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Wed, Oct 14, 2020 – 5:50 am
Singapore
SINGAPORE Press Holdings (SPH) reported on Tuesday its first net loss of S $ 83.7 million for the full year ending August 31, as Covid-19 “severely disrupted” all business segments, including ownership, which has been a key revenue driver for the group, as its media business remains in question amid declining advertising revenue.
The company, which publishes The Business Times (BT), was hit by non-cash fair value losses of S $ 232 million, mainly in its shopping centers and specially designed student accommodation (PBSA) assets.
The valuation of its shopping centers was reduced by S $ 196.5 million, while that of its PBSA assets was reduced by S $ 31.9 million.
These fair value losses were partially mitigated by S $ 68.5 million received from government plans, including the Employment Support Plan.
However, the group continues to be profitable from an operational point of view. For the full year, operating profit fell 41 percent to S $ 110.2 million.
SPH Chief Executive Ng Yat Chung told a news conference Tuesday that the fair value adjustments of its assets as a result of the pandemic are “in line with the market.”
He added: “So when things improve, we expect assets to revalue higher.”
As the real estate business continues to contribute the majority of the group’s operating profit, Ng said SPH will focus on improving recurring income from its existing assets and will look for good opportunities.
Operating income for the year decreased 9.8 percent to S $ 865.7 million, as media advertising revenue fell 31.4 percent.
Total costs were 6.8 percent higher, at S $ 844.4 million, in part due to increased operating costs of operating an expanded portfolio of Reit (real estate investment trust) and PBSA, tax rebates to the property transferred to the tenants and reduction costs.
For the full year, media business revenue decreased 22.8% to S $ 445.1 million due to a 32.9% decrease in newspaper print advertising revenue. Circulation remained stable due to the 52.5% increase in the daily average of digital newspaper sales, which partially offset the 12.6% drop in printed copies.
The pre-tax loss for the segment was S $ 11.4 million, compared to a gain of S $ 54.7 million for fiscal year 2019, after considering reduction costs of S $ 16.6 million.
Revenue from the real estate business increased 10.3 percent to S $ 327.2 million, driven by the acquisition of the Westfield Marion shopping center and the Student Castle PBSA portfolio. However, the S $ 33.8 million rental exemptions to Singapore tenants eroded the retail sector’s earnings. Meanwhile, PBSA sector revenues were up 60.6 percent.
The pre-tax loss for the property segment was S $ 75.8 million, compared to a gain of S $ 263 million in fiscal year 2019, due to fair value losses.
Revenue from the Others segment grew 8.7 percent to S $ 93.3 million, helped by higher sales of personal protective equipment from its senior care business. The segment posted a pre-tax profit of S $ 1.9 million, in part due to the divestment gain of S $ 25.7 million in the Media Center.
A final dividend of one Singapore penny per share was declared, up from 5.5 cents last year. SPH had also paid a special one cent dividend for fiscal year 2019. The dividend will be paid on December 18. Along with the interim dividend of 1.5 cents, the total dividend payment for fiscal year 20 will be 2.5 cents.
Annual loss per share was S $ 0.07, compared to earnings per share of S $ 0.13 in the last financial year. The net asset value per share was S $ 2.06 as of August 31, compared to S $ 2.16 as of August 31 last year.
When asked if more cost control measures needed to be taken, Mr. Ng said such measures have already been taken to ensure that losses are contained. By August, SPH had cut about 140 jobs, or 5 percent of the media group’s workforce to restructure its media sales and magazine operations. Mr. Ng said the move had put the group “in a good position to deal with the decline in publicity.”
He added that the media business will remain difficult until advertising revenue returns with the resumption of consumer spending.
However, the 9.4 percent growth in circulation figures for its digital News Tablet product and the increased number of readers are encouraging for the company, Ng said.
“We are intensifying our digitization efforts to transform the news content business in response to the changing demands of our audience,” he said. “We will continue to take a prudent and disciplined approach to liquidity and capital management to weather the Covid-19 crisis with all of our shareholders.”
DBS analyst Alfie Yeo told BT that the group’s core revenue was within expectations, but core operating profit fell short due to higher than expected operating costs.
Going forward, the property segment will continue to be SPH’s “key contributor to earnings,” Yeo said.
However, potential losses from the media business would drag down contributions from the property segment, he noted, adding: “If SPH can make the media segment profitable again, it would increase property income and help support group earnings. “
Shares in SPH closed unchanged at S $ 1.05 on Tuesday before the results were released.
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