Nationwide Accident Repair Services plc : Trading Update

AIM: NARS

NATIONWIDE ACCIDENT REPAIR SERVICES PLC

("Nationwide" or "the Group")

Trading Update and Acquisition

The Board of Nationwide, the largest dedicated provider of integrated automotive accident repair management services in the UK, issues the following update on trading.

Trading conditions in the accident repair marketplace remain tough, especially around margins, with the ongoing stresses apparent across the industry, creating both challenges and opportunities for the Group.

Against this background, the Group's expected revenue of c. 79 million and net cash position of c. 5.0 million for the first half are in line with management expectations however profit before tax is behind at c. 1.4 million. This reflects both margin pressures and an adverse workflow mix. Given the shortfall, management now expects profits for the full year to be below current market expectations. Management has already adopted a number of measures to enhance operational efficiency and sales performance. This will help to deliver an improved performance in the second half and beyond.

In the light of both the trading environment and the strategic growth opportunities that have been identified, management believes it prudent to reassess the level of the Group's dividend payments and will commence a review. The Board is extremely aware of the importance of the dividend to shareholders and will consider an appropriate dividend policy based on a payout ratio which reflects this importance whilst allowing the Group to exploit growth opportunities. An interim dividend will be declared.

The management is focused on its goals of further developing Nationwide's presence in the insurance market, broadening its range of automotive repair-related services, and building revenues from its newer markets of fleet and retail. First half revenues from the Group's fleet, mobile and glass operations are ahead of the corresponding period last year and there is an encouraging pipeline of opportunities with new and existing customers.

Managing economies of scale and flow of work across the Group's sites are key. In line with this, the management is pleased to report that it has recently completed a strategic acquisition in the South West region. The purchase of the business of Exway Coachworks Ltd ("Exway"), the vehicle accident repair specialist group which is headquartered in Torbay and operates from seven sites, is expected to generate annualised sales of around 6 million and will enhance operational efficiency in the region. The consideration, paid wholly in cash, has been largely funded from the Group's enhanced working capital position and is not anticipated to significantly impact on the current management expectation for year end cash. Exway also helps to increase the Group's presence in its target markets of insurance, fleet and retail. The acquisition will result in an exceptional cost in the current financial year and is expected to represent an above average Group return on investment.

Half year results are expected to be announced on Wednesday 25 September 2013.

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About Nationwide

Nationwide provides automotive crash repair and accident administration services to the UK insurance industry, fleet operators and retail customers and is the largest dedicated provider of accident repair services in the UK.

The Group operates a national network of accident repair centres across England, Scotland and Wales and has dedicated mobile repair fleets which repair light damage and automotive glass. Other services include accident administration, courtesy cars and salvage management. All Nationwide's services are fully integrated and unified on a single IT platform, enabling the Group to provide market-leading standards.