Zenith Hygiene Share Discussion Threads

[cortez] 04/4/2007 19:33

Orb, posted it in response to earlier posts worried about banking covenants being breached. By the way, thanks for the reply, I don't hold these so useful bit of info.

[0rb1t] 04/4/2007 09:50

Not sure how this is relevant to Zenith as the interest charge for last year was £392K compared to pre-exceptional earnings of £2,836K. Meaning that interest was covered over 7 times.

[cortez] 03/4/2007 21:10

'Allders, Courts, Railtrack, and now Kookai franchisee Forminster (LSE: FORM). All these companies have gone bust in recent years. For me, the demise of
these companies merely confirms the assertion that investing in shares can be risky. Some companies will fail, and your investments can become worthless
overnight.

Unfortunately, there are no electronic devices that you can buy that will alert you when you approach a death trap. Instead, it is important to regularly
monitor a range of vital signs which can provide early indications that a business may not be performing as well as it should. These include deteriorating
financial ratios, declining margins, shrinking shareholder equity and heavy dependence on short-term financing.

However, in my view, the biggest problem of all is debt, which, more often than not, can provide the killer blow to most businesses. For shareholders,
there is nothing worse than watching a company struggle to meet its borrowing obligations. But how can you tell if a company has too much debt?

By and large, the best way is to check a company's interest cover. This ratio is calculated by dividing the company's earnings before interest and tax by
its interest bill. The lower the ratio, the more the company is burdened by debt expense.

As a general rule of thumb, when a company's interest cover falls below 1.5 then its ability to meet interest payments becomes questionable. Additionally,
an interest cover of less than 1 indicates that a business is not generating enough operating profit to even cover its interest payments!

A quick trawl around the market reveals a few interesting examples of companies that may be too heavily indebted. Plant-hire firm Ashtead Group (LSE: AHT),
which is valued at £740m, has borrowings of almost £500m. Last year, Ashtead paid out £42m in interest, which ate up a huge chunk of its operating profits
of £58m. While interest payments were covered 1.4 times by operating profit, there was nothing left to distribute to shareholders after taxes were paid.

Invensys (LSE: ISYS) is another company that is barely generating enough operating profit to cover its interest expense. Last year, the engineering company
reported operating profits of £175m, of which £136m was paid out in interest. Elsewhere, car dealer HR Owen (LSE: HRO) looks ready to blow a gasket with
interest payments covered just 1.3 times by operating profits. And the result of failing to make ends meet was spelled out by sausage maker Canterbury
Foods (LSE: CBY). With an interest cover ratio of just 1, a modest downturn in sales quickly tipped the food producer into administration.

Of course, not all companies that skate on thin ice will end up in bankruptcy. Provided a business has enough disposable assets, a company can survive
until revenues and margins pick up again. However, given that investing in shares is already risky, prudent investors could do a lot worse than to steer
clear of heavily indebted companies especially given that there are plenty of healthy businesses on decent valuations to choose from.'

[0rb1t] 30/3/2007 16:27

AGM statement:

'Trading continues to be in line with management expectations and new business
activity remains strong. The Board continues to be fully focused on working
capital and the Group's net debt position is still on track to be below the
levels of January 2007 by the year end.'

Attended the AGM today with one other PI. The board appeared relaxed seeing they have 1/3 of the share capital between them. Julie Rowlands the stand in Finance Director has only been back with the company for two weeks so is still getting to grips with the accounts. She reassured that there should be no substantial items in the exceptions.

I can't understand why Oriel Securities have this as a Hold and forecasting a PE of 6 for next year. I can't see any issues and business is going well. With a lot of reducdancies last year the costs should have come down. The interims should make the situation clearer.

[its the oxman] 30/3/2007 14:30

could it be a nice double bottom being put in place?

[kenmill1] 27/3/2007 10:03

The exit of the FD could be related to the bad presentation of the profit warning last year. If the FD had not realised the significance of the exceptionals etc last year and had not therefore flagged the news to the Board, it is possible he was pushed after a reasonable gap to save face. The argument against that is the fact that they do not have anybody lined up as a replacement. The only slightly optimistic sign is that the fall in the share price is on low volume.

[0rb1t] 26/3/2007 17:23

AGM is this Friday

Location: Mitre House, 160 Aldersgate Street, London EC1A 4DD @ 10.30

[martinc] 26/3/2007 12:00

I wonder if the exit of the FD is directly related to the statement about "taking steps to strengthen the finance department", or whether it's merely an unfortunate coincidence?

[scorpionwinger] 23/3/2007 17:32

If a private equity team looked at it (uncontested) and walked away, we've had one profit warning, an exiting FD without a permanent replacement, and comments about not quite breaching covenants (when previously there was no hint of any bank issues) I think it would be VERY wise to stay on the sidelines. Yes this is cheap based on forecasts in the marke but my gut instinct tells me there's a big hit to come........ so, much as though I'd love to hit the buy button, not for now...

[its the oxman] 23/3/2007 10:01

if i was braver i'd be buying as there should be significant upside but will remain disciplined and wait for an update first

[chazza454] 22/3/2007 07:13

how would you estimate this as a conversion to share price?
I note the 'strengthening of the Finance dept' meant a new FD

[its the oxman] 21/3/2007 20:45

oriel forecast 11p eps 2007 and 18.7p eps for 2008 as of 6/3/07

[trexpert] 08/3/2007 17:45

And they also said "The Group will also be taking action to strengthen the operations of its finance department"!! Slightly worrying but I agree the upsode is bigger now -hopefully.

[chazza454] 08/3/2007 09:16

The phrase that raised my eyebrows was 'the banking covenants have not been breached' why would you say that unless things were exceedingly tight! I cant see any point in selling as the upside is so much bigger than the downside now - or so I hope!

[its the oxman] 08/3/2007 08:39

cut the losers - understandable - but infact i'm very tempted to buy more, that said on the basis of current share price performance and a modest holding already I'm holding back. nevertheless still hope to end up in profit on this one - eventually.

[chazza454] 06/3/2007 10:54

It would be very interesting to know what offer was not up to their valuations! It may well have been OK with the shareholders at this level!

[0rb1t] 06/3/2007 10:12

I agree. It is good news that the private equity bid did not proceed. The management have a decent shareholding and they know the company is worth more. The more companies and contracts they acquire the higher the margins will become.

My rough calculations make this trading at a current year PE of 4.7 now.

[chazza454] 06/3/2007 09:57

Based on the future profits it is difficult to see why this share is not trading at around 160 - it was at this level before with lower prospects. i think that the profit warning (that only related to delays not lost profit) and the sentiment of a failed approach have simply meant a total loss of interest but unless someone can explain otherwise I reckon with time it will be back at 160+

[its the oxman] 06/3/2007 09:33

not pleasant to see the share price this low - must bounce surely

[0rb1t] 28/2/2007 19:33

2006 Annual Account and Report now available online at:



AGM on 30th March.

[kenmill] 16/1/2007 16:58

The presentation on the website does not add a great deal to the picture. If you believe the story, all the bad news is out of the way and there is the added bonus of the potential bid. It is only the lingering bad taste in the mouth over the delayed bad news that stops this being an outright buy. Certainly no reason to sell at this level.

[0rb1t] 10/1/2007 12:07

Check out the last trading statement.

[jimboy99] 09/1/2007 17:08

is there rumour of a bid?

[its the oxman] 09/1/2007 14:26

bid would be nice - but perhaps simply well oversold - and prospects for next year could shape up quite nicely

[jimboy99] 09/1/2007 14:23

so why the rise on such thin volume?