Autoclenz Share Discussion Threads

[tole] 05/9/2006 10:57

Good to hear - noticed not seeing you about on the boards much.
All sent.

[njp] 05/9/2006 10:43

All good thanks. Been away for a couple of months - mainly Italy - and so getting back into the game.

Yes thanks, would be good to see those broker notes. You still have my email address?

[tole] 05/9/2006 10:37

Hi NJP - hope all is well mate - Do you want the broker notes?

[njp] 05/9/2006 10:33

Looks like excellent value on offer here, so have bought a few for an initial stake.

[tole] 05/9/2006 10:18

Yes like the part by KBC on

'the shares have fallen to a level that represents OUTSTANDING VALUE'

Also noted that they were given a further BUY recommendation again in last months Aim/Ofex newsletter focusing on those PeelHunt forecasts - highlighting that

'Autoclenz is a business with far greater upside potential than downside risk. BUY.'

[quinn20] 05/9/2006 10:00

Hi Papal, looks like this could breakout sooner rather than later, this is Peel Hunts take on the recent price weakness

Autoclenz is making steady trading progress and we can not see a
fundamental justification for the fall in its share price since IPO.
Indeed, the cause would appear to be technical; specifically sales
by shareholders for their own portfolio strategy reasons rather
than being based on the trading fundamentals. This has been
coupled with a lack of unencumbered buyers on the share register
as, for tax reasons, over half of the current holders can not buy
stock in the secondary market. This has resulted in the shares
falling to a level that represents outstanding value, particularly
given the strong cash flow, expected dividend yield and ability to
act as a shelter for inheritance tax.

[papalpower] 05/9/2006 09:54

Very interesting quinn, I'll look some more.

KBC Peel Forecast on 4th Sept 2006 was :

2006 PTP = 2.31m
2006 EPS = 15.58p
2006 DIV = 4.5p

2007 PTP = 4.5m
2007 EPS = 18.85p
2007 DIV = 5.5p

[quinn20] 05/9/2006 09:30

Interesting comment from the Peel Hunt update regarding the React division

Police forces are reluctant to commit to long-term
supply agreements whilst uncertainty persists over their future. Any
reversal in government policy to reorganise the existing 43 forces in
England & Wales will be positive for Autoclenz. Recent press
speculation suggests a full u-turn on government policy is imminent.

So whats a fair price target?

On a modest PER 10 for 2007 should be trading at least £2.20?

regards

[tole] 05/9/2006 08:50

Yep still able to buy under mid price - worth getting a quote to see - maybe the line of stock is about to clear...

[glasshalfull] 05/9/2006 08:37

Morning Tole

Does indeed look like these are coming off the bottom:-)


Regards
GHF

[tole] 05/9/2006 08:08

Nice posts Quinn20
Moving up at last - penny dropping on how cheap this is???
As you say - 2006 PER 7 and 2007 PER 5.9.

[quinn20] 04/9/2006 15:30

Good general business overview from old article on listing

Monday November 7, 2005
The Guardian


A business specialising in clearing up after major accidents and terror attacks is to join the stock market when its parent company Autoclenz is floated at the end of this month.
React was called in by the authorities after the July 7 bombings in London and works for rail and road companies, prisons and housing associations. Its jobs range from disposing of abandoned hypodermic needles, to removing debris after motorway and train incidents, including suicides. It is one of the fastest growing parts of the Autoclenz business, which includes car valeting services to retailers, auction houses and rental companies. Autoclenz is being spun off as part of a restructuring by its owner, Yule Catto, whose shares have risen from 241p to 275p since the proposal was announced.


The management of Autoclenz will pay Yule £18m for the business, funded by £13m of new shares and £5m of debt, which will be traded on the Alternative Investment Market. The directors, headed by the chief executive, Grahame Rummery, will hold options over about 6% of the business.
"We provide a hygienic deep-clean service - we start when the average contract cleaner finishes. It's a sensitive business but some of it is quite dirty. We clean up embankments for Network Rail, and remove animals and suicide traces from railway lines. We clean jewellery found at scenes so it can be handed over to any survivors." It also carries out work for local authorities and housing associations, cleaning up drug houses and squats. "All our staff need specialist training, and have injections against hepatitis. The gloves they wear, especially for removing needles, are made of meshed Kevlar and cost £100," said Mr Rummery.

The company's workers were in the London Underground stations after the July bomb attacks. "We are quite often sent in by the police force to a crime scene after the forensics have finished, partly to clean up the dust used for fingerprints."

Autoclenz was bought by Yule Catto in 1989. It had annual sales last year of £24.3m and profits of £1.8m. The valeting division makes up the bulk of the business, with React bringing in sales of £1.4m. But while valeting is high volume and low margin, React is the reverse. "React is a high-margin business because of the risk attached," said Mr Rummery.

[quinn20] 04/9/2006 14:49

This seems to have gone completely unnoticed since it listed late last year (witness post 37 on Tole's thread!)

10.4m ords @ £1.10 = mcap £11.5m, directors holding options over 625000 shares.

At current level it looks a complete no brainer with results 'outer' on 20 September.

I've just been going through the July Peel Hunt update which gives the following;

(gross operating margin circa 30%)

Y/E 2006 sales £26.2m EBITDA £3.2m Pre tax £2.3m Taxed @ 30% gives EPS 15.6p DIV 4.5p PER 7

Y/E 2007 sales £28.2m EBITDA £3.6m Pre tax £2.8m Taxed @ 30% gives EPS 18.8p DIV 5.5p PER 5.9

Y/E 2008 sales £30.2m EPS 22.2p DIV 6.5p PER 4.95

Company has confirmed trading in line and maiden interim dividend, also new contract wins

[tole] 01/9/2006 17:24

Maybe that has cleared some stock - and will allow this to start to move back up.

AIM REALISATION FUND LIMITED

Number of shares / amount of stock acquired
476000
Percentage of issued class
4.6%

[volsung] 22/8/2006 10:12

Well I've joined up for £8k worth. Lets see.

[asmagliocco] 15/8/2006 17:38

Hmmmm. 4 small buys listed as 4 sells because, quite incredibly, the actual buy price was less than than the published mid price today...

[tole] 23/7/2006 11:45

The July pre-close update re the interim results to June 2006 reported that trading has been in line with management expectations; a maiden interim dividend of 1.5p per share is expected to be declared; the reported water shortages in the South-East of England have not yet had any impact on Autoclenz's operations - contingency plans have been drawn up in case they do; 2 significant outsourcing partnership outsourcing contracts have been won, one for a leading car rental company at Stansted Airport and the other for a major car logistics provider - these involve both parties pooling strengths, resources and expertise in order to enhance customer service and satisfaction whilst maximising the utilisation of assets - the benefits of both contracts (which will together generate annualised sales of c.£1 million) are expected to start feeding through towards the end of H2.

Research Standing
A well established business with good scope for organic growth and, unusually, not overpriced at the time of its listing.

The company broker's note dated 11th July projects EPS of 15.6p for 2006 and 18.8p for 2007 representing P/Es of 7.1 and 5.9 respectively based on the share price of 110.5p at 11th July. In addition, the company is proposing a progressive dividend policy starting in 2006 - the broker is forecasting DPS of 4.5p for 2006 ie a yield of 4.1%.

[roughjustice] 11/7/2006 10:00

Reasonably positive update, had been worried by falling share price.

[roughjustice] 18/4/2006 13:44

Good write up, I agree also that it is a shame the CEO doesn't hold more stock. Especially as the company size is quite small and it would not cost him too much to be invested.

[tole] 13/4/2006 08:25

Testing its recent high today.

[tole] 10/4/2006 09:16

Buy Autoclenz at 128.5p
From the award winning AIM and Ofex Newsletter
About a decade and a half ago Official List-quoted Yule Catto, the specialist chemical company whose annual sales far exceed 500 million pounds, bought Autoclenz - and did so from that company's administrators. In December last year, having both built the company up to command an estimated quarter of its market and having decided that it did not really fit comfortably within its portals any more, Autoclenz was hived off. The new vehicle formed to effect the transaction raised 13 million pounds at 125p on AIM and borrowed 5 million pounds - the 18 million pounds was then made across to Yule Catto and with one bound, as they say, our hero was free.

Free to do what? Autoclenz provides car valeting services, and in addition to the Autoclenz brand does so too under the label of Pinnacle, the latter directed towards the smaller number of what are prestige marques. The main customers are car dealerships, car supermarkets, auction centres, rental operators and accident vehicle replacement specialists. Autologic, Avis, Inchcape and their peer group, through deployment of both brands, provided about 90% of the group's 2004 income.


The value of investments can go down as well as up. Investing in equities can lose you part or all of your capital. Smaller company shares can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares.
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By way of development, in 2002 trained teams had been brought into being on a country-wide basis so as to be at customers' disposal in respect of bodywork, upholstery or windscreen repairs, as part of vehicle preparation services. Two years later and the range of services was extended again when ALS ('Additional Labour Supplies') was formed with the object of marshalling teams of trained subcontractors to be supplied at short notice if customers faced problems in maintaining adequate staffing levels in the face of unpredictable volume increases. Pre-delivery inspection technicians, service engineers as well as auto electrical and electronics engineers can be hired on short, medium or long-term con tract. These newish activities lined up alongside long-established specialist decontamination services, a growing business with about half of its income (which is 3% of the group total) emanating from the public sector, so as to provide the remaining group income.

On the other side of the see-saw to the major customers which provide the group with its income and its earnings sits an equally heavyweight bunch, the 1,000 or more self-employed persons at work on the group's behalf on any given day.

In the half year to June 2004, sales were 12.5 million pounds and the company generated a contribution of 3.3 million pounds. Expenses just shy of 2.5 million pounds allowed an operating profit of 850,000 pounds. The full year figures to December showed sales of 24.3 million pounds, just under double those achieved at the half year - and less than 1 million pounds ahead of those of December 2003. But an expanding gross profit meant that for the the third year in a row there had been a handsome forward stride made on the earnings front.

The most recent set of figures for the six months to December 2005 show revenues of 1.6 million pounds, operating profits of 20,000 pounds and net assets of 12.4 million pounds.

So the threat is not that of new-car registration levels per se. But overall levels of economic activity, as we might have guessed, find, in the total pattern of consumer behaviour upon which demands for the company's services rest, a highly sensitive indicator. When one learns that, in Germany for example, the average age of cars cruising (or are they chugging now?) along the autobahns is getting close to that of the post-war era, one can see that Autoclenz might struggle a bit should such circumstances occur here.

Another threat, but one from another angle, lies in the fact that HM Revenue & Customs takes a keen interest in the financial affairs of subcontractors. The group has the status of such relationships defined by the authorities - that is that the people with whom it works are classed as self-employed - and that it follows that there is no obligation for Autoclenz to pay National Insurance or to incur other statutory employment costs. Clearly if the situation were to change there would be profound financial effects but it must be said that this whole area does not appear to be anything like the hot potato that it once was. It is the habit of outsourcing which has provided the backdrop for what is clearly the creation of a successful business, and with three-quarters of the total market still to aim at, the target is fat enough in all conscience. The company is especially keen to point out that franchised car dealerships comprise the largest consumption group in respect of outsourced car valeting services; there are over 6,000 of these within the United Kingdom and almost 1,000 of them deal with top-of-the-range models; but Autoclenz deals with just 4% of this market. It should be pointed out that innovations, that of ALS for example, have proved a key marketing device. Just 1% of group turnover comes from this service - but no less than one in five of the division's customers have switched to Autoclenz (or Pinnacle) as a result of using it. There are geographic issues to be addressed now - the directors have mapped out areas of the country in which they feel sustained promotion and investment will introduce its comprehensive range of services to a receptive new market. It is clear too that the freed board feels that not enough effort has gone into cross-selling, and a programme of clearer delineation of individual brands and a sharpening-up process in respect of the corporate sales force is aimed at achieving greater revenues and higher margins from existing customers.

Autoclenz's particular productivity benefit from investment in IT has been that of enhancing customer service levels and a consequent reduction in the churn rate. And,on what looks like a completely separate limb, those decontamination activities are being expanded through the recruitment of specialists to gain new business in specific niche market areas. It is rather unusual - and quite refreshing - to see a company which, as does Autoclenz, confine its intention to consider acquisitions as a means of developing the business to just that of one division - the last named.

The prospectus whilst genuflecting respectfully to its former parent (and quite rightly too given the history) makes the point that the separation will 'provide. a more favourable environment in which to more fully evolved and implement. the strategic direction'. And this is the core of the investment argument, for the figures appear to indicate that whilst good husbandry has polished the shaft and sharpened the point of the spear, what it needs now is the thrust which will see renewed growth in the top line. Mr Grahame Rummery, the chief executive, is 57 years of age, and has been at the helm for the 15 years in which it was under the ownership of Yule Catto.

He has a distressingly small stake in the newly-floated entity - 0.15% - but options over shares ten-times the volume which that holding represents. He has a decent salary and the incentive of a decent bonus. How he will react to the absolute freedom of command is the key question. Well, he built the business and if the presumption of the directors is correct, that the second half of 2005 held no surprises, he should have a splendid platform from which to launch his drive for renewed momentum. A 10% operating margin on 25 million of sales would mean, even after a full-year's interest charge, about 2.2 million pounds at the pre-tax level - say 1.5 million pounds net. With Autoclenz capitalised at 13 million pounds we are talking about an historic price:earnings ratio which could be as low as eight. With the prospect of a maiden dividend to come in the interim period to June this year, we think that Autoclenz is a business with far greater upside potential than downside risk. We welcome the new business, and say BUY.

Key Data

EPIC: ACZ
Price: 125 - 132p
Market : AIM

[roughjustice] 08/4/2006 14:28

I must of missed that one, you got the write up?