Zotefoams Plc · LSE:ZTF
Zotefoams — H1 2013 Earnings Presentation
31 slides from Zotefoams's earnings presentation, August 2013
Slide 1: Interim 2013 results presentation
ZOTEFOAMS ZOTEFOAMS Zotefoams plc ZOTEFOAMS plc Interim 2013 results presentation August Preliminary 2012 2013 presentation results March 2013 David Stirling Clifford Hurst 1
Slide 2: Important Notice
Important Notice ZOTEFOAMS By attending the meeting where this presentation is made, or by reading the presentation slides, you agree to be bound by the following limitations: • This presentation is being made only in the United Kingdom and this document is being distributed only to and is directed
Slide 3: Contents
Contents ZOTEFOAMS 1. Group Overview 2. Group Business model 3. Zotefoams’ Strategy 4. 2013 Interim Results and Financial Statements 5. Business Review 6. Outlook Appendices 3
Slide 4: Group Overview: year end 2012
Group Overview : year end 2012 ZOTEFOAMS 7% Revenue by Geography 2012cc 21% 27% UK 2012 Polyolefin Europe North America HPP Rest of the World MEL 2011 45% - 10.00 20.00 30.00 40.00 50.00 60.00 Revenue £m by Segment Revenue Split by Application Area Zotefoams is a world leader in cellular materials 5
Slide 5: Group Business Model
Group Business Model ZOTEFOAMS Our business model is designed to harness our unique manufacturing technologies and intellectual property to produce added value products that meet or anticipate market requirements. People Products Processes INVEST We ensure Zotefoams’ investment is balanced across pe
Slide 6: Zotefoams' strategy
Zotefoams’ strategy ZOTEFOAMS Zotefoams’ strategy is to expand through a combination of profitable organic growth of our Polyolefin and HPP foams businesses, new customers for our MuCell Extrusion technology licensing business, and through partnerships or acquisitions in related technologies, produc
Slide 7: Contents
Contents ZOTEFOAMS 1. Group Overview 2. Group Business model 3. Zotefoams' Strategy 4. 2013 Interim Results and Financial Statements 5. Business Review 6. Outlook Appendices 7
Slide 8: Financial Highlights
Financial Highlights ZOTEFOAMS H1 13 H1 12 £m £m Change Revenue 23.2 24.8 -6% Profit before Tax 2.5 3.5 -28% Basic earnings per share (p) 5.1 7.2 -29% Interim dividend (p) 1.7 1.7 0% Net (debt)/funds (0.8) 1.8 8
Slide 9: Profit Before Tax
Profit Before Tax ZOTEFOAMS H1 13 H1 12 Change £m £m Revenue 23.2 24.8 -6% Gross profit 6.2 7.8 -21% Gross margin 27% 32% Operating profit 2.7 3.7 -27% Net interest (0.2) (0.2) Profit before tax 2.5 3.5 -28% 2012 has been restated for IAS 19 which has a negative impact of £0.1m 9
Slide 10: Polymer (LDPE) Prices
Polymer (LDPE) Prices ZOTEFOAMS 10
Slide 11: Taxation
Taxation ZOTEFOAMS H1 13 H1 12 £m £m Profit before tax 2.5 3.5 Tax (0.5) (0.7) Effective tax rate 21% 21% Basic earnings per share (p) 5.1 7.2 Interim dividend (p) 1.7 1.7 11
Slide 12: Free Cash Flow
Free Cash Flow ZOTEFOAMS H1 13 H1 12 £m £m Operating profit 2.7 3.7 Depreciation & amortisation 1.7 1.6 Working capital (1.0) (0.8) Pensions and share schemes, net (0.1) (0.2) Cash generated from operations 3.3 4.3 Tax paid (0.5) (0.5) Capital expenditure (1.5) (1.3) Free cash flow 1.3 2.5 12
Slide 13: Working Capital
Working Capital ZOTEFOAMS H1 13 H1 12 H1 13 H1 12 £m £m % of sales % of sales Stock 7.2 6.4 15.5% 13.0% Receivables 11.6 11.4 25.1% 23.0% Payables (4.8) (6.1) -10.3% -12.3% Net working capital 14.1 11.7 30.3% 23.7% NB Payables excludes £1.0m deferred consideration in 2012 13
Slide 14: Net Funds
Net Funds ZOTEFOAMS H1 13 H1 12 £m £m Free cash flow 1.3 2.5 Acquisition 0.0 (1.3) Dividends (1.4) (1.3) Net funds movement (0.1) (0.1) Net funds brought forward (0.6) 1.9 Exchange adjustments/roundings (0.1) (0.1) Net (debt)/funds (0.8) 1.8 Comprising: Cash funds 3.0 3.0 Borrowings (3.8) (1.2) (0.8
Slide 15: Balance Sheet
Balance Sheet ZOTEFOAMS ` H1 13 H1 12 £m £m Intangible assets 5.4 5.6 Tangible assets 26.1 25.2 Net working capital 14.1 10.7 Retirement benefit obligations (7.0) (4.7) Deferred tax, net (0.2) (0.8) Tax payable (0.7) (0.9) Net funds (0.8) 1.8 Total shareholders' equity 37.0 37.0 15
Slide 16: Contents
Contents ZOTEFOAMS 1. Group Overview 2. Group Business model 3. Zotefoams’ Strategy 4. 2013 Interim Results and Financial Statements 5. Business Review 6. Outlook Appendices 16
Slide 17: Polyolefin Foams
Polyolefin Foams ZOTEFOAMS Business Model Strategy • Azote® polyolefin foams are more consistent, • Product line extension in specific sub- lighter, purer and have better mechanical segments where Zotefoams has a lower properties than similar foams made by other market share and/or can increase our
Slide 18: Polyolefin Foams: Results
Polyolefin Foams : Results ZOTEFOAMS • ORDER DELIVERY LEAD TIMES Polyolefins – Improvement in early 2013 following 2013 2012 capacity investment and debottlenecking £000's £000's in late 2012 Revenue 20,325 22,338 – inventory build in 2012 reversed in early Segment Profit 2,678 3,598 2013, particula
Slide 19: Polyolefin Foams: JV in Asia
Polyolefin Foams : JV in Asia ZOTEFOAMS Structure About INOAC Corporation • SALES • Japan HQ global manufacturing – Effective 1 July 2013 conglomerate – 50:50 shares, Zotefoams operated • US$ 3.3 bn in sales – INOAC as significant customer – B2B mainly in plastics and – Location Hong Kong rubbers –
Slide 20: HPP
HPP ZOTEFOAMS Business Model Strategy • ZOTEK® HPP foams are manufactured from • ZOTEK® F fluoroploymer foams for aviation raw materials offering enhanced properties, remains the largest market and medium-term such as being fire retardant or having stability offers the largest opportunity for growth
Slide 21: HPP: Results
HPP : Results ZOTEFOAMS • REVENUE HPP – Growth of 15% 2013 2012 – ZOTEK ®F : fluoropolymer foams largest £000's £000's segment with growth mainly from Revenue 1,973 1,717 additional content at existing customers in Segment Profit 118 14 North America aviation – T-Tubes® : sales at similar level to 2
Slide 22: MEL
MEL ZOTEFOAMS Business Model Strategy • MEL licenses technology for continuous • Refocus of activities towards a more limited foaming number of segments with high potential, • Process : easy to retrofit to existing mainly in consumer packaging equipment. Uses CO2 or Nitrogen inert, 1. thin films env
Slide 23: MuCell Extrusion: Results
MuCell Extrusion: Results ZOTEFOAMS • REVENUE MEL – One legacy licence “paid up” in Q4:2012 2013 2012 – Excluding this, revenue increase 41% vs £000's £000's H1:2012 with increases from all segments Revenue 920 753 (licence fees, royalty, equipment and Segment Profit 46 165 engineering services) (be
Slide 24: Outlook
Outlook ZOTEFOAMS In our Azote® polyolefin foams business the first half of 2013 saw customers reduce their inventory holding, adjusting to our shorter lead times. These lead time improvements have also resulted in a shortening of our order book resulting in less certainty in the outlook for the yea
Slide 25: Appendices
Appendices iY ZOTEFOAMS 25
Slide 26: Financial History
Financial History ZOTEFOAMS Actual Actual Actual Actual Actual Actual Actual Actual Actual 2012 2011 2010 2009 2008 2007 2006 2005 2004 £m £m £m £m £m £m £m £m £m Sales 47.2 44.2 39.9 31.8 34.8 31.6 30.1 28.0 25.2 Sales growth 7% 11% 25% -9% 10% 5% 7% 11% 7% PBT (excl exceptionals) 5.9 5.5 4.7 3.2 3
Slide 27: Financial Track Record (12 months to December)
Financial Track Record (12 months to December) ZOTEFOAMS 5-year history • Progressive Dividend since 2010 300 • Earnings cover > 2 times 250 • Strong balance sheet 200 • Good operational cash flow Revenue 150 PBT • Growth alongside Dividend Yield 100 TSR 50 0 5-year history 2007 2008 2009 2010 2011
Slide 28: High performance products
Value Chain / Strategy ZOTEFOAMS Resources to educate, Exploit the develop & benefits of our support unique High performance products technology in gas saturation of high Polyolefin Foams value materials Resources to manage, Focus on support & develop Immediate opportunity Development focus Sales fo
Slide 29: Key Information
Key Information ZOTEFOAMS • Share price 212.5p (02/08/13) Shareholder profile* • Market Main Market • Ticker ZTF.L • Market cap. £84.6m • Ord. shares in issue 39,831,312 * Source: Investec Investor Relations (30/06/13) –29 29
Slide 30: Process
iY Process ZOTEFOAMS Zotefoams Plc process > mixing and extrusion * 4 a impregnation ( ee r expansion = 30
Slide 31: Trademarks
Trademarks ZOTEFOAMS ZOTEK® and Azote® are registered trademarks of Zotefoams plc MuCell® is a registered trademark of Trexel Inc. T-Tubes® is a registered trademark of UFP Technologies Inc. Pebaxfoam® is a registered trademark of Arkema Paccor® is a registered trademark of Paccor Deutschland GmbH 3