Hansard (LSE: HSD) cuts its dividend as annual profits plunge.
Hansard (LSE: HSD) plunged 21p, or 18%, to 97p in early London trade this morning after investors realised the share's 12% dividend yield was in fact too good to be true.
The specialist savings provider today announced annual profits had plunged from £17 million to £11 million, although its full-year dividend would be lifted by 1% to 13.9p per share. Prior to today, Hansard's shares had been offering a 12% income based on this forthcoming payout.
However, Hansard added that now was "an appropriate time to adjust the dividend to a level commensurate with the surplus cash generated by the business". The firm currently expects to cut the payout for the year to June 2013 by 42% to 8p per share.
The dividend chop comes as Hansard struggles in the wake of the eurozone crisis. The "continued instability" of the single currency caused single-premium new business sales to slump 53% to £51 million, and the group admitted it did not anticipate the position to be improved within the next few years.
Also in the mix is litigation in Norway, whereby the company has suffered an adverse ruling in relation to writs of £11 million. Hansard anticipates "continuing additional expenditure" to address existing and new cases concerning "the selection and performance of assets".
Right now, Hansard's yield at 97p is 8%. That income is well above that offered by the wider FTSE, but this £133 million market-cap business does have its issues.
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> Maynard does not own any share mentioned in this article.
