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Singapore Press Holdings Limited’s FY2017 Earnings: What Investors Need to Know

Media giant, Singapore Press Holdings Limited (SGX: T39), announced its financial results for the full year ended 31 August 2017 (FY2017) yesterday evening. The financial period was from 1 September 2016 to 31 August 2017.

Here’s a quick rundown of the financial figures from the latest period:

1. SPH operates three business segments – Media, Property and Others. Total revenue for the firm slumped 8.2% year-on-year to $1.03 billion as the disruption to the media industry continued to impact sales at its Media business. This was partially mitigated by gains in the other two businesses.

2. Operating profit, which represents the recurring earnings of the media, property and other businesses, fell 32.7% to S$205.4 million.

3. Net profit, however, rose 32% to S$350.1 million. This was boosted by a one-off gain of S$149.7 million from the partial divestment of its stake in a regional online classifieds business.

4. As a result, diluted earnings per share for the year was at 22.0 Singapore cents, up from 16.0 cents in FY2016.

5. Let’s turn our attention to the balance sheet. As of 31 August 2017, SPH had S$1.19 billion in net debt. This is a deterioration from S$984 million in net debt that it had on 31 August 2016. The increase in borrowings was primarily due to a draw-down of short-term facilities to acquire Orange Valley Healthcare, a nursing home provider, in April this year.

6. The media outfit did not produce operating cash flow (OCF) for FY2017, just like in FY2016. For the year, it used S$19.8 million in operating activities, a decline from last year’s figure of S$13.8 million. SPH’s OCF oddly includes dividend payments.

The Media business saw its revenue slip as advertisement and circulation revenue fell 16.9% and 5.1% respectively.

Revenue for the Property segment grew 1.2% to S$244.2 million, due to higher rental income from the retail assets of the group.

Meanwhile, revenue from the SPH’s other businesses increased 28.9% to S$62.9 million, mainly on the back of income from the newly acquired healthcare business.

Shareholders would be getting a final dividend of 9.0 Singapore cents per share, comprising of a normal dividend of 3.0 cents and a special dividend of 6.0 cents. Together with the interim dividend of 6.0 cents paid out earlier, total dividend for FY2017 would be 15.0 cents. This is a drop from the total dividend of 18.0 cents dished out in FY2016.

The firm said that it will complete the full 10% staff reduction announced last October by the end of 2017.

It also added that to deal with the disruption to its core media business, it will step up its investments to enhance its capabilities in digital, data analytics, radio broadcasts, video and content marketing. On that note, the firm will launch two new radio stations early next year.

Shares of SPH are now going at S$2.72. This translates to a price-to-earnings (PE) ratio of around 19, excluding the one-off gain, and a dividend yield of 5.5%. Including the one-time gain, the PE ratio would be close to 12.

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Editor's Note: Point 6 of the article has been updated to include the part on dividend payments. 

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