Zotefoams

Website: Zotefoams
Index: FTSE Small Cap
EPIC: ZTF
Supersector: Chemicals
Sector: Chemicals
Subsector: Specialty Chemicals
Market Cap: £195.02M
Payout Frequency: Semi-Annual

Zotefoams Dividend Analysis and Summary

Key Dividend Details

Proposed final dividend: 5.35p per share (up 5% YoY; subject to AGM approval in May 2026)
Total FY25 dividend: 7.85p (vs 7.48p in FY24; up ~4.9%)
Ex-dividend date: 30/04/2026
Record date: 01/05/2026
Payment date: 03/06/2026
Dividend cover: 5.1x (based on adjusted PAT; Board targets minimum cover of 2x)
Indicative yield: not stated (depends on share price at ex-date)

Sustainability and Growth Outlook

Cyclically robust cover: Adjusted EPS up 46% to 38.0p supports the 5.1x cover on the full-year dividend; strong headroom relative to the 2x policy floor.
Cash-backed: Cash generated from operations £39.7m, free cash flow > £23m (101% cash conversion) comfortably funds the c. £2.6m final dividend cash out in June.
Progressive policy evidenced: Final dividend up 5% and total dividend up ~5% aligns with stated progressive framework.
Earnings quality improving: Exit of loss-making ReZorce/MEL and continued margin expansion (adjusted operating margin 14.4%, +220bps) underpins dividend sustainability.
Growth trajectory: Medium-term targets (ROCE >20%, operating profit >£40m by FY2029) and diversification across verticals support scope for gradual dividend growth, albeit with near-term normalisation in footwear volumes.

Financial Support and Capital Allocation

Balance sheet headroom: Leverage (bank basis) 0.8x with IFRS net debt £43.0m; covenant headroom strong.
Liquidity enhanced: RCF refinanced and upsized in Jan-26 to £90m (+£30m accordion), adding flexibility for capex and M&A while maintaining dividend capacity.
Disciplined investment: FY25 capex £14.0m focused on North America capacity and Asia build-out; management reiterates disciplined returns and cash conversion >95% target over the plan.
Deferred M&A payments: OKC deferred consideration of c. £3.0m due 30 Apr 2026 and £3.0m due 30 Oct 2026; manageable within cash/RCF without pressuring dividends given FCF profile.

Structural/Policy Changes Impacting Future Dividends

M&A: Acquisition of Overseas Konstellation Company (OKC) (Nov-25), expected to be earnings accretive in 2026; integration underway. Positive for medium-term dividend capacity if synergies materialise.
Portfolio reshape: Closure of ReZorce/MEL completed—removes earnings drag and simplifies cash flows, supportive of dividend resilience.
Footprint expansion: New Vietnam facility (with Seoheung holding 17.5% in the local partnership) and Korea innovation hub—execution and ramp risk, but aimed at lowering capital intensity and improving long-term cash generation.
Refinancing: New £90m RCF (plus accordion) extends tenor and enhances liquidity, stabilising funding for capex/M&A alongside dividends.

Risks and Flags to Dividend Stability

Footwear normalisation: Management guides to moderating footwear volumes in 2026 after exceptional 2024–25; partial offset from aerospace/industrial pipelines. Could trim near-term EPS growth momentum.
Execution risk: Vietnam ramp and OKC integration must deliver on time and within budget to preserve cash and returns.
FX exposure: ~91% of sales non-sterling; hedged but residual volatility can affect earnings and cash timing.
Deferred consideration and capex timing: 2026 cash outflows (OKC deferred payments and Asia capex) require continued strong cash generation; current FCF and RCF headroom appear adequate.
Customer concentration: Consumer & Lifestyle is 50% of revenue with a flagship footwear customer—any program or inventory adjustments remain a watchpoint.

Dividends Used in Calculation:

Ex-Dividend Date	Payment Date	Type	Amount	Currency
01/05/2025	02/06/2025	Final	5.10p	GBX
04/09/2025	06/10/2025	Interim	2.50p	GBX

Total (Annual Dividends Per Share): 7.60p

Dividend Yield = Annual Dividends Per Share (7.60p) ÷ Share Price (400p) = 1.9%

Ex Dividend Date	Payment Date	Type	Amount	Currency
30/04/2026	03/06/2026	Final	5.3500p	GBX
04/09/2025	06/10/2025	Interim	2.50p	GBX
01/05/2025	02/06/2025	Final	5.10p	GBX
05/09/2024	07/10/2024	Interim	2.38p	GBX
02/05/2024	03/06/2024	Final	4.90p	GBX
07/09/2023	06/10/2023	Interim	2.28p	GBX
04/05/2023	02/06/2023	Final	4.62p	GBX
08/09/2022	07/10/2022	Interim	2.18p	GBX
05/05/2022	01/06/2022	Final	4.40p	GBX
09/09/2021	08/10/2021	Interim	2.10p	GBX
06/05/2021	01/06/2021	Final	4.27p	GBX
10/09/2020	09/10/2020	Interim	2.03p	GBX
12/09/2019	10/10/2019	Interim	2.03p	GBX
25/04/2019	30/05/2019	Final	4.15p	GBX
14/09/2018	11/10/2018	Interim	1.97p	GBX
19/04/2018	24/05/2018	Final	4.02p	GBX
14/09/2017	12/10/2017	Interim	1.91p	GBX
20/04/2017	25/05/2017	Final	3.90p	GBX
15/09/2016	13/10/2016	Interim	1.85p	GBX
21/04/2016	25/05/2016	Final	3.80p	GBX
10/09/2015	08/10/2015	Interim	1.80p	GBX
23/04/2015	27/05/2015	Final	3.70p	GBX
03/09/2014	09/10/2014	Interim	1.75p	GBX

Year	Interim	Final	Currency	Total	Change
2024	2.380	4.900	GBX	7.280	5.500
2023	2.280	4.620	GBX	6.900	4.860
2022	2.180	4.400	GBX	6.580	3.290
2021	2.100	4.270	GBX	6.370	213.790
2020	2.030		GBX	2.030	-67.150
2019	2.030	4.150	GBX	6.180	3.170
2018	1.970	4.020	GBX	5.990	3.090
2017	1.910	3.900	GBX	5.810	2.830
2016	1.850	3.800	GBX	5.650	2.720
2015	1.800	3.700	GBX	5.500	214.280
2014	1.750		GBX	1.750

Number of Shares:

Payment	Paid	Amount
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