Trading Statement - Toy Market Demand Down

ZOTEFOAMS PLC 29 October 1999 Trading Statement In its interim statement on 2 August 1999 the Company cautioned that, with UK demand relatively flat and sales to the European toy segment reducing progressively, it expected the second half of the year to remain challenging. In the second half to date we have experienced improving trading conditions in most of our major geographical markets, in particular Europe and North America. However, the benefits of this have not been enough to offset the dual impact of rising raw materials prices and a major reduction in demand from the toy market. The price of our major raw material, polyethylene, has risen substantially in the second half and we anticipate that this, combined with adverse currency effects, will impact the Company's pre-tax profits for the full year by approximately £0.5 million. Further, contrary to normal seasonal trading patterns we have also recently experienced a severe reduction in demand from the toy market. In particular, our major customer has indicated a fundamental redesign and re-launch of its product line and therefore we do not anticipate receiving any further orders this year. As a consequence, the Board now expects profit before tax for the year to 31 December 1999 to be approximately £1.7m short of our expectations at the time of the interim announcement. While it is too early to give an accurate assessment, we also expect this situation to have an adverse impact on current market forecasts for the following year. We have made much progress over the last 12 months with an important element in our strategy, namely improving our sales mix by application and reducing our exposure to the toy market. However, in the light of today's announcement the Board is reviewing both the scope and timing of its current capital expenditure plans. Enquiries: Zotefoams plc 0181 664 1600 Andrew Gingell Managing Director David Stirling Finance Director Financial Dynamics 0171 831 3113 Tom Baldock