19 Mar 2009 07:00
19th March 2009
AUTOCLENZ HOLDINGS PLC
(AIM:ACZ)
Preliminary Announcement of results for the year to 31 December 2008
Autoclenz Holdings Plc, the UK's leading provider of outsourced Vehicle Valeting and Specialist Cleaning Services, announces its preliminary results for the year to 31 December 2008.
Key Points: Financial
Sales improved 3.5% to £27.97 million (2007: £27.01 million)
Operating profit, adjusted for amortisation of intangibles and share option related charges, was £1.20 million (2007: £1.86 million), slightly ahead of August 2008 stock market forecasts
Earnings per share, adjusted for amortisation of intangibles, share option related charges and deferred tax adjustments relating to IAS 12 were 5.51p (2007: 9.78p)
Strong cash flow and debt reduction- net year end debt reduced to £2.7m (2007: £3.8million)
Key Points: Operation
Successfully reducing fixed costs to combat recessionary margin and volume pressure
MOVEMENTS by Autoclenz now integrated into Automotive Services and profitability increasing
New DEALERCARE package developed to enhance cross selling to all Automotive customers
REACT Specialist Cleaning Operation increased sales and focused to expand in broader markets
New Chairman, James Leek commented:
"I have been impressed by the inherent quality of Autoclenz and its services. Although operating in currently depressed markets it is a sound business with genuine potential to improve. The management team is committed to ensuring that the many operational and financial improvements introduced in recent months counter the downward pressure on sales and margins."
| Enquires: | |
| James Leek, Chairman | 07966 528295 |
| Grahame Rummery, Chief Executive | 01283 550033 |
| Trevor Clingo, Group Finance Director | |
| Autoclenz Holdings Plc | |
| Nick Cowles | |
| Zeus Capital Ltd | 0161 831 1512 |
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AUTOCLENZ HOLDINGS Plc
Preliminary Results
for the year ended 31 December 2008
STATEMENT BY THE CHAIRMAN, JAMES LEEK
Results
It has been a challenging year with the effects of the recession increasingly impacting our revenue from the automotive sector particularly during the last quarter. Nonetheless, overall sales rose by 3.5% from £27m to £27.9m, reflecting a full year's contribution of our new Movements business, offset by the loss of some of our auction business.
Our adjusted operating profit (before the amortisation of intangibles and share option related charges) was £1.20m (2007 £1.86m) and interest charges were similar to 2007 at £0.3m, giving an adjusted profit before tax of £0.9m (2007: £1.55m) and adjusted earnings per share of 5.51p (2007:9.78p). I am pleased to report that despite the increasingly difficult market conditions, these results are slightly ahead of stockbrokers forecasts issued after our trading update in August 2008.
We believe that the reporting of adjusted operating profits as defined above gives shareholders a helpful indication of movements in our real earnings level; a reconciliation of these figures to those in the Consolidated Income Statement is given in the accompanying Finance Review.
Operating Review
We now manage and operate our activities in two distinct sectors
Automotive Services (incorporating AUTOCLENZ Valeting / PINNACLE, AC SMART, READY TO RENT and MOVEMENTS)
Specialist Cleaning Services (incorporating the rapid response decontamination and specialist deep cleaning services of REACT)
The four different products of Automotive Services are increasingly being offered across our full range of automotive customers, with an integrated and flat management structure; we therefore now report them as one business sector, whilst highlighting for shareholders significant changes in mix or volume that have taken place in the year.
continued…
-3-
Automotive services:
Sales increased to £26.4m (2007: £25.5m). The first full year of operating our MOVEMENTS business (collection and delivery principally for the rental market) added £3.5m to group sales, but this was offset by the loss of some £2m from our major auction customer (as announced in late 2007). This mix change contributed to the fall in gross profit margins from 24.1% in 2007 to 21.6% in 2008. Notable market and operating changes are taking place within the four automotive product areas:
In our core AUTOCLENZ Valeting market which accounts for the major part of the Groups Automotive Service we face relentless competition and price pressure. We combat this by our offer of superior service which is valued by our customers and continuous reviews of cost-down potential and process improvements. At PINNACLE, our prestige valet preparation service, we successfully renegotiated the contract with one of our principal customers for a further two years to December 2010, albeit at the expense of some gross margin; we have restructured this part of our business to negate some of this margin impact.
AC SMART repairs showed a slight decline in line with used car sales, but we have responded by removing the higher cost mobile service and sought business from automotive dealerships that have a need for a 'static' implanted operator on their own site. The cost savings are already delivering a good improvement in gross profitability which places us in a better position for the future. We are also developing a "slimmed down" version of AC SMART called MICROSMART which we can now offer to smaller retail automotive dealerships.
READY TO RENT (valeting for the car rental industry) saw sales growth in the year but this part of the business is extremely price sensitive with contracts being renegotiated throughout the year; here again we are taking steps by operational improvements to offset some of this impact.
MOVEMENTS by AUTOCLENZ is the division formed late in November 2007 from the demise of an independent business. We secured and selectively pruned the customer contracts and we have spent the year adjusting its cost base and its operating procedures so that it is now a profit contributor. We are moving from petrol-powered mini-bikes to electric power which reduces cost, increases labour options and improves the environment. We are also now offering the service outside the rental market to our traditional automotive dealership customers - this should not only improve its profitability in 2009 but is also part of our total package to such customers which differentiates us from our competitors and should increase the value of our services and ability to retain such customers.
continued…
-4-
Our Chief Executive Grahame Rummery and his team have set the following overall objectives to maintain the net profitability of our Automotive Services in todays challenging recessionary climate:
- Valeting
- SMART Repairs - sold via the Service Department
- Collection and Delivery - utilising MOVEMENTS
- Premises Cleaning
Specialist Cleaning Services
REACT has been less affected by recessionary pressure and showed a moderate level of sales growth to £1.6m (2007: £1.5m). It delivers a significantly higher gross profit margin (around 57%) than Automotive Services and operates in a wider support services market which grows with demand for outsourcing and increased health and safety requirements. It is therefore of fundamental importance that we focus a major part of our efforts on the sales growth and wider customer base of this business.
We have undertaken a review of REACT using some outside consultancy help and as a result have re-structured it in two ways: its dedicated sales team has been re-focused, and its services are now being delivered from a separate operational unit via our Automotive Management Team which gives additional labour flexibility in the non-clinical market place.
This separation has given us the opportunity to have a far more sales driven organisation for 2009 with increased marketing resources. We believe that with greater visibility of activity and increased targeting of potential new customers in new markets such as housing associations, catering and hygiene, we should at last begin to show the growth which this highly valued and specialist service can deliver.
Balance sheet and cash flow
In the current serious recession, cash flow and debt management are our number one priority. I am pleased to report that we have continued to make good progress in this area with operating cash flow of £1.8m (2007: £1.8m) after capital expenditure of £0.5m (2007: £0.8m). At the year end net debt stood at £2.7m, a reduction of £1.1m during the year During 2009 we are budgeting to continue this reduction and would like to see net debt at or below £2m - a level which we feel is more appropriately conservative given the tough conditions in the banking markets and the vulnerability of profits in a recession.
continued…
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Because of the priority we are giving to cash flow and complying with banking covenants we have decided, as foreshadowed in our August 2008 trading update, to pay no dividend for 2008. If we achieve our targeted debt reduction and maintain profitability then we would hope to be able to recommence payment of modest dividends based on our 2009 results.
Our bankers, HSBC, have been most supportive and as reported in our half-year statement have agreed the resetting of covenants to a level which is more appropriate to the lower level of earnings which the company is achieving compared to the time of its flotation on the AIM market in December 2005. Further detail of this important area are given in the accompanying Finance Review.
Corporate and Board Matters
We have reacted to the downturn by reviewing and reducing wherever possible central corporate costs, which are largely dictated by being listed on the AIM market. Shareholders will notice a less colourful annual report (there are however plenty of photographs on our website www.autoclenz.co.uk and www.react-decon.co.uk); we have reduced our professional costs ; the non-executive directors have reduced their fees and the executive directors have accepted a pay freeze. The effect is an annualised saving of £100,000 compared to 2008.
I was appointed Chairman of Autoclenz in January 2009, having volunteered myself for the post. We thank John Bell for acting as Chairman during the first three years of Autoclenz's life as a public company. I am under no illusion about the challenges which face the company today and the financial pain shareholders are suffering with a share price which is some 88% below the original issue price in December 2005 and no current dividend. I have no short term panacea but my experience of working with companies during past recessions together with the financial incentive I have as an 8% shareholder may be of some positive help in rebuilding shareholder value.
People
Of necessity we have seen a reduction in headcount throughout the year both in terms of Management and Administration and our employees and sub-contractors; we have also moved people within the business to take on additional work and responsibilities.
Whilst all of these changes have been going on the various management teams have worked hard to maintain morale and motivation in what has been a difficult economic climate. On behalf of our shareholders we thank all of those that have contributed to the business throughout 2008.
Outlook
There is a strong determination from everyone at Autoclenz that, despite the worst recession since the post-war years, we should strive to at least maintain our profitability at or above the 2008 level. As we face the daily barrage of fresh economic disaster, our challenge is to try and ensure that the many selling and operational improvements detailed above are converted from words into actions and can help offset the pressure on sales and margins. Our internal budgets are drawn on this basis but do assume that there are no major failures / closures amongst our automotive customers, and that the used car market (which is more important to our sector than headline new car sales) retains the reasonable level of resilience which it has shown so far.
I look forward to updating shareholders on this ambitious programme and the short-term outlook at the time of our AGM on May 21st 2009.
James Leek
Chairman
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AUTOCLENZ HOLDINGS Plc
Preliminary Results
for the year ended 31 December 2008
FINANCE REVIEW BY THE GROUP FINANCE DIRECTOR, TREVOR CLINGO
Period Reported
The primary statements all cover the period from 1 January to 31 December 2008. The Autoclenz Holdings Plc Group consolidates both its wholly owned subsidiaries Autoclenz Limited and Autoclenz Services Limited. Autoclenz Services Limited concentrates on a Collection and Delivery Service for both Rental and Retail customers trading as 'Movements by Autoclenz. The comparative trading period is 1 January to 31 December 2007
Summary Financial Results
The sales for 2008 increased by 3.5% on the comparable period in 2007.
| Reconciliation of profit | |||||
| £'000 | 2008 | 2008 | 2007 | 2007 | Change in Year |
|
|
|
|
|
| % |
| Sales |
|
|
| ||
| Automotive Services | 26401 |
| 25496 |
| 3.5% |
| Specialist Cleaning | 1568 |
| 1517 |
| 3.4% |
| Total Sales | 27969 |
| 27013 |
| 3.5% |
| Gross Profit | Gross Margin | Gross Margin |
| ||
|
| % | % |
| ||
| Automotive Services | 5715 | 21.6% | 6140 | 24.1% | -8.1% |
| Specialist Cleaning | 888 | 56.6% | 879 | 57.9% | 1.0% |
| Total Gross Profit | 6603 | 23.6% | 7019 | 26.0% | -5.9% |
| Fixed Costs | -5399 |
| -5164 |
| -4.6% |
| Adjusted Operating Profit before Interest | 1204 |
| 1855 |
| -35.1% |
| Interest | -294 |
| -307 |
| 4.2% |
| Adjusted Operating Profit after Interest | 910 |
| 1548 |
| -41.2% |
| Amortisation of Intangible Assets | -1070 |
| -1069 |
| 0.1% |
| Share Option Related Charges | -86 |
| -86 |
| 0.0% |
| (Loss)/ Profit before Tax as per Consolidated Income statement | -246 |
| 393 |
| -162.6% |
continued...
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The sales within the core Automotive Services Division were up 3.5% against 2007. This increase reflects considerable gains from within the Ready to Rent sector set against the loss of some Auction business announced in Q4 2007.
React sales increased by 3.4% in 2008 in a difficult market place, a testament to the reputation this service has in the Rail, Police and Housing Sectors.
Gross Profit
The gross profit reduced by 5.9% on the comparable period in 2007.
The gross margin fell by 2.4% to 23.6% in 2008. Customers within the Automotive Services segment of the Group found an increasingly difficult market as 2008 drew to a close. Margin in these businesses reduced by 2.5% to 21.6% predominantly due to the change in mix of our business, the loss of the higher margin Auction business was offset by the increase in sales in the Ready to Rent and Movements, which are lower margin. Dilution of margin was minimised by offering additional services to current customers and a tight control on direct costs.
Taxation
The effective rate of taxation in the period on profit before intangible asset amortisation, share based cost and adjustments to the deferred tax relating to IAS12's is 37% (2007 34%)
(Loss)/Earnings per Share
Basic loss per share for the period was 2.51p and fully diluted loss per share for the year was 2.46p The basic earnings per share before the amortisation of intangible assets, share option related charges and deferred tax adjustments relating to IAS 12 was 5.51 p (2007 9.78p)
Dividend
No dividend is to be paid from 2008 earnings.
Cash Flow
| Reconciliation of Cash Flow | |||
| £'000 | 2008 | 2007 | better / (worse) |
| Opening Debt | -3792 | -4809 | 1017 |
| Net Cash from Op Activities | 2269 | 2540 | -271 |
| Asset acquired on finance lease | -42 | 0 | -42 |
| Capex | -472 | -786 | 314 |
| Proceeds on Disposal | 58 | 70 | -12 |
| Financing | -294 | -307 | 13 |
| Dividends Paid | -385 | -500 | 115 |
| Closing Debt | -2658 | -3792 | 1134 |
continued…
-8-
Net debt reduced by £1,134,000 in the year due to excellent conversion of profits to operating cash of £2,269,000 (2007, £2,540,000) and a reduction of capital expenditure to £472,000 (2007, £786,000).
Banking Facilities
The bank facilities agreement dated 1 December 2005, where the loan of £5 million over 5 years and the provision of a £3 million working capital facility was put in place remains the same.
At 30th June 2008 there was a breach of the cash covenant, one of the four covenants attached to the facility agreement. A waiver of this breach was subsequently issued by the lender and resetting of the covenants took place. The margins applicable to the loan were adjusted from November 3rd,. The bank has been supportive of the company throughout 2008 and continues to be so. All term loan repayments have been made on due dates and covenants have all been complied with in Q3 and Q4 of 2008.
As at 31 December 2008 a net £16,000 was being utilised of the working capital facility (2007, (£58,000)).
In 2008, £1,250,000 was repaid on the term loan, leaving a balance of £2,600,000 a further £1,300,000 will be paid in 2009, all in line with the 1 December 2005 facility agreement.
Key Performance Indicators (KPI)
Key Performance Indicators are used by the board and Senior Management to monitor progress against targets on a monthly basis. The major KPI's for 2008 were:
| Target | Actual | |
| Sales Growth | 5% | 3.5% |
| Gross Margin | 24.2% | 23.6% |
| Divisional Management Costs | 11.6% | 10.4% |
| Customer Care Survey Collection | 78% | 80% |
| Customer Enquiries Resolved within ISO timescales | 95% | 99% |
The lower than expected sales growth was due to an increase in customer loss rates during the first half of 2008. A focus on the account management has reduced the level of losses in the second half. There has also been a strengthening of processes in React towards the end of 2008 which should lead to improved growth in 2009.
Principal Risks and Uncertainties
The principal risks and uncertainties are listed below, together with managements view on how these are assessed, managed and mitigated to minimise their potential impact on the reported performance of the Group.
continued…
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The principal risks currently are considered to be:
| Principal Risk | Mitigating Action |
| Self Employed Status of Valeters | Process Audits, Review of Operating Process. |
| Specialist Professional Advice | |
| Change in Administration System | |
| Loss of Customer to Competition | Multi Service Offering |
| Paperless Vehicle Management System linked to Customer Service | |
| Customer Care Process, managed by Independent Manager. | |
| Succession Planning, Retention and Capability | Competitive Pay and Benefits |
| Personal Performance Related Bonus | |
| Career Progression |
Financial Risk and Management
| Principal Risk | Mitigating Action |
| Credit Risk - potential that a customer is unable to pay their debt | Credit checks on all new customers |
| Rigorous use of Credit Recovery Agents | |
| Meticulous approach to credit control | |
| Price Pressure - Highly competitive market, with low barriers to entry | Multi service offering, reduce the effect of single service provider offering lossleader prices. |
| Competitor prices monitored by Sales Team | |
| Regular re-evaluation of margin requirements for new and current business | |
| Liquidity - potential that there is not sufficient funds available for ongoing operation | Mixture of long term and short term debt |
| Regular communication with lenders | |
| Alternative methods evaluated to provide working capital business | |
| Interest rate risk | Use of interest rate swap contracts to hedge those exposures. |
Going Concern Basis
The Group's business activities are detailed in the Chairman's Statement on pages 2-5. The financial position of the Group, its cash flows, liquidity position and borrowing facilities are described earlier in this Finance Report.
As highlighted earlier in the Financial Review, the Group meets its day to day working capital requirement through a revolving credit facility which is due for renewal on December 31st 2010.
After making enquiries the Directors have a reasonable expectation that the company and the Group have adequate resources to continue in operational existence for the foreseeable future. Accordingly the Directors continue to adopt the going concern basis in preparing the Annual Report and Accounts.
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AUTOCLENZ HOLDINGS Plc
CONSOLIDATED INCOME STATEMENT
For the year ended 31 December 2008
| Year ended | Year ended | ||
| 31 December 2008 | 31 December 2007 | ||
| Notes | £000 | £000 | |
| Revenue | 1 | 27,969 | 27,013 |
| Cost of sales | (21,366) | (19,994) | |
| Gross profit | 6,603 | 7,019 | |
| Distribution costs | (544) | (636) | |
| Administration expenses | (6,011) | (5,683) | |
| Operating profit | 48 | 700 | |
| Finance costs | (294) | (307) | |
| (Loss)/profit before tax | (246) | 393 | |
| Tax | 3 | (15) | 255 |
| (Loss)/profit for the year | (261) | 648 | |
| Basic (loss)/profit per share | 4 | -2.51p | 6.23p |
| Diluted (loss)/profit per share | 4 | -2.46p | 6.08p |
The results for the period are derived from continuing operations.
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AUTOCLENZ HOLDINGS Plc
CONSOLIDATED BALANCE SHEET
As at 31 December 2008
|
| As at | As at | |
|
|
| 31 December2008 | 31 December 2007 |
|
|
|
|
|
|
| Notes | £000 | £000 |
| Assets | |||
| Non-current assets | |||
| Goodwill | 9,091 | 9,091 | |
| Other intangible assets | 6,103 | 7,173 | |
| Property, plant and equipment | 593 | 847 | |
| 15,787 | 17,111 | ||
| Current assets | |||
| Inventories | 17 | 11 | |
| Trade and other receivables | 2,754 | 4,274 | |
| Cash and cash equivalents | 784 | 658 | |
| 3,555 | 4,943 | ||
| Total assets | 19,342 | 22,054 | |
| Current liabilities | |||
| Trade and other payables | 6 | (1,281) | (2,214) |
| Obligations under finance lease | 6 | (10) | - |
| Current tax liabilities | 6 | (820) | (1,132) |
| Borrowings | 6 | (2,100) | (1,850) |
| Non-current liabilities | |||
| Deferred tax liability | (1,510) | (1,834) | |
| Obligations under finance lease | 7 | (32) | - |
| Borrowings | 7 | (1,220) | (2,480) |
| Total liabilities | (6,973) | (9,510) | |
| Net assets | 12,369 | 12,544 | |
| Equity | |||
| Share capital | 1,040 | 1,040 | |
| Share premium account Share option reserve | 11,383 | 11,383 | |
| 292 | 206 | ||
| Retained earnings | (346) | (85) | |
| Total equity | 12,369 | 12,544 |
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AUTOCLENZ HOLDINGS Plc
CONSOLIDATED CASH FLOW STATEMENT
For the year ended 31 December 2008
| Year ended | Year ended | ||||
| 31 December 2008 | 31 December 2007 | ||||
| Note | £000 | £000 | £000 | £000 | |
| Net cash inflow from operating activities | 8 | 2,269 | 2,540 | ||
| Investing activities | |||||
| Interest received | 29 | 27 | |||
| Proceeds on disposal of property, plant and equipment | 58 | 70 | |||
| Purchases of property, plant and equipment | (472) | (786) | |||
| Net cash used in investing activities | (385) | (689) | |||
| Financing activities | |||||
| Dividends paid | (385) | (500) | |||
| Repayment of borrowings | (1,050) | (550) | |||
| Interest Paid | (323) | (334) | |||
| Net cash used in financing activities | (1,758) | (1,384) | |||
| Increase in cash | 126 | 467 |
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AUTOCLENZ HOLDINGS Plc
NOTES TO THE CONSOLIDATED FINANCIAL ACCOUNTING STATEMENTS
1. Segmental analysis
| 2008 | 2007 | |
| £000 | £000 | |
| Revenue | ||
| Automotive Services | 26,401 | 25,496 |
| Specialist Cleaning Services | 1,568 | 1,517 |
| Total | 27,969 | 27,013 |
| Results | ||
| Automotive Services | 5,715 | 6,140 |
| Specialist Cleaning Services | 888 | 879 |
| Distribution costs | (544) | (636) |
| Administration expenses | (6,011) | (5,683) |
| Finance cost | (294) | (307) |
| (Loss)/profit before tax | (246) | 393 |
| Tax | (15) | 255 |
| (Loss)/profit after tax | (261) | 648 |
The Group does not allocate all operating costs to the segments identified above, and these unallocated costs are separately identified above.
Assets and Liabilities are not split by segment. The nature of the services provided is such that the return on capital is not a useful measure. The low value assets are not apportioned across the various businesses and the ledgers for payables and receivables are not segmented. Geographically the Group operates solely in the UK and as such revenue, costs, assets and liabilities all originate and are held in the UK.
continued…
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2. Profit on ordinary activities before taxation
| 2008 | 2007 | |
| £'000 | £'000 | |
| Profit on ordinary activities before taxation is stated after charging/(crediting): | ||
| Depreciation of owned property, plant and equipment | 698 | 633 |
| Amortisation of intangible assets | 1,070 | 1,069 |
| Amortisation of finance cost | 40 | 40 |
| Fees payable to the company's auditors for the audit of the company accounts | 2 | 10 |
| Fees payable to the company's auditors for the audit of the group accounts | 18 | 32 |
| The audit of the company's subsidiary pursuant to legislation | 22 | 22 |
| Total Audit Fees | 42 | 64 |
| Recruitment and remuneration services | - | - |
| Corporate Finance Services | 13 | 15 |
| Total non audit fees | 13 | 15 |
| Profit on disposal of property, plant and equipment | (31) | (48) |
3. Tax
| Restated | ||
| 2008 | 2007 | |
| £'000 | £'000 | |
| The tax charge comprises: | ||
| UK corporation tax at current rates | 277 | 483 |
| Adjustment for prior years | 63 | 27 |
| Current tax | 340 | 510 |
| Deferred tax | (322) | (455) |
| Adjustment in respect of prior period | (3) | (310) |
| UK corporation tax at current rates | 15 | (255) |
The standard rate of tax for the period, based on the UK standard rate is 28% (2007: 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:
| Restated | ||
| 2008 | 2007 | |
| £'000 | £'000 | |
| (Loss)/profit on ordinary activities before taxation | (246) | 393 |
| Tax at 28% (2007: 30%) | 69 | (118) |
| Expenditure not deductible for tax purposes | (376) | (357) |
| Deferred tax liability on intangibles | 305 | 321 |
| Capital allowances in excess of depreciation | - | 5 |
| Adjustment in respect of prior period | (60) | 283 |
| Short term timing differences | - | (2) |
| Trading losses utilised | 49 | - |
| Effect of changes in tax rate | (2) | 123 |
| Current year tax | (15) | 255 |
continued…
-15-
4. (Loss)/earnings per share
| 2008 | 2007 | |||
| Basic shares | Diluted shares | Basic shares | Diluted shares | |
| Weighted average number of ordinary shares | 10,400,020 | 10,400,020 | 10,400,020 | 10,400,020 |
| Effect of dilutive potential ordinary shares: share options | - | 207,675 | - | 256,966 |
| Total | 10,400,020 | 10,607,695 | 10,400,020 | 10,656,986 |
| (Loss)/profit (£000s) | (261) | (261) | 648 | 648 |
| (Loss)/profit per share (pence) | -2.51 | -2.46 | 6.23 | 6.08 |
| Earnings per share (excl amortisation and share-based payment) (pence) | 8.61 | 8.44 | 17.34 | 16.92 |
5. Dividends
| 2008 | 2007 | |
| £000 | £000 | |
| Dividends on equity shares | ||
| - interim of nil (2007: 1.8p) per ordinary share | - | 187 |
| - final of nil (2007: 3.7p) per ordinary share | - | 385 |
| - | 572 |
6. Current Liabilities
| Restated | ||
| 2008 | 2007 | |
| Amounts falling due within one year | £000 | £000 |
| Short term loan | 800 | 600 |
| Bank loan and overdraft | 1,300 | 1,250 |
| Trade creditors | 759 | 1,096 |
| Finance lease | 10 | - |
| Corporation tax | 141 | 162 |
| Other taxation and social security | 679 | 970 |
| Other creditors | 29 | 31 |
| Accruals and deferred income | 493 | 702 |
| Proposed dividend | - | 385 |
| 4,211 | 5,196 |
continued…
-16-
7. Borrowings
| 2008 | 2007 | |
| Secured borrowings at amortised cost | £000 | £000 |
| Bank loan | 1,220 | 2,480 |
| Finance lease | 32 | - |
| 1,252 | 2,480 | |
| More than one year but not more than two years | 1,310 | 1,300 |
| More than two years but not more than five years | 22 | 1,300 |
| Finance costs incurred obtaining the bank loan | (200) | (200) |
| Finance costs amortised | 120 | 80 |
| 1,252 | 2,480 |
The bank loan is secured by a charge on all the assets of the Group. Interest is charged at 2.50% over LIBOR (2007: 1.75%).
8. Cash flow
| Reconciliation of operating profit to net cash inflow from operating activities | ||
| 2008 | 2007 | |
| £000 | £000 | |
| (Loss)/profit for the year | (261) | 626 |
| Adjustments for: | ||
| Finance income | (29) | (27) |
| Finance costs | 323 | 334 |
| Income tax expense | 15 | (255) |
| Depreciation of property, plant and equipment | 698 | 633 |
| Amortisation of intangible assets | 1,070 | 1,069 |
| Amortisation of finance costs | 40 | 40 |
| Share based payment expense | 86 | 86 |
| Gain on disposal of property, plant and equipment | (31) | (48) |
| Operating cash flows before movements in working capital | 1,911 | 2,458 |
| (Increase)/decrease in inventories | (6) | (9) |
| (Increase)/decrease in receivables | 1,520 | (227) |
| Increase/(decrease) in payables | (795) | 980 |
| Cash generated by operations | 2,630 | 3,202 |
| Income taxes paid | (361) | (662) |
| Net cash from operating activities | 2,269 | 2,540 |
continued…
-17-
9. Reconciliation of movement in shareholders' funds
| 2008 | 2007 | |
| £000 | £000 | |
| (Loss)/profit for the year | (261) | 626 |
| Dividends | - | (572) |
| Net reduction in shareholders' funds | (261) | 54 |
| Opening shareholders' funds | 12,544 | 12,404 |
| Share Option Reserve | 86 | 86 |
| Closing shareholders' funds | 12,369 | 12,544 |
10. Reconciliation of net cash flow to movement in net debt
| 2008 | 2007 | |
| £000 | £000 | |
| Increase in cash in the period | 126 | 467 |
| Cash inflow from movements in debt | 1,008 | 550 |
| Change in net debt resulting from cashflows | 1,134 | 1,017 |
| Net debt at beginning of period | (3,792) | (4,809) |
| Net debt at end of period | (2,658) | (3,792) |
11. Analysis of changes in net debt
| At 1 January 2008 | Cash flow | At 31 December 2008 | |
| £000 | £000 | £000 | |
| Cash at bank | 658 | 126 | 784 |
| Debt due within one year | (1,850) | (260) | (2,110) |
| Debt due after one year | (2,600) | 1,268 | (1,332) |
| Net debt | (3,792) | 1,134 | (2,658) |
12. The financial information set out above does not constitute the company's statutory accounts for the years ended 31 December 2008 or 2007, but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 will be delivered following the company's annual general meeting. The auditors have reported on those accounts; their reports were unqualified, did not draw attention any matters by way of emphasis without qualifying their report and did not contain statements under s237(2) or (3) Companies Act 1985.
13. The Annual Report is to be published and sent to shareholders shortly. Copies will be also available on request from The Company Secretary, Autoclenz Holdings Plc, Stanhope Road, Swadlincote, Derbyshire, DE11 9BE and will also be available on the Company web-site: www.autoclenz.co.uk
14. The Annual General Meeting will be held at the Company's registered office : Stanhope Road, Swadlincote, Derbyshire, DE11 9BE at 11.30am on Thursday, 21 May 2009.