COMMITTED TO THE HIGHEST STANDARDS OF CORPORATE GOVERNANCE
The Board recognises that being a well-managed business is important to our shareholders and stakeholders. Sound governance principles must permeate the entire organisation, providing a fundamental underpin to the process of value creation, value protection and value preservation. Governance drives the quality of decision-making that will help Zotefoams achieve its strategic objectives more efficiently and effectively and support long-term sustainable growth.
Dear Shareholder
Throughout the year, the Board has remained committed to its purpose of providing optimal material solutions for the benefit of society. Zotefoams continues to pursue a strategy of ‘Expanding Beyond the Core’, enabling access to a larger addressable market while maintaining disciplined capital allocation and a clear focus on investment returns.
The Board has a detailed programme of activities, ensuring that operational and financial performance, risk, governance, strategy, culture and stakeholder matters are discussed frequently, and supporting Directors’ oversight and understanding. This ensures that the Board’s discussions and decisions are appropriate for the business, our stakeholders and the markets in which we operate.
Strategy sessions are held annually and, in addition, business unit reviews led by the relevant Group Executive Team (GET) member are presented to the Board to enable Directors to better understand market trends, technology developments, our place in the lower-carbon economy, and people strategies. The culture, diversity and inclusion supporting the long-term planning and strategic direction of the Group are also explored during these sessions.
Key areas covered by the Board in 2025 included:
- the appointment of Simon Comer as the first Chief Strategy and Innovation Officer to lead innovation and strategic projects
- approving a Global Innovation Hub in the UK and a Footwear Innovation Centre in South Korea to develop breakthrough foam technologies
- the approval of a strategic partnership with Seoheung to support Zotefoams’ investment in Asia
- the acquisition of Overseas Konstellation Company S.A., a leading producer of high‑quality technical foams, to strengthen the Group’s European presence.
Further details may be found in our S172(1) Statement and in our Strategic Report
I am pleased to present the report on corporate governance on behalf of the Board.
Our governance framework
Governance
The business is managed in line with our risk management framework. The Company has due regard to best practice in governance matters.
Statement of compliance with the 2024 UK Corporate Governance Code
Throughout the financial year ended 31 December 2025, the Board has considered the contents and requirements of the Code and confirms that the Group has been compliant with the provisions of the Code in force throughout the year.
The Code can be downloaded from the FRC website www.frc.org.uk
Further details are provided in this report, the Board Committee reports and the Directors’ report
The disclosures required by Disclosure and Transparency Rules DTR 7.2.6R have been provided in the Directors’ report.
During 2025, the Board has assessed reporting requirements under the UK Corporate Governance Code 2024 (2024 Code) and is compliant with all relevant provisions dictated in the 2024 Code.
Accreditations
The Company is certified to ISO 14001:2015 (Environmental Management), ISO 45001:2018 (Occupational Health and Safety), ISO 9001:2015 (Quality Management) and ISO 27001:2022 (Information Security Management).
We follow ISO 14021:2016 when making environmental claims and have taken steps to gain independent accreditation for these. Further details are provided in our Environment section. The Cyber Essentials Plus certification, an in-depth and thorough independent assessment of our IT systems, was re-awarded in 2024 and we gained certification for the first time to ISO 27001 (Information Security Management Systems).
Policies
The Company has in place a wide range of ethical and control policies. Further details are provided in our Social section and our Environment section.
Roles and responsibilities
The Board’s role is to provide entrepreneurial leadership of the Group within a framework of prudent and effective controls that enable risk to be assessed and managed. The Board sets the strategic aims of the Group, ensures that the necessary resources are in place to achieve the Group’s objectives, and reviews management performance. The Board acts as the representative of the shareholders and other stakeholders and focuses on the governance of the Group. Management is delegated to the Executive Directors and GET.
As part of their role as members of a unitary Board, the Non-Executive Directors constructively challenge and develop proposals on strategy. The Non-Executive Directors scrutinise the performance of management in meeting agreed goals and objectives and monitor the reporting of performance. They satisfy themselves on the integrity of financial information and that financial controls and systems of risk management are robust and defensible. They are responsible for determining appropriate levels of remuneration for the Executive Directors and have a prime role in appointing and, where necessary, removing Executive Directors and in succession planning.
Three principal Committees report into the Board, functioning within defined Terms of Reference. These are the Audit, Remuneration and Nomination Committees.
The Terms of Reference for these Committees are available on the Group’s website www.zotefoams.com
The Board has put in place a schedule of matters that are reserved for its determination or which need to be reported to the Board. This schedule is reviewed regularly and was last reviewed in May 2025.
The Chair is responsible for the leadership of the Board, ensuring its effectiveness on all aspects of its role and setting its agenda. The Chair is also responsible for ensuring that the Directors receive accurate, timely and clear information. The Chair facilitates the effective contribution of the Non-Executive Directors and ensures constructive engagement between Executive and Non-Executive Directors.
The Board considers that Lynn Drummond has sufficient time to devote to her role as Chair of the Company. Lynn Drummond is currently a Non-Executive Director of Stevenage Bioscience Catalyst and Puma AIM VCT plc.
The Group CEO is responsible for the running of the Group’s business. He is supported by the Group CFO and the GET.
Composition and diversity
The Board and its Committees acknowledge the benefits of diversity, including that of gender and ethnicity, and are committed to setting an appropriate “tone from the top” in such matters. Further details about the Board’s approach to diversity may be found in our Nomination Committee report.
The structure, diversity and composition of the Board remain under review to ensure that we have the appropriate mix of skills and experience to best serve a dynamic, growing international company.
As at 31 December 2025, the Board comprised two Executive Directors, four independent Non‑Executive Directors and the independent Non-Executive Chair. L Drummond was appointed to the Board on 17 January 2023 as Non-Executive Director and Chair Designate and became Chair on 24 May 2023. D Robertson, who was appointed Senior Independent Director at the AGM held on 16 May 2018, retired on 31 December 2025. M Swift was appointed Senior Independent Director with effect from 1 January 2026. The Board considers both D Robertson and M Swift to be independent.
L Drummond is also Chair of the Nomination Committee and a member of the Remuneration Committee. Only the respective Committee Chairs and members are entitled to be present at meetings of the Remuneration, Audit and Nomination Committees, but others may attend at the invitation of the Committee Chair. During the year, the Chair met with the Non-Executive Directors regularly without the Executive Directors present and the Non-Executive Directors met without the Chair present to carry out a review of the Chair’s performance, in line with the principles of the Code.
The Directors’ tenures are as follows:
Director | Tenure at 31 December 2025 |
|---|---|
L Drummond | 3 years and 0 months |
R Cox | 1 year and 7 months |
N Wright | 0 years and 3 months |
M Swift | 2 years and 3 months |
J Carling | 8 years and 0 months |
C Wall | 5 years and 7 months |
J Clarke | 0 years and 2 months |
Evaluation and development
A formal review of the performance of the Board and its Committees is carried out each year. The review of the Chair’s performance is led by the Senior Independent Director, together with the other Non-Executive Directors in consultation with the Executive Directors. The other Non-Executive Directors’ performance is evaluated by the Chair in consultation with the Executive Directors. The GET’s performance is evaluated by the Remuneration Committee in conjunction with the Group CEO (except in the case of the Group CEO, when the Group CEO is not present).
Having considered the merits of retaining the services of an external facilitator, the Board concluded that, given the Group’s size, the Board’s needs and recent Board changes, more benefit would be derived from carrying out a fully facilitated Board evaluation at a later date.
Further details of the 2025 Board evaluation may be found in our Nomination Committee report.
The review confirmed that the Board and its Committees remained effective and continued to fulfil their remit, that the matters reserved for the Board were up to date and that appropriate Committees’ Terms of Reference were in place. All Directors contributed effectively and provided appropriate commitment to their role.
The Board considers that it is functioning well and that its current composition contains an appropriate balance and the diversity of views, qualifications, skills, experience and personal attributes necessary to carry out its duties and responsibilities.
Each month, all Directors receive management reports and briefing papers in relation to Board matters in a timely manner to ensure that they have due time to consider the information and act accordingly. New appointments to the Board receive an induction and, where appropriate, training. The Directors have access to the Company Secretary and independent professional advisers, at the Group’s expense, if required for the furtherance of their duties.
The Directors also undertake continuing professional development activities through the year to support development areas identified through the Board evaluation process, as well as to keep themselves up to date with evolving rules, regulations and guidance.
The Directors’ attendance at meetings of the Board and Committees is as follows:
Board meetings | Audit Committee meetings | Rem. Committee meetings | Nomination Committee meetings | ||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
Attendance at meeting | Eligible | Attended | Eligible | Attended | Eligible | Attended | Eligible | Attended | |||
J Carling | 9 | 8 | 3 | 3 | 4 | 4 | 3 | 3 | |||
J Clarke1 | 2 | 2 | 1 | 1 | 1 | 1 | 0 | 0 | |||
R Cox | 9 | 9 | – | – | – | – | – | – | |||
L Drummond | 9 | 9 | – | – | 4 | 4 | 3 | 3 | |||
G McGrath2 | 8 | 8 | – | – | – | – | – | – | |||
D Robertson | 9 | 9 | 3 | 3 | 4 | 4 | 3 | 3 | |||
M Swift | 9 | 9 | 3 | 3 | 4 | 4 | 3 | 3 | |||
| C Wall | 9 | 9 | 3 | 3 | 4 | 4 | 3 | 3 | |||
N Wright3 | 2 | 2 | – | – | – | – | – | – | |||
1 J Clarke joined the Board on 28 October 2025.
2 G McGrath, who joined the Board on 1 December 2015, resigned on 31 October 2025.
3 N Wright joined the Board on 22 September 2025.
Zotefoams’ culture
The Board understands its role in overseeing Zotefoams’ culture and ensuring that it aligns with strategy, values and stakeholder expectations. As tone-setter, the Board strives to reflect the Group’s culture through its decisions and behaviour. In order to better inform its decision-making, the Board employs a variety of methods to assess, understand and oversee the Group’s culture.
Led by a purpose of providing optimal material solutions for the benefit of society, Zotefoams has developed a set of values aimed at shaping the Group’s cultural identity and influencing its culture: Courage, Impact and Respect. Further details are provided in our CEO’s review and our Social section. The Board places strong emphasis on embedding these values in the business and ensuring they are reflected in decision‑making by staff throughout the Group.
The Board monitors how Zotefoams’ culture has been embedded through regular updates from the Group CEO and Group Chief People Officer on social matters. In 2025, the Board noted a number of initiatives aimed at further embedding the Group’s culture, including a comprehensive leadership programme, regular cross-regional forums, the appointment of Global Engagement Champions to support inclusion and feedback on culture throughout the Group, and global town hall events held throughout the year to allow all staff members to express their views on a wide range of topics, including culture. Board members also personally interact with staff members at regular intervals, including through site visits internationally. With the assistance of its Committees, the Board oversees the effectiveness of a number of Company policies in relation to Health and Safety, Modern Slavery, Whistleblowing, Diversity, Equity, Inclusion and Belonging, and other relevant matters.
The Board has concluded that satisfactory progress continues to be made towards embedding the appropriate culture in the Group in 2025 and has no concerns.
Details of the Company’s approach to investing in and rewarding its workforce are provided in the Directors’ Remuneration report.
Relations with shareholders
Our communication strategy with shareholders is guided by the principle of effective and transparent engagement. To ensure that the Board, particularly the Non-Executive Directors, understands the views of the shareholders, the Group’s corporate brokers provide summary feedback from the investor meetings, in particular from the meetings held following the interim and preliminary results announcements. Meetings between the Executive Directors and institutional shareholders are usually held twice a year following the announcement of the Group’s interim and preliminary results, in August and March respectively. Other meetings are held at the request of institutional shareholders. In 2025, investors were invited to join the Company Chair and the Group CEO at a Capital Markets Day held in March. The Board also recognises the importance of engaging with individual shareholders, and the Executive Directors continue to hold presentations through the Investor Meet Company digital platform at least twice per year. The platform provides individual investors with the same opportunity for two-way engagement as institutional investors through live, interactive presentations as part of the investor roadshows. The Chair and the Senior Independent Director, as well as the other Non‑Executive Directors, are available to meet institutional shareholders if requested. The Company also continued to keep shareholders abreast of developments within the business through Regulatory News Services announcements, including the Group CFO succession, a new strategic partnership with Seoheung Co. Ltd., an Executive appointment to support the Group’s Asia investment, the acquisition of Overseas Konstellation Company S.A. and Board changes.
Shareholder consultations on the proposals for the Directors’ Remuneration Policy to be adopted at the 2026 AGM were held in 2025 and early 2026. These included an outline of the proposals being sent to the top 13 shareholders of the business, who at the time accounted for 58.4% of the shareholder base, and subsequent engagement by telephone or through online meetings, with feedback being taken into account to ensure the proposals were fully aligned with shareholders’ expectations. Further details are provided in the Directors’ Remuneration report.
The Annual Report, the AGM, the Group's website www.zotefoams.com and social media channels also support communication with investors. The Chairs of the Board Committees will normally be available at the AGM to answer questions.
Internal control
Internal controls framework
In compliance with the UK Corporate Governance Code, the Board monitors the Group’s risk management and internal control systems and, at least annually, reviews their effectiveness. The Board’s monitoring covers all controls, including financial, operational and compliance controls. Bi-annually, the effectiveness and outputs of the risk management framework, as documented on the Risk management and principal risks section of this Annual Report, are reviewed.
This is based principally on reviewing reports from management to consider whether significant and emerging risks are identified, evaluated, managed and controlled, and whether any significant weaknesses are promptly remedied. The Board, via the Audit Committee, also sets a rolling three-year, risk‑based, internal audit plan and reviews the actions and closure of report findings. Annually, the Board receives a report from management on the key financial policies, processes and controls in place for the purpose of preparing the consolidated financial statements and reviews their effectiveness.
The Audit Committee assists the Board in discharging its review responsibilities.
During the course of its review of the internal control framework and the principal risks facing the Group, the Board did not identify, nor was it advised of, any failings or weaknesses it determined to be significant. Therefore, a confirmation in respect of necessary actions has not been considered appropriate.
Key elements of the Group’s internal controls framework are listed below. In addition, the Board is aware of the requirements of Provision 29 of the Code and provides further details of the work done to date in this respect in the Audit Committee report.
Control environment
The Group has an appropriate organisational structure for planning, executing, controlling and monitoring business operations in order to achieve Group objectives. Overall business objectives are set by the Board and communicated through the organisation. Lines of responsibility and delegations of authority are clearly documented. The Group’s ERP IT system is fit for purpose, well maintained and used whenever possible to automate controls, including the effective application of segregation of duties.
Control procedures
The Group has implemented control procedures designed to ensure complete and accurate accounting for financial transactions and to limit the potential exposure to loss of assets or fraud. Measures taken include physical controls, segregation of duties and financial authority levels, and reviews by management, the Internal Auditor and the External Auditor. The effectiveness of these control procedures is tested by management, the Audit Committee and the Board.
A process of control self-assessment and hierarchical reporting has been established, which provides for a documented and auditable trail of accountability. These procedures are relevant across the Group and provide for successive assurances to be given at increasingly higher levels of management and, finally, to the Board. Planned corrective actions are independently monitored for timely completion.
Risk management
Management is responsible for the identification and evaluation of key risks applicable to its areas of business. These risks are assessed on a continual basis and may be associated with a variety of internal or external sources.
The Group’s risk management framework is detailed here.
Monitoring and corrective action
There are clear and consistent procedures in place for monitoring the system of internal financial and non‑financial controls. The Audit Committee normally meets not less than three times a year and, within its remit, reviews the effectiveness of the Group’s system of internal financial controls. The Committee receives reports from the External Auditor, Internal Auditor and management.
Non-financial controls are reviewed regularly in line with the risk management framework. Corrective actions are taken by the risk committees, and exceptions are reported to the Audit Committee.
Information and communication with the Board
The annual budget and quarterly forecast updates are a key part of the planning and performance management process and the Board reviews performance against these. In addition, the Board receives monthly management reports, which highlight financial results, performance against key performance indicators and significant activities and matters of note during the month under review.
Through these mechanisms, the performance of the Group is regularly monitored, risks are identified in a timely manner, their financial implications assessed, control procedures evaluated, and corrective actions agreed and implemented.
Accountability
The Board acknowledges its responsibility to give a fair, balanced and understandable view of the financial position and future prospects of the business. On behalf of the Board, and at the recommendation of the Audit Committee, I confirm we believe that the 2025 Annual Report presents a fair, balanced and understandable assessment of the Group’s position, its performance and its prospects, as well as of its business model and strategy.
Annual General Meeting
Our AGM will be held at our UK foam manufacturing facility. Attendees will have the opportunity to meet the Board informally and ask questions. Further information is provided in our Notice of the 2026 AGM.
The Directors and I look forward to welcoming shareholders to the AGM.
L Drummond
Chair
10 April 2026