Trading Update

AIM: NARS

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

("Nationwide" or "the Company")

Trading Update

The Board of Nationwide, the largest dedicated provider of automotive crash repair services in the UK, is issuing the following update on current trading for the year ending 31 December 2011.

At half year results in September, the Board reported its confidence in Nationwide's long term prospects but cautioned that current economic conditions were expected to create near term challenges. It is now evident that although Nationwide achieved a marginal increase in its core insurance volumes (against market trend) in the first half, volumes in the second half will be impacted by the continuing decline in insurance claims, with the recent milder weather underscoring this factor. In particular, claims for smaller repairs (typically lower sales value but higher margin) are declining at a faster rate than claims for more substantial repairs (typically higher sales value but lower margin). As a result, while revenues are expected to remain broadly in line with the prior year, the Company's profit before tax (before non-recurring items) for the second half of the year, and therefore for the full year, is now anticipated to be below market expectations.

Anticipating that the current economic climate is unlikely to improve significantly in the short term, management has commenced a decisive programme to reduce the cost base, including the potential closure of non-core centres, with volumes transferring to other branches. This programme will preserve Nationwide's overall operational capacity and will continue to support the Board's strategy to build the Company's presence in the fleet and retail markets. The total one-off costs relating to the programme will be approx. £7.7m for the current financial year, of which £1.6m will be a cash cost in the current financial year. When fully implemented, management expects annualised savings of approx. £1.9m.

Nationwide's balance sheet remains strong and the Company expects to close the year with substantial net cash of some £4.5m. The Directors expect to propose a maintained final dividend of 3.5p per share for the year (2010: 3.5p), making a full year dividend of 5.4p per share (2010: 5.3p).

With a profitable business model, medium and long term prospects for Nationwide to capture market share in its core insurance marketplace (now at only c.5% penetration) remain very positive, helped by the Company's comprehensive offering, national reach and operating systems. Nationwide's drive into newer non-insurance markets is also developing well and results to date are encouraging.

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