SPH's $495m profit beats forecasts - Oct 12, 2005 (ST)

BackOct 12, 2005

The Straits Times / The Business Times News On SPH

SPH's $495m profit beats forecasts

Profit from operations rise 12.7%, revenue hits $1b for third time.

By Bryan Lee
Oct 12, 2005
The Straits Times

SINGAPORE Press Holdings (SPH) yesterday reported a better-than-expected full-year net profit of $494.7 million, boosted by a 12.7 per cent hike in operating profit to $380.8 million.

Revenue for the year ended Aug 31 rose 3.5 per cent to $1.02 billion. This is the third time, after 2000 and 2001, that turnover has crossed the $1 billion mark.

The media group has proposed a final dividend of 17.8 cents, comprising a normal dividend of 10 cents per share and a special dividend of 7.8 cents per share.

SPH's full-year income bettered a consensus Reuters Estimate forecast of $472.51 million but was 9.4 per cent lower than the $546.3 million earned in the previous year.

This was due primarily to lower one-off gains, compared with the previous year.

This year's bottom line was boosted by a $128.5 million gain from divesting itself of a stake in StarHub.

In comparison, the company recorded a $170.5 million gain from selling a stake in Belgacom and another $110.1 million from selling the former Times House site in the year ended August 2004.

The improvement in operating performance, seen by margins rising to 38 per cent from 35 per cent, was largely a result of the cessation of free-to-air TV operations, which were merged with MediaCorp at the end of last year.

That helped cut material, consumable and broadcasting expenses, which fell by 10.3 per cent or $20.9 million to $181.6 million.

Also boosting operations were SPH's core newspaper and magazine operations, whose revenues grew 7 per cent to $891.8 million.

Revenues from property, bolstered by rental income from the prime Orchard Road mall Paragon, rose 8.3 per cent to $89.4 million.

The company also managed to trim staff costs by 0.2 per cent as total head count fell from 3,591 a year ago to 3,443.

Newsprint costs, however, rose by 14.4 per cent to $109.1 million.

SPH's bottom line was also hit by a one-off $25.9 million charge associated with the merger of its TV operations with MediaCorp. It also took on a loss of $3.8 million for its share of MediaCorp's TV business though this was partly offset by a $1.5 million profit contribution by the Today newspaper, in which it owns a 40 per cent stake.

SPH chief executive Alan Chan said operational profits for the new financial year are likely to be comparable to the previous one.

'The group's advertising revenue is expected to move in tandem with the economy,' he said.

'However, there are concerns over global economic factors, such as the continued pressure on oil prices and interest rate hikes.'

When asked about the company's plans for Paragon, SPH chairman Lim Chin Beng said the property is not at the top of the list of non-core assets to be disposed of.

'We have had a lot of inquiries from interested parties. We are evaluating them but Paragon is not on the top of the list because we have other non-core assets which are giving us less returns.'

Mr Chan added that SPH's lowest-yielding non-core asset is Times Industrial Building, which has a market value of about $200 million.

Earnings per share were flat at 31 cents. Net asset value per share was $1.02, up from 93 cents 12 months ago.

SPH shares closed two cents lower at $4.88 yesterday. They had jumped 18 cents on Monday.