3 Things Investors Need to Know About Kingsmen Creatives Ltd’s 2017 Earnings

Kingsmen Creatives Ltd (SGX: 5MZ) is a communication design and production group serving global clients in Exhibitions & Thematic, Retail & Corporate Interiors, Research & Design, and Alternative Marketing.

Last week, the company announced its financial results for the full year ended 31 December 2017. Let’s look at three main aspects of the announcement here.

Show me the money

Revenue slipped 6.8% year-on-year, from S$329.7 million to S$307.2 million in 2017. All four business divisions saw their revenues decline, except for Research & Design.

The Exhibitions & Thematic division posted revenue of S$136.8 million for the year, a decline of 9.7% year-on-year. The fall in revenue was due to the completion of several main projects in 2016. For the latest year, the key contributors to the top-line were major events and projects like BNP Paribas WTA Finals Singapore presented by SC Global, Downton Abbey Touring Exhibition, Formula 1 Singapore Grand Prix, and thematic projects in the region.

The Retail & Corporate Interiors division’s revenue tumbled 4.9% to S$143.2 million on the back of “softer retail industry in some of the markets”. Some of the primary accounts which contributed to the division’s top line were Aldo, Birkenstock and Robinsons.

Revenue from the Research & Design division rose 2.9% to S$15.5 million while revenue from the Alternative Marketing division came down 7.2% to S$11.8 million.

Net profit for the year decreased 18.1% to S$9.7 million. Consequently, earnings per share fell from 6.02 cents to 4.90 cents. The net profit margin for 2017 stood at 3.2%, down from 3.6% seen one year back.

As at 31 December 2017, Kingsmen had S$73.6 million in cash and cash equivalents, and S$13.9 million in total debt. This translates to a net cash position of S$59.7 million. In comparison, at the end of 2016, it had a higher net cash position of S$65.1 million. 2017’s return on equity (ROE) stood at 8.1%, as compared to 2016’s ROE of 10.2%.

Cash flow from operations for the year fell 8.6% to S$13.8 million. With a capital expenditure of S$12.1 million in 2017, free cash flow came in at S$1.7 million. This pales in comparison to the free cash flow of S$11.5 million raked in one year prior.


The board has proposed a final dividend of 1.5 cents per share. Together with the interim dividend of 1.0 cent already paid out, the total dividend for 2017 would be 2.5 cents per share. This represents a payout ratio of 51%.

The dividend for 2017 is unchanged from that of 2016.

What the future holds?

Looking ahead, Andrew Cheng, the chief executive of Kingsmen, said:

“The diverse industries we serve and ability to create and build experiences give us unique opportunities to grow. While we continue to expand our reach in our existing business areas and markets, we will also continue to widen our service offerings and identify new business areas to introduce additional earning streams to the Group. Our recently established subsidiaries Kingsmen Ventures and Kingsmen Xperience are beachheads into realising this vision. The recent tie-up with Hasbro International, Inc. for the development and operation of NERF family entertainment center attractions across Asia Pacific is the first step. We intend to build on this and grow our portfolio of media/entertainment themed licenses.”

The company had secured contracts of S$84 million, as at 31 January 2018, of which S$82 million is expected to be recognised in the current financial year.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Sudhan P owns shares in Kingsmen Creatives Ltd.