SPH reports third quarter net profit of $187.5 million

SPH reports third quarter net profit of $187.5 million

SINGAPORE - Singapore Press Holdings Limited (SPH) today reported its results for the third quarter ended 31 May 2013 (3Q FY13). Net profit attributable to shareholders was $187.5 million, $83.8 million (80.7%) higher compared to the corresponding quarter last year (3Q FY12). The current quarter's results included one-off items, namely the fair value gain arising from change in recognition of investment properties from cost to fair value basis ($111.4 million), and impairment loss on certain investments ($26.2 million). Excluding the effect of one-off items, net profit of $100.5 million was lower by $3.3 million (3.1%) compared to 3Q FY12.

Group operating revenue of $324.9 million for 3Q FY13 was $6.9 million (2.1%) lower compared to 3Q FY12. Revenue for the Newspaper and Magazine business declined $9.0 million (3.3%) to $259.3 million. This was mainly attributable to a fall in advertisement revenue of $8.8 million (4.3%) to $197.8 million, especially in the property and transport sectors. Circulation revenue decreased $1.2 million (2.3%) to $50.7 million.

Rental income for the Group improved by $1.5 million (3.0%) to $50.2 million on the back of higher rental rates achieved by Paragon, while income from The Clementi Mall remained stable.

Materials, production and distribution costs fell $3.1 million (5.4%), with the benefit of a reduction of $3.1 million (12.0%) in newsprint costs. Staff costs decrease of $1.9 million (2.1%) was attributable to a lower variable bonus provision partially offset by salary increments.

Other operating expenses rose $24.4 million (79.2%). The increase was mainly due to an impairment charge of $15.6 million relating to an overseas subsidiary in the magazine segment as a result of unfavourable market outlook. In addition, there was a step-up in business promotion and other expenses in line with increased business activities.

With effect from this quarter, the Group changed its accounting policy with respect to the subsequent measurement of investment properties from cost to fair value model, with the changes in fair values recognised in the income statement. This change aligns the Group's accounting policy with industry practice in view of the proposed injection of certain investment properties into a REIT. The fair value gain on investment properties of $111.4 million which was recognised in the current quarter comprises the change in fair value since the end of the last financial year.

Investment income of $3.2 million was $6.3 million (66.5%) lower compared to 3Q FY12. During the quarter, the Group recognised $10.6 million impairment of an investment due to prolonged decline in value.

For the year-to-date ended 31 May 2013, the Group's recurring earnings of $290.5 million decreased by $47.1 million (14.0%) compared to the same period last year (YTD 3Q FY12). Group operating revenue declined $33.5 million (3.5%) while total operating costs rose by $14.2 million (2.2%). Investment income fell $4.0 million (27.7%) to $10.4 million. Including the fair value gain on investment properties of $111.4 million recognised in the current quarter, net profit attributable to shareholders was $358.3 million, $65.5 million (22.4%) higher compared to YTD 3Q FY12.

On the outlook for the year, Mr Alan Chan, Chief Executive Officer of SPH commented: "The Group's advertising revenue performance will be driven by market conditions and consumer sentiment in the key advertising sectors. The Group will continue its strategy to invest in online media and pursue growth opportunities, while striving to sustain its core newspaper business."

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