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Tuesday, 2 December 2014

SPH raised its appetite for risk

link to original story source
other related story : SPH AGM Opening Remarks


December 2nd, 2014 at 2:48 pm
mUmBRELLA Asia


SPH chairman tells shareholders ‘We are raising our appetite for risk’ to return to growth

The chairman of Singapore Press Holdings, one of Asia’s most profitable publishers, told shareholders today that the company had raised its “appetite” for risk as part of its plan to return to growth.

Speaking at SPH’s annual general meeting in Singapore today, chairman Lee Boon Yang said that a S$100 million (US49 million) fund set aside for new digital ventures showed that the company was prepared to take a higher level of risk than it has in the past, by investing in a wider range of companies outside of its core publishing competency.

“Have we raised our appetite for risk? The answer is yes,” he said, using the company’s investments in the magazine distribution platform Magzter and the real-time bidding firm Smaato as evidence of that, with the caveat that SPH had acquired “small stakes to begin with”.

“We’re looking to make more acquisitions in new digital media to supplement the traditional media business. But it’s not a head long rush to invest this fund.” he said.

“We’re making very careful and selective investments in digital media, which are in areas we think have good prospects, and that will supplement the business in years to come.”

“These investments will take time – they won’t generate profit immediately. And I must say that some investments will not succeed,” he cautioned.

We are investing in tech start ups, such as real-time bidding and digital magazine platforms. Some will make it – they will pay off very well. But some will not. We have to accept this,” he said.

SPH’s AGM comes two months after it reported a six per cent fall in operating revenue from its newspaper and magazine division. These losses were partly offset by gains made by the luxury shopping malls that it owns – up 3.5 per cent. But revenue was down two per cent overall.

Lee said that while a decline in newspaper circulation was being reversed by a rise in digital audiences, striking a profitable balance between print and digital would “take time.”

“Print newspaper circulation is going down, although our newspapers’ total circulation actually went up by 1.4 per cent this year,” Lee noted.

“That’s because of our paid digital subscriptions, which are helping to reverse a decline in print. We want to ensure we have the basis to recover losses from traditional print. This will take time,” he said.

“Our newspapers have been with us for 170 years next year. Our digital newspapers are still quite new in SPH’s history. We have to give it some time and work out how to monetise the model.”

Lee added that a number of the investments SPH has made were “not showing in the financial results yet” by contributing a profit. Those that are include online motoring website sgCarMart.com, which the company bought for $60 million in April last year, and Malaysian classified ads website Mudah.my.

“Some of our investments are profitable, and now the focus is on how to grow these investments so they can make a better contribution,” he said.

SPH remains one of the region’s most profitable newspaper groups, with 28.7 per cent operating margin 2014 – although that margin has fallen from 39 per cent in 2010.

The company’s return on shareholder funds has slipped from 22.4 per cent in 2010 to 11 per cent this year, while dividend per share has fallen from 27 cents in 2010 to 21 cents in 2014.

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