Zotefoams Solid operating profits and effective cash management


Zotefoams plc (LON:ZTF), a world leader in cellular material technology, has today announced its unaudited preliminary results for the year ended 31 December 2020.

“Solid operating profits and effective cash management, with record second-half sales, demonstrates resilience and flexibility.”

Financial highlights

StatutoryBefore exceptional item1Before exceptional item1StatutoryStatutory 
Operating profit£9.1m£9.1mnil£10.2m(10)% 
Profit before tax£8.3m£8.8m(5)%£9.8m(15)% 
Basic EPS14.87p14.91pnil17.10p(13)% 
Cash generated from operations£13.0m£10.7m21%£11.8m10% 
Leverage ratio22.1x2.0x2.0x 
Final dividend34.27p 

Exceptional item in 2019 of £1.1m relating to a pension credit following a legal claim against the previous pension advisors

Leverage is that defined under the bank facility, with net debt at the end of the period divided by the preceding 12 months’ EBITDA before exceptional items, adjusted for the impact of IFRS2 and IFRS16.

Final dividend is subject to approval at the Company’s AGM

Results highlights

·Delivered year-on-year revenue growth despite COVID-19 disruption in most markets, driven by High Performance Products (HPP) footwear and personal protective equipment (PPE) Polyolefin Foams sales:
HPP sales up 13% to £30.0m (2019: £26.5m) and account for 36% of Group revenue (2019: 33%)
Polyolefin Foams sales at similar levels to the previous year at £50.9m (2019: £51.4m)
MuCell Extrusion LLC (MEL) revenue down 41% to £1.8m (2019: £3.1m)
Record six-month sales in H2 2020, overcoming the severe impacts of COVID-19 in the first half
·UK PPE sales and successful cost management demonstrates resilience and flexibility of the business
·Very strong cash performance, with year-end leverage ratio of 2.1x, down from 2.6x at mid-year and well within covenants
·Dividends reinstated in October 2020, final dividend proposed of 4.27p, modest UK government support fully repaid

Strategic progress

·Poland plant commissioned in February 2021, representing the final commitment of a multi-year capacity enhancement programme
·Improved visibility in H2 2020 allowed for a return to investment in the commercial and product development initiatives that will enable development of the opportunity pipeline
·Investing to develop and assess ReZorce®, a sustainable mono-material barrier packaging solution 
·Manufacturing capacity in place to support future growth 

David Stirling, Zotefoams Group CEO, said:

“I am pleased with how Zotefoams has performed in 2020, given the COVID-19 impact on economies and supply chains globally. This performance has been a result of decisive actions taken by our management teams in prioritising staff welfare while ensuring our facilities operated as required by our customers. Overall, I believe our strategy is sound and the ability to realign our business, to adapt to a rapidly changing environment, to manage our cost base and investment profile demonstrates the flexibility of our product range, capacity and people. 

“We are experiencing a strong start to 2021, consistent with our growth expectations, across the business as a whole. Our Polyolefin Foams Business Unit is trading very strongly, buoyed by restocking in some markets and the restarting of some previously delayed projects. We do not anticipate any significant sales from PPE programmes this year, which materially supported 2020’s second half trading. In our HPP Business Unit, demand for footwear products continues at similar levels to the strong performance seen in the second half of last year, while COVID-related factors continue to impact aviation and the rate of growth in T-FIT® insulation products.

“The operational environment is currently impacted by Brexit-related changes and global trade imbalances, making it more difficult and expensive to plan transportation, although we anticipate that this will ease with time. We expect to recover inflationary pressure, particularly in raw material pricing, through price increases in the second quarter.

“Zotefoams demonstrated resilience and flexibility under very difficult macroeconomic conditions in 2020, while continuing to make good strategic progress and adding to its broad range of exciting business opportunities. We expect to deliver significant growth this year; however, our cost base will increase, reflecting a return to more normalised levels of spending, the new Poland facility coming on stream and selective investment to support our best growth projects. The year has started strongly and, while we are cautious on our short-term outlook given the on-going COVID-19 and logistics challenges, the Board remains confident about the future prospects for our business.”

An introduction from our Chair
Resilience and flexibility

The response to the pandemic has demonstrated an effective strategy delivered by a dedicated workforce and leveraging a differentiated technology


While 2020 was of course dominated by the impact of the COVID-19 pandemic, Zotefoams demonstrated its resilience and flexibility in successfully responding to the significant market, operational and workplace challenges posed. COVID-secure working procedures were introduced at each of its sites. Financial performance was robust, with a strong second half recovery leading to revenue growth for the year as a whole and we continued to make good strategic progress despite these considerable challenges. It has been an immense effort and, on behalf of the Board, I would like to record my sincere gratitude to the leadership team and all their colleagues across the Group who have worked safely, flexibly and tirelessly to support all of our stakeholders during the year.

Strategic progress

In an extremely challenging year, we have nevertheless made good strategic progress. In our High-Performance Products (HPP) business we delivered excellent growth in footwear and made significant headway in T-FIT® insulation, particularly in China, moderated by COVID-19 related disruptions in Europe and India. We commissioned our Poland manufacturing facility in February 2021, which was the final part of a multi-year capacity improvement programme adding 60% capacity to pre-2018 levels. As visibility improved in H2 2020, we recommenced investment into the commercial and product development initiatives that will enable us to develop our pipeline of opportunities and accelerate future growth. We also took decisive steps to assess and develop market entry plans for ReZorce® mono-material barrier packaging solutions in key application areas to capitalise on the significant opportunities which exist for this technology.

The major market impact of COVID-19 was felt in our ZOTEK® F foams business, which mostly supplies the aviation industry. Sales more than halved this year; however, through a combination of new application areas and recovery, we expect this business to return to pre-pandemic growth rates in the medium term. We demonstrated the resilience of our Polyolefin Foams business, supporting a new personal protective equipment (PPE) application which offset reduced demand in industrial markets brought on by the pandemic. We continue to see structural growth prospects in this important business unit, underpinned by the megatrends of environment, regulation and demographics and facilitated by our new global capacity.


Group revenue was £82.7m, 2% above the previous year (2019: £80.9m). Operating profit before exceptional item was in line with the previous year at £9.1m (2019: £9.1m), with statutory operating profit down 10% at £9.1m (2019: £10.2m). Basic earnings per share before exceptional item was in line with the previous year at 14.87p (2019: 14.91p) and basic earnings per share was down 13% at 14.87p (2019: 17.10p).

The combination of our rapid response to the pandemic and the successful execution of both new and existing opportunities in H2 2020 has demonstrated the financial resilience of Zotefoams’ business. We ended the year with a strong balance sheet and leverage down to 2.1x from its peak level of 2.6x at the mid-year, well within our covenants.


The Board has a progressive dividend policy, recognising the importance to our shareholders of the dividend as part of their overall return. Given the extraordinary uncertainty at the time of the COVID-19 outbreak, however, the Board did not recommend a final dividend for the year ended 31 December 2019. As the ongoing impact of the pandemic and our responses to mitigate it became clearer, a more confident assessment of the Group’s financial position and future was taken at the half year end and resulted in the payment of an interim dividend in October 2020 of 2.03p (2019: 2.03p). The small amount of UK government financial support received in the first half of the year was fully repaid in early August 2020. The Board remains confident in the Group’s future and is proposing a final dividend of 4.27p (2019: nil) which, if approved, will be paid on 1 June 2021 to shareholders on the register on 7 May 2021.


The Board is very focused on the growing importance of sustainability and the evolving debate around the use of plastics by society. It considers both in relation to the future desired outcomes for all stakeholders. Accordingly, our strategy incorporates the consideration of climate change in terms of financial and operational impacts. Zotefoams’ products are used almost exclusively for permanent solutions and often form a positive element of our customers’ own sustainability agenda. They are seldom used for single-use purposes which, understandably in certain applications, has caused most public concern. Our MuCell technology is focused on the reduction of plastic in society, lowering carbon footprint and improving recyclability of packaging. We believe that plastics, used appropriately, remain the optimal solution both functionally and environmentally for our customers’ needs. We also recognise the importance of continuous improvement around product development and operating efficiency to reduce the Group’s environmental impact. The Board has elevated sustainability and climate change to be a new principal risk at Zotefoams and the Group executive has been tasked with ensuring that both the strategic and operational impact of sustainability is embedded within decision making processes throughout the Group.

Governance and the Board

The Board leads an ongoing programme to ensure the highest standards of corporate governance and integrity across the Group and has remained abreast of developing governance standards. The Board’s interactions and communications with executive management continue to be excellent and as a result the Board is well placed to challenge, guide and support executive management in the delivery of the growth strategy. Due to COVID-19 there has been a considerable increase in our interactions as a Board, which have mainly taken place virtually in 2020. This year, we have paid particular attention to the provision of a safe working environment for our staff across all global locations and have maintained the improved visibility and quality of safety performance data across the business. We continue to support and empower our employees and are meeting our commitment to enhancing the employee voice in the boardroom through the position of J Carling as Board representative for workforce engagement.

The process to refresh the non-executive membership of the Board was completed in 2020. On 14 May 2020, we appointed C Wall and A Fielding to the Board, with A Fielding assuming the role of Chair of the Remuneration Committee. These changes have brought highly relevant skillsets and experiences to the Board and both new Board members have quickly amassed good knowledge of the business and its strategy, despite the obstacles presented by COVID-19. A Bromfield retired from the Board on 13 May 2020 after 6 years of invaluable service; we wish her well.

The Board considers that it has fully applied all the principles and provisions of the UK Corporate Governance Code during 2020.

Our people

We have always understood that our people are key to our success. This year, the most difficult of years, has reinforced this. Their contribution to the Group’s success through their dedication to each other, their adaptability to change, their steadfastness during an uncertain H1 2020 and tireless commitment in a very busy and demanding H2, has been inspiring. As the results show, the leadership team responded swiftly and very capably to the COVID-19 challenges, resolutely tackling short term issues while not losing sight of the long term. It has been a great team effort and I want to thank all of our employees for their considerable efforts during the year. 

The future

In 2020, Zotefoams delivered a strong response to the COVID-19 crisis, with good operating results and strategic progress in the face of very challenging macroeconomic conditions. Looking ahead, while the COVID-19 pandemic creates an uncertain environment, we continue to benefit from a highly talented and committed workforce, an attractive product portfolio and strong competitive positions in our markets. We recently completed our investment programme to significantly increase manufacturing capacity and, with a broad range of exciting business opportunities, we remain confident about our future prospects.

S P Good


22 March 2021

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