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Dividend Alerts – 10 December 2012 – Company Results
December 10, 2012


November 6th, 2012

  • Tesco’s US adventure is ending, finally

  • Vodafone’s dividend increase maintained

  • Summary results and dividend announcements

Dear subscriber

Alongside its third quarter interim management statement reviewed in more detail Here, Tesco also announced a strategic review of its 200 Fresh & Easy business in the USA on the back of consistently disappointing results. The Fresh & Easy operation has failed to generate any profit since launch despite being in its roughly fifth year of operation.

For a relatively small part of the group's business, Fresh & Easy has taken up a significant amount of capital and management time. The US unit had promised a lot but has never delivered and despite all the investment and management attention the US operations generated just 1 percent of group sales last year.

The announcement of the strategic review overshadowed Tesco’s third-quarter interim management statement, with group sales for the 13 weeks ended 24th November up 2.4 percent, including petrol at constant exchange rates (CER), and rose 2.9 percent excluding petrol at CER.

Management highlighted good progress for its six-part £1 billion investment programme to Build a Better Tesco in the UK, which I reported on in an earlier article, Here.

Vodafone’s dividend increase maintained

Blaming southern Europeans for cutting back on using their mobile phones, Vodafone released six months' group revenue to September 30 down 7.4 percent to £21.8bn. Read our extensive report, Here. Southern Europe accounted for around 18 percent of operating profit.

The group's first-half adjusted operating profit rose 2.2 percent to £6.2bn, thanks to a strong performance in the United States, which accounted for over half the total.

Weak trading, as well as adverse currency moves, and writing down £5.9bn on the value of its business in Spain and Italy sank Vodafone results into a first-half net loss of £1.98bn, compared to a profit of £6.68bn a year earlier.

In line with its dividend per share growth target of at least 7 percent per year until March 2013, Vodafone confirmed an interim dividend per share of 3.27 pence, up 7.2 percent, payable on February 6, 2013. However, the group did not disclose its dividend targets beyond 2013.

How is Vodafone's competion doing?

In comparison to its Europen peers, Vodafone's 'core' dividend compares well, as I reported in an earlier article.

European competitors such as Telefonica - which is embarking on a major offensive to pay down debt - France Telecom, Dutch KPN and Telekom Austria all have cut or scrapped their dividends, while Deutsche Telekom announced last week a drop in its dividends by almost a third for the next two years.

Clearly, the special dividends Vodafone is now receiving from joint venture Verizon Wireless have boosted payments to shareholders to a level that Deutsche Telekom shareholders can only dream of.

Results and dividend announcements

Greene King

Greene King published half-year results to 14 October. While revenue was up 7.3 percent, and adjusted earnings per share improved by 8.6 percent, the company announced an inflation beating 6.7 percent increase in dividends at7.15 pence going ex-dividend on 19 December and payable on 25 January.

While the company has a substantial freehold property element on its balance sheet, worryingly, net debt stood at £1,463m resulted in a rather massive gearing of 154 percent, slightly belows the 158% recorded at the April year end.

Compass Group

Compass Group published annual results to 30 September. Revenue was up 5.4 percent while underlying earnings per share rose by 10 percent with free cash flow up by a similar proportion. Gearing was 30.1 percent compared to 21.8 percent a year ago.

The final dividend is 14.1 pence going ex-dividend on 23 January and payable on 25 February, making a total payout for the year an inflation beating 10.4 per cent increase of 21.3 pence.

The company remains committed to dividend increases “in line with constant currency earnings, maintaining the current level of cover at two times earnings”. This means that the dividend will fluctuate in line with earnings.

Sage Group

FTSE100’s only software group Sage announced published annual results to with organic revenue growth of 2 percent in the year including 6 percent growth in subscription revenue and 5 percent contraction in software and software-related service revenue.

Pre-tax profit came in at £334.3m, just 1 percent ahead. Proposed final dividend amounts to 6.67 pence, going ex-dividend on 13 February and payable on 2 March 2013, giving a total 4 percent higher at 10.15 pence.

Severn Trent

Severn Trent announced its half year results to 30 September with turnover up 4 percent and with adjusted earnings per share up 2 percent in line with their full year expectations. Worryingly, gearing increased to 480 percent compared to the 408% at their year-end last March.

The dividend is an inflation beating 8.2 percent up on last year's interim at 30.34 pence having gone ex dividend on 5 December and payable on 11 January, in line with their current five year regulatory period for dividend rises of at least RPI+3%pa.

United Utilities

United Utilities announced its half year report to 30 September, including an inflation beating 7.2 percent increased interim dividend at 11.44 pence, going ex-dividend on 19 December and payable on 1 February, very much in line with their current regulatory period policy through to 2015 of RPI+2% annual dividend increases.

Gearing has gone worse; with debt standing at £5,323m representing gearing of 292 percent compared to the 288 percent at the March year end.

HSBC

HSBC has released the sterling value of its previously announced third quarter dividend of US 9.0¢ which becomes 5.6042 pence, due on 12 December.

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Dividend Income Investor.com
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Recent releases at Dividend Income Blog

What follows is an overview of the various company commentaries and results and dividend announcements at Dividend Income Blog released on:

21 November Commentaries on:

  • National Grid
Results and dividend announcements on:
  • SSE
  • Sainsbury
  • British Land
  • ICAP
14 November Commentaries on:
  • Vodafone
Results and dividend announcements on:
  • First Group
  • Land Securities
7 November Commentaries on:
  • Royal Dutch Shell
  • BP
Results and dividend announcements on:
  • Unilever
  • British Sky Broadcasting Group
6 November Commentaries on:
  • AstraZeneca
  • GSK


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