Final Results - to 31 December 1999 & Other News

Zotefoams PLC 28 February 2000 ZOTEFOAMS PLC Announcement of strategic alliance with Sekisui Chemical Company Ltd Preliminary results for the year ended 31 December 1999 Zotefoams plc, the world's leading manufacturer of cross-linked polyolefin block foam, is delighted to announce that it has signed a memorandum of understanding relating to a major new global sales and marketing agreement with Sekisui Chemical Company Ltd of Japan ('Sekisui'), the world's leading producer of roll polyolefin foam. The Company also announces today its preliminary results for the year ended 31 December 1999. Highlights of the agreement: - Combines the world's leading block and roll foam products to create a unique and complementary product portfolio - Accelerates Zotefoams' penetration of major global market areas: - combined portfolio to be sold via Sekisui's global network of sales and marketing offices - gives immediate access to growing markets in Asia and South America - provides superior service and access to European customers - strengthens profile of sales by end-user application, reducing exposure to single market segments - Increases significantly the potential of our investment in manufacturing at Cincinnati, USA Preliminary results summary: - Turnover reduced to £22.4m (1998: £24.2m) - Profit before tax of £5.8m (1998: £8.0m) - Earnings per share of 11.2 pence (1998: 15.6 pence) - Results impacted by rising raw materials prices and sharp reduction in turnover to the toys market segment, as forewarned in October 1999 trading statement -Major technological advance, substantially lowering economic hurdles to future overseas manufacturing - Dividend increased by 4%, reflecting management's confidence in the Company's future prospects Commenting on the alliance, Andrew Gingell, Managing Director of Zotefoams said: 'Our new alliance with Sekisui will transform Zotefoams' ability to penetrate new markets around the world with its growing portfolio of high quality block- foam products. Together we will be able to supply an unparalleled product portfolio through an established sales and marketing operation to a broader range of end users.' T Yamamoto, President of Sekisui (Chemical) Europe Ltd said: 'Sekisui is delighted to enter into this alliance with Zotefoams which will contribute to improved customer service through a combined portfolio of the finest block and roll foams and will lead to the opening of new market opportunities.' Enquiries: Zotefoams plc 020 8664 1600 Andrew Gingell, Managing Director David Stirling, Finance Director Financial Dynamics 020 7831 3113 Tom Baldock Chairman's statement During 1999 we experienced continuing growth in continental Europe and North America with a slight upturn in the UK market. However, as indicated in our trading statement on 29 October 1999, the dual impact of sharply increasing raw materials prices and a major reduction in demand from the toy segment reduced turnover and profits in the second half year. Results Profit before tax for the year ended 31 December 1999 was £5.8 million compared with a profit before tax, excluding exceptional profit on disposal of land, of £7.3 million in 1998. Turnover was £22.4 million (1998: £24.2 million). Earnings per share were 11.2p compared with 13.9p in 1998 excluding profits on the sale of land. Capital expenditure was £2.7 million, associated mainly with the commissioning of a new autoclave at Croydon and the purchase and levelling of the site in North America for our North American facility. Dividend The Directors are recommending a final dividend of 5.0p net per share (1998: 4.8p). This brings the total dividend for the year to 7.5p and represents a 4% increase on the dividend for 1998. The final dividend will be paid on 25 April 2000 to shareholders who are on the Company's register at the close of business on 31 March 2000. Dividend cover is 1.5 times. The Board As announced in the interim report, Roger Elmhirst resigned as a non-executive Director on 14 April due to ill health. Sadly Roger died shortly afterwards following a lengthy illness. Randall Redd, President of our North American subsidiary, Zotefoams Inc, joined the Board on 2 August 1999. On 1 October Andrew Gingell, previously Chief Operating Officer, was appointed Managing Director. At the same date, in line with the Board's succession plan, I took up the position of part-time executive Chairman having previously been full-time. The appointment of a third non-executive Director was made on 1 December when Christopher Ryan joined the Board. I am delighted to welcome Chris who is currently a non-executive Director at Air Products plc, having previously been Senior Vice President of Air Products Europe Inc. Employees In the difficult external environment, we continue to rely on the hard work, creativity and dedication of our employees and I would like to thank them for their efforts and loyalty. Prospects The pressures that impacted on our performance in the second half of 1999 have continued into the current year. However we are very excited by two new strategic developments that the Board believes will enhance significantly Zotefoams' medium- and longer-term growth prospects. Agreement has in principle been reached with Sekisui Chemical Company Ltd for a global marketing and sales agreement. Under the terms of the agreement, Zotefoams' block foam products will be marketed alongside Sekisui's market- leading thin roll foam product in the three major global market areas of Europe, Asia and North America. It is anticipated that the new alliance will be implemented during the second quarter of 2000, with benefits expected thereafter. In addition, in support of our globalisation objectives, we have developed and proven the technology to allow the long-distance shipment of nitrogen- saturated polymer slabs. This development substantially lowers the economic hurdle to establishing manufacturing in other parts of the world and will be applied to our planned North American facility, due for commissioning in 2001. We believe 2000 will be a year of transition from which Zotefoams will emerge as a balanced, high margin growth business with an expanding international dimension. W H Fairservice Chairman 25 February 2000 Consolidated profit and loss account for the year ended 31 December 1999 1999 1998 £000 £000 £000 £000 Turnover - continuing operations 22,426 24,199 Cost of sales (12,843) (13,148) Gross profit 9,583 11,051 Distribution costs (1,945) (1,895) Administrative expenses (1,932) (1,867) Operating profit - continuing operations 5,706 7,289 Profit on disposal of fixed assets - continuing operations - 763 Interest receivable 76 38 Interest payable and similar charges (9) (59) Profit on ordinary activities before taxation 5,773 8,031 Tax on profit on ordinary activities (1,704) (2,380) Profit for the financial year 4,069 5,651 Equity dividends - paid (906) (870) Equity dividends - proposed (1,813) (1,740) Total dividends paid and proposed (2,719) (2,610) Retained profit for the financial year 1,350 3,041 Earnings per ordinary share 11.2p 15.6p Diluted earnings per ordinary share 11.2p 15.6p Consolidated statement of total recognised gains and losses for the year ended 31 December 1999 1999 1998 £000 £000 Profit for the financial year 4,069 5,651 Currency translation differences on foreign currency net investments 16 3 Total recognised gains and losses 4,085 5,654 relating to the year Consolidated balance sheet at 31 December 1999 1999 1998 £000 £000 £000 £000 Fixed assets Intangible assets 27 37 Tangible assets 28,034 27,462 28,061 27,499 Current assets Stocks 2,487 2,253 Debtors 4,858 4,952 Cash at bank and in hand 2,975 2,044 10,320 9,249 Creditors: amounts falling due within one year (5,411) (5,282) Net current assets 4,909 3,967 Total assets less current liabilities 32,970 31,466 Creditors: amounts falling due after more than one year (36) (67) Provisions for liabilities and charges (3,875) (3,706) Net assets 29,059 27,693 Capital and reserves Called-up share capital 1,813 1,813 Share premium account 13,707 13,707 Capital redemption reserve 5 5 Profit and loss account 13,534 12,168 Total shareholders' funds - equity 29,059 27,693 Consolidated cash flow statement for the year ended 31 December 1999 1999 1998 £000 £000 £000 £000 Net cash inflow from operating activities 7,688 9,158 Returns on investments and servicing of finance Interest received 76 38 Interest paid - bank and other - (48) - finance leases (9) (11) 67 (21) Taxation ACT - (626) Mainstream corporation tax (1,562) (1,330) Overseas tax refunded 22 2 (1,540) (1,954) Capital expenditure Purchase of fixed assets (2,626) (4,379) Sale of fixed assets 11 1,471 (2,615) (2,908) Equity dividends paid (2,646) (2,501) Cash inflow before financing 954 1,774 Financing (34) (36) Management of liquid resources (1,600) - (Decrease)/increase in cash in the year (680) 1,738 Reconciliation of net cash flow to movement in net funds for the year ended 31 December 1999 1999 1998 £000 £000 (Decrease)/increase in cash in the year (680) 1,738 Cash outflow from decrease in debt 34 36 and lease finance Cash used to increase liquid resources 1,600 - Change in net funds resulting from 954 1,774 cash flows New finance leases - (19) Translation differences (19) 14 Movement in net funds in the year 935 1,769 Net funds at the start of the year 1,936 167 Net funds at the end of the year 2,871 1,936 Notes Financial Information The financial information set out above does not constitute the Company's statutory accounts for the years ended 31 December 1999 and 1998 but is derived from those accounts. Statutory accounts for 1998 have been delivered to the Registrar of Companies, whereas those for 1999 will be delivered following the Company's Annual General Meeting. The auditors have reported on those accounts; their reports were unqualified and did not contain a statement under Section 237 (2) or (3) of the Companies Act 1985.

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