SPH Will Stake Claim In Digital Realm (BT)
SINGAPORE Press Holdings' (SPH) online forays are still in their infancy but the company will participate in the digital revolution, chairman Lee Boon Yang said at the media group's annual general meeting yesterday.
"The opportunities for growth in digital advertisements are always there. We must stake a claim so we don't lose out in the battle for eyeballs," Dr Lee said.
"The trend that we cannot ignore is that more people are using technology. We cannot develop a strategy based on historical precedence ... If the market is moving towards digital or mobile, we must develop our products in this area," he added.
Half of the dozen shareholders who stood up to question management yesterday asked about the group's move into online businesses. They wanted to know if money can be made from online advertisements, as well as how much market share the company had in the online space.
Dr Lee said it was too early to peg the group against the market and more time should be given for the group's online businesses to stabilise. The company also cannot give away its content for free on the Internet or its advertisement and circulation business model will not be sustainable, he said.
Said chief executive Alan Chan: "It is still early days. We are fighting hard and obviously want to be number one."
SPH owns 18 newspaper titles in four languages, including The Business Times.Dr Lee said SPH's performance in 2012 was creditable despite a difficult economic climate. Group operating revenue rose 1.8 per cent to $1.3 billion for fiscal year 2012.
Dr Lee said the newspaper industry in Singapore was not immune to global trends of falling circulation. SPH fared better than elsewhere with a year-on-year circulation drop of just 0.3 per cent to 978,000 copies a day, he said.
SPH is also studying the possibility of hiving off its retail properties into a real estate investment trust (Reit), Dr Lee said. However, the group has not taken any steps towards this yet as it only has two operational properties, Paragon and Clementi Mall.
"With three malls (after the completion of The Seletar Mall at end-2014), do we have the critical mass to provide an attractive real estate retail Reit?
"We will study the issue closely. Given the right time and right conditions, we will take the appropriate steps to ensure shareholders' interests are safeguarded," he said.
Dr Lee was responding to a shareholder question on the possibility of creating a Reit based on its retail properties. He said the question was a "pertinent" one and the possibility of creating a Reit was "something which the board and management continues to study".
Reits are shareholding structures that return most of their income to investors in the form of distributions after deducting costs. They generate cash from rental payments made by tenants.
Dr Lee also said that SPH will not rule out investing in properties in the region, though it will adopt a cautious approach. That's because its people are ultimately more familiar with the Singapore market, and the group needs to acquire a lot more capabilities and resources first, he said.
For the year ended Aug 31, 2012, SPH's net profit attributable to shareholders fell 5.9 per cent to $365.5 million. But despite a difficult global economic climate, recurring earnings were slightly higher at $410.2 million as growth in the property and exhibitions businesses cushioned the lower profits from the newspaper and magazine segment. Investment income was impacted by volatility in the financial markets.
SPH's property profit before tax (PBT) was up 32 per cent from a year ago at about $100 million. PBT for newspapers and magazines was down about 8 per cent at $335 million.
Treasury and investments PBT dropped 25 per cent to $31 million. Losses from the "other" segment, which includes its online businesses, radio and television broadcasting, exhibition organising and book publishing, narrowed 6 per cent to $24.6 million.
SPH shares closed yesterday at $4.18, up one cent.