Singapore Press Holdings Limited’s Latest Earnings: Running to Stand Still

Singapore Press Holdings Limited (SGX: T39) reported its fiscal fourth-quarter earnings yesterday evening. The reporting period was for 1 June 2015 to 31 August 2015.

SPH may be best known as a publisher of most of the major newspapers here in Singapore. But there’s more to the company beyond that; it also engages in property development and other activities like events management. In addition, the firm’s also the majority owner and manager of SPH REIT  (SGX: SK6U), a real estate investment trust which owns retail malls.

You can learn more about SPH in here and here. You can also catch up with the company’s fiscal second-quarter earnings report here.

Financial highlights

The following’s a quick rundown on SPH’s latest financial figures:

  1. For the fiscal year ended 31 August 2015 (FY2015), revenue fell by 3.1% year-on-year to come in at $1.18 billion.
  2. During the same timeframe, profit attributable to shareholders had declined by a hefty 20.4% to $321 million. The falling profit is mainly a result of a lower change in the fair value of SPH’s investment properties and the lack of a one-off gain that happened in FY2014 from the sale of a joint-venture company. The operating profit picture’s healthier with SPH as the number was up 1.3% year-on-year in FY2015.
  3. With the big drop in profit attributable to shareholders, SPH’s earnings per share (EPS) naturally followed suit with a 20% decline from 25 cents in FY2014 to 20 cents.
  4. Cashflow from operations came in at $39.9 million for FY2015 with capital expenditures clocking in at $13.6 million. This gives SPH a positive free cash flow of $26.3 million, a nice improvement over FY2014 when the number was negative (cashflow from operations of S$13.9 million and capex of S$18.9 milion). Notably, SPH’s cashflow from operations includes the dividends it has paid.
  5. As of 31 August 2015, SPH had $292 million in cash and equivalents and borrowings of close to $1.3 billion. This is an improvement from where its balance sheet was a year ago where it had $443 million in cash and equivalents and borrowings of $1.8 billion.

In all, SPH saw its revenue stall, but the company was able to keep its operational profit stable. The management team had proposed a final dividend of $0.08 per share and a special dividend of $0.05 per share; this brings FY2015’s total dividend to $0.20 per share. The numbers are down slightly from FY2014, where the total dividend is $0.21 with a final dividend of $0.08 and a special dividend of $0.06.

Operational highlights

SPH’s revenue fell 3.1% year-on-year mainly due to lower revenues from its media segment. The segment’s slide was tempered by a 12.6% rise in the property segment’s revenue. New contributions from Seletar Mall, which opened only in November 2014, was the reason behind the property segment’s revenue increase.

For FY2015, SPH’s media business segment made up close to 77% of total revenue and is thus worth keeping an eye on. The segment’s revenue fell 6.3% from $963 million in FY2014 to $902 million. A sluggish advertising market and structural challenges within the industry had contributed to the fall in media revenue. SPH’s newspaper ad revenue had declined by 8.7% in FY2015 compared to a year ago; this marks the fourth consecutive year of lower newspaper ad revenues.

It’s worth noting however that SPH’s main newspaper, The Straits Times, had recorded higher overall circulation (digital and print) compared to last year; this is mainly due to higher digital circulation.

Alan Chan, the chief executive of SPH, had provided this future outlook for the company in the earnings release:

“FY2015 marks a year of resilience for the Group. Despite the tough market conditions, the Group has delivered a creditable performance with recurring earnings maintained YOY. That said, the operating environment will likely remain challenging for the year ahead. Amid the difficult times, the Group is seeing growth in its digital media revenues and will continue to evaluate and pursue growth opportunities.”

Foolish summary

As of its closing price yesterday of $4.00, SPH traded at a price-to-earnings ratio of 20 and has a dividend yield of around 5%.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.