SPH has $1.2b war chest to invest in new projects

Singapore

SINGAPORE Press Holdings (SPH) is in a strong financial position to tap new growth opportunities as the media group navigates new battlefields in a changing media landscape, said its top management on Tuesday.

"Shareholders may wish to note that actually we have a treasury of S$1.2 billion, so this is really our 'war chest' that enables us to invest in new projects," said chief executive officer Alan Chan at Tuesday's annual general meeting to a floor of around 720 shareholders. "Our gearing ratio is currently at 35 per cent, so actually that gives us still a lot of borrowing capacity," he added.

For example, the company dug into its vast financial resources earlier this year when SPH put in a bid for a parcel of land in Paya Lebar for mixed development, revealed chairman Lee Boon Yang. The company ended up as the second-highest bidder. "We need to have those resources ... that will enable us to tap into such opportunities in the future, to grow the business and revenue for the company," said Dr Lee.

In October, SPH reported in its financial results for the year ended Aug 31 (FY2015) that net profit fell 20.4 per cent to S$321.7 million, or 20 Singapore cents per share. This was due to fair value change on investment properties falling 66.8 per cent to S$36.3 million and a one-off gain of S$52.9 million in the preceding year from a partial divestment. Operating profit rose 1.3 per cent to S$353.5 million.

Full-year results also showed that pre-tax profits for its media business slid 5.5 per cent to S$241.5 million. This was attributed to lower advertisement and circulation revenue.

Dr Lee said on Tuesday that the company's papers remained strong amid changing media consumption patterns by reaching out to more readers on their mobile devices while continuing to promote its print products.

He said that SPH's print publications, which include The Business Times, have strengthened their digital offerings over the past year. This gave advertisers more advertising options across multiple platforms. SPH is also building up its digital armoury.

Aside from investments in websites, its latest Plug and Play incubator programme helps identify digital media companies with potential to nurture them into strong and sustainable businesses across media sectors. Even though contributions by the new media and Internet businesses to SPH's performance are still unable to offset the decline in print revenue, Dr Lee assured shareholders that contributions from these new businesses are increasing.

Dr Lee, when responding to a question on whether SPH is aggressive enough in its digital media investments, said that it is cautious in its approach. "Yes we want to make faster progress, but we will do it in our own way - measured, calculated and cautious," he said. SPH is also expanding into different areas to grow its business, and each requires the management's full attention.

Aside from property, events and exhibitions, and online classifieds, it recently acquired a stake in local pre-school operator Mindchamps, staking a claim in the early childhood sector, which is seen to be growing.

The challenges for the media business notwithstanding, Dr Lee believes that SPH will remain relevant for years to come, saying: "The model of providing the media service may change, it may become more digital, not purely a printed model ... core media is still sought after, still relevant, still worthy of investors' interest."

Meanwhile, SPH Reit, which is sponsored by SPH, announced on Tuesday that it has appointed Rachel Eng, joint managing partner of WongPartnership LLP, as an independent non-executive director to its board.

SPH shares closed one cent up on Tuesday at S$4.03.