SPH posts 1.3% rise in Q1 net profit to $111.9m - Jan 15, 2008 (BT)

BackJan 15, 2008

The Straits Times / The Business Times News On SPH

SPH posts 1.3% rise in Q1 net profit to $111.9m

Profit before investment income surges 19.8% to $126.5m.

Jan 15, 2008
The Business Times

SINGAPORE Press Holdings (SPH) yesterday reported a 1.3 per cent year-on-year rise in net profit to $111.9 million for its first quarter ended Nov 30, 2007.

The profit rise was despite a 66.9 per cent fall in investment income from $29.7 million to $9.8 million. Earnings per share came to seven cents.

Profit before investment income - which reflects the recurring earnings of the media and property businesses - surged 19.8 per cent to $126.5 million from $105.6 million a year ago, boosted by its newspaper and magazine businesses and profit contribution from its Sky@eleven condominium project.

Group operating revenue grew 14.7 per cent to $312.1 million. Revenue from newspaper and magazine operations rose 8.2 per cent to $261.3 million, underpinned by strong print advertisement revenue growth of 10.5 per cent to $202.9 million. Revenue from property rose 69.9 per cent to $43.5 million, with a contribution of $16.1 million from Sky@eleven.

The drop in investment income was due partly to the fair valuation of investments being affected by recent volatility in financial markets. In addition, the previous year's investment income was boosted by higher dividend income from telco MobileOne and profit from a capital reduction exercise by telco StarHub.

SPH's investment portfolio comprises mainly equities and bonds. BT understands that the portfolio does not have direct exposure to US sub-prime mortgages.

In the latest quarter, total operating costs increased 11.8 per cent to $188.5 million.

Property development cost for Sky@eleven accounted for $4.6 million, while staff costs were 14.7 per cent higher due to higher variable bonus provision in line with continued improved profitability of the newspaper business, increased headcount and annual salary increment.

Total headcount in November last year was 3,771, up from 3,562 a year ago, mainly due to the inclusion of new subsidiaries and staffing for new media businesses. Other operating expenses of $41.3 million were up 12.8 per cent, with increased business activity and costs for new subsidiaries.

SPH said that recurring earnings this financial year are expected to be satisfactory. 'Advertisement revenue will continue to be driven by the Singapore economy, which is expected to grow at a more moderate pace in 2008,' said chief executive Alan Chan.

'The group will continue to focus on sustaining its operating profit margin amid rising business costs. Profit from Sky@eleven will provide an added boost to earnings. Barring unforeseen circumstances, the directors expect the recurring earnings for the current financial year to be satisfactory.'

SPH shares closed unchanged yesterday at $4.60.