Zenith Hygiene Group plc (“Zenith” or “the Group”), the manufacturer and supplier of cleaning and non-food ancillary products to the food service and hospitality markets, announces the acquisition of the entire issued share capital of Quantum Hygiene PLC (“Quantum”).  The consideration is £1.8 million of which £0.9 million is in cash and £0.9 million is in the form of non-interest bearing loan notes repayable in one year.

Quantum, founded in 1984, is based in Orpington, Kent and is a supplier of cleaning, hygiene and non-food ancillary products. Its customers, many of whom are to be found in and around the M25, comprise mainly hotels, restaurants and contract caterers. Key customers include Baxter Storey, Pontis Group and in the care sector, Nuffield Homes. Quantum’s latest audited accounts to 31st December 2004 show turnover of £4.6 million, profit before tax of £0.1 million and net assets of £0.3 million, including net debt of some £0.9 million.

The board of Zenith expects the acquisition to be earnings enhancing in the first full year of acquisition. Significant pre-tax profit enhancing synergies of at least £0.5 million are expected to arise in the year ending 31 August 2006, through:

• the switch of chemical supplies from external parties to the Group’s in-house manufacturer, SB Chemicals Limited (“SBC”);
• improved product purchasing; 
• the elimination of duplicated head office functions; and
• distribution cost and efficiency savings.

Zenith is also today providing an update on trading in advance of its interim results for the six months ended 28 February 2005.

Revenues and operating profits are in line with the Board’s expectations and at this stage Zenith remains on track to meet market expectations for the year.  Based on unaudited management accounts, turnover for the first five months of the current financial year increased by 24 per cent. (or 12 per cent. excluding SBC).  Historically the majority of the Group’s operating profits have been generated in the second half of the year and with the acquisition of SBC on 6 October 2004, the full year outcome will this year once again be highly dependent on the Group’s performance in the second half of the financial year.

Since the 31 August 2004 there have been a number of new customers added, including Hand Picked Hotels, Leapfrog, Jigsaw and Princess Christian Nurseries, Courtyard by Marriott Hotels and the Massive Pub Company.  The integration of SBC into the Group is proceeding well and is expected to be completed by the scheduled date of 30 April 2005.

The Group expects to announce its interim results for the six months ended 28 February 2005 in early May.

Commenting on the acquisition, Ringo Francis, Chairman & Chief Executive, said:

“In line with our strategy, we are delighted to be adding Quantum, a very well respected business in our industry, to the Group.  The Group should reap considerable benefits from the acquisition not least because our existing investment in infrastructure, manufacturing capability and national distribution will enable us to make significant cost savings.”

Chris Brown, founder and major shareholder of Quantum, said:

“We have known Zenith for many years and are very pleased to become part of their Group. There are considerable opportunities for the two businesses, as one, to grow.”

For further information, please contact:

Zenith Hygiene Group plc
Ringo Francis, Chairman and Chief Executive
Richard Colwell, Finance Director
01707 270 260

Beattie Financial
Tim Blythe
Tracy Lloyd-Watts
020 7398 3300