SPH recurring profit rises 17.5% - Oct 11, 2008 (ST)

BackOct 11, 2008

The Straits Times / The Business Times News On SPH

SPH recurring profit rises 17.5%

It reported record revenue of $1.3 billion for the financial year ended Aug 31.

By Chua Hian Hou
Oct 11, 2008
The Straits Times

THE recession Singapore is facing will hurt, but it also presents an excellent opportunity to snap up solid companies on the cheap, said media group Singapore Press Holdings (SPH).

All companies - and this includes SPH - will need to 'brace ourselves for some trying times' ahead, warned chairman Tony Tan at a results briefing yesterday.

SPH reported record revenue of $1.3billion - up 12.1per cent from last year - alongside 17.5per cent higher recurring profits of $501.7million, for the 12months to Aug31.

Net profit fell 12.4per cent to $437.4million, primarily due to lower investment income and an investment-related impairment charge.

Dr Tan said the recession would definitely have an impact on SPH, but how badly it would be hit 'depends very much on how the Singapore economy performs'.

Nonetheless, SPH's 'well-diversified earnings base will stand us in good stead' to ride out the crisis.

The firm, which publishes 16 newspapers and is behind local search and directory engine, had also made 'several strategic moves... to better position SPH for the future', he added.

Its newspapers, including The Straits Times, The New Paper and The Business Times Weekend, have all been revamped 'to ensure they remain relevant and fresh to the readers and advertisers'.

Two of its Chinese papers, Lianhe Wanbao and Shin Min Daily News, have integrated their newsrooms for better synergy, while the new Uniset press promises better efficiency and print quality.

Being part of the winning OpenNet consortium that won the bid to build Singapore's next-generation high-speed broadband network will also generate positive cash flow in the long run, although SPH declined to say how much this new segment's contribution would be.

Crisis is 'nothing new' to the company anyway, added chief executive officer Alan Chan.

The company rode out 1997's Asian financial crisis and 2002's Sars epidemic, and continues to prosper today, said Mr Chan.

There was also a silver lining in such times of crisis.

'In difficult times, assets are cheaper, and we are always on the lookout for companies that will add to shareholder value,' he said.

Last month, before the most recent bout of share market turmoil, SPH acquired the popular financial portal

The same month, it also announced the acquisition of the contracts and intellectual property rights of SNP International Publishing (SNPIP), the book publishing arm of SNP Corp.

SPH, which had cash and cash equivalents of over $211million as at Aug31, bought technology media group Hardware Zone for $7.1million in 2006.

Dr Tan said SPH's core publishing business remained robust.

'While many predict a gloomy future for the newspaper industry, I am gratified to note that our core newspapers and magazines business has continued to do well,' he said.

This segment's contribution grew 5.7per cent to $1billion for the year, with print advertising up 7.6per cent to $780.1million.

Contribution from property rose a hefty 43.6per cent to $255.3million.

But these sterling results were dragged down by sharply lower investment income, 'amid the unfavourable investment climate brought about by the continued turbulence in global financial markets', the company said.

This resulted in a 67.3per cent fall in investment income to $47.7million. SPH was also hit by a $26.7million impairment charge in its investment in Tom Outdoor Media Group.

Earnings per share was 27cents, down from 31cents, while net asset value was $1.30, down from $1.33.

SPH announced a final dividend of 19cents per share to be paid on Dec23. This brings the total dividend paid this year to 27cents, one cent more than last year.

SPH shares closed 33cents down at $3.50 yesterday, before the results were announced.