“We have had a rewarding year, marked by overall business growth and consistent performance. The year’s accomplishments were headlined by robust top-line growth. Building on the strength of our core business, we have successfully developed attractive new opportunities that have fostered growth. We continue to strive for excellence in our service delivery and have enhanced our reputation as an All-Encompassing Brand Experience Facilitator not only in Jamaica but in the region as well. This 360-degree approach to the event planning industry is unique, innovative and forward-thinking. It is what continues to set us apart in our field.
At the close of the 2019 financial year, we achieved and exceeded our revenue targets, delivering revenue growth of $402.19 Million or 29%. We have achieved double-digit gains in all core revenue categories, and our newer service offerings have contributed $177.50 Million or 10% of revenues this past year.
Entertainment Sector & Segment Review
The overall sector showed that there was an increase in entertainment activities partially reflecting the increased granting of amusement licenses by the parish councils. These licenses increased 5.20 percent in the year to 22,560 approved events across the island, according to the latest statistics from the Economic and Social Survey published by the state-led Planning Institute of Jamaica. Main Event would have benefited from the increased activity; particularly in larger cities and towns which all showed an increase in license approval led by St James, St Ann, and Westmoreland.
During the year, the formal entertainment industry on a whole increased its propensity to grow with a slight uptick in bank loans outstanding totaling $2 Billion up to October 2019. This figure grew 10 percent to $2.2 Billion in December after the close of Main Event’s year-end. The Company thinks this growth in entertainment loans augurs well for the strengthening of the sector. Additionally, while the sector loans grew by some 15 percent over three years, over that same period, total loans across all industries virtually doubled from $481.90 Billion in September 2016 to over $842 Billion in December 2019, according to data from the Bank of Jamaica.
In the financial year, Main Event launched M Academy, its marketing, event management, and production certification programme. The Company has already graduated several students with new cohorts on the way. The Company will utilize the M Academy training and certification programme to capitalize on the demand for skill training in the entertainment and tourism industry. There are no facilities on the island that adequately train audio and visual technicians to professional standards.
In the past, Main Event has had to train its own staff in-house and decided that such training would benefit the wider society. To fill this void, M Academy was set up as a solution. A small band of suitable tutors and trainers have been recruited to take this concept to students. This will increase the pool of talent in the industry, which will redound to the benefit of Main Event and the nation on a whole. The course which completed its first set of training modules in November 2019successfully graduated over 100 students who are now equipped with the invaluable knowledge and skills required to obtain a career within the event industry. M Academy will continue its mandate in the coming financial year of training and development to ultimately provide opportunities for our youth within this ever-evolving event industry.
M Style XP Our exclusive full-service wedding and signature event design division of Main Event Entertainment Group Limited has continued to grow from strength to strength in 2019. Creating memorable experiences tailored to fit clients’ needs and style, M Style XP is devoted to exceptional service while providing superior value to our diverse and discerning clientele. M Style XP continues to perform exceptionally well. As a relatively new player in the industry, it continues to pick up traction and is now a top choice for premium weddings and corporate events. The division continues to make headway in the market through innovation as well as in its offerings of premium fixtures and furniture that distinguishes itself in the marketplace. We continue to expect even further growth in the years to come.
Financial Performance
Gross Profit increased by 21 percent to $776.7 million compared to $640.1 Million a year earlier. The Company’s gross profit margin (gross profit over total sales) declined slightly to 43 percent from 45 percent in the previous year. Despite the slight fall in margins, Main Event gained from an overall increase in revenue. Net Profit Net profit before tax totaled $100.7 million compared to $95 Million a year earlier. The increase in profit was due to increased business activity and sustained market share. Main Event was keen on effecting efficiencies during the year and administrative costs grew at a slower pace than revenue at $533 million compared to $418 Million a year ago, or 27.5 percent.
Total Assets: The balance sheet shows a $1.03 Billion or 9.4 percent increase in total assets when compared to the similar period last year. The Company completed the buildout of its M-Style facilities in the current quarter, and the buildout of the operational space in Western Jamaica was completed during the year. The rollout of the M-Style showroom allows for the exploration of new concepts targeted at building out an even stronger market demand for Main Event’s service experience.
Group Equity totaled $578.8 Million or 6.5 percent higher than a year earlier. The rise in equity was due to increased retained earnings which now totals $475.2 Million.
In the year, the Company declared $18 Million worth of dividends to its shareholders.
The market value of shares in Main Event closed the year at $5.32 in October 2019 compared with $6.50 in October 2018. Since that time, however, the price has trended towards higher levels. The Company believes that its fundamentals are sound and that the market will eventually see the value that has been created over the 2019 financial year, as reflected in increased cash generated from their record revenue.
Revenue:
The Company booked another year of record revenue at $1.8 Billion up $402 Million or 29 percent higher than a year earlier.
Main Event maintained steady revenue growth in the 2019 financial year as it benefited from diversified revenue streams. The MStyle experience was the best growth segment. Also, the Company’s presence in the West and M Academy project contributed to growth during the year.
Segment results showed that revenue from the Company’s entertainment promotions operations stood at J$1.25 Billion which accounted for almost 70 percent of the overall $1.8 Billion in revenue. This segment grew revenues by $218.5 Million year-on-year due in part to increased marketing spend from major clients.
The second highest revenue segment was audio & film operations which earned $268.2 Million up from $222.1 Million a year earlier. This segment represented 15 percent of total revenues.
During the financial year, revenue from digital signage totaled $101 Million from $77.3 Million in the previous financial year. M Style XP earned $160.7 Million up 152 percent over the previous year from $64 Million. M Academy revenue totaled $16.8 Million in its inaugural year of operations.
Business Outlook
For the upcoming financial year, the Company is aiming for a minimum of 8% growth in revenues.
Once the economy remains strong, we expect a robust year as prospects are good and continuing to grow in our industry. We recognize the importance of a lean cost structure and we have identified the need for a margin re-alignment 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 realignment project to have a positive impact on margins.
We are energized by the positive momentum that we are seeing in our Company and we are excited to build on this momentum in the new year. Over the past 2 years, we have expanded our business and we have realized immeasurable intangible growth and development in strategic areas of our business. We are committed to the continuing refinement of our service offerings as well as to sharpening of our skills and talent. We believe we have set the stage for sustainable growth in an expanding industry.
As we move forward into 2020 and beyond, we will be focused on pursuing operating efficiencies as we are keen to grow more efficiently and profitably.
Solomon Sharpe Chief Executive Officer, extracted and edited from 2019 Annual Report