interim report 2011 -...

Interim Report 2011

1 Highlights

2 Chairman’s & Chief Executive’s Statement

4 Unaudited Consolidated Statement of Comprehensive Income

5 Unaudited Consolidated Statement of Financial Position

6 Unaudited Consolidated Statement of Changes in Equity

7 Unaudited Consolidated Cash Flow Statement

8 Notes to the Unaudited Interim Statement

13 Directors & Advisors

With a national network of accident repair

centres and a fleet of mobile vans located

across England, Scotland and Wales, it is the

largest dedicated provider of accident repair

services in the UK.

Nationwide providesautomotive crash repair and accident administrationservices principally to the UK insurance industry.

Nationwide Accident Repair Services plc Interim Report 2011

“We are now in the second year of our three year growth planand, as the Group’s results for the first half of the year indicate,progress towards its objectives has been good. Underlying profit before tax has risen by 16% to £3.5 million for the six months to 30 June 2011, with revenues increasing by 6% to £92.3 million over the same period.

The results show the continuing steady progress we are making todevelop our core insurance market and, while sensibly leveragingour infrastructure and systems to build sales in non-insurancefunded markets, especially fleet and retail, where our presence is relatively low currently.

While we expect current economic conditions to create some challenges, we believe that the Group is well positioned for the remainder of the year and remain very positive about the Group’s long term prospects.”

Michael MarxChairman

Highlights

6 months to 6 months to30 June 2011 30 June 2010

Revenue £92.3m £87.2m

Operating profit beforenon-recurring items £3.4m £3.2m

Operating profit after non-recurring items £2.9m £3.2m

Profit before tax £3.0m £3.0m

Total comprehensive income after tax £2.2m £2.2m

Earnings per share 5.1p 5.1p

1Nationwide Accident Repair Services plc Interim Report 2011

• Strong profit* growth - reflects continuing progress with expansion strategy, now in second year - presence in fleet and retail markets developing

alongside core insurance market

• Revenue up 6% to £92.3m (2010: £87.2m)

• Gross profit margin maintained at 46% (2010: 46%)

• Underlying* profit before tax up by 16% to £3.5m (2010: £3.0m)- Statutory profit before tax of £3.0m (2010: £3.0m)

• Non-recurring items of £514,000 (2010: credit of £23,000)

• Underlying* earnings per share up 22% to 6.1p (2010: 5.0p) - Statutory earnings per share maintained at 5.1p

(2010: 5.1p)

• Strong operating cash flows of £3.0m (2010: £3.3m)

• Net cash at 30 June 2011 of £7.29m (2010: £8.15m)

• Interim dividend of 1.9p (2010: 1.8p)

*before non-recurring items

Introduction

We are now in the second year of our three yeargrowth plan and, as the Group’s results for thefirst half of the year indicate, progress towardsits objectives has been good. Underlying profitbefore tax has risen by 16% to £3.5 million forthe six months to 30 June 2011, with revenuesincreasing by 6% to £92.3 million over thesame period.

The results show the continuing steady progresswe are making to develop our core insurancemarket, while sensibly leveraging our infrastructureand systems to build sales in non-insurancefunded markets, where our market penetrationis relatively low currently. We are especiallyfocused on developing our presence in the fleetand retail markets, which together generate£1.4 billion of vehicle repairs in the UK,accounting for a third of the value of all repair jobs every year.

The Group’s revenues from the fleet sectorincreased by 28% over the six months, withretail sales rising by 72%, and there remainsstrong potential for further growth in boththese markets as we continue to implement our growth plan. In our core insurance-fundedmarket, despite difficult market conditions asoverall insurance claims volumes declined, wehave still seen some growth. This sector, worthapproximately £3.7 billion per annum andaccounting for two thirds of the value of thecrash repair market, remains our principal targetmarket. We see considerable growthopportunities here over time as insurerscontinue to consolidate their supply chains tosecure both operational and cost benefits.

The efficient management of workflows remainsa key area for us. It helps us both to maintainour market-leading service levels and propositionof Quality, Value, Speed and Service, and toenhance profitability. The launch of our upgraded

mobile repair capability last year has beeninstrumental in helping us to strengthenNationwide’s offering in all our marketplaces andto complete light vehicle repairs more efficiently.

The Group’s balance sheet remains strong, withnet cash of £7.29 million. This leaves us wellplaced to continue to invest in the Group’soperations for further expansion and we expectto make further progress against our growth plan.

Financial Results

For the six months to 30 June 2011, revenuesincreased by 6% to £92.33 million (2010:£87.25 million). Operating profit before non-recurring items rose by 5% to £3.4 million(2010: £3.2 million), with gross profit marginmaintained at 46% (2010: 46%). Underlyingprofit before tax improved by 16% to £3.5million (2010: £3.0 million). After accountingfor non-recurring items, the statutory profitbefore tax was £3.0 million (2010: £3.0 million).Non-recurring items totalled £514,000 (2010:credit of £23,000) and relate principally to the centralisation of Group finance andadministration functions to one site in Bristoland the closure of a non-core site inBournemouth. Underlying earnings per sharewere 6.1p, an increase of 22% on the sameperiod last year (2010: 5.0p). Statutoryearnings per share were maintained at 5.1p(2010: 5.1p).

Dividend

The Board is pleased to declare an interimdividend of 1.9p (2010: 1.8p) which will be paid on 4 November 2011 to shareholders onthe register at the close of business on 7October 2011.

Chairman’s &Chief Executive’s Statement

Michael MarxChairman

2 Nationwide Accident Repair Services plc Interim Report 2011

Turnover

92.3m

UnderlyingProfit beforetax before

non-recurring items

3.5m

Michael WilmshurstChief Executive

Trading overview

As indicated above, we continue to achievegood progress with our three year growth plan.

During the first half, volumes from our coreinsurance-funded market were up marginally.This is particularly pleasing in the light of aninsurance marketplace that is currentlyexperiencing a reduction in vehicle claims. We expect this trend to persist in the currenteconomic climate. We have close relationshipsacross the motor insurance industry and work hard to ensure we are aligned with ourinsurance customers’ needs, based upon ourcore proposition of Quality, Value, Speed and Service.

Our fleet sales grew by 28% in the first half ofthe year to £10.1 million, with new businessfrom a number of fleet operators, includingWest Mercia Police, Burnt Tree, the UK’slargest independent rental and contract hirecompany, and Norfolk County Council. Retailsales increased significantly, albeit from asmaller base, rising by 72% to £5.0 millioncompared to the first half of last year. Wehave invested in marketing and strengthenedour teams in order to enhance our prospectsin these markets and it is pleasing to see thebenefits coming through.

Sales growth across our markets has also beensupported by the expansion of our mobileoffering. In late summer 2010, we launchedour enhanced mobile repair proposition,which offers light repairs faster and moreconveniently for customers at almost anylocation of their choice and expanded ourmobile fleet. Revenues from our mobileoffering increased by 58% to £3.8 millioncompared to the first half of 2010. This serviceis attractive to our core insurance market as well as the fleet and retail markets, asdemonstrated by the contract wins with

Hastings Insurance Services and Avis, whichare now delivering work for Nationwide’sMotorglass service in line with our expectations.

We took the decision to centralise our financeand central administration function into oneoffice in Bristol in the first half of 2011. Whilethis has incurred one-off non-recurringexpenditure, we anticipate that it will reducecosts in 2012 as well as improve administrativeefficiency for both our customers and suppliers.

Nationwide’s integrated offering creates bothoperational and competitive advantage for theGroup. From a market perspective, we haveextended the range and scope of our servicesto offer a one-stop shop. This means that aswell as undertaking repairs (both at ourbodyshops and ‘off-site’ via our mobile fleet),our call centres can manage the ‘firstnotification of loss’ process, claims handling,the identification of repair work required (i.e.triaging), the deployment of work and theprovision of courtesy cars. We anchorefficiency across our operations through acommon IT platform. This ‘integrated’ modelenables us to handle repairs as effectively aspossible and our recent investment in thedevelopment of our mobile repair capabilityimproves efficiency further.

We intend to make additional investment inour mobile repair capacity during the secondhalf, which will help to support further growth.

Outlook

Nationwide has made progress with its growthplans in the first half and we are well placedto build on this success. We see opportunitiesto grow our market share in both our coreinsurance market, where we currently accountfor approximately a 5% market share, and in

our newer non-insurance funded markets offleet and retail. Our integrated offeringpositions us to take advantage of thispotential. In addition, our cash generativemodel and strong balance sheet, with netcash of £7.29 million, underpins both ourongoing investment in our business anddividend policy.

Following the UK Ministry of Justice’s recentannouncement that it will ban the payment of personal injury referral fees, it is relevant tonote that Nationwide’s business model is notreliant on this form of income. In fact, webelieve that the ruling may create furtheropportunities for us to secure work based on our overall capability.

While we expect current economic conditionsto create some challenges, we believe that theGroup is well positioned for the remainder ofthe year and remain very positive about theGroup’s long term prospects.

Michael MarxChairman26 September 2011

Michael WilmshurstChief Executive26 September 2011

“...underlyingprofit beforetax up 16% to £3.5m.”


Unaudited Consolidated Statement of Comprehensive Incomefor the six months ended 30 June 2011

Unaudited Unaudited Audited6 months 6 months 12 months to 30 Jun to 30 Jun to 31 Dec

2011 2010 2010Notes £’000 £’000 £’000

Revenue 2 92,330 87,245 172,251

Cost of sales (49,760) (46,733) (90,901)

Gross profit 42,570 40,512 81,350

Distribution costs (24,838) (22,840) (46,492)

Administrative expenses (14,330) (14,407) (28,335)

Share option charge (24) (48) (98)

Operating profit before non-recurring items 3,378 3,217 6,425

Non-recurring items – administrative costs 6 (514) 23 (5)

Operating profit 2,864 3,240 6,420

Finance income 7 114 2 5

Finance costs 7 — (214) (391)

Profit before tax 2,978 3,028 6,034

Income tax expense 8 (772) (831) (1,550)

Profit for the period 2,206 2,197 4,484

Other comprehensive income — — —

Total comprehensive income for the period 2,206 2,197 4,484

Attributable to:

Equity holders of the parent 2,206 2,197 4,484

Earnings per share

Basic 9 5.1p 5.1p 10.4p

Diluted 9 5.1p 5.1p 10.4p

All activities of the Group are classed as continuing.The accompanying notes form an integral part of these financial statements.


Unaudited Consolidated Statement of Financial Positionas at 30 June 2011

Unaudited Unaudited Audited30 Jun 30 Jun 31 Dec

2011 2010 2010Notes £’000 £’000 £’000

Assets

Non-current assets

Goodwill 7,768 7,768 7,768

Property, plant and equipment 3 12,368 10,491 12,066

Pension and other employee assets 4 10,458 9,101 9,589

30,594 27,360 29,423

Current assets

Inventories 2,468 2,428 3,148

Trade and other receivables 28,422 23,031 27,322

Cash and cash equivalents 7,293 8,151 7,459

38,183 33,610 37,929

Total assets 68,777 60,970 67,352

Liabilities

Non-current liabilities

Long-term provisions — 45 40

Deferred tax liabilities 2,791 2,200 2,621

2,791 2,245 2,661

Current liabilities

Short-term provisions — 16 31

Trade and other payables 34,041 28,928 33,800

Current tax payable 531 644 164

34,572 29,588 33,995

Total liabilities 37,363 31,833 36,656

Net assets 31,414 29,137 30,696

Equity

Equity attributable to the shareholders of the parent

Share capital 5 5,400 5,400 5,400

Capital redemption reserve 1,209 1,209 1,209

Share premium account 11,104 11,104 11,104

Revaluation reserve 8 8 8

Retained earnings 13,693 11,416 12,975

Total equity 31,414 29,137 30,696

The accompanying notes form an integral part of these financial statements.Company Number 966807.


Unaudited Consolidated Statement of Changes in Equityfor the six months ended 30 June 2011

Capital ShareShare redemption premium Revaluation Retained

capital reserve account reserve earnings Total£’000 £’000 £’000 £’000 £’000 £’000

Balance at 1 January 2010 5,400 1,209 11,104 8 10,596 28,317

Share option charge — — — — 48 48

Dividend paid — — — — (1,425) (1,425)

Transactions with owners — — — — (1,377) (1,377)

Profit for the six month period — — — — 2,197 2,197

Other comprehensive income — — — — — —

Total comprehensive income for the period — — — — 2,197 2,197

Balance at 30 June 2010 5,400 1,209 11,104 8 11,416 29,137


Dividend paid — — — — (778) (778)

Transactions with owners — — — — (728) (728)




Balance at 31 December 2010 5,400 1,209 11,104 8 12,975 30,696


Dividend paid (note 10) — — — — (1,512) (1,512)

Transactions with owners — — — — (1,488) (1,488)




Balance at 30 June 2011 5,400 1,209 11,104 8 13,693 31,414

The accompanying notes form an integral part of these financial statements.


Unaudited Consolidated Cash Flow Statementfor the six months ended 30 June 2011

Unaudited Unaudited Audited6 months 6 months 12 monthsto 30 Jun to 30 Jun to 31 Dec

2011 2010 2010£’000 £’000 £’000

Operating activities

Profit for the period 2,206 2,197 4,484

Adjustments to arrive at operating cash flow:

Net finance costs (1) (2) (5)

Depreciation 1,162 1,027 2,144

Profit on sale of property, plant and equipment — — (820)

Taxation recognised in profit or loss 772 831 1,550

Changes in inventories 680 (111) (831)

Changes in trade and other receivables (1,100) 429 (3,862)

Changes in provisions — — 37

Changes in trade and other payables 241 (641) 4,230

Movement in pension fund asset 431 848 1,661

Share option scheme charge 24 48 98

Outflow from pension obligations (1,300) (1,300) (2,600)

Outflow from provisions (71) (56) (83)

Net cash flow from operating activities 3,044 3,270 6,003

Tax paid (235) (409) (1,187)

2,809 2,861 4,816

Investing activities

Additions to property, plant and equipment (2,514) (1,556) (4,325)

Proceeds from the disposal of property, plant and equipment 1,050 — 897

Interest received 1 2 5

(1,463) (1,554) (3,423)

Financing activities

Dividend paid (1,512) (1,425) (2,203)

(1,512) (1,425) (2,203)

Net decrease in cash and cash equivalents (166) (118) (810)

Cash and cash equivalents at beginning of period 7,459 8,269 8,269

Cash and cash equivalents at end of period 7,293 8,151 7,459

The accompanying notes form an integral part of these financial statements.


1. Basis of preparation

The unaudited interim accounts have been prepared on the same basis and using the same accounting policies as used in the audited financialstatements for the year ended 31 December 2010, except as noted below.

These unaudited interim statements for the period ended 30 June 2011 have been prepared in accordance with IAS 34, Interim Financial Reporting. Theydo not include all of the information required for full annual financial statements, and should be read in conjunction with the consolidated financialstatements of the Group for the year ended 31 December 2010, which have been prepared in accordance with IFRS.

The financial information set out in these interim accounts does not constitute statutory accounts as defined in section 434 of the Companies Act 2006.The figures for the year ended 31 December 2010 have been extracted from the statutory financial statements which have been filed with the Registrarof Companies. The auditor’s report on those financial statements was unmodified.

There are a number of other accounting standards that have become effective in the current period. However, there is no material impact on thefinancial statements for the interim period.

2. Segment analysis

The Group operates three main business segments, Nationwide Crash Repair Centres (NCRC), Network Services and Mobile Division (which incorporatesMotorglass and Mobile Repairs). The segments are identified by their distinct functions within the Group, being site based vehicle repairs, accidentadministration and mobile vehicle repairs respectively. NCRC is the core business and comprises a dedicated network of repair centres across England,Scotland and Wales. Network Services provides accident administration services to insurance companies and fleet operators, in the main deploying work toNationwide Crash Repair Centres Limited, while the Mobile Division provides mobile repairs, glass, air conditioning and auto-electronic services to theautomotive industry. The income and costs of the holding company are shown within NCRC, which acts as the support function for the Nationwide CrashRepair Centres bodyshops.

The revenues and net result generated by the three business segments are summarised as follows:

Network Mobile NCRC Services Division Total

6 months to 30 June 2011 £’000 £’000 £’000 £’000

Revenue from external customers 81,048 8,125 3,157 92,330

Inter-segment revenues — 9,632 739 10,371

Total revenue 81,048 17,757 3,896 102,701

Profit before tax 2,498 143 337 2,978

Total Assets 60,825 6,347 1,605 68,777

6 months to 30 June 2010


Inter-segment revenues — 7,932 722 8,654

Total revenue 78,369 15,156 2,374 95,899

Profit/(loss)before tax 3,306 (91) (187) 3,028

Total Assets 54,527 5,127 1,316 60,970

12 months to 31 December 2010


Inter-segment revenues — 16,563 1,286 17,849

Total revenue 155,217 30,082 4,801 190,100

Profit/(loss) before tax 6,693 311 (970) 6,034

Total Assets 59,815 5,776 1,761 67,352

Notes to the Unaudited Interim StatementFor the six months ended 30 June 2011


3. Additions and disposals of property, plant and equipment

Plant, Equipment Land Buildings and Computers Total

6 months to 30 June 2011 £’000 £’000 £’000 £’000

Carrying amount at 1 January 2011 643 4,318 7,105 12,066

Additions 245 1,686 583 2,514

Disposals (245) (805) — (1,050)

Depreciation — (229) (933) (1,162)

Carrying amount at 30 June 2011 643 4,970 6,755 12,368

6 months to 30 June 2010


Additions — 482 1,074 1,556

Depreciation — (204) (823) (1,027)

Carrying amount at 30 June 2010 248 4,227 6,016 10,491

Year to 31 December 2010


Additions 395 801 3,129 4,325

Disposals — (15) (62) (77)

Depreciation — (417) (1,727) (2,144)

Carrying amount at 31 December 2010 643 4,318 7,105 12,066

4. 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 2002the 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 £2.6 million. This disclosure is inrespect of the defined benefit section of the Fund only. The Company made contributions of £1,300,000 (2010: £1,300,000) to the defined benefitscheme during the six month period to 30 June 2011 and £2,600,000 in the year to 31 December 2010. The defined benefit scheme was closed for futureaccruals on 31 July 2006 with active members transferred to a new defined contribution section of the scheme.

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

A full actuarial valuation of the scheme was carried out as at 31 December 2010 and has been updated to 30 June 2011 by a qualified independentactuary.

30 June 2011 30 June 2010 31 Dec 2010% % %

The major assumptions used by the actuary were (in nominal terms):

Discount rate 5.70 5.60 5.60Rate of increase to pensions in payment 3.00 3.00 3.00RPI Inflation assumption 3.40 3.10 3.30CPI Inflation assumption 2.70 n/a 2.60

Assumed life expectancies on retirement at age 65 are: 30 June 2011 30 June 2010 31 Dec 2010

Current Current CurrentPensioners Pensioners Pensioners

Retiring today: Males 21.2 21.1 21.1

Females 23.8 23.7 23.7




4. Pension and other employee assets/obligations continued

Assumed life expectancies on retirement at age 65 are: 30 June 2011 30 June 2010 31 Dec 2010

Future Future FuturePensioners pensioners Pensioners

Retiring today: Males 20.9 20.8 20.8

Females 23.5 23.4 23.4

Retiring in 20 years time: Males 22.8 22.7 22.7

Females 25.4 25.3 25.3

The assumptions used in determining the overall expected return of the scheme have been set with reference to yields available on government bonds andappropriate risk margins. The pre and post retirement mortality assumptions use the AC00 (Ultimate) and S1PA tables respectively. The SAPS S1 series ofmortality tables were published by the Continuous Mortality Investigation Bureau in October 2008 and are based on the mortality of defined-benefitpension schemes. The “AC00” tables are based on the mortality experience of life assurance policyholders. The “S1PA” tables are based on the mortalityexperience of pension annuity policyholders.

30 June 2011 30 June 2010 31 December 2010

% £’000 % £’000 % £’000

Equities 8.7% 40,584 8.8% 31,881 8.5% 39,723

Bonds 5.0% 13,204 4.9% 13,261 4.9% 13,220

Property 8.7% 4,653 8.8% 4,473 8.5% 4,570

Other 4.0% 2,357 3.9% 2,802 3.9% 1,793

Total market value of assets 60,798 52,417 59,306Present value of defined obligations (funded plans) (73,444) (77,337) (73,366)

Present value of unfunded obligations (12,646) (24,920) (14,060)Unrecognised actuarial losses 23,104 34,021 23,649

Net asset in balance sheet 10,458 9,101 9,589

Actual return on assets in period 1,446 (1,085) 5,781

Reconciliation of opening and closing balances of the present value of the defined benefit obligations6 months 6 months 12 months

to 30 June to 30 June to 31 Dec2011 2010 2010£’000 £’000 £’000

Benefit obligation at beginning of period 73,366 73,195 73,195Interest cost 2,009 2,185 4,331Actuarial (gain) loss (677) 2,695 (2,145)Benefits paid (1,254) (738) (2,015)

Balance at end of period 73,444 77,337 73,366

Reconciliation of opening and closing balances of the fair value of plan assets6 months 6 months 12 months


Fair value of scheme assets at beginning of period 59,306 52,940 52,940Expected return on scheme assets 2,122 1,971 3,940Actuarial (loss)/gain (676) (3,056) 1,841Contributions by employers 1,300 1,300 2,600Benefits paid (1,254) (738) (2,015)

Asset at end of period 60,798 52,417 59,306

The amounts recognised in the income statement are:

6 months 6 months 12 monthsto 30 June to 30 June to 31 Dec

2011 2010 2010£’000 £’000 £’000

Current service cost — — — Interest on obligation 2,009 2,185 4,331 Expected return on assets (2,122) (1,971) (3,940) Actuarial loss recognised in period 544 634 1,270 Curtailments and settlements — — —

431 848 1,661



4. Pension and other employee assets/obligations continued6 months 6 months 12 months


Charged to:

Administration expenses 544 634 1,270Finance costs — 214 391

544 848 1,661

Credited to:Finance costs (113) — —

431 848 1,661

History of scheme assets, obligations and experience adjustments30 Jun 2011 31 Dec 2010 31 Dec 2009 31 Dec 2008 31 Dec 2007

£’000 £’000 £’000 £’000 £’000

Present value of defined benefit obligations (73,444) (73,366) (73,195) (60,131) (65,040)Fair value of scheme assets 60,798 59,306 52,940 43,668 54,733

Deficit in scheme (12,646) (14,060) (20,255) (16,463) (10,307)

Experience adjustments arising on scheme liabilities (677) (2,145) 11,285 (6,983) (8,042)Experience item as a % of scheme liabilities (1%) (3%) 15% (12%) (12%)Experience adjustments arising on scheme assets (676) 1,841 5,400 (16,019) (207)Experience item as a % of scheme assets (1%) 3% 10% (37%) 0%

5. Equity30 June 2011 30 June 2010 31 December 2010Shares £’000 Shares £’000 Shares £’000

AuthorisedOrdinary shares of 12.5p each 64,000,000 8,000 64,000,000 8,000 64,000,000 8,000

Issued and fully paidOrdinary shares of 12.5p each 43,197,220 5,400 43,197,220 5,400 43,197,220 5,400

Of the 20,802,780 shares authorised, but not issued, 4,262,861 are reserved for issue in respect of the share options.

Share optionsNumber Exercise Exercise

of shares price period

M A Wilmshurst Approved 25,751 £1.165 2009–16Unapproved 2,217,860 £1.11 2009–16

D J Loftus Approved 25,751 £1.165 2009–16Unapproved 1,096,055 £1.11 2009–16

S D G Thompson Approved 25,751 £1.165 2009–16Unapproved 871,693 £1.11 2009–16

4,262,861

All the above options were issued on 4 July 2006 and no additional share options have been issued since this date. In total, £24,000 of employeecompensation expense has been included in the consolidated statement of comprehensive income for the six month period to 30 June 2011 and£98,000 in the year to 31 December 2010. The corresponding credit is taken to shareholders’ funds. No liabilities were recognised due to share-based transactions.

Each Director has been granted two tranches of options. The first tranche is not subject to any vesting conditions and the second tranche is subjectto achievement of a Total Shareholder Return performance condition. Under both tranches, vested options can be exercised at any time between thethird and tenth anniversary of the date of the grant.

The following have been factored into the model:

Exercise prices of £1.11 and £1.165, expected volatility of 25%, dividend yield of 3.00%, equivalent risk-free rate of return being the rate of returnon zero-coupon Government bonds with a term equal to the expected life assumptions.

The Company’s assumptions regarding the volatility of its shares have been based on a review of market and competitors’ volatility.

The Group’s objectives when managing capital are:

• to safeguard the entity's ability to continue as a going concern, so that it can continue to provide returns for shareholders and benefits for other stakeholders, and

• to provide an adequate return to shareholders by pricing products and services commensurately with the level of risk.

The Group sets the amount of capital in proportion to risk. The Group manages the capital structure and makes adjustments to it in the light ofchanges in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Groupmay adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt.



6. Non recurring items6 months 6 months 12 months


Site closure costs (257) (470) (513)Centralisation costs (208) — —Redundancy costs (49) (135) (337)Profit on assets destroyed in fire — 628 845

(514) 23 (5)

The site closure costs of £257,000 in 2011 relate to a provision for the closure of the Bournemouth branch that was announced in June 2011. Theclosure costs of £470,000 in the 6 months to June 2010 related to the closure of the Kidderminster site and the costs of £513,000 in the 12 monthsto December 2010 have arisen due to a provision for the disposal of the Croydon property lease.

The centralisation costs of £208,000 relate to a provision for redundancy costs in relation to the centralisation of the Group’s finance andadministration staff in Bristol.

In 2009, the company suffered two fires at its sites in Manchester (August 2009) and Norwich (September 2009). The Group’s insurers acceptedliability. Both claims have now been fully settled, covering both the loss of assets and business interruption (lost profits). The Norwich site reopened inMay 2010 and a profit on disposal of assets of £167,000 was recognised in 2010 (6 months to June 2010 £143,000). The Manchester site was fullyoperational in July 2010 and a profit on disposal of assets of £678,000 was recognised in 2010 (6 months to June 2010 £485,000).

7. Finance income and finance costs6 months 6 months 12 months


Finance incomePension costs (note 4):- interest on obligation (2,009) — —- expected return on assets 2,122 — —

Interest receivable on bank balances 1 2 5

114 2 5

Finance costsPension costs (note 4):- interest on obligation — 2,185 4,331- expected return on assets — (1,971) (3,940)

— 214 391

8. Tax expense


2011 2010 2010£’000 £’000 £’000

Current tax:UK corporation tax 602 743 1,128Adjustments in respect of prior years — — (87)

602 743 1,041

Deferred tax:On share options 1 (6) (20)Movement relating to pension asset (IAS 19) 130 36 167Timing differences origination and reversal 39 58 362

170 88 509

Income tax expense 772 831 1,550



9. Earnings per share

Basic earnings per share

The basic earnings per share has been calculated using the net profit attributable to the shareholders of the Company of £2,206,000 for the sixmonth period (2010: £2,197,000) (12 months to 31 December 2010: £4,484,000).

The weighted average number of outstanding shares used for the basic earnings per share amounted to 43,197,220 (2010: 43,197,220) (12 monthsto 31 December 2010: 43,197,220).

Diluted earnings per share

The diluted earnings per share has been calculated using the net profit attributable to the shareholders of the Company of £2,206,000 (2010:£2,197,000) (12 months to 31 December 2010: £4,484,000).

The weighted average number of outstanding shares used for the diluted earnings per share amounted to 43,197,220 (2010: 43,197,220) (12months to 31 December 2010: 43,197,220) and assumes the exercise of all the share options detailed in note 5 since the date they were grantedand the average market price of £0.99. Due to the share options being anti-dilutive, the diluted earnings per share is the same as the basic earningsper share.

Underlying earnings per share

The underlying earnings per share has been calculated as follows:


2011 2010 2010£’000 £’000 £’000

Profit before tax (as stated) 2,978 3,028 6,034Non-recurring items 514 (23) 5

3,492 3,005 6,039Tax expense (as stated) (772) (831) (1,550)Tax effect on non-recurring items (103) 6 (1)

Profit after tax after non-recurring items 2,617 2,180 4,488

Underlying earnings per share 6.1p 5.0p 10.4p

10. Dividends

In June 2011, the Company paid a dividend of £1,512,000 to its equity shareholders. This comprised a final dividend in respect of 2010 of 3.5p pershare. The directors have declared an interim dividend of 1.9p per share (2010:1.8p), which will be paid on 4 November 2011 to shareholders on theregister at the close of business on 7 October 2011.


Company No.966807 incorporated in England and Wales

DirectorsMichael MarxChairman

Michael WilmshurstChief Executive

David Loftus Finance Director

Stephen ThompsonExecutive Director

Lady Barbara Thomas Judge Non-executive Director

Christopher Mills Non-executive Director

SecretaryMartin Hickman-Ashby

AuditorGrant Thornton UK LLPGrant Thornton House202 Silbury BoulevardCentral Milton Keynes MK9 1LW

BankersThe Royal Bank of Scotland plc280 BishopsgateLondon EC2M 4RB

HSBC Bank plc29 King StreetLeeds LS1 2HL

SolicitorsK&L GatesOne New ChangeLondon EC4M 9AF

Osborne Clarke2 Temple Back EastTemple QuayBristol BS1 6EG

Financial Adviser and CorporateStockbrokerArbuthnot Securities Ltd20 Ropemaker StreetLondon EC2Y 4GE

RegistrarsCapita RegistrarsNorthern HouseWoodsome ParkFenay BridgeHuddersfieldW. Yorkshire HD8 0GA

Registered Office17A Thorney Leys ParkWitneyOxfordshire OX28 4GE

Website Addresswww.narsplc.com

Directors and Advisers

Nationwide Accident Repair Services plc17 Thorney Leys ParkWitneyOxfordshire OX28 4GE

www.narsplc.com

interim report 2011 -...

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