mm2 Asia reports net loss of $92.7m for FY2021 due to Covid-19

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mm2 Asia reports net loss of $92.7m for FY2021 due to Covid-19

SINGAPORE – Entertainment group mm2 Asia posted a net loss of $92.7 million for its financial year ended March 31, 2021, with its major businesses in movie-making and film distribution taking a severe beating from the Covid-19 pandemic, the company said in a bourse filing.

Comparatively, it reported a net profit of $3.3 million in FY2020, which ended March 31, 2020.

In FY2021, group revenue fell 68.1 per cent year on year to $75.2 million, as a result of the adverse effect the pandemic has had on mm2’s business in movies and drama production, film exhibitions and distributions as well as live entertainment since January last year.

In particular, its combined cinema and event revenues plunged 89 per cent year on year, as its cinema and event businesses were shut for most of the year.

Despite the challenging start to the year, mm2 Asia said there was a “noticeable rebound” in sales in H2 across most business segments, which brought a revenue of $58.2 million, compared with $20 million in the first half of FY2021.

It also generated S$7.3 million in earnings before interest, tax, depreciation and amortisation (Ebitda) and before impairment, while operation cashflow stood at $3.9 million.

Impairment losses went up to $38.8 million, compared with $10.7 million in FY2020, due to the impairment of film rights, film intangibles and inventories, films under production and goodwill in the cinema segment.

This was partially offset by a $12.1 million decline in other administrative expenses following cost containment measures implemented during the year, the company said.

Meanwhile, the group’s operations in Malaysia have also been severely affected by intermittent cinema closures and reduced seating capacity arising from social distancing measures.

The cinema segment however showed signs of a gradual recovery, with revenue in H2 coming in at $12.3 million, compared with $3.6 million in H1.

Despite the challenges, the group remains “upbeat” from the signs of rebound since H2, especially with China “nearing a complete recovery” over the last six months, company said.

“We firmly believe that the worst is almost over. We are confident that with tenacity, clear-mindedness, cost controls and discipline, we will be able to overcome the current headwinds to our businesses,” said Mr Melvin Ang, executive chairman of mm2 Asia.

He added that the company will continue to expand into non-Chinese content markets such as Thailand and South Korea by using methods that have worked in Chinese content markets.

Mr Ang said the company has a strong pipeline of core projects valued at $80.7 million, which offers earnings visibility up to FY2022.

He also said the group is currently working with over half the major over-the-top content players in the industry, and is targeting for 40 per cent of its content production revenue to come from these streaming channels by FY2022.

Following the group’s success in raising aggregated gross proceeds amounting to $54.65 million from the rights issue to redeem its medium-term note, mm2 Asia has re-engaged with its principal bankers to refinance existing borrowings and seek new credit facilities to secure its financial sustainability, the company said.

mm2 Asia shares fell 0.1 Singapore cent, or 1.587 per cent to close at 6.2 Singapore cents on Friday, ahead of its announcement on Saturday.

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