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Is Kingsmen Creatives Ltd a Profitable Company?

Photo: Images Money. Cropped. Licence: https://creativecommons.org/licenses/by-sa/2.0/

Previously, we looked at what business Kingsmen Creatives Ltd (SGX: 5MZ) is involved in and how it brings in the dough. Now, we will look at how profitable it is.

To tell us if Kingsmen is profitable, we have to take a look at its Profit and Loss Statement, also known as the Income Statement. The Profit and Loss Statement shows a firm’s revenue and expenses during a specified period.

Below is a snapshot of the statement of Kingsmen. The period is from 1 January to 31 December.

Source: Kingsmen’s Annual Report 2016

As seen above, Kingsmen had a net profit of S$11.896 million for Financial Year 2016 (highlighted by the green box). This was a decrease from the net profit of S$19.086 million seen one year ago. In percentage terms, net profit tumbled around 38%.

Looking at the earnings per share, the figure consequently came down from 9.71 cents in FY2015 to 6.02 cents in FY2016 (highlighted in blue).

In FY2015, the firm saw a one-off other income from the disposal of interest in an associate and the fair value of the remaining interest contributing to the net profit. Stripping off the figure of S$5.9 million, the net profit in FY2015 would have been S$13.2 million. This would have reduced the net profit decline in FY2016 to around 9% instead 38%, as quoted above.

The decline in net profit in FY2016 can be attributed to lower gross profit and increase in average wages. Despite the fall in the bottom line in FY2016 as compared to a year back, Kingsmen Creatives is still a profitable company.

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