ULSTER Television is to give its shareholders a special £10.5 million sterling dividend after reporting a 9.5 per cent jump in pretax profits to a record £8.2 million.
UTV's 16,000 shareholders would receive a special dividend of £1 for each share, subject to shareholder approval. The payment will halve the company's growing cash hoard.
UTV is also proposing a five for one share split in order to increase the stock liquidity and to bring the share price more in line with the market.
Shares in UTV, which is listed in London and Dublin, rose 85p to £13.80 following news of the results and the special dividend proposal but later fell back to £13.71.
Most of the shares are held by British institutional investors. The company announced a final dividend of 12.5p, making a total normal dividend for the year of 22.5p.
The station's managing director, Mr Desmond Smyth, said the company was delighted with the results, but warned that advertising revenue may fall back this year. "This year has been slow in the first quarter, but we are expecting an improvement later in the year," he said.
Mr Smyth said that the TV3 consortium, in which UTV holds a substantial stake, was continuing its licence negotiations with the Independent Radio and Television Commission (IRTC). A business plan has been submitted to the IRTC and the TV3 group has also responded to a number of queries raised by the commission.
Once the licence has been awarded, a round of fund raising will get under way to raise the bulk of the cash needed. The Republic's new station should be on air about 12 months after receiving the licence, Mr Smyth said. UTV is to fund its investment in the venture from exiting resources.
TV3 aside, UTV's main focus for the future is digital television. Like all ITV companies, UTV will receive a guaranteed digital band width but must also continue its current analogue service. It will also be working with other stations in the network to develop new digital projects such as pay TV and interactive services.
UTV's turnover increased by 8.8 per cent to £34.5 million, boosted in the main by a 9.8 per cent growth in advertising revenue from £29.9 million to £32.8 million. The company's pre-tax profits of £8.2 million were made up of £6.4 million in operating profit, and investment income of £1.8 million.
The station generated £2.4 million net cash during the year, boosting its cash reserves, including the value of its investment portfolio, to £20.5 million. UTV chairman, Mr John McGuckian, said that after assessing the company's current and future investment requirements it had been decided to distribute £10.5 million in excess funds.
Last year's near 10 per cent growth in advertising was significantly ahead of the average ITV growth of 5.5 per cent. Irish sourced revenue, from media buyers in Dublin and Belfast, increased by 17 per cent, with the top 10 advertisers accounting for about 70 per cent of the growth.
An "exceptional increase" in the amount spent by the British government on its "Days Like These" ceasefire advertising campaign, was of "particular note," Mr McGuckian said. But this spend is unlikely to be maintained during 1996, he added. Mr Smyth declined to reveal how much the British government had spent on the campaign but the sum involved is thought to have been substantial.
While advertising revenue has slipped back in the first quarter of this year, the company is hopeful that the advent of the British supermarket chains, Tesco and Sainsbury, will "act as a stimulus for further promotional expenditure".
UTV's viewer ship share slipped back 2 per cent in line with the entire ITV network, but its 42 per cent share remains the highest in independent television and far ahead of BBC1 Northern Ireland's 28 per cent. The proportion of ABCI and young adult viewers both increased.
