Final Results
Zotefoams PLC
09 March 2004
Tuesday 9th March 2004
Zotefoams PLC
Preliminary Results
Zotefoams PLC, the world's leading manufacturer of cross-linked polyolefin block
foam, today announces its preliminary results for the 12 months ended 31st
December 2003.
Summary
• Turnover flat at £23.5m (2002: £23.5m)
• Pre-tax profit, pre-exceptional items, was £1.0 million (2002: £2.0
million) reflecting the impact of additional costs in freight, depreciation
and property rates
• Second year of strong sales progress in North America with 13 % dollar
growth (2002: 18% dollar growth)
• Robust balance sheet, good cash generation and year-end gearing 12%
• Good progress made in exploiting unique technology to develop
high-performance foams
Commenting on the results, Bill Fairservice, Chairman, said:
'2004 has started with an increased level of activity and our expectation is
that we will achieve moderate sales growth for the year as a whole. However, in
common with many other UK companies, current exchange rates are very
unfavourable. With the majority of our sales in either Euros or US Dollars we
expect that our results for 2004 will be significantly negatively impacted
should these rates persist.
However, we believe that the changes made in our North American operations will
have a positive impact on 2004 and additional margins from sales growth will be
in excess of cost increases. We are also encouraged by the positive initial
reaction in the market to some of our new high performance polymer foams and
believe that these will begin to make a positive impact on the business sometime
next year.'
Enquiries:
Zotefoams plc 020 8664 1600
David Stirling, Managing Director
Clifford Hurst, Finance Director
Financial Dynamics 020 7831 3113
Charlie Armitstead
CHAIRMAN'S STATEMENT
Zotefoams strategy is to grow shareholder value by increasing sales, both
geographically and through new high-performance foams, exploiting the benefits
of improved asset utilisation.
Our direct investment in production facilities in Kentucky has been a major
factor behind 13% dollar growth in North America this year, following on from
18% dollar growth in 2002. In the UK and European markets, where Zotefoams has a
much greater presence, the focus is on market development and winning and
retaining key projects. During 2003 our performance here has been disappointing
and we have already started to address key areas requiring improvement. However
good progress has been made, exploiting our unique technology, in the
development of new materials under the ZOTEK(R) brand, the first of which are
currently in a limited number of acceptance trials with potential customers.
We are therefore delivering on our strategy for growth in North America and have
positive early indications from some of our new high-performance foams. Together
with the growth in North America, we expect an improved performance in the UK
and European markets to allow us to optimise the sales potential of the business
and profit from our substantial investments over the past four years.
Results
Profit before tax and exceptional items for the year ended 31 December 2003 was
£1.0 million compared to £2.0 million in 2002. Sales of £23.5 million were at
similar levels to last year and the decline in profitability was due to
additional costs, primarily in freight, depreciation and property rates. There
were no exceptional items in 2003.
Earnings per share before exceptional items were 2.0p compared to 4.0p in 2002.
This year we completed the rebuilding of our site after the fire in October
2000, reducing capital expenditure from £5.2 million last year to £1.6 million.
With depreciation of £3.2 million our net cash flow from operating activities
remains extremely strong at £3.5 million.
Dividend
In view of the disappointing trading performance in the current financial year,
the Board believes that a total dividend of 4.5p per share (2002: 7.5p) for the
year is a more appropriate level. Having paid an interim dividend of 2.5p per
share we are therefore proposing a final dividend for the year ending 31
December 2003 of 2.0 pence per share (2002: 5.0p). This would be payable on 24
May 2004 to shareholders on the Company register at the close of business on 23
April 2004.
Employees
The success of Zotefoams depends on the effort, support and commitment of all
employees. On behalf of the Board I would like to thank all employees for their
contribution to the business over the past year.
Future Outlook
The year has started with an increased level of activity and our expectation is
that we will achieve moderate sales growth for the year as a whole. However, in
common with many other UK companies, current exchange rates are very
unfavourable. With the majority of our sales in either Euros or US Dollars, we
expect that our results for 2004 will be significantly negatively impacted
should these rates persist. Cost pressures will continue to impact our business,
with £0.3 million additional depreciation from assets commissioned during late
2003 and early 2004. In addition, prices for LDPE, our major raw material, are
currently also at levels above our average for 2003 and further rises are being
sought by suppliers. Although this is not necessarily indicative of the future
direction of LDPE prices it will reduce our margins early in the year.
Despite these pressures we believe that changes made in our North American
operations will positively impact our results and additional margins from sales
growth will be in excess of cost increases. We are also encouraged by the
positive initial reaction in the market to some of our new high performance
polymer foams and believe that these will begin to make a positive impact on the
business sometime next year.
W H Fairservice
Chairman
MANAGING DIRECTOR'S REVIEW
Results
Profit before tax and exceptional items for the year ended 31 December 2003 was
£1.0 million compared with £2.0 million for the previous year. Sales of £23.5
million were at similar levels to 2002 and the decline in profitability was
attributable to cost increases which are explained in more detail below.
Sales and Marketing
Although sales were at similar overall levels to the previous year our
performance varied significantly between markets.
North America
Zotefoams has always had a strong presence in the UK and European markets for
polyolefin foams and, in late 2001 we opened a production site in Northern
Kentucky which significantly raised our profile and ability to supply this
dynamic and growing market. Prior to this Zotefoams had a good reputation in
high-value, speciality markets such as medical and electronics, but was unable
to sell to the larger, more consumer-driven markets due to price barriers
created by shipping and duty costs. Following the commencement of production in
the USA our growth in North America has come predominantly from lighter-density
products, particularly in the automotive and construction markets. In the longer
term we expect to develop outside these markets and exploit opportunities in
many more of the industries we serve in Europe. During 2003 annual growth was
13% in US dollars, but with an accelerating trend as growth in the second six
months was 20% in US dollars. We continue to seek new and profitable markets in
lighter-density foam while exploiting our product superiority and reputation to
enhance our position in speciality markets.
Reported results from North America were affected by the weak dollar relative to
the pound and local currency growth of 13% during 2003 translated to growth of
4% in Sterling.
Europe
In continental Europe results for 2003 have been very disappointing. In
conjunction with our exclusive agent Alveo AG, (a subsidiary of Sekisui Chemical
Co Ltd) we pursued a strategy of selectively increasing the number of direct
customers. Our objective was to increase market visibility and, by being 'closer
to the action' in many cases, to secure an increase in new business and projects
as older projects came to an end.
The transition to this approach requires some operational changes and the
building of relationships with a number of new customers previously supplied
through intermediaries. In the short term this has proved more difficult than
anticipated and we believe is a major contributor to our disappointing
performance in Europe this year. In addition we have seen mixed market
conditions and we experienced a sharp drop in sales late in the year in Southern
Europe and France.
Performance in Germany, showing growth of 12% in constant currency, was
particularly pleasing with an excellent year at our largest customer due to
strength in the automotive and packaging sectors and good performance at other
direct accounts.
United Kingdom
The UK remains our largest single country market. Overall we experienced a 6%
fall in sales revenue compared to 2002. The main reason for this was the decline
in the market for offshore oil and chemical hoses, supplied by one of our large
UK customers, due to the situation in the Middle East early in the year.
Conditions in this market are improving and we anticipate a slow recovery for
our product here. Excluding the decline in sales to this customer, sales were
around similar levels to last year.
Other Areas
Sales outside Europe and North America are a small percentage of our business.
The costs of transportation and duty limit our opportunities in these areas to
high value added materials which require significant end-user education and
sales effort. Our approach is to pursue the most promising opportunities using a
combination of sales agents and distributors supported by UK-based Zotefoams'
staff.
Operations and Cost Base
Zotefoams has two production sites: Croydon, UK where there is a 'full-service'
operation and Walton, Kentucky, USA where we have a 'satellite foaming' plant.
The Walton plant receives solid materials from Croydon and foams them thus
reducing freight costs and allowing cost-effective access to the North American
market.
The Croydon plant operated fully as expected during the year. However, we did
experience problems, mainly in the operation of our low-pressure vessel, at our
Walton plant. Our corrective action plan involved changes in senior management
at this facility and shipping expanded foam from Croydon to Walton, to ensure
supply to key customers and allow the development of our North American market
to continue uninterrupted. Plant modifications were made late in the first half
of 2003, however we decided to continue shipping a limited number of expanded
foam products for commercially sensitive accounts for the remainder of the year.
While we believe this was the best course of action for the long-term benefit of
the customer and Zotefoams, the excess freight costs were a significant
component of our overall cost increases this year. We do not expect freight
costs to continue at these levels and therefore our 2004 results will benefit
from the better utilisation of our Walton facility.
During the year we substantially completed the commissioning of our latest phase
of high-pressure equipment in Croydon and this machine became fully operational
in February 2004. This will allow us to decommission and refurbish some older
vessels and gives the ability to bring capacity on-line to meet future increases
in demand.
Investment in plant and equipment has been significant over the past four years,
with the US Plant opening, rebuilding our Croydon site after the fire in 2000
and a number of significant projects including investment in flexible
high-pressure capacity and IT systems. Capital expenditure for 2003 was £1.6
million, compared with an annual average over the last three years of £5.8
million and we expect that expenditure over the next few years will remain
around the lower levels seen this year. Significantly our depreciation charges
have increased in line with capital expenditure and depreciation in 2003,
excluding those charges which formed part of the 2002 exceptional item, was £0.3
million more than the previous year.
As indicated in our AGM statement in April 2003 there was also an unexpected
property rates increase, including a retrospective assessment for 2002, which
increased our costs by £0.2 million.
The average price of our main raw material, low-density polyethylene, was
similar to last year. Raw materials are a significant proportion of our cost
base and subject to commodity pricing. Currently the Board considers there is no
economically effective possibility of hedging prices for these materials and,
due to the frequency and magnitude of the variations, we do not pass such price
increases or decreases to the end customer.
Technology and Innovation
A key element in Zotefoams business strategy is to harness the potential of our
proprietary foaming technology. The combination of high temperatures and high
pressures in our installed production equipment allows us to expand materials
which cannot be handled by other foaming processes.
In 2002 we reported good progress in early feasibility trials. During 2003, in
line with our strategy of focused development activity, we moved the most
promising of these to plant production level. In August we signed a
collaboration agreement with Atofina Chemicals Inc., the chemical branch of
Total, to develop foams from their Kynar(R) PVDF flouropolymers, a range of
materials which are known for their purity and extremely good chemical
resistance. The first of a range of such foams, under the brand name ZOTEK(R),
is currently undergoing technical trials with a number of potential customers.
Early adopters are likely to be in aerospace where the combination of fire
performance, light weight and closed-cell configuration is highly valued.
Potential applications have also been identified in chemical process and
semi-conductor industries where chemical resistance and purity respectively may
be unique selling points.
Other materials are currently at early stage development and we are either
working with or seeking both commercial and technology partners to accelerate
development on many of these projects. Initial levels of interest in ZOTEK(R)
PVDF foams and other materials is high but we are aware that developments of
this kind, which offer potentially high rewards, also carry higher levels of
risk. Our approach remains therefore to ensure our development activities are
tightly focused and that projects which show good potential are progressed
quickly to market.
Expenditure on technical development activities varies depending on the stage
and progress of individual projects and, in 2003 we increased spending by 29% to
support the activities outlined above.
D B Stirling
Managing Director
FINANCE DIRECTOR'S REVIEW
Group turnover of £23.5 million for 2003 was at the same level as 2002. However,
gross profit was down by £1.2 million from £6.2 million pre-exceptional items in
2002 to £5.0 million in 2003. Due to manufacturing problems in North America we
incurred additional costs, largely on freight as we had to supply some American
customers from our Croydon plant while the manufacturing issues in North America
were addressed. There was also an increase in depreciation in the UK, excluding
those charges which formed part of the 2002 exceptional item, of £0.3 million
following completion of a number of capital projects in 2002 and a £0.2 million
additional rates charge of which £0.1 million was a retrospective charge for
2002. The average price of LDPE, our major raw material, was similar to last
year at around €770 per tonne.
Distribution, administration and interest costs were £0.2 million lower than
last year. Profit before tax pre-exceptional items was £0.95 million compared to
£1.95 million in 2002. Earnings per share pre-exceptional items were 2.0p, half
of the level achieved in 2002. There were no exceptional items in 2003.
Taxation
Corporation tax has been provided for at a rate of 30%. However, because of
movements in deferred taxation the profit and loss account tax charge of £0.2
million is 23% of pre-tax profits.
Cashflow and Funding
Analysis of capital expenditure
2000 2001 2002 2003
£m £m £m £m
______ ______ ______ ______
Minor expenditure 1.6 0.8 1.9 1.4
Building of US plant 4.5 2.8 0.2 -
Fire replacement assets - 2.5 3.1 0.2
______ ______ ______ ______
6.1 6.1 5.2 1.6
______ ______ ______ ______
EBITDA pre-exceptional items (earnings before depreciation, interest and
taxation) was £4.3 million compared to £5.1 million in 2002. Following heavy
capital expenditure on a new American plant and replacing items destroyed in a
fire in the Group's Croydon site in 2000, depreciation is £1.6 million higher
than capital expenditure. Tax payments in the year of £1.2 million were
unusually high because of payments relating to the £6.6 million exceptional
profit declared in 2002. However, despite this the dividends paid during the
year of £2.7 million were only partially covered by cash generation and the
Board has taken the difficult decision to propose a reduction of the dividend
from 7.5p per ordinary share to 4.5p. At the middle market quoted share price at
31 December 2003 of 82p this represents a 5.5% yield.
Net debt was £3.6 million at 31 December 2003 compared to £1.7 million in 2002.
With net assets of £29.8 million the level of gearing is 12%.
Pensions
The Group has made the disclosures required under the transitional rules of
FRS17 'Retirement Benefits' in respect of the defined pension scheme for UK
employees. Under these rules the pension fund had assets of £10.1 million and a
present value of liabilities of £14.9 million at 31 December 2003. This deficit
of £4.8 million is an increase from 2002 (£3.3 million) although the funding
ratio (the ratio of the deficit in the scheme to the present value of its
liabilities) remained similar at 68% for 2003 (2002: 71%). The scheme has been
closed to new entrants from 1 October 2001 and both the Company and the scheme
members increased their contributions to the scheme in March 2003.
Treasury
Treasury
2003 2003 2002 2002
Average Year End Average Year End
______ ______ ______ ______
US Dollar/Sterling 1.64 1.78 1.51 1.60
Euro/Sterling 1.45 1.42 1.59 1.53
______ ______ ______ ______
Exchange rates movements had a beneficial effect on the 2003 results. The
movement in the euro had a profit benefit of approximately £0.5 million offset
by a £0.2 million adverse movement in the US dollar.
Analysis of exposure to main currency groups
£ million equivalent
£m incurred in:
£ US$ € Total
______ ______ ______ ______
Turnover 7.6 5.6 10.3 23.5
Cost of sales (11.5) (2.9) (4.1) (18.5)
______ ______ ______ ______
Gross profit (3.9) 2.7 6.2 5.0
Distribution costs (1.0) (0.8) (0.1) (1.9)
Administration expenses (2.0) - - (2.0)
______ ______ ______ ______
Operating profit/(loss) (6.9) 1.9 6.1 1.1
______ ______ ______ ______
2002 operating profit/(loss) pre-exceptionals (7.7) 2.6 7.3 2.2
______ ______ ______ ______
The construction of the US plant was partly funded by a $4.2 million three year
loan. The loan is repaid from the dollar income generated by the Group's North
American operations and at the end of 2003 $1.4 million of the loan was
outstanding.
The Board has defined policies and procedures relating to treasury management
and accounting practices. These are designed to provide appropriate business
support, consistency of reporting and to mitigate risk.
During 2003 the Group increased the foreign exchange hedging that it undertakes
to hedge approximately 66% of the net foreign currency exposure for the next six
months sales. Translation exposure is not hedged. Interest rates on borrowings
are all based on variable rates plus a bank margin and are unhedged as the
interest rate risk is not, at present, considered material.
Accounting Policies
Although no new accounting standards were adopted in 2003, International
Accounting Standards are due for adoption in 2005. The Group has commenced
planning for the introduction of these standards.
Going Concern Statement
After making enquiries, the Directors have a reasonable expectation that the
Group has adequate resources to continue in operational existence for the
foreseeable future. For this reason they continue to adopt the going concern
basis in preparing the financial statements.
C G Hurst
Finance Director
consolidated profit and loss account
as at 31 December 2003
2002
Pre Exceptional Post
Exceptional item Exceptional
2003 item (note 3) item
Note £000 £000 £000 £000
______ ______ ______ ______
Turnover - continuing operations 2 23,504 23,468 - 23,468
Cost of sales (18,478) (17,242) 2,155 (15,087)
______ ______ ______ ______
Gross profit 5,026 6,226 2,155 8,381
Distribution costs (1,884) (1,923) (36) (1,959)
Administrative expenses (2,047) (2,152) 165 (1,987)
Other operating income - - 3,464 3,464
______ ______ ______ ______
Operating profit - continuing
operations 1,095 2,151 5,748 7,899
Profit on disposal of fixed assets - - 875 875
______ ______ ______ ______
Profit on ordinary activities before
interest and tax 1,095 2,151 6,623 8,774
Interest receivable 6 18 9 - 9
Interest payable and similar charges 7 (158) (208) - (208)
______ ______ ______ ______
Profit on ordinary activities before
taxation 4 955 1,952 6,623 8,575
Tax on profit on ordinary activities 8 (219) (517) (2,019) (2,536)
______ ______ ______ ______
Profit for the financial year 10 736 1,435 4,604 6,039
Equity dividends - paid (906) (906)
Equity dividends - proposed (725) (1,813)
______ ______
Total dividends paid and proposed 9 (1,631) (2,719)
______ ______
Retained (loss)/profit for the
financial year 19 (895) 3,320
______ ______
Basic earnings per ordinary share 9 2.0p 4.0p - 16.6p
______ ______ ______ ______
Diluted earnings per ordinary share 9 2.0p 4.0p - 16.6p
______ ______ ______ ______
There are no exceptional items in 2003.
All amounts in the profit and loss account are derived from continuing
operations for the current and prior year. There is no difference in profit for
the financial year stated above and the historical cost equivalents and
therefore no separate note of historical cost profits and losses has been
presented.
consolidated statement of total recognised gains and losses
for the year ended 31 December 2003
2003 2002
£000 £000
______ ______
Profit for the financial year 736 6,039
Currency translation differences on foreign currency
net investments (860) (730)
______ ______
Total recognised gains and losses relating to the year (124) 5,309
______ ______
consolidated balance sheet
as at 31 December 2003
Note 2003 2003 2002 2002
£000 £000 £000 £000
______ ______ ______ ______
Fixed assets
Tangible assets 11 32,375 34,765
32,375 34,765
______ ______
Current assets
Stocks 13 3,178 3,380
Debtors 14 5,893 5,625
Cash at bank and in hand 212 372
______ ______
9,283 9,377
Creditors: amounts falling due
within one year 15 (7,263) (6,831)
______ ______
Net current assets 2,020 2,546
______ ______
Total assets less current liabilities 34,395 37,311
Creditors: amounts falling due
after more than one year 16 (57) (1,049)
Provisions for liabilities and charges 17 (4,502) (4,671)
______ ______
Net assets 29,836 31,591
______ ______
Capital and reserves
Called-up share capital 18,19 1,813 1,813
Share premium account 19 13,707 13,707
Capital redemption reserve 19 5 5
Profit and loss account 19 14,311 16,066
______ ______
Total shareholders' funds - equity 20 29,836 31,591
______ ______
company balance sheet
as at 31 December 2003
2003 2003 2002 2002
£000 £000 £000 £000
Note ______ ______ ______ ______
Fixed assets
Tangible assets 11 25,728 26,985
Investments 12 7,581 9,492
______ ______
33,309 36,477
Current assets
Stocks 13 2,365 2,838
Debtors 14 5,041 5,814
Cash at bank and in hand - 203
______ ______
7,406 8,855
Creditors: amounts falling due
within one year 15 (7,156) (6,684)
______ ______
Net current assets 250 2,171
______ ______
Total assets less current liabilities 33,559 38,648
Creditors: amounts falling due after
more than one year 16 (57) (1,049)
Provisions for liabilities and charges 17 (4,174) (4,573)
______ ______
Net assets 29,328 33,026
______ ______
Capital and reserves
Called-up share capital 18, 19 1,813 1,813
Share premium account 19 13,707 13,707
Capital redemption reserve 19 5 5
Profit and loss account 19 13,803 17,501
______ ______
Total shareholders' funds - equity 20 29,328 33,026
______ ______
consolidated cash flow statement
for the year ended 31 December 2003
Note 2003 2003 2002 2002
£000 £000 £000 £000
______ ______ ______ ______
Net cash inflow from operating activities 24 3,516 10,954
Returns on investments and servicing of finance
Interest received 18 9
Interest paid - bank and other (89) (181)
- finance leases (27) (27)
______ ______
(98) (199)
Taxation
Mainstream corporation tax (1,103) (566)
Overseas tax (57) 39
______ ______
(1,160) (527)
Capital expenditure
Purchase of fixed assets (1,614) (5,197)
Sale of fixed assets 27 26
Capital receipts from insurers
relating to the fire 3 - 875
______ ______
(1,587) (4,296)
Equity dividends paid (2,719) (2,719)
______ ______
Cash (outflow)/inflow before financing (2,048) 3,213
______ ______
Financing
Capital element of finance lease
payments (119) (138)
New borrowings - -
Repayment of loan instalments (832) (928)
______ ______
(951) (1,066)
______ ______
(Decrease)/increase in cash in the year (2,999) 2,147
______ ______
reconciliation of net cash flow to movement in net debt
for the year ended 31 December 2003
Note 2003 2002
£000 £000
______ ______
(Decrease)/increase in cash in the year (2,999) 2,147
Cash outflow from decrease in debt and lease finance 951 1,066
______ ______
Change in net debt resulting from cash flows (2,048) 3,213
Translation differences 145 212
______ ______
Movement in net debt in the year (1,903) 3,425
Net debt at the start of the year (1,675) (5,100)
______ ______
Net debt at the end of the year 25 (3,578) (1,675)
______ ______
notes to the financial statements
1. Accounting policies
Basis of preparation
The financial statements have been prepared in accordance with applicable
Accounting Standards, and under the historical cost accounting rules. The
following principal accounting policies have been applied consistently in
dealing with items which are considered material in relation to the Group's
financial statements.
The Group has followed the transitional rules of FRS 17 'Retirement Benefits'
this year, providing certain additional disclosures for its defined benefit
pension scheme.
Basis of consolidation
The Group financial statements consolidate the financial statements of the
Company and its subsidiary undertakings. All companies within the Group make up
their financial statements to 31 December. Unless, otherwise stated, the
acquisition method of accounting has been adopted. Under this method, the
results of subsidiary undertakings acquired or disposed of in the year are
included in the consolidated profit and loss account from the date of
acquisition or up to the date of disposal.
A separate profit and loss account dealing with the results of the Parent
Company only has not been presented, as permitted by Section 230 of the
Companies Act 1985 (see note 10).
Tangible fixed assets and depreciation
Depreciation is provided by the Group to write off the cost less the estimated
residual value of tangible fixed assets by equal annual instalments over their
estimated useful economic lives as follows:
Freehold buildings 20 years
Plant and machinery 5 - 15 years
Computer equipment and vehicles 3 - 5 years
No depreciation is provided on freehold land. Licences purchased by the Group
are amortised over five years.
Assets held under finance leases are depreciated over the lease term where this
is shorter than the estimated useful economic life.
Foreign currencies
Monetary assets and liabilities denominated in foreign currencies are translated
into sterling at rates of exchange at the balance sheet date and the gains or
losses on translation are included in the profit and loss account.
Transactions in foreign currencies are recorded using the rate of exchange
ruling at the date of the transaction. The results of the overseas subsidiary
undertakings and overseas branches are translated at the average rate of
exchange ruling during the year. The assets and liabilities of the overseas
undertakings are translated at the closing exchange rate. Exchange differences
arising from the retranslation of the opening net investment in overseas
undertakings, and differences between the profits for the year translated at the
average and closing rates, are taken to reserves, net of exchange differences
arising on related foreign currency borrowings.
Research and development expenditure
Expenditure on research and development is written off against profits in the
year in which it is incurred.
Stocks
Stocks are stated at the lower of cost and net realisable value. In determining
the cost of raw materials, consumables and goods purchased for resale, the
weighted average purchase price is used. For work in progress and finished goods
manufactured by the Group, cost is taken as production cost, which includes an
appropriate proportion of attributable overheads.
Goodwill
Purchased goodwill (both positive and negative) arising on consolidation in
respect of acquisitions before 1 January 1998, when FRS 10 Goodwill and
intangible assets was adopted, was written off to reserves in the year of
acquisition. When a subsequent disposal occurs any related goodwill previously
written off to reserves is written back through the profit and loss account as
part of the profit or loss on disposal.
Purchased goodwill (representing the excess of the fair value of the
consideration given and associated costs over the fair value of the separable
net assets acquired) arising on consolidation in respect of acquisitions since 1
January 1998 is capitalised. Positive goodwill is amortised to nil by equal
annual instalments over its estimated useful life, not exceeding 20 years.
On the subsequent disposal or termination of a business acquired since 1 January
1998, the profit or loss on disposal or termination is calculated after charging
the unamortised amount of any related goodwill.
In the Company's financial statements, investment in subsidiary undertakings is
stated at cost less any provision against the value.
Pensions
The Company operates a pension scheme providing benefits based on final
pensionable pay, the assets of which are held independently from those of the
Company. Contributions to the scheme are charged to the profit and loss account
so as to spread the cost of pensions over employees' working lives with the
Company. The Group also operates defined contribution pension schemes in the US
and the UK. Contributions to these schemes are charged to the profit and loss
account as they are incurred.
Finance leases
Where the Company enters into a lease which entails taking substantially all the
risks and rewards of ownership of an asset, the lease is treated as a finance
lease. The asset is recorded in the Balance sheet as a tangible fixed asset and
depreciated in accordance with the Group's depreciation policy.
The capital element of future lease payments is included under creditors.
Interest is included within 'interest payable and similar charges' within the
profit and loss account.
Operating leases
Operating leases are any other leases which are not finance leases. Rental
charges in respect of operating leases are charged to the profit and loss
account on a straight line basis over the life of the lease.
Taxation
The charge for taxation is based on the profit for the year and takes into
account taxation deferred because of timing differences between the treatment of
certain items for taxation and accounting purposes. Deferred tax is recognised,
without discounting, in respect of all timing differences between the treatment
of certain items for taxation and accounting purposes which have arisen but not
reversed by the balance sheet date, except as otherwise required by FRS 19.
Turnover
Turnover represents the amounts (excluding value added tax) derived from the
provision of goods and services to customers during the year.
Cash
Cash, for the purpose of the cash flow statement, comprises cash in hand and
deposits repayable on demand, less overdrafts payable on demand.
2. Turnover by geographical market
Other
UK and Eire France Germany Europe
£000 £000 £000 £000
______ ______ ______ ______
2003 6,895 2,568 3,857 4,191
2002 7,335 2,754 3,121 4,529
______ ______ ______ ______
(continued from table above)
North Rest of
America the World Total
£000 £000 £000
______ ______ ______
2003 5,531 462 23,504
2002 5,331 398 23,468
______ ______ ______
In the opinion of the Directors the Group is engaged in only one class of
business. All turnover originates in the UK.
3. Exceptional item
On 22 October 2000, there was a fire at the Group's Croydon site. In 2001 the
expense incurred and insurance proceeds received up to 31 December 2001 were
shown in the accounts as an exceptional item. A final settlement of £13.9
million was agreed with insurers in July 2002, of this £6.1 million was received
in 2000/1 and £7.8 million in 2002.
2003 2002
£000 £000
______ ______
Stock destroyed - -
Net book value of fixed assets destroyed - -
Revenue costs incurred - (1,207)
Cash received from insurers - 7,830
______ ______
Exceptional item before taxation - 6,623
Tax on exceptional item - (2,019)
______ ______
Exceptional item after taxation - 4,604
______ ______
The insurance proceeds have not been allocated to specific items by the loss
adjusters and Zotefoams' management have therefore allocated these proceeds
using their best estimates at the time. Of the £7.8 million received in 2002
management have allocated £3.4 million to revenue cost, £0.9 million to fixed
assets destroyed in the fire and the remaining £3.5 million has been treated as
compensation for lost sales and allocated to other operating income. There were
no exceptional items in 2003.
4. Profit on ordinary activities before taxation
2003 2002
£000 £000
Profit on ordinary activities before taxation is stated after charging:
Amounts payable under operating leases 74 71
Research and development costs 635 492
Auditors' remuneration:
Audit: Group 64 61
Company 58 57
Other fees paid to the auditors and their associates - recurring 12 12
- non-recurring 32 49
______ ______
44 61
Net exchange (gains)/losses (168) 79
Depreciation and amortisation of fixed assets - owned assets 2,998 2,925
- leased assets 159 159
______ ______
5. Staff numbers and costs
The average number of people employed by the Group (including Directors) during
the year, analysed by category, was as follows:
Number of Number of
employees employees
2003 2002
______ ______
Production 124 121
Maintenance 19 20
Distribution and marketing 29 29
Administration and technical 64 64
______ ______
236 234
______ ______
The aggregate payroll costs of these persons were as follows:
2003 2002
£000 £000
______ ______
Wages and salaries 6,328 6,140
Social security costs 508 556
Other pension costs 559 488
______ ______
7,395 7,184
______ ______
6. Interest receivable
2003 2002
£000 £000
______ ______
Interest on bank deposits 1 9
Interest on other deposits 17 -
______ ______
18 9
______ ______
7. Interest payable and similar charges
2003 2002
£000 £000
______ ______
On bank loans and overdrafts 131 181
On finance leases 27 27
______ ______
158 208
______ ______
8. Tax on profit on ordinary activities
2003 2002
£000 £000
______ ______
UK corporation tax at 30% (2002: 30%) 291 190
Overseas taxation 45 (40)
Adjustment to prior year UK tax charge 52 168
______ ______
Current taxation before tax on exceptional item 388 318
Deferred taxation before tax on exceptional item (169) 199
______ ______
Total tax charge before tax on exceptional item 219 517
______ ______
Tax on exceptional item:
UK corporation tax - 1,798
Deferred tax - 221
______ ______
- 2,019
______ ______
Total tax charge 219 2,536
______ ______
Factors affecting the tax charge for the current period
The current charge for the period is higher (2002: lower) than the standard rate
of corporation tax in the UK of 30% (2002: 30%). The differences are explained
below.
2003 2002
£000 £000
______ ______
Current tax reconciliation
Profit on ordinary activities before tax 955 8,575
______ ______
Current tax at 30% (2002: 30%) 287 2,572
Effects of:
Research and Development tax credits
less expenses not deductible for tax purposes (25) 3
Depreciation in excess of capital allowances for period 58 (553)
Higher tax rates on overseas earnings 16 17
Adjustments to tax charge in respect of previous periods 52 77
______ ______
Total current tax charge 388 2,116
______ ______
9. Dividends and earnings per share
2003 2002
£000 £000
______ ______
Interim dividend of 2.5p (2002: 2.5p) net per 5p
ordinary share 906 906
Proposed final dividend of 2.0p (2002: 5.0p) net per 5p
ordinary share 725 1,813
______ ______
1,631 2,719
______ ______
Dividends per ordinary share 4.5p 7.5p
______ ______
Earnings per ordinary share
Earnings per ordinary share is calculated by dividing profit after tax of
£736,000 (2002: £6,039,000) by the weighted average number of shares in issue
during the year. Diluted earnings per ordinary share adjusts for the potential
dilutive effect of share option schemes in accordance with FRS 14.
2003 2002
______ ______
Average number of ordinary shares issued 36,255,772 36,255,772
Deemed issued for no consideration 69,168 61,204
______ ______
Diluted 36,324,940 36,316,976
______ ______
Shares deemed issued for no consideration have been calculated based on the
potential dilutive effect of the Save As You Earn share option scheme, the
Executive Share Option Scheme and options granted under the Inland Revenue
Approved Share Option Scheme:
Date from which exercisable Number of Number of
shares under shares under
Exercise option option
price 2003 2002
______ ______ ______
4 April 2004 92.5p 64,864 64,864
24 April 2004 93.5p 301,603 301,603
21 August 2004 107.5p 125,580 236,666
1 June 2005 77.0p 212,540 261,631
20 August 2005 80.5p 654,494 794,685
18 March 2006 80.0p 872,865 -
______ ______ ______
The average fair value of one ordinary share during the year was considered to
be 83.5p (2002: 90.0p).
10. Profit for the financial year
The Group accounts do not include a separate profit and loss account for
Zotefoams plc (the parent undertaking) as permitted by Section 230 of the
Companies Act 1985. The Parent Company loss after tax for the financial year is
£1,508,000 (2002 profit: £6,242,000).
11. Tangible fixed assets
Computer
Freehold equipment
land and Plant and and
buildings machinery vehicles Total
£000 £000 £000 £000
______ ______ ______ ______
The Group
Cost
At 1 January 2003 14,274 35,703 2,095 52,072
Additions 393 1,093 76 1,562
Foreign exchange (392) (430) (19) (841)
Disposals - (30) (64) (94)
______ ______ ______ ______
At 31 December 2003 14,275 36,336 2,088 52,699
______ ______ ______ ______
Depreciation
At 1 January 2003 1,930 14,178 1,199 17,307
Charge for the year 550 2,257 350 3,157
Foreign exchange (2) (57) (13) (72)
On disposals - (4) (64) (68)
______ ______ ______ ______
At 31 December 2003 2,478 16,374 1,472 20,324
______ ______ ______ ______
Net book value
At 31 December 2003 11,797 19,962 616 32,375
______ ______ ______ ______
At 31 December 2002 12,344 21,525 896 34,765
______ ______ ______ ______
Company
Cost
At 1 January 2003 10,071 31,245 1,992 43,308
Additions 391 956 67 1,414
Disposals - - (64) (64)
______ ______ ______ ______
At 31 December 2003 10,462 32,201 1,995 44,658
______ ______ ______ ______
Depreciation
At 1 January 2003 1,716 13,450 1,157 16,323
Charge for the year 398 1,951 322 2,671
On disposals - - (64) (64)
______ ______ ______ ______
At 31 December 2003 2,114 15,401 1,415 18,930
______ ______ ______ ______
Net book value
At 31 December 2003 8,348 16,800 580 25,728
______ ______ ______ ______
At 31 December 2002 8,355 17,795 835 26,985
______ ______ ______ ______
Included in computer equipment and vehicles and total fixed assets above for
both the Company and the Group is £238,000 (2002: £396,000) in respect of the
net book value of assets held under finance leases.
12. Fixed asset investments
Company Company
2003 2002
£000 £000
______ ______
Shares in Group undertakings - at cost 4,505 4,505
Provision against the value of investment in subsidiary
to reflect the value of the underlying net assets (3,294) -
Loan to Zotefoams Fabrications Limited 6,370 4,987
______ ______
7,581 9,492
______ ______
The investments consist of the entire ordinary share capital of Zotefoams
International Limited (£255,000), and the entire ordinary share capital of
£4,250,002 and a $11,342,000 loan to Zotefoams Fabrications Limited. Both
companies are incorporated in the UK.
The following is a complete list of the subsidiary undertakings of the Company,
all of which are either directly or indirectly 100% owned:
Zotefoams International Limited
Zotefoams Inc.
Zotefoams Fabrications Limited
All the limited companies are incorporated in the United Kingdom, with the
exception of Zotefoams Inc. which is incorporated in the US.
The principal activities of the subsidiary undertakings are as follows:
Zotefoams Fabrications Limited manufactures cross-linked block foams, Zotefoams
Inc. purchases and distributes cross-linked block foams and Zotefoams
International Limited is a holding company.
In the opinion of the Directors the investments in the Company's subsidiary
undertakings are worth at least the amount at which they are stated in the
balance sheet.
13. Stocks
Group Group Company Company
2003 2002 2003 2002
£000 £000 £000 £000
______ ______ ______ ______
Raw materials and consumables 1,311 1,673 1,296 1,673
Work in progress 624 760 597 734
Finished goods and goods for resale 1,243 947 472 431
______ ______ ______ ______
3,178 3,380 2,365 2,838
______ ______ ______ ______
14. Debtors
Group Group Company Company
2003 2002 2003 2002
£000 £000 £000 £000
______ ______ ______ ______
Amounts falling due within one year:
Trade debtors 5,743 5,473 4,548 4,430
Amounts owed by Group undertakings - - 359 1,282
Other debtors 3 78 3 44
Prepayments and accrued income 147 74 131 58
______ ______ ______ ______
5,893 5,625 5,041 5,814
______ ______ ______ ______
15. Creditors: amounts falling due within one year
Group Group Group Group
2003 2003 2002 2002
£000 £000 £000 £000
______ ______ ______ ______
Bank overdrafts 2,828 7
Trade creditors 855 771
Other creditors including taxation and social
security:
Mainstream corporation tax 385 1,165
Other taxation and social security 164 132
______ ______
549 1,297
Other creditors 79 339
Obligations under finance leases 119 119
Bank loans 786 872
Accruals and deferred income 1,322 1,613
Dividends proposed 725 1,813
______ ______
7,263 6,831
______ ______
(continued from table above)
Company Company Company Company
2003 2003 2002 2002
£000 £000 £000 £000
______ ______ ______ ______
Bank overdrafts 2,828 -
Trade creditors 855 767
Other creditors including taxation and social
security:
Mainstream corporation tax 396 1,156
Other taxation and social security 160 131
______ ______
556 1,287
Other creditors 35 272
Obligations under finance leases 119 119
Bank loans 786 872
Accruals and deferred income 1,252 1,554
Dividends proposed 725 1,813
______ ______
7,156 6,684
______ ______
16. Creditors: amounts falling due after more than one year
Group and Group and
Company Company
2003 2002
£000 £000
______ ______
Finance leases:
Amounts falling due in more than one year but less
than two years 57 119
Amounts falling due in more than two years but
less than five years - 58
Bank loans (see note 21):
Amounts falling due in more than one year but
less than two years - 872
Amounts falling due in more than two years but
less than five years - -
______ ______
57 1,049
______ ______
17. Provisions for liabilities and charges
Deferred Deferred
taxation taxation
Group Company
£000 £000
______ ______
The Group and Company
At 1 January 2003 4,671 4,573
Charge for the year in the profit and loss account (169) (399)
______ ______
At 31 December 2003 4,502 (4,174)
______ ______
Deferred tax is provided as follows:
Group Group Company Company
2003 2002 2003 2002
£000 £000 £000 £000
______ ______ ______ ______
Difference between accumulated depreciation
and amortisation and capital allowances 4,502 4,671 4,174 4,573
______ ______ ______ ______
4,502 4,671 4,174 4,573
______ ______ ______ ______
Deferred tax is provided at a rate of 30% (2002: 30%).
No amount is included above for any liability, which might arise in respect of
the undistributed reserves of the Company's overseas subsidiary undertaking,
which the Group does not expect to remit to the UK.
18. Share capital
2003 2002
£ £
______ ______
Authorised
At 31 December
Equity: 56,000,000 ordinary shares of 5p each 2,800,000 2,800,000
______ ______
Allotted, called-up and fully paid
At 31 December
Equity: 36,255,772 ordinary shares of 5p each 1,812,789 1,812,789
______ ______
Details of share options are provided in note 9.
19. Statement of movements in reserves and share capital
Profit Capital Share Share
and loss redemption premium capital
£000 £000 £000 £000
______ ______ ______ ______
The Group
At 1 January 2003 16,066 5 13,707 1,813
Translation differences (860) - - -
Retained loss for year (895) - - -
______ ______ ______ ______
At 31 December 2003 14,311 5 13,707 1,813
______ ______ ______ ______
The Company
At 1 January 2003 17,501 5 13,707 1,813
Translation differences (559) - - -
Retained loss for year (3,139) - - -
______ ______ ______ ______
At 31 December 2003 13,803 5 13,707 1,813
______ ______ ______ ______
The cumulative total of goodwill written off against Group profit and loss
account reserves in respect of acquisitions prior to 1 January 1998 when FRS 10
(Goodwill and Intangible Assets) was adopted amounts to:
£000
______
Group 990
______
Company 880
______
20. Reconciliations of movements in shareholders' funds
Group Group Company Company
2003 2002 2003 2002
£000 £000 £000 £000
______ ______ ______ ______
Profit/(loss) for the financial year 736 6,039 (1,508) 6,242
Dividends (1,631) (2,719) (1,631) (2,719)
______ ______ ______ ______
Retained (loss)/profit for the financial year (895) 3,320 (3,139) 3,523
Translation differences (860) (730) (559) (320)
______ ______ ______ ______
Net (reduction)/addition to shareholders' funds (1,755) 2,590 (3,698) 3,203
Opening shareholders' funds 31,591 29,001 33,026 29,823
______ ______ ______ ______
Closing shareholders' funds 29,836 31,591 29,328 33,026
______ ______ ______ ______
21. Financial instruments
Policy
The Group does not enter into significant derivative transactions. The Group's
principal financial instruments comprise bank loans, cash and short-term
deposits. The main purpose of these financial instruments is to raise finance
for the Group's operations. It is, and has been throughout the period under
review, the Group's policy that no trading in financial instruments shall be
undertaken.
The main risks arising from the Group's financial instruments are interest rate
risk, liquidity risk and foreign exchange risk. The Board reviews and agrees
policies for managing each of these risks and they are summarised below. These
policies have remained fundamentally unchanged since the beginning of 2003.
The disclosures in this note exclude short-term debtors and creditors.
Interest rate risk
The Group finances its operations through a mixture of retained profits and bank
borrowings. The Group borrows in the desired currency generally at a variable
rate of interest.
The interest rate profile of the Group at 31 December was:
2003 2003
Fixed Variable 2003
rates rates Total
£000 £000 £000
______ ______ ______
Sterling 176 2,828 3,004
US dollar - 786 786
______ ______ ______
176 3,614 3,790
______ ______ ______
(continued from table above)
2002 2002
Fixed Variable 2002
rates rates Total
£000 £000 £000
______ ______ ______
Sterling 295 7 302
US dollar - 1,745 1,745
______ ______ ______
295 1,752 2,047
______ ______ ______
The interest rate payable on the sterling overdraft and the US dollar bank loan
is determined by LIBOR (or similar) plus a bank margin.
Liquidity risk
The Group's objective is to maintain a balance of continuity of funding and
flexibility through the use of overdrafts, loans and finance leases as
applicable. The maturity profile of the Group's borrowings is shown in note 16.
The Group has a short-term facility of £5.0 million which is freely transferable
and convertible into sterling. This facility expires in February 2005 and is
utilised by Zotefoams plc and its subsidiary undertakings under a
cross-guarantee structure.
On 17 December 2001 Zotefoams plc borrowed $4.2 million under a three year loan
agreement, repayable in equal six monthly instalments. This facility is subject
to covenants relating to net assets, total borrowings and cash flow.
Foreign currency risk
The Group has significant undertakings in the US whose revenue and expenses are
denominated in US dollars. Zotefoams plc makes a significant proportion of its
sales to European customers and these revenues are predominantly in Euros. It is
the Group's policy to hedge the foreign currency cash flows of invoiced sales
net of expected foreign expenditure. Hedging is achieved by the use of foreign
currency contracts expiring in the month of expected cash flow.
Fair values
The fair value of all financial assets and liabilities is not materially
different from the carrying value. Therefore the fair value is not separately
disclosed. At 31 December 2003 the Group had forward exchange contracts with a
nil carrying value and a fair value, based on estimated market values, of £3.4
million (2002: £1.0 million).
22. Commitments
2003 2002
£000 £000
______ ______
(i) Capital contracts at the end of the financial year for which no
provision has been made: 298 772
______ ______
(ii) The Group has annual commitments under non-cancellable operating leases
which expire
- within one year: 73 67
- between two and five years: 117 181
______ ______
(iii) As at 31 December the Group had foreign currency
forward exchange contracts amounting to: 3,367 999
______ ______
The above amounts apply to the Company as well as the Group apart from Capital
Commitments which includes £200,000 (2002: £125,000) in respect of subsidiary
undertakings.
23. Pension scheme
The Company operates a defined benefit pension scheme - the Zotefoams Pension
Scheme ('the scheme') providing benefits based on final pensionable pay. The
assets of the scheme are held separately from those of the Company.
An actuarial review of the scheme was carried out as at 6 April 2002 by an
independent qualified actuary. The assumptions which have the most significant
effect on the results of the valuation are: discount rate - 6.75% p.a.
pre-retirement/5.25% p.a. post-retirement; rate of future salary increases -
4.25% p.a.; rate of pension increases in payments - 2.50% p.a.; and price
inflation - 2.75% p.a.
The valuation showed that the market value of the scheme's assets was
£10,082,000 which represented 94% of the benefits that had accrued to members,
after allowing for expected future increases in earnings. The total
contributions payable by the Company was agreed to be 12.0% of pensionable
salary to 1 March 2003 and 14.1% of pensionable salary thereafter. Employee
contributions were increased from 5.0% to 6.5% of pensionable salary
respectively.
The pension charge for the year was £468,837 (2002: £423,099) which represents
the contributions paid by the scheme in respect of the members.
In addition there is a stakeholder scheme for UK employees who joined the Group
after 1 October 2001. The contributions paid by the Company to the scheme was
£8,965 (2002: £2,723).
For US based employees, Zotefoams Inc. and Zotefoams Fabrications Limited
operate a 401(k) plan and a defined contribution pension plan to which Zotefoams
Inc. and Zotefoams Fabrications Limited contribute 6.2% of pensionable salary.
Whilst the Group continues to account for pension costs in accordance with
Statement of Standard Accounting Practice 24 'Accounting for Pension costs',
under FRS 17 'Retirement benefits' the following transitional disclosures are
required:
A full actuarial valuation was carried out at 6 April 2002 and updated by a
qualified independent actuary on a FRS 17 basis to 31 December 2003. The major
assumptions used by the actuary were as follows:
At year end At year end At year end
31 December 31 December 31 December
2003 2002 2001
% p.a. % p.a. % p.a.
______ ______ ______
Rate of general increase in salaries 4.30 3.85 4.50
Rate of increase of pensions in payment 2.70 2.25 2.25
Discount rate 5.36 5.47 5.83
Inflation assumption 2.80 2.35 2.50
______ ______ ______
The assumptions used by the actuary are the best estimates chosen from a range
of possible actuarial assumptions which, due to the timescale covered, may not
necessarily be borne out in practice.
The fair value of the scheme's assets, which are not intended to be realised in
the short-term and may be subject to significant change before they are
realised, and the present value of the scheme's liabilities, which are derived
from cash flow projections over long periods and thus inherently uncertain,
were:
Long-term Value at Long-term
rate of 31 December rate of
return 2003 return
2003 £000 2002
______ ______ ______
Equities 7.80 8,452 7.52
Bonds 5.10 1,356 5.00
Other - Cash 3.75 258 4.00
______ ______ ______
10,066
Present value of scheme liabilities (14,884)
______
Deficit in the scheme (4,818)
Related deferred tax asset 1,445
______
Net pension liability (3,373)
______
(continued from table above)
Value at Long-term Value at
31 December rate of 31 December
2002 return 2001
£000 2001 £000
______ ______ ______
Equities 6,579 7.95 7,875
Bonds 1,281 5.39 1,487
Other - Cash 324 4.50 414
______ ______ ______
8,184 9,776
Present value of scheme liabilities (11,497) (9,897)
______ ______
Deficit in the scheme (3,313) (121)
Related deferred tax asset 994 36
______ ______
Net pension liability (2,319) (85)
______ ______
Movement in deficit in scheme during the year
At year end At year end
31 December 31 December
2003 2002
£000 £000
______ ______
Deficit in scheme at beginning of year (3,313) (121)
Current service cost (452) (503)
Contributions paid 469 423
Past service cost - -
Other finance (cost)/income (53) 148
Actuarial loss (1,469) (3,260)
______ ______
Deficit in the scheme at end of year (4,818) (3,313)
______ ______
If FRS 17 had been fully adopted in these financial statements the pension costs
for the defined benefit scheme would have been:
Analysis of other pension costs charged in arriving at operating profit
2003 2002
£000 £000
______ ______
Current service cost 452 503
Past service cost - -
______ ______
452 503
______ ______
As the scheme is closed to new members the current service cost will increase,
relative to pensionable payroll, as members of the scheme approach retirement.
Analysis of amounts included in other finance income/costs
2003 2002
£000 £000
______ ______
Expected return on pension scheme assets 585 737
Interest return on pension scheme liabilities (638) (589)
______ ______
(53) 148
______ ______
Analysis of amount recognised in statement of total recognised gains and losses
2003 2003 2002 2002
% £000 % £000
______ ______ ______ ______
Actuarial return less expected return on
scheme assets 931 (2,646)
Percentage of year end scheme assets 9 (32)
Experience gains and losses arising on
scheme liabilities (681) (270)
Percentage of present value of year end
scheme liabilities (5) (2)
Changes in assumptions underlying the
present value of scheme liabilities (1,719) (344)
Percentage of present value of year end
scheme liabilities (12) (3)
______ ______
Actuarial loss recognised in statement
of total recognised gains and losses (10) (1,469) (28) (3,260)
______ ______ ______ ______
24. Reconciliation of operating profit to net cash inflow from operating
activities
2003 2002
£000 £000
______ ______
Operating profit 1,095 7,899
Depreciation charge 3,157 3,084
Loss on disposal of assets - 4
Decrease in stocks 75 120
Increase in debtors (397) (274)
(Decrease)/increase in creditors (414) 121
______ ______
Net cash inflow from operating activities 3,516 10,954
______ ______
In 2002 £7.8 million was received from the insurers of which £6.9 million was
allocated to revenue and the remainder to capital as described in note 3.
25. Analysis of changes in net (debt)/funds
At 31
At 1 January Translation December
2003 Cashflow differences 2003
£000 £000 £000 £000
______ ______ ______ ______
Cash at bank and in hand 372 (139) (21) 212
______ ______ ______ ______
Bank overdrafts (7) (2,860) 39 (2,828)
Obligations under finance leases (295) 119 - (176)
Bank loans (1,745) 832 127 (786)
______ ______ ______ ______
(1,675) (2,048) 145 (3,578)
______ ______ ______ ______
26. Statutory accounts
The financial information set out above does not constitute the company's
statutory accounts for the years ended 31 December 2003 or 2002 but is derived
from those accounts. Statutory accounts for 2002 have been delivered to the
Registrar of Companies, and those for 2003 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 statements under Section 237
(2) or (3) of the Companies Act 1985.
27. Reports and accounts
This statement is not being posted to shareholders. The Report and Accounts for
the year ended 31 December 2003 will be posted to shareholders by 30 March 2004.
Further copies will be available from the Company's Registered Office: Zotefoams
plc, 675 Mitcham Road, Croydon, CR9 3AL.
28. Annual general meeting
The Annual General Meeting will be held on 29 April 2004, at the Company's
Registered Office as above.
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