REG - Zotefoams PLC - Preliminary Results
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RNS Number : 8636W Zotefoams PLC 17 March 2026
Zotefoams plc
Preliminary Results (unaudited) for the Year Ended 31 December 2025
17 March 2026 - Zotefoams plc ("Zotefoams" or "the Company" or "the Group"), a
world leader in high-performance foams, today announces its unaudited
preliminary results for the year ended 31 December 2025 ("FY25").
"Continued growth and margin progression delivered another year of record
profitability as we execute on our long-term growth strategy"
Financial Headlines
Group
2025 2024 Change
£m £m
Revenue 158.5 147.8 7.2%
Gross profit 52.9 46.1 14.8%
Adjusted Operating profit(1) 22.8 18.1 26.0%
Adjusted Operating Margin 14.4% 12.2% 220bps
Adjusted Profit before tax 21.2 15.3 39%
Adjusted Basic EPS 38.0p 25.95p 46%
Final dividend(3) (p) 5.35 5.10 5%
Operating profit 21.6 3.0 620%
Profit before tax 20.0 0.2
Cash generated from operations 39.7 30.4 31%
Net debt Covenant Basis(2) 31.5 24.1 31%
Net debt (IFRS) 43.0 33.0 30%
Leverage ratio(2) 0.8 0.9
ROCE 13.9% 11.7% 220bps
(1) This is a reported number under UK-adopted IFRS and is after adding back
MuCell closure costs £0.9m (2024: £15.2m) and amortisation of acquired
intangibles of £0.2m (2024: £Nil)
(2) Leverage is that defined under the bank facility, with net debt at the end
of the period divided by the preceding 12 months' EBITDA, adjusted for the
impact of IFRS 2 and IFRS 16
(3) Final dividend is subject to approval at the May 2026 Annual General
Meeting
Results Headlines
· Record Group revenue of £158.5m, 7% higher than the prior year (2024:
£147.8m)
· Record adjusted operating profit up 26% to £22.8m (2024: £18.1m)
· Adjusted Basic EPS up 46% to 38.00p (2024: 25.95p)
· Strong cash generation and balance sheet foundation to support ongoing
investment and refreshed growth strategy
- Cash generated from operations up 31% to £39.7m (2024: £30.4m)
- Cash conversion at 101%, with FCF of >£23m
- ROCE up 220bps to 13.9% (2024: 11.7%)
- Net debt excluding leases up 31% to £31.5m (31 December 2024: £24.1m) due
to financing of the acquisition of Overseas Konstellation Company S.A.
("OKC").
- Leverage ratio improved at 0.8x (31 December 2024: 0.9x) providing
substantial investment headroom.
- Final dividend up 5% to 5.35p (2024: 5.10p)
Strategic Progress
· The Group is continuing to deliver on its Expanding Beyond the Core strategy
aimed at driving long term sustainable growth and shareholder value creation
· Through increased focus on operation execution, the expansion of geographical
footprint, investment in innovation and building a disciplined M&A
capability, the Group is targeting ambitious progress in the medium term:
- Organic growth of 7% CAGR to deliver FY2029 revenue of >£230m
- Operating profit of >£40m by FY2029
- ROCE of over 20% by FY2029
- Cash conversion of >95%
· Longer-term ambition to grow revenues to >£300m and operating profit to
>£60m, with the opportunity to accelerate progress through inorganic
growth
· Key initial enabling steps for this transformation were taken in FY2025:
- Construction of machinery for new Vietnam factory well progressed with
£4.3m invested
- Completion of new second low-pressure vessel in the US which is now
operational
- Innovation centre established in Korea with growth and investment planned
for 2026
- Acquisition of OKC, extending products, capabilities and routes to market in
Europe
· Early progress and momentum in 2026:
- Trading in line with expectations and continued strength in Transport &
Smart Technologies
- OKC integration progressing well, with integration into the European
operating model underway and full-year revenue contribution in 2026
- Growth becoming more balanced across the portfolio, with healthy pipelines
in aerospace, industrial and other technical applications
- Continued focus on execution in 2026, including service, efficiency, margin
improvement and delivery of strategic investments in Asia
Ronan Cox, Group CEO, said:
"We have entered 2026 with good momentum. Trading in the early part of the
year has been in line with our expectations, supported by continued demand in
Transport & Smart Technologies and improving order books across several
markets. We are also benefiting from the initial contribution of OKC, where
the integration into our European operating model is progressing well.
"As anticipated, demand patterns across our markets are becoming more balanced
following a period of exceptional growth in Consumer & Lifestyle. In
footwear, we expect volumes to moderate from the unusually high levels
experienced in 2024 and 2025 as customers normalise inventory positions which
is an expected transition, and our operating plans reflect this shift.
Importantly, our exposure across other market verticals continues to
strengthen, with healthy pipelines in aerospace, industrial and other
technical applications providing a broader base for growth.
"Operationally, our focus in 2026 is on execution and delivery. This includes
building and maintaining strong service levels, managing capacity carefully
across the network, and continuing to improve operational efficiency and
margins. We will also progress our major strategic investments, particularly
in Asia, ensuring that new capacity and innovation capability are delivered
safely, on time and within approved investment parameters.
"Looking further ahead, we are increasingly confident that the Group's
medium‑term prospects are in line with our stated ambitions. The strategic
progress made over the past two years - transitioning to a market‑led
organisation, expanding our geographic footprint, investing in innovation and
building a disciplined M&A capability - has materially strengthened the
business. Zotefoams is now more diversified by market, geography and customer,
with a clearer right‑to‑win in high‑value applications and a more
resilient operating platform.
"Our medium‑term objectives remain unchanged. We continue to target
sustained revenue growth, backed by strong margins and ROCE, with cash
generation supporting a disciplined capital allocation strategy focused on
value creation. We have made good progress down this path in 2025, executing
well in the business and identifying opportunities to accelerate
strategically. The acquisition of OKC enhances both our growth profile and our
strategic optionality, while our investments in Asia and innovation position
the Group for the next phase of development.
"While we remain mindful of ongoing macroeconomic and geopolitical
uncertainties, we are confident that Zotefoams is well positioned to navigate
these challenges. We have a clear strategy, a strengthened leadership team,
well‑invested assets and a strong financial position. The progress delivered
in 2025 provides confidence that we have both the capability and the
discipline to continue delivering sustainable growth and long‑term value for
all stakeholders."
Enquiries:
Zotefoams plc IFC Advisory (Financial PR & IR)
Ronan Cox, Group CEO Graham Herring
Nick Wright, Group CFO Tim Metcalfe
Zach Cohen
+44 (0) 208 664 1600 +44 (0) 203 934 6630
About Zotefoams plc
Zotefoams plc (LSE - ZTF) is a world leader in high-performance 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(®)
polyolefin and ZOTEK(®) high-performance foams, Zotefoams sells to diverse
markets worldwide. Zotefoams uses its own cellular materials to manufacture
T-FIT(®) advanced insulation for demanding industrial markets.
Zotefoams is headquartered in London, UK, with manufacturing sites in Croydon,
UK, Kentucky, USA and Brzeg, Poland (foam manufacture), Oklahoma, USA (foam
products manufacture and conversion), Anglesola and Burgos, Spain (foam
manufacture) and Jiangsu Province, China (T-FIT).
www.zotefoams.com (http://www.zotefoams.com)
AZOTE(®), ZOTEK(®), ReZorce(®) and T-FIT(®) are registered trademarks of
Zotefoams plc
Chair's statement
A year of continued momentum and strategic progress, building a stronger and
more diversified platform to deliver on our long-term ambition
Dear shareholders,
2025 was a year of momentum and strategic progress for Zotefoams. The Group
delivered another year of record financial performance while making tangible
progress against the refreshed strategy laid out by the Board in 2024. This
combination of delivery and investment has reinforced the resilience of the
business and strengthened the platform for sustainable long‑term growth.
During the year, the Board has focused closely on the execution of the Group's
strategy, including disciplined investment in expansion and innovation,
alongside continued focus on operational performance, cash generation and
balance sheet strength. The successful completion of Zotefoams' first
acquisition in this new strategic phase, progress in establishing a
manufacturing presence in Asia, and continued investment in our innovation
capabilities reflect the Board's confidence in the Group's strategic direction
and its ability to execute consistently and at pace. Importantly, these
actions have been undertaken with a robust capital discipline and governance
approach.
As we progress further, the Board remains committed to sustained execution of
the strategy and management of the associated risks as the Group continues to
upscale. We are confident that the governance, controls and oversight
arrangements in place are appropriate for this next phase of development, and
that the Group is well positioned to balance growth, returns and resilience.
The Board is encouraged by the progress made during the year. Zotefoams is now
operating with greater customer proximity, broader market exposure and a more
resilient global footprint. These developments support the Board's confidence
that the strategy is beginning to deliver as intended and that the Group is
well positioned for the next phase of growth.
Board composition and governance
The Board oversaw several important leadership and governance changes during
2025, all of which were managed in a planned and orderly manner.
On 3 March 2025, we announced the planned retirement of Gary McGrath, Group
CFO. Gary stepped down from the Board on 31 October 2025, following nine years
of dedicated service, as part of a managed succession process. On behalf of
the Board, I would like to thank Gary for his significant contribution to
Zotefoams and wish him well in his retirement.
Nick Wright, an ACA-qualified Chartered Accountant with both manufacturing
sector experience and listed company transformation expertise, was appointed
Group CFO on 1 November 2025. We welcomed Nick to the Group as CFO‑designate
and Executive Director from September 2025, ensuring a smooth transition and
continuity of financial leadership.
The Board was also strengthened with the appointment of Jack Clarke as an
Independent Non‑Executive Director in October 2025. Jack brings extensive
experience from senior strategy and finance roles, most recently as CFO of
Essentra plc. In December 2025, Doug Robertson retired from the Board after
almost nine years of service, including as Chair of the Audit Committee. I
would like to thank Doug for his leadership and commitment. Following Doug's
retirement, Jack assumed the role of Chair of the Audit Committee, and Malcolm
Swift became Senior Independent Director, continuing his role as Chair of the
Remuneration Committee.
This was also the first full year with Ronan Cox as Group CEO. Under Ronan's
leadership, the Group has continued to build momentum, and the Board is
confident that the executive team has the capability, balance and experience
required to deliver the next phase of the strategy.
Dividend
The Board remains committed to a progressive dividend policy and to sharing
the Group's success with shareholders. We are proposing a 5% increase in the
final dividend to 5.35 pence per share (2024: 5.10 pence), which, if approved,
would result in a total dividend for 2025 of 7.85 pence (2024: 7.48 pence).
This reflects the Board's confidence in the Group's future prospects and its
continued focus on disciplined capital allocation.
Further detail on capital allocation is set out in the Group CFO's review.
Sustainability and responsible business
The Board remains strongly focused on sustainability and responsible business
practices. Zotefoams' purpose - delivering optimal material solutions for the
benefit of society - continues to guide decision‑making at Board level.
During 2025, the Board oversaw continued investment in sustainable innovation
and ensured that environmental considerations were integrated into major
strategic and capital decisions.
The Board also maintained a strong focus on governance, integrity and risk
management, remaining attentive to evolving best practice and the UK Corporate
Governance Code. We continued to prioritise the safety and wellbeing of our
people and to promote a culture of accountability, inclusion and respect
across the Group.
Looking ahead
Zotefoams has entered 2026 with good momentum, a stronger and more diversified
platform, and a clear strategic focus. The progress delivered during 2025
gives the Board confidence that the Group is well positioned to navigate
ongoing macroeconomic and geopolitical uncertainties while continuing to
deliver sustainable growth, improving returns and strong cash generation over
the medium term.
On behalf of the Board, I would like to thank all our employees for their
commitment and contribution during the year, and our shareholders for their
continued support.
Lynn Drummond
Chair
17 March 2026
Group CEO's Review
A year of record performance and strategic momentum as we continued expanding
beyond our historical core and strengthening the foundations for long-term
growth.
Overview
2025 was a year of outstanding performance, building continued momentum for
Zotefoams. We delivered record revenues and profits while executing major
strategic initiatives against a challenging macroeconomic and geopolitical
backdrop. Group revenue increased by 7% to £158.5m (2024: £147.8m), marking
a new record for the Group. Adjusted profit before tax increased by 39% to a
record £21.2m, reflecting strong operational delivery, disciplined cost
management and the benefits of an increasingly differentiated product and
market mix. Cash generation also improved materially to nearly £40m, enabling
continued investment while maintaining a strong balance sheet and reducing
leverage year on year.
This performance was underpinned by robust demand across key end‑markets,
most notably the continued strength of our Consumer & Lifestyle
activities, particularly athletic footwear, alongside solid progress in
Transport & Smart Technologies. At the same time, we made tangible
progress in expanding beyond our historical core markets and product focus,
broadening our geographic footprint and deepening customer relationships
across a wider range of applications. Despite inflationary pressures, ongoing
supply‑chain complexity and geopolitical uncertainty, we exceeded market
expectations for the third consecutive year. This consistency of delivery
reflects the resilience of our business model and the effectiveness of the
strategic changes initiated over the past two years.
Importantly, 2025 was not simply a year of strong financial results; it was a
year in which we took meaningful actions to accelerate key components of the
strategy. We continued to reshape Zotefoams into a more market‑led,
customer‑focused and globally integrated organisation. We invested in
innovation and capacity, strengthened our leadership and operating cadence,
and took decisive steps to position the Group for sustainable, long‑term
growth. The completion of our first acquisition, Overseas Konstellation
Company S.A. ("OKC"), the advancement of our manufacturing expansion in Asia,
and the continued evolution of our high-performance, more customer centric
culture, all represent concrete progress against the strategic priorities we
set out.
The Group's adjusted operating profit and cash generation improved
substantially during the year, funding strategic investments and the
acquisition of OKC while preserving financial flexibility. Net leverage at the
end of the year was lower than in 2024, despite increased investment activity,
reflecting the strength of our operating cash flow and disciplined approach to
capital allocation.
Zotefoams continues 2026 a stronger, more diversified and more resilient
business. We are better balanced across markets, regions and customers,
supported by a well‑invested global manufacturing footprint and an
increasingly market‑driven organisation. With a clear strategy, an engaged
and capable leadership team, and a strong balance sheet, we are well
positioned to continue delivering profitable growth and creating long‑term
value for all stakeholders.
Strategic Progress
We made strong strategic progress in 2025, delivering against key objectives
within our refreshed strategy, Expanding Beyond the Core. Over the past two
years, this strategy has focused on repositioning Zotefoams from a
predominantly product‑led organisation to a more market‑driven,
customer‑centric and globally integrated business. In 2025, that shift moved
decisively from intent to delivery.
Fundamentally, Expanding Beyond the Core is about broadening the markets we
serve, deepening customer relationships, and building a platform capable of
delivering sustainable, high‑quality growth. During the year, we advanced
this across four interconnected priorities: market orientation, geographic
expansion, innovation and technology, and people and culture.
Market orientation
A central pillar of our strategy has been the move to an industry‑led
commercial model. At the start of 2025, we reorganised our global commercial
organisation around three core market verticals: Consumer & Lifestyle,
Transport & Smart Technologies, and Construction & Other Industrial.
This represented a fundamental shift away from a product‑centric view of the
business and toward a clearer focus on customer needs, application‑driven
value propositions and end‑market dynamics.
This new structure has sharpened customer focus, improved accountability and
strengthened collaboration across regions. It has also enhanced our ability to
identify and prioritise growth opportunities, allocate resources more
effectively and develop solutions aligned to specific industry requirements.
The benefits of this approach are already evident in improved commercial
momentum, a stronger opportunity pipeline and deeper engagement with strategic
customers across multiple markets.
Geographic expansion
2025 was also a year of meaningful progress in expanding Zotefoams' geographic
footprint, particularly in regions critical to our long‑term growth. We
completed our first acquisition, OKC, extending our presence in Southern and
Central Europe and adding complementary capabilities and customer
relationships. At the same time, we accelerated our manufacturing expansion in
Asia, committing to a major new manufacturing investment in Vietnam to support
our largest end‑market, athletic footwear.
These are targeted strategic actions: we are extending our footprint in ways
that improve customer proximity, strengthen supply chain resilience and
enhance returns over time. The combination of organic investment and selective
M&A activities provides a flexible and disciplined route to geographic
diversification.
Innovation and technology
Innovation remains fundamental to our differentiation and long‑term
competitiveness. In 2025, we continued to invest in research and development
while sharpening our focus on innovation that is closely aligned with our
market verticals and customers. We advanced plans to establish a new Global
Innovation Centre in the UK, consolidating and upgrading our R&D and
testing capabilities, and signed a lease for a Footwear Innovation Centre in
South Korea to support closer technical collaboration with key customers and
partners in Asia.
At the same time, we took decisive action to reallocate resources away from
initiatives that no longer met our strategic or return criteria. As a result
of the decision to cease further investment in the ReZorce packaging
initiative in 2024, we reallocated resources away from initiatives that no
longer meet our strategic and return criteria, and refocused innovation effort
on areas with clearer pathways to commercialisation, reflecting a more
discipled and execution-focused approach. This decision has already had a
positive impact on profitability, allowing us to redeploy resources toward
innovation programmes with clearer pathways to commercial success. As a
result, innovation investment in 2025 was more tightly aligned to customer
demand, operational efficiency and value creation.
People and culture
Underpinning all of this progress is a continued evolution of our culture and
organisation. 2025 was the first full year operating with a refreshed
leadership team and a clearer operating rhythm. We introduced a defined set of
values - Courage, Impact and Respect - with Health & Safety as our number
one priority, to guide decision‑making and behaviour across the Group.
We strengthened leadership capability, clarified accountability and launched
initiatives to embed a higher‑performance, more customer‑centric culture.
Learning from the highly responsive, customer‑focused ethos of OKC has
further reinforced our ambition to improve speed, flexibility and service
levels across the Group. These cultural shifts are critical to sustaining
strategic momentum and ensuring that execution quality keeps pace with our
growth ambitions.
Collectively, the actions taken in 2025 represent a step‑change in how
Zotefoams operates and competes. We are building a more diversified,
market‑led and resilient business, with a stronger platform for selective
growth. While there is more to do, the progress made during the year gives us
confidence that Expanding Beyond the Core is translating into tangible results
and positioning the Group well for the next phase of its growth and
development.
Expanding Beyond the Core
A defining feature of our progress in 2025 was the acceleration of Zotefoams'
expansion beyond its historical core. This expansion is not about moving away
from our strengths; rather, it is about extending them into new markets,
geographies and applications where our technology, know‑how and customer
relationships can deliver attractive, sustainable returns. During the year,
this strategy was advanced through a combination of targeted acquisition,
disciplined organic investment and a more focused approach to innovation.
Targeted M&A: establishing a scalable playbook
A major milestone in November 2025 was the successful execution of Zotefoams'
first significant acquisition. In November, we completed the acquisition of
OKC, a Spanish foam manufacturer, for total consideration of up to €36m (an
upfront cash consideration of €27.6m, plus a deferred element of up to
€8.4m based on OKC's financial performance in 2026). This transaction
represents the first tangible step in our strategy to expand selectively
through M&A and is expected to be earnings accretive in 2026.
OKC brings complementary capabilities, products and routes to market that
align closely with our strategic priorities. It extends our presence in key
European markets including Spain, France, Germany and Italy, with minimal
overlap with our existing customer base. Importantly, OKC also brings a highly
customer‑centric operating model and a strong reputation for responsiveness
and service - attributes that we regard as critical differentiators and which
we are actively seeking to embed more broadly across the Group.
We are taking a "best of both" approach to integration, preserving the
entrepreneurial, customer‑focused culture that has driven OKC's success,
while leveraging Zotefoams' operational scale, technical depth and global
footprint. Early integration work has progressed well, and we expect OKC to
make a growing contribution to Group performance over the medium term while
also strengthening our capability set.
From a strategic perspective, OKC provides a blueprint for how we intend to
approach future M&A: disciplined, selective and focused on strategic fit
and value creation.
Organic expansion: building a platform in Asia
Alongside M&A, we continued to invest in organic growth opportunities that
are central to our long‑term strategy. Asia is a critical region for
Zotefoams over the long term, and 2025 marked a decisive step forward in
establishing a manufacturing presence closer to our largest and
fastest‑growing end‑markets. To support this expansion, we created a new
Managing Director - Asia role during the year, strengthening regional
leadership and oversight as we build our platform in the region and execute
our investment plans.
During the year, we advanced the development of a new production facility in
Vietnam, which will specialise in producing advanced 3D foam preforms for
athletic footwear. This investment has the potential to be transformational
for the Group; it positions Zotefoams at the heart of a key global
manufacturing hub, closer to the customer, expands our technological
capability, aligns our capacity with the evolving geographic footprint of our
largest customers, and creates a more resilient and cost‑effective supply
chain over time.
To manage execution risk and accelerate delivery, we entered into a strategic
partnership with Seoheung Co. Ltd. ("Seoheung"), a long‑established
specialist in the footwear supply chain with extensive manufacturing
experience in Vietnam and across Asia. Under the terms of the partnership,
Seoheung will take a 17.5% equity stake in our Vietnam partnership in return
for a $10m investment, contributing to the approximately $32m total project
cost. This partnership brings valuable local expertise, strengthens customer
relationships in the region and reinforces our disciplined approach to capital
allocation.
Construction and commissioning of the leased Vietnam site is underway, ahead
of planned completion later this year / early 2027. While the facility will
initially support our Consumer & Lifestyle business, particularly athletic
footwear, its strategic significance is broader. Over time, it will enable the
transition of certain volumes currently produced in the UK, freeing up
capacity in our European operations to support growth in other markets and
applications. This is a clear example of how geographic expansion will support
not only growth, but also flexibility, resilience and improved returns across
the Group.
Innovation: focus, discipline and customer alignment
Innovation remains central to Zotefoams' competitive advantage, but our
approach in 2025 was characterised by greater focus and discipline. We
continued to invest in R&D and innovation infrastructure, while sharpening
alignment between innovation activity, customer needs and commercial outcomes.
We progressed plans to establish a new Global Innovation Centre at our UK
headquarters, consolidating and upgrading our R&D and testing facilities
to support product development and process innovation across the Group. In
parallel, we signed a lease for a Footwear Innovation Centre in South Korea,
enabling the showcasing of our technology, strengthening technical
collaboration with major Asian customers and partners and supporting the
ramp‑up of our Asian manufacturing strategy.
The benefits of this more focused approach are becoming evident. Innovation
investment is now more tightly aligned with our market verticals, supporting
applications where performance, reliability and sustainability are critical.
This discipline will remain a hallmark of our innovation strategy going
forward.
A platform for sustainable growth
Taken together, our actions in 2025 represent a step‑change in how Zotefoams
is expanding beyond its historical core. Through targeted M&A, disciplined
organic investment and a more focused innovation agenda, we are building a
broader, more resilient platform for growth. These initiatives are tightly
aligned with our strategy, capital discipline and customer priorities, and
they provide a strong foundation for continued progress in the years ahead.
Strategic Focus - Core Market Verticals
Building on our market-focused approach, our business is organised around
three core market verticals: Consumer & Lifestyle, Transport & Smart
Technologies, and Construction & Other Industrial.
Consumer & Lifestyle was again our largest vertical in 2025 and the
primary driver of Group growth. Demand in athletic footwear remained strong
through most of the year, supported by major customer programmes and
performance‑led product cycles. While volumes were exceptional, we always
expected demand to normalise following this period of growth. Our focus is
therefore on positioning the business to win sustainably through the next
phase of development, supported by closer customer proximity and a more
flexible global footprint.
Beyond footwear, Consumer & Lifestyle includes a range of smaller but
attractive niches where advanced foam performance can command premium value.
During 2025, we progressed opportunities selectively across consumer and
leisure applications, building pipeline depth and focusing on areas with a
clear right to win.
Transport & Smart Technologies delivered solid growth, supported by demand
in aerospace and other high‑specification applications. Success in this
vertical depends on long qualification cycles, deep technical engagement and
consistent delivery against exacting standards - areas where Zotefoams'
process capability and technical heritage provide a durable advantage. We
continued to invest selectively in capability and customer engagement,
prioritising opportunities with clear pathways to sustainable, high‑quality
revenue.
Construction & Other Industrial performance was mixed, reflecting softer
conditions in parts of the construction supply chain, offset by improved
activity in selected industrial applications. This experience reinforces our
emphasis on selectivity and margin discipline. Over time, this vertical
continues to offer opportunity, supported by long‑term drivers such as
energy efficiency and safety requirements, and strengthened by the addition of
OKC to our portfolio.
Across all three verticals, the benefit of this structure is increasing
clarity - sharper prioritisation, stronger accountability and more effective
allocation of talent, innovation effort and capital. While we are still early
in this transition, 2025 demonstrated tangible progress in both performance
and execution quality.
Cultural Transformation
Throughout 2025, we continued to evolve Zotefoams' culture to support the next
phase of the Group's development, formally embedding our core values -
Courage, Impact and Respect - with Health & Safety as our number one
priority. These values provide a shared framework for decision‑making and
behaviour across the Group, reinforcing what we expect from ourselves as
leaders and colleagues, and how we engage with customers, partners and
communities.
Courage is about making clear choices and acting decisively. In 2025, this was
reflected in our willingness to challenge legacy ways of working, to
re‑orient the business around market verticals, and to take deliberate
strategic decisions - including exiting activities that no longer met our
strategic or return criteria. We encouraged teams to focus on what matters
most for customers and to take ownership for delivery, supported by clearer
accountability and decision rights. This has improved pace, reduced complexity
and strengthened customer engagement.
Impact underpins our focus on execution and outcomes. We strengthened
cross‑functional collaboration across regions and functions, aligning teams
more closely to customers and end‑markets. This has supported faster
problem‑solving, improved prioritisation and more effective deployment of
resources. We have seen increasing evidence of a results‑oriented mindset,
with teams responding proactively to changes in demand, reallocating capacity
where required and maintaining momentum through the year.
Respect shapes how we treat people and how we operate as a global organisation
and is reflected in our emphasis on open communication, transparency and
collaboration across geographies, helping to break down silos and reinforce a
"one Zotefoams" mindset. As part of this, our commitment to Health &
Safety remains absolute, and it is the foundation for everything else we do.
While any incident is one too many, out safety performance continues to
perform favourably with industry benchmarks, and we remain focused on
prevention, learning and continuous improvement.
We have also actively sought feedback from employees to ensure that our
cultural initiatives are having a meaningful impact. In response, we have
continued to invest in leadership capability, including the launch of our
Living Brave leadership development programme and the establishment of a
Senior Leadership Team to strengthen alignment and cascade strategic
priorities more effectively through the organisation.
The integration of OKC during the year has provided further reinforcement of
the importance of culture. Their strong customer‑centric ethos and
responsiveness have set a high bar and offer valuable lessons as we continue
to raise service levels and customer focus across the wider Group.
These cultural changes are critical to sustaining our strategic progress. By
fostering an engaged, accountable and customer‑focused organisation,
grounded in strong safety discipline and clear values, we are creating the
conditions for consistent execution, innovation and long‑term value
creation.
Sustainability
Sustainability is integral to Zotefoams' strategy and to how we operate the
business. Our purpose, delivering optimal material solutions for the benefit
of society, reflects our belief that advanced foams, when engineered
responsibly and used in the right applications, can deliver meaningful
environmental and societal benefits over their long service lives. In 2025, we
continued to strengthen the foundations of our sustainability approach,
embedding it more firmly into operational decision‑making, innovation
priorities and governance.
Our focus is practical and disciplined. We are prioritising areas where we can
have the greatest impact: reducing the environmental footprint of our
operations, improving the sustainability performance of our products, and
ensuring strong governance and transparency. Sustainability considerations are
increasingly integrated into investment decisions, product development and
customer engagement.
Operational environmental performance
During 2025, we made further progress in reducing the environmental intensity
of our operations. Energy efficiency initiatives implemented in prior years
continued to deliver benefits, supported by improved process control, yield
improvements and targeted capital investment. We also increased the proportion
of renewable electricity across parts of the Group, including new capacity,
and progressed site‑level initiatives such as solar installations and
heat‑recovery projects where appropriate. These actions helped to stabilise
energy consumption despite higher production volumes and supported a continued
reduction in specific energy usage.
Waste reduction remains a key focus. Through improved yields, better scrap
segregation and increased internal recycling, we reduced waste sent to
landfill year on year. While our processes are not water‑intensive, we
continue to optimise cooling and handling systems to minimise unnecessary
consumption. These improvements reflect our emphasis on operational discipline
and continuous improvement.
Product sustainability and innovation
The sustainability impact of Zotefoams' products is often realised through
their use. Lightweight foams contribute to energy efficiency in transport,
durability reduces replacement cycles, and high‑performance insulation
supports lower energy consumption in buildings and industrial systems. In
2025, we continued to align innovation effort with these outcomes, focusing on
applications where material performance and sustainability objectives
reinforce each other.
We progressed development work on foams incorporating recycled polymer content
and advanced trials in selected applications, while maintaining performance
and quality standards. We also continued to explore opportunities to improve
circularity, including recycling pathways for production scrap and
end‑of‑life material where feasible. These initiatives remain at an early
stage, but they are guided by a clear focus on technical viability, customer
demand and regulatory compliance.
Governance and oversight
During the year, the Board strengthened its oversight of sustainability
matters, reinforcing accountability and ensuring alignment between
sustainability priorities, strategy and risk management. We continue to engage
constructively with customers, investors and other stakeholders on
sustainability topics, recognising the increasing importance of credible data,
clear targets and delivery over time.
Sustainability is a long‑term journey, and we recognise that there is more
to do. Our approach is grounded in realism and responsibility: focusing on
actions that are achievable, measurable and aligned with value creation. By
embedding sustainability into how we operate and innovate, we believe
Zotefoams can continue to grow responsibly while supporting customers in
meeting their own environmental and performance goals.
EMEA Performance (Europe, Middle East & Africa)
EMEA delivered another strong year in 2025, building on a very high
prior‑year base and demonstrating the resilience and scale of the
opportunity for the Group in this region. EMEA remains Zotefoams' largest
region by a significant margin, encompassing manufacturing operations in the
UK, Spain and Poland, supported by commercial teams across Europe, India and
Hong Kong. The region continues to play a central role in the Group's value
creation, technical capability and customer relationships.
Revenue in EMEA increased by 9% to £124.0m (2024: £113.3m), marking a
further year of record sales. Growth was driven primarily by continued
strength in Consumer & Lifestyle, particularly athletic footwear,
alongside solid progress in Transport & Smart Technologies and a more
mixed performance in construction‑linked markets. Growth in the region also
benefited from an initial contribution from OKC of £2m following completion
of the acquisition late in the year, and work is underway to integrate OKC
into a unified European commercial and operating model through 2026.
Footwear remained the dominant growth driver in EMEA during 2025. We supported
major customer programmes and inventory build activity through significant
shipments, and the region benefited from the ongoing geographic shift in
global footwear manufacturing, which influenced sourcing patterns and demand
for European production. Volumes reached exceptional levels during the year.
While this level of growth will not continue indefinitely, our planning
assumptions reflect a managed normalisation as customers adjust inventory
positions following an unusually strong period.
Beyond footwear, Transport & Smart Technologies in EMEA continued to show
momentum, with aerospace demand providing notable support. Our exposure to
high‑specification, technically demanding applications remains an important
source of balance within the region. In Construction & Other Industrial,
performance reflected more mixed conditions across construction supply chains,
with softer distributor demand offset by stronger direct industrial sales and
a recovery in insulation activity later in the year. Consistent with our
strategy, we prioritised quality of revenue and margin discipline, including
being prepared to step away from volume that did not meet our return criteria.
Operationally, EMEA executed well under challenging capacity conditions. Our
UK and Poland sites performed strongly in meeting customer requirements
through periods of high utilisation. The experience of operating close to
capacity during peak footwear demand reinforces the strategic rationale for
rebalancing the Group's manufacturing footprint over time. Importantly, EMEA's
performance in 2025 highlights both the depth of customer demand and the
importance of disciplined capacity management to protect service levels,
operational stability and long‑term value creation.
From a profitability perspective, EMEA's margin profile during 2025 reflected
deliberate choices. Segment margin reduced from 21.5% to 20.5%, driven by a
combination of reinvestment in commercial capability, the costs of
organisational transition as we embed our market‑vertical model, wage
inflation and foreign exchange effects. These impacts were absorbed alongside
strong revenue growth and are consistent with our approach of prioritising
long‑term value and resilience over short‑term margin optimisation. We
view this as an appropriate baseline from which margins can rebuild over time
through continued growth, operational efficiency and the benefits of our
increasingly market-focused commercial model.
Beyond its scale, EMEA remains strategically central to the Group. The region
combines deep, long‑standing customer relationships, broad exposure across
all three market verticals and a concentration of technical capability that
underpins much of the Group's innovation and application development. While
footwear has been a dominant growth driver in recent years, EMEA also provides
the industrial and aerospace depth that supports diversification as demand
normalises.
EMEA has entered 2026 with a stronger portfolio and an expanded footprint. A
fuller contribution from OKC, continued progress in non‑footwear pipelines
and the progressive rebalancing of capacity over time are expected to support
improved resilience and a broader growth base. EMEA will remain a cornerstone
of the Group's performance as Zotefoams transitions to a more balanced global
footprint, with disciplined execution and long‑term value creation firmly at
the centre of our approach.
North America Performance
Our North America region delivered a resilient performance in 2025, overcoming
a more challenging start to the year in Construction & Other Industrial to
achieve solid growth for the full year. Regional revenue increased by 7.1% to
£30.1m (2024: £28.1m).
Performance was driven principally by continued momentum in Transport &
Smart Technologies, which remains the largest market vertical in North America
and includes high‑value technical applications such as aerospace and
speciality packaging. In the first half, this vertical delivered strong
growth, supported by continued success in targeted key accounts and new
customer project wins, and that momentum remained a positive feature through
the year.
By contrast, Construction & Other Industrial in North America was more
mixed, reflecting operational challenges at a key customer that constrained
demand early in the year. As set out in our interim reporting, this impacted
the performance of our converting operation in Tulsa (Zotefoams Midwest),
where volumes declined in the period despite good underlying market
conditions. A recovery plan was implemented to improve utilisation and reduce
reliance on any single customer over time, including building a broader
pipeline aligned with our strategy of moving further along the value chain.
Operationally, we continued to strengthen the region's platform for growth.
The commissioning of our second low‑pressure vessel in North America
increased capacity and supports our ability to pursue additional opportunities
in polyolefin foams and other technical applications, improving responsiveness
to customers and creating headroom for growth.
From a financial perspective, North America's profitability improved
materially, reflecting the benefit of stronger mix in Transport & Smart
Technologies and improved operational discipline. The region delivered a clear
improvement in performance, with segment profit improving to £3.5m and margin
increasing to 11.6% (2024: 6.4%), supported by improved mix, cost control and
lower raw material pricing. As we progress through 2026, our focus remains on
sustaining this improvement through continued mix enrichment, disciplined cost
management and execution of the recovery actions in Construction & Other
Industrial.
Looking ahead, North America remains strategically important as a region where
we see attractive structural drivers across our target verticals, and where
our investments in capacity and commercial focus can translate into stronger
growth and improved returns over time. We will continue to prioritise
high‑quality opportunities in technical end‑markets, strengthen customer
engagement, and build a more resilient regional mix as we execute our
strategy.
Asia
Asia currently remains a relatively small contributor to Group revenue, but is
strategically critical to Zotefoams' long‑term growth. In 2025, performance
reflected softer near‑term trading conditions and our prioritisation of
capacity for other regions, alongside deliberate investment to build a larger
platform for the future.
Revenue was driven primarily by Construction & Other Industrial activity
through T‑FIT(®) insulation operations in China and India. The competitive
environment in China was more challenging during the year, which led us to be
more selective in pursuing opportunities to protect margins. As a result,
regional profitability declined to break even, reflecting both lower volumes
and early‑stage investment costs associated with Vietnam and South Korea.
Importantly, Asia is in a transition phase. During 2025, we made substantial
progress on the development of our new footwear manufacturing facility in
Vietnam, supported by our partnership with Seoheung, and on establishing a
Footwear Innovation Centre in South Korea. Together, these investments create
an integrated innovation‑to‑production platform aligned with customers'
future supply chains.
Initial production in Vietnam is expected from late 2026 into 2027, at which
point Asia's contribution to Group revenues will increase materially. In the
near term, our focus remains on disciplined execution and delivery of these
programmes within approved investment parameters.
Capacity and Investment
During 2025, we continued to invest selectively in capacity, capability and
operational resilience to support the delivery of our strategy and to position
the Group for sustainable growth. These investments are the result of
deliberate, long‑term planning rather than reactive responses to
short‑term demand, and they are guided by clear criteria: strategic
alignment, disciplined capital allocation and attractive returns.
Over the past several years, Zotefoams has undertaken a significant programme
of investment across its global manufacturing footprint. 2025 marked the
culmination of several of these projects, alongside continued progress on our
next major phase of expansion.
A key milestone during the year was the commissioning of our second
low‑pressure expansion autoclave in Kentucky, USA. This investment
effectively doubled low‑pressure capacity in North America and was fully
operational by the end of the fourth quarter of 2025. The project was
delivered on schedule and within budget, immediately enhancing our ability to
serve growing demand in Transport & Smart Technologies and improving
responsiveness to customers across the region. By increasing throughput and
reducing lead times, this additional capacity provides meaningful headroom for
growth and strengthens the resilience of our North American operations.
In parallel with adding physical capacity, we continued to focus on optimising
and debottlenecking existing assets across the Group. Through targeted
efficiency initiatives, improved scheduling, yield improvements and modest
equipment upgrades, we were able to increase effective output without
significant incremental capital expenditure. For example, in the UK and Poland
we achieved productivity gains through improved uptime and process
optimisation, effectively creating "virtual capacity" that supported record
volumes during the year. These actions demonstrate the importance of
operational discipline alongside capital investment.
The most strategically significant investment underway is the development of
our new footwear manufacturing facility in Vietnam, which represents a
transformational expansion of our footprint. This project will establish
Zotefoams' first major manufacturing base in Asia and is central to our
long‑term strategy, particularly in Consumer & Lifestyle. During 2025,
we made substantial progress, including site selection, permitting, detailed
design and the ordering of long‑lead equipment. The project is being
executed through a partnership with Seoheung, which brings deep local
expertise and de‑risks both execution and ramp‑up.
The Vietnam facility is designed to support advanced foam preform
manufacturing for athletic footwear and will enable a progressive transition
of certain volumes currently supplied from Europe. Importantly, this is not
simply a capacity addition; it is a rebalancing of the Group's manufacturing
network. Over time, as Asian production comes onstream, capacity in the UK
will be freed up to support growth in other markets and applications,
improving overall network flexibility, service levels and returns.
From a capital allocation perspective, we maintained a disciplined approach
throughout the year. Capital expenditure was focused on a small number of
high‑priority projects aligned to strategy, including North America
capacity, the Vietnam programme and investment in innovation capability. These
investments were funded comfortably through operating cash flow, supported by
improved cash generation and tight working‑capital management. Despite
completing our first acquisition and advancing major organic investment, the
Group exited the year with a strong balance sheet and lower leverage well
within covenant limits.
In early 2026, we further strengthened our financial flexibility by
refinancing and upsizing our revolving credit facility (to £90m with a £30m
accordion), providing additional headroom to support ongoing investment and
selective M&A activity. This ensures that Zotefoams has both the capacity
and the financial resilience to execute its strategy through the next phase of
growth.
With major investments completed or underway in the UK, Poland, North America
and Vietnam, Zotefoams now has a well‑invested and geographically
diversified manufacturing platform. As we look ahead, the emphasis will
increasingly shift from large‑scale capital projects to ramping up
utilisation, improving returns and extracting value from the assets we have
built. We remain confident that our capital investments will deliver
attractive long‑term returns and support sustainable growth, underpinned by
disciplined execution and a strong balance sheet.
Measuring Strategic Progress
To ensure that our strategy translates into sustained value creation, we track
a small number of clear, outcome‑focused metrics that reflect the quality of
growth, capital discipline and execution. These measures provide a consistent
framework for assessing progress over time and for holding ourselves
accountable as we expand beyond our historical core. In 2025, we made progress
across all five dimensions.
1. Product and mix quality
A central objective of our strategy is to grow through higher‑value
applications rather than volume alone. In 2025, we delivered a further
improvement in product and mix quality, with adjusted average selling prices
increasing by 2.0% year on year, following a 2.8% improvement in 2024. This
reflects continued progress in shifting the portfolio toward more technically
demanding, higher‑value applications across Consumer & Lifestyle and
Transport & Smart Technologies, alongside disciplined pricing where
justified. The result has been improved margin quality and greater resilience
through market cycles.
2. Asset utilisation and operational efficiency
We continue to focus on extracting more value from our asset base through
operational discipline, rather than relying solely on incremental capital
investment. In 2025, overall asset utilisation improved by approximately 4%,
building on the progress achieved in 2024. Through debottlenecking, yield
improvement and more effective scheduling, we increased effective capacity
across the network without significant additional capital expenditure. These
gains supported record production volumes and helped manage periods of high
demand, particularly in EMEA.
3. Margin development
Profitability improved materially in 2025, reflecting both mix enrichment and
operational execution. Adjusted operating margin increased by approximately
220 basis points to 14.4%, up from 12.2% in 2024. This improvement was
supported by a richer sales mix, manufacturing efficiency gains and the
elimination of losses associated with activities exited in prior periods.
While margins vary by region and market, the overall trend demonstrates the
effectiveness of our strategy in improving the quality of earnings. Our
medium‑term ambition remains to exceed 18% operating margin on a sustainable
basis.
4. Capital efficiency and cash discipline
Improving returns on capital is a core strategic priority. In 2025, return on
capital employed (ROCE) increased to approximately 13.9%, up from 11.7% in
2024, reflecting higher profitability and better utilisation of invested
assets. We also strengthened working‑capital discipline, reducing net
working capital as a percentage of sales and improving cash conversion despite
higher activity levels. This supported strong operating cash flow, funded
strategic investment and maintained balance‑sheet strength. Our
medium‑term objective is to achieve ROCE above 20%.
5. Sustainability and long‑term resilience
Sustainability is integral to our definition of long‑term value creation. In
2025, we continued to reduce the environmental intensity of our operations
through improved energy efficiency, waste reduction and better process
control. We also progressed development of more sustainable product solutions,
including materials incorporating recycled content, while maintaining
performance standards. These actions support customer requirements, regulatory
readiness and the long‑term resilience of the business, and they reinforce
our belief that disciplined sustainability and strong financial performance go
hand in hand.
People
Our people are central to the delivery of Zotefoams' strategy. As the business
continues to expand beyond its historical core and operate across a more
complex global footprint, the capability, engagement and safety of our
colleagues remain fundamental to performance and long‑term value creation.
Health & Safety is our number one priority and underpins everything we do.
The Board retains ultimate responsibility for health and safety performance
and operates with a very low risk appetite in this area. During 2025, we
continued to strengthen governance, leadership accountability and frontline
engagement to support a more consistent and proactive safety culture across
the Group.
We reinforced Board‑level oversight through structured quarterly reporting
and further embedded leadership ownership by formalising the Global Health,
Safety & Wellbeing Leadership Team, bringing together members of the Group
Executive Team, operational leadership, OHSE and HR. This forum provides
alignment across regions, supports consistent standards and ensures that
learning from incidents and near‑misses is shared openly across the
organisation.
Where incidents occurred during the year, they were investigated rigorously
and transparently, with corrective actions identified and lessons cascaded
across sites. While any incident is one too many, our approach is focused on
prevention, learning and continuous improvement rather than compliance alone.
To better understand the lived experience of safety across the Group, we also
conducted a Group‑wide Safety Culture Survey in 2025. The findings provided
valuable insight into leadership visibility, accountability and employee
involvement, and are informing our ongoing safety culture improvement
programme.
Leadership, capability and engagement
During 2025 we moved to operating with a refreshed leadership structure and a
clearer operating cadence. As Zotefoams has become more global, more
market‑led and more complex to operate, the demands on leadership have
increased. During the year, we focused on strengthening leadership capability
at all levels, improving clarity of roles and expectations, and building
greater consistency in leadership behaviours across regions.
We strengthened alignment across regions and functions through a more
structured senior leadership forum, improving the flow of information, clarity
of priorities and accountability for execution. This has supported better
cross‑functional collaboration and more effective decision‑making as the
Group upscales. Alongside this, we continued to invest in leadership
development, reinforcing performance expectations and supporting succession
depth in critical roles.
Employee engagement remains a priority. We actively sought feedback from
colleagues during the year, including through engagement and safety‑focused
surveys, to better understand where we are making progress and where further
attention is required. These insights are being used to shape leadership
development, communication and ways of working, with a clear emphasis on
building an organisation that is accountable, inclusive and focused on
delivery.
Building a sustainable organisation
As we invest in new capacity, enter new geographies and integrate
acquisitions, we remain focused on building a sustainable organisation with
the skills, leadership capability and operating discipline required to execute
at pace, without compromising safety or standards. This includes ensuring
appropriate resourcing, developing internal capability and maintaining a
strong focus on wellbeing alongside performance.
We are clear that sustained success depends on maintaining a culture where
people feel safe, respected and empowered to contribute. By continuing to
invest in our people, reinforcing clear leadership accountability and keeping
Health, Safety & Wellbeing at the centre of everything we do, we are
building an organisation that can upscale sustainably and deliver consistently
for customers and shareholders alike.
Forward-Looking Statements
Forward-looking statements have been made by the Directors in good faith,
based on information available up to the date of approving the preliminary
results.
Current Trading and Outlook
We have entered 2026 with good momentum. Trading in the early part of the year
has been in line with our expectations, supported by continued demand in
Transport & Smart Technologies and improving order books across several
markets. We are also benefiting from the initial contribution of OKC, where
the integration into our European operating model is progressing well.
As anticipated, demand patterns across our markets are becoming more balanced
following a period of exceptional growth in Consumer & Lifestyle. In
footwear, we expect volumes to moderate from the unusually high levels
experienced in 2024 and 2025 as customers normalise inventory positions which
is an expected transition, and our operating plans reflect this shift.
Importantly, our exposure across other market verticals continues to
strengthen, with healthy pipelines in aerospace, industrial and other
technical applications providing a broader base for growth.
Operationally, our focus in 2026 is on execution and delivery. This includes
building and maintaining strong service levels, managing capacity carefully
across the network, and continuing to improve operational efficiency and
margins. We will also progress our major strategic investments, particularly
in Asia, ensuring that new capacity and innovation capability are delivered
safely, on time and within approved investment parameters.
Looking further ahead, we are increasingly confident that the Group's medium
term prospects are in line with our stated ambitions. The strategic progress
made over the past two years - transitioning to a market led organisation,
expanding our geographic footprint, investing in innovation and building a
disciplined M&A capability - has materially strengthened the business.
Zotefoams is now more diversified by market, geography and customer, with a
clearer right to win in high value applications and a more resilient operating
platform.
Our medium term objectives remain unchanged. We continue to target sustained
revenue growth, backed by strong margins and ROCE, with cash generation
supporting a disciplined capital allocation strategy focused on value
creation. We have made good progress down this path in 2025, executing well in
the business and identifying opportunities to accelerate strategically. The
acquisition of OKC enhances both our growth profile and our strategic
optionality, while our investments in Asia and innovation position the Group
for the next phase of development.
While we remain mindful of ongoing macroeconomic and geopolitical
uncertainties, we are confident that Zotefoams is well positioned to navigate
these challenges. We have a clear strategy, a strengthened leadership team,
well invested assets and a strong financial position. The progress delivered
in 2025 provides confidence that we have both the capability and the
discipline to continue delivering sustainable growth and long term value for
all stakeholders.
Ronan Cox
Group CEO
17 March 2026
Group CFO's Review
A year of momentum with a significant increase in revenue and profitability
within the core foams business, with growth in our key markets and our first
acquisition which is anticipated to be earnings accretive in 2026. Revenue and
profit before tax were at record levels with a strong uplift in margins and
effective cost control, along with strong cash generation, a strong balance
sheet and recent refinancing, meaning we are well positioned for future
profitable growth.
Overview
Group revenue increased by 7.2% to £158.5m (2024: £147.8m), with an 8%
increase at constant currency. Key areas of growth were our largest regions of
EMEA and North America. EMEA grew 9.4% to £124.0m (2024: £113.3m) including
contribution from OKC of £2m, but with a healthy underlying c.7.5% growth
rate largely driven by another year of exceptional growth in Consumer and
Lifestyle driven by our footwear customer.
North America saw revenue increase 7.1% to £30.1m (2024: £28.1m), driven by
a strong growth in Transport & Smart Technologies. We saw robust orders in
automotive and transit applications and, encouragingly, demand in Construction
improved towards the end of the year after a slow start. Asia saw revenue fall
to £4.2m (2024: £5.1m) due to a shift in our China insulation business
following changes in local government support on pharmaceutical construction,
but we expect Asia to be a very significant growth driver going forwards once
our new manufacturing facility in Vietnam is fully operational later this year
/ early 2027.
Before exceptional items, operating profit for the year grew 26% to £22.8m
(2024: £18.1m) and profit before tax (PBT) increased 39% to a Group record of
£21.2m (2024: £15.3m), after margin improvement and lower interest charges.
Some additional costs, largely relating to one of the MEL leases and other
closure costs, have led to an exceptional charge of £0.9m being recorded in
the consolidated income statement along with £0.2m of intangible amortisation
relating to the acquisition of OKC which is being treated as exceptional.
Currency movements had nil effect on PBT.
Adjusted basic earnings per share (EPS), which excludes the exceptional item,
amortisation of acquired intangible assets and a recognition of deferred tax
assets in EMEA and North America, increased 46% to 38.00p (2024: 25.95p).
Return on capital employed (ROCE) increased to 13.9% (2024: 11.7%).
The Group's balance sheet at 31 December 2025 is strong, with the leverage
multiple (calculated as a multiple of net debt to EBITDA using definitions
under the bank facility agreement, see section "Debt facility") improving to
0.8x (31 December 2024: 0.9x) and financial headroom of £18.4m (31 December
2024: £25.7m) after completing the OKC acquisition which shows the benefits
of the strong cash generation of the Group.
Summary P&L
Zotefoams Group Excluding MEL and OKC
2025 2024 Change 2025 2024 Change
Net revenue 158.5 147.8 7.2% 156.2 146.6 6.5%
Gross profit 52.9 46.1 14.8% 52.9 48.1 10.0%
Distribution and administrative costs (30.3) (28.0) (8.2%) (30.0) (25.0) (20.0%)
Adjusted Operating profit 22.8 18.1 26.0% 22.9 23.1 (0.9%)
Exceptional items & amortisation of acquired intangibles (1.1) (15.2) - - -
Operating profit 21.6 3.0(2) 620% 22.9 23.1 (0.9%)
Finance costs and profit from joint venture (1.7) (2.8) (39%) (2.8) (2.8) (39.3%)
Adjusted profit before tax 21.2 15.3 38.6% 20.2 20.3 (0.5%)
Profit before tax 20.0 0.2 20.2 20.3 (0.5%)
Taxation 2.7 (2.9)
Adjusted Basic EPS 38.00 25.95 46%
Basic EPS/(LPS) 46.37 (5.66)
Revenue performance
EMEA sales increased 9% to £124.0m (2024: £113.3m), and by 9% to £124.4m at
constant currency. The robust performance was driven by another exceptional
year in our Consumer & Lifestyle market, reflecting continued high demand
for footwear products. We benefited both from new product launches and the
ongoing migration of athletic footwear from China to Vietnam, which boosted
sales to our flagship customer. After several years of rapid growth in
footwear, we anticipate demand to moderate as inventory levels normalise. EMEA
revenues also include an initial £2.0m from the acquired OKC business since
mid-November. Excluding this acquisition, underlying organic growth in EMEA
was 8%, reflecting healthy demand after a record footwear year in 2025.
North America sales increased 7% to £30.1m (2024: £28.0m) and 10% to £30.9m
at constant currency. This was driven by strong growth in Transport &
Smart Technologies. We saw robust orders in automotive and transit
applications and, encouragingly, demand in Construction strengthened in the
final quarter after a subdued first half. We continue to focus on operational
efficiencies and commercial initiatives in this region, which helped maintain
sales despite some macroeconomic headwinds earlier in the year. MEL sales
reduced to £0.2m (2024: £1.2m), following the pausing and subsequent closure
of the ReZorce business.
Revenue by region (£m)
2025 Reported 2025 Adjusted(1) 2024 Net change
Reported
Reported Adjusted
EMEA 124.0 124.4 113.3 9.4% 9.6%
North America 30.1 30.9 28.0 7.1% 10.4%
Asia 4.2 4.4 5.1 (17.6%) (13.7%)
Group excluding MEL 158.3 159.7 146.4 7.9% 8.9%
MEL 0.2 0.2 1.2 (83%) (83%)
Group 158.5 159.9 147.6 7.3% 8.2%
1. Constant currency, adjusting 2025 values to 2024 exchange rates. See
exchange rates table.
Revenue by vertical (%)
2025 2024
Consumer & Lifestyle 50 48
Transport & Smart Technologies 33 33
Construction & Other Industrial 17 19
Gross profit
Gross profit increased £6.8m to £52.9m (2024: £46.1m), while gross margin
increased to 33.3% (2024: 31.2%), reflecting a more favourable product mix and
operational efficiencies, with pricing and mix management successfully
offsetting input cost pressures. The uplift also reflects successful price
increases implemented in certain markets in 2025, which helped offset cost
inflation. EMEA gross profit increased 9.9% to £44.2m (2024: £40.2m), driven
primarily by higher revenue in the Consumer & Lifestyle market, notably
stronger footwear sales. North America recorded the highest percentage growth
in gross profit, up 27% to £7.7m (2024: £6.1m), largely due to growth in the
Transport & Smart Technologies vertical. Additionally, we selectively
built inventory of key foam grades during 2024 (especially in H2 2024) ahead
of capacity constraints expected in 2025. We entered 2025 well-stocked, which
enabled us to meet demand without incurring additional costs related to
overtime or external processing, again supporting our gross margin.
The Group has continued to pursue its refreshed strategy, Expanding Beyond the
Core, investing in innovation, geographic expansion and completing our first
significant acquisition. We have continued to invest in, and prioritise, our
talent, leadership, technical, sales and the resources needed to deliver our
investment, execute our strategy and focus on our customers.
Distribution and administrative costs
2025 2024 Change
Distribution costs 8.2 8.5 (3.5%)
Administrative costs excluding hedging movements 21.7 20.3 6.9%
Foreign exchange losses/(gains) 0.4 (0.8)
Administrative costs 22.1 19.5 13.3%
Distribution and administrative costs 30.3 28.0 8.2%
Included within distribution costs are sales, marketing and warehousing
expenses. These costs reduced by £0.3m, or 4%, to £8.2m (2024: £8.5m)
during the year as we optimised logistics and warehouse usage, reducing
reliance on external overflow storage that had been needed previously.
Included within administrative costs are technical development, finance and
information systems as well as the impact of foreign exchange hedges maturing
in the period and the revaluation of non-cash assets denominated in foreign
currencies. These costs increased in 2025 by £2.6m, or 14%, to £22.1m (2024:
£19.5m). However, after stripping out foreign exchange effects, which
generated a loss of £0.4m (2024: gain of £0.8m), these administrative costs
increased by 7%, or £1.4m, to £21.7m (2024: £20.3m). See "Currency review"
below for further information and context around foreign exchange movements.
This increase of £1.4m reflects our investment in our teams; we added key
roles in R&D and management to support our key strategic projects
including the regional expansion in Asia and our innovation centres and annual
pay rises were above historical norms due to the ongoing inflationary
environment.
These cost increases were largely offset by reductions in one-time and
non-core spend, in particular MEL ReZorce development spend that we incurred
in prior years. The pausing of investment in MEL resulted in a £4.9m
reduction in non-recurring operating costs in 2025, which has been redeployed
into our core innovation and commercial activities, the net effect of which
was a significant reduction in our overhead base.
The specific business unit results and margins that we report, see "CEO
review", do not include central plc costs, which are not considered to be
market-specific. Neither do they include hedging movements. In 2025, central
plc costs increased 55% to £6.5m (2024: £4.2m) and mainly comprise the
additional Executive team costs reflecting a strengthening of management, and
£0.5m in respect of amortisation charges of Shincell fees payable under the
licence agreement, which are not allocatable to a specific market.
Acquisition of Overseas Konstellation Company S.A. ("OKC")
On 18 November 2025, Zotefoams completed the acquisition of OKC, a business
based in Spain that specializes in advanced foam conversion and distribution
in niche markets. OKC was acquired to strengthen our value chain integration
and market reach in EMEA, particularly in high-performance technical foams for
industries like automotive and sustainable packaging. The transaction aligns
with our strategy of expanding into complementary markets.
The purchase consideration comprised a €27.6m initial cash payment (funded
from our existing debt facilities and cash on hand) and a further deferred
€6.9m cash payment and contingent payments, of which €1.5m is tied to
OKC's future performance.
Integration is proceeding smoothly: OKC's management team and 99 employees
have joined Zotefoams, and their operations are being integrated with our
existing European business. We have formulated a detailed integration plan,
focusing on cross-selling opportunities, operational synergies (for example,
leveraging Zotefoams' extrusion capacity to supply OKC's conversion
processes), and sharing technical expertise.
OKC brings us closer to certain end-customers with its direct relationships
with automotive and industrial clients that complement our own, along with
providing downstream fabrication capabilities that broaden our offering.
Rather than selling foam blocks/sheets, we can now supply more value-added
foam components and assemblies, capturing a greater share of the value chain.
The acquisition is expected to be earnings accretive in 2026.
Looking ahead, OKC will be fully integrated into our EMEA operations. We
expect to see revenue growth (through combined sales efforts and a broader
product range) and the benefit of OKC's excellent reputation for customer
service and its proprietary recycling technology.
Exceptional item, MEL
During 2025, the Group incurred a charge of £0.9m relating to additional
costs of closing these activities down. In 2024 we recognised a substantial
exceptional item of £15.2m related to the impairment and closure of the
MuCell Extrusion ("MEL") business (principally the ReZorce packaging project).
Operating profit
Adjusted operating profit was £22.8m, 26% above 2024 (£18.1m) and the
operating margin increased to 14.4% from 12.2%. Operating profit was £21.6m,
up substantially on 2024 (£3.0m) and the operating margin increased to 13.6%.
Finance costs
Gross finance costs for the year decreased 32% to £2.1m (2024: £3.1m) and
include £0.1m (2024: £0.1m) of interest on the Defined Benefit Pension
Scheme obligation. This decrease arose from a lower average debt balance
throughout the year that reflects the Group's strong cash generation. Net
finance costs, after finance income, decreased 41% to £1.7m (2024: £2.9m).
Profit before tax
Adjusted profit before tax increased 38% to £21.2m (2024: £15.3m). PBT
increased to £20.0m (2024 £0.2m).
Currency review
Exchange rates
Zotefoams transacts significantly in US dollars and euros. The exchange rates
used to translate the key flows and balances were:
2025 2024
Average Closing Average Closing
Euro/sterling 1.173 1.146 1.177 1.210
US dollar/sterling 1.312 1.345 1.278 1.252
Movements in foreign exchange rates can have a significant impact on Group
results, and while the Group seeks to mitigate this risk, as outlined in more
detail below, the impact was an increase in profits of £0.4m on a constant
currency basis (2024: £1.0m reduction). During the year, the sterling average
exchange rate year-on-year against the US dollar strengthened by 2.7% and the
sterling average exchange rate against the euro weakened by 2.8%. The sterling
spot rate against the US dollar from 31 December 2024 to 31 December 2025
strengthened by 7.4%, while the sterling spot rate against the euro weakened
by 5.3% over the same period.
Zotefoams is a predominantly UK-based exporter which invoices in local
currency, with the exception of Asia where all business is invoiced in US
dollars. In 2025, approximately 91% of sales (2024: approximately 92%) were
denominated in currencies other than sterling, mostly US dollars or euros.
Operating costs at the Croydon, UK, site are incurred in sterling, and the
main raw materials for polyolefin foams used for production in the UK are
euro-denominated. US subsidiary production and operating costs, most other
subsidiaries' staff and operating costs and some HPP raw materials are US
dollar-denominated, while Poland operating costs are incurred in zloty. The
Group uses forward exchange contracts to hedge up to 80% of its forecast net
cash flows over the following twelve months that are subject to US dollar and
euro transaction risk. The Group recorded a gain on forward exchange contracts
in the year of £1.3m (2024: gain £1.0m).
Zotefoams also faces translation risk. Zotefoams plc, the parent company,
holds the Group's multi-currency borrowings facility and has provided
intercompany loans and intercompany trading facilities to the USA and Poland
to support Group expansion. This translation exposure is mitigated, where
possible, through an offset with same-currency liabilities, primarily through
borrowing in the relevant currency. Every month, these foreign
currency-denominated intercompany net positions, despite being cash neutral,
require to be translated by Zotefoams plc on a mark to market basis and the
movement taken to the Company income statement. The Group also has a
fast-growing footwear business, which is mostly invoiced from the UK in US
dollars, which adds to its exposure to foreign currency-denominated net assets
and is accounted for in the same way as above. While FX exposure is partly
mitigated by the forward currency contracts, residual risk remains based on
the amount of forecast exposure not hedged, in line with Group policy, and the
fact that there is a timing difference between the recording of accounts
receivable and cash received. This timing difference is managed by further
hedging activities, but their effectiveness is subject to the accuracy of
forecasting cash receipts.
Currency movements during the year negatively impacted Group revenue by £2.6m
(2024: £4.0m negative impact). They positively impacted operating costs by
£1.4m (2024: £2.2m positive impact), resulting in a net negative impact of
£1.2m (2024: negative impact £1.8m) before hedging. After deducting the net
hedging gain of £1.3m (2024: gain of £0.8m), the currency net positive
impact on profit before tax for the year was £0.1m (2024: negative impact
£1.0m).
We recognise that one of our principal risks is our exposure to foreign
currency fluctuations, particularly the US dollar, which we will aim to manage
through hedging strategies. Based on 2025 and with respect to transaction
risk, it is estimated that for every one percentage point movement in the US
dollar/sterling rate, profit moves by £0.0m hedged and £0.6m unhedged.
Unhedged this consists of £1.0m relating to sales, offset by £0.4m relating
to costs. In the year, the transaction risk from euro/sterling movements
continues to be substantially naturally hedged, with the risk arising on sales
revenues offset by the opportunity on costs, primarily related to raw material
purchases and certain further processing costs.
The Group does not currently hedge for the translation of its foreign
subsidiaries' assets or liabilities. The foreign currency hedging policy is
kept under regular review and is formally approved by the Board on an annual
basis.
Profit before tax by region (£m)
2025 Reported 2025 Adjusted(1) 2024 Net change
Reported
Reported Adjusted
EMEA 24.1 24.8 23.1 4.3% 7.4%
North America 3.5 4.0 1.8 94% 122%
Asia 0.2 0.3 1.4 (86%) (79%)
MEL before exceptional item 0.2 0.2 (4.5)
Subtotal before exceptional item 28.0 29.3 21.8 28% 34%
Exceptional items & amortisation of acquired intangibles (1.1) (1.1) (15.2) (92%) (92%)
Subtotal after exceptional item 26.9 28.2 6.6 307% 327%
Central costs (6.5) (6.6) (4.0) (63%) (65%)
Hedging 1.3 NA 0.8 63% (100%)
Finance costs (1.7) (1.6) (2.8) (39%) (43%)
Subtotal other (6.9) (8.2) (6.4) 8% 28%
Adjusted Group Profit before tax 21.2 21.1 15.4 38% 37%
Group Profit before tax 20.0 19.9 0.2
1. Constant currency, adjusting 2025 values to 2024 rates. See exchange rates
table above.
Taxation charge and earnings per share
The tax credit for the year is £2.6m (2024: charge £2.9m). In the year, we
have recognised two deferred tax assets, one relating to our Poland business
and the other relating to our North America business. In Poland, our factory
is situated in the special economic zone which enables cumulative profits of
c.£6.7m up until 2034 to be treated on a tax-free basis, Our Poland plant has
been profitable and this profitability is anticipated now to be sustainable
into the future, given the refreshed strategy and ongoing utilisation of this
facility, therefore it is now appropriate to recognise a £3.6m deferred tax
asset in Poland.
The pausing of investment in MEL in 2024 means that we have profitable
operations in the US going forwards. After considering the brought forward
loss position in detail, management believe recognition of a deferred tax
asset of £1.5m is appropriate, given the certainty that now exists following
the complete wind down of the ReZorce business during the year.
The effective tax rate for the year was (13.4%) (2024: >100%). This
reflects the tax credit recognised in 2025 in respect of the first-time
recognition of deferred tax assets in Poland and the US. The effective tax
rate using adjusted PBT and tax charge for the year is 12.3% (2024: 19.0%).
The lower tax charge reflects the benefits of R&D and two years of patent
box claims made in 2025, reducing the effective tax rate considerably on the
UK business.
Adjusted Basic earnings per share was 38.00p (2024: 25.95p), an increase
of 46%. Adjusted diluted earnings per share was 36.77p (2024: 25.24p). Basic
earnings per share was 46.37p, and diluted earnings per share was 44.87p.
Capital allocation
Disciplined capital allocation is a key driver of sustainable growth and
long‑term financial returns, and is a principal focus area for the Board.
Zotefoams prioritises achievable, sustainable profit growth by directing
investment into the areas that support the development and long‑term
strength of the business.
Capital expenditure in foam manufacturing
The autoclave‑based manufacturing processes operated in the UK, USA and
Poland are capital‑intensive, with certain key equipment requiring long lead
times. Investment decisions are therefore planned carefully and assessed
against strategic fit, risk and risk appetite, sustainability considerations
and expected returns. Confidence in the Group's developing portfolio of HPP
opportunities influences the timing of specific investments, while the
strategic importance of sustaining growth in the profitable Polyolefin Foams
business, the Group's largest‑volume product range, supports decisions to
expand total Group capacity rather than relying solely on mix enrichment.
The Group continues to invest in its manufacturing footprint in the UK, USA
and Poland, and is now extending this investment to Vietnam to support the
Footwear business segment. In parallel, ongoing investment in Innovation and
R&D centres in the UK and Korea underpins future product development and
long‑term growth. Supported by increased investment in innovation and
partnerships, the Group aims to reduce capital intensity and lead times,
enabling faster and more flexible deployment of capital. The first
representation of this strategy is the expansion of our geographic reach into
Asia and closer collaboration with Nike and its Tier 1 partners, with
significant investment committed in 2025 to both the Korea and Vietnam
operations, scheduled for completion in 2026 / early 2027.
Beyond major capacity‑related projects, the Group also invests to maintain
and enhance its existing assets, with a focus on minimising operational
disruption, improving energy efficiency and further reducing health and safety
risks. Annual and five‑year capital planning outcomes, along with progress
against them, are reviewed by the Board, and individual projects above defined
expenditure thresholds require specific Board approval in addition to the
annual budget cycle.
Zotefoams targets improvements in the Group's return on capital over the
investment cycle, while recognising the short‑term impact of large capital
projects during construction and early operation, when utilisation and mix
optimisation may initially be lower. The transition to smaller modular
production in Asia is expected to deliver improved returns and lower capital
intensity compared with the Group's traditional large‑scale extruders and
autoclaves in the UK and USA.
Investment in sustainable innovation
Zotefoams is an innovator in advanced technical foams and pursues a strategy
to continuously develop a portfolio of products that leverages its unique
technology. As part of our refreshed strategy, we intend to adopt a hub and
spoke model for innovation and will invest in an Innovation Centre of
Excellence (the hub), and smaller Innovation Centres (spokes) that are focused
on, and embedded within, specific markets. Investing more in dedicated teams,
we will protect our intellectual property and build on 100+ years
of supercritical fluid foam experience. We will expand our capability into
foam and plastic fabrication to move along the value chain by providing
solutions beyond a raw material to customers. We will evolve our current
technology and invest in new technologies to reduce energy consumed in
manufacture, while developing products that significantly reduce waste and
emissions along the value chain and will harness AI to reduce the number of
iterative development cycles and time required.
During 2026, the Group will site its innovation centre in Croydon, to ensure
that the greatest synergies are obtained with its manufacturing operation to
further enhance innovation and staff the location with qualified resource. It
has also commissioned the first Innovation spoke in South Korea to support
closer technical collaboration with key customers and partners, who are all
based in the region.
Working capital
The Group continues to require investment in working capital to support high
customer service levels and targeted margins. Customer payment terms reflect
competitive market conditions, while inventory levels are driven by raw
material values, supply‑chain length, and the stock needed to meet service
expectations. Growth beyond the capacity‑restricted UK site, together with
the faster expansion of HPP relative to Polyolefin Foams, is increasing
inventory requirements, given HPP's longer supply chains, additional technical
testing, more strategic customer relationships, and higher raw material costs.
Supplier terms remain consistent with those typically offered by large
multinational polymer and energy companies. The Group progressed initiatives
to optimise working capital through 2025, including improvements to supplier
payment terms, with performance monitored monthly by the Board. The transition
of manufacturing for the Footwear business segment from the UK to Vietnam in
2026-2027 will temporarily increase inventory to support the move and maintain
customer service, after which shorter supply chains and reduced in‑transit
inventory are expected to deliver a structural working‑capital benefit.
Non-organic growth
The Group's refreshed strategy explicitly identifies acquisitions as a new
lever to complement organic growth that will help us expand market access,
acquire new capability and expertise, and diversify into adjacent markets.
Our first acquisition of OKC is in line with this strategy and expands our
geographic reach and adds complementary products to the Group as well as
diversifying the customer base with its long-standing range of customers.
Return on capital employed
Zotefoams defines the return on capital employed (ROCE), which is a non-IFRS
measure, as operating profit before exceptional items divided by the average
sum of its equity, net debt and other non-current liabilities. This measure
excludes acquired intangible assets and their amortisation costs. It also
excludes significant capacity investments under construction until they enter
production. We do not attempt to adjust for first phase inefficiencies.
In 2025, the Group's ROCE increased to 13.9% (2024: 11.7%), mostly reflecting
improved profitability in the year as the Group increased utilisation of its
assets and improved the product mix. In line with the definition, we have
removed capitalised costs to date in Vietnam and costs related to investment
in our second low-pressure vessel in the USA, which was commissioned in H2
2025 and will add to ROCE on a time-apportioned basis.
Dividend
The Board has a progressive dividend policy, recognising the importance to our
shareholders of the dividend as part of their overall return while ensuring
sufficient capital and liquidity to pursue its growth ambition. Minimum
earnings cover of 2 times is targeted. The Board regularly reviews this policy
as the Group grows and capital expenditure demands a lower share of the cash
generated.
The Directors are proposing a final dividend of 5.35p (2024: 5.10p), which
would be payable on 3 June 2026 to shareholders on the Company register at the
close of business on 1 May 2026. The ex-dividend date will be 30 April 2026.
Taken with the interim dividend of 2.50p (2024: 2.38p), this would bring the
total dividend for the year to 7.85p (2024: 7.48p) and would represent a
dividend cover of 5.1 times based on an adjusted PAT number (2024: 3.4 times).
Cash flow
The Group is by its nature highly cash generative and, this year, cash
generated from operations has significantly increased by £9.3m (31%) to
£39.7m (2024: £30.4m). Within this, there was a £7.4m net working capital
inflow (2024: £2.5m). Trade and other receivables increased £1.6m (2024:
decreased £1.5m), slightly lower than revenue growth thanks to strong
collections and some large end of year receipts. Inventory decreased £4.5m
(2024: decreased £1.9m), reflecting the reversal of a 2024 stock build
to maximise use of available capacity at that time and in anticipation of
high levels of demand in 2025, together with focused management action to
bring down inventory levels. Trade and other payables increased £4.5m (2024:
decreased £1.0m) reflecting a concerted effort by our management and
procurement teams to agree more favourable supplier payment terms and to pay
in line with the agreed terms. Free cash flow before M&A was £23.1m
(2024: £13.9m) which represents cash conversion of 101% (2024: 77%).
During the year, the Group paid interest on its borrowings of £1.6m (2024:
£2.5m), reflecting both lower interest rates and lower average debt levels
across much of the year. Net taxation paid during the year, net of refunds,
amounted to £3.0m (2024: £2.9m), reflecting higher profits at the Company
offset by expected savings from the patent box.
Zotefoams' property, plant and equipment capital expenditure amounted to
£14.0m (2024: £10.3m, £9.1m excluding ReZorce). Capital deployment in the
current year increased relative to the prior year, primarily driven by
strategic investments to expand beyond the core business. This included the
ramp-up of the second low-pressure autoclave in North America (46%) and
expansion initiatives within the Footwear business in Asia (28%).
Geographically, expenditure was predominantly concentrated in North America,
which accounted for 60% (2024: 52%) of total spend, with Footwear Asia
representing 34% (2024: 0%) due to the ongoing investment in Vietnam and
Korea, with EMEA accounting for the remaining 6% (2024: 22%) and MEL 0% (2024:
33%). While capital expenditure at established plants has been moderated, this
reflects the fact that they are well invested. These sites continue to receive
sufficient funding to preserve asset integrity, ensure operational
reliability, and maintain a safe working environment for operators.
Summary cash flow
2025 2024
Profit before tax 20.0 0.2
Depreciation and amortisation 8.9 9.0
Exceptional costs of closure of business 0.9 15.2
Other 3.4 4.3
Net cash from operations before provisions and investment in working capital 33.2 28.8
Receivables (1.6) 1.5
Inventory 4.5 1.9
Payables 4.5 (0.8)
Employee defined benefit contributions (0.9) (0.9)
Cash generated from operations 39.7 30.4
Net Interest paid (1.2) (2.2)
Taxation paid (3.0) (2.9)
Investments in intangible assets (0.3) (3.3)
Investments in tangible assets (14.0) (10.3)
Acquisition of business, net of cash acquired (23.4) -
Proceeds on disposal of fixed assets 0.7 -
Net movement in borrowings 11.3 (1.6)
Lease payments (2.6) (2.3)
Dividends (3.7) (3.5)
Movement in cash and cash equivalents 3.5 4.3
The net effect of working capital movements was an inflow of £7.4m (2024:
£2.5m). Lease payments increased to £2.6m (2024: £2.3m), with £1.7m of
these payments related to the Shincell agreement (2024: £1.3m). Closing net
debt (as defined under the bank facility definition) increased £7.4m (31%) to
£31.5m (2024: £24.1m), while on an IFRS basis, closing net debt rose to
£43.0m (2024: £33.0m) as a result of IFRS 16 leases, £6.1m of which relate
to the year-end Shincell liability.
At the year end, the Group remains comfortably within its bank facility
covenants, with a multiple of EBITDA to net finance charges of 23.1 (2024:
10.8), against a covenant minimum of 4 (2024: 4), and net debt to EBITDA
(leverage) multiple of 0.8x (2024: 0.9x), against a covenant of 3.5x (2024:
3.5x).
Debt facility
The Group's gross finance facilities with Handelsbanken, NatWest and HSBC were
renewed in January 2026 and comprise a £90.0m multi-currency revolving credit
facility, a £30.0m accordion with a renewal date of January 2029 and an
interest rate ratchet. The facility has two covenants: a finance cost covenant
with a multiple of 4.0x and a leverage covenant with a multiple of 3.5x.
At 31 December 2025, headroom, which we define as the combination of amount
undrawn on the facility and cash and cash equivalents disclosed on the
statement of financial position, amounted to £18.5m (2024: £25.7m).
Zotefoams defines EBITDA as profit for the year before tax, adjusted for
depreciation and amortisation, net finance costs, the share of profit/loss
from its joint venture, equity-settled share-based payments (IFRS 2) and
exceptional costs.
Net debt comprises short- and long-term loans less cash and cash equivalents
and is adjusted from IFRS by the impacts of IFRS 16 under the bank facility
definition.
Group banking covenants definition
Net debt to EBITDA ratio (Leverage)
£m 2025 2024 £m 2025 2024
Profit after tax 25.8 (2.8) Net debt per IFRS 43.0 33.1
Adjusted for: IFRS 16 leases (11.5) (9.0)
Depreciation and amortisation 9.6 9.0
Finance costs 2.1 3.1 Net debt per bank 31.5 24.1
Finance income (0.4) (0.2) Leverage per bank 0.8 0.9
Share of result from joint venture 0.0 (0.1)
Equity-settled share-based payments 1.7 1.1
Exceptional costs of closure of business 0.9 15.2
Taxation (1.9) 2.9
EBITDA 37.8 28.2
EBITDA to net finance charges ratio
£m 2025 2024 £m 2025 2024
EBITDA, as above 37.8 28.2 Finance costs 2.1 3.1
Finance income (0.4) (0.3)
Share of result from joint venture - -
EBITDA to net finance charges 23.1 10.8 Net finance charges 1.7 2.91
Post-employment benefits
The Company operates a UK-registered trust-based Defined Benefit Pension
Scheme (the "DB Scheme")
The net IAS 19 deficit on the DB Scheme decreased by £1.6m to zero as at 31
December 2025 (31 December 2024: £1.6m). The present value of the defined
benefit obligation at the year-end decreased by £1.2m from £24.7m in 2023 to
£23.5m in 2024 which was offset by the actual investment return achieved on
the assets, which increased by £0.3m from £23.2m in 2024 to £23.5m in
2025. Mitigation of further risk is expected to come from the continued focus
by the Trustees on a lower-risk strategy to lock in this improved funding
position. Annual payments into the scheme will continue at £0.8m per annum.
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 its available debt 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. The Directors have also continued to draw on the Group's success
in reacting to the challenges of COVID-19 through its safety protocols and
cost and cash management, all of which could be replicated in a similar
scenario.
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 preliminary results.
Financial risk management
The main financial risks of the Group relate to funding and liquidity,
credit, interest rate fluctuations and currency exposures.
Nick Wright
Group CFO
17 March 2026
Consolidated income statement
For the year ended 31 December 2025
2025 2024
Note £'000 £'000
Revenue 0 158,490 147,791
Cost of sales (105,591) (101,658)
Gross profit 52,899 46,133
Distribution costs (8,175) (8,478)
Administrative expenses (22,153) (19,525)
Exceptional costs of closure of business (946) (15,178)
Operating profit 0 21,625 2,952
Adjusted operating profit * 22,821 18,130
Finance costs (2,058) (3,147)
Finance income 350 274
Share of profit from joint venture 46 74
Profit before income tax 19,963 153
Adjusted profit before income tax * 21,159 15,331
Income tax credit / (expense) 2,676 (2,908)
Profit / (loss) for the year 22,639 (2,755)
Adjusted profit for the year * 18,555 12,423
Profit / (loss) attributable to:
Equity holders of the Company 22,639 (2,755)
Earnings / (loss) per share:
Basic (p) 0 46.37 (5.66)
Diluted (p) 0 44.87 (5.66)
Adjusted earnings per share **
Basic (p) 0 38.00 25.95
Diluted (p) 0 36.77 25.24
* This is not an IFRS measure. Adjusted operating profit, profit before tax
and profit for the year have been calculated by excluding the exceptional item
relating to MuCell closure, amortisation of intangible assets arising on
acquisition of subsidiary and exceptional tax credit.
** This is not an IFRS measure and has been calculated using the adjusted
profit for the year
Consolidated statement of comprehensive income
For the year ended 31 December 2025
2025 2024
Note £'000 £'000
Profit / (loss) for the year 22,639 (2,755)
Other comprehensive income
Items that will not be reclassified to profit or loss:
Actuarial gains on Defined Benefit Pension schemes 755 348
Tax relating to items that will not be reclassified (189) (87)
Total items that will not be reclassified to profit or loss 566 261
Items that may be reclassified subsequently to profit or loss:
Foreign exchange translation losses on investment in foreign subsidiaries (1,099) (371)
Change in fair value of hedging instruments 647 (965)
Hedging gains / (losses) reclassified to profit or loss 743 (968)
Tax relating to items that may be reclassified (509) 590
Total items that may be reclassified subsequently to profit or loss (218) (1,714)
Other comprehensive income / (loss) for the year, net of tax 348 (1,453)
Total comprehensive income / (loss) for the year 22,987 (4,208)
Total comprehensive income / (loss) attributable to:
Equity holders of the Company 22,987 (4,208)
Total comprehensive income / (loss) for the year 22,987 (4,208)
Consolidated statement of financial position
As at 31 December 2025
2025 2024
Notes £'000 £'000
Non-current assets
Property, plant and equipment 0 105,607 92,088
Right-of-use assets 6,266 2,153
Goodwill 0 9,903 -
Intangible assets 13,883 438
Intangible right-of-use assets 6,458 7,233
Investment in joint venture 327 281
Trade and other receivables 134 14
Deferred tax assets 5,571 548
Total non-current assets 148,149 102,755
Current assets
Inventories 27,270 29,924
Trade and other receivables 36,484 31,494
Derivative financial instruments 980 42
Current tax asset 229 -
Cash and cash equivalents 13,982 10,534
Total current assets 78,945 71,994
Total assets 227,094 174,749
Current liabilities
Trade and other payables (21,580) (11,878)
Provisions (859) (1,381)
Derivative financial instruments (67) (1,164)
Current tax liability (925) (757)
Lease liabilities (2,774) (2,134)
Deferred consideration (6,022) -
Interest-bearing loans and borrowings 0/8 (45,511) (34,602)
Total current liabilities (77,738) (51,916)
Non-current liabilities
Lease liabilities (8,729) (6,821)
Deferred tax liabilities (9,239) (5,103)
Deferred Consideration 0 (1,309) -
Post-employment benefits - (1,552)
Total non-current liabilities (19,277) (13,476)
Total liabilities (97,015) (65,392)
Total net assets 130,079 109,357
Equity
Issued share capital 0 2,462 2,442
Share premium 0 44,178 44,178
Own shares held (16) (7)
Capital redemption reserve 15 15
Translation reserve 2,554 3,653
Hedging reserve 198 (683)
Retained earnings 80,688 59,759
Total equity 130,079 109,357
Consolidated statement of cash flows
For the year ended 31 December 2025
2025 2024
Note £'000 £'000
Cash flows from operating activities
Profit before tax 19,963 153
Adjustments for:
Depreciation and amortisation 8,890 8,983
Loss on disposal of assets 20 28
Finance costs 1,708 2,873
Share of profit from joint venture (46) (74)
Net exchange differences 22 524
Equity-settled share-based payments 1,674 1,077
Non-Cash cost of closure of business 946 15,178
Operating profit before changes in working capital and provisions 33,177 28,742
(Increase) / Decrease in trade and other receivables (1,586) 1,539
Decrease in inventories 4,536 1,948
Increase / (Decrease) in trade and other payables 4,466 (997)
Employee defined benefit contributions (859) (859)
Cash generated from operations 39,734 30,373
Interest paid (1,561) (2,515)
Income taxes paid, net of refunds (3,024) (2,857)
Net cash flows generated from operating activities 35,149 25,001
Cash flows from investing activities
Interest received 350 274
Purchases of intangibles (262) (3,306)
Purchases of property, plant and equipment 0 (13,963) (10,342)
Proceeds from disposal of property, plant and equipment 0 700 39
Payment for acquisition of subsidiary, net of cash acquired 0 (23,406) -
Net cash used in investing activities (36,581) (13,335)
Cash flows from financing activities
Proceeds from exercise of share options 25 72
Repayment of borrowings (14,584) (8,357)
Proceeds from borrowings 25,931 6,750
Payment of principal portion of lease liabilities (2,736) (2,335)
Dividends paid to equity holders of the Company 0 (3,713) (3,542)
Net cash from / (used in) financing activities 4,923 (7,412)
Net increase in cash and cash equivalents 3,491 4,254
Cash and cash equivalents at 1 January 10,534 6,294
Exchange losses on cash and cash equivalents (43) (14)
Cash and cash equivalents at 31 December 13,982 10,534
Consolidated statement of changes in equity
For the year ended 31 December 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 2024 2,442 44,178 (12) 15 4,024 660 64,456 115,763
Loss for the year - - - - - - (2,755) (2,755)
Other comprehensive losses for the year:
Foreign exchange translation losses on investment in subsidiaries - - - - (371) - - (371)
Change in fair value of hedging instruments recognised in other comprehensive - - - - - (965) - (965)
income
Reclassification to income statement - administrative expenses - - - - - (968) - (968)
Tax relating to effective portion of changes in fair value of cash flow - - - - - 590 - 590
hedges, net of recycling
Actuarial gain on Defined Benefit Pension scheme - - - - - - 348 348
Tax relating to actuarial gain on Defined Benefit Pension scheme - - - - - - (87) (87)
Total comprehensive loss for the year - - - - (371) (1,343) (2,494) (4,208)
Transactions with owners of the Parent:
Options exercised - - - - - - 72 72
Proceeds of shares issued, net of expenses - - 5 - - - - 5
Equity-settled share-based payments net of tax - - - - - - 1,267 1,267
Dividends paid 0 - - - - - - (3,542) (3,542)
Total transactions with owners of the Parent - - 5 - - - (2,203) (2,198)
Balance as at 31 December 2024 2,442 44,178 (7) 15 3,653 (683) 59,759 109,357
Balance as at 1 January 2025 2,442 44,178 (7) 15 3,653 (683) 59,759 109,357
Profit for the year - - - - - - 22,639 22,639
Other comprehensive Income for the year:
Foreign exchange translation losses on investment in subsidiaries - - - - (1,099) - - (1,099)
Change in fair value of hedging instruments recognised in other comprehensive - - - - - 647 - 647
income
Reclassification to income statement - administrative expenses - - - - - 743 - 743
Tax relating to effective portion of changes in fair value of cash flow - - - - - (509) - (509)
hedges, net of recycling
Actuarial gain on Defined Benefit Pension scheme - - - - - - 755 755
Tax relating to actuarial gain on Defined Benefit Pension scheme - - - - - - (189) (189)
Total comprehensive (loss) / income for the year - - - - (1,099) 881 23,205 22,987
Transactions with owners of the Parent:
Options exercised - - - - - - 25 25
Proceeds of shares issued, net of expenses 20 - (9) - - - - 11
Equity-settled share-based payments net of tax - - - - - - 1,412 1,412
Dividends paid 0 - - - - - (3,713) (3,713)
Total transactions with owners of the Parent 20 - (9) - - - (2,276) (2,265)
Balance as at 31 December 2025 2,462 44,178 (16) 15 2,554 198 80,688 130,079
1. General overview and accounting policies
Zotefoams plc (the "Company") is a public limited company, which is listed on
the London Stock Exchange and incorporated and domiciled in England, UK. The
registered office of the Company is Salisbury House, Finsbury Circus, London
EC2M 7AQ.
The preliminary results (unaudited) (referred to as the 'preliminary results')
include the results of the Company and its subsidiaries (together referred to
as the 'Group'). The preliminary results of the Group have been prepared on
the basis of the accounting policies set out in the statutory financial
statements for the year ended 31 December 2024. Whilst the financial
information included in this announcement has been computed in accordance with
the recognition and measurement requirements of UK-adopted international
accounting standards ("UK-adopted IAS") and as applied in accordance with the
provisions of the Companies Act 2006, this announcement does not itself
contain sufficient disclosures to comply with UK-adopted IAS.
The information for the year ended 31 December 2025 does not constitute
statutory accounts for the purposes of section 435 of the Companies Act 2006.
A copy of the accounts for the year ended 31 December 2024 was delivered to
the Registrar of Companies. The auditors' report on those accounts was not
qualified and did not contain statements under section 498(2) or 498(3) of the
Companies Act 2006. The audit of the statutory accounts for the year ended 31
December 2025 is not yet complete. These accounts will be finalised on the
basis of the financial information presented by the Directors in these
'preliminary results' and will be delivered to the Registrar of Companies
following the Company's Annual General Meeting.
The preliminary results are prepared on the historical cost basis except for
derivative financial instruments which are stated at their fair value. The
same accounting policies, presentation and methods of computation are followed
in the preliminary results as were applied in the Group's 2024 annual audited
financial statements.
2. 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, Spain and Poland in addition to
foams supplied via Croydon through the Group's 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 from 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
2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
Restated Restated Restated Restated Restated
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Group revenue 123,953 113,337 30,084 28,089 4,230 5,144 223 1,221 158,490 147,791
Segment Profit/(loss) 25,379 24,449 3,529 1,819 223 1,373 180 (4,891) 29,311 22,750
Exceptional cost of closure of business - - - - - - (946) (15,178) (946) (15,178)
Unallocated central costs (214) - - - - - - - (6,740) (4,620)
Operating profit / (loss) 25,165 24,449 3,529 1,819 223 1,373 (766) (20,069) 21,625 2,952
Financing costs - - - - - - - - (2,058) (3,147)
Financing Income - - - - - - - - 350 274
Share of profit from joint venture - - - - - - 46 74
Profit before taxation - - - - - - - - 19,963 153
Taxation - - - - - - - - 2,676 (2,908)
Profit / (loss) for the period - - - - - - - - 22,639 (2,755)
Depreciation and Amortisation:
Depreciation 4,332 4,211 2,441 2,219 68 81 - 560 6,841 7,071
Amortisation 336 241 - - - - - 306 336 547
Allocated depreciation of right-of-use assets 409 347 164 168 102 39 - 294 675 848
Unallocated depreciation of right-of-use assets - - - - - - - - 834 517
Capital expenditure:
Property, plant and equipment (PPE) 1,703 2,774 8,388 6,057 4,196 4 - 1,266 14,287 10,101
Intangible assets 23,946 97 - - - - - 3,140 23,946 3,237
EMEA North America Asia MuCell Consolidated
2025 2024 2025 2024 2025 2024 2025 2024 2025 2024
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Segment Assets 158,320 108,141 50,424 49,703 11,665 7,440 89 2,232 220,498 167,516
Unallocated Assets - - - - - - - - 6,696 7,233
Total Assets 158,320 108,141 50,424 49,703 11,665 7,440 89 2,232 227,194 174,749
Segment liabilities (56,289) (32,228) (26,644) (21,943) (7,748) (1,962) (1,063) (2,677) (91,744) (58,810)
Unallocated liabilities - - - - - - - - (5,271) (6,582)
Total liabilities (56,289) (32,228) (26,644) (21,943) (7,748) (1,962) (1,063) (2,677) (97,015) (65,392)
3. Business combinations
Acquisition of Overseas Konstellation Company S.A.
On 18(th) November 2025 the Group acquired 100% of the voting shares of
Overseas Konstellation Company S.A. and its subsidiary Inversiones C2GFC, SL
(together "OKC Group") a non-listed company based in Spain specialising in the
manufacture of polyolefin foam.
Assets acquired and liabilities assumed
The fair value of the identifiable assets and liabilities of OKC Group as at
the date of acquisition were:
Acquired Fair Value Adjustment * Fair Value recognised on acquisition
£'000 £'000 £'000
Assets
Property Plant and equipment 5,822 2,670 8,492
Right-of-use assets 2,763 2,763
Acquired intangibles - 13,668 13,668
Inventories 1,942 413 2,355
Trade and other receivables 4,407 - 4,407
Cash and cash equivalents 955 - 955
15,889 16,751 32,640
Liabilities £'000
Trade payables (3,640) - (3,640)
Lease liabilities (2,763) - (2,763)
Provisions (448) - (448)
Deferred Tax - (4,030) (4,030)
(6,851) (4,030) (10,881)
Total identifiable net assets at fair value 21,759
Goodwill arising on acquisition 10,016
Purchase consideration transferred 31,775
* The fair value valuation technique relies on inputs not in the public domain
and is categorised as Level 3 in the hierarchy.
The acquisition date fair value of trade receivables amounts to £4,155k. The
gross amount of trade receivables is £4,155k and it is expected that the full
contractual amounts can be collected.
The acquisition date fair value of inventories amounts to £2,355k. This was
uplifted by £413k to reflect a distributor's margin on the value of the
inventory.
The goodwill of £10,016k comprises the value of expected synergies arising
from the acquisition and represents the excess value of consideration over the
fair value net assets and intangible assets acquired. Intangible assets were
separately recognised relating to the trade name £2,133k, Corporate name
£227k, Know-How £1,153k, Order backlog £299k and Customer list £9,856k.
The deferred tax of £4,030k relates to the Intangibles assets acquired and
fair value adjustments on the land and buildings, applied at a flat rate of
25%, that being the prevailing rate of corporation tax in Spain.
From the date of acquisition, OKC contributed £2,047k of revenue and £618k
to loss before tax from continuing operations of the Group. If the combination
had taken place at the beginning of the year, revenue from continuing
operations would have been £23,365k and profit before tax from continuing
operations for the Group would have been £3,418k.
Purchase consideration £'000
Cash paid 24,361
Deferred consideration - to be paid on 30(th) April 2026 3,045
Deferred consideration - to be paid on 30(th) October 2026 3,045
Contingent consideration 1,324
Total consideration 31,775
4. Property, plant and equipment
Land and buildings Plant and equipment Fixtures and fittings Under construction Total
£'000 £'000 £'000 £'000 £'000
Cost
At 01 January 2024 46,613 115,276 3,388 9,118 174,395
Additions 26 26 18 10,031 10,101
Disposals - (148) (9) - (157)
Transfers 1,852 7,669 450 (9,977) (6)
Effect of movement in foreign exchange (477) 177 (11) 83 (228)
At 31 December 2024 48,014 123,000 3,836 9,255 184,105
At 1 January 2025 48,014 123,000 3,836 9,255 184,105
Additions - 1,019 18 13,250 14,287
Acquisition of a subsidiary (note 3) 5,623 14,171 247 - 20,041
Disposals (79) (2,980) (191) (614) (3,864)
Transfers 1,762 10,740 144 (12,646) -
Effect of movement in foreign exchange (122) (2,813) (75) (308) (3,318)
At 31 December 2025 55,198 143,137 3,979 8,937 211,251
Accumulated depreciation
At 1 January 2024 17,059 62,872 2,721 - 82,652
Depreciation charge 1,597 5,155 319 - 7,071
Impairment 6 1,186 53 856 2,101
Disposals - (74) (8) - (82)
Transfers 1 (14) 13 - -
Effect of movement in foreign exchange 37 223 11 4 275
At 31 December 2024 18,700 69,348 3,109 860 92,017
At 1 January 2025 18,700 69,348 3,109 860 92,017
Depreciation charge 1,514 5,041 286 - 6,841
Acquisition of a subsidiary (note 3) 1,563 9,743 243 - 11,549
Impairment - - - 204 204
Disposals (79) (2,885) (190) - (3,154)
Transfers (2) 19 (17) - -
Effect of movement in foreign exchange (379) (1,385) (68) 19 (1,813)
At 31 December 2025 21,317 79,881 3,363 1,083 105,644
Net book value
At 1 January 2024 29,554 52,404 667 9,118 91,743
At 31 December 2024 and 1 January 2025 29,314 53,652 727 8,395 92,088
At 31 December 2025 33,881 63,256 616 7,854 105,607
5. Interest-bearing loans and borrowings
Note Group Company
2025 2024 2025 2024
£'000 £'000 £'000 £'000
Current bank borrowings 7 45,511 34,602 45,511 34,602
At the end of the financial year, the Group has utilised £45.5m (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 of
either a three- or six-month duration. The net amount above of £45.5m, is net
of £0.0m (2024: £0.2m) origination fees paid up front and being amortised
over four years. The Group has headroom of £18.5m, being £14.0m cash and
cash equivalents and the undrawn facility of £4.5m, being the facility of
£50m less the drawn-down balance of £45.5m.
The loan was repaid in full on 23 January 2026 and refinanced with a new loan
on similar terms lasting for 3 years from that date.
The interest rates on the debt facility ranged between 3.1% and 5.7% in 2025
(2024: between 4.3% and 6.6%).
6. Issued share capital
Issued, allotted and fully paid ordinary shares of 5.0p each:
Number of shares Par value Share premium Total
£'000 £'000 £'000
At 1 January 2024 and 1 January 2025 48,846,234 2,442 44,178 46,620
Share issue to Employee Benefit Trust 400,000 20 - 20
At 31 December 2025 49,246,234 2,462 44,178 46,640
The holders of ordinary shares are entitled to receive dividends as declared
from time to time and are entitled, on a poll, to one vote per share at
meetings of the Company.
7. Dividends and earnings per share
2025 2024
£'000
£'000
Prior year final dividend of 5.10p (2024: 4.90p) per 5.0p ordinary share 2,491 2,383
Interim dividend of 2.50p (2024: 2.38p) per 5.0p ordinary share 1,222 1,159
Dividends paid during the year 3,713 3,542
The proposed final dividend for the year ended 31 December 2025 of 5.35p per
share (2024: 5.10p) is subject to approval by shareholders at the AGM and has
not been recognised as a liability in these financial statements. The proposed
dividend would amount to £2,635k if paid to all shareholders on the Company
register at the close of business on 31 December 2025.
Earnings per ordinary share
Earnings per ordinary share is calculated by dividing the consolidated profit
after tax attributable to equity holders of the Company of £22,639k (2024:
£2,755k loss) by the weighted average number of shares in issue during the
year and excluding own shares held by the EBT which are administered by
independent trustees. The number of shares held in the trust at 31 December
2025 was 322,230 (2024: 133,573). The 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".
2025 2024
Weighted average number of ordinary shares in issue 48,827,596 48,669,691
Adjustments for share options 1,631,212 1,361,985
Diluted number of ordinary shares issued 50,458,808 50,031,676
8. Financial instruments and financial risk management
Capital management
The Group's objectives when managing capital are to safeguard its ability to
continue as a going concern, in order to provide returns for shareholders and
benefits for other stakeholders, and to maintain an optimal capital structure
to reduce the cost of capital. In order to maintain or adjust the capital
structure, the Group can adjust the amount of dividends paid to shareholders,
issue new shares or redeem existing ones or borrow funds from financial
institutions.
The Group monitors capital on the basis of the following leverage ratio: net
borrowings divided by EBITDA (as per bank facility agreement).
Loan covenants
Under the terms of its borrowing facilities, the Group is required to comply
with the following financial covenants:
· the ratio of net borrowings on the last day of the relevant period to
earnings before interest, tax, depreciation and amortisation, share of
profit/(loss) from joint venture, equity-settled share-based payments and
exceptional items (EBITDA) shall not exceed 3.50:1.00
·the ratio of EBITDA to net finance charges in respect of the relevant period
shall not be less than 4.00:1.00.
The Group has complied with its covenants throughout the financial year.
As at 31 December 2025 As at 31 December 2024
£'000 £'000
Net borrowings 31,529 24,068
EBITDA * 37,793 28,190
Net borrowings/EBITDA 0.83 0.85
Net finance charges 1,638 2,600
EBITDA/Net finance charges 23.07 10.84
* For the purposes of this calculation EBITDA has been adjusted to reflect a
full year of the newly acquired subsidiary OKC being part of the Group.
Net borrowings comprise current and non-current interest-bearing loans and
borrowings of £45,511k (2024: £34,602k), as per note 5, and cash and cash
equivalents of £13,982k (2024: £10,534k).
The definition of net finance charges for the purpose of calculating the ratio
of EBITDA to net finance charges includes bank loan interest expensed of
£1,860k (2024: £2,738k), less interest income of £222k (2024:£138k), that
being gross interest of £350k (2024: £274k) less interest income from
customers of £128k (2024: £136k).
EBITDA comprises:
2025 2024
£'000 £'000
Profit / (loss) for the year 25,820 (2,755)
Depreciation and amortisation 9,632 8,983
Finance costs 1,665 2,873
Share of profit from joint venture (46) (74)
Equity-settled share-based payments 1,674 1,077
Taxation (1,897) 2,908
EBITDA before exceptional items 36,848 13,012
Add back exceptional items 946 15,178
EBITDA 37,794 28,190
The definition of finance costs when calculating EBITDA includes finance costs
expensed of £2,058k (2024: £3,147k) less interest income of £393k (2024:
£274k), with the effect of a full year of OKC added on.
The Group's objective is to maintain leverage below the Board's appetite of
2.0. However, it is prepared to accept increases in this ratio at times of
sizeable, capacity-related, capital expenditure in order to support continued
growth. Subject to short-term macroeconomic and geopolitical volatility, this
is always expected to reduce quickly back below the Board's appetite, and to
significantly lower levels, as capacity utilisation improves.
The bank covenant definition does not include the impact of IFRS 16 "Leases",
which would have moved the ratio from 0.83 to 1.30.
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