SPH's Q3 profit jumps 80.7% to $174.6m - Jul 12, 2006 (BT)

BackJul 12, 2006

The Straits Times / The Business Times News On SPH

SPH's Q3 profit jumps 80.7% to $174.6m

Results helped by exceptional gain from re-valuation of Paragon.

By Wong Wei Kong
Jul 12, 2006
The Business Times


SINGAPORE Press Holdings (SPH) reported yesterday an 80.7 per cent jump in third-quarter net profit - thanks to exceptional gains from the re-valuation of its Paragon commercial building - and said it has no immediate plans to divest the property.


SPH's net profit for the three months ended May 31, 2006, rose to $174.6 million from $96.7 million a year ago, mainly due to an exceptional gain of $69.1 million, compared with the previous corresponding period's exceptional loss of $11.6 million.

The media group said the exceptional gain resulted from the write-back of impairment losses of $70.5 million for the Paragon in view of its 'strong sustained valuation'. The fair value of the Paragon, determined based on a recent independent professional valuation, is $1.52 billion. The valuation, which is done on an annual basis, is required under the terms of the bank loan for the property.

'The valuation of the Paragon is expected to stay healthy on the back of a sustained recovery in the property market. Together with on-going efforts to enhance rental yields, the fundamentals of the Paragon remain strong,' said SPH chief executive Alan Chan.

'In view of this, the directors are committed to holding on to the Paragon for the foreseeable future,' he said.

Despite higher operating revenue, SPH's profit before investment income and exceptional items fell 8.8 per cent to $94.5 million due to higher newsprint and other operating costs. Group operating revenue rose 2.2 per cent in the third quarter to $265.7 million, with revenue for the core newspaper and magazine operations increasing by a slight 0.6 per cent to $237.2 million, while property revenue rose 8.3 per cent to $24.3 million.

Total operating expenses at $173.5 million was 9.6 per cent higher. Newsprint cost rose 12.2 per cent as a result of higher consumption and price increase. Staff cost was marginally down 0.2 per cent. Total headcount at the end of May 2006 was 3,583, up from 3,448 a year ago, mainly due to the launch of new editorial products and ventures into outdoor and other media businesses.

Group investment income for the quarter was $31.5 million, down from $38.0 million last year, with the impact from poorer market conditions and lower trading volumes partially offset by an increase in dividend income.

SPH made an impairment provision of $1.4 million for the acquisition of out-of-home advertising business SPH MBO.

For the nine months ended May 31, 2006, SPH registered a net profit of $357.6 million against the previous year's $413.3 million, which had included a $128.5 million gain from the sale of the major portion of the group's stake in telco StarHub.

Giving the outlook for the rest of the financial year, Mr Chan said the group expects recurring earnings to be satisfactory. While Singapore's economic outlook for 2006 remains healthy, concerns over oil prices, rising interest rates, threats of terrorism and an avian flu pandemic remain, he said.