Slide 1: Interim Results 22 March 2022
1 Interim Results 22 March 2022 David Stirling Group CEO Gary McGrath Group CFO Presenters name AZOTE®® / ZOTEK® ®/ T-FIT® /®MuCell® T-FIT® AZOTE / ZOTEK / T-FIT / MuCell®
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: Introduction
Introduction AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 3
Slide 4: Business overview
Business overview EXTRUSION AUTOCLAVE TECHNOLOGY TECHNOLOGY POLYOLEFINS HPP MEL AZOTE® ZOTEK® T-FIT® MuCell® Premium durable foams Lightweight technical foams Technical insulation for industry Innovative and accessible Uniformly dense foam sheets with a Foams which offer superior A range of insulati
Slide 5: Strategy
Strategy “Our ambition is to be the world leader in cellular materials technology in our We intend to develop chosen markets” business through Overall, we believe our strategy is sustained high levels of organic sound and the ability to realign our growth and through business, to adapt to a rapidly
Slide 6: Results Summary
Results Summary Gross revenue Adjusted1 Adjusted1 Leverage ratio up 22% to £100.8m operating profit basic EPS down maintained at (2020: £82.7m) down 11% to to 9.31p 2.1x £8.4m (CC21: £104.9m (2020: 15.33p) (2020: 2.1x) (2020: £9.4m) • Exceeded £100m sales for the first time in the Group’s history an
Slide 7: Strategy summary
Strategy summary • We believe that plastics, used appropriately, remain the optimal solution both functionally and environmentally for our customers’ needs. • Strategy is built around a focus on sustainable organic growth • Rapid recovery in Polyolefin Foams demonstrates structural growth prospects
Slide 8: Segment overview
Segment overview Revenue by geography Revenue by business unit 2021 2020 Revenue by industry A well-balanced geographical and industry spread Recovery in all markets with a rebalancing away from the higher than normal level of medical sales in 2020, as expected (COVID PPE related), continued growth
Slide 9: Financial review
Financial review Financial review AZOTE® / ZOTEK® / T-FIT® / MuCell® 9
Slide 10: Abbreviated income statement
Abbreviated income statement • Significant revenue growth of 22%, or 36% £million Dec-21 Dec-20 Change excluding the 2020 PPE sales. Currency adverse impact £4.1m Group revenue 100.8 82.7 22% • Gross margin impacted by: Gross profit 26.6 27.8 (4%) • significant cost inflation in polyolefin foams raw
Slide 11: Statement of financial position
Statement of financial position Key observations £million Dec-21 Dec-20 Change • Recent capacity expansion plan complete • Working capital increase activity related Intangible assets 6.2 5.9 6% • Net deferred tax liability up due to accelerated Tangible assets 92.5 94.3 (2%) capital allowances on re
Slide 12: Statement of cash flows
Statement of cash flows £million Dec-21 Dec-20 Profit before tax 7.0 8.3 Depreciation 7.6 6.8 Other 1.9 1.0 Operating profit before movements in W/C • Cash generated from operations remains and provisions 16.5 16.1 strong at £12.8m, only marginally down Movement in receivables (1.6) 1.2 from 2020 Mo
Slide 13: Main cost headwinds: LDPE & Energy
Main cost headwinds LDPE & Energy LDPE • Low-density polyethylene polymer is the primary raw material for AZOTE® foams • Prices paid doubled in the six months to the end of June 2021 and remained high throughout the second half of the year • Prices are approx. 60% above the average price of the past
Slide 14: Other headwinds: Freight and Currency
Other headwinds Freight and Currency Freight • Zotefoams exposure in three main components • Sales: 30% freight paid by ZTF, 70% freight paid by customer (mostly HPP and USA) • Internal freight: movement between sites, mainly from UK to Poland/USA • Raw materials & WIP: mainly in respect of HPP prod
Slide 15: Business review
Business review AZOTE® / ZOTEK® / T-FIT® / MuCell® 15
Slide 16: Commercial overview
Commercial overview Markets and programmes • Recovery in all major polyolefin foam markets with the exception of aviation and automotive • PPE demand negligible as anticipated (2020: £9.6m, 12% of sales) • Footwear has performed extremely well and accounted for 34% of Revenue (2020: 26%) • ZOTEK® F,
Slide 17: Polyolefin Foams results
Polyolefin Foams results ® Common polymers made extraordinary by Zotefoams’ unique AZOTE process, creating premium, durable, consistent materials Revenue – up 10% Polyolefin Dec 21 Dec 20 Change Foams £m £m • Volumes up 39% (sales up 36%) when excluding PPE from Segment revenue* 56.2 50.9 10% compara
Slide 18: HPP results
HPP results ® ZOTEK® foams: retaining the attributes of high-performance polymers ZOTEK with the added benefits of consistent foaming T-FIT® T-FIT® high-performance insulation Revenue – up 41% (42% of Group sales) HPP Dec 21 Dec 20 Change £m £m • Footwear sales up 56% and represent 34% (2020: Segmen
Slide 19: MuCell Extrusion (MEL) results
MuCell Extrusion (MEL) results MuCell® microcellular technology Revenue & growth MEL Dec 20 Dec 20 Change £m £m • Resources redeployed from the traditional MEL licensing model while continuing to support existing Segment revenue 2.3 1.7 32% and in-progress licensing clients Segment loss pre (0.5) (1
Slide 20: Sustainability
Sustainability Appendices AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 20
Slide 21: ReZorce circular packaging
ReZorce circular packaging A MuCell Extrusion LLC development Positioning • The first fully recyclable beverage carton with performance to match current multi-material solutions • Five times less energy; 11 times less water; 50% lower Global Warming Potential 1 • 100% recyclable (up to 100% recycled
Slide 22: Sustainability
Sustainability Optimal material solutions for the benefit of society • Appropriate use of plastics meets functional and environmental needs: o Long-term use o Saves weight and fuel by making cars and planes lighter o Saves energy by insulating o Solves recycling challenges • Committed to reducing th
Slide 23: Our place in a lower-carbon economy
Our place in a lower-carbon economy Four aspects of our business will enable us to thrive in a lower carbon economy • Our nitrogen-based process o Our core high-pressure autoclave foaming process uses nitrogen borrowed from the atmosphere o Energy and raw material become the only environmental impac
Slide 24: Key messages & outlook
Key messages & outlook KEY MESSAGES: 2021 OUTLOOK Strong trading performance in a difficult Currently experiencing good demand environment, with continued momentum in across the business Footwear from H2 2020 and broad-based recovery in most polyolefin foam markets Price rises implemented and furthe
Slide 25: Appendices
Appendices Appendices AZOTE®® / / ZOTEK AZOTE ZOTEK®® / T-FIT® /®MuCell® ® / T-FIT / MuCell 25
Slide 26: Investment case
Investment case Sustained high levels of organic growth with margin enhancement through product mix and operational gearing Flexible core autoclave MuCell optionality: capacity for block investment in foam production customer base (AZOTE® & with long value tail ZOTEK®) Downstream HPP growth rates in
Slide 27: Overview
Overview Organisation Products Founded on innovation Polyolefin stretching back Foams to 1921 Environmentally friendly High- Nitrogen/CO2 A world leader Performance gas foaming in cellular Products processes Barriers materials to entry: technology IP, capital, Technology application licensing for sp
Slide 28: How our business works
How our business works Leveraging our unique technology with an innovation-led portfolio of advanced products • Starting with a core process o Proprietary three-stage process o Meaningful and sustainable competitive advantage • Making the best use of our assets o Running full and mix-enriching o AZO
Slide 29: Three stage process
Three stage process AZOTE® / ZOTEK® / T-FIT® / MuCell® 29
Slide 30: MuCell process technology
MuCell® process technology MuCell® technology produces foam that performs like solid plastic. It creates micro-bubbles in the centre of plastic extrusions by injecting gas into the melt during manufacture. Lighter Greener Lower cost cost AZOTE® / ZOTEK® / T-FIT® / MuCell® 30
Slide 31: Group overview - locations
Group overview - locations MuCell Extrusion HQ Zotefoams plc Zotefoams T-FIT Woburn, MA, USA Croydon UK Material Technology licenses MuCell® block foam main (Kunshan) Co. Ltd, technology to end-users manufacturing site China Zotefoams Poland, T-FIT ® products SP z.o.o., Brzeg manufacture foam manufa
Slide 32: Multi-year capacity enhancement now complete
Multi-year capacity enhancement now complete +60% Group capacity versus end 2017: well invested to support growth Brzeg Site: • Commissioned 2021 • Ideal logistics location • Flexible capacity, linked to UK site, to meet European customer needs Croydon, UK: largest site, AZOTE and all Brzeg, Poland:
Slide 33: Main markets & typical applications
Main markets & typical applications Product Transport Industrial Protection AZOTE® ZOTEK® MuCell® AZOTE® ZOTEK® T-FIT® AZOTE® ZOTEK® MuCell® Aircraft seats, seals Seals and gaskets Automotive seals, gaskets Marine hoses and fenders Luxury, fine art and museum Galley areas / window seals Cleanroom en
Slide 34: Market information and shareholder profile
Market information Share price 300p (16/03/22) Shareholder Profile* Market Main Market Ticker ZTF.L Market cap. £145.3m Ord. shares in issue 48,621,234 500 500 450 400 Traded volume ('000s) Share price (p) 400 300 350 200 Schroders 12.4% Canaccord 8.9% Invesco 8.4% Premier Miton 5.4% Highclere 5.1%
Slide 35: Board of Directors
Board of Directors Steve Good Non-Executive Chair Dr Alison Fielding Non-Executive Director (Chair of the Nomination Committee and member of the Remuneration (Chair of the Remuneration Committee and member of the Audit and Committee) Nomination Committees) Appointed to the Board in October 2014 as a