December 31, 2019
Main Event Entertainment Group Limited (MEEG) for the year ended October 31, 2019 recorded a total of $1.80 billion in revenue compared to $1.40 billion booked for the year ended October 31, 2018. Revenue for the quarter rose 31% to close the quarter at $435 million relative to $331.49 million booked for the corresponding period in 2018. Notably, the Company mentioned, “we have successfully developed attractive new opportunities that have fostered growth. We have achieved double digit gains in all core revenue categories; and our newer service offerings have contributed $177.501 million or 10% of revenues this past year.”
Cost of sales for the year increased 35% year over year to $1.02 billion relative to $757.14 million. Gross profit for the year thus improved 21% to $776.72 million (2018: $640.12 million). Gross profit for the quarter increased 33% from $130.46 million reported for the year ended October 2018 to $173.11 million for the same period in 2019. Moreover, MEEG stated that, “due to significant increases in operating costs, the gross margins are down at the end of the fiscal year, which we attribute to increasing logistics, labour and third-party service costs.”
MEEG booked other income of $10.34 million for the financial year, 300% higher than the prior comparable year’s $2.59 million.
Total expenses rose 26% to $667.05 million versus $527.72 million recorded for 2018. Of this:
Administrative and general expenses climbed 28% to $533.26 million (2018: $417.99 million). This is attributable to, “increases in automobile and fuel expenses; staff related costs; depreciation; foreign exchange losses and expected credit losses (in accordance with IFRS 9) have all had negative impacts on the bottom line,” as stated by the Company.
Depreciation expense increased 29% to $116.91 million (2018: $90.37 million).
Selling and promotion expense fell 13% to $16.88 million relative to $19.37 million.
Total expenses for the quarter amounted to $175.19 million, 30% higher relative to last year’s $134.80 million.
Consequently, operating profit for the year rose 4% to $120.01 million (2018: $114.98 million).
Finance cost year over year, decreased by approximately 3% to $19.30 million (2018: $19.80 million) due to, “the absence of commitment fees.”
MEEG recorded profit before taxation of $100.71 million, a 6% rise when compared to last year’s corresponding period of $95.18 million.
The company reported taxation of $3.37 million (2018: $524,000) during the year, resulting in net profit totalling $97.34 million compared to $94.66 million booked last year, a 3% increase year over year. MEEG reported net loss of $10.76 million for the fourth quarter versus a net loss of $10.82 million for the comparable period in 2018.
Earnings per Share (EPS) for the year amounted to $0.324 (2018: $0.316), while for the quarter the company booked a loss per share of $0.0358 relative to a loss per share of $0.0361 in 2018. The number of shares used in the calculation was 300,005,000 units. MEEG closed the trading period on December 30, 2019, at a price of $6.21.
The Company noted, “we recognize the importance of a lean cost structure and we have identified a need for a margin realignment project. We have commenced a detailed review of direct costs aimed at re-assessing and refining cost management and control strategies. We have also recognized a need to expand our portfolio of higher-value service offerings and expect the re-alignment project to have a positive impact on margins.”
Balance Sheet Highlights:
As at October 31, 2019, the company’s assets totalled $1.03 billion (2018: $941.55 million), $88.14 million more than its value a year ago. This increase in total assets was largely driven by an increase in ‘Property, plant and equipment’ which rose $131.21 million to close at $646.65 million relative to $515.44 million in 2018. ‘Receivables’ however tempered the overall improvement in the asset base year over year by a 15% decline to $267.94 million (2018: $316.99 million).
Equity attributable to stockholders of the company amounted to $578.84 million (2018: $540.99 million). This translated to a book value per share of $1.93 relative to $1.80 for the corresponding period in 2018.
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.
