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SPH's Q1 net profit down 6.3% as investment income falls



MEDIA and property group Singapore Press Holdings' net profit for the first quarter ended November fell 6.3 per cent to S$57.9 million from S$61.8 million a year ago, owing to a decline in investment income with last August's partial divestment of its treasury and investment portfolio.

"The divestment was timely as SPH locked in gains and avoided losses on the portfolio during the recent financial market turbulence," said SPH in its results announcements on Friday.

The group has said it will use the proceeds from the divestment to invest in yield-generating assets, chiefly in the property and digital business.

Operating revenue came in marginally lower by 1.7 per cent at S$254.3 million from S$258.8 million in the previous year's corresponding quarter, on the back of lower print advertisement revenue.

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This was however offset by contribution from the UK student accommodation portfolio acquired by SPH last September.

The absence of retrenchment costs over the period under review versus a year ago led to operating costs dipping 7 per cent to S$183.9 million. Accordingly, the group's operating profit rose 7.6 per cent to S$74.8 million.

Earnings per share stood at four Singapore cents, unchanged from a year ago. No dividend was recommended for the period, the same as a year ago.

Revenue for SPH's media business slipped 6.8 per cent to S$162.1 million; operating profit improved nearly 15 per cent mainly due to the absence of retrenchment costs recognised over the same quarter last year. Print ad revenue fell 7.2 per cent - the slowest rate of decline in four quarters: Display ads, which contribute the bulk of the revenue, declined marginally by 2.7 per cent; classified ads logged a sharp fall of 17.1 per cent, while newspaper ads slipped 7.2 per cent.

Digital ad revenue jumped 12.9 per cent, led by better performances from The Straits Times, The Business Times and Lianhe Zaobao, and efforts to improve offerings to advertisers.

SPH chief executive Ng Yat Chung said: "The print side of the media business continues to experience headwinds, even as we grew revenue from the digital side of the business."

SPH said the media business continues to pursue various digital initiatives and new partnerships as it seeks to enhance the products and improve audience engagement with better use of data analytics.

Revenue from the property segment - SPH's largest profit segment and a steady one at that - rose 11.1 per cent to S$68 million. The segment recorded a 5.2 per cent jump in pretax profit, thanks to the initial contribution of S$3.2 million in net operating income from the UK student dormitory assets.

Mr Ng pointed out that the group has made progress in growing recurring income in the property segment, with the contribution of the UK student housing assets.

Plans to grow the assets to a "sizeable platform" are on track; SPH said it was actively reviewing an "extensive deal pipeline" with some deals in the advanced stage of negotiation.

"Demand for UK university education is expected to be sustained even after Brexit, as the UK is a popular destination for quality education for international students," said the company.

Revenue from the Others segment, including the aged care business, improved 2.6 per cent to S$24.2 million.

The counter closed unchanged at S$2.49 on Friday.

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