Final Results

PATERSON ZOCHONIS PLC
7 September 1999
                                 
                       PATERSON ZOCHONIS plc
                                 
                     PRELIMINARY ANNOUNCEMENT

Operating and financial review

  Global review
  Good  progress  was made during the year in most units,  however
  the  serious  economic  and  trading conditions  experienced  in
  Eastern Europe and China, as previously announced, have impacted
  the  group's results.  During the year, significant losses  were
  incurred in these units, but actions have already been taken  to
  improve their performance.

  Europe
  The  UK  business  had  a good year with improved  turnover  and
  profitability.    A   new  shower  product,   Imperial   Leather
  Foamburst,  was  successfully launched at the beginning  of  the
  financial  year  and  a  new  skin moisturising  washing  range,
  Imperial Leather Aquasource, was introduced this spring.
  In   Eastern   Europe  the  currency  and  credit  difficulties,
  particularly  in  Russia  and  Ukraine,  severely  affected  our
  business from the autumn of 1998.  Turnover reduced immediately,
  although there are currently signs of some improvement.   Action
  has been taken to reduce costs in all areas of the business.
  The  new  factory in Greece, badly damaged by fire in 1997,  has
  now  been  repaired  and  turnover and profitability  have  been
  maintained at similar levels to last year.

  Asia
  Generally  our  units  in  the Far East  had  a  good  year,  in
  particular  in Indonesia and Thailand where growth  in  turnover
  and  profitability was significant.  Their improved results were
  however  largely negated by the problems encountered  in  China.
  The  increasingly  competitive  nature  of  the  Chinese  market
  resulted  in  lower selling prices and reduced  margins  forcing
  that  company  to  re-assess  the focus  and  structure  of  its
  business.   The  company is now concentrated much  more  on  its
  range of soap products, severely curtailing other activities and
  bringing  more distribution under its own control.  These  broad
  measures  have  enabled the losses incurred in the  year  to  be
  reduced  quickly  with  the  aim of growing  the  business  into
  profitability  in the near future.  As a result of  the  revised
  strategy,  an  exceptional provision of £6.3m has been  made  to
  cover losses on under-utilised plant and machinery and necessary
  stock and debtor write-offs.

  Africa
  Kenya and Ghana maintained trading profits at a similar level to
  the  previous  year, however, profitability of the associate  in
  Nigeria  was affected by the reduction in consumer demand  as  a
  result of the depressed economy caused mainly by the weak  price
  of  oil.   With  the  impact now of higher oil  prices  and  the
  actions  taken  by the new civilian government,  there  is  some
  indication of a slow pick up in activity.

  Post balance sheet event
  Since  the  year  end, the group's interest  in  the  associated
  company  in Nigeria has increased to over 50%.  The results  and
  net  assets will be consolidated as a subsidiary from  1st  June
  1999.   Details  of  the  listed  associated  company  and   its
  subsidiaries are set out in note 2.

  Investment
  During the year, current asset investments have been reduced  to
  fund  the completion of the capital investment programme and  to
  reduce borrowings.  As a result, investment income has risen  in
  the  year,  with profits being taken on the disposal  of  equity
  investments.

  Outlook
  The major investment programme of the last few years was largely
  completed by the year-end.  The priorities of the group for  the
  immediate future are to consolidate existing businesses  and  to
  concentrate on profitability and cash generation, to enable  the
  group  to  resume  its  long  term strategy  of  growth  in  its
  principal developing markets.
  The very first priority has been to tackle the problem areas  of
  China  and Poland, both of which have growth potential  for  the
  group   going  forward.   Rapid  action  on  cost  cutting   and
  consolidation   in   these  areas  has  resulted   in   improved
  performance  in  the current year.  Any modest recovery  in  the
  overall  economic  conditions in Nigeria, Indonesia,  China  and
  Eastern  Europe will further improve profitability.  Group  cash
  flow  is  now positive and the board is recommending a  dividend
  increase of 5.4%.
                                 
                       PATERSON ZOCHONIS plc
                                 
Consolidated Profit and Loss Account for the Year to 31st May 1999

                                    1999    1999      1999       1998
                                    Before                       
                               Exceptional Exceptional
                                      item       item      Total      Total
                                               (note 1)           (Restated)
                                       £000       £000      £000       £000
                                                                 
Turnover                          357,297            -     357,297    355,946
Cost of sales                    (227,710)      (5,177)   (232,887)  (225,298)
                              
Gross profit                      129,587       (5,177)    124,410    130,648
Selling & distribution            (71,703)      (1,115)    (72,818)   (73,319)
expenses                         
Administrative expenses           (40,836)          -      (40,836)   (37,159)
                               
Group operating profit             17,048       (6,292)     10,756      20,170
Share of operating profit of        4,832           -        4,832       6,392
 associated companies
                                   21,880       (6,292)     15,588      26,562
Investment income - group          14,445           -       14,445      12,559
companies
Interest payable:                                                
Group companies                   (5,831)           -       (5,831)    (5,466)
Associated companies              (1,129)           -       (1,129)      (945)
                                  (6,960)           -       (6,960)    (6,411)
                                                                 
Profit on ordinary activities     29,365        (6,292)     23,073     32,710
before taxation
Taxation on profit on ordinary    (7,443)           -       (7,443)   (10,572)
activities                                                  
Profit on ordinary activities     £21,922     £(6,292)      15,630     22,138
after taxation                            
Equity minority interests                                   3,106      1,006
Profit for the financial year                              18,736     23,144
Preference dividends                                         (770)      (770)
Profit attributable to                                     17,966     22,374
ordinary capital
Ordinary dividends                                         (9,252)    (8,777)
Profit for the financial year                              £8,714     £13,597
retained
                                                                 
                                                                 
Earnings per ordinary share                                      
after                                                       37.87p    47.16p
exceptional item
                                                                 
Earnings per ordinary share                                      
before                                                      46.62p    47.16p
exceptional item

The results for both years arise from continuing operations.
                                 
                       PATERSON ZOCHONIS plc
                                 
                Balance Sheets as at 31st May 1999

                                  The group            Parent company
                                  1999       1998        1999       1998
                                  £000       £000        £000       £000
Fixed assets                                                        
Intangible assets                     299          -          -          -
Tangible assets                   149,378    125,596          -          -
Investments:                                                        
Subsidiary companies                    -          -     76,403     75,036
Associated companies               34,565     26,864      7,187      7,036
Other investments                       -         61          -         61
                                  184,242    152,521     83,590     82,133
Current assets                                                      
Stocks                             61,081     55,625          -          -
Debtors                            62,403     62,673     59,955     51,589
Investments                        69,665    107,082     36,427     59,922
Cash at bank and in hand            7,804      6,166          -          -
                                  200,953    231,546     96,382     111,511
Creditors - amounts falling      (120,107)  (143,061)   (44,990)   (62,589)
due within one year             
Net current assets                 80,846     88,485     51,392     48,922
Total assets less current         265,088    241,006    134,982    131,055
liabilities
Creditors - amounts falling       (14,546)   (14,427)         -          -
due after one year
Provisions for liabilities and     (1,830)    (4,412)         -     (1,875)
charges
Net assets                       £248,712   £222,167   £134,982   £129,180
                                                  
                                                                    
Capital and reserves                                                
Equity ordinary share capital       4,744      4,744      4,744      4,744
Non-equity preference share         7,898      7,898      7,898      7,898
capital
Total called up share capital      12,642     12,642     12,642     12,642
Reserves attributable to                                            
equity interests:
Revaluation reserve                46,656     26,772          -          -
Profit and loss account           185,740    177,106    122,340    116,538
Total shareholders' funds         245,038    216,520    134,982    129,180
                                                                    
Equity minority interests           3,674      5,647          -          -
                                 £248,712   £222,167   £134,982   £129,180
                                                  
                                 
                       PATERSON ZOCHONIS plc
                                 
                     Group Cash Flow Statement
                                 
                                                 1999         1998
                                                         (Restated)
                                                 £000     £000
                                                          
Cash flow from operating activities              6,366      23,834
                                                          
Dividends received from associated companies         -       1,873
                                                          
Returns on investments and servicing 
of finance                                       7,864       6,840
                                                          
Taxation                                        (6,701)     (9,574)
                                                 
                                                          
Capital expenditure and financial investment   (25,019)    (27,602)
                                                 
                                                          
Acquisitions and disposals                          (1)     (2,054)
                                                          
Equity dividends paid                           (8,777)     (8,327)
                                                 
Cash outflow before use of liquid resources 
and financing                                  (26,268)    (15,010)
                                                          
Management of liquid resources                  37,738        (547)
                                                          
Financing                                      (11,637)     17,218
                                                 
                                                          
(Decrease) / increase in cash in the period      £(167)     £1,661
                                                          
                                                          
                                                 1999     1998
                                                 £000     £000
Reconciliation of net cash flow to movement in            
net funds
                                                          
(Decrease) / increase in cash in the period        (167)      1,661
Cash outflow / (inflow) from financing           11,637     (17,218)
                                                          
Cash (inflow ) / outflow from management of     (37,738)        547
liquid resources                                 
Change in net funds resulting from cash flows   (26,268)   (15,010)
                                                
Currency retranslation                              701      1,153

Movement in net funds in the period             (25,567)   (13,857)
Opening net funds                                54,493     68,350

Closing net funds                               £28,926    £54,493
                                                 
                                 
                       PATERSON ZOCHONIS plc
                                 
                Group Cash Flow Statement continued
                                 
Analysis of net                                      
funds
                     At 31st May    Cash    Exchange At 31st May
                            1998    flow    Difference     1999
                          £000      £000       £000        £000
                                                         
Cash in hand and at       6,166     1,564      74         7,804
bank
Overdrafts              (15,245)   (1,731)    473       (16,503)
                          
                                     (167)                
Loans due within one      (38,548)  11,624     (159)     (27,083)
year                     
Loans due after one       (4,962)   13         (8)       (4,957)
year                      
                                    11,637               
Deposits                  40,960     2,505     321       43,786
Other current asset       66,122   (40,243)     -        25,879
investments                         
                                   (37,738)
                                   
                          £54,493  £(26,268)    £701      £28,926
                         
                                 
                                 
                                 
                                 
          Statement of Total Recognised Gains and Losses


                                                  1999      1998
                                                        (Restated)
                                                        
                                                  £000     £000
Profit for the financial year                              
  Group companies                                 16,056     19,275
                                                  
 Associated companies                             2,680       3,869
                                                  18,736     23,144
                                                  
Currency retranslation                                     
  Group companies                                 590       (19,094)
                                                           
  Associated companies                         (2,400)         (205)
                                                 
                                               (1,810)      (19,299)
                                                  
Surplus on revaluation                                     
  Group companies                               13,118        1,794
                                                  
Associated companies                            8,496         -
                                                21,614        1,794
                                                  
                                                           
Total recognised gains and losses for the year    £38,540    £5,639
                                                  
                                                           

                                 
                       PATERSON ZOCHONIS plc
NOTES

1.   Exceptional item
  As   discussed  in  the  operating  and  financial  review,   an
  exceptional provision was made during the year in respect of the
  group's operations in China:
                                                      £000
  Write down of fixed assets                          3,436
  Provision for obsolete stock                        1,741
  Provision for bad debts                             1,115
  Effect on profit before taxation                    6,292
  Taxation                                            -
  Minority share                                      2,138
  Effect on retained profit                          £4,154
  
2.   Listed associated company
  The  group  share of the profits and net assets  of  the  listed
  associated company and its subsidiaries in Nigeria is  based  on
  the audited accounts for the year ended 31st May 1999 translated
  to sterling at the rates of exchange stated:
  
                                       1999           1998
                                           Group           Group
                                 Total     share   Total   share
                                          of 48.41%        of 48.22%
                                 £000      £000    £000    £000

  Turnover                       95,330    46,062   103,143    48,829
                                          
  Profit before taxation         7,664      3,703    11,506     5,447
                                                   
  Taxation                       (2,117)   (1,023)   (3,334)   (1,578)
                                           
  Profit after taxation          £5,547    £2,680    £8,172    £3,869
                                           
                                                           
  Fixed assets                   44,845    21,711    26,091     12,582
                                           
  Current assets                 71,971    34,844    75,260     36,293
                                           
  Creditors (due within one     (39,843)  (19,290)  (40,638)   (19,597)
  year)                          
  Creditors (due after one year)   (688)     (333)   (1,967)     (949)
                                                  
  Provisions for liabilities                               
   and charges                   (7,793)   (3,773)   (5,822)   (2,808)
                                           
  Net assets                     £68,492   £33,159   £52,924   £25,521
                                           
                                                           
  Share capital:                                           
  1,116,969,367 ordinary shares                            
  of 50k each
  (1998 - 1,116,969,367 shares)  3,631     1,758     3,979    1,919
  Reserves                       64,861    31,401   48,945   23,602
                                           
                                 68,492    33,159   52,924   25,521
                                           
  Proposed dividend              2,905     1,406    2,785     1,343
  Group interest                         £34,565            £26,864
                                             
  £1=N153.8056 (1998 -  £1=N140.3700)
  
  
                       PATERSON ZOCHONIS plc
                                 
3.   AGM and dividend
  The  board is recommending a final dividend of 13.65p per  share
  which, together with the interim dividend of 5.85p gives a total
  distribution  of 19.5p, an increase of 5.4% over  the  total  of
  18.5p last year.

  The date of the annual general meeting has been fixed for Monday
  November  1st  1999  and dividend warrants  in  respect  of  the
  proposed final dividend, subject to shareholders' approval, will
  be  posted on that day to members on the register at 5.00 pm  on
  1st October 1999.

4.   Presentation of accounts
  Under  the  requirements  of  Financial  Reporting  Standard   9
  'Associates and Joint Ventures', interest payable by  associates
  is  now  shown separately from the share of operating profit  in
  those  companies  in  the  profit and loss  account.   Resultant
  changes have also been made to the statement of total recognised
  gains  and  losses  and  the cash flow  statement.   Comparative
  figures have been restated accordingly.

5.   Basis of accounts
  The  1999  results  are  an abridged version  of  the  statutory
  accounts  for  the  year ended 31st May  1999  which  have  been
  approved  by  the  board of directors and which  will  carry  an
  unqualified  audit  report.  The 1998 results  are  an  abridged
  restated  version of the statutory accounts for the  year  ended
  31st  May 1998 which carry an unqualified audit report and which
  have  been  filed  with  the Registrar  of  Companies.   Neither
  accounts  contain  a  statement in respect of  s.237(2)  of  the
  Companies Act 1985.
 
 
 
 
 
Enquiries 7th September 1999

Paterson Zochonis plc
0161 491 8000                  Graham Calder
(Between 9.00 am and 5.15 pm)  Finance Director