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Nationwide Accident Repair Services (NARS:AIM) – Finals PTP: £6.8m (£2.4m) Divi: 3p (2.6p)

The general decline in motor insurance claims suggests support service groups to the financial industry need to rework their business models. The social campaigns to promote road safety have resulted in fewer large-scale accidents. Fortunately for Nationwide (but not for the drivers or insurers), there continue to be small-scale crashes, thus ensuring a steady stream of vehicles that need repairing.

Nationwide’s principal goal is to become more efficient. The amount of work commissioned by insurance companies remains level, reflected in flat annual revenue and margins. It’s the push on ‘sweating assets’ and ancillary revenues that accounts for an improved bottom line. In plain English, Nationwide is simply keeping its workshops open for longer hours and recruiting more mechanics – more jobs are being turned around from existing sites.

As flagged up in its half-year results, it declined to renew a £20 million-plus contract with Royal Bank of Scotland (RBS), claiming the margins to be uneconomical. It has more than compensated for the loss of earnings with contract wins, including work for Norwich Union, AXA and Zenith.

Eager to test new revenue streams, Nationwide has dipped its toe in the retail sector. It generated £1.8 million sales from a pilot on repair work that insurers refuse to cover in a customer’s policy. It is expanding a scheme to repair scratches for fleet owners about to return leased vehicles. Chief executive Michael Wilmshurst said the company would also target refurbishment work on end-of-life rental and leased cars, prior to them being resold. The shares were flat at 132.5p on the results.

Shares says: A solid performance with management proving there is still growth in the business.

by: Dan Coatsworth