SPH's H1 net profit up 26.1% as non-media segments see improvement

SINGAPORE Press Holdings (SPH) had on Tuesday posted a 26.1 per cent increase in net profit to S$97.9 million for the half year ended Feb 28, due to improvements in its non-media business segments as the economy recovers gradually.

Operating profit rose 16.6 per cent to S$119.8 million despite a 11.5 per cent dip in operating revenue to S$417.1 million.

Overall, total revenue fell 4.2 per cent S$460.3 million, dragged by its media segment.

Revenue for the media segment decreased 23.9 per cent to S$193.1 million as advertising revenue continues to take a hit, as well as with the absence of revenue from Buzz, which was divested in July last year.

SPH, which publishes The Business Times, said that the media business continues to be affected by the structural decline in the print advertisement sector, which was exacerbated by the Covid-19 pandemic. Still, digital circulation continues to grow and the group will continue to work on its digital transformation strategy, it said.

Profit before tax for the segment was 70.9 per cent lower year-on-year to S$3.1 million, partially cushioned by the Job Support Scheme (JSS) grant income of S$12.8 million and reduction in costs.

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Total costs declined 9.8 per cent to $340.5 million, mainly due to lower materials, production and distribution costs which fell 40.9 per cent, or $23.9 million with the decline in revenue from media and exhibitions. Staff costs dropped 4.6 per cent to $158 million due to a lower headcount.

Excluding the JSS grant income, the media segment recognised a pre-tax loss of S$9.7 million.

Revenue for the retail and commercial segment rose 4.4 per cent to S$154.6 million. This was due to the six months worth of contributions from Westfield Marion shopping centre in Australia, compared with the year-ago period which only took into account less than three months of results given that it was acquired in December 2019.

Despite the fair valuation loss of S$8.4 million for Westfield Marion and Figtree Grove Shopping Centre, the segment recognised a profit before tax of S$86.3 million, which is 1.4 per cent lower year-on-year.

Revenue from the purpose-built student accommodation (PBSA) business grew 24.2 per cent to S$35.3 million mainly due to the six months worth of contributions from the Student Castle portfolio which was acquired in December 2019. This was however, partially negated by revenue loss due to lower occupancies and delayed tenancy start dates as a result of the pandemic.

The segment’s pre-tax profit rose 18.3 per cent to S$22.4 million. Its Student Castle portfolio contributed a 93.1 per cent or S$16.1 million increase in net operating income, which includes a S$9.4 million in rental guarantee received from the vendor for the Oxford and Brighton greenfield assets.

Revenue from its others segment, which mainly include aged care, digital treasury portfolio and others, fell 16.9 per cent to S$34.1 million. Revenue from the exhibitions business also dropped 85.8 per cent or S$7.7 million due to the deferment of shows.

Including a S$10.7 million higher dividend income from the investment portfolio and the one-off gain on disposal of 100 per cent stake in MICE company Sphere arising from the SingEx-Sphere merger, the segment posted a pre-tax profit of S$25 million.

SPH also noted that it will progressively review its investments and digital portfolio to unlock value with proactive capital recycling to maximise shareholder returns.

Its digital portfolio includes the US$3.9 million investment in South Korean e-commerce company Coupang in 2014 via a special purpose vehicle. Coupang made its market debut on March 11 raising some US$4.6 billion with a market valuation of US$60 billion. On that valuation, SPH’s stake is worth around US$50 million.

SPH noted in its financial results that any changes to fair value from the investment in Coupang will be recognised in other comprehensive income with no impact on profit and losses.

Ng Yat Chung, chief executive officer of SPH, said: “The operating performance of our non-media business segments led by PBSA and Retail and Commercial has improved as the economy recovers gradually. Despite expanding our audience reach, our media business continues to be affected by the structural decline in advertising and the impact of Covid-19. We will continue our digital transformation strategy and efforts to place media on a more sustainable footing.”

An interim dividend of three Singapore cents was declared to be paid on May 21, up from 1.5 cents the year before. Half-year earnings per share stood at five Singapore cents versus four cents previously. Net asset value per share was S$2.24 as at Feb 28, up from S$1.35 as at Feb 29 last year.

Shares of SPH ended Tuesday flat at S$1.50.