1 Aug 2008 07:00
Issued by Citigate Dewe Rogerson Ltd, Birmingham
Date: Friday, 1 August 2008
Autoclenz Holdings PLC
("the Group" or "the Company")
Trading Update
Autoclenz Holdings Plc issues the following trading update ahead of the publication of the Group's interim results for the six months ended 30 June 2008 which will be announced on Wednesday 24 September 2008.
As stated in the Company's Annual General Meeting statement (22 May 2008) and as witnessed by a number of our principal customers within the automotive sector, trading conditions in the first six months of the calendar year have become more difficult. This has impacted on our performance so far this year and has led to results for the six month period falling below our expectations.
Given the macro-economic outlook for the UK, we feel that these market conditions are unlikely to improve for the remainder of 2008. Accordingly, trading for the full year to 31 December 2008 is also likely to fall below expectations. At this stage the Directors do not expect to pay any dividend in respect of the current financial year. The Company is in regular dialogue with its bank which remains supportive to the Group.
In our core valeting business we have seen a decline in sales of 14% in Q1 2008. This trend has continued into quarter 2 but has not worsened.
In spite of these challenging conditions, the appointment of a Group Head of Sales as referred to in the Group's Preliminary Results has helped secure a high level of new business that will launch early in Q3. This is encouraging and supports the efforts of the whole sales team. Furthermore, it will allow us to take advantage of any upturn in the market in both our current and new account base. These new business gains have been achieved at a margin level that reflects the current market conditions but still retains a positive profit margin.
Our SMART business has also been impacted with like for like sales down 7% on 2007, reflecting lower used car sales. However, new accounts have been added during the first half of the 2008 financial year which has offset the volume reductions, leaving trading just marginally below management expectations.
Our new Movements by Autoclenz Division is performing in line with expectations and the Ready to Rent Division is still showing significant sales growth but is experiencing margin pressure relating to competitive tendering for new and existing accounts. Collectively, these two Divisions now have sales levels in excess of £9 million. We are constantly looking for ways to improve our competitive response to market price pressure and have recently finalised negotiations with a major customer within our Pinnacle Division to secure this important piece of business until December 2010. The negotiations will result in a reduction in margin and adjustments are in place to reduce the costs of delivering the service.
The Board has embarked upon a strategic review of the Group. The aim is to assess the performance of the existing business units and their prospects against current and projected market conditions, and to identify opportunities to expand the non-automotive activities of the Group. If successful the latter will, over time provide a balance with the cyclical nature of the automotive sector.
We have also redoubled our efforts to reduce our cost base to reflect the current trading levels and will continue to review all costs on an ongoing basis. All of these actions are designed to help limit the impact of the current difficult trading conditions.
| Enquiries: |
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| Grahame Rummery, Chief Executive |
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| Trevor Clingo, Group Finance Director | Keith Gabriel | Julian Blunt |
| Autoclenz Holdings PLC | Citigate Dewe Rogerson | KBC Peel Hunt |
| Tel: 08707 510 410 | Tel: 0121 455 8370 | Tel: 020 7418 8900 |
| www.autoclenz.co.uk | Mobile: 07770 788 624 |
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| Ticker : AIM: ACZ |
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Notes to Editors:
Founded in the 1960s, Autoclenz is widely recognised as the leading name in car valeting and vehicle preparation in the UK. The Company provides the complete package for the total valeting operation that includes labour, chemicals, equipment, materials, management and quality control systems that are required to achieve quality vehicle preparation. A commitment to a high quality, cost effective service has made Autoclenz a key partner to many of the best known names in the fleet, daily rental, auction and dealer network across the country. Key customers to Autoclenz include Helphire, Premier First, AVIS and major automotive groups.