Zotefoams Plc · LSE:ZTF
Zotefoams — H1 2016 Earnings Presentation
43 slides from Zotefoams's earnings presentation, August 2016
Slide 1: Half Year Results 2016
Half Year Results 2016 David Stirling: Group CEO Gary McGrath: Finance Director
Slide 2: Important notice
Important notice 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 only at pers
Slide 3: Six months to 30 June 2016 Summary
Six months to 30 June 2016 Summary
Slide 4: Highlights
Highlights 2% increase in Interim dividend Group Revenue increased by to £27.07m 3% to 1.85 (2015: £26.49m) pence Operating profit Positive sales pre-exceptional momentum items increased A world leader in cellular going into by 5% materials technology second half of 2016 Adjusted profit Group focus
Slide 5: Contents
Contents Zotefoams is a world leader in cellular materials technology. Using a unique manufacturing process with environmentally friendly nitrogen gas expansion, Zotefoams produces lightweight foams in UK and USA for diverse markets worldwide. Zotefoams also owns and licenses patented MuCell® microc
Slide 6: Group Overview - Locations
Group Overview - Locations Zotefoams Plc MuCell Extrusion HQ Zotefoams Midwest Croydon UK Woburn, MA, USA Tulsa, OK, USA AZOTE® and ZOTEK® Licences MuCell Foam cutting technology to end users block foam manufacturing site Zotefoams Inc AZOTE AZOTE Asia Limited Walton, KY, USA Hong Kong AZOTE® block
Slide 7: Group Overview
Group Overview Revenue by Geography Revenue By Business Unit Polyolefins HPP MEL £millions 10% 21% 40% June -15 29% June -16 Continental Europe North America United Kingdom & Eire RoW - 5.0 10.0 15.0 20.0 25.0 30.0 Revenue by Industry 35% 30% Business Units 30% Business Units 25% 24% Polyolefin Foam
Slide 8: Zotefoams' Strategy
ZOTEFOAMS Zotefoams’ Strategy 7 Zotefoams’ strategy is to expand through a combination of profitable organic growth of our AZOTE® and HPP foams businesses, new customers for our MuCell® extrusion-technology licensing business, and through partnerships or acquisitions in related technologies, product
Slide 9: Contents
Contents 1. Group Overview 2. Results 3. Business Review Appendices Page : 9
Slide 10: Income Statement
Income Statement £ million June-16 June-15 % Change Group Revenue 27.07 26.49 2% Gross Profit 8.14 7.94 2% Distribution and admin expenses1 (5.31) (4.33) (23%) FX translation gains/(losses) 0.51 (0.44) Operating Profit before exceptional item 3.33 3.17 5% Net Interest/Joint Venture Loss (0.31) (0.16
Slide 11: Polymer (LDPE) Prices
Polymer (LDPE) Prices 1800 1600 1,392 1400 1,240 1200 €/tonne 1000 800 600 400 200 0 P&L Cost Spot Price • P&L impact up 15% Y-on-Y at the half year Page : 11
Slide 12: Free Cash Flow
Free Cash Flow £ million June-16 June-15 Operating profit (pre exceptional item) 3.33 3.17 Depreciation, impairment & amortisation 1.78 1.73 Working capital 0.34 0.28 Pension contributions (0.33) (0.33) Other (0.18) 0.14 Cash generated from operations 4.93 4.99 Tax & interest paid (0.82) (0.41) Net
Slide 13: Cash Flow and Net Debt
Cash Flow and Net Debt £ million June-16 June-15 Free cash (out)/inflow (3.89) 1.22 Repayment of borrowings (0.46) (0.38) Dividends (1.66) (1.62) £ million June-16 June-15 Other 0.29 (0.14) Net (debt)/cash (0.32) 3.71 Net cash used (5.59) (0.92) Borrowings (6.91) (1.85) Net (debt)/cash (7.23) 1.86 N
Slide 14: Balance Sheet
Balance Sheet £ million June-16 June-15 Investments in joint venture 0.16 0.34 Intangible assets 7.22 6.79 Tangible assets 41.98 29.78 Net working capital 16.91 16.50 Retirement benefit obligations (7.62) (5.91) Deferred tax, net 0.17 (0.40) Tax payable (0.44) (0.49) Net (debt)/cash (7.23) 1.86 Tota
Slide 15: Contents
Contents 1. Group Overview 2. Results 3. Business Review Appendices Page : 15
Slide 16: Zotefoams
| YQ ZOTEFOAMS
Slide 17: AZOTE Polyolefin Foams
AZOTE® Polyolefin Foams High quality foams from a variety base polymers all manufactured using the same nitrogen expansion process Structure: AZOTE® Polyolefin Zotefoams has foams are largest market consistent, share in UK, EU lightweight & pure and North AZOTE® foams Process: core American markets
Slide 18: AZOTE Polyolefin Foams
AZOTE® Polyolefin Foams High quality foams from a variety of base polymers all manufactured using the same nitrogen expansion process Sales growth of Product line AZOTE® foams to extension in specific exceed twice the sub-segments, where average rate of Zotefoams has a global GDP growth lower market
Slide 19: AZOTE Polyolefin Foams: Results
AZOTE® Polyolefin Foams: Results Revenue • Underlying volume estimated +4% offset by customer destocking • Strong performance in UK +9% Polyolefin Foams June-16 June-15 % • Continental EU volumes -5% £m £m Change • Asia volumes -25% Group Revenue 22.79 22.09 3% • North America +9% volume with added
Slide 20: HPP
| X ZOTEFOAMS
Slide 21: HPP: ZOTEK and T-FIT
HPP: ZOTEK® and T-FIT® High performance foams manufactured from advanced materials ZOTEK® HPP foams T-FIT® advanced are manufactured from insulation raw materials offering manufactured from enhanced properties ZOTEK polymers Properties: fire Process: core high- retardant or having pressure nitrogen
Slide 22: HPP: ZOTEK & T-FIT
HPP: ZOTEK® & T-FIT® High performance foams manufactured from advanced materials ZOTEK® F Increase fluoroploymer Penetration of foams for aviation existing market remains the largest such as aviation & market clean-room ZOTEK® PEBA insulation energy New management Opportunities foams primarily for r
Slide 23: HPP Results: Sales History
HPP Results: Sales History 12 months ended 30 June 9,000 8,000 7,000 6,000 5,000 £000s Jan to June 4,000 July to Dec 3,000 2,000 1,000 - 2009 2010 2011 2012 2013 2014 2015 2016 Page : 23
Slide 24: HPP Results
HPP Results HPP June-16 June-15 % Change Revenue £m £m • H1:2016 sales impacted due to timing Group Revenue 3.17 3.39 (7%) • 12 months to 30 June 2016 2016 £8,046k (2015: £7,251k), 11% growth Segment profit pre- 0.30 0.67 (55%) • Strong second half with full year 2016 amortisation “orders + invoiced
Slide 25: MuCell
MUCELL® | YQ ZOTEFOAMS
Slide 26: MuCell Extrusion Business Model
MuCell Extrusion Business Model MUCELL® technology is a remarkable patented process that creates “micro-bubbles” in the core of plastic parts or products Process: easy to MEL licenses retrofit to existing technology for equipment. Uses continuous foaming CO2 or nitrogen. Both are inert, environmenta
Slide 27: MuCell Extrusion
MuCell Extrusion MUCELL® technology is a remarkable patented process that creates “micro-bubbles” in the core of plastic parts or products Focus of activities towards a limited number of segments Machinery sales with high potential, are enabling mainly in consumer technology packaging Consumer Strat
Slide 28: MuCell Extrusion: Results
MuCell Extrusion: Results MEL June-16 June-15 % Revenue £m £m Change Group Revenue 1.11 1.01 10% • Further 11 lines installed at licensees bringing total installed base to 99 Segment loss pre (0.24) (0.22) (9%) • Co-operation with The Dow Chemical amortisation Company related to 2016 Rio Olympic Amo
Slide 29: MuCell Extrusion: Equipment Base
MuCell Extrusion: Equipment Base 2015 as at 31/12/2015, 2016 as at 30/06/2016 21 16 10 13 14 14 19 20 3 4 12 12 9 9 5 6 FILM FILM BLOW BLOW SHEET SHEET SPECIALITY SPECIALITY 2015 2016 MOULDING MOULDING 2015 2016 2015 2016 2015 2016 Units in use Units not in use Page : 29
Slide 30: Business Review: Other
Business Review : Other | X ZOTEFOAMS
Slide 31: Group Investment
Group Investment Autoclave technology used for both AZOTE® and ZOTEK® foams. Investment in Kentucky & Croydon capacity based on demand expectations. Kentucky, USA investment in capacity scheduled for commissioning H1:2017 New sites in Oklahoma, USA operational. Kunshan, PRC expected to be operationa
Slide 32: NEW - 3D Foaming
NEW - 3D Foaming FLEXIBLE AND EFFICIENT TECHNOLOGY FOR HIGH-VOLUME 3D SHAPES UNIQUE TECHNOLOGY ENHANCEMENT • 3D foaming of the initial non-foamed shape allows efficient utilisation of raw materials and reduction (or elimination) of processing after the foaming step. • Particularly suited to higher-c
Slide 33: Kentucky, USA Investment
Kentucky, USA Investment GLOBAL CAPACITY INVESTMENT EXPANSION IN GROUP ON EXISTING CAPACITY FREEHOLD TO SUPPORT GROWTHSITE FURTHER INVESTMENT & REAFFIRMATION OF PLANNED START-UP Project scale extension by adding a second high-pressure autoclave • Underpins investment in KY site • Ability to deliver
Slide 34: Capex Investment
Capex Investment An international business delivering significant growth through organic expansion and leverage of our unique technologies INVESTMENT TO SUPPORT GROWTH £0.90 • Investment over 4 sites globally £1.10 • Kentucky, USA main focus • Two business start ups £4.10 £0.40 • UK balance of capac
Slide 35: Current Trading and Prospects
Current Trading and Prospects In our AZOTE® Polyolefin foams business, where customers are predominantly based in the UK and continental Europe, the softening of orders experienced in June 2016 has continued into July 2016, whereas demand for August 2016 looks strong by comparison to previous years.
Slide 36: Outlook
Outlook We enter the second half of the year with a good order book, a strong product portfolio, growth expectations in all business units and the benefits of the weaker Sterling. Whilst recognising the significant uncertainty resulting from the macro-economic backdrop, the Board remains confident i
Slide 37: Appendices
Appendices | X ZOTEFOAMS
Slide 38: Zotefoams Process
Zotefoams Process Stage 1: High quality extrusion and cross-linking of solid polymeric sheet Base resin and additive ingredients are fed into an extruder. This produces a wide, continuous sheet of crosslinked plastic, from which precise size slabs are cut. Page : 38
Slide 39: Zotefoams Process
Zotefoams Process Stage 2: Impregnation and saturation The extruded slabs are loaded into a high pressure autoclave. The plastic is heated above its softening temperature and subjected to a high pressure dose of pure nitrogen. Page : 39
Slide 40: Zotefoams Process
Zotefoams Process Stage 3: Expansion The nitrogen charged slabs are loaded into a low pressure autoclave. The material is again heated above its softening temperature under a moderate air pressure; then the pressure is removed. Without the pressure, the nitrogen expands, physically foaming the soft
Slide 41: Value Chain / Strategy
Value Chain / Strategy Page : 41
Slide 42: Financial History
Financial History Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual £million 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Group Revenue 53.9 48.9 44.6 47.2 44.2 39.9 31.8 34.8 31.6 30.1 Revenue Growth 10% 10% (6%) 7% 11% 25% (9%) 10% 5% 7% PBT (excl exceptionals) 6.0 5.3 3.9
Slide 43: Market Information
Market Information Share price 265.0p (29/07/16) Market Main Market Ticker ZTF.L Shareholder Profile* Market cap. £117.7m Ord. shares in issue 44,414,440 380 1,000 360 900 800 340 700 Traded volume ('000s) 320 Share price (p) 600 300 500 280 400 260 300 240 Miton 13.9% BlackRock 13.6% 200 Schroders