Further to my post on Monday, the TalkTalk (TALK) interims are out and look OK as they say they are on track to meet forecasts before the costs of the cyber attack. Therefore it seems they have decided to tough it out despite the estimated cost of £30 to £35 million for cyber attack which represents a hit of about 25% to their expected net profit for this year . So they have decided to increase the interim by the promised 15% and say the expect to grow the final by 15% too. So it seems my fears of a dividend cut were unfounded for now and unsurprisingly the shares have had a bounce as a result.
However, given the financial metrics and the fact that these figures pre date the cyber attack, I would still be cautious on the dividend prospects for this one though given the limited cover and rising debt. It is worth noting though that the Company claim that net debt will be down in H2, although it always seems that something crops up to push back their growth & debt reduction targets.
Given that it seems to me that they cannot continue to push the dividend up by 15% per annum and something has to give, although as ever they say they expect to see a big pick up in profits next year. I guess time will tell as to the longer term effects of the cyber attack on the business and whether they can tough it out in the long term and move to a more profitable position, therefore I remain concerned about the longer term growth / sustainability of the dividend here.