Preliminary Results

NARS

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

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

Preliminary Results

For the 12 months to 31 December 2011

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

·; Creditable underlying results in challenging year - results affected by deterioration in trading conditions in H2 after satisfactory H1

- prompt action in H2 to rebalance cost base, keeping capacity intact

·; Revenues maintained at £172.9m (2010: £172.3m)

·; Gross profit margin down by one percentage point to 46% (2010: 47%) - impacted by mix of repair work which showed significant reduction in higher margin cosmetic repair work

·; Non-recurring items totalled £8.1m (2010: £nil) - reflect cost reduction programme

- expected annualised savings of £1.9m

·; Underlying* profit before tax reduced by 8% to £5.5m (2010: £6.0m)

Statutory loss before tax of £2.6m (after non-recurring items) (2010: £6.0m profit)

·; Underlying* earnings per share of 9.2p (2010: 10.4p)

Statutory loss per share of 5.5p (2010: 10.4p earnings)

·; Net cash up by 6.6% to £8.0m (2010: £7.5m)

·; Final dividend of 3.6p per share proposed (2010: 3.5p), takes total to 5.5p per share (2010: 5.3p)

·; Continuing encouraging progress in non-insurance markets (fleet & retail) - volumes up 25% and 55% respectively

·; Operational efficiencies remained a major focus

·; Board views growth prospects positively

* before non-recurring items

Michael Marx, Chairman, said,

"In a tough year for the industry, Nationwide has performed robustly and underlying results for the year are creditable, with profit before tax excluding non-recurring items at £5.5 million on sales of £172.9 million. The decisive action we took in the second half to reduce the cost base was the correct response to position Nationwide appropriately for the future and while we have cut back, we have preserved overall capacity. At the same time, we are continuing to invest for long term growth both in our core insurance market as well as our newer fleet and retail markets. The overall market for repairs (both insurance-funded and fleet and retail) remains substantial and Nationwide has the infrastructure in place to build market share across all three sectors.

The Group has a strong balance sheet with net cash of £8.0 million and good cash generation. Therefore, while we expect trading to remain challenging in 2012, we believe that the medium and long term prospects of the Group are positive."

Enquiries:

Chairman's Statement

Introduction

In very tough trading conditions, underlying results for the year are creditable, with profit before tax excluding non-recurring items at £5.5 million on sales of £172.9 million. In addition, our financial position remains robust with net cash at the year end standing at £8.0 million compared to £7.5 million at the same point in 2010.

Underlying profits however are below our original expectations for the financial year and reflect a difficult second half where our more profitable light repair insurance work reduced both in total and as a proportion of our overall repair volumes, not helped by the very mild and dry weather. The trend for consumers to avoid making claims on their motor insurance policies for light cosmetic damage is a feature very much in play currently. Progress outside our core insurance market in our newer market segments of fleet and retail has been encouraging and we are successfully cross-selling our services into new and existing customers. Over the year, fleet and retail sales have risen respectively by 25% to £24.5 million and 55% to £9.4 million.

In November 2011, in view of economic conditions, we took decisive action to rebalance the Group's cost base. This was largely completed in January 2012 and has incurred one-off costs of £8.1 million in the period under review. The expected annualised savings arising from the cost saving programme is approximately £1.9 million. It is important to note that we have also preserved our overall operational capacity.

Nationwide remains a leading operator in its core market, benefiting from a comprehensive offering, a national network of bodyshops and efficient operating systems. We continue to focus on managing workflows effectively and our growing mobile repair offering plays an important role in this, as well as aiding our steady expansion in the fleet and retail markets. We believe that the strategy of leveraging our infrastructure and systems to grow sales in non-insurance related markets, where Nationwide is currently relatively under-represented, continues to offer very good growth potential over time and progress to date is encouraging.

The Board is pleased to recommend an increased final dividend of 3.6p per share, taking the total dividend for the year to 5.5p (2011: 5.3p).

Financial Results

Revenues for the year ended 31 December 2011 were £172.9 million (2010: £172.3 million). However, as indicated above, the mix of repair work included a greater proportion of larger repairs, with lower margins, against light repairs, with higher margins. This adversely affected gross margins which reduced to 45.6% from 47.2% in 2010. Operating profit before non-recurring items was £5.2 million (2010: £6.4 million).

Profit before tax before non-recurring items was £5.5 million (2010: £6.0 million) and earnings per share before non-recurring items were 9.2p per share (2010: 10.4p). During the year, the Group implemented a cost reduction programme to align Nationwide's cost base with the current market requirements. The total one-off non-recurring items relating to this programme were £8.1 million, of which £1.8 million was a cash cost in the financial year under review. The expected annualised savings are £1.9 million. Taking into account non-recurring items, the statutory loss before tax was £2.6 million and the statutory loss per share was 5.5p (2010: earnings per share of 10.4p).

The Group's balance sheet remains robust, with no borrowings and net cash of £8.0 million as at 31 December 2011 (2010: £7.5 million), which was ahead of expectations due to strong year end customer cash receipts.

Dividend

The Board is pleased to recommend an increased final dividend of 3.6 pence per share (2010: 3.5 pence per share). This takes the total dividend for the year to 5.5 pence per share (2010: 5.3 pence per share).

Subject to shareholder approval at the Annual General Meeting on 25 June 2012, the final dividend will be paid to shareholders on 2 July 2012, based on the register at the close of business on 1 June 2012.

Trading Overview

Conditions in our traditional insurance-funded market proved challenging. During the first half of the year, we achieved a small increase in volumes, compared to an overall decline in insurance claims across the industry, however insurance claims frequency decreased sharply in the second half and our volumes were affected, particularly for light repairs. In order to win volumes in a market where claims frequency is under pressure, we launched a number of sales initiatives and we continued to secure new insurance contracts over the year. Given the ongoing economic conditions, in the second half, management took decisive action and initiated a cost reduction programme to realign Nationwide's cost base with demand, generating annualised cost savings of approximately £1.9 million.

Nationwide remains a leading provider in the insurance marketplace and notwithstanding the current environment, we believe that the Group is well placed to build on this position. As insurers seek to enhance efficiency by consolidating their suppliers, our integrated offering is attractive.

Our initiative to build our presence in the fleet and retail markets saw good progress, with pleasing volume increases. Fleet volumes increased 25% to £24.5 million (2010: £19.6 million). We are cross-selling our core competencies to the fleet and retail markets with increasing success.

Direct retail sales grew by 55% to £9.4 million (2010: £6.1 million). We have invested in additional resource to support growth in these markets and it is pleasing to see the benefits of this coming through. In October 2011, we also opened our third Fast Fit+ branch, which offers vehicle servicing, at our existing bodyshop site in Redruth, Cornwall.

The mobile service which we re-launched in 2010 has continued to perform strongly and revenues grew 57% during 2011 to £7.5 million (2010: £4.8 million). Our mobile offering is attractive to fleet and retail customers, where speed and convenience are paramount, but also to our core insurance customers.

The Board

After the year end, at the start of March 2012, Nationwide announced that it had appointed David Pugh as Finance Director with effect from 10 April 2012. He succeeds David Loftus, who is stepping down from the Board and the Company on 10 April. I would like to reiterate the Board's thanks to David Loftus for his hard work and contribution to the Group over the last nine years and welcome David Pugh to the team.

Outlook

In a tough year for the industry, Nationwide has performed robustly and the decisive action we took in the second half to reduce the cost base was the correct response to position Nationwide appropriately for the future. At the same time, we are continuing to invest for long term growth both in our core insurance market as well as our newer fleet and retail markets. The overall market for repairs (both insurance-funded and fleet and retail) remains substantial and Nationwide has the infrastructure in place to build market share across all three sectors.

In addition, the Group has a strong balance sheet with net cash of £8.0 million and good cash generation.

Therefore, while we expect trading to remain challenging in 2012, we believe that the medium and long term prospects of the Group are positive.

Michael Marx

Chairman

Chief Executive's Report

Introduction

2011 proved to be a challenging year for the automotive repair sector and the number of people claiming on their insurance, especially for smaller repairs, continued to decline. Nationwide is not immune to this industry-wide trend and our profitability was affected, especially in the second half of the year although it was creditable to maintain overall sales at £173 million. Management responded decisively to the trading conditions in order to ensure Nationwide's capacity matched current demand more closely and we implemented a cost reduction programme in the second half to protect and improve profitability going forward. This will generate annualised cost savings of approximately £1.9 million per annum, although the non-recurring costs incurred in 2011 impacted results for the year.

Our strategy to grow our overall market share by entering the fleet and retail markets is proving a successful and key driver for future growth. By leveraging our core competencies, we have achieved further progress in these sectors during the year. The strong growth in both fleet and retail sales helped to offset the weakening insurance volumes and we continue to see significant and encouraging expansion opportunities. We also believe that the current challenging market will create opportunities to grow our presence in our traditional insurance-funded market and have launched a number of sales initiatives in order to further increase market share. After the year end, in February 2012, we were pleased to be appointed by Hastings Direct as sole provider for all vehicle repairs. This nearly doubles the size of Nationwide's contract with Hastings Direct. As insurers seek to enhance their service standards, secure quality capacity and use information technology to improve their efficiency, we remain well-placed to develop both our existing and new relationships.

Managing Cash and Dividends

At 31 December 2011, Nationwide's net cash balances stood at £8.0 million (31 December 2010: £7.5 million). Credit control and cash management remain a key focus for the Group and this result demonstrates our continued success in this area. It is particularly pleasing in view of both the additional investment in our mobile capacity and resource to support our fleet and retail expansion, and the one-off costs incurred during our cost reduction programme. (Details of our investment and cost reduction programme are given in the operational review below.)

We are pleased to recommend an increased final dividend of 3.6 pence per share, taking the total dividend for the year to 5.5 pence (2010: 5.3 pence per share).

Operations Review

The core insurance-funded market saw repair volumes decline during the year as a whole. In the first half, Nationwide maintained some volume growth, against the industry trend, but volumes decreased markedly in the second half, influenced by a number of factors including the unusually mild and dry weather conditions. Not surprisingly, the current economic climate has resulted in customers deferring the repair of light, more cosmetic damage and the proportion of larger, lower margin repairs increased. This resulted in a lower overall gross margin for the year at 45.6% down from 47.2% in 2010.

In November 2011 we announced a cost reduction programme which included the closure of eight under-utilised and, therefore, non-core sites, with the transfer of volumes to other sites. We largely completed the programme by the year end, incurring a total of £8.1 million one-off costs, whilst maintaining the overall capacity of our network. This will deliver cost savings of £1.9 million on an annualised basis.

We have continued to focus on improving our operational efficiency. Key areas include enhancing parts margins, conversion ratios, speed of repair, customer satisfaction and, of course, securing additional sales from both new and existing customers.

As the UK's largest accident repair group our purchasing of parts is significant and economies of scale are an important element of our competitive advantage. During 2011, we further improved our parts margin (by almost 1%), a useful contribution in a challenging market.

Conversion rates, i.e. the number of opportunities that we convert into repairs, increased overall from 84.4% in 2010 to 86.7% in 2011 and we are encouraged by the increasing effectiveness of our 'up stream' Network Services call centres in securing and converting claims. This integrated offer, comprising call centres and repair capability (fixed site and mobile), is proving attractive to both insurers and the fleet market and continues to support growth. The speed at which we repair vehicles is important to the majority of markets we service and offers us operational and commercial benefits. In 2010 the average "full cycle" period (from the point of claim to the point of repair completion) was 23.57 days. By balancing capacity with demand through our call centres and increasingly sophisticated IT platform, the continued roll-out of our mobile repair service (which is a particularly rapid solution) and working with our insurance customers to streamline processes, we have reduced this to 20.33 days in 2011. Measuring our "key to key" average (which is the average time taken to complete a repair, from the day we receive a vehicle to the day it is returned to a customer), we have reduced the average to 11.68 days from 12.93 days in 2010. There are opportunities to further improve both the "full cycle" and "key to key" averages, particularly for those repairs deployed centrally through our Network Services division.

Customer satisfaction levels across the business saw an increase in 2011 to 85.9% (2010: 85.3%), as measured by independent telephone surveys of approximately 17,000 of our customers. The same customers also rated the "quality of repair" at 91%, similar to 2010. We also scored strongly in insurers' own benchmarks.

Our enhanced offer includes the mobile repair service, now integrated within our fixed site repair network. Sales have increased by 57% to £7.54 million, demonstrating the attractiveness of this service as part of our 'one stop shop' offer. Our dedicated glass repair offering, Motorglass, performed very strongly with sales of £4.37 million, an increase of 71% on 2010, when it launched. The increased mobile capacity enables the Group to manage its workflows more efficiently and provides customers with a quick and convenient service. Both our mobile and Motorglass operations are now making a good contribution to Group performance and we remain confident of further growth opportunities.

The fleet and retail markets are a natural extension to our core insurance business and the mobile offering is highly attractive to all three target segments. We achieved excellent growth in both fleet and retail sales during the year.

Our fleet sales increased by 25% to £24.5 million and we now have established a presence in the rental vehicle, governmental and private commercial sectors. We also secured a number of new fleet customers and should see the full benefit of these relationships coming through in 2012 and beyond. As a result of our success in this area a number of insurance customers, including AXA and Zurich, have engaged with us to work on this important sector of the market.

Direct retail sales have improved by 55% over last year to £9.4 million as we continue to strengthen our offer and sales process. These sales typically involve undertaking additional repairs for private individuals while their vehicles are being repaired under an insurance claim and are targeted to provide convenience, quality and value for money. Nationwide now has a proven track record of successfully integrating additional automotive support services within our offer. This process continues and in 2011 we opened our third Fast Fit+ branch in Redruth, Cornwall, offering MOTs and other vehicle services such as the supply and fitting of exhausts and tyres.

Outlook

Nationwide has the foundations in place on which to build, both operationally and financially. Although the downturn in insurance repair volumes is not expected to reverse in the short term, management has taken the necessary actions to align our bodyshop network with demand, whilst maintaining capacity and investing in growth areas such as fleet and retail.

The Group is increasingly well positioned to offer existing and potential customers an integrated, automotive support service, has a strong balance sheet, with net cash and no borrowings, and good cash conversion. We remain confident that medium and long term prospects for Nationwide to capture market share in its three target markets, insurance, fleet and retail, are positive.

Michael Wilmshurst

Chief Executive

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

For the year to 31 December 2011

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

At 31 December 2011

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

for the year ended 31 December 2011

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

CONSOLIDATED CASH FLOW STATEMENT

For the year to 31 December 2011

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 2011 or 2010 but is derived from those accounts. Statutory accounts for 2010 have been delivered to the registrar of companies, and those for 2011 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.

2. non-recurring itemS - Administrative costs

Eight sites were closed in December 2011 and one site in June 2011. The redundancy costs relate to amounts paid in 2011 in relation to these closures as well as costs in relation to the centralisation of the Group's finance and administration staff in Bristol. The site closure costs include £471k of asset loss on disposals and impairments, operating losses since the date of the closure announcement of £800k and provisions made for future rental commitments, dilapidations and closure costs of £4.3m. The future rental commitments have been subject to a discounted cash flow calculation using a rate of 5%.

Goodwill relating to the closed sites was impaired in 2011 by £1,274k. In addition, following an assessment of the work provision at the Gravesend site, which was acquired in February 2008, the goodwill was impaired by the full carrying amount of £228k.

In 2009, the Company suffered two fires at its sites in Manchester (August 09) and Norwich (September 09). The Group's insurers accepted liability. Both claims were fully settled in 2010, 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.

3. FINANCE INCOME AND FINANCE COSTS

4. EARNINGS PER SHARE

Basic earnings per share

Basic earnings per share has been calculated using the net loss attributable to the shareholders of the Company of (£2,382,000) (2010: £4,484,000 profit). The weighted average number of outstanding shares used for basic earnings per share amounted to 43,197,220 (2010: 43,197,220).

Diluted earnings per share

Diluted earnings per share has been calculated using the net loss attributable to the shareholders of the Company of (£2,382,000) (2010: £4,484,000 profit). The weighted average number of outstanding shares used for diluted earnings per share amounted to 43,197,220 (2010: 43,197,220).

In the current year due to the average market price of £0.92, the share options are not included in the dilutive earnings per share calculation. In 2010, 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 2012 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 15 years (2010: 17 years).

A full actuarial valuation of the scheme was carried out as at 31 December 2011 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:

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.

2,131,430 TSR options lapsed in 2011.

In total, £49,000 of employee compensation expense has been included in the consolidated statement of comprehensive income for 2011 (2010: £98,000). 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 30 April 2012 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