SPH posts S$404.3m profit for FY2014

Singapore

MEDIA and property group Singapore Press Holdings (SPH) reported on Wednesday a 6.2 per cent year-on-year drop in net profit for the year ended Aug 31, 2014, as its newspaper and magazine business took a hit from lower advertising and circulation revenue.

Its property and other businesses, however, performed well - helping to stem the slide in earnings.

SPH's net profit attributable to shareholders fell to S$404.3 million for FY2014, from S$431.0 million in FY2013.

Its operating revenue was down 2 per cent at S$1.22 billion in FY2014. This was due mainly to its newspaper and magazine division reporting a 6 per cent fall in operating revenue to S$931.7 million. Advertising revenue was down 6.8 per cent, while circulation revenue was down 4.9 per cent. The newspaper and magazine division ended with a 16 per cent fall in profit before tax to S$246.4 million in FY2014.

The group's property business - its retail assets, Paragon and The Clementi Mall - fared better. It turned in a 3.5 per cent increase in operating revenue to S$205 million in FY2014, thanks to higher rental income from both retail properties. Net profit before tax for this division was up 7.6 per cent at S$239.4 million.

Meanwhile, SPH's other businesses turned in a stellar performance; contributions from its exhibitions, radio and online classifieds business, such as sgCarMart - acquired in April 2013 - pushed operating revenues in this division up 56.7 per cent to S$78.5 million. This segment also turned in a profit before tax of S$12.2 million - from a loss of S$38 million the year before - helped in large part by the S$52.9 million gain on the partial divestment of online classifieds business, 701Search, to Norway's Telenor ASA in December 2013.

Commenting on the better performance of the group's other businesses at its earnings briefing on Wednesday, Patrick Daniel, editor-in-chief of SPH's English and Malay Newspapers Division, said: "With the newspaper business under threat, we are taking our reserves and also investing in other businesses."

Among its "other" recent investments has been a 22 per cent stake in local pre-school operator MindChamps PreSchool (Worldwide), which the group took up in August; SPH was also the lead-investor for a December 2013 round of funding in global digital magazine store and newsstand Magzter Inc.

SPH CEO Alan Chan said at the briefing that the acquisitions of such businesses will continue "unabated".

The group's executives also stressed that digital sales have been growing, helping to boost the daily average circulation of several newspapers - such as The Straits Times, The Business Times and Lianhe Zaobao - despite print advertising and circulation revenue falling.

SPH declared a final dividend of 14 cents per share for FY2014, comprising a normal dividend of 8 cents and a special dividend of 6 cents per share. They will be paid on Dec 23. Together with the interim dividend of 7 cents, the total dividend payout for FY2014 will be 21 cents.

On the business outlook, Mr Chan said: "Uncertainties in the global macroeconomic environment continue to persist, with escalating geopolitical tensions weighing on the somewhat benign outlook."

Still, he added, FY2014 was a "milestone year" for the group.

"Having completed the organisational review during the year, the group has undertaken a journey of transformation to counteract the challenges presented by a rapidly evolving media landscape. We have gained traction in our quest and will be intensifying efforts to reinvigorate the core media business. We will also continue to pursue opportunities that position the group for sustainable growth and value creation.

"On this note, we look forward to the opening of The Seletar Mall by the end of the year," he added. The Seletar Mall - a joint venture between SPH and United Engineers Developments - is tipped to be the largest suburban lifestyle hub in the north-east of Singapore, and is targeted to open in November.

SPH shares closed Wednesday up one cent at S$4.17.