Nationwide Accident Repair Services

Against a flat market, leading crash repair firm Nationwide (NARS) has reported a solid set of results for the year to 31 December. 

The AIM listed counter operates a national network of 71 accident repair centres and last year achieved a 19% hike in pre-tax profits to £6m on sales up marginally to £172.3m. Margins were up 1% to 47%, a return secured by tight control of costs. The net cash balance dipped to £7.5m (2009: £8.3m) but investors will still be rewarded with a slightly increased dividend to 5.3p a share.

A three-year growth plan is underway to develop its activities in the core insurance market, as well as pushing the business into the self-funded fleet market. Nationwide is developing a mobile repair business that will allow it to undertake light repairs off site, at a location that suits its clients. The fleet is being expanded and now has 68 vans.

The insurance sector spends £3.7bn a year on repairs in the UK, so with a 5% share Nationwide has plenty of scope to expand. Last year it won a £8m contract with Groupama to undertake all their vehicle repairs, it has also recently extended a big deal with RSA. The RBS contract is also up for grabs.

Acquisitions are off the agenda in the short term as Nationwide looks to maximise the potential from its existing repair sites. In an interview with Growth Company Investor chief executive Michael Wilmshurst said 'these results are at the top end of expectations and we believe there is still plenty of scope in what remains an enormous market'.

House broker Arbuthnot forecasts 2011 pre-tax profits of £7m and EPS of 11.7p. At 99p, the shares trade on just eight times earnings and sport a 5.4% yield. Given the strength of its balance sheet and the opportunities for expansion we rate the shares as a buy/hold.