SPH posts rise in operating profit, media biz still in flux

Singapore Press Holdings (SPH) posted a 69.8% increase in operating profit to SG$206.7 million for its non-media operations for the year ended 31 August 2021 (FY 2021). The improved performance was across all segments, including retail and commercial and purpose-built student accommodation (PBSA) despite the ongoing disruption from COVID-19, especially in the earlier part of the financial year. SPH's media business is currently in the midst of restructuring. The move to transfer the business to a company limited by guarantee (CLG) was first announced in May and SPH's shareholders voted in favour of the transfer last month to the CLG named SPH Media Trust.

Total revenue for its non-media business grew to SG$475.1 million due to higher rental income from retail and commercial and PBSA driven by the expanded portfolios and lower tenant rental relief for retail tenants. The increase was partially offset by the absence of revenue from the supply of masks by aged care. At the same time, total costs dropped by 21.6% mainly due to lower costs of aged care in line with lower revenue as well as the absence of impairment of intangible assets.

On the other hand, revenue for the media business dipped SG$85.8 million (17.5%) as a result of lower advertisement revenue of SG$37.6 million (-14.1%) and circulation revenue of SG$17.2 million (-12.3%). Income from the job support scheme (JSS) was also lower by SG$10.3 million (36.7%). In line with the lower revenue, costs similarly dipped by SG$83.6 million (16.7%) with lower materials, production and distribution costs as well as staff costs. According to SPH, staff costs dropped 6.6% from FY 2020 as part of strict cost management measures in place since FY 2019. 

According to SPH, the losses were contained due to extensive cost savings and reduction initiatives despite the continued secular decline of print media revenue. Going forward, there is less scope for major cost cuts without impairing the core media capabilities. Over the two financial years, the cumulative loss from media is SG$78.8 million and is expected to widen further. With the impact of JSS factored in, but not that of assumed depreciation, media’s operating loss is SG$13.0 million. Together with SG$115.3 million of media restructuring costs, media’s loss is SG$128.3 million in FY2021. Across FY 2021 and FY 2022, the media restructuring costs will be SG$243.3 million including SG$12.5 million of transaction costs.

The latest results for its media business continues a downward trend that the company has been experiencing. During the first half of 2021, SPH CEO Ng Yat Chung said despite expanding its audience reach, the company's media business continues to be affected by the structural decline in advertising and the impact of COVID-19. SPH's overall total revenue also dropped SG$20.0 million (4.2%) to SG$460.3 million with a decline in operating revenue from its media business during the first half of the year. Revenue for the media business dip SG$60.8 million (23.9%) to SG$193.1 million.

Before the restructuring of its media business, SPH laid off 5% of its staff and restructured its media sales and magazines operations last year as part of its media transformation roadmap to tackle COVID-19's impact on its ad revenue. SPH also underwent a strategic review to consider options for its various businesses in March this year.

Separately, SPH Media Trust, is ceasing the print edition of The New Paper and taking it fully digital as part of its efforts to accelerate the digital transformation of newsrooms and to meet audience preferences in a rapidly-changing media landscape. At the same time, it also plans to expand resources in The Straits Times newsroom and speed up the digital transformation of The Business Times. Shortly after, SPH Media Trust also announced that it is merging Lianhe Wanbao and Shin Min Daily News from 26 December.

Meanwhile, Keppel Corporation has also proposed to acquire and privatise SPH excluding its media arm. Upon successful completion, SPH will eventually be delisted and become a wholly-owned subsidiary of Keppel.

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