LONDON (Alliance News) - Entu (UK) PLC Tuesday said its full year results will be below market expectations after it decided to shut-down its struggling solar business and warned it may cut its dividend.
"Following the developments in Solar, Entu now anticipates that its full year results will be below market expectations," said the company in a statement.
Back in July, the home improvement group said its solar division had faced "difficulties" in the first half of 2015 and on Tuesday said the division's performance did not improve in the "historically stronger months" of July and August.
Entu also said the solar market is expected to become "increasingly difficult" due to speculation that VAT for solar products could rise to 20% from 5%, compounded by uncertainty about the Feed-In-Tariff subsidies currently used for solar products.
The government has already said there will be a substantial reduction in Feed-In-Tariffs from the start of 2016.
"The board does not believe that its Solar business is likely to make an acceptable return on investment in the medium term and therefore, after fulfilling all current obligations, Entu will discontinue its retail Solar activities in a controlled manner, and re-train and re-deploy as many staff as possible into its other activities," it said.
Entu said its operating profit for the full year to end October 31 will be in the region of GBP8.0 million.
The company stressed that away from the solar business, the company's future prospects continue to trade in line with management expectations. Its other divisions include home improvement products, insulation products, boilers and repairs and renewals cover plans.
Entu said it intends to pay a final dividend of 5.33 pence per share, which would bring the full year dividend to 8.0 pence per share. However, it said it will not decide on the final dividend until the end of the financial year, but said the dividend for the full year will be no less than 5.34 pence.
"The prospects for our Solar business have deteriorated dramatically over the last six months, and we have taken a decision which I have no doubt will be seen to be correct. However we have disappointed our shareholders and I can only assure them that we are entirely focused on restoring earnings, dividends and shareholder value," said Chief Executive Ian Blackhurst.
By Joshua Warner; joshuawarner@alliancenews.com; @JoshAlliance
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