Interim Results
May 16 2007 - 3:02AM
UK Regulatory
RNS Number:6701W
Zenith Hygiene Group plc
16 May 2007
ZENITH HYGIENE GROUP
INTERIM RESULTS
FOR THE SIX MONTHS ENDED 28 FEBRUARY 2007
Zenith Hygiene Group plc, the leading independent manufacturer and supplier of
cleaning and non-food ancillary products to the food service and hospitality
markets, announces its interim results for the six months ended 28 February
2007.
Highlights
*Net turnover increased 27% to #20.0 million (2006:#15.7 million)
*EBITDA has increased 56% to #1.7 million (2006: #1.1 million)
*Normalised operating profits* have more than doubled to #850,000 (2006:
#416,000)
*PBT pre goodwill amortisation, exceptional items and after interest
charges increased 95% to #605,000 (2006: #310,000)
* represents profits before goodwill amortisation, exceptional items, interest
and tax
Ringo Francis, Chairman and Chief Executive, Zenith Hygiene Group, said:
"We continue to make progress despite the distractions of the recent takeover
approach. Since the departure of the previous Finance Director in March 2007,
the Group has been making significant improvements in our financial controls and
reporting mechanisms.
"We have also made a number of new business gains since September 2006 with
companies such as Starbucks and Travelodge for which we anticipate combined
annualised sales of #2 million."
For further information:
Zenith Hygiene Group
Ringo Francis Tel: 01707 255070
Julie Rowlands Tel: 01707 255099
Beattie Communications Tel: 020 7053 6022
Tim Blythe / Hannah Green
CHAIRMAN'S STATEMENT
Introduction
I am pleased to present Zenith's third set of interim results since becoming a
listed company on AIM in February 2005.
Trading Results
In the six months to 28 February 2007, Group turnover was #20.0 million (2006:
#15.7 million), an increase of 27 per cent on the corresponding period last
year.
Operating profit before goodwill amortisation and exceptional items increased
104 per cent to #850,000 (2006: #416,000) and profit before tax, goodwill
amortisation, exceptional items and after interest charges increased by 95 per
cent to #605,000 (2006: #310,000).
Like-for-like sales to the top twenty customers increased by 3.75 per cent over
the period.
New Business
Since 1 September 2006 our new business wins have been in line with
expectations; sales attributed to new customers in the first six months are
currently annualising at a rate of #3.1 million.
We are pleased to announce the following significant client gains since 1
September 2006;
Starbucks Travelodge
Caffe Uno TCG Acquisitions
Connect Catering Gaucho Grill
Royal Marsden Hospitals Whittlebury Hall
However, the full impact of these is not expected to be realised until FY2008.
Starbucks and Travelodge together add 850 new units to our portfolio and we
anticipate combined annualised sales of #2 million for these two groups.
Progress on Integration
The acquisitions made last year are now fully integrated and the Group is
focused on delivering the synergies of the enlarged Group. The manufacturing
plant at Lisburn is now producing the majority of the Group's chemical products
and further capacity is available for future expansion.
Net debt as at 28 February 2007 was #8.12 million. The Group is committed to
implementing further plans to improve and manage working capital, however, it is
envisaged that the improvements will not be realised until after the year end.
Consequently, net debt is expected to increase from its current position by the
year end before these improvements take effect.
Strategy
The Group is focused on strengthening its infrastructure to allow us to continue
to grow organically. However, we will not lose sight of our strategy of market
consolidation through acquisition and organic growth, which in turn should
deliver increasing shareholder value year on year. The remainder of 2007 is
expected to be a period of consolidation and internal review within the Group.
Outlook
Since February, the anticipated seasonal uplift has been slower than expected
and some of the more significant new business gains have started later than
scheduled. The outlook for the remainder of the year is that the second half
year sales will be tracking in the same proportion as the first half of the
year.
We are also coming under increasing pressure from our suppliers to accept
increased prices, however our leverage ability through the expanded Group size
has allowed us to resist most of these so far.
We have indicated that our exceptional items will be lower in 2007 compared with
2006 and we still are on track to achieve this. However, we announced on 6 March
2007 the termination of discussions with a private equity firm and we will incur
in the second half the associated costs of our advisers who were assisting the
Board during discussions.
The search goes on for a permanent Finance Director, who, once in place, will be
critical to the continuing growth and success of the Group. In addition, the
Group is endeavouring to strengthen the overall composition of its Board.
Dividends
The Board is pleased to announce an interim dividend of 0.5p per share
(2006: 0.5p). This will be paid on 16 July 2007 to shareholders on the register
at close of business on 1 June 2007.
International Financial Reporting Standards
The major area of impact will be share-based payments, goodwill amortisation and
segmental reporting.
These will be introduced for the first time in our FY 2008 accounts and
associated comparatives.
Adopting these will impact the financial reporting of the Group, but we fully
intend to provide information to assist investors and analysts to make
meaningful comparisons.
Stakeholders
The Zenith success story to date could not have been achieved without the
dedication, hard work and consistency of all our employees. I continue to be
impressed by the quality of our employees who have underpinned our organisation
and I would like to thank them all.
I would also like to add my thanks to our shareholders who have invested in us
and allowed us to grow the Company both organically and by acquisition over the
past two years. I look forward to continuing to improve the business for you all
going forward.
RINGO FRANCIS
CHAIRMAN & CHIEF EXECUTIVE
Welham Green, May 15, 2007
Summarised Consolidated Profit and Loss Account
6 months ended 6 months ended
28 February 28 February
2007 2006
Unaudited #'000 Unaudited #'000
Group Turnover 20,008 15,730
Cost of sales (10,444) (7,872)
------------- ------------
Gross Profit 9,564 7,858
Other income 7 14
------------- ------------
9,571 7,872
Admin expenses incl. depreciation (8,721) (7,456)
------------- ------------
Operating profit pre amortisation 850 416
Goodwill amortisation (364) (174)
------------- ------------
Operating profit before exceptional items 486 242
Exceptional items ( note1 ) (392) (62)
------------- ------------
Operating profit after exceptional items 94 180
Interest payable (245) (106)
Interest receivable - -
Taxation ( note 2 ) - (22)
------------- ------------
Profit on ordinary activities after tax (151) 52
------------- ------------
Earnings Per Share
--------------------
Basic EPS ( note 4 ) (0.74p) 0.31p
Diluted EPS (note 4 ) (0.70p) 0.28p
*Normalised EPS 2.98p 1.69p
*Normalised basic EPS is calculated using Profit after interest charges and tax
but before exceptional items and goodwill amortisation.
The 2006 Normalised basic EPS figure is restated.
Summarised Consolidated Cash Flow Statement
6 mths to 6 mths to
28 Feb 2007 28 Feb 2006
Unaudited Unaudited
#'000 #'000
Net cashflow from operating
activities ( note 5) 541 (466)
Returns on investment and
servicing of finance (245) (106)
Taxation paid - (33)
Capital expenditure
---------------------
Purchase of tangible fixed
assets (1095) (895)
Purchase of intangible fixed
assets (49)
Proceeds from asset sales 5 -
Acquisitions and disposals
----------------------------
Businesses disposed of - -
Debt acquired with
acquisitions - (646)
Cash consideration paid - (5,500)
------------ ------------
Net cash flow before financing (843) (7,646)
Issue of ordinary shares - 6,075
Associated share issue costs - (364)
Loan notes redeemed - (162)
Loans drawn down 1,000 6,000
HP repayments (116) (113)
Loan repayments - (557)
------------ ------------
Increase in Cash 41 3,233
============ ============
Summarised Consolidated Balance Sheet
28 February 28 February
2007 2006
Unaudited Unaudited
#'000 #'000
Fixed assets
Intangible assets and goodwill 10,336 9,087
Tangible assets 6,078 5,736
------------- -------------
16,414 14,823
------------- -------------
Current assets
Stocks 4,902 3,110
Debtors 9,753 8,656
Cash at bank and in hand 4,551 4,539
------------- -------------
19,206 16,305
Creditors: Amounts falling due within
one year (14,543) (13,139)
------------- -------------
Net current assets 4,663 3,166
------------- -------------
Total assets less current liabilities 21,077 17,989
Creditors: Amounts falling due after
more than one year (8,331) (6,423)
------------- -------------
Net assets 12,746 11,566
============= =============
Capital and reserves 12,746 11,566
------------- -------------
12,746 11,566
============= =============
Notes to the Interim Financial Information
1. OPERATING EXCEPTIONALS
6 mths to 6 mths to
28 February 28 February
2007 2006
#'000 #'000
The profit on ordinary activities before taxation is
stated after charging the following exceptional items:
Items associated with group
re-organisation e.g. plant relocation
costs 188 22
Non-recurring costs associated with
integration of businesses acquired e.g.
redundancies/third party suppliers 162 25
Project costs in relation to takeover
approach 42 -
Flotation costs not readily attributable
to shares issued - 15
----------- -----------
392 62
=========== ===========
2. TAX
6 mths to 6 mths to
28 February 28 February
2007 2006
#'000 #'000
UK Corporation tax - 22
Deferred taxation - -
----------- -----------
- 22
=========== ===========
3. DIVIDENDS
An interim dividend has been proposed of 0.5p per share (2006: 0.5p).
A dividend of 1.7p was proposed at the full year stage in 2006, and approved at
the AGM on 30 March 2007.
This was paid in March 2007.
4. EARNINGS PER SHARE
6 mths to 6 mths to
28 February 28 February
2007 2006
#'000 #'000
These have been calculated on earnings
of: (151) 52
=========== ===========
The weighted average number of shares used was:
'000 '000
Basic 20,307 17,027
Share option adjustment 1,217 1,363
----------- -----------
Diluted 21,524 18,390
=========== ===========
5. RECONCILIATION OF OPERATING CASH FLOW
6 mths to 6 mths to
28 February 28 February
2007 2006
#'000 #'000
Operating profit 94 180
============ ===========
Working capital movements:
----------------------------
(Increase) in stocks (322) (576)
(Increase) in debtors 450 (55)
(Increase) in creditors (909) (870)
Goodwill / amortisation 364 174
Tangible fixed assets depreciation 862 678
Loss/(profit) on disposal of fixed
assets 2 3
------------ -----------
Operating cash outflow 541 (466)
============ ===========
6. INTERIM REPORT
This interim report was neither audited nor reviewed by the auditors. It has
been approved by the Board of Directors. It has been prepared using accounting
policies that are consistent with those adopted in the interim accounts for 6
months to 28 February 2006 and also for the full year to 31 August 2006 (audited
and available from zhgplc.com).
This information is provided by RNS
The company news service from the London Stock Exchange
END
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