Interim results for the UK’s largest accident repair network show pre-tax profits have slumped to £141,000 from the £7.6m achieved in the same six month period last year.
Net profit totals £77,000, meaning earnings per share have also fallen to 0.2p from 15.9p previously. This prompted an immediate 11p drop in the company’s share price, to 153.5p, as the results were made public.
Turnover has increased by 18% to £78.7m from £66.6m, and gross profit totals £36.9m, an increase over the £31.3m achieved previously. However, this has been impacted by a significant increase in distribution costs and administrative expenses.
In addition, the business incurred costs of £683,000 relating to the flotation on AIM and £2,859,000 of non-recurring bonuses. Of this, £2,407,000 was paid to Troy Solutions, a training and development business where Nationwide’s chief executive Michael Wilmshurst is a director.
David Loftus, Nationwide’s finance director, also received a £400,000 bonus.
Chairman Michael Marx bullishly describes the business as making “encouraging progress” and says he is confident that full-year results will be in line with expectations. “We believe that the group’s national coverage, economies of scale and customer service, give us a competitive advantage when competing for business,” he says.
“We continue to pursue our twin track approach of improving our existing businesses while exploring opportunities for growth through acquisition.”
Nationwide’s work with Zurich Insurance and Royal and Sun Alliance has seen “substantial increases”, allowing it to reduce its exposure to lower margin business elsewhere. It also carries out repairs for Norwich Union and Equity Red Star.
Marx and Wilmshurst intend to position Nationwide as the crash repairer of choice for insurers, by growing the business organically and through acquisitions.
“The potential for growth by acquisition is good since the market is highly fragmented, with nearly half of all bodyshops owned by small businesses, and it is gradually consolidating as smaller operators come under pressure,” says Marx.
Nationwide has 69 crash repair centres, including 10 it has integrated since buying Gemini Accident Repair Centres last year. Marx says integration is now complete.
This year, Nationwide’s apprenticeship programme has attracted more than 50 young people into the group, whose total workforce now exceeds 2,100 employees.