No interim dividend for shareholders in the Ten Network for another half, despite it seeing a "strong" improvement in its latest half, the first interim profit to be reported by the group as an independent company.
Despite the lack of a payment to shareholders, the market liked the result and pushed the shares up to a 21 month high of $1.90 yesterday.
Executive chairman, Nick Falloon, said there was no decision on a resumption of dividend payments, but with four new directors named yesterday, the new look board would examine the question later in the year.
Ten has not paid a dividend to shareholders now for a year after a 2c a share interim in the previous financial year.
But he said in a statement yesterday that "We expect a return to a dividend payout this year, with the announcement of a dividend at the time of the full year results in October".
Yesterday’s interim profit figure showed a better performance in the second quarter, but on a six month on six month comparison the company is still travelling a bit roughly.
But compared to a year ago, when the company had a troubled parent in the Canwest group of Canada (it has since collapsed), it couldn’t get a fund raising away because the price was too steep and its trading position was fraught after being forced to take big asset impairment losses of more than $130 million.
The market has been pushing ten’s share price higher, accepting that it is experiencing improved trading conditions and in expectations of a higher return from the hit series, Masterchef Australia, which starts its second series after Easter.
As well, the market also voted the company the winner from the licence fee rebate gift from the federal government last month, and there’s also been an element of takeover speculation in the way the shares have risen in the last six weeks or so.
The shares rose 4.5c or more than 2.4% to $1.90 yesterday.
That’s the highest the shares have been since June, 2008.
The shares are up 20% from early February, outperforming the market as a whole.
Ten revealed a net profit of $58.70 million for the six months to February 28, 2010 yesterday, compared with a net loss of $79.7 million for the previous corresponding period, which included $138.4 million in write-downs related mainly to its outdoor advertising assets.
Group revenue was $474.0 million for the half, up marginally from the $467.6 million in the same half of last year.
Group earnings before interest, tax, depreciation and amortisation (EBITDA) were $117.5 million (2009: $118.9 million).
The TV business had an EBITDA of $110.2 million (2009: $114.1 million) and the EYE outdoor business had EBITDA of $7.8 million (2009: $5.3 million),
Group earnings before interest and tax (EBIT) of $103.3 million (2009: $101.4 million).
Mr Falloon said the results reflected improving operating conditions, "notably a considerably stronger second quarter when television revenue grew by more than 12 per cent compared to the same period last year".
"Ten Holdings is benefiting from improving market conditions, as well as improving earnings and cashflows. The Company has a strong balance sheet, with comfortable levels of gearing."
Mr Falloon said, "Network Ten achieved a 30.1 per cent share of television advertising revenue for the six months to December 2009 and we were pleased to have been the only network to have grown revenue on the previous half.
"The revenue share was also up from the 27.7 per cent recorded for the comparable period the previous year, when our share of revenue was adversely impacted by the Beijing Olympics.
"We have previously stated that our audience performance warrants more than a 30 per cent revenue share, and we have delivered on that expectation. In an improving market, with strong advertiser renewals and a proven schedule, Network Ten is striving to deliver another successful year in 2010.
"The revenue market continues to show strong demand, positively influencing Network Ten’s revenue position for the remainder of the 2010 financial year."
Mr Falloon reiterated previous cost guidance for the 2010 financial year, being that normalised television cost growth (ex-selling and excluding the costs of the 2009 AFL Grand Final and a full year of ONE) would be contained to approximately 3%.
"The Federal Government’s recently announced licence fee relief for Australia’s commercial television operators has not yet been implemented by regulation and therefore has not been factored into our results for the February half.
"However, when the measure is passed by the Parliament, it will apply retrospectively to 1 January 2010 and the impact for the months of January and February will be reflected in the full year results," he said.
Mr Falloon said that trading conditions across the out-of-home advertising sector continued to be difficult, notably in the US and the UK. EYE’s sustained focus on cost management had led to an improved EBITDA contribution for the half.
