Nationwide. Nationwide Accident Repair Services Plc Preliminary Results

Transcription

1 Nationwide Accident Repair Services Plc Nationwide (NARS) Accident Repair Services Plc 2013 Preliminary Results (NARS) 15 April 2014 Interim Results Six months to 30 June 2013

2 Disclaimer Any comments contained in this presentation are intended for distribution to professional and institutional investors only (i.e. persons who are authorised persons or exempted persons under FSMA 2000). The investment mentioned in this document may not be suitable for all recipients or be appropriate for their personal circumstances. The information in this document is believed to be correct but cannot be guaranteed. Opinions constitute our judgment as of this date and are subject to change without warning. This document is not intended as an offer or solicitation to buy or sell securities. Westhouse Securities Limited and its officers and employees may have positions in the securities mentioned herein. Past performance is not necessarily indicative of future performance and the value of investments may fall as well as rise and the income from them may fluctuate and is not guaranteed. Investors may not recover the amount invested. Some securities carry a higher degree of risk than others. The levels and basis of taxation can change. When we comment on AIM shares you should be aware that the rules for this market are less demanding than for those of the Official List of the London Stock Exchange and there is a risk of losing the money you have invested. Furthermore, the marketability of these shares is often restricted, you may have difficulty in selling your shares and there is often a big difference between the buying and selling price so that if you have to sell them immediately after purchase you may get back much less than you paid for them. If you are in any doubt, you should consult your investment adviser. The contents of this document have been prepared by, are the sole responsibility of, and have been issued by the Company. The contents of this document have not been approved by Westhouse Securities Limited for the purposes of section 21 of the FSMA Westhouse Securities Limited is authorised and regulated by the Financial Conduct Authority. 2

3 Contents PAGE INTRODUCTION -The Business 5 THE MARKET -Market Size and Inflexion Points -Demand -Supply HIGHLIGHTS -Trading Key Points -Financial Key Points FINANCIAL RESULTS -Group Income Statement: Underlying Results -Underlying Results: By Business Segment -Group Income Statement: Non-Recurring & Intangibles -Group Cash Flow -Group Balance Sheet ACQUISITIONS -Acquisitions 20 STRATEGY -Strategy 22 3

4 Introduction 4

5 The Business Integrated Automotive Accident Repair Management Services Nationwide Crash Repair Centres ( NCRC ) Vehicle Body Repair for insurance, fleets and retail 68 bodyshops across the UK Vans for mobile repairs UK s largest vehicle body repairer 40 sites with high top ovens for light commercial vehicles (LCVs) 3,308 courtesy vehicles 1 Fast Fit+ service centre Network Services Accident Management for insurance companies and fleets 24 hour call centre First Notification of Loss ( FNOL ) Deployment for repair (to NCRC and approved network) Claims handling Organising hire/courtesy vehicles Engineering services Salvage disposal (Total loss) Motorglass Motor Glass Repair and Replacement Vans for mobile glass repairs and replacement Call centre claims handling Common I.T. platform 5

6 The Market 6

7 Market Size and Inflexion Points Fleet - self funded 0.9bn 26% Retail -self funded 0.5bn 14% 3.5bn Insurance funded - Private 1.5bn 43% Fault 68% Cost effective Speed of repair Customer satisfaction Line Chart Source: Trend Tracker Insurance funded Fleet 0.6bn 17% 4.5bn Non- Fault 32% Risk transfer Personal injury capability Credit hire Source: OFT Bodyshop Repair Capacity 4.5bn Versus Demand Demand No.of Repairs Capacity 7

8 Market Demand Car and LCV PARC 3,500 3,250 3,000 2,750 2,500 LCVs Cars 2004 Q Q Q Q Q Q Q Q Q Q Q Q Q Q4 Source: DfT 35,000 32,500 30,000 27,500 25,000 Age of PARC 3,000,000 LCVs 2,500,000 2,000,000 1,500,000 1,000, , Cars 2007 Source: DfT 300, , , , ,000 50, Complexity of Repair Total Vehicle Options Available 369, , Source: CAP Miles Travelled LCVs Cars Source: DfT Claims Frequency 35% 30% 25% 20% 15% Private car Vehicles excl.cars & motorcycles Source: ABI 10% Qtr04 Qtr05 Qtr06 Qtr07 Qtr Qtr09 Qtr10 Qtr11 Qtr12 Qtr Gross Written Premiums The rest 29% Aviva 12% Admiral 11% Vehicle Repair Demand Source: Trend Tracker Zurich 3% NFU 3% Allianz 3% AXA 5% RSA 7% LV 8% DLG 10% Ageas 9% Source: ABI 8

9 Market Capacity Non Fault Facilitators Accident Exchange FMG Helphire Innovation Group Physical Operators 5,500 5,000 4,500 4,175 4,000 3,416 3,500 3,000 3,220 2,500 2,766 2,000 1,500 1, Turnover of Bodyshop Operators Source: Trend Tracker No.of Bodyshops 10m > 10% Market Participants / Fragmentation < 1m 18% Bodyshop Repair Capacity Independent Franchised Dealer Total Quindell/ AI WNS 3m - 5m 10% 2m - 3m 17% 1m - 2m 39% No.of Repairs Source: ABP 9

10 Highlights 10

11 Trading Key Points Results in line with revised expectations significant improvement in H2 Measures to enhance operational efficiency Regional focus and acquisitions Strategy of expansion into complementary services continues to progress Encouraging start to new financial year 11

12 Financial Key Points Revenue of 156.6m (2012: 155.9m) - insurance revenues down 3.9% to 111.5m market share up - good sales growth in fleet market up 14.7% to 40.4m (now 26% of Group revenue) - stable retail sales at 4.7m Underlying PBT of 3.1m (2012: 5.5m) - H2 profitability up 29.8% over H1 helped by measures to improve operational efficiency - non-recurring costs and amortisation of intangibles of 3.0m (2012: 0.4m) Underlying EPS of 5.1p (2012: 9.9p) Good cash flows net cash up to 6.3m (2012: 5.1m) Proposed final dividend per share of 1.9p for total of 2.9p (2012: 3.6p, total 5.5p) Two acquisitions (one post period end) Bank facilities of 20m in place - supports growth plans 12

13 Financial Results 13

14 Group Income Statement: Underlying Result Growth 2012 Insurance revenue Fleet revenue Retail revenue 111,557 40,410 4,654 (3.9)% 14.8% (0.6)% 115,978 35,214 4,682 Revenue 156, % 155,874 Gross profit 56,035 55,307 Gross margin % 35.8% 0.3% 35.5% Overheads (51,849) 1.9% (48,544) Operating profit before non-recurring items 4,186 6,763 Net finance costs (1,079) (1,255) Underlying profit before tax 3,107 5,508 Income tax expense (899) (1,240) Underlying profit 2,208 4,268 Fleet & Retail Sales ( '000) 39,896 45,063 32,143 22,357 21, Group Gross Margin % 35.8% 35.5% 35.0% Underlying earnings per share 5.1p (48.5)% 9.9p PBT bridge: ( M) H PBT Exway & SW impact Operational Efficiencies GP impact Overheads H PBT 14

15 Underlying Results: by Business Segment NCRC Network Services Motorglass 73% of Group revenue 'm Growth % Fleet % Insurance % Retail % Total Revenue % Intercompany (0.1) - External Revenue % Gross Profit Margin % 37.3% 36.6% 23% of Group revenue 'm Growth % Fleet % Insurance % Retail - - Total Revenue % Intercompany (26.2) (24.5) External Revenue % Gross Profit Margin % 10.8% 10.7% 4% of Group revenue 'm Growth % Fleet % Insurance % Retail - - Total Revenue % Intercompany (0.7) (0.8) External Revenue % Gross Profit Margin % 19.3% 20.0% No.of invoiced jobs 163, , % External income per job Customer satisfaction index 86.7% 86.5% No. of billings: Total 168, , % NCRC 99,793 79, % External 68,895 60,986 Ext.Income/ billing No. of jobs 58,299 54, % External income per job Customer satisfaction index 88.7% 89.2% Growth % Ave. no. of technicians % Property rental cost ( 'm) (5.7) (5.3) 7.5% Depreciation ( 'm) (2.1) (2.1) 0.0% Capex ( 'm) (1.7) (1.0) 70.0% Growth % Ave. no. of employees % Property rental cost ( 'm) (0.2) (0.1) 185.7% Depreciation ( 'm) (0.1) (0.1) 0.0% Capex ( 'm) (0.3) Growth % Vehicle rental cost ( 'm) (0.3) (0.2) 50.0% Depreciation ( 'm) (0.1) (0.1) 0.0% Capex ( 'm) (0.1) (0.1) 0.0% 15

16 Group Income Statement: Non- Recurring Items, Intangible Amortisation & Statutory Result Site closure costs (2,123) (933) Release of closure provision Impairment of I.T. asset (354) - Employee settlements (229) (291) Exway acquisition costs (167) - Non- recurring costs (2,747) (376) Amortisation of intangible assets (212) - Non-recurring & Intangible Loss Before Tax (2,959) (376) Income tax credit Non-recurring & Intangibles Loss (2,402) (284) Underlying profit before non-recurring items 2,208 4,268 (Loss)/profit attributable to shareholders (194) 3,984 Basic (loss)/earnings per share (0.5p) 9.2p 16

17 Group Cash Flow Underlying Other (1) 2012 Underlying Other (1) Profit before tax 148 3,107 (2,959) 5,132 5,508 (376) Net finance costs Depreciation 2,260 2,260-2,395 2,395 - Amortisation of intangible Exway acquisition Impairment of I.T. system 354 Loss/(profit) on sale of fixed assets (38) (38) - Changes in working capital 7,663 7,663 - (4,099) (4,184) 85 Movement in pension fund liability 1,256 1,256-1,388 1,388 - Share option scheme charge Outflow from pension obligations (2,600) (2,600) - (2,600) (2,600) - Outflow from provisions (1,595) - (1,595) (2,127) - (2,127) Net cash flow from operating activities 7,773 11,761 (3,988) 98 2,516 (2,418) Tax (paid)/received (1,134) (1,134) Additions to property, plant and equipment (2,056) (2,056) - (1,024) 663 (361) Acquisition of Exway business (1,732) - (1,732) Proceeds re disposal of property, plant & equipment Interest paid (43) (43) - (34) (34) - Dividends paid (1,987) (1,987) - (2,376) (2,376) - Net increase/(decrease) in cash and cash equivalents 1,194 6,564 (5,370) (2,924) (145) (2,779) Cash and cash equivalents at beginning of period 5,071 9,748 (4,677) 7,995 9,893 (1,898) Cash and cash equivalents at end of period 6,265 16,312 (10,047) 5,071 9,748 (4,677) (1) Other includes movements relating to the closure provision, acquisition and amortisation of intangible assets

18 Group Balance Sheet 000 Dec 2013 Dec 2012 Non-current assets Intangible assets 6,654 6,266 Property, plant & equipment 10,012 9,970 Deferred tax asset 3,570 5,736 Current assets Inventories 2,807 2,594 Trade and other receivables 20,190 21,147 Current tax receivable Cash and cash equivalents 6,265 5,071 Total assets 50,320 50,784 Non-current liabilities Long-term provisions 979 1,207 Pension fund deficit 18,706 22,698 Current liabilities Short-term provisions Trade and other payables 29,687 24,725 Current tax payable Total liabilities 50,367 50,087 Net (liabilities)/assets (47) 697 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 (17,768) (17,024) Total equity (47) Closure Provision, 1 January 2013 (1,932) Income statement charge (1,763) Release to income statement 126 Costs incurred during the year 1,595 Cash flow impact 1,595 Closure Provision, 31 December 2013 (1,974) 2013 Closure Provision : Ageing Profile 1,000, , , , , Pension Deficit Market value of assets 73,373 64,453 Present value of defined obligations (92,079) (87,151) Pension deficit (18,706) (22,698) Deferred tax 3,741 5,221 Net liability (14,965) (17,477) Current service cost (220) (167) Expected return on assets 2,991 2,703 Interest on obligation (4,027) (3,924) Income statement charge (1,256) (1,388) 18

19 Acquisitions 19

20 Acquisitions NCRC current operating structure: NCRC Lease Expiry Profile NUMBER OF SITES > Why? Business and actions Investment ROI EXWAY Customer relationships 7 Bodyshops Consideration & fees 1.2m Regional balance of capacity Integrated, 6 regional closures SW site closures 1.2m Workforce Revenue circa 6m p.a. 2.4m c.23% p.a. Economies of scale and flow Freehold 0.8m HOWARD BASFORD Customer relationships Regional balance of capacity 8 Bodyshops Mobile repair & tyres Cash consideration 4.6m Cash acquired (0.4m) Management & Workforce Revenue circa 16.0m p.a. 4.2m 15%+ p.a. Economies of scale and flow Operating profit c. 0.5m+ p.a. Contingent cash 1.8m Platform for regional growth 20

21 Strategy 21

22 Strategy Grow Fleet and Retail revenue UK Market Consolidate and grow market share - Regional inflexion points - Customer and investment benefits Fleet - self funded NARS Retail - self funded Insurance funded Extend range of complementary services Fixed site speed of repair Mobile Repair Glass Short term vehicle solutions Outsourced network services End of life vehicle services Secondary network Technology Write-offs CREATING THE LEADING INTEGRATED AUTOMOTIVE SUPPORT SERVICE GROUP 13% Repairs 87% UK automotive aftermarket sector Crash Repairs Revenue 38.8% Wear & Tear Parts Revenue 21.3% Tyre Revenue 13.9% Service Parts Revenue 11.0% Mechanical Parts Revenue 7.7% Accessories Revenue 7.4% Source: Marketline 22