Carphone Warehouse tries to keep investors happy with maiden dividend
Tuesday 25 March 2003
Carphone Warehouse, Britain's biggest mobile phone retailer, is to pay its first dividend this year as it seeks to placate shareholders who have seen the group's shares fall sharply.
The group will pay a dividend of a penny a share in the year to March. The biggest winner will be founder and chief executive Charles Dunstone, who owns 309 million shares, a stake of 35.4 per cent. His payout will be just over £3m.
Roger Taylor, the finance director, said: "I don't think it's a life-changing experience for Charles." Mr Dunstone received £60m as a result of the company's stock market float in mid-2000. "If he's spent that I'm not sure what he's spent it on," Mr Taylor commented. "He does rather seem to spend a lot of time in the office."
Carphone Warehouse said its dividend policy was now to raise the payout in line with earnings per share. This is expected to be about 20 per cent in the year to 2004. The company had earmarked its cash to spend on expanding its store portfolio, especially in Continental Europe. It now has more than 1,200 outlets across the Continent but has suffered problems in some countries such as Germany, which is loss-making.
As part of a trading update yesterday Carphone Warehouse said it is on track to meet analysts's profit forecasts of £57m this year. However, the company will take an exceptional charge of £15m to cover a write-down in the value of its investment in a technology start-up venture called Wireless Internet Fund. Carphone pumped £40m into this fund at the peak of the internet boom in 1999 and 2000. It has already had to write down the value of its stake once and yesterday's second charge cut the value of its stake to £10m. "I hope this is the last one, but then I said that last year," Mr Taylor said.
Mr Taylor admitted that most of the 16 wireless technology companies the fund had invested in had not amounted to anything. "Only five or six have any value but there are two or three good businesses in there," he said.
The exceptional charge will be balanced by a £13.2m profit Carphone Warehouse has made on the sale and leaseback of its support centre in Acton, west London.
The company added that it has signed up 31,000 customers to its talktalk fixed-line phone service since its launch in February. The service is designed to offer lower prices than BT. Carphone Warehouse said that 15 per cent of its customers who are signing up for new mobile phones are taking up talktalk too. It suggested the average revenue per user was £15 a month.
The company's shares fell 0.75p to 64.75p.
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