Main Event Entertainment Group has finally posted a profit after three successive quarters of decline, owing to its business being among the hardest hit by the government’s containment measures in response to the COVID-19 pandemic.

For the January 2021 quarter, Main Event made a net profit of J$8.07 million after three quarters of net losses. During this quarter, the team continued to work closely with key customers to create opportunities in the ongoing challenging circumstances. Revenues declined 71 pef cent to J$175.838 million in this first quarter of 2021, down from J$598.142 million.

The management of the entertainment group advised shareholders that, “the COVID-19 pandemic continues to impact business activity and performance. This has meant a very modest start to our 2021 fiscal year. Our footprint is noticeably smaller, as revenues continue to deviate significantly from historical levels. However, the company’s performance this quarter shows promise, with improving revenues… .”

Impact of nightly curfew being felt hard

The management in its quarterly report to shareholders pointed to its M-Style product together with its western operations, which contributed $21.909 or 12 per cent of revenues this quarter, compared to $110.193 or 18 per cent in the corresponding period, 2020. This is an 80 per cent decline year over year and is reflective of the impact of the nightly curfews and government regulations on public gatherings on our core business.

The decline this quarter was notably not as pronounced as it was in the third and fourth quarters of the 2020 fiscal year, which were down 87 per cent and 77 per cent respectively.

“We will continue to strive for improvements in each quarter’s results despite ongoing business disruption from the pandemic,” the management and board advised shareholders.

For the three months ended January 2021, Main Event reported revenues of $175.84 million, 71 per cent lower than the $598.14 million booked in 2020. Cost of Sales decreased 80 per cent to close at $65.11 million (2020: $325.46 million), this resulted in gross profit decreasing by 59 per cent to $110.73 million relative to $272.68 million recorded in 2020.

The company noted that, “our gross margins are higher. This is due to a higher percentage of revenues coming from recurring services in digital signage”.

Other income for the quarter closed at $16,000 (2020: $306,000).

Big drop in expenses which were kept at a minimum

Total expenses for the January 2021 quarter amounted to $101.37 million (2020: $197.27 million), a 49 per cent decrease when compared to the prior year. Of that, administrative and other expenses declined by 61 per cent, moving from $161.62 million in 2020 to $63.72 million for the period under review. Selling and promotions fell 80 per cent to $829,000 from $4.22 million reported in 2020.

Depreciation for the January 2021 quarter rose one per cent to total $31.64 million (2020: $31.43 million). Management noted that, “the most significant decline occurred in employee costs, as most of our complement continue to work at reduced capacities. Significant savings have also been realised from the suspension of most discretionary spending on travel, entertainment, advertising, and promotion”.

As such, operating profit decreased by 88 per cent from $75.72 million in 2020 to $9.38 million for the period under review. Finance costs decreased by 46 per cent to close the period at $2.38 million (2020: $4.37 million). The decrease results from lower interest on bank debt due to lower debt levels.

Profit before taxation decreased by 90 per cent to close the period at $7 million (2020: $71.35 million). Notably, Main Event reported a tax credit of $1.07 million for the period under review relative to the tax charge of $1.34 million for  the January 2020 quarter. Thus, net profit amounted to $8.07 million (2020: $70.01 million).

EPS hit by pandemic

Consequently, earnings per share (EPS) for the quarter amounted to $0.03 compared with $0.23 for the corresponding period of last year. The trailing 12 months loss per share amounted to $0.27

Main Event’s total assets base, as at January 2021, closed at $810.44 million relative to $1.05 billion a year prior. The decrease in total assets was largely due to decreases in ‘Receivables’ and ‘Property Plant and Equipment’ which declined by 715 and 16 per cent, respectively to close at $77.36 million (2020: $270.65 million) and $546.77 million (2020: $652.80 million), respectively.