Singapore Press Holdings Limited: Transition Time

Singapore Press Holdings Limited (SGX: T39), a newspaper publisher and real estate developer, has had a dour year so far.

SPH’s revenue had declined by 3.1% in the financial year ended 31 August 2015 (FY2015). Profit attributable to shareholders suffered more, with a drop of 20.4%.

On top of that, the company’s dividend in FY2015 was also reduced from 21 cents per share a year ago to 20 cents. The less-than-stellar performance may have led to shares of SPH falling by around 7% since the start of 2015.

Weakening net cash position

SPH’s net cash position has deteriorated over its past two fiscal years.

SPH recorded $292.2 million in cash and equivalents and $1.28 billion in borrowings as of 31 August 2015. The newspaper publisher also had $474.6 million in short-term investments and $617.3 million in long-term investments. These investments comprise of stocks, bonds, and investment funds.

The company’s cash and equivalents, borrowings, and short- and long-term investments over the past few quarters are summarised in the graph below:

SPH Balance sheet
Source: SPH’s earnings announcements

The net cash position seen above is calculated as such:

Net cash position = Cash & equivalents + Short-term investments + long-term investments – Total debt

As of 31 August 2015, SPH had a net cash position of $100.2 million. But as you can see, the company’s cash and equivalents has been trending downwards over the past two years (observe the red line). Along with it, the newspaper publisher’s net cash position (see the blue bars) has gradually fallen as well.

The good thing is that SPH’s borrowings have declined over the past two quarters (notice the steep drop in the purple line). The company also has $3.94 billion in investment properties, so it does have significant assets that it can use to shore up its balance sheet.

Foolish summary

SPH is in the process of transitioning its traditional print business to digital formats, so the tough operating environment may continue for the foreseeable future.

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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.