SPH FY18 profit down in absence of one-off gains

Singapore

SINGAPORE Press Holdings' (SPH) net profit for FY18 fell 19.7 per cent to S$281.11 million in the absence of one-off gains, as FY17 had benefited from a gain on divestment of the group's stake in an online classifieds business.

Excluding one-offs, however, net profit for the financial year under review improved by 2.4 per cent, the media and property group said.

Operating revenue fell 4.8 per cent year-on-year to S$982.56 million on the back of lower revenue from the core media business, which declined 9.6 per cent to S$655.78 million. This was partly offset by higher revenue from the others segment which rose 34 per cent to S$84.36 million, led by the aged care business.

While the property segment saw revenue edging downward by 0.7 per cent to S$242.42 million, it remained the largest contributor to group profit, with an operating profit of S$151.8 million.

Earnings per share for FY18 clocked 17 Singapore cents, compared to 22 cents in the previous financial year.

During the financial year, operating profit edged up by 0.4 per cent to S$206.35 million, helped by lower staff costs, lower materials, production and distribution costs, as well as lower impairment charges.

Meanwhile, investment income more than doubled from S$53.87 million a year ago to S$115.18 million due to gain on divestment of portfolio investments.

SPH chief executive officer, Ng Yat Chung, said: "Print continues to experience headwinds, but we are seeing encouraging results from our efforts to digitise the core media business."

In its media segment, the decline in print ad revenue is slowing, while overall circulation has grown with more digital subscriptions. Digital revenue currently comprises 15 per cent of total media revenue.

The group - which owns newspapers such as The Business Times - has proposed a final dividend of seven Singapore cents per share, comprising a normal dividend of three cents per share and a special dividend of four cents per share. The dividend is payable 21 Dec.

In a briefing on Monday, Mr Ng said SPH will continue to look to grow its student accommodation and its digital portfolios, as well as identify opportunities to expand its footprint for the aged care business both locally and overseas.

Last month, SPH announced it had made its maiden investment in the purpose-built student accommodation sector with a S$321 million acquisition in the United Kingdom, which is expected to be earnings accretive at a cap rate of at least 6.3 per cent. SPH's management highlighted that it plans to build up its student accommodation business to a size where it can achieve economies of scale, and maintain an efficient team on the ground to take care of the business; this means it would have to be "at least a couple of times bigger" than it is today.

Meanwhile, condominium units in The Woodleigh Residences are expected to be launched for sale in the next few months, in the wake of the recent property cooling measuress that were implemented in July. Mr Ng also emphasised that the project - which is being developed in partnership with Japan's Kajima Development - has a retail component, which will deliver recurring income for the long-haul.

SPH - which announced last month that it would join Keppel Corporation in making a pre-conditional general offer for telco M1 - noted that there is potential for long-term value creation in M1 from growth and business transformation initiatives to be undertaken after the offer closes.

The counter closed at S$2.62, down one cent, on Monday before the results were released.