Interim Results

Zotefoams PLC
14 August 2001

Tuesday 14th August 2001


                                ZOTEFOAMS PLC

                               Interim Results


Zotefoams plc, the world's leading manufacturer of cross-linked polyolefin
block foam, today announces its interim results for the six months ended 30
June 2001.


Summary



  * Turnover up to £12.6 million (2000: £10.8 million)

  * Profit before tax up to £2.1 million (2000: £1.0 million)

  * North American plant completed and now fully operational

  * Sales growth across all markets

  * Strong performance in Continental Europe and North America

Commenting on the results, David Stirling, Managing Director said:

'During the first six months of the year we met the three objectives that we
set ourselves. We made a rapid recovery from the fire which stuck our Croydon
facility in October 2000, achieving significant sales growth across the
business. We completed our plant in Walton, Kentucky and now have an
established operational presence in North America and we have continued to
capitalise on and benefit from our strategic alliance with Sekisui. We are
confident that the business is in a strong position to move forward.'


Enquiries:

Zotefoams plc                                           020 8664 1600
David Stirling, Managing Director
Clifford Hurst, Finance Director

Financial Dynamics                                      020 7831 3113
Charlie Armitstead


www.zotefoams.com


CHAIRMAN'S STATEMENT

RESULTS


Profit before tax for the six months ended 30 June 2001 was £2.1 million
compared with £1.0 million for the same period last year.  Operating profit
increased by 27% on a like-for-like basis after adjusting for the write downs
of stock and capital equipment made in 2000. The profit improvement resulted
from a 17% increase in turnover to £12.6 million (2000: £10.8 million), a
major contribution to the growth coming from the European part of the Sekisui
alliance agreement.  Earnings per share for the six months ended 30 June 2001
were 4.3p compared with 2.2p for the six months ended 30 June 2000.  £3.1
million cash was generated from operating activities in the period.



Sales growth was achieved in all our major markets with underlying growth
supplemented by some customer restocking post fire. UK sales growth of 3% was
only mildly positive. Sales in Continental Europe grew by 31%, mainly as a
result of the new customers gained through our alliance with Sekisui who are
now acting as Zotefoams' agent in this area. In North America sales growth of
25%, in the run-up to plant commissioning, was aided by a relatively strong
dollar.



The price of our major raw material LDPE remained strong during the period,
relaxing by only 7% from the average price in the first half of 2000.



Capital additions of £3.3 million for the period included £2.2 million on
completing the North American production facility in Kentucky. Forecast
expenditure for the second half of 2001 is £3.5 million of which £2.0 million
is fire damage replacement.



Debt at 30 June 2001 was £2.4 million.



OPERATIONAL REVIEW



We set out to achieve three objectives in the first half of 2001: a rapid
recovery from the fire which struck our Croydon facility in October 2000, to
capitalise on the benefits of our strategic alliance with Sekisui Chemical Co
Ltd and to complete construction of our North American plant.



Recovery from the fire has been good with significant progress being made in
meeting customer requirements.  However the demands on our operations,
particularly while running with limited stock and continuing site
restructuring undoubtedly caused manufacturing inefficiencies.  Site
rebuilding has progressed more slowly than we had hoped, mainly due to the
planning approval process required. I am pleased to say that we now have
planning approvals for the whole rebuilding programme which should be complete
by early 2002.  Until then technical development is severely constrained as is
our ability to operate an optimal despatch process.



The strategic alliance agreements with Sekisui Chemical Co Ltd of Japan which
were described in detail in our Annual Report in February 2001, have
progressed satisfactorily even though the fire damaged our supply capability
to potential new customers soon after the strategic alliance had been agreed.



Construction of our North American plant was completed in June and
commissioning took place in early July.  This investment confirms our
commitment to the North American market.  I am particularly pleased that the
innovation of supplying frozen slabs of plastic from Croydon to expand in
North America is working at an operational level.  This allows a major
reduction of shipping costs and a step-change improvement in customer service
for the North American market.



INSURANCE CLAIM



Costs clearly identifiable as a result of the fire have been held on the
balance sheet to the extent that these are deemed recoverable from the
insurers and are disclosed in note 3.  The interim statement has not been
adjusted for the other effects of the fire - for example, changes in sales
level, the effect on material yields and scrap rates - until the recovery of
these items is agreed with the insurers, at which point the full effect of the
fire will be disclosed as an exceptional item in the profit and loss account.



DIVIDEND



The Directors have declared an interim dividend of 2.5p net per share.  The
dividend will be paid on 20 September 2001 to shareholders who are on the
Company's register at the close of business on 31 August 2001.  This dividend
is unchanged from the interim dividend in respect of the six months ended 30
June 2000.



BOARD CHANGES



Mike Lewsey resigned from the Board as Marketing & Sales Director in June
2001.  From July 2001, I have relinquished my executive role, but continue as
part-time Chairman of the Board.



OUTLOOK



In the short-term we anticipate continuing sales growth underpinned by the
benefits of our alliance with Sekisui and our investment in North America.
While we do anticipate good levels of sales growth from these developments the
business as a whole is affected by general economic conditions; the forecasts
for which remain mixed.



With the most severe effects of the fire behind us we are confident we can
maintain a quality service to our customers despite the continuing limitations
imposed by site restoration until early 2002.



Although the fire has dented our forward momentum, we remain confident that
the strategic elements are still in place to deliver the high margin growth
business and by mid 2002 we will be fully equipped to progress in all areas.



WH Fairservice
Chairman
14 August 2001



Consolidated profit and loss account
for the six months ended 30 June 2001


                                     Six months     Six months     Year ended
                                          ended          ended    31 December
                                   30 June 2001   30 June 2000           2000
                                    (Unaudited)    (Unaudited)      (Audited)
                                           £000           £000           £000

Turnover - continuing
operations                               12,588         10,778         20,828
Cost of sales                           (8,349)        (7,814)       (14,265)


Gross profit                              4,239          2,964          6,563
Distribution costs                      (1,028)          (981)        (2,037)
Administrative expenses                 (1,027)        (1,037)        (2,175)



Operating profit - continuing
operations                                2,184            946          2,351
Loss on disposal of fixed assets              -              -           (94)
Interest received                            31             66             93
Interest paid                              (80)            (4)           (42)


Profit on ordinary activities
before taxation                           2,135          1,008          2,308
Taxation                                  (576)          (225)          (557)


Profit on ordinary activities
after taxation                            1,559            783          1,751
Interim dividend                          (906)          (906)          (906)
Final dividend                                -              -        (1,813)


Retained profit/(loss) for the
period                                      653          (123)          (968)


Earnings per share                         4.3p           2.2p           4.8p


Diluted earnings per share                 4.3p           2.2p           4.8p




Consolidated statement of total recognised gains and losses
for the six months ended 30 June 2001


                                     Six months      Six months      Year ended
                                          ended           ended     31 December
                                   30 June 2001    30 June 2000            2000
                                    (Unaudited)     (Unaudited)       (Audited)
                                           £000            £000            £000

Profit for the period                     1,559             783           1,751

Currency translation
differences
on foreign currency net
investment                                   85              68              52

Total recognised gains and
losses
relating to the period                    1,644             851           1,803



Consolidated balance sheet
as at 30 June 2001


                                  As at             As at             As at
                              30 June 2001      30 June 2000    31 December 2000
                               (Unaudited)       (Unaudited)        (Audited)
                              £000     £000     £000     £000     £000     £000
Fixed assets
Tangible assets             32,222            27,397            30,112
                                     32,222            27,397            30,112


Current assets
Stocks                       2,903             2,340             2,148
Debtors                      6,147             5,628             5,889
Cash at bank and in hand       382             1,884             1,518
                             9,432             9,852             9,555



Creditors: amounts
falling due within 1 year
(note 3)                   (8,774)           (4,315)           (7,349)

Net current assets                      658             5,537             2,206



Total assets less
current liabilities                  32,880            32,934            32,318
Creditors: amounts
falling due after more
than one year                         (365)              (50)             (433)
Provision for liabilities
and charges                         (3,634)           (3,880)           (3,742)


Net assets                           28,881            29,004            28,143

Capital and reserves
Called-up share capital               1,813             1,813             1,813
Share premium account                13,707            13,707            13,707
Capital redemption
reserve                                   5                 5                 5
Profit and loss account              13,356            13,479            12,618


Shareholders' funds -
equity                               28,881            29,004            28,143




Consolidated cash flow statement
for the six months ended 30 June 2001


                                     Six months     Six months     Year ended
                                          ended          ended    31 December
                                   30 June 2001   30 June 2000           2000
                                     (Unaudited)    (Unaudited)     (Audited)
                                    £000   £000    £000   £000    £000   £000


Net cash inflow from operating
activities
(note 5)                                    3,073          2,278          5,504
Returns on investment and
servicing of finance
Interest received                      31             66             92
Interest paid - bank and other       (63)              -           (22)
              - finance leases       (17)            (4)           (20)

                                             (49)             62             50

Taxation
Mainstream corporation tax          (322)          (229)          (963)
Overseas tax paid                       -            (2)           (22)
                                            (322)          (231)          (985)
Capital expenditure
Purchase of tangible fixed assets (2,907)        (1,390)        (6,139)
Sale of tangible fixed assets          36              6            982

                                          (2,871)        (1,384)        (5,157)
Equity dividends paid                     (1,813)        (1,813)        (2,719)


Cash outflow before use of liquid
resources and financing                   (1,982)        (1,088)        (3,307)
Management of liquid resources                  -              -          1,600
Financing                                       -              -            595
Capital element of finance lease
payments                                     (72)           (13)           (86)

Decrease in cash in the period            (2,054)        (1,101)        (1,198)





Reconciliation of net cash flow to movement in net debt/funds
for the six months ended 30 June 2001


                                     Six months      Six months      Year ended
                                          ended           ended     31 December
                                   30 June 2001    30 June 2000            2000
                                    (Unaudited)     (Unaudited)       (Audited)
                                           £000            £000            £000

Decrease in cash in the period          (2,054)         (1,101)         (1,198)
Cash outflow from decrease in
debt and lease finance                       72              13              86
Cash inflow from decrease in
liquid resources                              -               -         (1,600)

Change in net (debt)/funds
resulting from cash flows               (1,982)         (1,088)         (2,712)
New finance leases                            -               -           (595)
Translation differences                      12             (9)              53

Movement in net (debt)/funds
in the period                           (1,970)         (1,097)         (3,254)
Net (debt)/funds at the start
of the period                             (383)           2,871           2,871

Net (debt)/funds at the end of
the period                              (2,353)           1,774           (383)



Notes to the interim financial information



1  Basis of preparation


The accounting policies used in the preparation of the interim financial
information are the same as those used in the last annual report and accounts.
The comparative figures for the financial year ended 31 December 2000 are not
the Company's statutory accounts for that financial year. Those accounts have
been reported upon by the Company's auditors and delivered to the Registrar of
Companies.


The report of the auditors was unqualified and did not contain a statement
under section 273(2) or (3) of the Companies Act 1985.


Taxation has been estimated at the rate expected to be incurred in the full
year.



2  Earnings per share


Earnings per share in each period is calculated by dividing profit after tax,
by the number of shares in issue. There has been no change to the number of
shares in issue since the Company's flotation in February 1995.



Diluted earnings per share is also shown in compliance with FRS14.


3  Creditors: Amounts falling due within one year


Included within creditors falling due within one year is £0.8 million in
respect of the insurance claim following the fire at the Group's Croydon site
on 22 October 2000. This amount is made up as follows:


                                                  As at                   As at
                                           30 June 2001        31 December 2000
                                                     £m                      £m

Balance brought forward at 1
January 2001                                      (0.9)                       -
Interim cash receipts from
insurers                                            3.3                     2.0
Stock destroyed                                       -                   (1.2)
Fixed assets destroyed                                -                   (0.9)
Other costs                                       (1.6)                   (0.8)

Balance carried forward                             0.8                   (0.9)


This amount is a creditor as payments on account from the insurers currently
exceed by £0.8 million stock and fixed assets written off and costs incurred
which are deemed recoverable from insurers. This cash is being used to buy
assets to replace those destroyed as a result of the fire and at 30 June 2001
fixed asset additions included £0.9 million of replacement assets.



4   Reconciliation of movement in shareholders' funds


                                                                           £000

Profit for the six months ended 30                                        1,559
June 2001                                                                 (906)
Dividend

Retained profit for the period                                              653
Other recognised gains and losses                                            85
Opening shareholders' funds at 1
January 2001                                                             28,143

Closing shareholders' funds at 30
June 2001                                                                28,881


5   Reconciliation of operating profit to net cash inflow from operating
activities

                                   Six months      Six months      Year ended
                                        ended           ended     31 December
                                 30 June 2001    30 June 2000            2000
                                  (Unaudited)     (Unaudited)       (Audited)
                                         £000            £000            £000

Operating profit                        2,184             946           2,351
Depreciation and impairment
charge and amortisation of
licences                                1,133           1,768           3,013
(Increase)/decrease in stocks           (732)              14             339
Increase in debtors                     (186)           (626)         (1,031)
Increase in creditors                     674              86             832
Increase in provisions                      -              90               -

Net cash inflow from
operating activities                    3,073           2,278           5,504



6  Circulation and enquiries

This interim report will be sent to shareholders and will be available from
the Company's registrars,

Computershare Services PLC, PO Box 82, The Pavilions, Bridgwater Road, Bristol
BS99 7NH