Zotefoams plc ($ZTF)

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.