Notes to the Financial Statements

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Strong all round performancefrom a rapidly growing businessFinancial Review ZiRAX Annual Report & Accounts 2006ResultsTotal revenue for 2006increased 21% from theprevious year to $25.0m.Within our segments, salesof oilfield process chemicalshave grown to $9.2m, whichis 160% over 2005, whilstreducing our dependence onhigh performance de-icingproducts to $13.6m from$16.1m in 2005. We havecoupled this with a 138%increase in the industrialsector to $2.2m, furtherspreading our segment rangeand taking advantage of salesopportunities.Cost of sales showed a muchsmaller increase from $10.9min 2005 to $11.8m in 2006,a 9% rise. Distribution, salesand marketing expenses grew9% to $5.5m compared to$5.0m in 2005, whilst Generaland Administrative expenses(excluding exceptional costs)increased 129% to $3.6m in2006 compared to $1.6min 2005.2006 was the first full yearduring which we owned andoperated the majority of ourproduction facilities. As aresult the cost structure ofthe business has changedconsiderably in the periodunder review. The business hasalso significantly expanded itscorporate overheads to meetits requirements as a publiccompany. This has addedan additional $1.4 million ofcosts. Looking at the costs as awhole they have increased from$17.5 m in 2005 to $20.9 min 2006, representing an overall19% increase. The employeenumbers have decreased from225 at the end of 2005 to205 at the close of 2006 asRevenue increased 21%,profit before tax increased 35%…to penetrate markets across the globe…we introduced efficienciesprincipally on the productionside, after we took ownership ofthese facilities.Operating profit beforeexceptional item has grown 32%to $4.0m in 2006 from $3.1min 2005.The previous year’s exceptionalitem of $1.2m representedone off costs of our admissionto AIM.Profit before taxation hasincreased 135% to $3.9m in2006 from $1.7m in 2005.Profit before tax excluding theexceptional item has increased35% from $2.9m in 2005 to$3.9m in 2006.Profit for the year after tax,excluding the exceptional item,was $2.8m compared to $2.1min 2005, a 33% increase.08
Capital expenditureInvestment in fixed assets of$2.0m in 2006, primarilyresults from the expansion of ourVolgograd plant and facility.Cash flowIn 2006 cash from operationsamounted to $2.5m comparedto $1.0m in 2005.Cash capital expenditure was$2.0m as we expand theVolgograd plant capacity. Wealso made an advanced paymentof $2.6m on the signing ofour Supply Agreement withSolvay and repaid borrowings of$2.4m. The remaining $5.3mof funds from the December2005 Admission, shown in tradeand other receivables on thebalance sheet at 31 December2005, were fully received in theearly part of 2006.Cash and cash equivalentsincreased from $6.1m at31 December 2005 to $9.4mat 31 December 2006.Liquidity and financialriskThe Group has sufficient cashfunds to meet its foreseeablebusiness plans. Any surplusfunds are invested, but wedo not undertake speculativetreasury transactions.Basic EPS was 1.63 centsfor 2006 compared to 0.87cents in 2005. In line withthe Boards’ stated strategy nodividend will be payable forthe period.Fenlon DunphyChief Financial OfficerFinancial Review continued…both existing and emerging.ZiRAX Annual Report & Accounts 200609
Page 1 and 2: Annual Report & Accounts 2006We’v
Page 3: Market potential in bothde-icing an
Page 6 and 7: Having achieved our operational goa
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Page 15 and 16: Directors’ ReportcontinuedOOO Yug
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Page 21 and 22: Balance SheetsAt 31 December 2006No
Page 23 and 24: Consolidated Statement of Sharehold
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Page 52: Zirax plc68 Lombard Street,London E

Notes to the Financial Statements

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