Preliminary Results

NARS

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

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

Preliminary Results

For the 12 months to 31 December 2010

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 it is the largest dedicated provider of accident repair services in the UK.

KEY POINTS

·; First year of three year growth plan completed - encouraging progress

- targeting growth in core insurance market and in non-insurance markets (fleet and retail)

·; Revenues up to £172.3m (2009: £170.9m)

·; Gross profit margin up by one percentage point to 47% (2009: 46%)

·; Profit before tax (before non-recurring items) up 13% to £6.0m (2009: £5.4m)

Profit before tax (after non-recurring items) up 19% to £6.0m (2009: £5.1m)

·; Earnings per share (before non-recurring items) up by 17% to 10.4p (2009: 8.9p)

Earnings per share (after non-recurring items) up by 24% to 10.4p (2009: 8.4p)

·; Net cash of £7.5m (2009: £8.3m)

·; Final dividend of 3.5p per share proposed (2009: 3.3p), taking total 2010 dividend to 5.3p per share (2009: 5.0p)

·; Major insurance contract win with Groupama, April 2010 - sole deployment of all vehicle repairs

·; Launch of enhanced mobile repair capability in Summer 2010

·; Operational efficiencies remained a major focus

·; Board views growth prospects in 2011 positively

Michael Marx, Chairman, said,

"Against trading conditions which showed no material improvement on the prior year, our results show a 19% rise in profit before tax. This increase in profitability was helped by an improvement in gross margins, reflecting our continued focus on operational efficiencies and on the cost base, as well as a more favourable mix of repair work undertaken.

Growth opportunities for us in both the insurance and non-insurance marketplaces remain promising and our industry-leading processes and IT systems continue to underpin the efficient management of workflow and will help to support our ongoing expansion. I look forward to another year of growth in 2011 and believe that we have the foundations in place to achieve our targets".

Enquiries:

Chairman's Statement

Introduction

I am pleased to report that Nationwide continues to make progress. Against trading conditions which showed no material improvement on the prior year, results show a 19% rise in profit before tax. This increase in profitability was helped by a one percentage point improvement in gross margins, reflecting our continued focus on operational efficiencies and on the cost base, as well as a more favourable mix of repair work undertaken.

During the year, we also invested significantly in our corporate infrastructure and in equipment. The Group's balance sheet and cash position remain very strong and we are pleased to be recommending an increase in the final dividend.

I reported in my half year statement that we had commenced a three year growth plan, aimed at developing our activities in our core insurance marketplace and increasing our presence in the non-insurance market, especially in the self-funded fleet market, where repairs are funded by fleet operators themselves, and in the retail market, where our presence is currently relatively under-represented.

Growth opportunities for us in both the insurance and non-insurance marketplaces remain promising. The insurance sector accounts for an estimated £3.7 billion of repairs in the UK annually. With Nationwide's share of the insurance market currently standing at around 5%, we believe we are well placed to grow, supported by the trend towards insurers consolidating their supplier base in order to save costs and enhance efficiency. The multi-year contract we signed with Groupama in April 2010, to manage the deployment of all its vehicle repairs, represents encouraging progress. The self-funded fleet and retail markets generate repair work worth some £0.9 billion and £0.5 billion a year respectively. In the first year of our growth plan, we have increased revenues from the self-funded fleet sector by approximately 27% to £19.6 million and, in the retail market, we have seen a 21% rise in revenues to £6.1 million.

Our industry-leading processes and IT systems continue to underpin the efficient management of workflow and will help to support our ongoing expansion. I look forward to another year of growth in 2011 and believe that we have the foundations in place to achieve our targets.

Financial Results

Revenues for the year ended 31 December 2010 of £172.3 million were slightly ahead of last year (2009: £170.9 million). As predicted, the volume of insurance claims in 2010 did not change materially from the previous year; however, the mix of repair work included a larger contribution from non-insurance work. Operating profit before non-recurring items rose by 10% to £6.4 million (2009: £5.8 million), helped by the improvement in gross margins from 46% to 47%. The rise in gross margins is the second successive year of increase and demonstrates our ability to implement operational efficiencies throughout the business.

Profit before tax before non-recurring items increased by 13% to £6.0 million (2009: £5.4 million) and earnings per share (before non-recurring items) rose 17% to 10.4p (2009: 8.9p). Statutory profit before tax (after non-recurring items) increased by 19% to £6.0 million (2009: £5.1 million) and statutory earnings per share (after non-recurring items) rose by 24% to 10.4 pence (2009: 8.4 pence).

The Group continues to maintain a robust balance sheet, with no borrowings and net cash of £7.5 million at 31 December 2010 (2009: £8.3 million).

Dividend

The Board is pleased to recommend a final dividend of 3.5 pence per share (2009: 3.3 pence per share), representing an increase of 6%. This takes the total dividend for the year to 5.3 pence per share (2009: 5.0 pence per share), a rise of 6% year-on-year.

Subject to shareholder approval at the Annual General Meeting on 14 June 2011, the final dividend will be paid to shareholders on 20 June 2011, based on the register at the close of business on 13 May 2011.

Trading overview

The annual repair market in the UK is substantial, being worth £5.1 billion per annum and Nationwide's current market share remains at less than 5%. Despite market conditions in 2010 showing no improvement on the challenging conditions of 2009, Nationwide has considerable opportunities to increase its share in each of its three key markets. Nationwide's national scale and unmatched infrastructure and operating systems, which are underpinned by a single IT platform, enable us to manage our network of bodyshops, call centres and mobile repair fleet in an efficient, integrated manner. Our strategy to leverage the advantages of our scale and operating systems has meant that we have been able to drive further operational efficiencies throughout the business. We have reduced costs further, made changes to the way in which we manage repair work and improved gross margins. At the same time, we are careful to ensure that Nationwide continues to offer industry-leading service levels. Our core proposition of Quality, Value, Speed and Service, is key. By flexing this offering, we can adapt to individual customer requirements, further increasing our market opportunities.

We continue to focus on maintaining close customer relationships across the automotive insurance industry, working alongside our clients to understand and respond to their changing needs. In April 2010, we were very pleased to secure a major three year contract to manage the deployment of all Groupama's vehicle repairs. This followed Groupama's decision to consolidate its large supplier network and the contract made a significant contribution in the second half of the year. In December 2010 we agreed an expansion in the services we provide Hastings Insurance Services. Under the terms of this agreement we are now providing Hastings with mobile glass repairs across the UK and are one of only two providers delivering this service. This agreement comes directly as a result of our initiative to develop our mobile services.

In my interim report, I highlighted the development of our mobile repair capacity as an important element in our overall growth plans. We launched our re-branded and enhanced specialist repair fleet at the beginning of the second half of 2010. The expansion in our mobile repair capacity has given us significant added flexibility and we can now complete light repairs 'off-site', at a location convenient to our customers. At the same time, with our national network of bodyshops and integrated IT systems, we can transfer any substantial repairs efficiently into one of our fixed sites. The expansion of our mobile fleet is progressing well, with 68 vans at the end of the year. The division made a contribution of £4.8 million to the Group's turnover, which represented a £1.2 million year-on-year increase and we believe that we are well positioned to achieve our 2011 target for mobile work.

The investment in our fleet and retail initiatives has already generated promising results. The second half of 2010 was particularly encouraging and for the year as a whole, we achieved £19.6 million of combined self-funded fleet sales (comprising fixed site and mobile repairs) compared to £15.4 million in 2009. Private retail repairs delivered revenues of £6.1 million, an increase of £1 million on last year.

Outlook

The Group delivered a good performance in 2010. We invested significantly in the business over the course of that year, in line with our three year growth plan, and are pleased with the results coming through. We will be continuing to make further investments during 2011 to support our ongoing expansion within our three key markets of insurance, fleet and retail.

Both financially and operationally, we believe that Nationwide is well-placed to achieve its targets over the coming year. Our strong balance sheet with net cash of £7.5 million and good cash generation underpin our growth plans and I look forward to reporting on our continued progress.

Michael Marx

Chairman

Chief Executive's Report

Introduction

I am pleased to report on our progress at the end of the first year of our three year growth plan.

After a good first half, we closed the year having delivered a strong overall trading performance, with gross margins for the 12 months up by over one percentage point on last year to 47.2% and earnings per share (after non-recurring items) up by 24% to 10.4 pence per share year-on-year. The balance sheet at 31 December 2010 remains very strong and the business continues to generate very good cash flows, helping to support our progressive dividend policy.

These results are pleasing and we expect to see further healthy growth as we implement the remainder of the three year growth plan.

At the heart of our growth plan is our strategy to expand Nationwide's presence in the insurance, retail and fleet sectors. While the insurance-funded market will remain the core engine for growth, we are now strategically targeting the retail and fleet markets alongside it. We see significant expansion opportunities in all three key markets which have considerable and currently untapped potential.

At the same time as expanding Nationwide's presence in the insurance, retail and fleet sectors, there continue to be margin gains to be made in ensuring that we focus on operational efficiencies. The gross margin improvement we made this year directly reflects this and efficient workflow management remains an area of our business that we target for further improvement.

Our network of over 70 bodyshops across the UK, backed by our accident management call centres, give us national reach and scale. Overlaying this is our single IT platform and information systems, which together provide us with significant commercial and operational advantages. In the second half of this year we strengthened our competitive positioning with the launch of an enhanced mobile repair offering. We intend to increase our mobile capacity over the next few years and as well as supporting our expansion plans, the increased flexibility is designed to deliver further operational efficiencies.

Managing Cash and Dividends

At 31 December 2010, the Group held net cash of £7.5 million (31 December 2009: £8.3 million). In a period of increased expenditure over and above our normal annual investment, this result highlights our continuing emphasis on credit control and cash management.

Expenditure to support expansion was ongoing over the course of the year. We invested approximately £1.2 million on refurbishments at our repair centres (31 December 2009: £0.6 million) and approximately £3.1 million on capital equipment and mobile repair units. Included within this amount is £1.2 million of non-recurring items. As we grow, it is important to ensure that our investment in our repair facilities and equipment, as well as in the Group's technology and systems, is maintained at a standard which means that we can deliver market-leading performance levels.

We are pleased to recommend an increased final dividend of 3.5 pence per share (2009: 3.3 pence per share) taking the total dividend for the year to 5.3 pence (2009: 5.0 pence per share).

Progress

I am delighted that the improvement in gross margins I reported in the first half of 2010 continued into the second half of the year, assisted by an increase in smaller repairs with higher labour content. Year-on-year, the Group's gross margin increased by over one percentage point from 45.9% to 47.2%, which reflects our efficient management of the repair process and commitment to identifying potential cost savings. I am also pleased to report that overall site efficiency (i.e. productivity) improved by two percentage points compared to the prior year, with this improvement supported by the adjustments we made to the labour cost base in the year.

In the late summer of 2010 we launched our re-branded and improved mobile repair capability. Trading as 'mobile repair', and 'motorglass', our fleet of specialist mobile repair vehicles can now undertake the repair of lightly damaged vehicles, including glass, electronic and air-conditioning-related repairs, 'off-site' without requiring the vehicle to be brought to a bodyshop. The combined fleet now comprises 68 vehicles, up from 52 at 30 June 2010, and should help our competitive positioning as we target sales across all three of our key markets. We were especially pleased to announce early progress of this strategy in December 2010, with the signing of a significant contract with Hastings Insurance Services to provide mobile glass repairs from February 2011. For the year as a whole, the mobile division reported sales of £4.8 million compared to £3.5 million in the prior year, which represents a substantial 37% increase.

In May 2010 we acquired a modern, leasehold site in Newcastle-upon-Tyne to extend the Group's repair capacity in the North East region. We already operate a site in Middlesbrough and an RSA-dedicated site in Gateshead, and the addition of the bodyshop in Newcastle came after we had identified the need for further capacity. The new site is now fully integrated, with Nationwide's IT platform and workflow processes in place, and it brings the Group's total number of bodyshops to 71. We also operate two "fast Fit+" centres, which offer MOTs and other bolt-on services such as exhausts and tyres.

Insurance work

We made good progress in our core insurance market, securing a number of new contracts over the year. In the first half of the year, at the end of April 2010, we signed a major new contract with Groupama, estimated to be worth approximately £8 million in revenue per annum. We now manage the deployment of all Groupama's vehicle repairs, with Groupama having decided to consolidate its large supplier network in order to improve both efficiencies and service levels. Groupama is also using our mobile repair services.

The UK motor insurance industry generates an estimated c. 2.4 million repairs a year, worth c. £3.71 billion per annum. We believe that our market share is approximately 5%, indicating the scale of the growth opportunity available to us.

Fleet work

While total spend on vehicle repairs by the fleet market is estimated at £1.5 billion per annum, this includes £0.6 billion of insurance-funded repairs. The remaining £0.9 billion is spent directly by fleet operators and it is the self-funded fleet market we are now targeting more aggressively.

The self-funded fleet market is a natural extension to our core insurance business and while, historically, we have always worked for a number of fleet operators, including the Royal Mail, Environment Agency and G4S, our presence in this market is currently very small. Typically, speed and service are the key drivers for fleet operators, reflecting their need to ensure that vehicles are off the road for as short a time as possible. The launch of our enhanced mobile repair offering and continued development of our management information IT platform is specifically designed to assist in our penetration of this market.

I am pleased to report a number of new contract wins in 2010, including Kindertons and Easidrive and we also increased our work with existing customers. Sales for the year rose by 27% to £19.6 million against the same period last year, including £2.2 million of sales generated by motorglass and mobile repair.

Retail work

The majority of our repairs are for damaged vehicles belonging to private individuals who come to us indirectly via insurers. Over recent years we have increased our direct retail sales, undertaking additional repairs for private individuals while their vehicles are being repaired under an insurance claim. During the twelve month period, we have continued to focus on this area while also undertaking some highly targeted marketing campaigns. Site-based retail sales increased by 21% to £6.1 million in 2010 from £5.0 million in the prior year.

We plan to further increase retail sales over 2011. The retail market is worth some £0.5 billion a year in the UK and so there is significant potential to grow our sales in this area over time.

Outlook

We have made a good start to our three year growth plan and results for 2010 are very encouraging. Looking forward to 2011 and 2012, we believe there is very good potential for Nationwide to continue to strengthen its presence in its core insurance market as well as in the allied fleet and retail markets. We are working hard to ensure that our offering remains market-leading and delivers value, quality, speed and service to customers. The development of our mobile repair solution will assist this as well as help to enhance operational efficiencies.

The business is cash generative with a solid balance sheet, which will continue to allow us to pursue a progressive dividend policy and supplement our organic growth with suitable acquisition opportunities. I look forward to another successful year in 2011.

Michael Wilmshurst

Chief Executive

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year to 31 December 2010

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2010

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2010

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED CASH FLOW STATEMENT

For the year to 31 December 2010

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.

The financial information set out in this report does not constitute the Company's statutory accounts for the years ended 31 December 2010 or 2009 but is derived from those accounts. Statutory accounts for 2009 have been delivered to the registrar of companies, and those for 2010 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.

The Group recategorised certain items of expense from distribution costs and administration expenses to cost of sales. The 2009 consolidated statement of comprehensive income has been restated accordingly, to increase cost of sales and reduce distribution costs by £1,703k.

2. non recurring itemS-Administrative costs

In 2009 the Company suffered two fires at its sites in Manchester (August 2009) and Norwich (September 2009). The Group's insurers accepted liability. Both claims have now been fully settled, covering both the loss of assets and business interruption (lost profits).

The Norwich site reopened in May 2010 and a profit on disposal of assets of £167k has been recognised in 2010 (12 months to December 2009: £200k). The combined profit of £367k has arisen as the insurance proceeds of £470k less costs of £56k are in settlement of fixed assets with a net book value of £47k.

The Manchester site was fully operational in July 2010 and a profit on disposal of assets of £678k has been recognised in 2010, which comprises insurance proceeds of £749k less costs of £56k in settlement of fixed assets with a net book value of £15k. No profit was recognised in 2009.

The site closure costs relate to a provision for the disposal of the Croydon property lease and the 2009 charge related to the closure of the Kidderminster site.

3. FINANCE INCOME AND FINANCE COSTS

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 £4,484,000 (2009: £3,617,000). The weighted average number of outstanding shares used for basic earnings per share amounted to 43,197,220 (2009: 43,197,220).

Diluted earnings per share

Diluted earnings per share has been calculated using the net results attributable to the shareholders of the Company of £4,484,000 (2009: £3,617,000). The weighted average number of outstanding shares used for diluted earnings per share amounted to 43,197,220 (2009: 43,197,220) and assumes that none of the share options detailed in note 6 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 2009, the average market price was £0.90 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:

5. PENSION and other employee assets/obligations

The Company operates a funded pension scheme in the UK. The Fund has both defined benefit and defined contribution sections. Since 1 January 2002 the Fund has been closed to new members. Active members of the Fund ceased to accrue further benefits in the defined benefit section on 31 July 2006. Under the current Schedule of Contributions, contributions to the Fund for the year beginning 1 January 2011 will be £2.6m. This disclosure is in respect of the defined benefit section of the Fund only.

The Company has opted to amortise all actuarial gains and losses above the corridor (10% of the greater of assets and liabilities) over a term of 17 years.

A full actuarial valuation of the scheme was carried out as at 31 December 2010 by a qualified independent actuary. The major assumptions used by the actuary were (in nominal terms) as follows:

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:

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

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

The amounts recognised in the statement of comprehensive income are:

History of scheme assets, obligations and experience adjustments

6. EQUITY

Share capital

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

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

In total, £98,000 of employee compensation expense has been included in the consolidated statement of comprehensive income for 2010 (2009: £169,000). 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 2011 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.