Media giant Singapore Press Holdings (SPH) reported positive momentum across all its business segments - media, property, digital and aged care - even as it turned in a smaller profit for the second quarter.
SPH chief executive Ng Yat Chung said at a results briefing yesterday that the group's strategy of growing its non-media businesses, along with its digital revenues - to make up for a decline in print revenues - remains "on track".
The group's net profit attributable to shareholders was down 25.7 per cent to $29.7 million for the three months ended Feb 28, compared with $39.9 million the year before.
For the six months ended Feb 28, net profit attributable to shareholders was down 14.7 per cent to $85.6 million.
SPH said this was due mainly to the lack of investment gains following the divestment of its treasury and investment portfolio last year. The proceeds are being recycled to its businesses to increase recurring income over time.
SPH's operating revenue for the quarter was down 4.4 per cent year on year to $223.3 million from $233.7 million, with a drop in advertisement revenue cushioned by higher property revenue.
Its operating profit for the quarter - which represents the recurring earnings of its media, property and other businesses - was down 8.9 per cent to $46.5 million from $51 million previously.
This was due to lower revenue, as well as higher premises costs and finance costs partly related to its United Kingdom student accommodation portfolio.
SPH's UK PBSA (purpose-built student accommodation) portfolio comprises 17 assets in eight cities, with more than 3,800 beds. In September last year, it acquired a portfolio of 14 PBSA buildings in established university towns and cities with large full-time student populations, such as London, Birmingham, Bristol and Huddersfield.
SPH's operating profit improved slightly for the first half of the 2019 financial year, due to a drop in operating expenses for the period.
For the first half of FY2019, operating revenue was down 3 per cent, or $14.8 million, to $477.6 million.
But total operating expenses decreased 5.6 per cent, or $21.7 million, to $365.3 million, due mainly to ongoing cost control and the absence of retrenchment costs seen in the previous period.
This brought SPH's operating profit for the six months to $121.3 million, a 0.6 per cent increase from $120.6 million the year before.
For its core media business, Mr Ng said the decline in the group's print revenue has continued to slow, while its digital revenue is increasing steadily. Newspaper digital ad revenue increased 15.1 per cent year on year for the six months, while total digital revenue - which includes takings from other digital portals, circulation and online classifieds - was up 13.1 per cent.
Its property revenue increased by 15.3 per cent for the first half of the financial year, through acquisitions by SPH Reit and its UK student accommodation portfolio. In fact, the property segment was responsible for two-thirds of the group's profits, which SPH said was delivering a steady income stream.
The group hopes to build its UK PBSA portfolio to a sizeable platform in the near future.
Other revenue - such as that from the aged care and digital businesses - remained stable.
Mr Ng also said the group was looking forward to extracting synergies from telco M1, in collaboration with Keppel Corporation, once M1 has completed its delisting from the Singapore Exchange.
He also said SPH is on the lookout for expansion opportunities for its aged care business, both domestically and overseas, as it seeks to build operational capabilities here and enhance its range of services.
"We continue to make progress with our digital transformation strategy," Mr Ng said. "Although the media business continues to experience headwinds, revenue from the digital side of the business is showing growth. We also see improved recurring income from the property segment which has expanded its portfolio following recent acquisitions."
SPH's board declared an interim dividend of 5.5 cents per share for the period, a slight dip from the 6 cents per share declared for the corresponding period last year.
SPH shares closed unchanged at $2.53.