MCIL's 4Q profit plunges 72% on impairment of goodwill

by **Cals** Fri 29 May 2015, 00:17

MCIL's 4Q profit plunges 72% on impairment of goodwill

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By Chen Shaua Fui / theedgemarkets.com | May 28, 2015 : 10:10 PM MYT

KUALA LUMPUR (May 28): [size=14]Media Chinese International Ltd (MCIL)'s net profit plunged 72% to RM9.23 million for the fourth quarter ended March 31, 2015 (4QFY15), against RM33.11 million a year ago, due to recognition of an impairment loss of goodwill.

The media group’s home operation was hit by RM19.7 million of goodwill impairment.

MCIL’s revenue dropped 12.85% to RM321.5 million, from RM368.9 million last year. The decline was mainly due to lower revenue from the group’s publishing and printing operations, it said.

For the financial year ended March 31, the media group's net profit contracted nearly 35% to RM116.4 million, from RM178.64million in 2014.

Revenue dipped 8.45% to RM1.59 billion, from RM1.74 billion last year.

The group proposed an interim and final dividend of 1.82 sen per share for the financial year ended March 31 (FY15), payable on July 31.

In a filing to the Bursa Malaysia, MCIL (fundamental: 2.4; valuation:1.8) said its profit before income tax plunged by 55.4% to RM21.44 million (US$5.79million), from RM48.11 million in the prior year's quarter.

The decrease was due to recognition of an impairment loss of goodwill and an allowance for impairment loss of interest in an associate, totaling RM28 million.

“The decline in turnover for the quarter was cushioned by lower newsprint costs and savings from the Group’s on-going tight cost management. The group’s profit before the impairment losses was RM49.44 million, 2.8% higher than the same quarter last year,” it said.

For 4Q15, turnover and profit before tax (PBT) of the group’s publishing and printing segment declined 13.6% and 35.2% respectively, as compared to last year.

Meanwhile, it said the Malaysian operations’ revenue fell by 15.3% to RM206.58 million, resulting from soft consumer and business sentiments, as well as market uncertainties over the impending Goods and Services Tax.

Its Malaysian operation’s PBT dropped 26.8% to RM41.03 million, mainly due to an impairment loss of goodwill of RM19.7 million. The segment's PBT before the impairment loss was RM60.74 million (US$16.40 million), an 8.3% increase when compared with the same quarter last year, attributed mainly to cost savings.

Revenue from operations in Hong Kong and Mainland China eased 5.5% to RM54.22 million, mainly due to weak local retail market, especially for luxury products, which led to advertisers tightening their advertising and promotion spending.

The group said its operations were adversely affected as a result, especially those of the group’s lifestyle magazine group, One Media Group. The segment reported a loss of RM4 million for the quarter, as against a profit of RM48,145.50 a year ago.

Besides the decline in revenue, the loss was also caused by an impairment loss of goodwill, which amounted to RM1.3 million. The segment's loss before the impairment loss was RM2.7 million, it said.

On its operations in North America, the segment’s revenue declined 15.5% to RM20.3 million, while PBT decreased 74.5% to RM425,902.50, due to slow economy in the region and the bitter cold weather during the quarter, and was further exacerbated by the weakening Canadian dollar.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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