As announced by the Company on 28 March 2018, Tan Sri Datuk Sir TIONG Hiew King has been re-designated from his position as Group Executive Chairman and Executive Director to a Non-executive Director of the Company, and I, Dato’ Sri Dr TIONG Ik King, a Non-Executive Director of the Company, have been appointed as the Non-executive Chairman of the Company with effect from 1 April 2018.
I am humbled by the appointment to lead a renowned Chinese media group with influential presence in Southeast Asia and Greater China. I am committed to steering the Group through these tumultuous times that most print media are experiencing with the hope of emerging as a stronger and more resilient Group.
The year 2018 marks the 10th anniversary of the merger of our three main publishing groups in 2008. The Group’s flagship newspaper, Sin Chew Daily, had recently celebrated its 30th year re-publication after the take-over by Tan Sri Datuk Sir TIONG Hiew King in 1988.
Over the past few years, the media sector worldwide has been facing massive disruptions brought about by the advent of internet and global digitalisation. Changes in media landscape, consumer reading behavior and lifestyle has forced media companies and practitioners to relook at the manner in which content has to be presented and the medium through which it is presented. We, at Media Chinese International Limited, are no different. Whilst not forgetting our role as the fourth estate in ensuring accurate and truthful news and information are communicated to our readers in a timely manner, we are also mindful that our advertisers are constantly reviewing the manner and platform in which their advertisements are delivered to their customers.
The digital landscape is rapidly changing and we are fully aware that we have to change the way we look at our business as a media company and the way we run our operations in this digital era. As such, we have intensified our efforts in strengthening our digital capabilities and enhancing our web content development as well as investing more in the digital space and social media in order to ride on the rapid shift of readers and advertisers to the digital platforms. With the new technologies and communication tools, we are now able to reach a more extensive audience base through digital channels. The interactive nature of the digital media also enables us to provide our readers with the content that they want and need.
By aligning our sales and marketing strategies across different channels, we are able to provide customised and integrated advertising solutions for our advertisers to reach their targeted customers across print, mobile, video and social platforms. Our travel business has also been affected by the digital technology as more travelers choose to plan and manage their trips using convenient and user-friendly apps. Moreover, airlines are now reaching out to travelers directly and competing with tour operators by offering very competitive airfares.
FINANCIAL YEAR 2017/2018
In spite of all the challenges, our core business in print media remained important and relevant as the Group’s revenue was still substantially generated from its publishing and printing segment.
The Group’s total turnover for the year was US$284,963,000 as opposed to US$302,586,000 for the last financial year, reflecting a yearon-year decline of 5.8%. Due to the provisions for impairment of goodwill and some plant and machinery totalling US$25,855,000, the Group reported a loss before income tax of US$6,874,000 as against prior year’s profit before income tax of US$20,775,000.
However, the digital revenue for the Group grew by about 24.6% year-on-year with some of our major digital categories showing encouraging growth.
Basic loss per share for the year ended 31 March 2018 was US0.68 cents, compared with a basic earnings per share of US0.90 cents in the previous year. As at 31 March 2018, the Group’s net assets stood at US$201,768,000, which was 2.3% higher than the previous year’s US$197,315,000. The Group’s net gearing ratio was zero as at 31 March 2018.
The financial year 2017/2018 has been an extremely challenging one.
For the publishing and printing business, soft advertising spending and subdued market sentiments in Malaysia, especially in the property and retail sectors, have negatively impacted our revenue. The rise in cost of living has affected many people, especially the lower income earners, in Malaysia. This weakened consumer spending and subsequently advertisers’ spending. Advertising expenditure in Malaysia for FY2017/18 fell 7.6% year-on-year to RM16,990 million.
The significant global newsprint price hike due to the supply shortage of newsprint, as well as the commencement of creditors’ voluntary winding up of the only local newsprint manufacturer in Malaysia have given us no alternative but to raise the cover price for our four newspaper titles in Peninsula Malaysia effective from March 2018, 13 years since it was last adjusted.
In Hong Kong, our publishing and printing business continued to face a decline owing to the reduction in advertisement spend from the property and luxury goods sectors. However, the demand for classified, especially job-related, advertisements continued to be on an uptrend, as unemployment rate has been low for years.
With much concerted efforts and as a result of driving for new revenue streams, total advertising revenue is stabilising which is an indication that the economy of the markets we operate in is improving and that our efforts in building our digital capabilities and developing multi-platform media offerings are creating tangible results.
Besides intense competition from airline companies, our travel business was also affected by additional travel restrictions imposed by the US government. However, our travel business managed to maintain a stable performance in 2017/2018 with its offer of attractive tour destinations and customised holiday packages. Furthermore, our tour operations in North America continued to lead with demand for its tours to the Rockies and Northern Lights packages.
Meanwhile, our digital business has gone from strength to strength with strong growth in our new digital products and services such as uniquely customised content for our readers and innovative cross-platform advertising campaigns for our customers.
THE WAY FORWARD
Our publishing and printing business will continue to be the main revenue driver for the Group. As such, we are continuously working towards finding the balance between generating content that will retain readers for our printed publications and providing alternative content on our digital platforms to allow both our readers and advertisers the benefit of switching between platforms.
Our editorial operations in Malaysia have been undergoing a fundamental transformation. We are in the process of transforming the editorial operations in Malaysia to reflect our new Newsroom Motto: DIGITAL FIRST. We will move more into digitalisation and further streamline our operations to boost efficiency, without neglecting our fundamental objective in providing the top-quality journalism, especially in an environment where fake news is prevalent.
We will also continue to upgrade and increase ways to monetise our digital venture. Further, we will redouble our efforts to achieve optimum convergence between our print and digital operations for greater cost efficiency.
For our travel business, we have intensified our efforts to look for new exotic destinations and are continuously reviewing our tour packages to make them more attractive and unique.
In addition to the above initiatives, the Group is also reviewing its operations to ensure optimum utilisation of assets and manpower. It is studying ways to rationalise the number of offices it operates in and the optimisation of its production plants by further integrating the operations of all its publications. A study of its manpower needs and utilisation is being carried out to ensure it can meet the demands of the rapidly changing business environment.
To ensure sustainable growth, the Group strives to maintain a healthy financial position while at the same time is always on a lookout for business expansion through investments that are synergistic with the business of the Group. The investments would be in businesses that can springboard the Group to new digital media innovations with minimum time investment.
CORPORATE GOVERNANCE & SUSTAINABILITY
The Board is committed to practising high standards of corporate governance and promoting sustainability measures throughout the Group. Details of our corporate governance initiatives, risk management, internal control policies and sustainability efforts are set out in the relevant sections of the Annual Report.
The Board has declared a second interim dividend in lieu of final dividend of US0.18 cents per share payable on 13 July 2018. Together with the first interim dividend of US0.25 cents paid on 29 December 2017, the Group has declared a total of US0.43 cents per ordinary share for the financial year 2017/2018. This represents a dividend payout ratio of about 50.5% of the adjusted profit attributable to owners of the Company* and a dividend yield of 4.5% based on the Company’s closing share price on 31 March 2018.
* Excluding the provision for impairment of goodwill of US$20,709,000 and impairment loss of plant and machinery of US$5,146,000.
We expect the operating environment for our businesses, both publishing and printing and travel business, to remain challenging. Despite the improvement in the general economy of the countries we operate in, such improvement has not benefitted our businesses as the sectors in which our advertisers operate in remain subdued. Nevertheless, we will continue our efforts in converging our print with our digital business and intensify our cost cutting efforts. The Group is committed to further developing its digital media business in order to ensure long term sustainable competitiveness while continuing to strengthen its core publishing and printing and travel businesses.
CHANGE IN BOARDROOM
On behalf of the Board, I would like to thank Mr NG Chek Yong who resigned from the Board on 2 October 2017. Mr NG Chek Yong was appointed as an Executive Director on 1 March 2012.
I would like to put on record our sincere appreciation to Tan Sri Datuk Sir TIONG Hiew King for his commendable stewardship and valuable contribution to the Group during his tenure of office as the Group Executive Chairman. The Board believes that the shareholders and the Group will continue to benefit from his presence as a non-executive director of the Company.
I, on behalf of the Group, would like to express our gratitude to our shareholders, readers, viewers, advertisers, business partners and other stakeholders for their continued support and confidence in the Group. We also thank our employees for their passion, efforts and contribution in delivering value for our shareholders and stakeholders especially in the current challenging environment for the media industry.
Dato’ Sri Dr TIONG Ik King
30 May 2018