Zotefoams plc (LON:ZTF), a world leader in cellular material technology, has 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
| Statutory | Before exceptional item1 | Before exceptional item1 | Statutory | Statutory | |
| 2020 | 2019 | Change | 2019 | Change | |
| Revenue | £82.7m | £80.9m | 2% | £80.9m | 2% |
| Operating profit | £9.1m | £9.1m | nil | £10.2m | (10)% |
| Profit before tax | £8.3m | £8.8m | (5)% | £9.8m | (15)% |
| Basic EPS | 14.87p | 14.91p | nil | 17.10p | (13)% |
| Cash generated from operations | £13.0m | £10.7m | 21% | £11.8m | 10% |
| Leverage ratio2 | 2.1x | 2.0x | – | 2.0x | – |
| Final dividend3 | 4.27p | – | – | – | – |
1 Exceptional item in 2019 of £1.1m relating to a pension credit following a legal claim against the previous pension advisors
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 before exceptional items, adjusted for the impact of IFRS2 and IFRS16.
3 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, 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.”
