recent acquisition, in February 2014, of Howard Basford Ltd
("Howard Basford"), which operates bodyshops in the North West, is
also performing well. Derek Gladwin Ltd ("Gladwins"), a leading
provider of crash repair services in the East of England, was
acquired in September 2014 performed and continues to perform as
anticipated at the time of its acquisition. After the year end, in
April 2015, we acquired Seward Accident Repair Centres Ltd
("Sewards") which operates in the South of England, for a total
cash consideration of GBP3.8m including properties of GBP0.4m. Like
our previous acquisitions its purchase is in line with our strategy
to expand selectively in territories, providing competitive
advantage for our customers, as well as delivering economies of
scale and work flow efficiencies alongside our plans to build the
Group's presence in the insurance, fleet and retail markets.
During the year we were pleased to announce two major contract
agreements. In June we signed a contract extension with AXA UK and
in early September we signed a new contract with Allianz Insurance
plc. Each contract is worth an estimated GBP10m per annum and
supports the Group's trading performance in the 2014 financial year
and beyond.
Financial Results
Group revenue for the year to 31 December 2014 was GBP187.0m
(2013: GBP156.6m) with growth in both the insurance and fleet
markets. The Howard Basford and Gladwins acquisitions performed
well, contributing revenues of GBP21.9m (2013: nil). Insurance
revenues increased by 24.7% to GBP139.1m (2013: GBP111.6m) which
includes a like-for-like increase of 9.8% and represented a gain in
market share. Fleet sales grew by 8.2% to GBP43.7m (2013: GBP40.4m)
and represent 23% of Group revenue. Retail sales were GBP4.2m
(2013: GBP4.7m).
The enhancements to operational efficiency from the second half
of 2013 combined with 2014's higher work volumes and contribution
from acquired businesses resulted in an improvement in the gross
margin to 36.7% for 2014 (2013: 35.8%). Underlying overhead costs
were GBP10.7m higher at GBP62.5m (2013: GBP51.8m) and included both
Howard Basford and Gladwins operational overheads of GBP6.7m
together with further investment in our I.T. infrastructure and
bonuses paid across the team in recognition of their share in the
Group's progression.
Underlying operating profit increased by 47.6% to GBP6.2m (2013:
GBP4.2m) and represented a margin of 3.3% (2013: 2.7%) of revenue.
Improved returns on pension scheme assets contributed to a GBP0.2m
favourable variance in net finance costs following which underlying
profit before tax was GBP5.3m (2013: GBP3.1m). Underlying earnings
per share, adjusted for separately identified items and
amortisation of intangibles, was 84.3% higher at 9.4p (2013:
5.1p).
Separately identified items and amortisation of intangibles of
GBP4.0m (2013: GBP3.0m) were incurred, as anticipated, and mainly
related to the reorganisation of our network following the recent
acquisitions with the closure of four sites during the year.
Amortisation of intangible assets amounting to GBP1.7m (2013:
GBP0.2m) relates to those recognised on the recent acquisitions.
Statutory profit before tax for the year to 31 December 2014 was
GBP1.3m (2013: GBP0.1m) and the statutory earnings per share was
1.6p (2013: loss per share of 0.5p).
Net cash at 31 December 2014 stood at GBP1.5m (2013: GBP6.3m)
and reflects the Group's improving profitability and strong control
of working capital when taking into account the net consideration
for businesses acquired during the year of GBP13.4m, GBP2.6m of
pension deficit contributions and a GBP2.2m cash outflow effect
from separately identified items.
Dividend
On 1 April 2015, the Board of Nationwide Accident Repair
Services plc and the Board of Canaveral Bidco Limited announced
that agreement has been reached on the terms of a recommended cash
acquisition by CSP Bidco of the entire issued and to be issued
ordinary share capital of NARS. It is intended that the transaction
will be implemented by way of a court-sanctioned scheme of
arrangement under Part 26 of the Companies Act 2006, with a
completion date of 31 May 2015. Accordingly, NARS will be a 100%
owned subsidiary and a private company. The Board will not declare
or recommend a final dividend in respect of the financial year
ending 31 December 2014 on the basis and assuming that the scheme
becomes effective (or, if applicable, the offer becomes or is
declared unconditional in all respects).
Board Changes
Lady Judge and Stephen Thompson stepped down from the Board on
25 March 2014 and 31 March 2015 respectively. Each having served
for more than eight years, I would like to thank them for their
contribution to Nationwide over these years and wish them well for
the future.
Strategy
As previously stated, we see opportunities to develop a broader
and deeper range of solutions for our customers in our target
markets of insurance, fleet and retail. We plan to deliver
economies of scale and efficiency in the flow of work across the
Group through a combination of organic growth and selective
acquisitions which will help to enhance our customer
proposition.
By balancing capacity with demand on a geographical basis in the
UK there are also opportunities for Nationwide to further develop
its operating platform and return on investment.
Acquisitions
In February 2014, we completed the acquisition of Howard
Basford, the eighth largest independent bodyshop chain in the UK,
comprising eight fixed sites and also providing mobile repair
services. The acquisition is highly complementary to the Group's
existing operations and provides an enhanced presence in the North
West, with the prospect of economies of scale and efficient work
flows as well as other benefits.
In September 2014, we completed the acquisition of Gladwins
which operates from eight locations in the East of England and was
the eleventh largest independent bodyshop chain in the UK.
In April 2015, we completed the acquisition of Sewards for a
total consideration of GBP3.8m including properties with a value of
GBP0.4m. Sewards operates from eight locations in the South of
England and was the tenth largest bodyshop chain in the UK.
All of these acquisitions have helped to increase Nationwide's
presence in its target markets and improve operational efficiencies
in these regions, enhancing return on capital.
Outlook
The worst effects of the economic cycle are behind us and
although there continues to be scope for UK bodyshop capacity to
reduce, some regions are already beginning to see a rebalancing of
supply in line with demand. We are well positioned and there are
opportunities to build our business both organically and by further
strategic acquisitions.
We continue to focus on customer requirements and developing our
service range selectively across the UK.
Michael Marx
Chairman
22 April 2015
CHIEF EXECUTIVE'S STATEMENT & OPERATING REVIEW
Introduction
In recent years our industry has experienced significant
pressures of both a cyclical and structural nature; however there
are now signs of improving economic conditions.
The improvement in Nationwide's performance reflects a number of
factors. Acquisitions have contributed to these results but the
improvement also reflects organic growth in the core business and
the measures that we put in place during 2013 to enhance
Nationwide's performance have contributed to significantly improved
2014 results. The impact of these initiatives and actions are also
evident within the encouraging start made by the Group in 2015. Our
acquisition of Howard Basford in February 2014, Gladwins in
September 2014 and subsequent purchase of Sewards in April 2015
further strengthen our operations and I would like to welcome these
teams to the Group.
Market Overview
The size of the UK automotive repair market is estimated by us
as GBP3.5bn, which is a more conservative assessment than
independent research sources. Of this total, we estimate that
approximately 60% (GBP2.1bn) of the market is insurance funded, 26%
(GBP0.9bn) is fleet funded and 14% (GBP0.5bn) is retail funded.
Following a decline in the size of the insurance funded vehicle
repair market for more than ten years, with the number of operators
diminishing, there still remains an oversupply of repair capacity;
however some regions in the UK are beginning to see a rebalancing
of supply in line with demand. It is our view that the worst
effects of the economic cycle are behind us now and the slowing
rate of decline in insurance-funded repairs is evidence of this.
The increase in new vehicle registrations and the growth of the UK
car parc (i.e. the total number of vehicles) as well as the rise in
miles travelled are all positive indicators. Many industry analysts
are predicting work volumes to stabilise in the near term.
Nationwide's insurance market positioning, with the strategic
introduction of a wider range of services including rapid repair
solutions catering, for instance, for the increase in the average
age of vehicles on our roads, is designed to ensure that we remain
at the forefront of our industry and can deliver commercial
advantage to our customers.
We continue to work hard to ensure that our offering and service
levels remain market-leading. All of our customers require a
solution which delivers quality, value, service and speed. In order
to satisfy this market demand, operators need to have a customer
focused, efficient, consistent, transparent and integrated approach
supported by increasingly strong information technology.
Fleet customers include vehicle hire companies, corporates and
SMEs. The fleet market represents a growth opportunity as customers
become increasingly proactive in deciding who they wish to partner
with in order to keep their vehicles on the road. Fleets will also
experience growth as the economic cycle moves into recovery and
have significantly contributed to the recent growth in the vehicle
parc. To support their own business success, fleet customers
require a service which offers speed, flexibility, good management
information, value and a national coverage with local presence. An
integrated automotive support service is particularly attractive
for this market. This market is unable to be directly satisfied by
many traditional repairers and larger 'virtual' facilitators
struggle to provide a sustainable solution which offers competitive
value and quality. Our intention is to continue to penetrate this
marketplace and the evolving and progressive broadening of our
services helps to support our growth plans.
The retail market for vehicle repair during the past few years
has been affected by growing insurance claims policy excesses which
have in part derived from the growth in policy placement through
web-based aggregators. Lower fuel prices and any rise in disposable
incomes are positive drivers of this market. Trust, value and
convenience have been the key attributes of successful operators in
the retail market. We anticipate a strategic growth opportunity for
Nationwide as transparency, brand awareness and digital capture
progressively become differentiators for successful retail market
participants.
Nationwide Crash Repair Centres ('NCRC')
With external revenue of GBP162.1m (2013: GBP133.8m) including
revenues from Howard Basford and Gladwins, NCRC is the Group's
largest business segment and has almost a 5% share of the vehicle
repair market. Comprising 80 bodyshops (2013: 68), a mobile repair
fleet, two Rapid Repair facilities and two Fast Fit Plus vehicle
service centres, NCRC provides services to the insurance, fleet and
retail markets on a local and national basis.
Year-on-year insurance revenue to external customers increased
by 25.6% to GBP123.1m (2013: GBP98.0m) hence growing our market
share. Fleet sales grew by 11.5% to GBP34.8m (2013: GBP31.2m) as we
continued to penetrate this market. Our mobile repair service,
commercial ovens, integrated technology and broadening range of
mobility solutions help to provide the speed, flexibility and
information that fleet customers require. Retail sales declined by
10.6% to GBP4.2m (2013: GBP4.7m), mainly due to the primary focus
being placed on the effective delivery of higher insurance and
fleet sales.
NCRC's gross margin has increased to 38.4% (2013: 37.3%).
Continued emphasis has been placed upon ensuring that damage is
remedied through repair in preference to parts replacement.
Our strategy of balancing capacity with demand has been
augmented through the acquisition of eight Howard Basford and eight
Gladwins sites, with the closure of four sites during 2014. In
February 2014, we completed the acquisition of North West based
Howard Basford, the eighth largest independent bodyshop chain in
the UK, comprising fixed sites and also providing mobile repair
services. The initial net cash consideration of GBP4.5m produced
revenue of GBP16.8m and underlying profit before tax of more than
GBP0.8m during the post-acquisition period to 31 December 2014. The
decision to purchase Gladwins for a cash consideration of GBP10.2m,
including properties, is in line with our strategy to expand
selectively in territories providing competitive advantage for our
customers. In the post-acquisition period from September 2014 to 31
December 2014, Gladwins contributed revenue of GBP5.1m and
underlying profit before tax of GBP0.3m.
Customer satisfaction levels, as measured by independent
telephone surveys which rate the overall NCRC quality of repair,
increased during 2014 to 86.94% (2013: 85.39%) for our fixed sites
and to 94.64% (2013: 94.29%) for mobile repairs. The speed of our
repair process has also improved further with a 'key to key' repair
time (time taken from receipt of vehicle) of 10.29 days (2013:
10.36 days) with a higher 'full cycle' time (time taken from the
notification of claim) of 17.38 days (2013: 15.88 days) which
reflects a number of factors including the higher work volumes and
capacity requirements.
Network Services
Our accident management services business segment operates a 24
hour call service and deploys vehicle damage work to NCRC and an
approved network of repairers. In addition, Network Services
receives first notification of loss on vehicles, handles claims,
organises replacement vehicles, provides engineering services and
facilitates salvage. Network Services' engineering team bring
additional value to the wider Group as does this business's lead
role in balancing deployments between NCRC and the approved network
of repairers.
During 2014, revenue generated from sub-contracting to our
approved network grew by 13.5% to GBP18.5m (2013: GBP16.3m), while
sales invoiced by Network Services from work deployed into NCRC
decreased by GBP5.4m to GBP20.8m (2013: GBP26.2m). Total revenue
for the Network Services business segment therefore reduced to
GBP39.3m (2013: GBP42.5m) although gross profit increased to
GBP4.8m (2013: GBP4.6m), reflecting the greater proportion of
Network Services activity being generated through the approved
network. Some of the deployments made are invoiced directly by NCRC
and approved repairers to Network Services' customers. Total
deployments by Network Services during the year of 109,023 (2013
106,646) comprised those to NCRC of 89,915 (2013 91,291) and to
approved repairers of 19,108 (2013: 15,355).
Motorglass
Motorglass operates a fleet of specialist vans for automotive
glass repair and replacement which is coordinated using the Group's
common I.T. platform.
Revenue was consistent at GBP7.2m (2013: GBP7.2m) with a
marginal (GBP0.2m) reduction in insurance sales being offset by a
small improvement of GBP0.2m in fleet sales. Gross profit reduced
to GBP1.3m (2013: GBP1.4m) reflecting movement in the customer
mix.
Board Changes
I would like to join the Chairman in thanking Lady Judge for her
contribution to the Group for over eight years before stepping down
in March 2014. I would also like to take this opportunity to
formally express my appreciation for the work that Stephen Thompson
has performed over more than ten years and wish him every success
for the future.
Strategy and Outlook
The Group's economies of scale and efficient management of work
flows provides competitive advantages for customers and there is
scope to augment these through carefully targeted acquisitions.
We still only satisfy around 5% of the overall UK demand within
the insurance market and we see clear opportunities to enhance our
position. As repair capacity realigns against demand we are
identifying both regional and national opportunities to continue
the pace of consolidation in this market. We remain focused on our
industry-leading technology and integrated service approach.
Enhanced economies of scale and flow of work also bring significant
benefits to customers.
Prospects for growth in the Group's share of the fleet market
are good with ongoing focus to extend our mobile repair capability
and mobile glass operations to support Nationwide's fixed site
repair capability and so provide a more flexible solution than many
of our competitors. Additionally, we plan to widen our
complementary service offering through a combination of organic
developments and acquisitions.
In the retail market, where our market share is less than 1%, we
have so far mainly sold to consumers whose vehicles have entered
our repair process as a result of an insurance-funded claim. We
have plans to further build and communicate our brand, develop
matrix pricing and extend our flexible service offering, including
mobile repair and glass solutions.
Our combined approach of organic development and acquisitions
will help to increase the Group's market share on both a regional
and national scale and 2015 has started in line with the Board's
expectations. We remain focused on generating further economies of
scale and improved flow of work benefiting both our customers and
the Group.
Michael Wilmshurst
Chief Executive
22 April 2015
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
for the year ended 31 December 2014
2014 2013
Notes GBP'000 GBP'000
Revenue 2 187,020 156,621
Cost of sales (118,343) (100,586)
--------------------------------------------------- ------ ---------- ----------
Gross profit 68,677 56,035
Distribution costs (38,249) (32,214)
--------------------------------------------------- ------ ---------- ----------
Administrative costs before amortisation
of intangible assets and separately identified
items (24,224) (19,635)
Amortisation of intangible assets (1,673) (212)
Administrative costs: separately identified
items 3 (2,346) (2,747)
Total administrative costs (28,243) (22,594)
Operating profit 2,185 1,227
Finance costs 4 (882) (1,079)
--------------------------------------------------- ------ ---------- ----------
Profit before tax 1,303 148
Income tax expense 5 (633) (342)
--------------------------------------------------- ------ ---------- ----------
Profit/(loss) for the year attributable
to equity holders of the parent 670 (194)
--------------------------------------------------- ------ ---------- ----------
Other comprehensive income:
Items that will not be reclassified subsequently
to profit or loss
Defined benefit plan actuarial (losses)/gains (4,993) 2,648
Tax on other comprehensive income 999 (1,211)
--------------------------------------------------- ------ ---------- ----------
Other comprehensive income (3,994) 1,437
--------------------------------------------------- ------ ---------- ----------
Total comprehensive income for the year (3,324) 1,243
--------------------------------------------------- ------ ---------- ----------
Attributable to:
Equity holders of the parent (3,324) 1,243
--------------------------------------------------- ------ ---------- ----------
Earnings per Share
Basic 6 1.6p (0.5p)
Diluted 6 1.6p (0.5p)
--------------------------------------------------- ------ ---------- ----------
The accompanying notes form an integral part of these financial
statements.
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as at 31 December 2014
2014 2013
Notes GBP'000 GBP'000
-------------------------------------------- ------ --------- ---------
Assets
Non--current assets
Intangible assets 18,453 6,654
Property, plant and equipment 14,580 10,012
Deferred tax asset 2,546 3,570
35,579 20,236
-------------------------------------------- ------ --------- ---------
Current assets
Inventories 3,717 2,807
Trade and other receivables 24,715 20,190
Current tax receivable - 822
Cash and cash equivalents 1,635 6,265
-------------------------------------------- ------ --------- ---------
30,067 30,084
-------------------------------------------- ------ --------- ---------
Total assets 65,646 50,320
-------------------------------------------- ------ --------- ---------
Liabilities
Non--current liabilities
Long-term provisions 359 979
Hire purchase and finance lease agreements 22 -
Pension fund deficit 8 22,099 18,706
--------- ---------
22,480 19,685
-------------------------------------------- ------ --------- ---------
Current liabilities
Short-term provisions 935 995
Hire purchase and finance lease agreements 94 -
Trade and other payables 46,525 29,687
Current tax liabilities 236 -
-------------------------------------------- ------ --------- ---------
47,790 30,682
-------------------------------------------- ------ --------- ---------
Total liabilities 70,270 50,367
-------------------------------------------- ------ --------- ---------
Net liabilities (4,624) (47)
-------------------------------------------- ------ --------- ---------
Equity
Equity attributable to the shareholders
of the parent
Share capital 5,400 5,400
Capital redemption reserve 1,209 1,209
Share premium account 11,104 11,104
Revaluation reserve 8 8
Retained earnings (22,345) (17,768)
-------------------------------------------- ------ --------- ---------
Total equity (4,624) (47)
-------------------------------------------- ------ --------- ---------
The accompanying notes form an integral part of these financial
statements.
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year ended 31 December 2014
Share Capital Share Revaluation Retained Total
capital redemption premium reserve earnings
reserve account
GBP'000 GBP'000 GBP'000 GBP'000 GBP'000 GBP'000
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Balance at 1 January 2013 5,400 1,209 11,104 8 (17,024) 697
Dividend paid (see note 7) - - - - (1,987) (1,987)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Transactions with owners - - - - (1,987) (1,987)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Loss for the year - - - - (194) (194)
Other comprehensive income - - - - 1,437 1,437
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Total comprehensive income for the year - - - - 1,243 1,243
Balance at 31 December 2013 5,400 1,209 11,104 8 (17,768) (47)
Dividend paid (see note 7) - - - - (1,253) (1,253)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Transactions with owners - - - - (1,253) (1,253)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Profit for the year - - - - 670 670
Other comprehensive income - - - - (3,994) (3,994)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Total comprehensive income for the year - - - - (3,324) (3,324)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
Balance at 31 December 2014 5,400 1,209 11,104 8 (22,345) (4,624)
----------------------------------------- -------- ----------- -------- ------------ --------- --------
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
CONSOLIDATED CASH FLOW STATEMENT
for the year ended 31 December 2014
2014 2013
GBP'000 GBP'000
---------------------------------------------------------------------------------- --------- --------- ----------
Operating activities
Profit/(loss) for the year 670 (194)
Adjustments to arrive at operating cash flow:
Depreciation 2,636 2,260
Amortisation of intangible asset 1,673 212
(Profit)/loss on sale of property, plant and equipment (incl. separately identified items) (50) 32
Impairment of I.T. system (separately identified item note 3) - 354
Net finance expense 77 43
Movement in pension fund liability 1,000 1,256
Taxation recognised in profit or loss 633 342
Changes in inventories (185) (18)
Changes in trade and other receivables (636) 1,127
Changes in trade and other payables 8,882 4,917
Changes in provisions 1,500 1,637
Outflow from provisions (2,180) (1,595)
Outflow from pension obligations (2,600) (2,600)
Net cash flow from operating activities 11,420 7,773
Tax received/(paid) 404 (1,134)
--------------------------------------------------------------------------------------------- --------- ----------
11,824 6,639
Investing activities
Acquisition of Howard Basford business (net of cash acquired) (3,983) -
Acquisition of Gladwins business (net of cash acquired) (9,440) -
Acquisition of Exway business (net of cash acquired) - (1,732)
Additions to property, plant and equipment (1,996) (2,056)
Proceeds from the disposal of property, plant and equipment 353 373
(15,066) (3,415)
--------- --------- ----------
Financing activities
Repayment of obligations under finance leases (58) -
Dividend paid (1,253) (1,987)
Interest paid (77) (43)
--------------------------------------------------------------------------------------------- --------- ----------
(1,388) (2,030)
--------- --------- ----------
Net (decrease)/increase in cash and cash equivalents (4,630) 1,194
Cash and cash equivalents at beginning of year 6,265 5,071
--------------------------------------------------------------------------------------------- --------- ----------
Cash and cash equivalents at end of year 1,635 6,265
--------------------------------------------------------------------------------------------- --------- ----------
2014 2013
Analysis of net cash/(debt) GBP'000 GBP'000
----------------------------------------------------------------------------------- -------- --------- --------
Cash and cash equivalents 1,635 6,265
Finance lease obligations (116) -
----------------------------------------------------------------------------------- -------- --------- --------
Net cash 1,519 6,265
----------------------------------------------------------------------------------- -------- --------- --------
The accompanying notes form an integral part of these financial
statements.
NATIONWIDE ACCIDENT REPAIR SERVICES PLC
NOTES TO THE PRELIMINARY STATEMENT
1. BASIS OF PREPARATION
The financial information set out in this report does not
constitute the Company's statutory accounts for the years ended 31
December 2014 or 2013 but is derived from those accounts. Statutory
accounts for 2013 have been delivered to the registrar of
companies, and those for 2014 will be delivered in due course. The
auditors have reported on those accounts; their reports were (i)
unqualified, (ii) did not include reference to any matters to which
the auditors drew attention by way of emphasis without qualifying
their report and (iii) did not contain a statement under section
498 (2) or (3) of the Companies Act 2006.
This preliminary statement has been prepared under the
historical cost convention. The accounting policies have remained
unchanged from the previous year.
2. Segment analysis
The chief operating decision maker, as defined by IFRS 8, has
been identified as the Executive Directors of Nationwide Accident
Repair Services plc. The information reported below is consistent
with the reports regularly provided to the Board of Directors. The
Group operates three main operating segments, Nationwide Crash
Repair Centres ("NCRC" which incorporates Mobile Repairs), Network
Services and Motorglass (which incorporates Windscreen Invoice
Control Service "WICS"). The segments are identified by their
distinct functions within the Group, being site-based repairs,
supported by mobile vehicle repairs, accident administration and
glass services respectively. NCRC comprises a dedicated network of
repair centres across England, Scotland and Wales. Network Services
provides accident administration services to insurance companies
and fleet operators, including deploying work to Nationwide Crash
Repair Centres Limited, while Motorglass and WICS provide glass,
air conditioning and auto-electronic services to the automotive
industry. The income and costs of the holding company are shown
within NCRC, which acts as the support function for the NCRC
bodyshops.
Intra-Group transactions with Network Services are accounted for
including VAT, as the segment is within a separate VAT group. All
intra-Group transactions are invoiced or recharged at cost
The revenues and net result generated by the three business
segments are summarised as follows:
NCRC Network Motorglass Total
Services
Year to 31 December 2014 GBP'000 GBP'000 GBP'000 GBP'000
Revenue from external customers 162,115 18,481 6,424 187,020
--------------------------------- -------- ---------- ----------- --------
Inter-segment revenues 744 20,848 749 22,341
--------------------------------- -------- ---------- ----------- --------
Total revenues 162,859 39,329 7,173 209,361
================================= ======== ========== =========== ========
Depreciation 2,411 129 96 2,636
Profit before tax 359 857 87 1,303
--------------------------------- -------- ---------- ----------- --------
Amortisation of intangible
assets 1,673 - - 1,673
--------------------------------- -------- ---------- ----------- --------
Separately identified items 2,140 - 206 2,346
--------------------------------- -------- ---------- ----------- --------
Underlying profit before tax 4,172 857 293 5,322
--------------------------------- -------- ---------- ----------- --------
Total assets 58,750 5,831 1,065 65,646
--------------------------------- -------- ---------- ----------- --------
Additions to property, plant
and equipment 1,961 16 19 1,996
--------------------------------- -------- ---------- ----------- --------
Year to 31 December 2013
Revenue from external customers 133,809 16,303 6,509 156,621
--------------------------------- -------- ---------- ----------- --------
Inter-segment revenues 141 26,175 722 27,038
--------------------------------- -------- ---------- ----------- --------
Total revenues 133,950 42,478 7,231 183,659
================================= ======== ========== =========== ========
Depreciation 2,087 44 129 2,260
(Loss)/ profit before tax (757) 523 382 148
--------------------------------- -------- ---------- ----------- --------
Amortisation of intangible
assets 212 - - 212
--------------------------------- -------- ---------- ----------- --------
Separately identified items 2,259 488 - 2,747
--------------------------------- -------- ---------- ----------- --------
Underlying profit before tax 1,714 1,011 382 3,107
--------------------------------- -------- ---------- ----------- --------
Total assets 37,540 9,813 2,967 50,320
--------------------------------- -------- ---------- ----------- --------
Additions to property, plant
and equipment 1,709 294 53 2,056
--------------------------------- -------- ---------- ----------- --------
The Group is involved within three main areas of the market;
insurance, fleet and retail work. The revenues attributable to each
area are summarised as follows:
2014 2013
Group Revenue % of total Revenue % of total
GBP000 GBP000
----------------------- -------- ----------- -------- -----------
Insurance 139,132 74.4% 111,557 71.2%
----------------------- -------- ----------- -------- -----------
Fleet 43,723 23.4% 40,410 25.8%
----------------------- -------- ----------- -------- -----------
Retail 4,165 2.2% 4,654 3.0%
----------------------- -------- ----------- -------- -----------
Revenue from external
customers 187,020 156,621
======================= ======== =========== ======== ===========
3. Administrative costs: Separately identified items
2014 2013
GBP'000 GBP'000
---------------------------------------- -------- --------
Site closure costs (1,647) (2,123)
Release of closure provision 103 126
Employee settlements (138) (229)
Derek Gladwin Limited acquisition fees (203) -
Auto Think Limited acquisition fees (280) -
Exway acquisition fees - (167)
Asset impairment - (354)
Glass cost adjustments (181) -
---------------------------------------- -------- --------
(2,346) (2,747)
---------------------------------------- -------- --------
The site closure costs of GBP1,647,000 (2013: GBP2,123,000)
include additional provision for future rental commitments,
dilapidations and costs in relation to closed sites. Four sites
were closed in 2014.
The release of GBP103,000 of the closure provision to separately
identified items in 2014 (2013: GBP126,000) followed the
negotiation of exits from the lease commitments at the previously
closed Wednesbury and Walsall sites.
The employee settlements of GBP138,000 in 2014 (2013:
GBP229,000) arose principally following the integration of
acquisitions.
Professional fees in respect of the acquisition of Derek Gladwin
Limited in 2014 were GBP203,000 and fees in respect of the
acquisition of Auto Think Limited were GBP280,000 (2013: costs
associated with the acquisition of Exway were GBP167,000).
In 2013, a full fixed asset impairment review of the Voyager 2
system, which is no longer used by Network Services (Nationwide)
Limited, was undertaken and an adjustment of GBP354,000 made in the
year to reflect fair values.
The Glass cost adjustments of GBP181,000 arose in WICS and
relate to the change from cash accounting for this business.
4. Finance Costs
2014 2013
GBP'000 GBP'000
----------------------------------------------- -------- --------
Interest payable on bank balances (72) (43)
Interest payable on hire purchase and finance (5) -
leases agreements
----------------------------------------------- -------- --------
(77) (43)
Pension costs (see note 8):
Interest expense (4,133) (4,027)
Interest income 3,328 2,991
----------------------------------------------- -------- --------
(882) (1,079)
----------------------------------------------- -------- --------
5. Tax expense
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Current tax:
2014 2013
GBP'000 GBP'000
------------------------------------------------- --------- ---------
Current tax:
United Kingdom corporation tax at 21.5%
(2013: 23.25%) 552 81
Adjustments in respect of prior years 7 (501)
------------------------------------------------- --------- ---------
559 (420)
Deferred tax:
Movement relating to pension liability
(IAS 19) 296 269
Temporary differences origination and reversal (222) 312
Losses carried forward - 181
633 342
------------------------------------------------- --------- ---------
The tax assessed for the period is higher 2014 2013
(2013: higher) than the effective rate GBP'000 GBP'000
of corporation tax in the UK of 21.5% (2013:
23.25%). The differences are explained
as follows:
------------------------------------------------- --------- ---------
Profit for the year before tax 1,303 148
------------------------------------------------- --------- ---------
Profit on ordinary activities before tax
multiplied by effective rate of UK corporation
tax of 21.5% (2013: 23.25%) 280 34
Effect of:
Adjustments in respect of prior years 47 106
Re-measurement of deferred tax - change
in UK tax rate - (16)
Effect of rate changes - change in UK
tax rate (27) (28)
Transfer of deferred tax between companies 16 -
Marginal rate adjustment (3) (7)
Items not deductible for tax purposes 320 253
Total tax charge for the year 633 342
------------------------------------------------- --------- ---------
6. EARNINGS PER SHARE
Basic earnings per share
Basic earnings per share of 1.6p (2013: 0.5p loss) has been
calculated using the net profit attributable to the shareholders of
the Company of GBP670,000 (2013: GBP194,000 loss). The weighted
average number of outstanding shares used for basic earnings per
share amounted to 43,197,220 (2013: 43,197,220).
Diluted earnings per share
Diluted earnings per share of 1.6p (2013: 0.5p loss) has been
calculated using the net profit attributable to the shareholders of
the Company of GBP670,000 (2013: GBP194,000 loss). The weighted
average number of outstanding shares used for basic earnings per
share amounted to 43,197,220 (2013: 43,197,220).
In the current year due to the average market price of GBP0.75,
the share options are not included in the dilutive earnings per
share calculation. In 2013, the average market price was GBP0.65
and similarly, due to the share options being anti-dilutive, the
diluted earnings per share is the same as the basic earnings per
share.
Underlying earnings per share
The underlying earnings per share has been calculated as
follows:
2014 2013
GBP'000 GBP'000
Profit before tax (as stated) 1,303 148
Amortisation of intangible assets 1,673 212
Separately identified items (note 5) 2,346 2,747
------------------------------------------ -------- --------
5,322 3,107
Tax expense (as stated) (633) (342)
Tax effect on amortisation of intangible
assets (351) (42)
Tax effect on separately identified
items (290) (515)
------------------------------------------ -------- --------
4,048 2,208
========================================== ======== ========
Underlying earnings per share (basic
and diluted) 9.4p 5.1p
========================================== ======== ========
7. DIVIDENDS
During 2014, the Group paid dividends of GBP1,252,719 (2013:
GBP1,987,100) to its equity shareholders.
These comprised:
-- a final dividend in respect of 2013 of 1.9p per share paid in June 2014 (GBP820,747); and
-- an interim dividend in respect of 2014 of 1.0p per share paid
in November 2014 (GBP431,972).
8. PENSION and other employee assets/obligations
The Group participates in a defined benefit pension scheme. It
is a final salary scheme which provides benefits to members in the
form of a guaranteed level of pension payable for life. The level
of benefits provided depends on members' length of service and
their salary in the final years leading up to retirement. The
pensions in payment are generally increased in line with inflation
or subject to fixed increases.
The scheme is closed to new entrants and was also closed to
future benefit accrual from July 2006. Benefits are paid to members
from trustee-administered funds, who are responsible for ensuring
that the scheme is sufficiently funded to meet current and future
benefit payments. Scheme assets are held in trusts and are governed
by local regulations and practice in each country. If investment
experience is worse than expected, the Group's obligations are
increased.
The trustees must agree a funding plan with the sponsoring
company such that any funding shortfall is expected to be met by
additional contributions and investment outperformance. In order to
assess the level of contributions required, triennial valuations
are carried out with the scheme's obligations measured using
prudent assumptions (relative to those used to measure accounting
liabilities).
The scheme trustees' other duties include managing the
investment of scheme assets, administration of scheme benefits and
exercising of discretionary powers. The Group works closely with
the trustees to manage the scheme.
The table below sets out the details of the latest funding
valuations, including current agreed cash contributions.
Details of the last funding valuation GBP'000
--------------------------------------- ------------
Date of last formal funding valuation 31 December
2011
Assets at valuation date 61,477
Funding liabilities at valuation date 99,658
Surplus / (deficit) at valuation date (38,181)
Lump sum contributions per annum to remove the deficit
GBP2,600,000 per annum from 5 November 2014
Period over which the deficit is expected to be removed November
2014 to 31 December 2023
Plan details
------------------------------------------------------
Duration of the defined benefit obligation 18 years at 31
December 2014
Estimated company contributions for FY15 GBP2,600,000
Principal accounting assumptions at balance sheet dates
The assumptions used in calculating the accounting costs and
obligations of the defined benefits pension plans, as detailed
below, are set by the Directors after consultation with
independent, professionally qualified actuaries.
The discount rate used to determine the present value of the
obligations is set by reference to market yields on high quality
corporate bonds. The assumptions for price inflation are set by
reference to the difference between yields on longer-term
conventional government bonds and index-linked bonds with
appropriate adjustments to reflect distortions due to supply and
demand, except for UK CPI inflation, which is set by reference to
RPI inflation as no CPI-linked bonds exist.
The assumptions for life expectancy have been set with reference
to the actuarial tables in accordance with published statistics in
the UK and the latest funding valuation with an element of prudence
removed.
31 December 31 December
2014 2013
% %
------------------------------------------------------------------ ---------------------- ----------------
Interest rate for discounting liabilities 3.70 4.60
Deferred Revaluation 1.80 2.35
Pension increases in payment in line with
RPI or 5% pa if less 3.00 3.35
Pension increases in payment in line with
RPI or 2.5% pa if less 2.50 2.50
RPI rate of inflation 3.00 3.35
CPI rate of inflation 1.80 2.25
Mortality
Current / future pensioners: 99% / 103% S1PxA, 99% / 103%
CMI 2014 1% S1PxA,
Medium Cohort
1%
Life expectancies
For a 65 year old male (current pensioner) 22.1 21.8
For a 65 year old male (future pensioner) 21.8 21.4
For a 65 year old male, currently 23.1 23.3
aged 45 24.4 24.4
For a 65 year old female (current 24.1 24.0
pensioner) 25.6 25.9
For a 65 year old female (future
pensioner) 90% take 30% 90% take 30%
For a 65 year old female, currently of of
aged 45 Pension Pension
Cash commutation
The amounts recognised in the balance 31 December 31 December
sheet are as follows 2014 2013
-------------------------------------------------------- ----------- ------------------ ----------------
Fair value of scheme assets 78,662 72,624
Present value of scheme Liabilities 100,761 91,330
Net liability recognised under IAS
19 (22,099) (18,706)
----------------------------------------------------------------- ------------------ ----------------
The movement in the defined benefit obligation over the year is
as follows:
Present value Fair value Surplus / (Deficit)
of of plan or
obligation assets Income / (Expense)
GBP'000 GBP'000 GBP'000
----------------------------------- -------------- ----------- --------------------
At 1 January 2013 86,413 63,715 (22,698)
Current service cost
Administration expenses 220 - (220)
Interest expense / (income) 4,027 2,991 (1,036)
Past service cost / settlements - - -
----------------------------------- -------------- ----------- --------------------
Total amount recognised in income
statement 4,247 2,991 (1,256)
Return on plan assets, excluding
amounts included as interest - 6,468 6,468
Change in demographic assumptions - - -
Change in financial assumptions 3,873 - (3,873)
Experience (gains) / losses (53) - 53
----------------------------------- -------------- ----------- --------------------
Total remeasurements in other
comprehensive income 3,820 6,468 2,648
Employer contributions - 2,600 2,600
Employee contributions - - -
Benefit payments (3,150) (3,150) -
----------------------------------- -------------- ----------- --------------------
At 31 December 2013 91,330 72,624 (18,706)
----------------------------------- -------------- ----------- --------------------
Present value Fair value Surplus / (Deficit)
of of plan or
obligation assets Income / (Expense)
GBP'000 GBP'000 GBP'000
----------------------------------- -------------- ----------- --------------------
At 1 January 2014 91,330 72,624 (18,706)
Current service cost
Administration expenses - (195) (195)
Interest expense / (income) 4,133 3,328 (805)
Past service cost / settlements - - -
----------------------------------- -------------- ----------- --------------------
Total amount recognised in income
statement 4,133 3,133 (1,000)
Return on plan assets, excluding
amounts included as interest - 3,267 3,267
Change in demographic assumptions (591) - 591
Change in financial assumptions 10,400 - (10,400)
Experience (gains) / losses (1,549) - 1,549
----------------------------------- -------------- ----------- --------------------
Total remeasurements in other
comprehensive income 8,260 3,267 (4,993)
Employer contributions - 2,600 2,600
Employee contributions - - -
Benefit payments (2,962) (2,962) -
----------------------------------- -------------- ----------- --------------------
At 31 December 2014 100,761 78,662 (22,099)
----------------------------------- -------------- ----------- --------------------
Asset categories at period end 31 December 31 December
2014
% 2013
%
-------------------------------- --- ------------ ------------
Equities 70.0% 72.7%
Bonds 20.9% 22.8%
Diversified Growth Funds 6.9% 2.4%
Cash 2.2% 2.1%
Total 100.0% 100.0%
------------------------------------- ------------ ------------
The amounts recognised in the statement of comprehensive income
are:
2014 2013
GBP'000 GBP'000
----------------------------------------- -------- --------
Current service cost 195 220
Net interest on the net defined benefit
liability 805 1,036
Total expense 1,000 1,256
----------------------------------------- -------- --------
Charged to:
Administration expenses 195 220
Finance costs 805 1,036
----------------------------------------- -------- --------
1,000 1,256
----------------------------------------- -------- --------
This disclosure is in respect of the defined benefit section of
the Fund only.
The defined benefit pension scheme, in common with the majority
of such schemes, has a number of areas of risk. These areas of
risk, and the ways in which the Group has sought to manage them,
are set out in the table below.
The risks are considered from both a funding perspective, which
drives the cash commitments of the Group, and from an accounting
perspective, i.e. the extent to which such risks affect the amounts
recorded in the Group financial statements.
Risk Description
Asset volatility The funding liabilities are calculated using
a discount rate set with reference to government
bond yields, with allowance for additional return
to be generated from the investment portfolio.
The defined benefit obligation is calculated
using a discount rate set with reference to
corporate bond yields. The scheme holds a large
proportion of its assets in equities and other
return-seeking assets. The returns on such assets
tend to be volatile and are not correlated to
government bonds. This means that the funding
level is likely to be volatile in the short-term,
potentially resulting in short-term cash requirements
and an increase in the net defined benefit liability
recorded on the balance sheet. However, the
Company believes that equities offer the best
returns over the long term with an acceptable
level of risk and hence holds a significant
proportion. However, the schemes' assets are
diversified by investing in a range of asset
classes, including diversified growth funds
and corporate bonds. The investment in bonds
is discussed further below.
Inflation risk A significant proportion of the scheme's benefit
obligations are linked to inflation and higher
inflation will lead to higher liabilities (although
in most cases caps on the level of inflationary
increases are in place to protect the plan against
extreme inflation). The majority of the scheme's
assets are either unaffected by inflation (fixed
interest bonds) or loosely correlated with inflation
(equities), meaning that an increase in inflation
will also increase the deficit.
Life expectancy The scheme obligations are to provide a pension
for the life of the member, so increases in
life expectancy will result in an increase in
the scheme's liabilities. This is particularly
significant, where the longer duration and inflation-linked
nature of the payments result in higher sensitivity
to changes in life expectancy.
Changes in bond Falling bond yields tend to increase the funding
yields and accounting liabilities. However, the investment
in corporate bonds offers a degree of matching,
i.e. the movement in assets arising from changes
in bond yields partially matches the movement
in the funding or accounting liabilities. In
this way, the exposure to movements in bond
yields is reduced.
Sensitivity analysis
Some of the above changes in assumptions may have an impact on
the value of the schemes' investment holdings. For example, the
scheme holds a proportion of its assets in UK corporate bonds. A
fall in the discount rate as a result of lower UK corporate bond
yields would lead to an increase in the value of these assets, thus
mitigating the increase in the defined benefit obligation to some
extent. The extent to which these sensitivities are managed are
discussed further below.
Increase Decrease
in in
assumption assumption
----------------------------------- --------------- ---------------
Sensitivity to:
Interest rate for discounting (GBP8,400,000) GBP9,600,000
liabilities (0.50%p.a.)
RPI inflation (including effects GBP4,100,000 (GBP3,600,000)
on CPI, salary growth and pension
increases)
Life expectancy (1 year) GBP4,100,000 (GBP3,600,000)
9. BUSINESS COMBINATIONS
Analysis of assets and liabilities acquired
On 15 February 2014 the Group acquired Auto Think Limited, the
holding company of Howard Basford Limited ("Howard Basford"). The
addition of Howard Basford is highly complementary to the Group's
existing operations and provides a significantly enhanced presence
in the North West region, with the prospect of economies of scale
and flow as well as other efficiencies. It also helps to increase
the Group's presence in its target markets of insurance, fleet and
retail. 100% of the voting rights were acquired. Howard Basford is
a leading provider of crash repair services in the North West of
England. The fair value of consideration for the acquisition is
GBP6,225,000 comprising GBP4,475,000 cash and GBP1,750,000
contingent consideration. Transactions fees associated with the
acquisition and expensed to the Consolidated Statement of
Comprehensive Income in 2014 were GBP280,000.
Book Fair Value Fair Value
Value Adjustments on
Acquisition
GBP'000 GBP'000 GBP'000
------------------------------- --------- ------------- -------------
Intangible assets 138 4,097 4,235
Property, plant and equipment 568 68 636
Trade and other receivables 2,835 (229) 2,606
Inventories 416 - 416
Cash and cash equivalents 492 - 492
Finance lease obligations (114) - (114)
Trade and other payables (2,589) (639) (3,228)
Current tax liability (198) 103 (95)
Deferred tax 54 (747) (693)
Net assets acquired 1,602 2,653 4,255
------------------------------- --------- ------------- -------------
Goodwill 1,970
Consideration paid 6,225
------------------------------- --------- ------------- -------------
Satisfied by
Cash 4,475
Contingent consideration 1,750
Total purchase consideration 6,225
---------------------------------------- -------
In the period 15 February 2014 to 31 December 2014, Howard
Basford contributed revenue of GBP16,773,000 and profit of
GBP809,000.
If Howard Basford had been acquired on 1 January 2014, the
impact upon revenue would have been GBP19,512,000 and profit
GBP967,000.
Fair value adjustments
On acquisition of Auto Think Limited, all assets were fair
valued and appropriate intangible assets recognised following the
principles of IFRS3. A deferred tax liability related to these
intangible assets was also recognised. Management identified the
main material intangible asset as customer relationships acquired
with Howard Basford. This intangible asset was valued using the
excess earnings method at GBP4,235,000. These customer
relationships are being amortised over a period of five years
which, in accordance with IAS 38, reflects the pattern of benefits
from these relationships. A GBP747,000 credit to deferred tax has
been made to record the liability arising on these intangible
assets.
Contingent consideration of GBP1,750,000 is payable in 2015
subject to certain performance criteria being attained.
Goodwill of GBP1,970,000 represents the excess of the purchase
price over the fair value of the net tangible and intangible assets
acquired. The goodwill arising on the acquisition is largely
attributable to the synergies anticipated to be associated with
being part of the enlarged Group.
Provisional analysis of assets and liabilities acquired
On 17 September 2014 the Group acquired Derek Gladwin Limited
("Gladwins"). Gladwins is a leading provider of crash repair
services in the East of England and, like our previous
acquisitions, its purchase is in line with our strategy to expand
selectively in territories providing competitive advantage for our
customers as well as delivering economies of scale and work flow
efficiencies alongside our plans to build our presence in the
insurance, fleet and retail markets. 100% of the voting rights were
acquired. The fair value of consideration for the acquisition is
GBP10,160,000 comprising GBP10,160,000 in cash. Transactions fees
associated with the acquisition and expensed to the Consolidated
Statement of Comprehensive Income in 2014 were GBP203,000.
Book Fair Value Fair Value
Value Adjustments on
Acquisition
GBP'000 GBP'000 GBP'000
-------------------------------- --------- ------------- -------------
Intangible assets 8 3,677 3,685
Investments 5 (5) -
Property, plant and equipment 5,291 (416) 4,875
Trade and other receivables 1,418 (135) 1,283
Inventories 309 - 309
Cash and cash equivalents 720 - 720
Finance lease obligations (60) - (60)
Trade and other payables (1,686) (1,292) (2,978)
Deferred tax (88) (1,168) (1,256)
Net assets acquired 5,917 661 6,578
-------------------------------- --------- ------------- -------------
Goodwill 3,582
Consideration paid 10,160
-------------------------------- --------- ------------- -------------
Satisfied by
Cash 10,160
Total purchase consideration 10,160
-------------------------------- -------
In the period 17 September 2014 to 31 December 2014, Gladwins
contributed revenue of GBP5,143,000 and profit of GBP298,000. If
Gladwins had been acquired on 1 January 2014, the impact upon
revenue would have been GBP16,210,000 and profit GBP1,002,000.
Fair value adjustments
On acquisition of Derek Gladwin Limited, all assets were fair
valued and appropriate intangible assets recognised following the
principles of IFRS3. A deferred tax liability related to these
intangible assets was also recognised. Management identified the
main material intangible asset as customer relationships acquired
with Gladwins. This intangible asset was valued using the excess
earnings method at GBP3,685,000. These customer relationships are
being amortised over a period of five years which, in accordance
with IAS 38, reflects the pattern of benefits from these
relationships. A GBP1,168,000 credit to deferred tax has been made
to record the liability arising on these intangible assets.
Goodwill of GBP3,582,000 represents the excess of the purchase
price over the fair value of the net tangible and intangible assets
acquired. The goodwill arising on the acquisition is largely
attributable to the synergies anticipated to be associated with
being part of the enlarged Group.
10. POST BALANCE SHEET EVENTS
On 1 April 2015 the Group acquired Seward Accident Repair
Centres Limited ("Sewards"). The addition of Sewards provides a
significantly enhanced presence in the South, with the prospect of
economies of scale and flow as well as other efficiencies.
Sewards is a leading provider of crash repair services in the
South of England. The fair value of consideration for the
acquisition is GBP3,800,000 payable in cash.
Due to the timing of the Sewards acquisition no fair value
adjustments have yet been considered and management have yet to
identify acquired intangibles.
11. FINANCIAL STATEMENTS
The audited financial statements will be available in due
course. This announcement is 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.
END
This information is provided by RNS
The company news service from the London Stock Exchange
END
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