Singapore

WHILE Singapore Press Holdings reported a "creditable" showing in the second quarter with property offsetting declines in the media business, the conglomerate slashed interim dividend to conserve cash and prepare for an increased impact from the Covid-19 outbreak.

SPH said it was bracing itself for a tough second half as recession fears hurt advertising business across most segments except for government spending. While circulation is up, this would not be able to offset the decline in advertisements for the media business, said SPH in its results announcement.

Declining footfall and social distancing measures have hit its malls in Australia and Singapore while its portfolio of Purpose-Built Student Accommodation (PBSA) in the United Kingdom as well as Germany are affected by rental rebates due to university closures and student departures.

Citing the challenging business environment and the priority to conserve cash to sustain its businesses, SPH has declared an interim dividend of 1.5 Singapore cents per share versus 5.5 cents a year ago. The dividend is payable on May 22.

The company, which publishes The Business Times, said it will continue with the media segment's digital transformation while other investment activities have been put on hold (the company recently terminated a plan to buy five Aged Care assets in Canada).

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"SPH will continue to provide reliable reporting on the Covid-19 situation and to progress our digital transformation initiatives. With the uncertainty over the depth and duration of the Covid-19 pandemic, we will need to adopt a prudent approach in managing our cash flows and our investment activities," said SPH chief executive Ng Yat Chung.

For the quarter ended February, the media and property group posted a 5.5 per cent rise in net profit to S$31.3 million.

Operating revenue rose 1.8 per cent to S$227.5 million, led by a 33 per cent jump in revenue from the property segment which was offset by declines of 18.3 per cent and 6.5 per cent in the media segment's advertisement and circulation revenue respectively.

The group derives its revenue mainly from advertisement and circulation revenue from both print and digital media business, rental income from retail malls and student accommodation, and income from other businesses such as aged care, events and exhibitions and education.

Total costs rose marginally by 0.6 per cent to S$182.5 million. While staff costs rose 1.8 per cent to S$81.3 million owing to headcount of the newly acquired businesses, the costs of materials, production and distribution fell nearly 13 per cent while other operating expenses came in lower by 24 per cent led by lower business promotion costs.

For the first half period, SPH reported a 9.3 per cent drop in net profit to S$77.6 million on the back of a 1.3 per cent dip in operating revenue to S$471.4 million owing to lower newspaper print advertisement revenue.

The group said the results reflect the "initial impact" of the Covid-19 outbreak.

Over the six months, the media business reported a 75.4 per cent drop in pre-tax profit to S$10.3 million, led by a 14.3 per cent decline in revenue to S$253.9 million and retrenchment costs of S$7.2 million recognised in the first half year.

Although newspaper print advertisement revenue fell 20.4 per cent, the group's share of the overall market has been increasing, said SPH. The newspaper digital advertisement revenue reported a 3.7 per cent growth year-on-year.

The property business saw pre-tax profit jump 31.4 per cent to S$104.9 million, boosted by a price adjustment of S$10.5 million to an asset in the student accommodation portfolio. Revenue from this segment rose 26.2 per cent to S$177.1 million due to the expanded student accommodation portfolio and SPH REIT.

Separately, SPH on Tuesday disclosed legal proceedings commenced by Samuel Cranage Baker and Jeremy Lee Chuen Yang against the company and its wholly-owned subsidiary, SPH Interactive Pte Ltd (SPHI). The other defendants are StreetSine Technology Group Pte Ltd (SSTG) and its chief executive Jason Barakat-Brown.

Mr Baker and Mr Lee each owns a 20 per cent stake in SSTG, with the remaining 60 per cent interest held by SPHI. They are alleging minority oppression in SSTG and are seeking an order to compel SPHI to buy out their shareholdings and for damages to be assessed for unlawful means conspiracy.

SPH and SPHI have filed a counterclaim against Mr Baker and Mr Lee for various liabilities relating to taxation accrued by SSTG and its wholly-owned subsidiary prior to SPHI's acquisition of its shareholding in SSTG in 2014.

"(SPH) board is of the view that the allegations by the plaintiffs are unmeritorious and groundless. The company and SPHI intend to rigorously defend the claim."

SPH shares closed higher by five cents or 3.2 per cent at S$1.60 on Tuesday.