Operating revenue of SPH's media business falls for first 9 months of FY21

Singapore Press Holdings T39 : T39 0% (SPH) on Monday reported that its media business continues to face a secular decline in the ad sector, with the segment's operating revenue declining in the first nine months of its FY2021.

In a business update for the third quarter ended May 2021, SPH, which publishes The Business Times, said media operating revenue fell 16.8 per cent year on year for the first nine months of FY2021 to S$286.7 million.

This was led by a decline in newspaper print ad revenue, which fell S$28.6 million or 17.6 per cent year on year.

SPH said: "Underlying secular decline continues to impact newspaper print ad revenue, even as overall economy recovers from the worst of Covid-19." The publishing company added that media revenue is likely to continue on a downward trend.

Total circulation for the media business remained unchanged year on year, with digital circulation copies growing 17.8 per cent year on year to offset print circulation decline.

SPH said that there is little scope for further cost cuts without impairing the quality of products.

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In May, the property and media group proposed a restructuring entailing a transfer of the media business to a company limited by guarantee. This structure will allow the future profits of the media business to be reinvested into the media operations, rather than be distributed to shareholders.

On Monday, SPH said that the extraordinary general meeting (EGM) to seek shareholder approval for the restructuring of the media business is expected between August and September. It has submitted the EGM circular to SGX for approval.

Upon securing shareholder approval, SPH expects to commence the restructuring from September, with completion estimated by end of the year.

SPH said that the non-media segment has improved operating performance across all segments since February. It noted that suburban malls have remained resilient, with tenant sales for suburban malls in Singapore and Australia recovering to pre-Covid-19 levels. There is also full occupancy at The Clementi Mall, The Seletar Mall and The Rail Mall.

On the purpose-built student accommodation (PBSA) front, SPH turned out a steady operational performance, and had achieved 73.7 per cent of target revenue for the academic year 21/22 as at July 16. It noted that the sales trend for the latest academic year has surpassed the previous year, and is on track to achieve portfolio occupancy of over 90 per cent.

"Bookings have picked up as UK announced re-opening on July 19, giving students more assurance to start booking," SPH said.

It added it will tap the capital markets to further grow the PBSA portfolio, and set up a private fund to develop a pipeline of development projects. Some of the investment criteria include assets being yield-accretive to the existing PBSA portfolio, and assets must be located in cities with highly-rated or Tier 1 universities.

In the aged care business, SPH said it is building a "sizeable portfolio" of overseas aged-care assets to be a key business pillar". It noted that its Japan nursing home assets continued steady performance, with underlying portfolio occupancy at over 90 per cent. It is sourcing good assets for possible acquisition to expand the Japan portfolio. Meanwhile, it is also seeking growth opportunities in Canada, Australia and the UK.

SPH also said its digital portfolio has been delivering value. It noted a S$240 million remeasurement gain from its stake in iFast, the share price of which has gone up since last August. It also noted a S$100 million remeasurement gain from Coupang, compared with August last year.

SPH added that Carousell has been exploring a merger with a special purpose acquisition company (SPAC) for around US$1.5 billion, which provides a potential opportunity for SPH to divest its 2 per cent stake at "significant profit above carrying cost".

As of end May, SPH's weighted average debt to maturity stood at 3.7 years, with a cash balance of S$713 million.

Last week, SPH Reit declared a third-quarter distribution per unit of 1.38 Singapore cents, up 11.3 per cent increase from the previous quarter. It recorded a 22 per cent in crease in gross revenue for the first nine months of 2021, compared to the same period last year, led by recovery across all assets.

Shares of SPH closed at S$1.80 on Monday, down S$0.01 or 0.6 per cent.