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Sky TV makes $124.5m special dividend to distribute tax credits

Sky Network Television, whose long-standing cornerstone shareholder Todd Communications exited this month, will pay a $124.5 million special dividend to shareholders to share its tax credits with investors.

The Auckland-based company will make a special dividend of 32 cents per share with a record date on December 13 and payment on December 19, it says in a statement. Last year Sky TV paid a special dividend of 25 cents per share.

The payment was being made after the company was left with $44 million in tax credits, having settled its tax bill of $16 million yesterday, spokeswoman Kirsty Way told BusinessDesk.

The shares were unchanged at $5.07 yesterday and have slipped 4.3% this year. The stock is rated an average "hold" based on 10 analyst recommendations compiled by Reuters with a median target price of $5.30.

Sky TV made a profit of $123.7 million, or 31.78 cents per share, in the 12 months ended June 30 and paid a dividend of 22 cents in the 2012 financial year.

As at June 30, the company had cash and equivalents of $27.9 million.


Comments and questions

Distributing tax credits seems an odd reason to be paying a special dividend, it is more a consequence of paying a special dividend. The story makes it sound like Sky TV have settled some unusual tax bill / dispute with the Inland Revenue yesterday (the reference to $16m), whereas this is surely to have been just an ordinary provisional tax payment, which incidentally was due yesterday.

They would need to get rid of the IC before News Corp sold out.

Maybe this is a signal from the board that they expect this to happen and don't want to be left holding ICs they can't distribute.

Setting itself up for takeover.

Interesting the extent to which the share price seems to have anticipated this.

Although if, with shareholder changes, they are getting close to losing the imputation credits due to failing the continued ownership rules, they may want to distribute all ICs.

Amazing, and soon we will get a letter telling us that due to increased costs they will be putting up their prices.