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SPH lifts profit 44% to $546m - Oct 12, 2004 (ST)

BackOct 12, 2004

The Straits Times / The Business Times News On SPH

SPH lifts profit 44% to $546m

Better consumer sentiment and Paragon extension contributions boost turnover; investors to enjoy special dividend again.

By Lee Su Shyan
Oct 12, 2004
The Straits Times

MEDIA group Singapore Press Holdings (SPH) yesterday reported a 44.2 per cent rise in full-year net profit to $546.3 million and rewarded its shareholders with yet another bumper payout in dividends.

Revenue for the year ended Aug 31 was up 8 per cent at $970.1 million on the back of improving consumer sentiment and contribution from the new Paragon extension, SPH chairman Lim Chin Beng told reporters at a press conference.

In the last two years, SPH has returned more than $1 billion to shareholders through regular dividends, a special payout and a capital reduction.

Yesterday was no different, with the SPH board recommending a special dividend of 11.25 cents per share on top of a final dividend of 10 cents per share. The previous year, a final dividend of 50 cents per share and a special dividend of 30 cents per share were declared.

Because SPH shares underwent a one-into-five share split during the financial year, the proposed final payout is actually higher than the previous year's.

When asked whether SPH's generous dividend policy could continue, Mr Lim said: 'I think our track record speaks for itself. We are committed to returning as much as possible to shareholders.'

Profit from operations grew 16.2 per cent to $337.9 million, thanks to improved advertising revenue.

Its flagship daily The Straits Times has seen a sharp increase in the number of pages.

Said SPH chief executive Alan Chan: 'We see the improvement in the thickness of our newspaper. There's a recovery in consumer sentiment, we see a thicker recruitment section.'
Executive vice-president of finance Arthur Seet added: 'Last Saturday's Straits Times was 214 pages, which we haven't seen for a long time and this is just the start of the season for Christmas.'

Revenue for the group's core newspaper and magazine segment increased 5.6 per cent to $833.2 million as print advertising and circulation revenue rose.

Revenue from property operations rose 56.7 per cent to $82.6 million, helped by the opening of a new extension at the Paragon shopping mall in September last year.

However, broadcast advertising revenue fell 9.7 per cent to $37.5 million in a difficult television market.

Free sheet newspaper Streats incurred a loss of $2.8 million while the broadcasting arm, MediaWorks, reported a loss of $44.5 million.

While revenue rose, operating costs also increased. Materials, consumables and broadcasting costs were up 8.9 per cent at $202.6 million.

This was partly due to higher newsprint prices which have sent newsprint costs up some 6.2 per cent. Broadcasting costs were higher due to increased investment in producing local programmes.

Staff costs rose 9 per cent to $262.4 million, due mainly to larger provision for bonuses.

Headcount fell to 3,564 from 3,715 the previous year.

Investment income surged to $258 million from $39.6 million, thanks to the disposal of SPH's entire stake in Belgacom.

There were also gains from the revaluation gain on euro deposits, and from higher dividend income.

On the flip side, exceptional gains fell from $121.8 million to $28.7 million. The previous year's figure was boosted by gains from the partial sale of its stake in telco M1.

In comparison, the one-off gain from selling Times House for $110.1 million was tempered by losses as a result of impairment to assets, plus a $65.3-million charge relating to an exercise to review its broadcasting assets.

Mr Chan said it was premature to say whether there would be retrenchments, or what the level of any write-down would be, as a result of the merger of its free-to-air television and free newspaper businesses with MediaCorp. The deal, announced last month, is expected to be completed by year-end.

As for its non-core assets, SPH expects to book investment income of between $126.3 million and $144.4 million in the current first quarter from the sale of its stake in telco StarHub through an initial public offer.

Another non-core asset on the cards for divestment is Times Industrial Building. Mr Chan said that its market value is $200 million while its book value is $11 million.

Yesterday, SPH shares ended down two cents at $4.84.