Update on ReZorce

Zotefoams PLC

18 December 2024

 

Zotefoams plc

("Zotefoams" or "Group")

 Update on ReZorce

18 December 2024 - Zotefoams, a world leader in supercritical foams, is today providing an update on ReZorce^® circular packaging technology and confirms trading comfortably in line with market expectations for the full year.

Update on ReZorce

As previously reported, the Group has been seeking to commercialise its fully recyclable mono-material barrier packaging solution, ReZorce. This proprietary technology has clear circularity and sustainability benefits and has generated significant interest from global food & beverage and packaging businesses.

During 2024, the Group achieved several important technical milestones and has now produced an award-winning beverage carton capable of being run at full industrial speed through existing production machinery. Validation that the packaging is food sterile is still pending, but the route to this is clear and considered readily attainable, albeit requiring more time to complete.  

Given the capital investment, market access and expertise required to achieve high volume production of finished packaging, the Board has consistently believed that a strategic partner is necessary to realise the commercial potential of the ReZorce technology. As previously reported, the Group has been actively seeking a potential partner, supported by specialist external advisers. While this process has been extensive and included engagement with parties across the value chain, it has not identified a partner prepared to take the ReZorce technology forward at this time. Based on the feedback from this process, the Board believes that the inherently low visibility over factors such as pricing, within the overall evolution of the packaging market, when set against the capital commitments required, is the principal reason the process has been unsuccessful. 

Having concluded that it will not be possible to identify a strategic partner at this time, the Board has decided to pause its investment in ReZorce and focus all of the Group's resources on the near-term opportunities in the core supercritical foams businesses. The intellectual property and know-how associated with ReZorce is well protected and will be retained by the Group in order to preserve its ability to realise the value of this unique technology, should market conditions become more favourable. The Group will, however, initiate a process to wind down the operations of its MuCell business unit (MEL), which includes both ReZorce and the operations related to MuCell Extrusion LLC.

The exit from these activities is expected to reduce ongoing Group overheads and will allow resources to be re-deployed into the foams businesses, but will result in an impairment of the carrying value of associated assets¹ and one-off closure costs of up to £1.2m, both of which will be recorded as an exceptional item in 2024.

Update on Trading

Further to the announcement of 4 November, Zotefoams has continued to deliver a strong financial performance in a volatile market and the Board is confident that the Group will deliver a full year adjusted profit performance comfortably in line with the guidance provided at that time². Both foams businesses are performing well, and our order book remains robust with good visibility into next year. The decision to pause ReZorce and exit MEL is not expected to impact the Group's ability to achieve current market expectations for future performance.

Commenting on the update Ronan Cox, Group CEO of Zotefoams, said: 

"Given how the unique aspects of, and the opportunity from, ReZorce are significant, it is disappointing that we have not been able to find a partner able to commit to this truly disruptive technology capable of giving consumers a recyclable and circular packaging solution.

"We continue to believe in the potential for this technology, but equally need to ensure that the Group has the focus and resources available to maximise the significant potential that we see in our core businesses. As evidenced by their continued strong financial performance, our supercritical foams businesses are well-placed to leverage their market leading positions and capitalise on long-term structural growth trends. This decision will allow us to redirect the considerable financial resources that we have been dedicating to the ReZorce project to focus on the exciting opportunities we have within the core Zotefoams business, and we will be sharing our plans in this regard at a capital markets day expected early in 2025."

1.	As at 30 June 2024, the net asset value associated with the MEL business unit was £15.1m
2.	Current Zotefoams-compiled consensus expectations for revenue is £145.5m and adjusted profit before income tax and separately disclosed items, for the year ending 31 December 2024, is £14.9m.

This announcement contains inside information for the purposes of Article 7 of the Market Abuse Regulation (EU) No 596/2014 as it forms part of UK Domestic Law by virtue of the European Union (Withdrawal) Act 2018 ("UK MAR")

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Enquiries:

Zotefoams plc	[phone]
Ronan Cox, Group CEO
Gary McGrath, Group CFO
IFC Advisory	[phone]
Graham Herring Tim Metcalfe Zach Cohen

About Zotefoams plc

Zotefoams plc (LSE - ZTF) is a world leader in cellular materials technology delivering optimal material solutions for the benefit of society. Utilising a variety of unique manufacturing processes, including environmentally friendly nitrogen expansion for lightweight AZOTE^® polyolefin and ZOTEK^® high-performance foams, Zotefoams sells to diverse markets worldwide. Zotefoams uses its own cellular materials to manufacture T-FIT^® advanced insulation for demanding industrial markets. Zotefoams also owns and licenses patented microcellular foam technology to reduce plastic use in extrusion applications and for ReZorce^® mono-material recyclable barrier packaging.

Zotefoams is headquartered in Croydon, UK, with additional manufacturing sites in Kentucky, USA and Brzeg, Poland (foam manufacture), Oklahoma, USA (foam products manufacture and conversion), Massachusetts, USA (MuCell Extrusion) and Jiangsu Province, China (T-FIT).

AZOTE^®, ZOTEK^®, ReZorce^® and T-FIT^® are registered trademarks of Zotefoams plc.

www.zotefoams.com

 

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