WH Smith warns on profits; Smart Metering in £291m deal
WH Smith: warning
WH Smith has issued a sales and profit warning in the light of the impact of coronavirus on its business.
The stationery firm said it had been monitoring the financial impact of Covid-19 since the outbreak began across both its travel division, which includes airport and railway station outlets, and its high street business.
In Asia Pacific, which accounts for about 5% of its travel division’s revenue, it said it had seen a “significant impact on the business since February”.
Over the last two weeks, it has seen a “material reduction” in passenger numbers at airports outside of Asia Pacific.
“For UK Travel, we expect revenue for the six months to be down approximately 15% on expectations which includes airports, our most affected channel, down 35% in March and April.
“On the same basis, including significant reductions in March and April, second half revenue in the US is expected to be approximately 20% lower than our expectations. The rest of our International business is also expected to be approximately 20% lower.”
The group said it was not seeing a “significant impact” on its high street business as a result of coronavirus. However, it said it recognised that Covid-19 could result in “reduced high street footfall”.
Smart Metering Systems, the Scotland-based energy services company, has conditionally sold a minority of the group’s meter assets to funds managed by Equitix Investment Management for £291 million (£282m net).
The disposal will enable the implementation of an enhanced long-term, sustainable dividend payment policy and results in a significant reshaping of SMS’s capital structure.
Alan Foy , chief executive, said: “This transaction realises considerable cash returns and demonstrates the substantial value of our smart meter portfolio.
“It also will enable us to enhance greatly shareholder value with significant and sustainable increase in dividends – underpinned by our asset-backed, inflation-linked, recurring revenue stream.
“With a strengthened balance sheet, we will also be in a much stronger position to invest in the sizeable UK smart meter rollout programme, which is central to the establishment of a decentralised and decarbonised energy system.”
The company has proposed a revised dividend of 25p per share for FY2020, increasing at least in line with RPI a year until FY2024 and a proposed scrip alternative for up to 30% of dividend.