May 15, 2020
iCreate Limited (iCreate) the three months ended March 31, 2020 reported revenues of $24.51 million, up from $11.90 million reported a year ago. Icreate hightlighted that, “Our growth in revenue is attributable to a number of initiatives that the company took to ensure we deliver on our commitment to our shareholders. They are as follows:
-
- Diversification of our customer segments which now include: Business-to-Consumer (B2C) Training, Business-to-Business (B2B) Training and Business-to-Business (B2B) Training Content Design and Production.
- Revenue growth in the Business-to-Consumer (B2C) Training customer segment, as a result of the addition of two new courses for our Kingston location which were widely accepted in Event & Entertainment Production and Interior Design.
- Revenue growth in the Business-to-Consumer (B2C) Training customer segment, as a result of growth in our student population. Specifically, revenue from our Creative Courses increased by 166% while revenue from our Digital Courses increased by 21%.
- Revenue growth in the Business-to-Business (B2B) Training customer segment, as a result of the earnings from our partnership with HEART (The Human Employment and Resource Training Trust/National Training Agency). Specifically, we have started training individuals from HEART in the areas of digital photography and digital video production, in both Kingston and Montego Bay.
- Revenue growth through the addition of a new customer segment: Business-to Business (B2B) Training Content Design and Production. We began serving this customer segment in order to tap into the growing demand of e-Learning Content Design & Production. Serving this new customer segment will allow us to further leverage our investment in production facilities and equipment to bring new revenue opportunities for the company. In 2019 we invested heavily in facilities and equipment which now allows us to partner with various educational institutions to provide training content to support their e-learning initiatives. E-Learning represents the future of education for schools, colleges, universities and corporate training departments which are all embracing the role of digital training delivery platforms.”
Total direct cost for three months amounted to $5.18 million, 59% greater than 2019 three months direct cost of $3.27 million.
Management noted, “We are pleased to report a Net Profit of $1.25m for the quarter ending March 31, 2020. This is our first profitable quarter since being listed on the Jamaica Stock Exchange. This represents a 184% turnaround when compared to the Net Loss of $1.48m made in 2019. This was attributable to the number of strategic initiatives that were set in motion after being listed in 2019. Some of these strategic initiatives included the raising of the bond issue which was closed in February 2020 and the completion of the expansion and construction of iCreate’s training and operational infrastructures which was completed in 2019.”
Other income for the quarter amounted to $30,288 relative to $190,755 for 2019. As such, total income for the three months amounted to $19.36 million compared to $8.82 million for the first three months of 2019.
Administrative expenses rose 104% to $13.29 million (2019: $6.51 million) for the three months, as well as, Depreciation & amortization which increased by 232% to close at $974,855 compared to $293,672 booked for the corresponding period. As such, total operating expenses for the quarter closed at $14.27 million, 110% greater than the prior year same time operating expense of $6.81 million.
Operating profit for the quarter closed at $5.09 million in contrast to a profit of $2 million for the corresponding quarter of 2019.
Finance cost for the first quarter amounted to $3.85 million relative to $3.49 million documented last year same time. Consequently, profit before taxation amounted to $1.25 million versus a loss of $1.48 million twelve months earlier.
Taxation for the current and previous three months amounted to nil thus resulting in net profit after taxation of $1.25 million relative to a loss of $1.48 million for the three months ended March 31, 2019.
Consequently, earnings per share (EPS) amounted to $0.01 compared to an LPS of $0.01 for the same quarter of 2019. The trailing twelve months LPS is $0.22. The number of shares used in this calculation was 197,592,500 shares. iCreate traded on May 15, 2020 at $0.90.
iCreate noted, “With an aim to maximize profit, in spite of the current COVID-19 crisis, we have undertaken several operational changes which will enable us to reduce costs. Firstly, we have decided to temporarily close our Montego Bay location, effective May 1, 2020. Overall, we have embarked on a cost reduction strategy that will see us reducing expenses by approximately 30% over the coming months as we aim to stay on this path of profitability in this new environment brought on to us by COVID-19.”
Balance Sheet at a Glance:
As at March 31, 2020, total assets increased to close at $57.67 million (2019: $51.49 million). The increase was largely due to increases in ‘Intangible Asset’ and ‘Property, Plant & which closed at $8.91 million (2019: $1.18 million) and $19.74 million (2019: $ and $15.41 million) respectively.
Shareholder’s debt totaled $3.74 million compared to the $39.29 million quoted as at March 31, 2019. This resulted in a book value of negative $0.019 relative to a book value of $0.20 the prior year.
Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer(s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation(s) or view(s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.