COVID-19 hits Main Event hard
Profit plummets by 119%, but company manages to achieve revenues of $1 billion even with 42% dip
The novel coronavirus pandemic has had a devastating impact on Main event entertainment Group, sending its year-over-year profits plummeting by 119 per cent, which equates to $115 million.
The year 2020 has seen Main Event — Jamaica’s premier events management, promotions and digital signage outfit — experiencing its worst financial performance since it began operations in 2004. The Ian Blair and Solomon Sharp-led company ended its 2020 financial year on October 31 in the red with net profit at minus $18.22 million, coming from a profit of $97.33 million in 2019.
The financial situation was not made any easier with revenues for the year under review falling by $753.01 million, or 42 per cent, to just over $1 billion, coming from the $1.79 billion posted in 2019. Luckily for the company, most of its revenues came during the first half of the year, prior to the COVID-19 outbreak, but since then revenues have been trending down.
In fact, up to 85 per cent of the revenues for 2020 were booked during the first half of the year. In their statement accompanying the audited financial statement for the year, which was posted on Wednesday, Chairman Blair and Chief Executive Officer Sharpe took solace from the fact that Main Event managed to achieve revenues of over $1 billion in this current climate.
“Faced with declining revenues, we took quick and effective actions to ease the impact to our cash flow and profitability. We moved aggressively to reduce operating costs, with all cost categories under continuous review,” Blair and Sharpe said, and described 2020 as “a year of extraordinary challenges” for the company.
In their report to shareholders the principal officers pointed out that the financial performance in the second half of the year reflects the brunt of the impact of the pandemic.
“The year offered a promising start, showing good momentum with strong revenue and profit growth carrying partially through the second quarter,” they said.
The Main Event bosses noted that the company has since been confronted with unprecedented reductions in business activity due to the pandemic. This has had a major impact on revenues and net earnings for 2020.
There was some good news on the expense side as the company was able to cut administrative and general costs by 27 per cent to end the year at $484.8 million. This is down from the $667.05 million recorded at the end of 2019.
Total administrative and general expenses represent 46 per cent of revenues, compared to 37 per cent in 2019. Operating profit for the year was a mere $5 million, compared to the $120.01 million posted last year.
The income statement for the current year includes some individually significant items such as a $57.44 million reduction in expected credit losses, which has aided in easing the impact of the revenue decline over the COVID-19 period.
Main Event has maintained a good asset base, despite suspending capital expenditure for much of the second half of the year and continuing depreciation throughout.
Total assets came out at $854.12 million, a 17 per cent decline from the over $1 billion posted at the end of the 2019. Current assets registered a 43 per cent decline from $380.53 million in 2019 to $218.16 million in 2020, which is indicative of the reduction in business.
Receivables declined by $198.83 million, or 74 per cent, stemming from lower revenues recorded in the second half of the 2020 financial year. Cash flow from operations showed improvements for a second year, growing by 22 per cent to $243.61 million, up from $199.8 million.
Shareholders’ equity has declined by $45.22 million, or eight per cent, in the financial year just ended. This decrease reverses a seven per cent gain in the prior year and includes a cash dividend of $27 million paid to shareholders during 2020.