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.

(BusinessDesk)


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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.

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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.

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Setting itself up for takeover.

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

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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.

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

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