Zotefoams plc (LON:ZTF) Chief Financial Officer Gary McGrath caught up with DirectorsTalk for an exclusive interview to discuss the Shincell Global Alliance, who Shincell currently work with, what the group will receive from Shincell, and what investors can look out in the coming months.
Q1: First off, congratulations on the Shincell Global Alliance, Could you just explain for us what that means for Zotefoams?
A1: The Company has known Dr. Jiang and Shincell and their work on complementary foaming technology for some time now.
The deal essentially licenses this technology to us, which is based on inert gases similar to our own nitrogen processing. This includes developments over the coming five years and has product, market and regional components designed to facilitate a global cooperation.
Q2: What does Shincell do above and beyond the group’s offering?
A2: Shincell work with a combination of two gases, carbon dioxide and nitrogen, which offer different capabilities to our pure nitrogen process. This will allow us to extend our product offerings and work with Shincell to develop new products and markets together.
Q3: So, who does Shincell work with? Who are their customers?
A3: They work with a variety of customers, predominantly in sports and leisure and industrial markets in China. They supply to the footwear and automotive industries, as well as other segments but there’s very little overlap with our business.
Q4: What will Zotefoams receive from its RMB 80 million investment?
A4: Shincell have solid theoretical underpinning for their technology and crucially have solved the scale-up processes which often hinder new technologies.
We will gain full access to the technical, polymer, machinery and operating processes developed by Shincell. This will accelerate our R&D capability in a direction that we know is scalable.
Q5: What can investors expect from the group in the coming months?
A5: It’s going to take more than a few months for our plans to be implemented, but we’re already looking at investing, in bringing this process technology into the group, with Poland the most likely first investment. We’re also looking at developing a range of new materials, as well as sampling the market with existing Shincell products in Europe and North America.
There’ll be a small associated cost this year, on top of the RMB 80 million licensing fees and deal cost. There’s also the potential for relatively minor capital investment, which most likely will remain within or close to current guidance.
