Zotefoams Stock

Good afternoon, and welcome to the Zotefoams plc investor presentation. [Operator Instructions]

Before we begin, I would like to submit the following pool. I would now like to hand you over to Ronan Cox, CEO. Good afternoon, sir.

Thank you very much, Lily, and good afternoon, everyone, and thank you for joining us for the Zotefoams's 2026 Interim Results. I am Ronan Cox, Group CEO, and I'm joined here by Nick Wright, our Group CFO. Today, I'll begin with the business performance and the strategic context. Nick is going to take you through the financials in detail. We'll cover the strategic progress together, and I will close on the outlook before we take your questions.

So if we go to the next slide, please, Lily. I'll take the disclaimer as read, and then we move on. And just quickly on business performance, let me start with how the business performed in the first half. And if we go on again, Lily. Next slide, please. Thank you.

So the first half really shows diversification and disciplined execution working together. That is the key message here. Sorry, I think that we are probably a few slides ahead. Can we go back, Lily, please?

Yes. There we go. That's the one. Thank you. So diversification and disciplined execution working together. Group revenue was up 23% to GBP 95.2 million. It's really important to be clear about the quality of the growth. It includes the first full half year contribution from OKC, and that was acquired growth. So on an organic basis, revenue grew by 4% or 6% on a constant currency basis.

And the important point is that growth was broad. And non-footwear markets were particularly strong with doubling of Asia and the contribution of OKC together more than offset that footwear normalization that we have been signaling for quite some time after an exceptional run starting at around about Q4 2024 following the whole way through in 2025, that normalization has come in 2026 and H1. The mix that we've seen in H1 is why profitability has improved. Adjusted operating profit was up 34% to GBP 16.3 million. And the adjusted operating margin improved 130 basis points to 17.1%. Adjusted earnings per share were up nearly 29% and the balance sheet is really strong with leverage sitting just about 1x and a new GBP 90 million multicurrency revolving credit facility is in place.

And indeed, we have increased our interim dividend by just over 5%. In short, what I would say is that the group has absorbed really significant footwear normalization, but still delivered really strong revenue and profit and margin growth. For me, this is the proof point of the strategy.

And if we go to the next slide, please, then. And this is a brief reminder of that strategy and a brief reminder of where we are going. So expanding beyond the core is moving from execution to impact. So the strategy that we laid out as much as 1.5 years ago at our Capital Markets Day is now starting to have impact.

Health and safety remains the foundation of everything that we do around it sits our priorities. But with so much going on across the group, as I said, health and safety is incredibly important for us as we're installing batteries, upgrading facilities. It is our #1 priority. And as I say, around that, our priorities are about getting closer to customer, around driving innovation and sustainability leadership with a much sharper industry and customer focus and then driving that disciplined M&A beyond the core with high-performing teams. I think the thread that connects all of this is the shift from selling a product to serving industries, moving up the value chain and building capability closer to where our customers are.

So if we then start to go into the different regional performances, we go to the next slide, please. Thank you. We're going to start with EMEA. EMEA delivered record revenue, up almost 20% with non-footwear growth more than offsetting the anticipated footwear normalization that I mentioned earlier. Transport and Smart Technologies really continue to build on strong momentum that we've seen towards the end of last year, including a growing aerospace and indeed a growing space business, which are both key drivers for the underlying growth. That footwear normalization was as expected after that exceptional demand that started in and around Q4 2024 and continued the whole way through 2025.

Revenue was GBP 28.5 million in footwear. So it was not insignificant, but that was down 23%. The one thing I really want to stress is that the long-term opportunity in footwear is intact and indeed, the shift of production to Vietnam is central to that long-term growth opportunity. OK Company contributed just under GBP 15 million in its first full half, and that was ahead of plan, and it was earnings accretive with some early cross-selling wins being registered in H1. Margin improved modestly to 22.8%, reflecting really good cost discipline. There was some partial offset from mix and wage inflation and indeed higher input costs with some of the headwinds that we've seen from the conflict in the Middle East.

But again, great discipline to see those margins nudging up. And our Global Innovation Hub at Croydon is progressing at pace. This is going to strengthen the research and development of the innovation that supports all of the group growth. If we go to the next slide, please, Lily. And touching on North America. North America really was a standout with revenue up 29% and the segment margin up a whopping 930 basis points to 17.6%. So growth was broad, and it was across both Transport and Smart Technologies and Construction & Other Industrial. And new business and key account wins were really important here.

And on top of that, we had record manufacturing output growth at both Walton, which is in Kentucky and Tulsa and Oklahoma. You'll see one of the pictures there is celebrating the opening of the LP2 investment with the Lieutenant Governor in Kentucky. We did that last month. So that big investment that we went through in '25 and started to commission properly in '26, really taking traction and helping us significantly. Also in North America, we've got a fully reshaped commercial organization that in of itself is driving stronger customer engagement and it's really helping us to grow the commercial pipeline here. I would also say that the margin step-up reflects the new operational leadership that we have in North America.

So fundamentally better performance out of the factory with higher volumes, better mix, stronger operational gearing. And that operational gearing, we've said for a very long time. Gearing in our factories is really important. Volumes really help the profitability. And that was helped by that second low-pressure vessel that, as I said, is now fully operational, and we commissioned it fully in the last couple of months.

So moving to the next slide, please, on Asia. Asia is and continues to be a small business today, but it is strategically very important for us. Even with the existing small business there, revenue more than doubled to GBP 3.9 million, driven principally by that construction and other industrial demand. Most of the legacy demand in Asia is around that Construction & Other Industrial market coming from T-FIT, mainly in China and indeed in India. But the bigger story is the platform that we're building in Asia. The bigger story is the Vietnam footwear facility, and that is very much on track for first stage trial from October, so in a couple of months' time.

Autoclaves are on site. I'll come into more detail on Vietnam later in the presentation, but you'll see a picture here. There will be a bigger picture later on in the presentation. Autoclaves are on site. And the South Korea Footwear Innovation Center has been opened. It is operational. It's already hosting customers, deepening collaboration with those key customers and footwear partners. So still more installation to do there, and I'll touch on that as well later in the presentation, but still already incredible progress.

And then if we turn to the next slide, please, Lily, touching on vertical performance. The profile of the business is more balanced. So what we've seen is Transport and Smart Technologies growing by 76% from the largest vertical, as I said, supported by those sort of industries like aerospace, space, automotive. And then we have Construction & Other Industrial, which grew 41%, the largest part of that growth coming from North America and a reasonable amount coming from that doubling of sales coming in Asia.

Consumer and Lifestyle was down 19%, and that is the full reflection of the normalization of that footwear demand after that 2025 exceptional run. The long-term opportunity remains in Vietnam, and that is really, really important. We are still very confident. We're not stepping away from that. So that long-term opportunity still exists and will be realized as we commission and optimize the facility there. This rebalancing of the portfolio is exactly the strategy that we put in place, and it is exactly the strategy actually starting to deliver. This is what we designed, and this is what we are achieving what we designed.

So with that context, let me hand over to Nick, who's going to take you through the financials in more detail. Over to you, Nick.

Thank you, Ronan, and good afternoon, everyone. If we go to the next slide, 2026 has started well with a strong performance that demonstrates the growing breadth and resilience of our business. Ronan has already covered revenue and adjusted profit. So in terms of a few other key items on this slide, adjusted profit before tax increased 34% to GBP 15.3 million. Adjusting items totaled GBP 1.3 million, GBP 0.9 million of this is noncash amortization of acquired intangibles. Adjusted earnings per share increased 29% to [ 25.7p ]. And finally, we have proposed an interim dividend of [ 2.63p ] per share, an increase of 5%.

These headlines reflect the momentum in our business and the benefits of diversification alongside disciplined execution. So let me take you through the financial performance in more detail on the next slide. Group revenue increased 23% to GBP 95.2 million. But more significantly, gross profit grew 26% to GBP 33.9 million, demonstrating strong cost control. This includes our rapid response to the conflict in the Middle East. The war in Iran has resulted in higher raw materials and transport costs, which we have passed on to customers through surcharges. We have also experienced some supply chain disruption, although none of our goods go through the Strait of Hormuz.

Our customers' top priority is typically security of supply. So we've safeguarded that by investing in raw materials where necessary. Gross margin improved 100 basis points to 35.6%. This benefited from the OKC contribution, price increases and surcharges, partly offset by higher raw materials, utility and freight costs and wage inflation. SG&A expenses increased to GBP 17.6 million, largely reflecting the inclusion of OKC as well as the build-out of teams in Asia and innovation. Looking at the breakdown by region. Operating profit in EMEA increased 22% to GBP 16.8 million with a margin of 22.8%.

This was driven by OKC and a strong non-footwear performance, partly offset by the normalization of footwear, which was down 23% following exceptional demand last year.

In North America, operating profit almost tripled to GBP 3.3 million with margin improving to 17.6%. The second low-pressure vessel is now fully operational. This gives us additional capacity to process higher volumes at marginal cost, driving strong operating leverage. Operating profit in Asia improved to GBP 0.5 million from breakeven last year, and this was driven by Construction and Other Industrial demand in India and China. Asia also absorbed the first half start-up costs incurred in Vietnam and Korea, and we expect Asia to become materially more important as Vietnam comes on stream.

Looking at the right-hand side of the slide, net finance charges increased to GBP 1.1 million, reflecting higher average borrowings following the OKC acquisition and our ongoing investment in Asia. Adjusted profit before tax increased 34% to GBP 15.3 million. The tax charge was GBP 2.4 million, an effective tax rate of 15.7%. This is up from 14%, reflecting lower tax deductions from patents and the addition of OKC, which is taxed at 25%. This resulted in adjusted profit after tax of GBP 12.6 million, up 29%.

Turning now to cash generation and our balance sheet on the next slide. Cash generated from operations was GBP 8.2 million compared with GBP 15.8 million last year. This is a year of strategic investment, which reflected in both working capital and capital expenditure. Net working capital increased by GBP 14 million. Around half of this reflects higher inventory in the U.K. and U.S., both to maintain customer supply and to manage the transition of footwear from the U.K. to our new site in Vietnam. Receivables also increased due to normal seasonality in OKC and higher activity levels in the U.S. We continue to focus on managing working capital across receivables, payables and inventory.

CapEx of GBP 7.2 million mainly relates to investment in Asia and the innovation hub in the U.K. Return on capital employed was 15.8%. Net debt increased to GBP 39.1 million from GBP 31.5 million at the year-end, and this reflects our strategic investments and the deferred consideration paid on OKC. Despite this, our leverage ratio remains below 1x, well below our target of 2x. Following our refinancing in January, we have a new GBP 90 million multicurrency revolving credit facility, giving us liquidity headroom of GBP 50 million.

Turning now to the movement in net debt on the next slide. We started the year with net debt of GBP 31.5 million. We generated GBP 8.2 million of cash from operations, invested GBP 7.2 million in CapEx and paid GBP 3 million of deferred consideration on the OKC acquisition. A further GBP 3 million is expected in October with the final GBP 1.3 million in the first half of next year, contingent on OKC delivering its targets. We paid net interest of GBP 0.7 million, tax of GBP 1.4 million and returned GBP 2.6 million to shareholders in dividends. Finally, there was a net outflow of GBP 0.9 million from other items, bringing closing net debt to GBP 39.1 million.

So before I conclude, if we move to the next slide, let me remind you of our approach to capital allocation. We deploy capital to drive long-term sustainable growth and create value for our shareholders, and this slide sets out our priorities. First, we are investing in geographic expansion and product innovation, particularly in Asia and the U.K. We are also building a scalable platform to drive efficiency and improve return on capital employed, and this includes digitalization and the deployment of AI. Second, we intend to maintain our progressive dividend policy. And third, we have a disciplined approach with high hurdles for acquisitions in line with our strategy. And fourth, we will return any surplus capital where this represents greater value for shareholders.

So in summary, we've delivered strong revenue and profit growth despite the normalization in footwear as we continue to diversify and grow the wider business. We are pleased that OKC is performing ahead of plan. We're making good progress with our strategic investments in Vietnam, South Korea and the U.K. And we've achieved this while maintaining a strong balance sheet with leverage below 1x and significant liquidity headroom.

Thank you very much, and I'll now hand back to Ronan.

Great. Thank you, Nick. We go to the next slide, please. I'm just going to spend a little bit of 5 minutes just talking through strategic progress. So if we go to the next slide, I think the first round of progress is around diversification. Transport and Smart Technologies and OKC are actually driving growth and more than offsetting that footwear normalization. As we mentioned earlier, OKC has contributed just under GBP 15 million in its first full half year, well ahead of plan, and it's an early proof point for disciplined value-accretive M&A. Our approved partner network continues to roll out across both North America and EMEA.

And then the cost discipline and productivity gains together with much stronger profitability in North America are really supporting the margins whilst footwear margins are temporarily moderated.

If we go to the next slide, and we'll delve into Vietnam. This is the second strand, which is really all about getting closer to the customer. Vietnam, this gives us in-region, scalable footwear optimized manufacturing with a much shorter lead time and a factory that is designed and bottom up for sustainability. We've received all of the permitting required in the business, all of the construction licenses. We started to receive machinery. You see some pressure vessels there in the picture.

Hiring is accelerating. And the first injection molding machine has been delivered on site and trials being run through that lab equipment goes in this month. And the first autoclaves that are already there are going to be fully commissioned in September with the first stage trials of product going to our customer to begin in October. And that's really about proving out the efficacy of the whole manufacturing process there. So incredible progress in that facility that's really risen out of the ground and is substantial in nature now. So all on track, which is excellent progress in H1.

If we go to the next slide, alongside Vietnam, then we have the South Korea Footwear Innovation Center. And actually, the 2 are completely intertwined. There is no point in doing one without the other. Vietnam needs the innovation center in South Korea to actually make it viable long term to feed it with the innovations that are going to help us get more platforms in the future. So that innovation center accelerates our supercritical foam material development and shortens those footwear development cycles. And we work in this innovation center alongside the key partners. And those are the key partners that are -- they're essentially the Tier 1 shoe manufacturers. The people that work directly with our materials. So at that innovation center, the construction is complete. First injection molding machine is in situ.

Almost all of the lab equipment has been installed there. And indeed, we have already been hosting our customers there and the large autoclaves with super high pressure ranges, they're coming in 2027. But that facility is already hosting people, hosting Tier 1 manufacturers who were helping work with new models and new designs for our customers.

And then if we go to the next slide, I'm going to hand over to Nick, who's just going to talk you through the U.K. business.

Thank you, Ronan. So turning to our U.K. business. We have continued to invest in automation and process improvement in Croydon. As footwear transfers to Vietnam and we make greater use of our facility in Poland, our U.K. site will carry a higher fixed cost base than the business needs. So today, we have announced proposals to optimize our U.K. business across all functions. This means that Croydon will focus on materials innovation and non-footwear applications for the other 6 key industries. And I want to be clear that we remain committed to our U.K. manufacturing base in Croydon. Croydon is also home to our global innovation hub, which is progressing at pace.

The Board has approved starting a collective consultation process, which is expected to affect more than 100 roles. These are proposals at this time. No final decisions have been taken and no decisions on individual roles will be made until the consultation has concluded. And our priority is to consult openly and fairly and to support our colleagues throughout the process. Subject to that consultation, we expect the changes to deliver annualized savings of around GBP 4 million with payback of under a year. The associated one-off costs, including the redundancy and impairment of plant that's no longer required will be treated as adjusting items. These do not change our adjusted expectations for the full year.

I will now hand back to Ronan, who will cover our investment in AI and our outlook. Over to you, Ronan.

Brilliant. Thank you, Nick. And as Nick alluded, the final strand of our investment strategy is around AI, which is now starting to drive productivity, innovation and growth rather than sitting on the side of the business. Our customer tools powered by the ZoteIQ engine are already generating leads and giving customers high accuracy material recommendations. This is available on our website today. And then we have ZoteLabs, which is in its beta version, and I'll dig into a bit more detail in a moment, but this is accelerating material innovation through AI-driven recipe design, feasibility scoring. And this is drawing on more than 2.1 million technical files and more than 6 million academic and patent papers.

AI is also active in operational planning now in the business. It's improving forecasting. It's improving production efficiency. And all of this is done with a really robust governance framework with our black wall protection ensuring it is secure and responsible. And to bring this to life, I'm going to try to bring it to life with a very short video clip with ZoteLabs in action. If we go to the video. So ZoteLabs, we've developed -- it's a proprietary AI platform that brings together over 100 years of technical knowledge, more than 2 million internal files, millions of scientific publications into a single connected system.

We've got Forge. This helps engineers explore new formulations and concepts, and it accelerates early-stage development while capturing really valuable technical expertise and reasoning. The great thing is that with a single click, we can take data from Forge and we can push that into what we call Bench, which is carrying for that design intent and assumptions and rationale. This allows specialist agents to build on each other's work. And we've got an application selector and this application selector really helps them identify opportunities and support customer conversations faster and with greater confidence.

And we also have then Academy, and this gives our team the ability to explore those millions of scientific publications in a single environment, helps us discover knowledge and insights at scale that honestly otherwise would have been impossible for the business. And then finally, an area of great impact for us is Gas Lab and Permeate. So our most expensive assets are our gassing equipment. And this is using AI modeling to help reduce unnecessary trials and accelerate this development. Permeate. enables the platform to continuously grow by bringing new knowledge into the system under expert oversight.

Together, these capabilities create a platform that protects institutional knowledge, accelerates innovation and actually improves our business with every single interaction. And that's ZoteLabs, it's built today. It's delivering value now and it's creating a more competitive advantage for the future right now.

So moving to outlook. We go to the next slide, please. So our first half really underpins our confidence in the full year and indeed in our medium-term ambition. Our full year expectations are unchanged, and the continued momentum supports the delivery in line with market expectations. The business is broader and more balanced with non-footwear, OK Company and Asia offsetting the footwear normalization. And the margin progression is supported by that disciplined execution and a materially stronger North American profitability.

The strategic investments in Vietnam, South Korea and indeed the U.K. Global Innovation Hub are on track. And as you've heard from Nick today, we have set out proposals, these are still just proposals to optimize our U.K. business alongside the buildup of Vietnam and the greater use of Poland and the continued investment in innovation, automation and process improvement. It's the right steps to keep the U.K. footprint for the long term. This is about continued investment in our U.K. manufacturing business. This is getting the right footprint for the future.

On footwear, I want to be really straight with you. As the production transfers to Vietnam and as we move from foam shape to 3D preforms, we expect footwear revenue to be lower in the second half of 2026 and indeed into 2027 before recovering from 2028. This is not unexpected. This is a planned transition. It is not a change in the long-term opportunity. We remain very confident in the medium-term ambition of revenue above GBP 230 million and operating profit above GBP 40 million by the full year 2029. So while the timing of profit progression will reflect that transition, we are increasingly confident in the materially stronger value creation from 2028 onwards. So that's the presentation.

With that, Nick and I will move over to take your questions.

And I see that we've got quite a few in. So let me just have a quick scan through and we'll just go top to bottom, first come, first served. So first question is, will pretax profit be flat in 2027 compared to 2026 due to lower footwear sales and margins balanced by growth in other areas and by cost cutting in the U.K.?

Thank you, Ronan. So we are at the very start of our planning process for 2027 in terms of going through our 3-year -- 5-year plan and moving into our budget process. And therefore, we have not given formal guidance for 2027. That said, we are very cognizant of '27 being a year of transition for the reasons that Ronan has highlighted. But I would hope there would be some modest progress in terms of profitability between 2027 and 2026, but we're in the process of finalizing those plans. As Ronan said, it is a year of transition, and that will be reflected in those plans.

Thanks, Nick. Next question, will the expansion in Vietnam move the revenue concentration back to footwear? Or do you think the foundations away from footwear will grow equally?

We want to grow both, that's the bottom line here. Footwear, there's an amazing opportunity, but the strategy is now set that a development of the business in Vietnam, I think it's a key. I can see that business growing materially, but we've also got great avenues for growth in the rest of the business. So we want to grow both. And the success of having a more balanced business, I think that that's the way that we would like to be. But that doesn't mean that we hold back footwear. We press on footwear and we press on everywhere else at the same time.

And what is the current spare capacity in the U.S.A.? And do you have line of sight filling that capacity?

The capacity is very much dependent on mix. I think that what we have consistently said is that we believe that we could double the revenues in the U.S. so taking it very close to $100 million without having to invest significantly. We think the big pieces of investment have already been made there.

So the next question is your 2029 forecast for sales of GBP 230 million, operating profit of GBP 40 million. Does this forecast include M&A?

So no, it doesn't. M&A would layer on top of that.

And why are you confident of 17.4% operating margins?

Well, I think that we can -- a lot of our business is about getting operational gearing. I think we're rightsizing our facilities. And when we optimize, we've got experience with those sort of margins, and we're confident that we can maintain those.

And where do you expect footwear operating margins to reach in 2028 compared to, say, H1 2026?

I think that's getting to a level of granularity we prefer not to get to, and simply because it can be identified down to one single customer. I think that we can have very healthy margins and give great value at the same time to our key customer there. So I am confident that, that move to Vietnam will be very successful for that business.

How do non-footwear operating margins normally compare to footwear operating margins?

Nick, do you want to answer that?

Yes. So across the range of products outside of footwear, we have a wide range of margins, is the truth. So some are higher margins than footwear and some of those product ranges are lower. So it really is a range. And you can see that the non-footwear growth in the first half, we have also as well as growing that non-footwear revenue, we've managed to improve our margins. So overall, it is very much, as Ronan highlighted before, mix dependent, but we are confident that there's good opportunities to grow the non-footwear business and to grow that and have good margins in non-footwear as well.

Okay. Next question is when do you expect footwear operations to run smoothly? So I assume that means that footwear operations in Vietnam by June 2027.

I think that we've made incredible progress at commissioning machines, first testing in October. Real sort of production will start towards the end of Q1, middle of Q2 next year. That's dependent on the programs that we focus in there. It normally takes a factory a good amount of time to operate and optimize. So I think that will be up and running with initial production in June '27. It's going to take through the whole of 2027 to optimize. In fact, I think that we will be optimizing that factory forever as most factories do.

I think the main learning is going to take us the whole way through 2027. And that's why we very much describe footwear in 2027 as a year of transition. The first partnership that you make is always a little bit more expensive. The second one is better, the third one is better and better and you optimize. And it's no different if you're making [ midsoles or ships ]. So we'll use all of 2027 to optimize. I think that by the time we get to the end of '27, we'll be in a good place. But I would imagine optimization will be -- it will be a case of continuous improvement forever.

Okay. Having customers in the Korean development facility, is this outside of the exclusive deal?

No, it's not. It is when we talk about customers, our direct customers in the footwear industry are the Tier 1 producers for Nike, with whom we have the exclusive contract. They are very, very important in the supply chain. They are very important as development partners. Nike don't make any shoes, they make all the shoes. So actually, this is coming together really, really close as a component supplier with all of those Tier 1. And that's what we use a development center to do because we work together to design -- now to design and help with the design of new models and bring new fantastic foams onto those shoes. So that is what we focus on.

Okay. And the like-for-like sales of 6%, how much of this growth is volume? Do you want to describe the big volume movements there?

Nick, do you want to describe that?

Yes. So it's very -- as we've talked, it's all about mix. So volumes in both our EMEA factory in the U.K. and Poland and the U.S. this first half have been very, very high. So we've been producing at record volumes. So in terms of replacing some of that footwear with non-footwear revenue, some of that is at lower margin and therefore, higher volumes. So there's quite a lot of increased volume that's gone through the business in the first half, but we've also benefited from price and also from the surcharges I've mentioned as well.

Excellent. Okay. Next question is, can you see the Nike Group recovering in 2027 and why?

So I wouldn't really comment on Nike itself. I don't think that would be appropriate. What we see is that the running sector, the running shoe sector within Nike remains very strong and competitive. We believe in winning with the winners, and we see Nike as a winner. And as the single largest footwear brand in the world, I think that we're very happy that they're the people that we're working with at the moment. So...

Okay. Next question, specific to the Croydon facility, there has been significant investment in Croydon during the last 10 years. Does the repurposing mean that the equipment will be redundant? If so, can they be repurposed or sold? Or will the cost be written off?

I think the first thing just to really stress is that the discussions around Croydon are only proposals. Should those proposals go ahead, we still think that the Croydon facility is a fantastic facility. We're just focusing on making it fit for the future. We would see that we will continue to use much of the equipment there. And anything that we didn't, I would have thought if the proposal went ahead that we could find other ways to use it. So as I said, these are only proposals at the moment. But Croydon as a site [indiscernible]

And the next question is, what is your plan for the site in Croydon?

First, we've got a wonderful workforce there. We're consulting with them on these proposals, and we will treat them with great dignity and respect as we go through that. We see a long-term future for that site. Today, it exports a huge amount of its material. Tomorrow, it will be innovating and making different products, I would suggest some of it created in the innovation hub in Croydon and servicing its customers closer to that base.

I still see an ongoing role for the Croydon site. We've got, as I said, great people, great equipment. And what we are proposing to do is to work with our colleagues to make it even better to make sure -- we've been on Croydon for over 90 years. We have a business for over 100 years old. We see it still a long and we want to have a long future for the Croydon facility. We wouldn't be putting our innovation center on that site if we didn't have faith in the future.

Great to see the updates on Vietnam and Korea. Can I suggest you formally share more updates on the positive progress incrementally as it occurs rather than just in results?

Fair point, we'll think about that. We do concentrate all of our updates really with our customers. So we think about how we might do that. It might be commercially sensitive to do that beyond this. But let me take it away and think about that. We can certainly post more stuff on the likes of LinkedIn as we're there to show those machines come on board. So maybe that will be the format.

Nick, this is a perfect one for you just by reading the first 2 words. You said net debt. So net debt has continued to rise despite the improving profitability, largely due to higher working capital. Can you quantify how much of this is increase -- how much of the increase is temporary and linked to the Vietnam transition and when investors should expect working capital to normalize and net debt to begin falling.

Nick, over to you.

Yes. So it's a great question. So in terms of the working capital movement, as I said in the presentation, about half of that relates to inventory. And of that, just slightly over half relates to footwear. The other half of that is really about making -- it's about a combination of the increased activity levels in North America and making sure that we can secure supply for our customers. So that is our customers' top priority that they can see security of supply in the current situation.

I would expect that we will be carrying higher levels of working capital as we manage that transition from the U.K. to our new facility in Vietnam, probably throughout the rest of this year and through 2027. It's actually important that we make that transition a success and a key to that success is making sure that we at all stages continue to meet the needs of our customer with product, and that's what we're committed to doing to support them through that transition. So I expect that working capital will be high throughout 2027 as we manage that transition and then we'd expect it to normalize.

Perfect. Last question is how is the partnership with Seoheung going?

And I think that's been tremendous. I genuinely don't think that we would be where we are without the partnership. They've got in-region, in-country experience, Korea, Vietnam, and they know from the footwear industry, we have rented a facility off their sister company. They have allowed us to employ people from their business that are experts in injection molding, which is we have been in an extrusion business. They brought out injection molding expertise, footwear expertise helped us navigate everything in and around establishing a business there.

And -- so they've been tremendous, wonderful partners, great people, fantastic to work with, and I think they've been really, really helped us with establishing the business to where we are at the moment. So okay. Actually, we've -- well, we've managed to get through all the questions.

That's great. Thank you for taking the time to address all those questions that came in from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Ronan, could I please ask you for a few closing comments.

Thank you, Lily. I think there's probably 5 things. It's quite a lot to leave you with, but 5 things I'd like you to sort of take away today. I think the first of all is that the H1 is a proof point of our promise. And so H1 is hard evidence of the expanding beyond the core strategy is working, profits up, margins up, growth in other sectors. That's really important, a broader and more balanced business than we were a year ago.

I think the second thing is that footwear is normalizing to plan and the future of the footwear platform is being built, getting nearer to the customer, shorter supply chain, lower cost. And there is a short-term drag, but we will be structurally stronger in this market from 2028 onwards.

Third thing I would say is that disciplined M&A is paying. So we had our first M&A in H1 showing that we can do that and OKC has been an earnings accretive acquisition ahead of plan. And fourth is that we've got a very strong balance sheet, and we are self-funding the transition. So as we transform and we work on our transition, leverage remains below 1x. And we've got a GBP 50 million headroom. Dividend is up. We can fund Vietnam. We can fund the innovation hub, and we can fund the whole OKC purchase.

And then finally, and the fifth point is these are -- we've got a fantastic business that's been built by the colleagues that are all around us. And Croydon has been at the core of the business. It will continue to be an incredibly important part of this business going forward. What we have proposed is about the fitness for the long term. It is not a retreat from the U.K., far from it. We are repositioning the site around innovation. We are repositioning it around different applications by committing ourselves to U.K. manufacturing.

And we are entering into a consultation process. These are just proposals, but this is not a retreat from the U.K. And that's it. So I'd like to thank everyone for joining us this afternoon. Thank you for all your questions, and thank you to all our shareholders for all of your support. Thank you very much.

And Nick, thanks for updating investors today. I please ask investors not to close this session as you will now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company. On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.

Good afternoon, and welcome to the Zotefoams plc investor presentation. [Operator Instructions] Before we begin, I'd like to submit the following poll.

I'd now like to hand you over to Ronan Cox, CEO. Good afternoon, sir.

Thank you very much, and good afternoon, everyone, and welcome to the Zotefoams Group year-to-date trading update. I'm joined this afternoon by my colleague, Nick Wright, the Group CFO.

So let's get into the presentation. Usual disclaimers, you're all used to these. Okay. So introduction. I just want to come back to some -- to a slide that I've shared quite a few times now over the last 2 years that I've been in position at Zotefoams, and this is the strategy reminder. So nothing has changed in our strategy. So that's the really good news.

And I think that the highlights that we're going to touch on today are really going to dig into where we've made really significant progress against the real strategic imperatives of the business. So from that move from industry to customer focus, the development work that we're doing around getting closer to customer in the likes of Vietnam, innovation, investment to acquisitions and indeed to driving productivity and becoming a higher-performing team.

So our strategy remains unchanged. And everything that we do and everything that we talk about within the business. And indeed, as we present to you today, I believe you will be able to attach everything back to this strategy.

And therefore, as we come to look at 2026 and we pause for this trading update, the real highlights in the business are, number one, I would say, the growth that we've seen beyond consumer and lifestyle. So in our trading update, you will have read about the moderation in footwear, which is exactly what we expected to see as a business. What was imperative for us as a business and over the last year is that we prepare for moderation and therefore, drive organic growth in -- particularly in EMEA, but also in North America. And I've been very, very pleased with what we have seen in that regard in both of those regions. So that's a real highlight.

We transacted and acquired OK Company at the end of 2025, and I've been delighted with the integration work and the successes that we are having in joining up our businesses in the first 4 months of the year. So another really strong highlight. The investment case is absolutely paying off, and we're already seeing some real synergies between the organizations and some really strong cross-selling opportunities, not just opportunities, but wins that have helped us actually with organic sales growth as well in the legacy Zotefoams business. So really good progress there.

Our investment in Asia, which we announced last year is really taking hold. We've taken possession of the keys of both our innovation center in South Korea. I was there a number of weeks ago with our large footwear customer who had visited it. So that's making great progress. We've now got 7 people, the majority of whom have come from the footwear industry that are now working in that innovation center. So that's really exciting to see that come on track.

And then in Vietnam, we've properly broken ground, and we're actually started to receive some of the larger pieces of kit to come into that facility, and that's happened in the last few weeks. And we're still confident that we're going to be ready to actually have first test production by the end of 2026.

Also in the first 4 months, we've launched our global approved partner program. And this really is about looking at those 7 key industries and the key partners in those industries that we believe are going to help us grow fastest and in the most profitable way. And we've -- that partner program has now been properly introduced, multiregional, multi-industry, and we've got really good partners already signed up into that, and that's really helping us as we continue to drive growth in the organic business.

And then finally is our investment in AI. And I know there's a lot of hype around AI and maybe a lot of hot air around it. But I would say that we, as a business, have made tremendous impact or have tremendous progress, I would say, in the last 4 months with a pretty modest investment to connect the business. And I'll touch on that point a little bit later as we delve into a bit more detail.

But before we do that and go in more detail in some of the strategic highlights, I'm going to pass over to Nick Wright, our Group CFO, who's going to talk to us about business performance. So over to you, Nick.

Thank you, Ronan, and good afternoon, everyone. If we turn to the next slide and go through the results in the first 4 months of the year. We are pleased with group revenue up 26% to GBP 64.1 million, which reflects the initial contribution from OKC but also solid organic growth in other markets.

Looking at by region, EMEA, up 24% to GBP 50.1 million. This is where we see the GBP 9.8 million contribution from OKC, slightly ahead of our expectations for that business. Also within EMEA is where the moderation that we anticipated from footwear has been largely offset by growth in other markets, largely transport and other -- transport and smart technologies.

When we move through to North America, up strongly 30% to GBP 12.1 million. This really reflects the benefit of the additional capacity that came on stream in the end of Q4 2025, robust demand in consumer life cycle transport and smart technologies, but also reflecting the fact that in the similar period last year, we had lower demand in our industrial business.

And then last but not least, Asia, where the revenue in the first 4 months of the year had almost doubled up to GBP 1.9 million, a small part of our business at the moment, but also is clearly, as Ronan highlighted earlier, will be really important for the business going forward as our investments in Vietnam spring towards the end of the year and as we transition the footwear business from the U.K. over the course of 2027, 2028 into that region. Really important, though, to see that the non-footwear businesses in EMEA and North America are stepping up and filling the moderation that was anticipated before.

Outside of that, we're seeing good performance in terms of margins. We've responded proactively to the challenges in the Middle East crisis and therefore, have increased prices where necessary to cover the cost of raw materials, to cover the cost of increased transport costs and cover the cost of increased energy, and that's maintained margins and our focus on working capital has meant that we are in a good position and remain with a strong balance sheet, which will support our investments over the remainder of the year.

So on the next slide, a reminder of the results from FY '25. I'm not proposing to go through this in any detail as we covered this extensively at the year-end. But it really just highlights that 2026 is we're building on a strong foundation and continuing the progress that we saw in 2025 into the first half of 2026.

Perfect. Thank you, Nick. And so coming back to strategic progress, really the main purpose of today is just to give you all an update and a bit more detail on those few items that I touched on earlier.

So starting with the Global Approved Partner Programme. This has been quite some time in the making actually, and it's extremely important part of our strategy, as we say, getting closer to our customers, bringing those partners that we believe have got the greatest capabilities in the industries that they serve to bring them closer to Zotefoams to help us in areas of innovation, but also taking innovation and taking our existing products and ensuring that we've got the deepest and best penetration in the markets that we see as having the greatest long-term growth opportunity.

So I think the Technifab, the team that you see pictured here, an amazing business based in North America. They do a lot of work in the aviation sector. They work with some of our most technical products, and they do some really amazing stuff with those products in terms of the design, the thermoforming, the manipulation, the work that they do with our products. It creates some incredible components that are used in this fantastic industry. And these are just sort of epitomize the way that we want to operate with key partners in key industries. They understand our product through and through. They can help us enhance our products and they can help look and identify industries, other industry opportunities and clear adjacencies.

So it's been really great to get this program off the ground. We have partners that are now, I think, in all of our 7 key industries, and we plan to actually add more and more over the coming months and years. This is all about bringing structure and deep technical expertise. And I'll touch on AI later. We've got such an incredible knowledge base within this business. And now we're being able to actually organize it in such an incredible way with things like AI that genuinely with partners like Technifab and others that are in this program, we believe that our approach to application engineering and market penetration, it is second to none.

So it's a phenomenal initiative. Our partners that we sign up to this are highly motivated and incredible business is well invested, and we think this is certainly a key component for the ongoing organic growth story of the business.

The next point I just wanted to touch on is our strategic progress in Asia. So a really big investment for us. The manufacturing facility in Vietnam, as I mentioned, the construction is underway. We had a really impressive groundbreaking ceremony a couple of months ago. As I mentioned at the beginning, we're starting to receive some large pieces of kit.

If you look at this slide, the rendering in the bottom right-hand corner is our facility. So that's the facility that we're preparing at the moment. The rendering in the bottom left is an actual picture of our innovation center in South Korea. As I mentioned again at the beginning, I was there a couple of weeks ago, and we hosted Nike for the first time in that innovation center. What was, for me, just fantastic is our ability to hire fantastic talent into that.

So the facility itself is amazing, but the talent that we're able to attract there coming from that footwear industry is incredibly impressive. And what's more is that the location is within a driving distance of the headquarters of the Tier 1 suppliers into Nike. So our ability to collaborate close to our customer is just phenomenal here.

And put together, that local footprint in Asia for footwear manufacturing, combined with innovation and proximity to all of that sort of development in that footwear ecosystem is really going to, I genuinely believe, continue to spur the growth of this company. So an incredible foundations that have been laid in those first 4 months of this year super exciting, and I'll be excited to get further updates as we progress to initial trials at the end of this year out of the Vietnamese facility. So great progress there, great team. As I said, we've recruited talented people in Korea. We're also starting to form a really good team in the Vietnam facility as well. So amazing progress.

The next initiative that I want to touch on, again, I mentioned it before, is the investment in AI. And I want to be really clear about it when we talk about investment in AI. We've had a few look at a few different approaches to AI, certainly since I've been in the business over the last 2 years. At the beginning of the year, we've just hired a relatively young, super talented AI expert to come into the business and actually help us navigate around AI, the opportunities that we have in the business with this.

And actually, what we've done in the first 4 months is plumb in roughly 2 million articles and artifacts and data files into our protected AI system within Zotefoams. On top of that, we've been able to pull in over 6 million academic papers. And then on top of that, we've been able to take a whole bunch of other external data, market data, et cetera, that has helped us validate not only market opportunities, but then to use AI to help us with recipe predictions. And then we have another arm to this, which then helps our salespeople and our application engineers with actually bringing those solutions and help them land within the industries that we're targeting here.

And we've done all of this in a very controlled way. So this is -- all of our AI is done within our environment, very safe. We've created what we call a black wall protection around this to make sure that we are completely secure and compliant. We don't have any free AI tools anywhere in the organization. All of that has been locked out of our business.

This is one closed protected system where we're putting all of that corporate memory, feeding it into it, and that is feeding back to the business and allowing us to accelerate, as I say, in areas of innovation, but also we're seeing some real productivity improvements just automating basic transactions, building simple agents that take away a few minutes of every day. And these things are adding up and stacking up across the organization. I have to say I am incredibly excited in what we've been able to do in the last 4 months. And that -- what we've done in the last 4 months is probably 100x greater than what I managed to achieve in the previous 20 months. So it's -- I'm really excited for the potential of AI within Zotefoams.

As you see here on the right, we've got Zotelabs. We did a trial for some people yesterday actually and gave them a demo of this. And I think they were blown away at what we'd achieved here. So AI will have an amazing impact on this business. in innovation and speeding up innovation and helping our customer-facing folks engage with our clients and how best to use our products, but it's also helping us become a lot more efficient internally in our day-to-day actions as a business. So really great progress there and a key highlight for the first 4 months of the year.

And I think the next update we're going to talk about is OK Company, but I'm going to let Nick talk to that.

Yes. Thank you. So just as a reminder, OKC, our first significant acquisition acquired in November last year, which was entirely in line with our strategy. It brought some fantastic customers 2 good facilities and some complementary products to Zotefoams, earnings accretive and sensibly priced, and we are really pleased with how the integration is progressing well.

We said we were going to do the integration properly. We started with the commercial teams. They are working well together, and we're already seeing that come through with additional opportunities for the business. The deal rationale wasn't dependent on synergistic sales, but it's really pleasing to see new opportunities coming through. The business is performing ahead of our plans after the first 4 months, which is really good to see. It's been really encouraging to see how the 2 teams are coming together and working and the cultural alignment is coming together.

We've had the Board exec team visit. But we're learning from them. They're learning from us. We highlighted that this is a business that's got the heart of the customer, really customer-centric approach, and that's feeding into Zotefoams as well. We are -- we've completed the initial integration of the finance sort of processes in terms of being able to obtain information, and we're focusing now into the more detailed data IT integrations.

The initial brand refresh is underway and OKC is positioning itself as a Zotefoams company. So overall, as a first acquisition, it's really demonstrated that this business can and has done a good job of making acquisitions and bringing them into the business, and we're really pleased with how this first one has gone. And we are using this. We're capturing the learnings and this provide a blueprint for future integrations.

Perfect. Thank you, Nick. And I think let's start with just go quickly to outlook. So we've had a really solid start to the year. As we have said in our trading update, we -- our full year expectations remain unchanged. Demand has been pretty robust. The -- and indeed, the moderation that we had expected in footwear has happened. And we've been really pleased that we've been able to take demand from other industries to offset the moderation. So very much as expected, and that has been very pleasing.

As Nick touched on the OK Company contribution, the business is performing, I would say, on or slightly ahead of the original investment case, and that's brilliant. It's the nonfinancial stuff that's really great, which is the cultural integration, the spirit of customer centricity, that attention to service, which I think is really helping us as an organization as well. And there are various learnings and passings of knowledge from one business to the other. That's great. But the fact that the commercial integration has happened so quickly is tremendous and the successes there are really, really encouraging.

I touched on that Global Approved Partner Program. We will be adding more partners by the end of H1. This is an ongoing process. We believe that there's a lot of opportunities for partners in our target industries to come in and work closer with us. And the more we can give them the tools and the products and the innovations and the excitement, the more people we see coming in that want to come into this program. So it's a fantastic program for our partners.

Obviously, the Middle East continues to create uncertainty, particularly around things like raw material pricing and energy costs. The first few months of the year have seen us mobilize ourselves in a way that I've been really pleased with and impressed with the way that we've been able to get our finger on the pulse, understand the impacts on the business and make sure that we are able to pull the relevant levers that would ensure that we protect the ongoing profitability of the business. So the business has responded really well there. At this point, we haven't seen any particular headwinds in terms of demand. But of course, one never knows what the secondary impact of a prolonged issue there could be. But so far, in the stuff we control, we've controlled it really, really well.

And I think all of that sets us up with confidence in our medium-term growth strategy. And nothing is saying to us that we're anything other than continuing on the course that we set and that we're confident to continue on that course that it's the right course, it's yielding benefits. We can already see a lot of the strategic levers that we've been pulling to actually come through and deliver meaningful results that give us the confidence that, that long-term strategy or that medium- to long-term growth strategy is entirely achievable.

So with that, I'm going to hold the presentation, and I am going to go to the Q&A.

Perfect. Okay. So we may as well jump straight in. And I'm just going to go from top to bottom. So I think it's first in, first answered. Okay. So the first question is what is the actual range of equipment being installed in Vietnam? We're installing all equipment required to go from polymer to a 3D part. So everything from injection molding through to gasing high-pressure vessels and then low-pressure vessels is what we're installing in Vietnam. So it's a fully integrated manufacturing facility.

Are we benefiting from the increased military spending in Europe and the U.S.? I would say that we are seeing some benefit, but I would see it as a bigger opportunity for us. Somewhat ironically, we're probably stronger when it comes to the U.S. than it is to European or U.K. military spending. It's one of our target industries. It's clearly something where there should be some tailwinds. And it's an area where we're looking to continue to drive commercial focus. And so we're seeing a bit, but we'd like to see more, okay.

Why is T-FIT not as successful in the U.S.A. and Europe, whereas it seems to be doing well in China and India. It's more -- I think this is more a case of the projects. We've got -- first of all, we've got a bigger team in China and in India. The projects tend to be bigger there. It's a case of where is the greatest opportunity for growth, and they're probably sitting with more builds having went on in China and India. But we've got a decent business in Europe, and we've -- the T-FIT business in the U.S. is not doing bad either.

We are -- I would say the T-FIT business itself is performing much better this year than it has done in the last few years. We've brought new leadership in. So it's got a new General Manager. We've got someone else who's helping us lead all of the logistics and coordinate our service across the different territories. So I think market opportunities are biggest and quickest in China and India at the moment, but that is not to say that we're deprioritizing the U.S. and Europe. I think there's still plenty of opportunities there.

Nick, I'm going to get through a few questions for you, don't worry, but I like these ones. Okay. So adidas, I knew this one was going to come. Adidas seem to have a better running shoe than Nike as evidently by their London Marathon wins. What was the foam they use? And -- well, I suppose the athlete came into it. So the guy that was wearing the shoes is something to do at the time. But listen, I think they've got very good roster of athletes, and that's not -- let's not underplay the importance of them. I think that it is not lost on us, adidas' recent successes.

We are very confident that we can offer a foam that is better than on those shoes. And we are engaging with our footwear partners to see how we could actually ensure that, that gets on to elite athletes shoes. So listen, these things -- these come in cycles. I think that Nike as our partner are not going to take this laying down. I'd say watch this space. I'm pretty sure that Nike will have new running systems in place that will be out there on winning gold medals in the near future.

But there's nothing like a good competition out there to keep us innovating and advancing. So if everything just stood still in '26, it wouldn't be good. So you know what, we're up for it, Nike is up for it, and it's important that we keep innovating.

Right. How are you improving your sustainability as a business? Well, there are various aspects to improving your sustainability. We talk about our lengthy supply chain from the U.K. to Vietnam. So that localization in itself is a dramatic improvement in sustainability. So we're not shipping product around the world. So when we have that facility closer to customer, that will very much help our carbon footprint.

Our product, I would remind anyone that doesn't know our products so well, but our product, we do not use any chemical going agents in the vast majority of our manufactured products. And where we do in some of the products, for example, from -- OK Company, then there's a high level of -- very high level of recycled content. So we're very focused on productivity, reducing the electricity consumption, trying to shorten the length of supply chains of products coming to us and our materials going to our customers. And we're very much leaning into recycled content as a business.

Okay. All right. Ronan, 2 years on from becoming CEO, honestly, are you ahead in line or behind where you thought the group would be? I think it's a combination of stuff. I think that we've made really tremendous progress in certain areas. I think the strategic direction and alignment has been fantastic. There are other areas always, I think, operationally and execution-wise, where I wish that we were further ahead.

So I think it's a bit of a mixed bag. I'm very happy with where we are, but I'm never that happy because that's just the nature of me. So I think that where I thought the group would be, I think that we're making really good progress. But I'm just super demanding. I'd always like us to be further ahead than we really are.

This is definitely one for you, Nick, I think. Okay. AI is driving gigantic CapEx commitments into areas like data centers, power systems, et center. Are there opportunities for Zotefoams to have its products designated? Okay. Equally, the likely hype around SpaceX IPO will shine spotlight on the aerospace sector. Again, does Zotefoams have potential exposure there? I'll tell you go to the latter part of that, the SpaceX one maybe.

So we do have opportunities in the aerospace and SpaceX sector. We've already got our products on a number of applications there. And I think as that sector continues to grow, that will create opportunities for our products where it has those unique properties that are just aligned with that kind of demanding application where you need super lightweight insulation, thermal properties that our product has. So our property really does help in those applications, and there's lots of opportunity there, and it's an area of focus. And as we bring in those industry specialists that know those markets well, we're seeing more opportunities open up for us.

Very good. Given the speed of progress, there's a question here. It's really about grants from innovation funds in the U.K. the European Union, U.S. or Asia. Do you want to talk about R&D tax credits in the U.K. perhaps?

Yes. So yes, I mean, we do take advantage of the opportunities to get tax credits for our R&D spend and where we have patents, we look to utilize those in the most effective way. I think there's always possibility of looking for government support, but government support normally comes with strings attached. So it's not something that at the moment that we feel that we're actively exploring. But if there are specific opportunities that we think would be too much of a risk for us as a business and potentially government would want to share some of that risk, then we would look at it. But at the moment, our focus is really on investing in our core business in the areas that we understand where we see that our investment will deliver appropriate returns for our shareholders, and that's really where we're focusing our capital allocation.

Okay. Very good. Oil shock impact on inputs. Do you want to mention that? We haven't touched on it, but...

I'll touch on that. So we've responded to that. Our aim is to recover the increased costs. We're currently applying surcharges to where appropriate to make sure that we recover those costs. And our customers understand the need for us to do it. They don't like price increases, but they understand why it would be necessary for us to do that. And at the moment, our customers are more concerned about security of supply than the short-term surcharges. As Ronan said, if the situation continues long term, then that may have impact on demand. But at the moment, the real focus is from our customers is making sure that they have the product that they need.

Okay. Very good. From Richard, can you give an update on the pipeline of acquisitions? So we have got -- what I would say is that we've got a healthy pipeline of acquisitions today. I've been -- I think that many of you that were at our Capital Markets Day will have heard from our Corporate Development Director, who's doing a tremendous job in filling that pipeline. At the moment in time, I think that we've got quite a number of very interesting opportunities that we've got a line of sight of.

So we can't go into any more detail than that, but I think that what we would say is that there's a healthy pipeline there, and that certainly didn't exist just over a year ago. So we're in a good place. We're very focused. We've got our Corporate Development Director, who is 100% focused on this. This is all he does day in, day out. And I have to say, he's exceptional at identifying the opportunities, but then starting the engagements and those conversations and looking at the details of the opportunities. So it's a muscle that we started to build just 1.5 years ago, and I think that it's developing really well.

As you push for new partners, are you displacing others or are you allowing for their innovation? I'm not quite sure that I understand the question, but we will -- we have got scope to partner with many, many, many businesses. What we want are like-minded businesses that are driven by value creation and growth. There's -- our material, I genuinely believe can reach way beyond its traditional applications. And for those partners that understand their industries and then understand the physical attributes of the materials that we make and that can bring that together, I think there's many opportunities to innovate and to grow partners together.

So we're not having to -- I don't necessarily like displacing anyone. It's about really who do we lean into closest for those partners that we can really share those same philosophy around growth and co-innovation. So there's a lot of room. It's not that we're pushing people out. It's just that where we focus our efforts where we see the greatest runway for growth.

Okay. Here's a good one. Out of curiosity, I have seen novelty items that expand into dinosaurs or whatever. Is that how some of your Zotefoams does work? I've got no idea. I think that Zotefoams as a business, we're just going to expand. Whether we can expand our products into dinosaurs, I don't think so, but there you go.

What room for growth should we expect in margins? They seem to be stuck around 15%. Okay. So as a medium-term objective, so out to the end of our sort of 5-year strategy period, we're targeting to get to PBT margins of around 20%, okay? But we're also incredibly open about the -- as we see that transfer of quite a lot of business from our U.K. facility out to Asia, as we move stuff around and get it manufactured closer to where the customers are, whether that's in Asia or the U.S. or in Mainland Europe, that margins will move around a bit. But longer term, our objective for the business, as I say, in our strategy period is to get our PBT up to 20%.

Okay. 3 years ago, this was U.K. business with U.S. and Polish manufacturing. Now it's -- okay. So 3 years ago, this was a U.K. business with U.S. and Polish manufacturing. Now it's a global business with Asia. How are you managing the risk that comes with going global? Plenty of companies have come to grief often because management was overstressed. That's very key point and it's not lost on us. I think, first of all, if we look at our Asian investment, so the investment in Korea and in Vietnam.

In Vietnam, we've entered into a partnership with a business that has been in Vietnam, so a South Korean business that's been in Vietnam for over 30 years. We are hiring people with regional and industry expertise, so they know the country and the industry that we're operating in. We're not trying to do this expansion in that part of the world with -- by remote control from London, absolutely not, yes. So we're hiring knowledgeable talent from the industries that know the country to drive this for us.

I think the other thing -- and actually, you can say on the other side, in other instances, so if we look at our U.S. business, Actually, we've taken one of our most talented U.K. leaders, and he's over there now in the U.S. And actually, he's driving a lot of the real improvements that we're seeing there. So yes, we are becoming more international. We're becoming more global. I think that the leadership team that I have assembled now are all experienced in operating in global businesses. I myself have lived in various countries, have set up businesses earlier in my career in different parts of the world. We're all experiencing the sort of risks that come along with this.

As we look at the governance models in the business, we're really upgrading them. And actually, this year, we've had our -- looking at all of the risk sort of management profiles across the business. And we're ensuring that they are -- where they were probably much more U.K.-centric in the past that they're globally fit. So great point. It's -- that's part of the business that we have to keep ourselves effectively managed and run and governed as we expand. It's one of our principal risks and one that we don't take lightly.

Okay. I think we've got a final question from Gavin. How is the new U.S. pressure system performing the utilization so far? I almost touched on that. It's going really well. As we've now got one of our U.K. leaders who is now across in the U.S. He had been actually very active in the commissioning -- well, on a sort of fly-in, fly-out basis. I'm so delighted he's now based in the U.S., and he's making sure that, that asset is up and sing. So really, really, really, really good progress there. So it's fantastic.

Okay. When will you need a third pressure vessel in the U.S. when we get to over $100 million of sales in the U.S., all right? So where we've got a good bit of growth to go until we get there. And I think that if we ever do come back to that, maybe in a different format, but I think we'll all be quite happy because it will have meant that, that U.S. business will have doubled in size. We've got a lot of growth opportunities there without having to invest a truckload more money into the U.S. or putting in another low pressure vessel. But there we go. I think that we've managed to do all of the questions.

That's great. Thank you for answering all those questions you can from investors. And of course, the company can review all questions submitted today, and we'll publish those responses on the Investor Meet Company platform. Just before redirecting investors to provide you with their feedback, which is particularly important to the company, Ronan, can I please ask you for a few closing comments?

Well, thank you, everyone, for joining this afternoon. Thank you for staying tuned for the update. As we said, momentum really started in 2025. That momentum has continued in 2026. Yes, there are challenges out there, but we, as a management team, remain confident that we will be able to face into those challenges. And as we say, guidance remains unchanged for the rest of the year.

So we're making great progress on many fronts, not just the financial fronts, but also on the quality of business front. So we're excited for the future, and I thank you all, all shareholders of the business. We appreciate your interest in the business, and thank you for your time today.

That's great. Thank you for updating investors today. Can I please ask investors not to close the session as you'll now be automatically redirected to provide your feedback in order that the management team can better understand your views and expectations. This may take a few moments to complete, and I'm sure will be greatly valued by the company.

On behalf of the management team, we'd like to thank you for attending today's presentation, and good afternoon to you all.

Good afternoon, ladies and gentlemen, and welcome to the Zotefoams plc 2025 Preliminary Results Investor Presentation. [Operator Instructions] Due to the significant attendance on today's call, the company may not be in a position to answer every question received during the meeting itself. However, the company can review all questions submitted today and we'll publish those where it's appropriate to do so.

Before we begin, we'd like to submit the following poll, and I'm sure that the team will be most grateful for your participation. It gives me great pleasure to hand over to CEO, Ronan Cox. Ronan, good afternoon.

Good afternoon, Mark, and good afternoon, everyone. Thank you for joining us. I'm Ronan Cox, Group CEO of Zotefoams. With me is Nick Wright, our Group CFO, who will take us through the financial details shortly. I'll start with an overview of our performance and strategic progress. Nick will then cover the financials in more depth, particularly margins, cash, capital allocation before I return to wrap up and lead on Q&A.

But before we do that, a quick disclaimer. You've all read through this before. As always, today's discussions may include forward-looking terminology. Actual outcomes might differ. So let's go to the first slide, please, Nick. Thank you.

And before we delve into the detail, really, in summary, 2025 was a really strong year for Zotefoams financially, operationally and indeed strategically. Importantly, the strategy that we launched at our Capital Markets Day back almost 1 year ago, I think March 20, 2025, that strategy is gaining momentum. I want to be very clear from the outset that the strategy is not moving one bit. What you're seeing from the results that we present today is the execution of a plan that we are already committed to. There is no change in direction.

A really critical enabler of that execution is -- has been a fundamental renewal of the leadership team. And over the last 2 years, we've built an entirely new group of leaders across the business, bringing in specialists from the industries that we are now focused on, so people from footwear, people from the likes of automotive, aviation, advanced transport and industrial applications. And these are leaders that understand our customers. These are leaders that understand the applications and the operating realities of the markets that we see as are the most attractive for our product. And we are starting to move at pace.

So with that, we'll dive into some of the detail. So in summary, 2025 saw strong revenue growth and record profitability. The slide captures both the outcome and I guess, the quality of the year. Group revenue was up 7% with really strong growth in EMEA. We had -- more importantly, we translated that growth into record earnings. So our adjusted operating profit increased by 26% to GBP 22.8 million, and our margins expanded by 220 basis points.

Cash generation was super strong, and our leverage reduced to 0.8x as we refinanced the business with a GBP 90 million multicurrency revolving credit facility, and that is giving us substantial headroom in the business. Nick will take you through all the main margin drivers. He will take you through cash conversion, and he will touch on the balance sheet in more detail. But the headline is pretty simple. This was a year of profitable growth, and it was supported by good cash generation and really good discipline across the organization.

Go to the next slide, please, Nick. And this is just taking us back to the Capital Markets Day and the strategic highlights. And as I said at the outset, nothing has changed from the strategy that we laid out just 1 year ago. At the CMD, the strategy was clear. It was about expanding beyond the core. And that strategy, I'm pleased to say, remains exactly the right one, in my view, for this business.

What's changed from then is actually our ability to execute. So we now have the right leadership. We have got clear accountability, and we have an operating model that is aligned to markets rather than to products. We are materially closer to our customers. We are sharper on things like prioritization. And we are more disciplined in where we invest both organically and inorganically. And underperforming everything that we do, I should point out, is our priority one in terms of health and safety, and we continue to make real strides in our health and safety culture across the organization.

So Nick, if we could go to the next slide, please, and we're going to turn to EMEA. And this was another record year for our -- what has been always the primary region for the business, but that is changing. But this year, our growth was again driven primarily by Consumer & Lifestyle and particularly footwear, although we did see solid progress in transport and smart technologies in EMEA. It's important to call out one point, and that is that European demand outpaced our ability to actually supply in 2025. So in fact, demand was greater than our available capacity in the year.

Now this is not a weakness. It's really a consequence of a strong customer pull and really successful execution across the business. Margins were slightly lower year-on-year, and that reflects some deliberate choices, deliberate choices like reinvesting in people and capability, embedding that industry-led model and then on top, obviously, absorbing some inflationary impacts and some ForEx movements, all while trying to protect and improve the service to our expanding customer base.

We also saw an initial contribution to revenues in the year from OK Company for the short number of weeks that they were with the business. And that revenue came as we look to integrate them into a unified European operating model, which we continue to work on as part of that integration. This is a business that's been positioned for the next phase of growth rather than a business that's being managed for short-term margin optics. So those investments are really key for the long-term growth of the overall group.

If we go to the next slide, please, Nick, and then turning to North America. The North America result is really, I think, a really good example of how the -- how our strategy translates into material results. Revenue grew by 7%, but profit nearly doubled and margins expanded materially. So that reflects essentially a better mix, strong execution, particularly in the Transport & Smart Technologies area, including aerospace and indeed cost discipline. The commissioning of the second low-pressure vessel, which was a major investment for the U.S. facility, gives us capacity and indeed, it gives us optionality to support future growth there. This is not a cyclical recovery. This really is a structural improvement in our North American business, and I continue to believe that we've got a lot of runway for growth in that particular market.

If we move to the next slide. Asia. Asia, the numbers are small, but Asia is indeed strategically important for Zotefoams' long-term growth. And the execution is already underway significantly in Asia as we look to expand our footprint and really lean into the footwear market. In Korea, work has started on the footwear innovation center. We've taken possession of the facility, and we're already filling that out and getting it ready to receive initial innovation equipment. We've already got some 7 team members on the ground, all coming from the footwear industry, experts in their field who will be working on the next generation of innovations for us in that area. They are working directly with customers already on developments for future products and collaborating closely also with the newly formed Vietnamese team.

And in Vietnam, we entered in '25 into a partnership with Seoheung, a Korean business, specialists in footwear, part of the Jungshin Group. And we've already started to prepare our facility, which just lies outside Ho Chi Minh City. Our first hires have already joined. And as I've mentioned previously in previous announcement, Brandon Thomas is leading that business for us. He joined us from Nike, and he has already started to build his team in Vietnam. I'm really pleased that we're starting to move from planning into execution. If you can see the slides in front of you in the bottom right is the rendering of the new facility. Much of that already exists. The large shed at the very back, you'll see there are 2 factories effectively. The one in the foreground, the large one in the foreground in the middle of the screen, I guess, is already there, and that's being fitted out and ready to receive significant manufacturing equipment.

And Vietnam is not just about unlocking growth in Asia, it also frees up constrained capacity in Europe, allowing us very much to support the demand that we weren't really able to serve fully in 2025. So this is disciplined capability-led expansion. It's delivered by teams with direct experience in building operations in the region. This is not us sending people from the U.K. over to Vietnam. We are hiring sector specialists, regional specialists, specialists in Vietnam, specialists in building factories who are driving this investment forward for us.

And if we go to the next slide, please, Nick. Just to zoom out and look at globally the verticals. So in 2025, we fully embedded that industry-led model that we outlined in the capital -- at the Capital Markets Day. Consumer & Lifestyle remains our largest vertical and footwear within that very, very important. Volumes in 2025 were exceptional. And we planned for a normalization of that demand in 2026. What matters most is that strategically, the relationship that we have with our key customer here is getting stronger and stronger. We -- with our investment in innovation, with our investment in Asia, we see that we're getting earlier involvement in design cycle engagement.

And indeed, this allows us to grow our pipeline of opportunities with our customer even greater with that proximity and with that investment in innovation. I'd just add that OK Company actually brings more customers also into this vertical, but not in the area of footwear, principally in the area of swimming, flotation and buoyancy aids and quite a significant business that they have in Europe for those products in those markets. In Transport & Smart Technologies, performance continues to be strong, and that's supported very much by aviation and aerospace and other very technically demanding applications. It's a vertical that's got very, very long development cycles. We've got pretty good visibility. But this is really where Zotefoams technical capability is a clear differentiator. We have real technical advantages in this particular vertical.

Okay. Company's profile business will also add a lot into this area. So this is out of their facility near Barcelona. It's manufacturing non-cross-linked foam profiles with a really good presence in the auto sector in Europe. Construction & Other Industrial was mixed, and we had expected that. We were deliberately selective in the way that we address that market, prioritizing margin and returns over just top line sales growth. And I will also add that OK Company here also strengthens our position further up the value chain as they're supplying into some very interesting construction end markets. So it's clear that the structure is delivering clarity, it's delivering accountability and it's allowing us to better allocate resources across the business.

If we go to the next slide, please then, Nick. And just touching then, I've mentioned OK Company a few times. The acquisition of OK Company really fits squarely within our strategy. It strengthens the European footprint. It moves us further up the value chain and adds capability, customer access and a big business optionality. We've increased our numbers. You'll see -- if you circle back to CMD numbers, you'll see that we've increased our numbers to reflect the addition of OK Company. That's not a change in our strategy. That is just a strategy being executed, which is wonderful to see. OK Company is earnings accretive. The integration is progressing well. We've integrated our commercial teams and it's starting to provide a blueprint for future acquisitions. And there will be more M&A. However, we will remain incredibly disciplined. We'll be very selective and we will make sure that it is consistent with our strategy.

Now with that, I'm going to hand over to Nick, who will take you through the financials in more detail, including margins, cash generation and leverage and capital allocation. Nick, over to you.

Thank you, Ronan, and good afternoon. I'm very pleased to be here for the first time presenting Zotefoams full year results. I joined the group last September and have been pleasantly surprised by what I've seen. If anything, I'm now even more convinced by the potential of the business. 2025 was a year of outstanding performance across all key metrics. Group revenue increased 7% to GBP 158.5 million, with a strong sales performance and an initial contribution from our first acquisition, OKC, which completed in November.

Adjusted operating profit, excluding exceptional items, increased 26% to GBP 22.8 million, reflecting revenue growth supported by disciplined cost control. Adjusted operating margin was 14.4%, up 220 basis points. And adjusted profit before tax increased 39% to GBP 21.2 million, driven by higher operating profit and lower net finance charges. Adjusting items totaled GBP 1.1 million, down from GBP 15.2 million in 2024 when we took an impairment charge on closing the MuCell Extrusion business. Statutory profit before tax was GBP 20 million, a significant improvement from the prior year. Adjusted earnings per share increased 46% to 38p and statutory earnings per share were 46.4p compared to a loss of 5.7p in the prior year. These headlines demonstrate the quality and momentum in our business.

So let me now take you through the financial performance in more detail. As I mentioned, group revenue increased 7% to GBP 158.5 million or 8% in constant currency. More significantly, gross profit grew 15% to GBP 52.9 million, demonstrating strong operational gearing. Gross margin improved 220 basis points to 33.4%. There were 3 key drivers. First, we benefited from more favorable product mix. Second, we implemented selective price increases to offset cost inflation. And third, we delivered operational efficiencies, including managing inventory, improving utilization and exercising strong cost control.

SG&A expenses increased 8% to GBP 30.3 million. Within this, distribution costs decreased 3.5% to GBP 8.2 million as we focused on reducing inventory and relied less on external storage. Admin costs increased GBP 2.6 million to GBP 22.1 million or GBP 1.4 million, excluding the impact of foreign exchange. This reflects investment in our teams as well as higher wages in an inflationary environment. These increases were largely offset by stopping development spend on resource, which brought nonrecurring operating costs down by GBP 4.9 million, and this has been redeployed into our core innovation and commercial activities.

Looking at the breakdown by region. Operating profit in EMEA increased 4% to GBP 25.4 million with a margin of 20.5%. While revenue growth was strong at 9.4%, the lower margin reflects investment in talent as well as cost increases due to inflation. In North America, operating profit almost doubled to GBP 3.5 million, as did the segment margin to 11.6%. This was driven by revenue growth and the reduction in resource costs, along with better cost discipline.

Operating profit in Asia of GBP 0.2 million reflects a reduction in revenue due to lower demand in construction in China. This demand started to improve in the second half, which has continued into the year. And we expect Asia to be a significant growth driver once our new manufacturing facility in Vietnam is fully operational.

Adjusting items of GBP 1.1 million comprised GBP 0.9 million of mill closure costs and GBP 0.2 million of amortization relating to the OKC acquisition. Net finance charges decreased 41% to GBP 1.7 million as a result of lower average net debt balances through the year, reflecting the group's strong cash generation. Adjusted PBT increased 39% to GBP 21.2 million. And on an adjusted basis, the tax charge was GBP 2.6 million, resulting in an effective tax rate of 12.3%. This was down from 19% in 2024, reflecting the benefits of tax relief on R&D and 2 years of patent box claims made during 2025.

Adjusted profit before tax (sic) [ adjusted profit after tax ] increased 50% to GBP 18.6 million. This translated into adjusted earnings per share of 38p, up 46%. We have proposed a final dividend of 5.35p, bringing the total dividend to 7.85p per share, up 5% on 2024. These results demonstrate a strong operational delivery and financial discipline.

Let me now turn to cash generation and our balance sheet. Cash generated from operations increased 31% to GBP 39.7 million, demonstrating the high-quality cash-generative nature of our business. A key driver of this was excellent management of working capital. We reduced net working capital by GBP 7.4 million, which is around 3x more than the prior year. Inventory decreased by GBP 4.5 million as we reversed the buildup of stock in 2024. Trade and other payables increased by GBP 4.5 million as a concerted effort to agree more favorable payment terms and trade and other receivables increased by GBP 1.6 million, slightly lower than revenue growth, thanks to strong collections. This disciplined approach to working capital has freed up cash to support our strategic growth initiatives.

Capital expenditure increased 4% to GBP 14.2 million. And importantly, 82% of this was directed to growth opportunities rather than maintenance. The increase was mainly driven by strategic investments to expand beyond our core businesses. 46% was allocated to the ramp-up of our second low-pressure autoclave in North America and 34% to the footwear business in Asia, specifically in Vietnam and Korea.

Geographically, North America accounted for 60% of the total spend with Footwear Asia representing 34% and EMEA accounting for the remainder. Maintenance CapEx was significantly below our depreciation charge as our established plants are well invested and require funding only to ensure operational reliability and maintain a safe working environment. Return on capital employed increased 13.9%, up 220 basis points.

Net debt, excluding the impact of IFRS 16 leases, increased 31% to GBP 31.5 million due to the acquisition of OKC, which was funded from existing financial resources. The initial cash consideration was GBP 27.6 million with up to GBP 8.4 million of deferred and contingent payments linked to future performance. Despite the acquisition, our leverage ratio improved to 0.8x, down from 0.9x at the end of 2024. So strong cash generation has enabled us to complete an earnings accretive acquisition whilst maintaining a robust balance sheet.

In January this year, we successfully renewed our revolving credit facility with Handelsbanken and NatWest on improved terms and added HSBC to the syndicate. Our new GBP 90 million multicurrency facility has a GBP 30 million accordion and a renewal date of January 2029.

Turning now to the movement on net debt. We started the year with net debt of GBP 24.1 million. During the year, we generated GBP 39.7 million of cash from operations. This strong cash flow more than covered our capital expenditure, financing costs, taxes and dividend. As I just mentioned, we invested GBP 14.2 million in capital expenditure and the acquisition of OKC represented a cash outflow of GBP 23.4 million. Importantly, the acquisition is expected to be earnings accretive in 2026, its first full year within the group.

We paid GBP 3.7 million in dividends during the year, and there was a net outflow of GBP 1.6 million from other items, mainly comprising lease payments under the Shincell agreement. This brings our closing net debt position to GBP 31.5 million, GBP 7.4 million higher than the start of the year as we deployed cash to fund the OKC acquisition.

And I'd like to close by summarizing our approach to capital allocation. We deploy capital to drive long-term sustainable growth and create value for our shareholders, and this slide sets out our top priorities. First, we are investing in geographic expansion and innovation, both in the U.K. and Asia. We're building a scalable platform using technology to drive efficiency and improve return on capital employed. Second, we intend to maintain our progressive dividend policy. Third, we have a disciplined approach with high hurdles for M&A in line with our strategy. And fourth, we will return any surplus capital if this represents greater value for our shareholders.

So in summary, we delivered strong revenue growth and record profits as we managed costs well. We are pleased with our strong cash generation, improved working capital and higher return on capital employed. We made our first acquisition, which will be earnings accretive in 2026. And we have done that while maintaining a strong balance sheet. Our leverage ratio remains low at 0.8x. Finally, we have refinanced our revolving credit facility, giving us financial flexibility to invest in future growth.

Thank you very much, and I'll now hand back to Ronan.

Perfect, Nick. Thank you for that. And as we move into summary and outlook, just to summarize 2025, it was a year of delivery and of gaining momentum. We executed the strategy that we set out. We delivered record results. We strengthened the platform for long-term growth. It has been a really key year.

So if we go to the next slide, please. So we delivered record revenue and profit. We managed through the capacity constraints while also investing for growth. We strengthened Europe through OK Company. We've moved Asia -- our footwear business to Asia from concept and into execution and we have built a stronger and a more specialist leadership team. So this is a materially stronger business than it was 12 months ago.

If we go to the next slide, and we just look at outlook. We've entered 2026 with good momentum. Our footwear volumes will normalize, and we've planned for that. We've discussed it before, and we have planned for it. What matters is that the business is now more diversified by market, it's more diversified by geography and it's more diversified by application. And we have got improving balance across the portfolio. The integration of OK Company and the freeing of European capacity through the investment in Vietnam and the continued disciplined investment also give us confidence in our medium-term targets.

So in summary, the strategy is unchanged. The capability to execute it indeed is stronger and the pace across the business is increasing. And with that, that's the end of our slides. And thank you, and I'm happy -- Nick and I will be happy to take any questions.

[Operator Instructions] I just like to remind you a recording will be available post today's meeting. Ron and Nick, you've had a number of questions from investors throughout today's presentation. Thank you to everybody for your engagement. Ronan, if I may hand back to you and ask you to read out the questions, I'll pick up from you at the end. Thank you.

Yes. Very good. Okay. First question, we'll try and go top to bottom as much as we can. What percentage of your revenue came from Nike in 2025? Nick, do you have that?

Yes. So in 2025, it was around 40% of revenue.

Okay. And then we have -- you mentioned footwear volumes will moderate in 2026 as customer normalize inventory. It's not just necessarily about inventory, but what is the expected magnitude of this transition? And will the OKC contribution be enough to offset it?

Yes. So work backwards on that. Yes, OK Company will absolutely more than offset it. But it's not about OK Company offsetting it. Actually, we've got growth opportunities in other parts of the business. So net-net, without OKC, we would offset any moderation or normalization of the demand in footwear.

Adjusted operating margins rose to 14.4%. Aside from the resource exit, what are the primary drivers required to reach your medium-term ambition of more than 18%. There you go, Nick. How do we get to 18%?

Okay. So there's a few things. Utilizing the additional capacity that we have in North America, make sure that we've got that up to full capacity. There's quite a bit of self-help that we are doing. So I talked about use of systems and technology and building a scalable platform. There's a lot we can do to be more effective, efficient, improve our planning and how we operate and seeing the benefits of the growth coming through both outside of footwear in EMEA and the U.S. really drives that operational leverage and improves margins over time.

Okay. Good. You set a clear target of reaching more than GBP 300 million in revenue in longer-term ambition. Given the current 7% growth targets plus you had said GBP 230 million by 2029. What is your expected split between organic growth and M&A to bridge that GBP 70 million gap and which geographic regions do you see as the primary engine for that extra growth? Okay. So just a slight qualification on that. We -- so we had originally at the Capital Markets Day set our organic target for 2029 at GBP 200 million to GBP 220 million. The GBP 300 million was with inorganic, so with M&A on top of that.

We are remaining consistent with the organic growth, and we can see that continuing. So yes, essentially, to take us from a GBP 230 million, let's say, an upside of organic to GBP 220 million to GBP 300 million, then that's around about GBP 80 million would come from inorganic, so therefore, from M&A. I think that answers it.

There are quite a few questions at the moment about the impact on raw material prices, on chemical export risk, on polyethylene prices, on energy costs. Nick, you're heading up a working party that's ensuring that we're completely fit for that. Do you want to just talk about the exposure immediate and then how we're setting ourselves up.

Yes, of course. So in the short term, we have -- we're pretty well hedged in terms of energy usage for the next 6 months and maybe slightly longer in Spain. We have raw materials around us, and we have no goods that are currently in the Gulf. So all of our shipping that goes to Asia does not go through the straits. So we don't have any immediate exposure. However, if the ongoing situation leads to ongoing increased input prices, we will have to reflect that in our pricing to our customers -- so longer term, we could see increased transport costs. Our transport costs are relatively low, but we could see cost of that which we have to pass on. And obviously, once if the oil price feeds into feedstocks, if it remains elevated, then we will have to pass that on to our customers. And the business has demonstrated its ability to do that. It's always never easy, but we will pass that on, and we are focusing very much on making sure that we maintain our margins over the next few months.

Very good. Thank you. With the new GBP 90 million credit facility, what specific capabilities or geographic gaps are now the highest priority for your next acquisition? So our focus is on North America and Europe. And I think the -- we're pretty open to opportunities that are in our focused industries, and we've got 7 focused industries. We will be attracted by technologies and also perhaps forward integration where it increases our runway for growth. So our opportunity to increase our addressable market. But essentially, North America and EMEA. And whatever we do, we'll stick very closely with our strategy. And so complementary technologies, complementary products moving along the value chain.

We are looking across, as I say, the various different industries and different stages of value addition within those supply chains and we continue to fill the hopper with opportunities in there. So -- but geographically, it's really, really clear. 7 industries is where it will be. The precise nature is more down to what's available, and we're talking to people at various different parts of the value chain.

How do you see the recent 25% increase in polyethylene? Well, I think we've addressed the point in terms of material price increases. So I think back to your point, Nick, we're on it. We'll -- it's very important that we protect our margins. And as we see things flowing through, then we will address that.

Please give the percentage of your cost of goods sold in terms of raw material costs by each major material.

We wouldn't go into that level of detail. It clearly differs across the different substrates, but that's a level of granularity that we wouldn't want to go into.

Can you quantify the expected revenue and profit reduction in footwear in '26 over '25?

Again, we don't go down into those -- delve down into those specific 7 different industries. What we've said is that the business will normalize. So we see some moderation there. And following in behind that, what we also are clear on is that there's other business that can make up for any normalization in that demand. And we actually anticipate that demand to remain fairly stable as we go through the sort of strategy period as we move more and more volumes from Europe across Asia.

Obviously, huge growth potential in Asia and North America, but profit margins are substantially below 20%. Can you drive the U.S. and Asian margins towards European levels?

I would say, yes. There's a lot of operational gearing. So as we fill facilities and particularly as we fill North America, we can see that there's a very significant flow from top line down to profit, and that's because of the operational gearing. And Asia, we will have similar ambitions in terms of as we scale up our facility there around footwear. And it's essentially about driving utilization of our facilities. That's hyper important. And indeed, as we take capacity out of Europe and transfer that demand across the Asia, that's why we're looking to backfill the demand as well in from business that perhaps we haven't satisfied as well as we would have liked to have in the past.

What are the 3 key messages you'd stress to new institutional investors taking a stake?

What I would say, I suppose it depends on those that are in their stage of knowing the business. But I think the first thing I would say is that our technology is expanding and our addressable market is expanding. So -- once upon a time, we had a particular way of manufacturing our products, and that has evolved significantly over the last 10 years. The likes of the sort of technical collaboration that we've had with Shincell has allowed us to open up many more opportunities for the market. So the addressable market has increased. I think that's the first thing.

I think that two is we lean into many of the big megatrends at the moment, particularly around sustainability. Everything that we do goes into essentially protecting products. It goes to protect people. And in many ways, it goes to protect planet because its carbon intensity is much less than many of the competing substrates.

And I think the third thing is that we are building a really great team here. We have had a great team. This is a fantastic business. It's been operating for over 100 years. There's a lot of talent in the business. I inherited a lot of great talent. There are great people across the organization, very, very clever people. And they have been honing their skills, and we're entering a new era actually where the data that we have accumulated over 100 years, we're now able to actually harness it and use it with the likes of AI, which we're deploying across the business in very material ways. And I think that it's of our moment as we're able to tap into that wonderful heritage and technical ability and skills across the business.

And I think the final one we'll add a fourth one is that we're not a one-trick pony. Actually, I'm going to add 2. We're not a one-trick pony. So we're diversifying our portfolio to our customer base. I think the next one is, and it was tied in probably with an earlier point is that our return on capital is improving. So this has been a very capital-hungry business for a long time. The advances in technology around what we do are really attractive, and we're leaning into those, particularly in the Vietnamese investment. We can see that happening and how that allows us to improve the returns on invested cash in the business.

And what will your tax rate be going forward, Nick?

Yes. So as I explained, our tax rate on an adjusted basis this year was significantly lower than before. We would expect it to return back to a much more normal rate of 24% to 25% going forward.

Very good. Has there been any progress in the alliance with Shincell that has -- that was announced in May 2024?

Lots of -- in fact, I think the alliance with Shincell has allowed us to take a much more nimble capital-light flexible approach to building the facility in Vietnam. And that's always -- they've given us knowledge and access to new emerging technologies and variants of technology. We don't copy what they do, but we've learned a lot from what they do. And we've been able to layer that on top of our 100 years' worth of knowledge and that's catapulted us forward. So I think it's been massively productive. We would have spent many years trying to replicate some of the development work that's happened in that particular area. So I think it's been incredibly valuable, and I'm delighted with the progress that we continue to make around that.

Okay. Has OK Company opened up many cross-selling opportunities?

It has. We've integrated the commercial teams. The acquisition was at the end of last year. We integrated commercial teams in February. We've already seen some very early cross-selling successes. So yes, absolutely, 100%.

How much of the cost base is committed to innovation versus SG&A, et cetera? Nick, can you -- do you have the details at hand for that?

I don't have the specific details, but we are increasing our investment, as we said, in Korea, and we are also building our new innovation center in Croydon. So those 2 are going to account for quite a bit of investment in the coming year. As Ronan said, we have a number of talented people already that are working in innovation, but we're adding to that team, both in Korea and in the U.K.

Very good. I love this next question. There's a lot of publicity around the recent introduction of Lidl carbon running shoes for EUR 50. How do you see that affecting sales of Nike products and consequently, your supply?

I don't think that, that's going to have a material impact. I don't think that we're going to see necessarily a world record being athletes wearing Lidl shoes anytime soon. However, what it does highlight and one of the reasons that Lidl have done it because they're also looking at using supercritical foam in those shoes is absolutely for the environmental credentials, yes. Lidl is incredibly driven by using recycled and sustainable materials.

And I would say that, that's very much at the heart of what they're doing versus necessarily thinking that they're going to win the London or Boston or New York marathons. They're recognizing that the old way of making shoes ain't good. So if anything, I think it's really cool because it highlights the fact that supercritical foaming is a much more sustainable way to achieve a really top class shoe. But the foam that's in their shoe, I don't think it's going to be setting records, but fair play of them for recognizing the environmental credentials of what we do.

All right. How confident are you that Vietnam commissioning will be relatively trouble-free?

I've been around the block a few times. I've been involved in quite a few factory setups. I've learned many mistakes. I've been in the middle of them. There will be surprises for sure. But I am very confident in the team that we have assembled. And in fact, as we commission this, we don't just commission it and then start putting product out. Our customer is with us every step of the way. They are helping review the manufacturing processes. They are willing us on for success.

We've got incredible teams both inside the business from -- also from our customer, but also from our partner, Seoheung, which is incredibly important. They have got 40 years' experience in making shoes. They've got 30 years' experience in Vietnam. And that's why we're involving all the people that we're involving. Will it be without trouble? Definitely not. Will it go well? I absolutely believe so. And it's -- these things are challenging, but we've got a wonderful team assembled of both Zotefoams' folks, but also our partners in the form of customers and obviously, our partner in the form of Seoheung.

I'm going to leave that one to the end. That's a good one to finish with. How is the company dealing with the ever-changing landscape? Could trade tariffs affecting Vietnamese exports to the U.S. disrupt the new hub?

Basically, no. So if you look at the FOB value of a pair of shoes, and I'll not go into it, but labor probably accounts for roughly 1/3 of that and labor costs in Vietnam versus the U.S., you can imagine, are significantly lower, probably 1/10, if not a little bit lower again. So the -- any tariff on the FOB export value of goods going from Vietnam to the U.S. will not have a -- it will never lead to the reestablishment of footwear manufacturing in the U.S., not at all. It's -- tariffs are higher on Chinese goods to the U.S. than Vietnamese.

So if anything, what we're seeing is more migration from the likes of China to Vietnam or Indonesia. We may see more migration to India. But for the moment, Vietnam is a net recipient of volumes from China, and I expect that to continue. China continues to manufacture roughly 60% of all athletic footwear in the world with Vietnam at 20% and Indonesia at 10%. What we'll see is more movement from China probably to Vietnam. This supply chain will never be reestablished in the West, not certainly in my lifetime.

Okay. Has your house broker offered an opinion on why the stock is so lowly rated? There you go, Nick. That's one for you.

I think what our focus is really, as Ronan has highlighted, is on delivering the strategy and execution. We're delivering good results. We're really pleased with what the business has achieved in 2025. We're optimistic about the future. And I think if we can continue to deliver, then the valuation will take care of itself.

Very good. Let's just see. What skill sets are still missing in the management team? Where are you focused on recruitment? I think the first thing is that we can't scale this business based on just an executive team. So we're very focused on the senior leadership team. We've assembled a new senior leadership team in the group. So that is group-wide, and there are 40 or 45 folks in that. We will bring that team together very, very soon. It is important that if we are to scale this business that there's much more than just 7 people sitting on the executive team that's driving this forward.

So our focus is really developing the existing talent and bringing new talent into the senior leadership team. If there are 2 areas that get an oversized proportion of investment at the moment, well, 3, I think, get an oversized portion of investment. One is innovation for obvious reasons. Two is business development and three is around health and safety because as we expand, it's important that we really continue to lean into that. We're all learning all the time. We're bringing new skills in all the time. We just recruited a wonderful AI expert. He's a 24-year-old college graduate who's coming in and he's transforming our world from AI. So the world moves fast, and we're always looking to bring in great talent into the business and see where we can drive our growth faster.

What further opportunities do you see with your footwear customer, different line opportunities?

We -- running is the absolute sweet spot, but we continue to work across different sectors. Our foam is particularly adept at people running fast in a relatively straight line, but we have got on to basketball programs. There are likes of tennis. We work across all the different categories at our client. And we will continue to innovate. And where we see opportunities and the ability to add value and technical performance, then we will continue to do that.

What range of CapEx will be required to add a bolt-on business to achieve the GBP 90 million of additional revenue to hit the GBP 300 million plus of turnover. So it's not really CapEx. So what range of CapEx will be required to add a bolt-on business to achieve the GBP 90 million of additional revenue? So how much does it cost to buy a business with GBP 90 million of revenue, Nick?

Yes. So we paid 7x EBITDA at OKC, and we paid around about, let's say, sort of 1x revenue. So I think you can do the math.

Yes. Okay. Can you provide a bit more information on your product and plans? You know what, I'm going to do -- we've got a few minutes. I'm going to do this because I like this slide. Sorry, everyone bear with me. I haven't hit it too many times. Okay. Sorry, this will go to answer the question, trust me, okay? All right. Sorry, go back. There you go. Here's an idea, okay?

So we're all about reducing weight, we're about providing insulation, we are in safety critical fire safety applications. So you see the use in and around Airbus, you see -- so in seating, in armrest and some insulation installations. In Boeing, you'll see used in business, particularly around business class seating. Those pictures on the left then are gaskets for windows, but also used in plenums and also inducting, so stuff that you don't see.

And then on the right, which is really cool, there's a rocket on the right-hand side, and that thing is draped from top to bottom. It's got a nice layer of high-performance foams around it. So quite a lot of different applications. So over the last 15 to 20 years, the team here at Zotefoams have been developing incredible specifications. The great thing is that specification in aviation sees it move into space type applications.

Okay. Are you using Kaizen or similar techniques to drive operational efficiencies?

I would say that we are -- it's not -- we're not in sort of in a material way at this point. It is something that some of the leadership team that have come into the business have great experience with and are absolutely chomping at the bit to get at. But we've got some basic fundamentals that we're really sorting out, which is also very neat. We continue to look at the less complex areas of driving productivity. But for sure, there's a real opportunity for things like Kaizen. If we look at actually what we're doing in Vietnam and our partners are absolute masters in Kaizen, and they are helping us set up those processes in Vietnam. In fact, we'll probably be taking some of that learning back into the legacy businesses.

Okay. And then the last question is from Bob M. and it is, what is your ambition for 2030?

You know what, we're just going to keep our foot on the gas. We're going to drive as hard as we can. We're going to drive organic growth. I think that the strategy is a good one. I think there are lots of really interesting inorganic opportunities out there. I would set our stall out at being more than GBP 300 million, I would say. But the key for us is just execute every day here. And I've got a lot of -- I've got a real sense of hope and ambition and confidence in what we have here in the business and the team. And so we're just going to keep driving hard. I wouldn't want to limit ourselves to any number at 2030. I know that we publish some, but whatever it is, we always want to go a bit further.

So with that, I think I've managed to answer all the Q&A. I hope -- Okay. Thanks. It's to be double my own. I'm not allowed to comment on those things. You've to create your own thing.

That's great.

Okay. Wonderful. Listen, thank you very much. Mark, over to you to help us close out.

That's great. Ronan and Nick, thank you very much indeed for updating investors. I was going to ask you for feedback, but it looks like Bob has beat me to the chase. So thank you, Bob. Ladies and gentlemen, if I could please ask you not to close this session as we'll now automatically redirect you so that you can provide your feedback in order the company can better understand your views and expectations. This may take a couple of moments to complete, but I'm sure it'll be greatly valued by the company. On behalf of the management team of Zotefoams plc, I'd like to thank you for attending today's presentation and wish you all the best.