ITV plc Announces Special Dividend On £581m Profit

ITV plc (LON: ITV) is confident of future growth and ongoing cash generation.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 26 February, 2014 10:16 am GMT

| More on: ITV

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The share price of ITV (LSE: ITV) increased a little over 1% to 206p during early trading this morning, after the media firm delivered a 27% increase in profit on higher revenue, driven in part by good performance in its production business, while the television advertising market returned to growth. Over the last 12 months shares in ITV have increased by 71%.

Profit before tax was up to £581m compared with £457m the year before. This was partly attributable to revenue and profit growth in ITV studios, which increased 20% and 24% respectively, as the firm made acquisitions in the UK and the US.

The profit figure was also bolstered by cost-cutting measures which saved £28m — £8m ahead of targets — bringing the total amount saved since 2009 to £118m. In 2014 ITV is targeting a further £10m in savings with a strong focus on cash generation.

The chief executive, Adam Crozier, commented:

“ITV is now demonstrably a much stronger company both operationally and financially. Over the last four years we’ve grown our revenues and delivered double digit profit growth every year, our adjusted earnings per share has increased six fold to 11.2p and our cash conversion has been consistently strong. While we’ve made good progress to date there is still much to do.”

“In 2014 we again expect all parts of the business to see further growth. The television advertising market continues to show signs of improvement, with ITV Family NAR expected to be up 5% to 6% over the four months to the end of April, and we expect to outperform our estimate of the television advertising market over the full year.”

ITV reported earnings per share of 11p while the full-year dividend increased 35% to 3.5p. Therefore, after this morning’s price movement, shares in ITV may trade on a P/E of 19 and offer an income of 1.7%.

As a reflection of “the board’s confidence in the ongoing growth and cash generation of the business” an additional special dividend payment of 4p per share was announced.

Of course, the decision to ‘buy’ — based on those ratings, today’s results as well as the wider prospects of the broadcast sector — is solely up to you.