REG - Zotefoams PLC - Interim Results
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RNS Number : 9273T Zotefoams PLC 05 August 2025
Zotefoams plc
Interim Report for the Six Months Ended 30 June 2025
Continued strategic progress underpins record H1 results
5 August 2025 - Zotefoams plc ("Zotefoams", the "Company" or the "Group"), a
world leader in supercritical foams, is pleased to announce its interim
results for the six months ended 30 June 2025.
Results highlights
· Record H1 sales performance, with Group reported revenue up 9% to £77.4m (HY
2024: £71.1m), representing constant currency growth of 10%:
- EMEA revenue up 11% to £61.4m (HY 2024: £55.3m)
- North America revenue up 10% to £14.5m (HY 2024: £13.1m)
- Consumer & Lifestyle revenue up 16% to £38.6m (HY 2024: £33.3m)
- Transport & Smart Technologies revenue up 13% to £26.2m (HY 2024:
£23.1m)
- Construction and Other Industrial revenue down 14% to £12.6m (HY 2024:
£14.7m)
· Further increase in margins delivered record H1 profit performance:
- Gross margin up 140 bps to 34.6% (HY 2024: 33.2%)
- Operating margin increased by 220 bps to 15.8% (HY 2024: 13.6%)
- Profit before tax up 37% to a record £11.4m (HY 2024: £8.3m)
· Basic earnings per share up 55% to 19.99p (HY 2024: 12.89p)
· Strong balance sheet:
- Improved cash generation from operations up 86% to £15.8m (HY 2024: £8.5m)
- Net debt (covenant basis(2)) of £21.1m (HY 2024: £35.1m), representing
leverage of 0.7x (FY 2024: 0.9x; HY 2024: 1.4x)
· Interim dividend increased by 5.0% to 2.50p per share (HY 2024: 2.38p per
share)
Strategic highlights
· Excellent progress aligning the commercial functions to focus on three target
market verticals on a global basis with existing staff repositioned into the
new structure and good progress made in recruiting industry experts into key
roles.
· The development of a new manufacturing facility in Vietnam continues as
planned and will position the Group closer to a key global footwear
manufacturing hub. Post period end, Zotefoams announces it will partner in
this venture, via a new operating subsidiary, with Seoheung Co. Ltd.
("Seoheung"), a footwear supply chain specialist manufacturing footwear in
Korea, Vietnam, Indonesia, and China. The company plays a key sourcing role
for major footwear producers, including Changshin Inc. Seoheung has acquired a
17.5% stake in the venture for a $10m cash consideration, with the proceeds
applied to the commissioning of the facility and the project expected to cost
a total of $32m.
· Future organic growth in North America will be supported by capital investment
on a second low-pressure vessel, which remains on track for Q3 2025
commissioning.
Financial summary
June 2025 June 2024 Change
Revenue (£m) 77.4 71.1 9%
Gross margin (%) 34.6 33.2 140 bps
Operating profit(1) (£m) 12.2 9.7 26%
Operating margin (%) 15.8 13.6 220 bps
Profit before tax(1) (£m) 11.4 8.3 37%
Basic EPS(1) (p) 19.99 12.89 55%
Net debt (£m) 29.1 44.6 (35%)
Net debt (£m) covenant basis(2) 21.1 35.1 (40%)
Leverage ratio(3) 0.7 1.4 -
Interim dividend (p) 2.50 2.38 5%
(1) This is a reported number under UK-adopted IAS. Following the impairment
of MuCell Extrusion assets in December 2024, there is no amortisation of
acquired intangibles booked in the period and thus no difference between
reported and adjusted numbers (HY 2024: £0.126m)
(2) Net debt (covenant basis) is that defined under the bank facility,
adjusted for the impact of IFRS16. The main adjustment is the elimination of
Shincell (£5.9m), treated as a right-of-use asset and a corresponding lease
liability
(3) Leverage is not an IFRS measure and is that defined under the bank
facility, with net debt, adjusted for IFRS16, at the end of the period divided
by the preceding 12 months' EBITDA, adjusted for IFRS2 and IFRS16
Commenting on the results and the outlook, Ronan Cox, Group CEO, said:
"I am pleased to report a record first half performance for Zotefoams, as we
embark on a refreshed strategy. Our commercial transformation into
market-focused verticals continues to progress well, with our pipeline of
opportunities growing across all three sectors. While this remains a
longer-term strategic initiative, we are encouraged by early benefits from
this more targeted approach to market development. The curtailing of
investment in MEL has improved profitability significantly and we are
targeting continued strong margin performance, supported by stable polymer
pricing and the benefits of ongoing efficiency improvement programmes. We are
successfully absorbing the costs of our commercial and operational
reorganisation within normal operations while maintaining our focus on
operational efficiency and reinvesting in new capability aligned with the
refreshed strategy.
"We enter the second half with positive momentum. Structural trends across our
three key verticals remain supportive, albeit we remain mindful of near-term
volatility created by the current macroeconomic backdrop. We anticipate some
moderation in Consumer & Lifestyle demand as expected seasonal patterns
emerge and the exceptional growth rates experienced in H1 normalise. Given
the strong H1 2025 performance and momentum carried into the second half, the
Board now expects to deliver full year underlying profit before taxation ahead
of current market expectations.
"We are delighted to be partnering with Seoheung in our investment in Vietnam.
This partnership goes far beyond just investment, as it de-risks the programme
start-up, leverages over 30 years of local knowledge and explores best
practice for injection moulding and footwear component manufacturing systems
and processes.
"The Board is pleased with the Group's early progress of its refreshed
strategy, as shared at the Capital Markets Day held in March 2025, and the
clear focus on the three market verticals provides both stability and
opportunities to unlock growth in a mixed economic backdrop. Our ongoing
investment in Vietnam, innovation capabilities, and the development of our
M&A pipeline positions us well for sustainable growth in line with our
medium-term targets."
Note: Zotefoams-compiled consensus expectations, for the year ending 31
December 2025, are £149.7m for net revenue and £19.4m for adjusted profit
before income tax as at 4 August 2025
Enquiries:
Zotefoams plc +44 (0) 208 664 1600
Ronan Cox, Group CEO
Gary McGrath, Group CFO
IFC Advisory (Financial PR & IR) +44 (0) 203 934 6630
Graham Herring
Tim Metcalfe
Zach Cohen
About Zotefoams plc
Zotefoams plc (LSE - ZTF) is a world leader in supercritical fluid foam
technology, delivering optimal material solutions for the benefit of society.
Utilising a variety of unique manufacturing processes, including
environmentally friendly nitrogen expansion for lightweight AZOTE(®) and
ZOTEK(®) high-performance foams, Zotefoams sells to diverse markets worldwide
across three market verticals, Consumer & Lifestyle, Transport & Smart
Technologies, and Construction & Other Industrial. Zotefoams uses its own
materials to manufacture T-FIT(®) advanced insulation for demanding
industrial markets.
Zotefoams is headquartered in Croydon, UK, with additional manufacturing sites
in Kentucky, USA and Brzeg, Poland (foam manufacture), and foam products
conversion in Oklahoma, USA and Jiangsu Province, China (T-FIT).
www.zotefoams.com (http://www.zotefoams.com)
AZOTE(®), ZOTEK(®) and T-FIT(®) are registered trademarks of Zotefoams plc.
Results overview
Group revenue in the period increased £6.3m, or 9%, to £77.4m (HY 2024:
£71.1m). At constant currency, Group revenue increased £7.3m, or 10%, to
£78.4m.
Gross profit increased 14%, to £26.8m (HY 2024: £23.6m) and gross margin
improved to 34.6% (HY 2024: 33.2%). Operating profit for the period increased
26%, to £12.2m (HY 2024: £9.7m). Profit before tax increased 37%, to £11.4m
(HY 2024: £8.3m) and basic earnings per share increased 7.10p, or 55%, to
19.99p (HY 2024: 12.89p). Operating profit was negatively impacted by £0.3m
of currency headwind (HY 2024: negatively impacted by £0.4m of currency
headwind). The prior year period includes a segment loss of £2.2m in the
Group's MuCell Extrusion (MEL) division, as the Group invested in ReZorce(®)
circular packaging technology. Having paused investment in this initiative in
December 2024 and closed down MEL's operating activities, there has been
minimal activity in 2025.
Cash generated from operations was up £7.3m to £15.8m versus the comparative
period (HY 2024: £8.5m). On an IFRS basis, net debt after the first six
months of the year was down £3.9m to £29.1m (31 December 2024: £33.0m; 30
June 2024: £44.6m). On a bank covenant basis, see full explanation in section
"Net debt and covenants", net debt was down in the period to £21.1m (31
December 2024: £24.1m; 30 June 2024: £35.1m). The leverage multiple (net
borrowings to EBITDA, see section "Net debt and covenants" for definition) at
the end of the period was 0.7x (31 December 2024: 0.9x, HY 2024: 1.4x)) and
financial headroom at 30 June 2025 was £28.8m (31 December 2024: £25.7m; HY
2024: £14.6m).
The Board remains confident in the cash generation of the business and an
interim dividend of 2.50p per share has been approved by the Board (HY 2024:
2.38p per share).
Business unit review
As announced in March 2025, Zotefoams has re-aligned commercially from the
previous product focus of Polyolefin Foams, High-Performance Materials and
MuCell Extrusion (MEL) to a market focus across three key verticals,
comprising Consumer & Lifestyle (which includes footwear and sports &
leisure), Transport & Smart Technologies (which includes aerospace,
transport, industrial packaging and medical) and Construction & Other
Industrial (which includes construction and insulation). Alongside this, the
Group has transitioned to a regional management and reporting structure to
better align the business with its key markets. Performance is presented in
line with this new structure. In Note 6 to this statement, we disclose the MEL
segment separate to the regional segments, to provide a clearer view of
underlying regional performance.
EMEA
In the period, the EMEA region delivered 11% revenue growth (12% at constant
currency), to £61.4m (HY 2024: £55.3m), which included 8% volume growth.
Consumer and Lifestyle drove much of the region's growth, with revenues up 18%
to £37.9m (HY 2024: £32.1m) as Nike demand increased 5% on an already strong
H2 2024. Nike sales were up 19% to £37.0m (HY 2024: 31.1m). This time last
year, we forecasted 2025 revenues would be weaker than 2024, due to the boost
2024 was receiving from an Olympics year and the planned phase-out of a
particular shoe model at the end of 2024. The next generation of ZoomX
programmes in the high-volume 'mid-premium' sector have seen significant
growth in the period over original forecasts and have driven period-on-period
growth for Zotefoams as our customer has built up launch stocks. Also in the
period, ZoomX foam was adopted by some additional smaller programmes -
including basketball - that were not in original forecasts for 2025, creating
additional top-up demand in H1 2025 as the relevant sites stocked up. While
sales in this vertical have been strong in the period, we have seen an easing
in demand during Q2 2025, which we expect will result in H2 2025 being at a
slightly lower run-rate than H1 2025.
Transport & Smart Technologies grew 1% to £17.5m (HY 2024: £17.2m), with
strong performance in our engineered foam products in the aerospace sector,
which showed continued growth in build rates and demand from Boeing 787 and
737 platforms, as well as ongoing success with SpaceX, for whom we have
products in use across multiple launch systems. Our Tier 1 customers to Airbus
also saw growth versus prior year, particularly for the A350. Growth in these
markets was offset by lower demand in volume applications such as packaging,
with packaging product distributors across the region drawing down on existing
stocks along with some regional shifting of demand.
Construction & Other Industrial was unchanged at £6.0m (HY 2024: £6.0m).
Higher sales were achieved direct into some key customers in industrial
applications in both the oil and gas and industrial gasket markets,
particularly for the domestic UK market, which has run significantly ahead of
the prior year and which we expect to continue through H2 2025. This was
offset by lower sales through our distribution partners serving the wider
construction market. Our T-FIT insulation business in particular has had a
slow start to the year as we saw clean room projects and spend in Europe
delayed into the second half of the year. We expect revenue for these products
to be backloaded into H2 2025.
Overall, growth outside of footwear has been largely in line with our
expectations, requiring careful management of capacity to support the stronger
than expected footwear demand.
In the period, the average cost of low-density polyethylene (LDPE), our main
raw material, was slightly below the long-run historical average polymer price
but remained consistent with the comparative period; however, mix changes
towards footwear and ZOTEK® products saw overall polymer costs rise relative
to sales. Energy prices have remained stable in the period and have declined
approximately 10% against the prior year comparative, with efficiency gains
driving further improvement. Labour costs have increased in the period, £0.5m
of which was due to annual payroll inflation, including the increase in
national insurance, and restructure costs to support the refreshed strategy.
Profitability was further impacted by foreign exchange, including the effect
of hedging, where the net impact in the period was negligible, but the prior
year period benefited from a gain of £0.7m.
Regional segment profit increased 2% to £13.8m (HY 2024: £13.5m), with
segment margin declining from 24.4% to 22.4%.
North America
In the period, the North America region delivered 10% revenue growth (12% at
constant currency), to £14.5m (HY 2024: £13.1m), which included 5% volume
growth.
Transport & Smart Technologies is the largest market vertical in this
region and delivered revenue growth of 49% to £8.8m (HY 2024: £5.9m), driven
by continued success with key account targeting in aerospace and specialty
packaging segments, where we have seen both base demand grow and new customer
projects won.
Construction & Other Industrial includes the Zotefoams MidWest business,
based out of Tulsa, OH producing closure strips for industrial buildings and
servicing one customer. Revenue in this vertical declined 17% in the period to
£5.0m (HY 2024: £6.0m) with operational challenges at the key customer
limiting their ability to meet market demand. A recovery plan is in place for
H2 to enable better utilisation of our assets in an otherwise growing market.
This plan includes working with our key customer and building a new pipeline
of opportunities to use this converting capacity in line with a strategy of
moving along the value chain. T-FIT sales were up 32% in the region but from a
low base.
Consumer and Lifestyle is the smallest market vertical in North America, with
sales generated mostly from two customers, and revenues declining 42% to
£0.7m (HY 2024: £1.2m). A continued focus on price increases and mix
enrichment has led to reduced demand in this sector with the existing customer
base, but it remains an area of interest for future new customer
acquisition.
Good progress has been made with the second low-pressure vessel, which
provides a balance of high- and low-pressure capacity for the region and
allows the business to meet its exciting growth potential. Commissioning is
imminent and we expect to be producing commercial products in the third
quarter of this year.
Regional segment profit improved in the period by £1.2m, from breakeven to a
profit of £1.2m, and segment margin improved to 8.6%, driven by improved
performance at our production facility in Walton, KY. This was achieved
through higher sales, an improved mix towards higher margin ZOTEK products and
strong cost control. Successful negotiations with raw material suppliers
resulted in price reductions on low-density polyethylene of approximately 10%
below the prior year comparative, and a focus over the past two years on
efficiency is now beginning to reap rewards, with sizeable yield improvements
and a change in shift patterns reducing direct labour costs.
Asia
Asia is currently an immaterial part of the Group and its revenues of £1.4m
in the period (HY 2024: £2.1m) were generated in the Construction & Other
Industrial vertical through T-FIT® insulation sales fabricated out of China.
This region will grow in importance once the Group's Vietnam footwear
manufacturing facility begins operations. T-FIT sales declined as a result of
a challenging local demand and competitive environment, meaning we have had to
be selective with opportunities that maintain margins. A focus on broadening
our product offering to cater for more price-conscious applications, along
with efforts to establish stronger distribution networks, are key to returning
this region to growth. We have implemented structural changes to the business
which will include improving channel access.
Regional segment profit has declined from £0.6m to a breakeven position due
to the lower revenue performance and the region supporting some of the
start-up costs of the new production facility in Vietnam and innovation centre
in South Korea.
Strategic Investment in Asia
We announced this morning that we are partnering with Seoheung Co. Ltd.
("Seoheung") in Vietnam. Seoheung is a footwear supply chain specialist
manufacturing footwear in Korea, Vietnam, Indonesia and China. The company
plays a key sourcing role for major footwear producers, including Changshin
Inc., and continues to grow steadily through ongoing innovation, with annual
revenues of approximately US$260m.
The collaboration de-risks Zotefoams' Asian investment from both financial and
technical perspectives. By partnering with an experienced local manufacturer,
Zotefoams gains immediate access to proven Asian manufacturing expertise while
sharing project costs and operational risks. Seoheung brings decades of
experience in the Asian footwear industry, including a deep knowledge of
Vietnam's manufacturing landscape. The partnership supports Zotefoams'
strategic evolution from supplying traditional foam sheets to producing
advanced 3D preforms for the athletic footwear market. This technological
transition requires both Zotefoams' expertise in supercritical foams and
Seoheung's manufacturing process expertise to ensure successful implementation
and rapid market adoption. The
joint venture allows Zotefoams to continue to serve and work in collaboration
with all its customers in the footwear business.
Under the terms of the joint venture, Seoheung will invest US$10m for an
initial equity stake of 17.5% in a newly established holding company for the
Vietnamese facility, with the Group retaining the remaining 82.5%. Subject to
the agreement of both parties, Seoheung can increase its equity ownership to
35%, for a further $14m investment. The proceeds of Seoheung's investment will
be applied to the commissioning of the facility, with the project expected to
cost a total of approximately $32m.
Progress on our Vietnam facility continues as planned. Key machinery orders
have been placed, property arrangements finalised, and we have appointed an
experienced leader in both the region and the industry to head the joint
venture operation. This investment will position us at the heart of global
footwear manufacturing and, by deepening our strategic relationships, also
provides greater longer term market access and operational flexibility.
M&A Strategy
The Group's primary focus is on driving organic growth, but the potential
opportunity exists to use targeted M&A as a new growth lever where it
meets the Board's stringent criteria. Value could be enhanced through either
market consolidation, and portfolio expansion with complementary products,
acquisition of technologies to deepen expertise, or through downstream
extension, to shorten the value chain, gain machining and processing
capabilities and get closer to customers, while respecting existing customers,
many of whom are active in this area.
Environmental, Social and Governance ('ESG')
The Board understands that embedding ESG in our business creates sustainable
long-term value for stakeholders. Zotefoams' purpose, to provide "optimal
material solutions for the benefit of society" reflects our belief that
plastics, when used appropriately, are frequently the best solution for the
sophisticated, long-term applications typically delivered by our
customers. We are making good progress on our ESG plans including reducing
energy and polymer usage, minimising waste and developing new products which
use recycled materials. A full ESG report was published in the 2024 Zotefoams
Annual Report, setting out the Group's ESG management framework, goals and
performance to date. This will be updated in the next Annual Report to be
published in April 2026.
Employees and talent management
Hiring and retaining employees with the right skills, along with managing and
further developing these talented people, is very important to Zotefoams as it
grows and evolves globally. We have a wide scope of opportunities and need to
continue to identify and develop the right people to define and deliver our
potential. We had a global workforce (fulltime equivalent) of 600 people as at
the period end (HY 2024: 632 people), 43% (HY 2024: 45%) of whom are located
outside the UK. The reduction is mostly related to the closure of our MEL
activities, where headcount reduced to one employee, from 29 in the
comparative prior year period.
On behalf of the Board, we would like to thank all our employees for their
continued contributions and commitment to Zotefoams.
Financial review
Currency review
As a predominantly UK-based exporter, and with the Group's fast-growing market
opportunities invoiced almost entirely in US dollars, approximately 90% of
Zotefoams' sales are denominated in currencies other than sterling, mostly the
US dollar and euro. Most costs are incurred in sterling, other than the main
raw materials processed at the Croydon, UK site, which are in euros, and the
operating costs of the Group's North American activities, which are in US
dollars. As a result, movements in these foreign exchange rates can have a
significant impact on the Group's results. The Group also incurs operating
costs at the Poland facility in Polish zloty and operating costs at its China
T-FIT processing plant in Chinese yuan but any fluctuations here are
immaterial to the Group.
The exchange rates used to translate the key flows and balances were:
6 months to 30 Jun 25 6 months to 30 Jun 24 12 months to 31 Dec 24
Euro to GBP - period average 1.192 1.167 1.177
Euro to GBP - period-end spot 1.169 1.182 1.210
USD to GBP - period average 1.282 1.264 1.278
USD to GBP - period-end spot 1.372 1.264 1.252
The Group uses forward exchange contracts to hedge its foreign currency
transaction risk and hedges its exposure to foreign currency denominated
assets, where possible, by offsetting them with same-currency liabilities,
primarily through borrowing in the relevant currency. These foreign currency
denominated assets, which are translated on a mark to market basis every month
with the movement being taken to the income statement, include loans made by
the Company to, and intercompany trading balances with, its overseas
subsidiaries, the effect of which is cash neutral. They also include
non-sterling accounts receivable held on the Company's balance sheet, which
mostly relate to the Group's engineered polymer product sales, where further
hedging activities are taken although their accuracy is subject to the timing
of customer receipts. The Group does not currently hedge for the translation
of its foreign subsidiaries' assets or liabilities. This policy is kept under
regular review and is formally approved by the Board on an annual basis.
In the period, net foreign exchange movements had a negative impact on sales
and profitability. Reported net sales were £1.1m below those adjusted at
constant currency (HY 2024: £1.8m below). The net profit effect of this on
the Group, prior to any hedging activity, was unfavourable by approximately
£0.5m (HY 2024 loss: £0.9m). Offsetting this was a gain of £0.2m (HY 2024
gain: £0.5m) from transactional hedging via forward exchange contracts, which
mostly occurs on USD-denominated footwear receivables. The combined
unfavourable impact of movements in foreign currency on profitability in the
period was £0.3m (HY 2024: unfavourable impact £0.3m).
Gross profit
Gross profit increased by £3.2m or 14% in the period to £26.8m (HY 2024:
£23.6m), on increased sales of £6.3m resulting in an improvement in gross
profit margin to 34.6% (HY 2024: 33.2%). Margin benefitted from the removal of
losses generated by the MEL business. Excluding MEL, gross margin remained
stable at 34.5% (HY 2024: 34.4%) where increased labour costs in EMEA offset
benefits from the favourable sales mix. The Group was negatively impacted by
£0.5m of currency impact (HY 2024: £1.1m of negative currency impact) before
hedging.
Distribution and administrative costs
Included within distribution expenses in the Group's income statement are
sales, marketing, despatch and warehousing costs. These costs reduced 11% to
£4.1m (HY 2024: £4.6m), led by the removal of the MEL business. Excluding
MEL, distribution expenses decreased £0.2m due to headcount reductions,
mostly in the North America business.
Included within administrative expenses are technical development, finance,
information systems and other administration costs as well as the impact of
foreign exchange translation expenses. In the period, these costs increased
13% to £10.5m (HY 2024: £9.3m). Excluding foreign exchange movements, costs
increased 4% to £10.3m (HY 2024: £9.9m), largely reflecting salary inflation
and headcount additions on higher salaries, including changes to the executive
leadership team, which are mostly to support the refreshed corporate strategy.
This offsets the reduction of 23 technical and administration employees from
the closure of MEL. See the currency review for further details of FX-related
variances.
Net finance costs
Net finance costs reduced to £0.8m (HY 2024: £1.4m) and included interest
income of £0.2m (HY 2024: £0.1m). Within the interest charge, £0.05m (HY
2024: £0.05m) relates to the Company's Defined Benefit Scheme pension
obligation and £0.2m (HY 2024: £0.1m) relates to the interest charge on the
capitalised cost of the Shincell global alliance agreement. The decrease has
arisen from a lower level of debt through the period and lower lending rates
in the US dollar and euro, the currencies of the primary borrowings of the
Group.
Taxation and earnings per share
The income tax expense for the period reduced 20% to £1.6m (HY 2024: £2.0m).
The tax charge is recognised based on management's estimate of the weighted
average annual income tax rate expected for the full financial year.
Zotefoams' estimated average annual tax rate used for the period to 30 June
2025 is 14.45% (estimated average annual tax rate for the year used at 30 June
2024: 24.21%). This lower rate arises from more effective utilisation of
research and development credits and patent box initiatives, together with
improved profitability in overseas regions with favourable tax rates.
Basic earnings per share was 19.99p (HY 2024: 12.89p) an increase of 55%,
while diluted earnings per share was 19.44p (HY 2024: 12.63p), an increase of
54%.
Cash flow
Cash generated from operations was £15.8m (HY 2024: £8.5m). Included in this
was a net decrease in working capital in the period of £0.5m (HY 2024: net
increase of £5.9m). Accounts receivable increased £3.6m in the period (HY
2024: increased £3.3m), to a quantum in line with that of the prior year
comparative despite higher sales and reflecting a concerted pursuit of
receipts. Inventories decreased £0.7m in the period (HY 2024: increased
£5.1m), as the Group took targeted measures to reduce its inventory holding
across all product lines. Accounts payable increased £3.3m (HY 2024:
increased £2.5m), reflecting proactive engagement with suppliers to increase
payment terms and an increased focus to pay on time, not ahead. As a
consequence of these actions, working capital as a percentage of sales at 30
June 2025 was 780 bps below the comparative prior year period, at 31.5% (HY
2024: 39.3%).
Capital expenditure in the period was £8.5m (HY 2024: £8.1m), of which £nil
(HY 2024: £2.0m) related to intangibles, the decline in intangible
expenditure being attributable to the decision in December 2024 to pause
investment in ReZorce circular packaging. The primary spend for the Group in
H1 2025 was the low-pressure vessel in the USA, where £5.0m (HY 2024: £1.8m)
was invested and commissioning remains on target for Q3 2025. Downpayments on
essential equipment for the Vietnam manufacturing facility were made in the
period of £2.0m, but capital spend will increase in H2 2025 and thus keep the
rate of capital expenditure across the Group constant in the period. Lease
payments in the period increased to £1.4m (HY 2024 £1.0m) and were driven by
payments to Suzhou Shincell New Materials Co, Ltd ("Shincell"), as per the
technology licensing agreement signed in May 2024, amounting to £0.9m (HY
2024: £0.6m), and a final dividend of £2.5m (HY 2024: £2.4m) was paid
during the period.
Net debt and covenants
The Group's gross finance facility, held with our partner banks Handelsbanken
and NatWest, comprises a £50m multi-currency revolving credit facility with a
£25m accordion and has an end term date of March 2027. It includes an
interest rate ratchet linked to leverage on a six-monthly basis and has a
small element related to the achievement of annual sustainability targets.
Net debt (cash less bank borrowings and lease liabilities) decreased by £3.9m
from the start of the period to £29.1m at 30 June 2025 (31 December 2024:
£33.0m; 30 June 2024: £44.6m). Under the bank covenant definition of net
debt, which adjusts for the impacts of IFRS 16, most notably the Shincell
lease liability of £5.9m, (HY 2024: £7.1m), net debt decreased £3.0m in the
six months to £21.1m (31 December 2024: £24.1m, 30 June 2024: £35.1m),
driven significantly by the reduction in working capital as noted in the
section "Cash flow" above. Headroom, which we define as the combination of
amount undrawn on the bank facility and cash and cash equivalents disclosed on
the Statement of Financial Position, amounted to £28.8m at 30 June 2025 (31
December 2024: £25.7m).
The Group remained comfortably within its banking covenants, which are tested
semi-annually, throughout the first half of the year. As at 30 June 2025, the
multiple of EBITDA to net finance charges on a rolling 12-month basis was 14.7
(31 December 2024: 10.8; 30 June 2024: 9.4), against a covenant minimum of
4.0, and the multiple of net borrowings to EBITDA (leverage) on a rolling
12-month basis was 0.7 (31 December 2024: 0.9, 30 June 2024: 1.4), against a
covenant maximum of 3.5.
These covenant measures, which are not UK-adopted IAS, are defined in the
following table:
Net debt to EBITDA ratio (Leverage)
£m 12 months to 30 June 2025 12 months to 30 June 2024 £m At 30 June At 30 June
2025 2024
Profit after tax 13.9 9.9 Net debt per IFRS 29.1 44.6
Adjusted for: IFRS 16 leases (8.0) (9.5)
Depreciation and amortisation 9.1 8.2
Net finance costs 2.3 2.7 Net debt per bank 21.1 35.1
Share of result from joint venture (0.0) (0.1)
Equity-settled share-based payments 1.2 1.3
Taxation 4.6 3.8
Roundings (0.2) 0.1
EBITDA 30.9 25.9 Leverage per bank 0.7 1.4
EBITDA to net finance charges ratio
£m 12 months to 30 June 2025 12 months to 30 June 2024 £m 12 months 12 months
to 30 June to 30 June
2025 2024
EBITDA, as above 30.9 25.9 Finance costs 2.3 2.9
Finance income (0.2) (0.2)
EBITDA to net finance charges 14.7 9.4 Net finance charges 2.1 2.7
Post-employment benefits
The last full actuarial valuation of the DB Scheme, closed to new members
since 2001, took place as at 5 April 2023 in line with the requirement to have
a triennial valuation. On a Statutory Funding Objective basis, a deficit was
calculated for the DB Scheme of £2.9m (previous triennial valuation: £7.7m).
As a result, the Company agreed with the Trustees to continue to make
contributions to the DB Scheme of £643,200 per annum to meet the shortfall by
31 July 2028. In addition, the Company pays the ongoing DB Scheme expenses of
£216,000 per annum to cover death-in-service insurance premiums, the expenses
of administering the DB Scheme and Pension Protection Fund levies.
At the previous year-end of 31 December 2024, the IAS19 deficit disclosed in
the Company accounts was calculated to be £1.6m. Over the period to 30 June
2025, the Scheme's invested assets have reduced by around £0.2m while the
liabilities have reduced by around £1.2m due to the increase in long dated
corporate bond yields. After taking these factors into account, the IAS19
deficit is estimated to have reduced by around £1.0m (i.e. from £1.6m as at
31 December 2024 to around £0.6m as at 30 June 2025).
Going Concern
The Group's business activities, together with the factors likely to affect
its future development, performance and position, are set out in the Strategic
Report of the 2024 Annual Report on pages 1 to 71 and the section entitled
risk management and principal risks on pages 38 to 50. This Interim Report
provides information on business and financial performance for the six months
to 30 June 2025.
The Directors believe that the Group is well placed to manage its business
risks and, after making enquiries including a review of forecasts and
predictions, taking account of reasonably possible changes in trading
performance and considering the existing banking facilities, have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the next 12 months following the date of approval of this
Interim Report. After due consideration of the range and likelihood of
potential outcomes, the Directors continue to adopt the going concern basis of
accounting in preparing these interim financial statements.
Dividend
An interim dividend of 2.50p per share (HY 2024: 2.38p per share) will be paid
on 6 October 2025 to shareholders on the Company's register at the close of
business on 5 September 2025.
Principal risks and uncertainties
Zotefoams' business and share price may be affected by a number of risks, not
all of which are within its control. The process Zotefoams has in place for
identifying, assessing and managing risks is set out in the risk management
and principal risks section, pages 38 to 50, of the 2024 Annual Report.
In the opinion of the Board, the specific principal risks (which could impact
Zotefoams' sales, profits and reputation) and relevant mitigating factors, as
currently identified by Zotefoams' risk management process, have not changed
significantly since the publication of the last Annual Report, which was four
months prior to this Interim Report. Detailed explanations of the Group's
principal risks can be found in the 2024 Annual Report. Broadly, we list these
as operational disruption, sustainability and climate change, global capacity
management, technology displacement, scaling-up of international operations,
loss of a key customer and external.
The evolving US trade landscape presents both challenges and opportunities.
Current tariff rates of on Chinese goods versus 20% on Vietnamese imports are
likely to accelerate footwear production migration to Vietnam, supporting our
£24m facility investment there. Our diversified manufacturing footprint
across the UK, US, Poland, and Vietnam positions us to capture market share
from competitors in higher-tariff jurisdictions. While we monitor potential
impacts on US consumer demand and supply chain margins, the fundamentals of
our proposition remain compelling.
Outlook
Following our strong first half performance, we enter H2 2025 with good
trading and strategic momentum. Structural trends across our three key
verticals remain supportive, albeit we remain mindful of near-term volatility
created by the current macroeconomic backdrop. We anticipate some moderation
in Consumer & Lifestyle demand as expected seasonal patterns emerge and
the exceptional growth rates experienced in H1 normalise. Transport &
Smart Technologies continues to show robust momentum, driven by recovering
build rates in aviation and expanding opportunities in the space sector. In
Construction & Other Industrial, whilst we anticipate European
construction markets to remain subdued, we expect a stronger H2 performance in
North America as our key customer addresses their operational challenges. Our
T-FIT business remains a focus area as we continue to invest in team
capabilities, channel access, and new product development.
Operationally, capacity is being carefully managed in EMEA, as we support the
greater than expected growth in the Consumer & Lifestyle business. The
imminent commissioning of our second low-pressure vessel in North America
provides exciting growth opportunities in that region, while progress on our
Vietnam facility continues as planned, and will be bolstered by our
partnership in the country with Seoheung Co. Ltd., announced today. The
curtailing of investment in MEL has improved profitability significantly and
we are targeting continued strong margin performance, supported by stable
polymer pricing and the benefits of ongoing efficiency improvement programmes.
We are successfully absorbing the costs of our commercial and operational
reorganisation within normal operations while maintaining our focus on
operational efficiency. Foreign exchange remains a headwind, although our
hedging strategy continues to provide appropriate protection at the moment.
Given the strong H1 2025 performance and momentum carried into the second
half, the Board now expects to deliver full year underlying profit before
taxation ahead of current market expectations.
We are delighted with the Group's early progress of its refreshed strategy, as
shared at the Capital Markets Day held in March 2025, and the clear focus on
the three market verticals provides both stability and opportunities to unlock
growth in a mixed economic backdrop. Our ongoing investment in Vietnam,
innovation capabilities, and the development of our M&A pipeline positions
us well for sustainable growth in line with our medium-term targets.
L Drummond R Cox
Chair Group CEO
4 August 2025 4 August 2025
ZOTEK(®), AZOTE(®), ReZorce(®) and T-FIT(®) are registered trademarks of
Zotefoams plc.
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that these condensed consolidated interim financial
statements have been prepared in accordance with International Accounting
Standard 34, 'Interim Financial Reporting' as adopted by the United Kingdom
and that the interim management report includes a fair review of the
information required by DTR 4.2.7 and DTR 4.2.8, namely:
• an indication of important events that have occurred during the first six
months and their impact on the condensed set of financial statements, and a
description of the principal risks and uncertainties for the remaining six
months of the financial year; and
• material related-party transactions in the first six months and any material
changes in the related-party transactions described in the last annual report.
The Directors of Zotefoams plc are listed on the Zotefoams plc website:
www.zotefoams.com.
By order of the Board:
L Drummond R Cox
Chair Group CEO
4 August 2025 4 August 2025
Zotefoams PLC
Consolidated Interim Income Statement
For the six months ended 30 June 2025
Six months ended Year Ended
30-Jun-25 30-Jun-24 31-Dec-24
(Unaudited) (Unaudited) (Audited)
Notes £'000 £'000 £'000
Revenue 6 77,432 71,060 147,791
Cost of sales (50,664) (47,490) (101,658)
Gross profit 26,768 23,570 46,133
Distribution costs (4,051) (4,568) (8,478)
Administrative expenses (10,491) (9,340) (19,525)
Exceptional costs of closure of business - - (15,178)
Operating profit 12,226 9,662 2,952
Operating profit before exceptional items 12,226 9,662 18,130
Finance costs (1,053) (1,554) (3,147)
Finance income 205 122 274
Share of profit from joint venture 19 59 74
Profit before income tax 11,397 8,289 153
Profit before income tax and exceptional items 11,397 8,289 15,331
Income tax expense 7 (1,647) (2,006) (2,908)
Profit/(loss) for the period/year 9,750 6,283 (2,755)
Profit for the year before exceptional items 9,750 6,283 12,423
Profit attributable to:
Equity holders of the Company 9,750 6,283 (2,755)
Earnings per share:
Basic (p) 9 19.99 12.89 (5.66)
Diluted (p) * 9 19.44 12.63 (5.66)
Earnings per share excluding exceptional closure costs **
Basic (p) 9 19.99 12.89 25.95
Diluted (p) 9 19.44 12.63 25.24
* In 2024 the loss attributable to equity shareholders and weighted average
number of ordinary shares for the purposes of calculating diluted earnings per
ordinary share are identical to those used for basic earnings per ordinary
share. This is because the exercise of share options and warrants would have
the effect of reducing the loss per ordinary share and is therefore
anti-dilutive.
** This is not an IFRS measure and has been calculated based on the
pre-exceptional lines above.
The notes below form an integral part of these condensed consolidated interim
financial statements.
Zotefoams PLC
Consolidated Interim Statement of Comprehensive Income
For the six months ended 30 June 2025
Six months ended Year ended
30-Jun-25 30-Jun-24 31-Dec-24
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Profit/(loss) for the period/year 9,750 6,283 (2,755)
Other comprehensive income
Items that will not be reclassified to profit or loss:
Actuarial gains on defined benefit pension schemes 570 768 348
Tax relating to items that will not be reclassified (143) (192) (87)
Total items that will not be reclassified to profit or loss 427 576 261
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation losses on translation of foreign operations (1,777) (94) (371)
Change in fair value of hedging instruments 3,302 (411) (965)
Hedging gains reclassified to profit or loss (185) (501) (968)
Tax relating to items that may be reclassified (1,005) 297 590
Total items that may be reclassified subsequently to profit or loss 335 (709) (1,714)
Other comprehensive income/(expense) for the period/year, net of tax 762 (133) (1,453)
Total comprehensive income/(expense) for the period/year 10,512 6,150 (4,208)
Profit / (loss) attributable to:
Equity holders of the Company 10,512 6,150 (4,208)
Total comprehensive income/(expense) for the period/year 10,512 6,150 (4,208)
The notes below form an integral part of these condensed consolidated interim
financial statements.
Zotefoams PLC
Consolidated Interim Statement of Financial Position
For the six months ended 30 June 2025
30-Jun-25 30-Jun-24 31-Dec-24
(Unaudited) (Unaudited) (Audited)
Notes £'000 £'000 £'000
Non-current assets
Property, plant and equipment 10 93,342 93,347 92,088
Right-of-use assets 11 1,910 2,259 2,153
Intangible assets 327 11,111 438
Intangible right-of-use assets 6,845 7,624 7,233
Investments in joint venture 301 266 281
Trade and other receivables 14 24 40 14
Deferred tax assets 483 350 548
Total non-current assets 103,232 114,997 102,755
Current assets
Inventories 28,628 36,970 29,924
Trade and other receivables 14 35,716 36,315 31,494
Derivative financial instruments 14 2,899 331 42
Cash and cash equivalents 8,257 7,942 10,534
Total current assets 75,500 81,558 71,994
Total assets 178,732 196,555 174,749
Current liabilities
Trade and other payables (15,888) (14,917) (11,878)
Provisions (139) - (1,381)
Derivative financial instruments 14 - (286) (1,164)
Current tax liability (568) (2,528) (757)
Lease liabilities 11 (2,116) (1,934) (2,134)
Interest-bearing loans and borrowings 12 (29,380) (43,055) (34,602)
Total current liabilities (48,091) (62,720) (51,916)
Non-current liabilities
Lease liabilities 11 (5,820) (7,536) (6,821)
Deferred tax liabilities (6,227) (4,529) (5,103)
Post-employment benefits (600) (1,506) (1,552)
Total non-current liabilities (12,647) (13,571) (13,476)
Total liabilities (60,738) (76,291) (65,392)
Total net assets 117,994 120,264 109,357
Equity
Issued share capital 2,442 2,442 2,442
Share premium 44,178 44,178 44,178
Own shares held (20) (12) (7)
Capital redemption reserve 15 15 15
Translation reserve 1,876 3,930 3,653
Hedging reserve 1,429 45 (683)
Retained earnings 68,074 69,666 59,759
Total equity 117,994 120,264 109,357
The notes below form an integral part of these condensed consolidated interim
financial statements.
Zotefoams PLC
Consolidated Interim Statement of Cash flows
For the six months ended 30 June 2025
Six months ended Year ended
30-Jun-25 30-Jun-24 31-Dec-24
(Unaudited) (Unaudited) (Audited)
£'000 £'000 £'000
Cash flows from operating activities
Profit/(loss) for the period/year 9,750 6,283 (2,755)
Adjustments for:
Depreciation and amortisation 4,278 4,154 8,983
Disposal of assets 44 68 28
Finance costs 848 1,432 2,873
Share of profit from joint venture (19) (59) (74)
Net exchange differences (1,558) 236 524
Equity-settled share-based payments 761 672 1,077
Non-Cash cost of Closure of Business - - 15,178
Taxation 1,647 2,006 2,908
Operating profit before changes in working capital and provisions 15,751 14,792 28,742
(Increase)/decrease in trade and other receivables (3,551) (3,292) 1,539
Decrease/(increase) in inventories 727 (5,094) 1,948
Increase/(decrease) in trade and other payables 3,289 2,494 (997)
Employee defined benefit contributions (430) (430) (859)
Cash generated from operations 15,786 8,470 30,373
Interest paid (734) (1,283) (2,515)
Income taxes paid (1,734) (1,103) (2,857)
Net cash flows generated from operating activities 13,318 6,084 25,001
Cash flows from investing activities
Interest received 205 122 274
Purchases of intangibles (13) (1,970) (3,306)
Purchases of property, plant and equipment (8,465) (6,120) (10,342)
Proceeds from disposal of property, plant and equipment 700 - 39
Net cash used in investing activities (7,573) (7,968) (13,335)
Cash flows from financing activities
Proceeds from options exercised and issue of share capital - 60 72
Repayment of borrowings (4,012) - (8,357)
Proceeds from borrowings - 6,750 6,750
Lease payments (1,357) (1,003) (2,335)
Dividends paid (2,491) (2,382) (3,542)
Net cash used in financing activities (7,860) 3,425 (7,412)
Net (decrease)/increase in cash and cash equivalents (2,115) 1,541 4,254
Cash and cash equivalents at start of period/year 10,534 6,294 6,294
Exchange (losses)/gains (162) 107 (14)
Cash and cash equivalents at end of period/year 8,257 7,942 10,534
Cash and cash equivalents comprise cash at bank and short-term highly liquid
investments with a maturity date of less than three months.
The notes below form an integral part of these condensed consolidated interim
financial statements.
The net exchange differences of £1,558k (June 2024: £236k, December 2024:
£524k) within operating activities relate to the foreign exchange movement on
borrowings.
Zotefoams PLC
Consolidated Interim Statement of Changes in Equity
For the six months ended 30 June 2025
Share capital Share premium Own shares held Capital redemption reserve Translation reserve Hedging reserve Retained earnings Total equity
£`000 £`000 £`000 £`000 £`000 £`000 £`000 £`000
Balance as at 1 January 2025 2,442 44,178 (7) 15 3,653 (683) 59,759 109,357
Profit for the year - - - - - - 9,750 9,750
Other Comprehensive income for the year:
Foreign exchange translation losses on investment in subsidiaries - - - - (1,777) - - (1,777)
Change in fair value of hedging instruments recognised in other comprehensive - - - - - 3,302 - 4,163
income
Reclassification to income statement - administrative expenses - - - - - (185) - (1,046)
Tax relating to effective portion of changes in fair value of cash flow - - - - - (1,005) - (1,005)
hedges, net of recycling
Actuarial gain on defined benefit pension scheme - - - - - - 570 570
Tax relating to actuarial gain on defined benefit pension scheme - - - - - - (143) -
Total comprehensive income for the period - - - - (1,777) 2,112 10,177 10,512
Transactions with owners of the Parent:
Options exercised - - (13) - - - - (13)
Equity-settled share-based payments net of tax - - - - - - 629 629
Dividends paid - - - - - - (2,491) (2,491)
Total transactions with owners of the Parent - - (13) - - (1,862) (1,875)
Balance as at 30 June 2025 (Unaudited) 2,442 44,178 (20) 15 1,876 1,429 68,074 117,994
Share capital Share premium Own shares held Capital redemption reserve Translation reserve Hedging reserve Retained earnings Total equity
£`000 £`000 £`000 £`000 £`000 £`000 £`000 £`000
Balance as at 1 January 2024 2,442 44,178 (12) 15 4,025 660 64,455 115,763
Profit for the period - - - - - - 6,283 6,283
Other Comprehensive income for the year:
Foreign exchange translation losses on investment in subsidiaries - - - - (94) - - (94)
Change in fair value of hedging instruments recognised in other comprehensive - - - - - (411) - (411)
income
Reclassification to income statement - administrative expenses - - - - - (501) - (501)
Tax relating to effective portion of changes in fair value of cash flow - - - - - 297 - 297
hedges, net of recycling
Actuarial gain on defined benefit pension scheme - - - - - - 768 768
Tax relating to actuarial gain on defined benefit pension scheme - - - - - - (192) (192)
Total comprehensive income for the period - - - - (94) (615) 6,858 6,149
Transactions with owners of the Parent:
Options exercised - - - - - - 62 62
Equity-settled share-based payments net of tax - - - - - - 672 672
Dividends paid - - - - - - (2,382) (2,382)
Total transactions with owners of the Parent - - - - - - (1,648) (1,648)
Balance as at 30 June 2024 (Unaudited) 2,442 44,178 (12) 15 3,931 45 69,665 120,264
During the six months period ended 30 June 2025, 142,925 shares (June 2024:
103,401) were issued from the Zotefoams Employee Benefit Trust ('EBT')
following the exercise of options.
During the six months period ended 30 June 2025, 656,217 Long Term Incentive
Plan awards (June 2024: 418,894), 113,281 Deferred Bonus Share Plan awards
(June 2024: 72,340) and 33,991 share options (June 2024: 9,537) were granted.
The notes below form an integral part of these condensed consolidated interim
financial statements.
Zotefoams PLC
Notes to the condensed consolidated Interim financial statements
For the six months to 30 June 2025
1. General Information
Zotefoams plc ('the 'Company') and its subsidiaries and joint venture
(together, 'the Group') manufacture and sell high-performance foams and
license related technology for specialist markets worldwide. The Group has
manufacturing sites in the UK, USA, Poland and China. The interim condensed
consolidated financial statements of the Group For the six months ended 30
June 2025 were authorised for issue in accordance with a resolution of the
directors on 4 August 2025.
The Company is a public limited company which is listed on the London Stock
Exchange and incorporated and domiciled in the UK. The address of the
registered office is 675 Mitcham Road, Croydon, CR9 3AL.
These condensed consolidated interim financial statements do not comprise
statutory accounts within the meaning of section 434 of the Companies Act
2006. Statutory accounts for the year ended 31 December 2024 were approved by
the Board of Directors on 7 April 2025 and delivered to the Registrar of
Companies. The report of the auditors on those accounts was unqualified, did
not contain an emphasis of matter paragraph and did not contain any statement
under section 498 of the Companies Act 2006.
These condensed consolidated interim financial statements have been reviewed,
not audited.
These condensed consolidated interim financial statements for the six months
ended 30 June 2025 have been prepared in accordance with the Disclosure
Guidance and Transparency Rules of the Financial Conduct Authority and with
IAS 34, 'Interim financial reporting' as adopted by the United Kingdom. The
condensed consolidated interim financial statements do not include all the
information and disclosures required in the annual financial statements and
should be read in conjunction with the annual financial statements for the
year ended 31 December 2024, which have been prepared in accordance with UK
adopted international accounting standards (IAS).
Forward-looking statements
Certain statements in this condensed set of consolidated interim financial
statements are forward-looking. Although the Group believes that the
expectations reflected in these forward-looking statements are reasonable, we
can give no assurance that these expectations will prove to be correct. As
these statements involve risks and uncertainties, actual results may differ
materially from those expressed or implied by these forward-looking
statements.
We undertake no obligation to update any forward-looking statements, whether
as a result of new information, future events or otherwise.
2. Basis of preparation
2.1 Accounting policies
The accounting policies adopted in the preparation of the interim condensed
consolidated financial statements are consistent with those followed in the
preparation of the Group's annual consolidated financial statements for the
year ended 31 December 2024, except for the adoption of new standards
effective as of 1 January 2025 as disclosed in Note 17. The Group has not
early adopted any standard, interpretation or amendment that has been issued
but is not yet effective. Several amendments apply for the first time in 2024,
but do not have an impact on the interim condensed consolidated financial
statements of the Group. Taxes on income in the interim condensed consolidated
financial statements are accrued using the tax rate that would be applicable
to the expected full financial year results for the Group.
2.2 Going concern
The Group has prepared the financial statements on the basis that it will
continue to operate as a going concern.
The Directors believe that the Group is well placed to manage its business
risks and, after making enquiries including a review of forecasts and
predictions, taking account of reasonably possible changes in trading
performance and considering the existing banking facilities, have a reasonable
expectation that the Group has adequate resources to continue in operational
existence for the next twelve months following the date of approval of the
financial statements. After due consideration of the range and likelihood of
potential outcomes evaluated as part of stress tests on the viability
statement, the Directors continue to adopt the going concern basis of
accounting in preparing these interim financial statements.
3. Estimates and Judgements
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these condensed consolidated interim financial statements, the
significant judgements made by management in applying the Group's accounting
policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial statements for the year
ended 31 December 2024 with the exception of changes in estimates that are
required in determining the provision for income taxes.
4. Financial Risk Management
There have been no changes in any risk management policies since the year-end.
5. Seasonality of operations
The seasonality of the Group's business, in our Transport & Smart
Technologies and Construction & Other Industrial verticals, is generally
balanced with performance more dependent on the underlying cyclical nature of
our markets, over the longer macroeconomic business cycle, as the Group sells
into a wide variety of business segments, many of which are themselves
cyclical. Our Consumer & Lifestyle vertical, dominated by footwear sales,
tends to be evenly split across the year, however this can be impacted by the
timing of the launch or cessation of product lines. Regionally, business unit
performance tends to follow the same pattern, except for Asia, which is
typically weighted towards H2, based on ordering patterns of our T-FIT
customers.
6. Segment reporting
The Group's operating segments are reported in a manner consistent with the
internal reporting provided to and regularly reviewed by the Group Chief
Executive Officer, Ronan Cox, who is considered to be the 'chief operating
decision maker' for the purpose of evaluating segment performance and
allocating resources. The Group Chief Executive Officer primarily uses a
measure of profit for the year before tax and exceptional items to assess the
performance of the operating segments.
In 2025 the Group has adopted a new structure of segmental reporting which
follows the regions in which the Group operates and the markets to which it
sells in those regions. This presents a significant change from the method
applied in 2024 and so the prior year figures presented have been restated to
show this new structure.
The Group manufactures and sells high-performance foams for specialist markets
worldwide. The Group's activities are reviewed regionally as follows:
· EMEA: Manufacturing facilities in Croydon, UK and Brezg, Poland in
addition to foams supplied via Croydon through our AAL joint venture with
INOAC Corporation
· North America: Manufacturing facility in Walton, USA and foams
fabrication business in Tulsa, USA
· Asia: T-FIT manufacturing facility in Kunshan, China, a distribution
operation of T-FIT products in Gurgaon, India and the recently announced
expansion into Vietnam with a new, purpose-built manufacturing facility where
capital investment is beginning to take place.
· In 2024 there was a MuCell segment which licensed microcellular foam
technology and sold related machinery. It was developing a fully circular
solution for mono-material barrier packaging, branded ReZorce®. At the end of
2024, this line of business was wound down, will not be a separate segment in
future years and is presented for comparative purposes only
Following the shift in product-focus to market-focus, sales are analysed in
three main market verticals:
· Consumer & Lifestyle: Addressing applications such as
footwear and premium consumer goods
· Transport & Smart Technologies: Serving automotive, aviation
and high-tech industries requiring advanced material solutions
· Construction & Other Industrial: Supporting building,
infrastructure and specialised industrial applications
EMEA North America Asia MEL Consolidated
Six Months ended (Unaudited) 30-Jun-25 30-Jun-24 30-Jun-25 30-Jun-24 30-Jun-25 30-Jun-24 30-Jun-25 30-Jun-24 30-Jun-25 30-Jun-24
Restated Restated Restated Restated Restated
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Consumer and lifestyle 37,890 32,088 703 1,213 - - - - 38,593 33,301
Construction and other industrial 6,038 5,990 5,025 6,037 1,440 2,086 158 554 12,661 14,667
Transport and Smart Technologies 17,434 17,232 8,744 5,860 - - - - 26,178 23,092
Group revenue 61,362 55,310 14,472 13,110 1,440 2,086 158 554 77,432 71,060
Segment Profit/(loss) 13,757 13,545 1,244 (49) 11 583 116 (2,164) 15,128 11,915
Unallocated central costs - - - - - - - - (2,902) (2,253)
Operating profit 13,757 13,545 1,244 (49) 11 583 116 (2,164) 12,226 9,662
Financing costs - - - - - - - - (1,053) (1,554)
Financing Income - - - - - - - - 205 122
Share of profit from joint venture 19 59 - - - - - - 19 59
Profit/ (loss) before taxation - - - - - - - - 11,397 8,289
Taxation - - - - - - - - (1,647) (2,006)
Profit for the period - - - - - - - - 9,750 6,283
Depreciation and Amortisation:
Depreciation 2,304 1,867 1,172 1,117 35 1 - 266 3,511 3,251
Allocated depreciation of right-of-use assets 197 177 84 85 39 - - 100 320 362
Unallocated depreciation of right-of-use assets - - - - - - - - 387 127
Amortisation 60 261 - - - - - 173 60 434
Capital expenditure:
Property, plant and equipment (PPE) 514 1,782 5,509 2,953 1,856 4 8 790 7,887 5,529
Intangible assets 13 91 - - - - - 1,880 13 1,971
EMEA North America Asia MuCell Consolidated
30-Jun-25 31-Dec-24 30-Jun-25 31-Dec-24 30-Jun-25 31-Dec-24 30-Jun-25 31-Dec-24 30-Jun-25 31-Dec-24
As at
(Unaudited)
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Segment Assets 110,497 109,711 52,397 48,675 7,268 6,898 1,508 2,232 171,670 167,516
Unallocated Assets - - - - - - - - 7,062 7,233
Total Assets 110,497 109,711 52,397 48,675 7,268 6,898 1,508 2,232 178,732 174,749
Segment liabilities (23,810) (30,083) (25,988) (23,041) (3,197) (2,020) (1,725) (3,666) (54,720) (58,810)
Unallocated liabilities - - - - - - - - (6,018) (6,582)
Total liabilities (23,810) (30,083) (25,988) (23,041) (3,197) (2,020) (1,725) (3,666) (60,738) (65,392)
Major customers
Revenues from one customer of the group located in Asia contributed £37,032k
(2023: £31,068k) to the Group's revenue.
Analysis of revenue by category
Breakdown of revenue by products and services for the Group:
Six months ended
30-Jun-25 30-Jun-24
(Unaudited) (Unaudited)
£'000 £'000
Sale of foam 77,273 70,505
Sale of equipment 50 406
Licence and royalty income 109 149
Group Revenue 77,432 71,060
7. Income tax expense
Six months ended
30-Jun-25 30-Jun-24
(Unaudited) (Unaudited)
£'000 £'000
UK corporation tax 1,790 2,447
Overseas tax (246) 107
Total current tax 1,544 2,554
Deferred tax 103 (548)
Income tax expense 1,647 2,006
Income tax expense is recognised based on management's estimate of the
weighted average annual income tax rate expected for the full financial year.
The estimated average annual tax rate used for the period to 30 June 2025 is
14.45% (the estimated average annual tax rate for the period ended 30 June
2024 was 24.21%).
8. Dividend
A dividend of £2,491k (2024: £2,243k) that relates to the period to 31
December 2024 was paid in June 2024.
An interim dividend of 2.50p pence per share was approved by the Board of
Directors on 4 August 2025 (2023: 2.28 pence per share). It is payable on 6
October 2025 to shareholders who are on the register at 5 September 2025. This
interim dividend, amounting to £1,231k (2024: £1,163k), has not been
recognised as a liability in this interim financial information. It will be
recognised in shareholders' equity in the year to 31 December 2025.
9. Earnings per share
Earnings per ordinary share is calculated by dividing the consolidated profit
after tax attributable to equity holders of the Parent Company of £9,750k
(2024: £6,283k) by the weighted average number of shares in issue during the
period, excluding own shares held by employee trusts which are administered by
independent trustees. The number of shares held in the trust at 30 June 2025
was 390,648 (30 June 2024: 139,332). Distribution of shares from the trust is
at the discretion of the trustees. Diluted earnings per ordinary share adjusts
for the potential dilutive effect of share option schemes in accordance with
IAS 33 Earnings per share.
Six months ended
30-Jun-25 30-Jun-24
(Unaudited) (Unaudited)
Weighted average number of ordinary shares in issue(1) 48,763,864 48,735,829
Deemed issued for no consideration 1,401,377 1,022,777
Diluted number of ordinary shares issued 50,165,241 49,758,606
(1) Own shares held by employee trusts have already been deducted.
10. Property, plant and equipment
Land and buildings Plant and equipment Fixtures and fittings Under construction Total
£'000 £'000 £'000 £'000 £'000
(Unaudited) (Unaudited) (Unaudited) (Unaudited) (Unaudited)
Cost
At 1 January 2025 48,014 123,000 3,836 9,255 184,105
Additions - 108 7 7,772 7,887
Disposals - (125) (51) (614) (790)
Transfers 1,996 1,102 372 (3,470) -
Effect of movement in foreign exchange (475) (3,096) (214) (1,074) (4,859)
At 30 June 2025 49,535 120,989 3,950 11,869 186,343
Accumulated depreciation
At 1 January 2025 18,700 69,348 3,109 860 92,017
Depreciation charge 754 2,410 133 - 3,297
Impairment - - - 210 210
Disposals - (72) (51) - (123)
Effect of movement in foreign exchange (507) (1,515) (175) (203) (2,400)
At 30 June 2025 18,947 70,171 3,016 867 93,001
Net book value
At 31 December 2024 29,314 53,652 727 8,395 92,088
At 30 June 2025 30,588 50,818 934 11,002 93,342
11. Leases
(i) Amounts recognised in the statement of financial position relating to
leases:
Right-of-use assets
Group
30-Jun-25 31-Dec-24
£'000 £'000
(Unaudited) (Audited)
Property 756 809
Equipment 1,154 1,344
Licences 6,845 7,233
8,755 9,386
Lease Liabilities
Group
30-Jun-25 31-Dec-24
£'000 £'000
(Unaudited) (Audited)
Lease liability falls due within 1 year 2,116 2,134
Lease liability falls due within 3 years 4,534 4,203
Lease liability falls due in more than 3 years 1,286 2,618
7,936 8,955
Additions to the right-of-use assets during the financial year were £143k
(2024: £9,099k) for the Group. Within additions £0k related to licences
(£7,752k in 2024).
(ii) Amounts recognised in the income statement relating to leases:
Group
30-Jun-25 30-Jun-24
£'000 £'000
(Unaudited) (Unaudited)
Property 136 175
Equipment 184 179
Licences 387 129
707 483
Interest expenses (included in finance costs) 262 113
Expense relating to short-term leases (included in cost of sales and 54 62
administrative expenses)
Expense relating to leases of low-value assets that are not shown above as 55 32
short-term leases (included in administrative expenses)
The total cash outflow 1,357 1,003
Within interest expenses £193k related to licences (£73k in 2024), and
within total cash outflow £884k related to licences (£611k in 2024).
12. Interest bearing loans and borrowings
30-Jun-25 31-Dec-24
(Unaudited) (Audited)
£'000 £'000
Current bank borrowings 29,380 34,602
Total 29,380 34,602
In March 2022, the Group completed a debt refinancing and selected
Handelsbanken and NatWest, the incumbents, to continue as its lenders. Under
the terms of the facility, secured against the property, plant and equipment
and trade receivables, the Group's gross finance facility consists of a £50m
multi-currency revolving credit facility with a £25m accordion. With a 4+1
tenor, the extending year option was taken up in January 2023.
At 30 June 2025, the Group has utilised £29.5m (31 December 2024: £34.8m) of
its multi-currency revolving credit facility of £50m, this amount is
repayable on the last day of each loan interest period, which is either of a 3
or 6 month duration. The reported balance of £29.4m (31 December 2024:
£34.6m) is net of £0.1m (31 December 2024: £0.2m) origination fees paid up
front and being amortised over 4 years.
The interest rate on the debt facility ranged between 3.5% and 5.8% in H1 (FY
2024: between 4.3% and 6.6%).
13. Related party Transactions
There were no material related party transactions requiring disclosure for the
periods ended 30 June 2025 and 30 June 2024.
14. Financial Instruments and Financial risk management
Fair value estimation
To provide an indication about the reliability of the inputs used in
determining fair value, the Group classifies its financial instruments into
the three levels prescribed under the accounting standards. An explanation of
each level follows underneath the table.
The following table presents the Group's financial assets and financial
liabilities measured and recognised at fair value at 30 June 2025 and 31
December 2024:
Level 1 Level 2 Level 3 Total
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
30 June 2025 £'000 £'000 £'000 £'000
Assets
Forward exchange contracts - 2,899 - 2,899
Total assets - 2,899 - 2,899
Liabilities
Forward exchange contracts - - - -
Total liabilities - - - -
Level 1 Level 2 Level 3 Total
(Audited) (Audited) (Audited) (Audited)
31 December 2024 £'000 £'000 £'000 £'000
Assets
Forward exchange contracts - 42 - 42
Total assets - 42 - 42
Liabilities
Forward exchange contracts - (1,164) - (1,164)
Total liabilities - (1,164) - (1,164)
The forward exchange contracts have been measured at fair value using forward
exchange rates that are quoted in an active market.
Level 1: The fair value of financial instruments traded in active markets
(such as publicly traded derivatives, and trading and available-for-sale
securities) is based on quoted (unadjusted) market prices at the end of the
reporting period. The quoted marked price used for financial assets held by
the Group is the current bid price. These instruments are included in level 1.
Level 2: The fair value of financial instruments that are not traded in an
active market (for example, over-the-counter derivatives) is determined using
valuation techniques. These valuation techniques maximise the use of
observable market data where it is available and rely as little as possible on
entity specific estimates. If all significant inputs required to measure an
instrument at fair value are observable, the instrument is included in level
2.
Level 3: If one or more of the significant inputs is not based on observable
market data, the instrument is included in level 3. This is the case for
unlisted equity securities.
Group's valuation process
Derivative financial instruments are valued using Handelsbanken and NatWest
mid-market rates (HY 2024: Handelsbanken and NatWest mid-market rates) at the
Statement of Financial Position date.
The Group also has a number of financial instruments which are not measured at
fair value in the Statement of Financial Position. For the majority of these
instruments, the fair values are not materially different to their carrying
amounts, since the interest receivable/payable is either close to current
market rates or the instruments are short-term in nature. The fair value of
the following financial assets and liabilities approximate to their carrying
amount:
· Trade and other receivables
· Cash and cash equivalents
· Trade and other payables
Financial assets and liabilities measured at amortised cost
The fair value of borrowings is as follows:
30-Jun-25 31-Dec-24
(Unaudited) (Unaudited)
£'000 £'000
Current 29,380 34,602
Total 29,380 34,602
The fair value of financial assets excluding cash and cash equivalents is as
follows:
30-Jun-25 31-Dec-24
(Unaudited) (Unaudited)
£'000 £'000
Non-current trade receivables 24 14
Trade receivables 31,892 28,833
Total 31,916 28,847
15. Capital Commitments
Capital expenditure commitments of £5,546k (31 December 2024: £1,737k) have
been contracted for at the end of the reporting period but not yet incurred in
respect of Property, Plant and Equipment.
16. Events occurring after the reporting period
After the period end, Zotefoams announced it had signed an agreement with
Seohung Co. Ltd, whereby Seohung acquires a 17.5% equity stake in the future
Vietnam subsidiary for a cash consideration of $10.0m. See "Investment in
Asia" section in this interim report for further details.
17. Standards issued but not yet effective
i) New standards and amendments - applicable 1 January 2025
The following standards and interpretations apply for the first time to
financial reporting periods commencing on or after 1 January 2025:
Effective for accounting periods beginning on or after Expected Impact
Amendments to IAS21: the effects of changes in Foreign Exchange Rates: 1 January 2025 None
Lack of Exchangeability
ii) Forthcoming requirements
As at 30 June 2025, the Group has not early adopted any standard, the
following interpretations and amendments that have been issued but are not yet
effective:
Effective for accounting periods beginning on or after
IFRS 18 Presentation and disclosure in financial statements 1 January 2027
IFRS 19 Subsidiaries without Public Accountability Disclosures 1 January 2027
Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments: 1 January 2026
Disclosures, Classification and Measurement of Financial Instruments
Annual improvements to IFRS Standards - Volume 11 1 January 2026
Amendments to IFRS 9 and IFRS 7 : Contracts referencing nature dependent 1 January 2026
electricity
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