ZHG Zenith Hygn.

RNS Number:4569K
Zenith Hygiene Group plc
21 December 2007

                            Zenith Hygiene Group plc


                              Update Announcement



Zenith Hygiene Group plc ("Zenith", "the Company" or "the Group"), the leading
independent supplier of hygiene products to the leisure, healthcare and
education sectors, today announces an update regarding its recent trading,
internal business review, financial position, and Board changes.



Recent trading



First quarter revenues are in line with the Board's expectations. In the first
three months we have won in excess of 550 new outlets with an estimated
annualised revenue of �1.6m. Included within these wins are Harbour and Jones -
contract caterers to BSkyB, Food and Drink Group - operators of Jamies Bars and
Henry J Bean's and North Cambridge Hospital. Furthermore the Group is enjoying
momentum from the contracts announced in September, as they roll out their
growing number of outlets.



Early indications are that gross margins are improving over those achieved
during the second half of the year ended 31 August 2007, largely due to the
improved processes and controls implemented by the Board. The Group has
generated cash from its operating activities, and operates within its current
banking facilities





Ongoing Internal Business Review



Further to our announcement of 6 September 2007, the Company has continued with
its internal operational and financial review. This review is proving to be more
complex and time consuming than originally expected and the Board's current view
is that the net assets and therefore the profit as per the 2006 published
accounts were overstated by substantially more than the �0.9m previously
indicated, following additional write offs of older items.



The review has also highlighted that the losses for the year ended 31 August
2007 are expected to be substantially greater than the Board originally
anticipated. The Board stresses that the above write offs are largely of old
balances which do not materially affect the current cash generation or cash
position of the business.



The internal business review is still ongoing and the Board expects to be able
to announce further details, when it reports its results for the year ended 31
August 2007 during February 2008.



While this review will inevitably have exceptional costs associated with it
impacting the Company's results for the current financial year ending 31 August
2008, the Board is confident that the Group will emerge as a more efficient
organisation with strong internal controls, which will benefit future periods
and support the Group's growth plans.



Our bankers are fully aware of the status of the internal review and they remain
fully supportive of the process and have maintained their lines of credit to the
Group at all times.



Board Changes



The Board is pleased to announce the appointment of Ian Robert Selby ACA (41) as
Finance Director. Ian is a chartered accountant with significant experience in
both UK and US listed organisations. Most recently he was Chief Financial
Officer of Corero plc, an AIM quoted software company, where he took a leading
role in the completion and successful integration of three acquisitions, several
fund raisings, debt negotiations and restructuring. Previously to that he held
European finance roles in Halliburton Inc, Sybase Inc and Micro Focus plc. He
qualified as a chartered accountant with Coopers and Lybrand Deloitte and holds
a degree in Physics from the University of Birmingham.



In addition, Tony Cousins, Derek Lafbery and Colin Fogarty, who were all
involved with the creation of Zenith and have been instrumental in its growth
and development within the market in the last ten years, have today stepped down
from the Board in order to form a new Operational Management Board. This Board
will report to Gavin Gracie, the Group's Chief Operating Officer and the focus
of the Operational Management Board will be to ensure that customers continue to
receive the high level of service that they have come to expect from Zenith, and
that new business opportunities are handled by an experienced management team.



Julie Rowlands, who has been Interim Finance Director since March 2007, today
stands down from the Board.



This restructuring of the Board will help the Company to implement strategies
which improve the Group's customer focus and streamline the decision-making
process at an operational level. Furthermore, these changes will help to ensure
that going forward the executive team is focused on improving profitability and
the delivery of the Group's core strategy.



Ringo Francis, Chairman and Chief Executive, Zenith Hygiene Group, said:



"Whilst we have announced further adjustments to our full year 2006 accounts and
a greater than anticipated loss for 2007, the measures to tighten financial
controls and operational efficiency that we have implemented are already having
a positive impact. We are confident that the historic accounting issues are
behind us, leaving the Company well positioned for future growth. We are
confident of gaining a larger share of the market going forward and have been
pleased with the performance in obtaining new accounts since the beginning of
this financial year. The pipeline of new business in the coming months is also
encouraging and, this, along with our planned operating efficiencies should
return the Group to sustained profitability."



"I am delighted to welcome Ian Selby to the Group. Ian's appointment, along with
our other recent Board changes, has resulted in a highly strengthened team that
is already adding significant value to the Company. It is the Group's intention
to further strengthen its Board in the near future."





For further information please contact:


Zenith Hygiene Group plc                                         01707 255 081
Ringo Francis, Chairman and Chief Executive

Ian Selby, Finance Director

Blythe Weigh Communications                                      020 7138 3204
Paul Weigh                                                       07989 129 658

David Murphy                                                     07929 443 427

Oriel Securities Limited (Nominated Adviser)                     020 7710 7600
Malcolm Strang / Michael Shaw









                      This information is provided by RNS
            The company news service from the London Stock Exchange
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