Christmas has come early for investors at polymer manufacturer Victrex (VCT) as it declares a special dividend of 69p per share, beating expectations of 50p per share.

We flagged the potential for a special payout in September after the company’s tax rate was cut from approximately 21% to 12%. This was due to Victrex’s significant R&D spending, making it eligible for the UK’s Patent Box tax break.

The company said it would pay out the special dividend if net cash hit £85m by the end of September, which it surpassed by delivering £120.1m.

Victrex has now declared 121.8p in dividends across the ordinary and special payments for the year to 30 September, equal to a 5% yield on the current share price.

The company says currency movements provided a benefit of £18m to full year pre-tax profit, which rose 11% to £111m.

Sales increased by 15% to £290.2m, driven by strong growth in Victrex’s core business and offset significantly lower volumes in its consumer electronics division.


N+1 Singer analyst James Tetley says there is scope for a ‘modest increase’ in earnings forecasts for the year to 30 September 2018 as over £10m of currency gains are hedged and underlying growth momentum continues.

UBS analyst Andrew Stott is impressed that Victrex beat his sales forecast of £275m and highlights earnings per share exceeded expectations thanks to the tax rate cut.

He has flagged higher operations and distribution costs, as well as a hike in costs to manufacture new polymer products that pushed the earnings before interest and tax (EBIT) margin lower to 37% in the second half of the financial year.

This was 280 basis points lower compared to the first half of the financial year, which may explain why shares in Victrex dip 0.8% to £24.01 on publication of its financial results.

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Issue Date: 05 Dec 2017