MPAY.L Regulatory News (MPAY)

21 Mar 2007 07:01

Autoclenz Holdings PLC21 March 2007 Issued by Citigate Dewe Rogerson Limited, BirminghamDate: Wednesday 21 March 2007 Embargoed: 7.00am Autoclenz Holdings PlcThe UK's leading outsourced car valeting and vehicle preparation provider Preliminary Resultsfor the period ended 31 December 2006 The preliminary results are for the period from incorporation (1 September 2005)to 31 December 2006. Where appropriate the figure for the calendar year has beenincluded to aid understanding 1 September 2005 to 1 January 2006 to 31 December 2006 31 December 2006* (Unaudited)Earnings Per Share - Basic 5.32p 5.53p - Diluted 5.76p 5.96p - Basic before goodwill 14.47p 14.19p amortisation and share based payments Group sales of £28 million - 1 January 2006 to 31 December 2006 (unaudited) £26.4 million - an increase of 7.2% year-on-year - Investment in AC SMART brand has brought an increase of 53.8% in sales calendar year on year Operating profit pre goodwill amortisation and share based payments - an increase of 10.8% year-on-year* - 1 September 2005 to 31 December 2006 £2.6 million - 1 January 2006 to 31 December 2006 (Unaudited) £2.5 million - 1 January 2005 to 31 December 2005* (Unaudited) £2.2 million Sales in the core Autoclenz valeting business grows by 0.8%, whilst new carregistrations declined by 3.9% (Source: Automotive Management magazine) £3.7 million net cash inflow from operating activities Proposed Final Dividend of 3.0 pence per share, total dividend 4.5 pence per share \* These figures are for Autoclenz Limited and are for comparison only. Theprimary statements all cover the period from incorporation of Autoclenz HoldingsPlc on 1 September 2005 to 31 December 2006. Autoclenz Limited is the onlytrading subsidiary of Autoclenz Holdings Plc. The comparisons are between thecalendar year 2005 for Autoclenz Limited and for the calendar year 2006(unaudited) for the new Autoclenz group to show the progression over the year. "The Group remains focused on tight cost control, and on improving margins andoperational efficiencies which will maintain our leading position, futurecompetitiveness and growth. "We have an increasing number of opportunities to tender for additional businesswith new and existing customers. This, together with the strength and mix of ourbusiness brands, provides us with a solid foundation on which to developfurther." John Bell, Chairman FULL STATEMENT ATTACHEDEnquiries:Grahame Rummery, Chief ExecutiveTrevor Clingo, Group Finance Director Katie Dale, Senior Account Manager Julian BluntAutoclenz Holdings Plc Citigate Dewe Rogerson KBC Peel HuntTelephone: 08707 510 410 Telephone: 0121 455 8370 Telephone: 020 7418 8900www.autoclenz.co.uk Mobile: 07770 788 624 (KD) -2- IntroductionIn its first period as an independently quoted business on the AlternativeInvestment Market ("AIM") of the London Stock Exchange, the Group has achieved acreditable overall performance, despite trading in a highly competitive marketplace. The majority of the brands within the Group's business have performed well, inparticular AC SMART, which increased revenues in the calendar year against thelast calendar year by 54%, Pinnacle by 16% and Ready to Rent by 16%. Operatingprofits for these businesses were also up compared to the previous year. Within our core valeting business, Autoclenz, as we have previously indicated inboth our half-year review and pre-close trading update in January 2007, therewere a number of factors outside our immediate control which had an adverseimpact on performance. Despite these factors, revenues and operating profits areup in the period as compared to the 2005 trading results of Autoclenz Limited. In the final 6 months of the period being reported upon, we were prudent inreducing our cost base by £0.3m (5.3%). This adjustment in the operational baseshould not inhibit our business in the coming financial year and should, webelieve, support our anticipated growth through 2007. Financial HighlightsIn the period ended 31 December 2006, Group revenues were £28 million andOperating Profit was £1.6 million after goodwill amortisation and share basedperformance awards. The overall gross margin for the calendar year reduced 1.2 percentage points to27.5% from 28.7% in the prior calendar year, the primary factors being: • The reduction in volumes of new car registrations particularly in Q4 2006 • The on going price pressures reflected across the motor trade • Start up investment in two major pieces of new business won in 2006 • Lower than expected growth at REACT Furthermore, we suffered an unscheduled and non-budgeted rebate payment to oneof the core valeting division's principal customers of £75,000. Thisrenegotiation of contract terms was a contributor to the overall shortfall inthe Group results against market forecasts, but should position the Group wellfor the future. Although once again, overheads remained under strict control, there were anumber of costs in 2006 which were not in 2005 including £0.4 million interestcosts in relation to new banking and finance facilities together with theon-going regulatory and statutory costs related to our independent 'PLC' status. During the period we have invested some £100,000 which principally relates to anew computer system, of which phase 1 has been implemented on time and in linewith our plans and expectations. Pre-tax profit was £1.2 million and after adding back goodwill amortisation andshare based payments, totalled £2.1 million. Fully diluted earnings per share was 5.76 pence. The earnings per share for the year ended 31 December 2006 before goodwillamortisation and share based payments was 14.19 pence. continued... -3- DividendIn line with our previously stated dividend policy the Directors arerecommending a final dividend payment of 3.0 pence per share. This, togetherwith an interim dividend payment of 1.5 pence per share, makes a total dividendpayment for the year of 4.5 pence per share. Subject to approval at the Annual General Meeting on 23 May 2007 the finaldividend of 3.0 pence will be paid on 25 May 2007 to shareholders on theRegister as at 27 April 2007. Review2006 has seen good performances and the strengthening of a number of brandswithin the business. During the period being reported, we have undertaken a review of the Group toensure that we are fully compliant with operational best practice. Also duringthis period both the REACT and AC SMART brands gained ISO 9001 accreditation. The operational teams have continued to focus on building their brands whileservicing our existing strong partnerships and seeking new businessopportunities. AC SMARTParticular merit must be given to our cosmetic repair division AC SMART, whoseoperator base has now increased to in excess of 40 operators, as a result ofhaving secured significant new accounts with several prestige marques. Theseinclude Mercedes, BMW and Land Rover together with one of the main Used CarSupermarkets, which has in excess of 10 sites nationally. Since the period end, AC SMART has further extended its service offering tocustomers by introducing a pioneering new innovative paint, dent and wheelrepair service, with the ability for the customer to sell SMART repairs via itsservice department to add an additional profit stream for us and our customers. PinnaclePinnacle, our prestige vehicle preparation division, has grown consistentlythroughout the financial period, expanding further its range of services intothe major dealers within the prestige marque arena. We were delighted to secure a significant piece of new business in November 2006with Mercedes Benz World, the prestigious new site which was opened atBrooklands in Surrey. We have extended the range of our service offering toencompass a personal 'concierge service', as well as a 'collection and deliveryservice' for customer vehicles. To date, we have a total of 23 operators onsite. Pinnacle has also assisted in the growth of AC SMART, adding and securing newbusiness within the Pinnacle Division for AC SMART. This clearly illustrates thebenefit and importance of brands "cross-selling" within the Group. AutoclenzAs we have already indicated, our core valeting division, Autoclenz, hasexperienced a challenging year. Although the sector remains highly competitive, we will continue to focus onimproving our performance, and adding value to our service offering whilst alsomonitoring the cost base to ensure that we remain both efficient and profitablein this challenging trading environment. Post the period end, we are pleased to report that for the third time, and as weannounced in February, Autoclenz has been recognised for its high levels ofcustomer service to the automotive industry, receiving a prestigious industryaward from the Institute of Transport Management. The 'UK Contract ValetingCompany 2007' was accredited to Autoclenz following an intensive research andselection process of the Group's overall service offering to customers. continued... -4- Autoclenz was selected to receive the award primarily in recognition of the highlevels of efficiency and service it continues to deliver to its customer baseacross the automotive industry. All involved should be congratulated. AC Ready to RentAC Ready to Rent has performed strongly in the period, having secured severalnew major accounts during this time. In June we were delighted to win an additional contract with an existingcustomer to provide the management of the car rental fleet at Stansted Airport.This is an important extension to the range of services that the Group hashistorically provided to this customer as we now provide essential back officecustomer support at this location, including, 'Meet & Greet Service' and a'Collection & Delivery Service' to and from a customer's premises. By increasingthe range of services in this way, we anticipate that there will be increasedopportunities for profitable growth in the future. REACTREACT has experienced a difficult year, with challenging and mixed tradingconditions. As we have already announced to shareholders earlier in the year, due to costconstraints within the public sector, we lost two Police contracts in January2006. Despite this setback, we have successfully recovered the shortfall from newbusiness gained within new markets including the rail sector, and this hasstarted to be reflected in revenues which by the end of the year were 1% upyear-on-year. More importantly, as we move forward, we will continue to exploit variousopportunities in both new and existing sectors that will allow us to takeadvantage of the key skills we have within this specialist niche business. PeopleOn behalf of the Board we would like to take this opportunity to thank all ourstaff who have worked so hard during the period. The brands within the Group are being well managed and driven by a successfulteam of people at the operational level, all of whom are committed to eachbrand's success, and supported by a highly focused Sales Team who are targetedon winning new business for all our brands. ProspectsThe Group remains focused on tight cost control, and on improving margins andoperational efficiencies which will maintain our leading position, futurecompetitiveness and growth. Trading in the current financial year continues to be challenging and subject toa high degree of price competitiveness. However, we have an increasing number of opportunities to tender for additionalbusiness with new and existing customers. This, together with the strength andmix of our business brands, provides us with a solid foundation on which todevelop further. -5- AUTOCLENZ HOLDINGS PLC CONSOLIDATED PROFIT AND LOSS ACCOUNT Period ended 31 December 2006 Notes £000 Turnover 1 28,015Cost of sales (20,322) ------------Gross profit 7,693Distribution costs (561)Administration expenses (5,522) ------------ Operating profit 1,610Interest payable 2 (397) ------------Profit on ordinary activities before taxation 1,213Tax on profit on ordinary activities 6 (660) ------------ Profit on ordinary activities after taxation and for the financial period 25 553 ============ Basic Earnings per share 5 5.32pDiluted Earnings per Share 5 5.76p All activities are derived from continuing operations and there are no other gains or losses to report. -6- AUTOCLENZ HOLDINGS PLC CONSOLIDATED BALANCE SHEET AT 31 DECEMBER 2006 As at 31 December 2006 Notes £000 Fixed AssetsIntangible assets - goodwill 9 14,791Tangible Assets 10 721 ------------ 15,512 ------------Current AssetsStocks 11 2Debtors• due within one year 12 4,003• due after one year 12 205 Cash at bank 191 ------------ 4,401 Creditors : amounts falling due within one year 13 (3,845) ------------Net Current assets 556 ------------Total assets less current liabilities 16,068Creditors: amounts falling due after more than one year 14 (3,440) ------------Net assets 12,628 ------------Capital and ReservesCalled up Share Capital 15 1,040Share premium account 16 11,383Share Option Reserve 16 120Profit and loss 16 85 ------------Shareholders' funds 12,628 ------------ -7- AUTOCLENZ HOLDINGS PLC COMPANY BALANCE SHEET AT 31 DECEMBER 2006 Notes 2006 £'000Fixed AssetsInvestments 8 18,000 ------------ 18,000 ------------Current AssetsDebtors 12 48 ------------ 48Creditors: amounts falling due within one year 13 (2,053) ------------Net Current liabilities (2,005) ------------Total assets less current liabilities 15,995Creditors: amounts falling due after more than one year 14 (3,440) ------------Net assets 12,555 ------------Capital and ReservesCalled up Share Capital 15 1,040Share premium account 16 11,383Share Option Reserve 16 120Profit and loss 22 12 ------------Shareholders' funds 12,555 ------------ -8- AUTOCLENZ HOLDINGS PLC CONSOLIDATED CASH FLOW STATEMENT Period ended 31 December 2006 Notes £000 £000 Net cash inflow from operating activities 20 3,666 Returns on investments and servicing of finance Interest paid (397) Taxation (637) Capital expenditure and financial investment Purchase of tangible fixed assets (716) Sale of tangible fixed assets 76 ---------- (640) AcquisitionsAcquisition of subsidiary 21 (18,000) Overdraft acquired with subsidiary 21 (868) ---------- (18,868) Equity Dividends Paid (156) ------------Net cash outflow before financing (17,032) Financing Issue of ordinary share capital net of expenses 12,423 Term Loan net of expenses 4,800 Proceed of short term loan 400 Repayment of term loan (400) Net cash inflow from financing 17,223 ------------Increase in cash 191 ============ -9- AUTOCLENZ HOLDINGS PLC ACCOUNTING POLICIES 31 DECEMBER 2006 The principal accounting policies are summarised below. They have been appliedconsistently throughout the period. Basis of accountingThe financial statements have been prepared under the historical cost conventionand comply with applicable United Kingdom accounting standards. TurnoverTurnover represents the invoiced value of goods sold, and services provided, tothird parties, net of value added tax and trade discounts. Fixed assets Tangible fixed assets are stated at cost, net of depreciation and any provisionfor impairment. The cost of tangible fixed assets is depreciated using astraight-line basis over their expected useful lives as follows: Plant and motor vehicles between 2 and 5 yearsProperty improvements 7 years StocksStocks are valued at the lower of cost and net realisable value. Net realisablevalue is based on estimated selling price, less further costs expected to beincurred to completion and disposal. Provision is made for obsolete, slow-movingor defective items where appropriate. TaxationUK Corporation tax is provided at amounts expected to be paid using the taxrates and laws that have been enacted or substantially enacted by the balancesheet date. Deferred tax is recognised in respect of all timing differences that haveoriginated but not reversed at the balance sheet date where transactions orevents that result in an obligation to pay more tax in the future or a right topay less tax in the future have occurred at the balance sheet date. Timingdifferences are differences between the company's taxable profits and itsresults as stated in the financial statements that arise from the inclusion ofgains and losses in tax assessments in periods different from those in whichthey are recognised in the financial statements. A net deferred tax asset is regarded as recoverable and therefore recognisedonly when, on the basis of all available evidence, it can be regarded as morelikely than not that there will be suitable taxable profits from which thefuture reversal of the underlying timing differences can be deducted. Deferred tax is measured at the average tax rates that are expected to apply inthe periods in which the timing differences are expected to reverse, based onthe tax rates and laws that have been enacted or substantively enacted by thebalance sheet date. Deferred tax is measured on a non-discounted basis. ConsolidationThe accounts consolidate the accounts of the company and Autoclenz Ltd, the onlysubsidiary. GoodwillConsolidated goodwill, being the excess consideration over the fair value of theassets acquired on the purchase of Autoclenz Ltd is capitalised and charged toprofit over 20 years on a straight line basis over its useful economic life. continued... -10- Pension ContributionsThe company launched a Group personal pension plan with the assistance of MercerHuman Resource Consulting (EB) Ltd, in April 2006. The pension is offered to allemployees after 3 months service. The company makes contributions at varyinglevels from 4% to 10%, depending on the level of contribution made by theemployee. Amounts charged to the profit and loss account in respect of pensioncosts is the contribution payable in the year. Differences between contributionspayable and paid in the year are shown as either accruals or prepayments on thebalance sheet. Finance CostsFinance costs of debt are recognised in the profit and loss account over theterm of such instruments at a constant rate on the carrying amount. Period CoveredAll notes below detail costs and statistics relating to the period 7 December2005 to 31 December 2006. Derivative TransactionsThe group enters derivative transactions to manage the interest rate riskarising from its operations and sources of finance. Further disclosures aroundthe groups policies for using derivatives and the detail of those used duringthe period are given in the Finance Directors report and note 23. -11- AUTOCLENZ HOLDINGS PLC NOTES TO THE FINANCIAL STATEMENTS 1 Turnover The turnover is all derived from the company's principal activities; the following analysis shows the turnover attributable to the various products/services offered by the company. 2006 £'000 Autoclenz 24,347 AC Smart 1,956 React 1,712 -------- 28,015 ======== All turnover is derived within the United Kingdom. 2 Finance Charges (net) 2006 £'000 Interest payable on bank loans and overdrafts (397) ======== 3 Profit on ordinary activities before taxation Profit on ordinary activities before taxation is stated after charging/(crediting): 2006 £'000 Depreciation of owned tangible fixed assets 581 Amortisation of intangible fixed assets 832 Amortisation of finance costs 40 Fees payable to the company's auditors for the audit of the company and group accounts 13 The audit of the company's subsidiary pursuant to legislation 20 Recruitment and remuneration services 4 Other Services 17 Profit on disposal of fixed assets (54) ======== continued... -12- 4 Staff costs 2006 Group and company Number The average monthly number of employees including executive directors was: Administration 38 Operational management 165 ---------- 203 ========== The aggregate remuneration of all employees comprised: 2006 £'000 Wages and salaries 3,351 Social security costs 529 Other pension costs 107 ---------- 3,987 ========== Company Directors' remuneration 2006 £'000 The remuneration of the directors was as follows: Directors' emoluments 326 Company Contribution to Money Purchase Scheme (included in above) 20 ========== Number of directors members of money purchase pension scheme 2 ========== Highest paid director's emoluments 145 ========== Company Contribution to Money Purchase Scheme for highest paid director (included in above) 12 ========== 5 Earnings per share Consolidated Basic shares Diluted shares In Issue from December 7 10,400,020 10,400,020 On option 660,038 Sub total 10,400,020 11,060,058 Earnings (£000s) 553 637 Earnings per share 5.32p 5.76p continued... -13- 6 Tax on profit on ordinary activities 2006 £'000 The tax charge comprises: UK corporation tax at current rates 633 Adjustment for prior years (15) ------------ Current tax 618 Deferred tax 42 ------------ UK corporation tax at current rates 660 ============ The standard rate of tax for the period, based on the UK standard rate is 30%. The actual tax charge for the current and previous period differs from the standard rate for the reasons set out below in the following reconciliation: 2006 £'000 Profit on ordinary activities before taxation 1,213 Tax at 30% (364) Expenditure not deductible for tax purposes (273) Depreciation in excess of capital allowances 4 Adjustment in respect of prior period 15 ------------ Current year tax (618) ============ 7 Dividends paid and proposed Dividends £'000 - interim of 1.5p per ordinary share 156 - final of 3.0p per ordinary share 312 ------------ 468 ============ 8 Investments Company 2006 £'000 Shares in group undertaking 18,000 This investment represents 100% of the ordinary shares in Autoclenz Limited, a company incorporated in England & Wales. The principal activity of Autoclenz Limited is the same as that of the company. continued... -14- 9 Intangible assets: goodwill £'000 Cost at 7 December 2005 15,623 ------------ At 31 December 2006 15,623 ============ Amortisation charge in period 832 ------------ At 31 December 2006 832 ============ Net book value 31 December 2006 14,791 ============ 10 Tangible Fixed Assets Plant, motor vehicles and property improvements Group £000 Cost 2,251 Additions 716 Disposals (480) ------------ At 31 December 2006 2,487 ------------ Depreciation 1,643 Charge for the year 581 Disposals (458) ------------ At 31 December 2006 1,766 ------------ Net book value At 31 December 2006 721 ============ 11 Stocks 2006 £'000 Group Consumables 2 There is no material difference between the balance sheet value of stocks and their replacement cost. continued... -15- 12 Debtors Consolidated Company 2006 2006 Amounts falling due within one year: £000 £000 Trade debtors 3,787 Other debtors 2 4 Prepayments 214 6 ------------------------ 4,003 10 ------------------------ Amounts falling due after more than one year: Deferred Taxation 167 - Called up share capital not paid 38 38 ------------------------ 205 38 ------------------------ Total debtors 4,208 48 ------------------------ 13 Creditors - amounts falling due within one year Consolidated Company 2006 2006 £000 £000 Short term loan 400 - Bank loan and overdraft 1,000 1,312 Trade creditors 697 - Corporation tax 292 - Other taxation and social security 765 - Amounts owed to subsidiary - 350 Other creditors 21 - Accruals and deferred income 308 29 Dividends Payable 312 312 Redeemable preference shares 50 50 ------------------------ 3,845 2,053 ----------------------- continued... -16- Preference Shares 50,000 redeemable preference shares of £1 each. The main rights are:- The right to receive a fixed preferential dividend in priority to any rights ofholders of any other class of shares in the capital of the company at the baserate of the Bank of England from time to time on the paid up amount of theRedeemable Preference Shares. The Preference Dividend to accrue from day to day from the date of issue andshall be paid on the date of redemption. These shares may be redeemed at their nominal amount plus the accrued but unpaiddividend on the earlier of (a) the publication of the companies audited accountsor (b) 18 months from the date of issue of the Redeemable Preference Shares. On a return of assets on liquidation or capital reduction or otherwise, theassets of the Company remaining after the payment of its liabilities shall bedistributed to the holders of the Ordinary shares and Redeemable preferenceshares (pari passu as if the same constituted one class of share). 14 Creditors - amounts falling due after more than one year Consolidated Company 2006 2006 £000 £000 Bank loan 3,440 3,440 ------------ ------------ More than one year but not more than two years 1,000 1,000 More than two years but not more than five years 2,600 2,600 Finance costs incurred obtaining the bank loan (200) (200) Finance costs amortised 40 40 ------------ ------------ 3,440 3,440 ------------ ------------ The bank loan is secured by a charge on all the assets of the Group. Interest is charged at 1.75% over LIBOR. 15 Called-up share capital Authorised £'000 15,000,000 ordinary shares of 10p each 1,500 50,000 redeemable preference shares of £1 each 50 Called up, allotted and fully paid 10,400,020 ordinary shares of 10p each 1,040 Called up, allotted and 25% paid up 12,500 redeemable preference shares of £1 each 13 continued... -17- 16 Reserves for group Share Option Share Premium Profit and Loss Fair value on issue of share options 120 Premium on shares issued during the period 11,960 Issue Expenses (577) Profit for the period 553 Dividends (468) -------------------------------------------- As at 31 Dec 2006 120 11,383 85 -------------------------------------------- 17 Deferred tax 2006 £'000 Group balance on acquisition of subsidiary 209 Debit for the period (42) ------------ Debtor balance at 31 December 2006 167 ============ 18 Related party transactions There were no related party transactions during the year (other than between Autoclenz Holdings Plc and Autoclenz Limited). The group has taken advantage of the exemption available in FRS 8 not to disclose details of these transactions. 19 Pension commitments The company operates a Group personal pension plan which is offered to all employees after 3 months service. The company makes contributions at varying levels from 4% to 10%, depending on the level of contribution made by the employee. Contributions to the scheme are charged to the profit and loss account as and when made. The pension charge for the period was £107,000, (company £20,180). The accrual in the accounts at the period end was £15,000. 20 Reconciliation of operating profit to net cash inflow from operating activities 2006 £000 Operating profit 1,610 Depreciation and amortisation charge 1,453 Profit on sale of tangible fixed assets (54) Decrease in stocks 3 Decrease in debtors 545 Decrease in creditors (11) Increase in share option reserve 120 ---------- Net cash inflow from operating activities 3,666 ---------- continued... -18- 21 Acquisition of Autoclenz Ltd On 7 December 2005 the company acquired the whole issued share capital of Autoclenz Ltd for a total consideration of £18m. The consideration was satisfied by a cash payment of the total sum. The £18m was raised through obtaining a £5m 5 year term loan from HSBC and £13m from a placing of 10.4m shares at £1.25. £'000 Net Assets acquired (book and fair value) Tangible Fixed Assets 608 Stocks 5 Debtors 4,794 Creditors (2,162) Bank Overdraft (868) ---------- 2,377 Goodwill 15,623 Acquisition Price 18,000 ========== 22 Exemption of Company Only Profit and Loss Account Under section 230 of the Companies Act 1985, Autoclenz Holdings Plc have taken advantage of the exemption to not include the company only profit and loss account. The result for the company for the period was £12,000. 23 Derivatives not included at fair value The company has entered into one derivative transaction during the year. The derivative represented a participating swap transaction that was decomposed into one interest rate swap and one interest rate cap. Set out below is a comparison of book values and fair values of the group's derivative financial instrument held to manage interest rate risk at 31 December 2006. Book Value Fair Value £'000 £'000 Interest Rate Swap - 34 The Finance Director's Report details the financial risk management objectives and policies. continued... -19- 24 Share Option Schemes The group operates a share option plan that was established on flotation of the company to AIM on 7 December 2005. In any 10 year period no more that 10% of Autoclenz's issued share capital can be under option. During the reporting period, there have been two separate share option grants. Both grants can only be settled by equity. The first grant of share options took place on 7 December 2005, where 616,000 shares were granted on condition that the AIM float took place. These were spread across 6 directors and senior managers. 479,760 of the options were granted as Enterprise Management Incentives (EMI). The remainder of 136,240 shares were unapproved share options under section 421 Income Tax (Earnings and Pensions) Act 2003. Both EMI and the unapproved options were granted at the float price of £1.25. The performance condition was the admission to Aim. The option may not be exercised after the tenth anniversary of grant. The second award during the period under review was made on 2 November 2006. In total 286,250 share options were granted and spread across 6 directors and senior managers. For the options to fully vest the fully diluted earnings per share (EPS) for the accounting period ending 31 December 2009 must be no less than 22.2p per share. EPS will be based on profit on ordinary activities after taxation (and after exceptional items) but before goodwill amortisation and charges for share based payments. There is a declining scale for the number of shares that shall vest and be exercisable. However, if less than 70% of the EPS target is achieved then no shares will vest. The options have been granted at the nominal share value of 10p each. The table below presents the awards outstanding and the charge to the profit and loss account. --------------------------------------------------------------------------------------- Date of grant Number of shares Expiry Date of Award Option Price Charge to P&L --------------------------------------------------------------------------------------- 07-Dec-05 616,000 06-Dec-15 £1.25 £105,500 02-Nov-06 286,250 01-Nov-16 £0.10 £14,000 --------------------------------------------------------------------------------------- Being the first period of trading for Autoclenz Holdings Plc, there were no share options outstanding at the beginning of the period; no shares have been forfeited or exercised during the period under review; and no options have expired during the period. The table above details the 2 grants during the period, all options granted remain outstanding. To calculate the fair value of the options, the Black Scholes method was used. Share volatility was assessed on the limited history available for the share trading and was calculated as 18.06%. Maturity was assumed to be the earliest allowable at 3 years. Dividend Yield was estimated at 4% and Interest rate was 5%. The Fair Value of the grant at flotation totalled £105,500. The Fair Value of the second grant totalled £260,000. continued... -20- 25 Reconciliation of movement in shareholders funds 2006 £000 Profit for period 553 Dividends (468) -------------- Net addition to shareholders funds 85 Opening shareholders funds - New shares issued 1,040 Share premium account 11,383 Share Option Reserve 120 -------------- Closing shareholders funds 12,628 ============== 26 Reconciliation of net cash flow to movement in net debt 2006 £000 Increase in cash in the period 191 Cash (outflow) from movements in debt (5,000) -------------- Change in net debt resulting from cashflows (4,809) Net debt at beginning of period - -------------- Net debt at end of period (4,809) ============== 27 Analysis of changes in net debt At start of Cash At 31 December period flow 2006 £000 £000 £000 Cash at bank - 191 191 Debt due within one year - (1,400) (1,400) Debt due after one year - (3,600) (3,600) ------------------------------------------ Net debt - (4,809) (4,809) ========================================== 28 The financial information set out above does not constitute the company's statutory accounts for the period ended 31 December 2006, but is derived from those accounts. Statutory accounts for the period will be delivered to the Registrar of Companies following the company's annual general meeting. The auditors have reported on those accounts; their report was unqualified and did not contain statements under s237(2) or (3) Companies Act 1985. This information is provided by RNS The company news service from the London Stock Exchange