SOEs hit profitability of Palace Amusement
…dividend payment to shareholders also deferred for financial yearWednesday, December 11, 2019
BY KELLARAY MILES
Local film provider, Palace Amusement Company has said that some of the declared states of emergency (SOEs) imposed across sections of the island have resulted in a dip in profits for the company this financial year.
Speaking at an annual general meeting held yesterday at the company's South Camp Road offices, Chairman Charles 'Douglas' Graham said that the SOEs declared earlier this year in parts of Montego Bay and Portmore by law enforcement hit the company with negative financial impacts, resulting from the loss of some show times at Palace locations in these areas.
“We opened Sunshine Palace in Portmore on the 24th of July and by September a SOE was declared that included most of St Catherine and certainly all of Portmore. Our show times became limited and the number of shows that we could have became limited — and as a result of that the theatre has underperformed,” he said.
He mentioned that with the Portmore audience being a predominantly late crowd, they had to adjust shows that would normally be aired later to earlier times in compliance with SOE requirements. This, they said has both decreased attendance and profits, which otherwise would have been positive.
“That has not changed our expectations and ambitions, because as soon as this passes over I expect the theatre will revert to what it should be. But right now we are having to have an 8 o'clock show and in Portmore that's no good — we have always known that. Portmore people coming from their employment and elsewhere are getting home between 6-7:30 pm; they can't make it to the movies by 8:00 pm. It's a 9 and 10 o' clock town. So is Montego Bay. It's a late town, but when you have a cut-off period like that then you have to cut off your audience,” he further stated.
He continued in saying that separate from what was explained earlier, “a SOE creates a certain amount of anxiety in the population and reluctance to venture out after dark. We couldn't have anticipated the SOE placing us now in a position of which we have to be prudent and be very careful. We don't know how long this will last. In the case of Montego Bay it's gone on now for over a year and from what we see the crime rate has not yet been reduced to an acceptable level — and so we wonder if there is some other device that will be employed or if we will just continue living and the SOEs becomes the new normal. Of this, we hope not.”
Expressing hope for normalcy to return to the parishes and positive outcomes from the security interventions, Graham said that he looks forward to a time when the figures will reflect the true potential of the location.
He reasoned that as it relates to dividend payments, the directors of the company have recommended not having one for this year, based on the aforementioned responses of law enforcement which have impacted the business, in addition to having invested heavily in Sunshine Palace at Portmore.
“The company is not in a position to declare a dividend at this time and the frugality displayed will benefit shareholders in the future,” he reassured shareholders present.
One shareholder who was dissatisfied with this decision said that he does not think it should be left to the directors and management to “willy-nilly” decide when and when not to pay out dividends, especially when share prices for the company are at record highs.
He therefore called for the introduction of more stringent measures, such as a dividend policy which he believes will provide more structure to the payments.
Compared to what the company described as a spectacular previous year, they have said that the 2019 financial year has still managed to “hold its own”, given a significant 11 per cent decrease in attendance across circuits and a decrease in after-tax net profits of $66.9 million relative to the previous year. This as profits for the year-ended June 30th reflected after-tax net profits of $70.4 million when compared to that of $137.3 million in 2018.
The chairman also highlighted that though show-goers responded well to “a mixed bag” offering of products which buoyed revenue figures to $1.113 billion, it still represented a five per cent decline when compared to $1.163 billion in the previous year.
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