SINGAPORE (May 29): Memories Group posted US$6.1 million ($8.4 million) in 4Q19 earnings, up y-o-y from its earnings of US$1 million due to a one-off US$8 million gain from its acquisition of SM Assets Holdings.
The gain was derived from a lower fair value of the purchase consideration paid for the acquisition compared to the fair value of net identifiable assets of SM Assets acquired by Memories.
The 4Q results bring the group’s full-year earnings to US$2.3 million for the FY19 ended March, reversing from a loss of US$6.2 million in FY18.
Revenue for 4Q rose 10% to US$5.4 million from US$4.9 million a year ago, boosted mainly by growth from the Hotel segment due to newly-acquired businesses including Keinnara Loikaw, Awei Pila and Hotel Suggati Mawlamyaing.
The Jan 2019 opening of Awei Metta also contributed to the increase in revenue of the group’s Hotel segment for 4Q and FY19.
Quarterly revenue contributions from the Experiences and Services segments remained relatively flat on-year at US$3.4 million and US$1.3 million, respectively.
In all, group FY19 revenue grew 14% to US$10.1 million from US$8.8 million on the Hotel segment growth.
The Experience segment’s full-year revenue contributions notably expanded to US$6.4 million from US$6.4 million upon booking full-year contributions from Burma Boating, whose acquisition was completed in Feb 2018.
FY19 gross profit margin however fell by 10.3 percentage points to 37.4% due to lower margins from the Hotel segment as compared to a year ago, when the Experiences segment was the group’s main revenue contributor instead.
Cost of sales for 4Q and FY19 grew 30% and 37% to US$3.3 million and US$6.3 million, respectively, in line with both periods’ revenue growth as well as higher staff costs on additional staff hired for new hotel openings.
Similarly, administrative expenses near-doubled in both 4Q and FY19 to US$2.9 million and US$8.2 million, respectively, after accounting for one-off professional fees due to newly-acquired businesses.
Despite noting a challenging tourism environment faced by Myanmar due to a fall in Western traveller volumes, Memories says the situation remains “balanced” with higher tourist arrivals in Asia.
The group says it has been enhancing its marketing efforts for its Experiences businesses in Asia, and expects its effort to materialise with improved bookings for the segment in the medium-term.
Going forward, Memories says it will be re-strategising its sales and marketing plan for the European market and expanding its efforts into other markets. With the peak season coming to a close, it expects sales in the next six months to be slow due to the monsoon season, during which it seeks to improve operational processes as well as upgrades and refurbishments of certain hotel assets.
Shares in the group closed flat at 7.4 cents on Tuesday.
