Date: May 21, 2019
K.L.E. Group Limited (KLE), for the first three months ended March 31, 2019 reported Total Revenue of $49.72 million, a 3% decrease when compared with the $51.38 million reported for the corresponding period of 2018. KLE noted, “The road improvement project on Constant Spring road continues to negatively impact the customer traffic to the location at Marketplace.”
Gross Profit totaled $35.73 million, up 4% relative to the $34.39 million reported in 2018. This followed Cost of Sales of $13.99 million recorded year to date relative to $16.99 million for first three months of 2018. Management highlighted, “ The company has been resolute in managing the challenges and successfully has improved its cost management strategies which resulted in a higher gross profit margin and lower Cost of Sales when compared to the first quarter of 2018. There was a 5% increase in our Gross Profit margin for the period and overall a 5% decrease in the company’s Cost of Sales percentage. KLE will continue to employ cost savings strategies and monitor our Key Performance Indicators to improve efficiencies and increase profitability.”
Other Operating Income for the quarter totaled $6.41 million (2018: $7.55 million).
Administrative and Other Expenses fell by 6% from $38.93 million to $36.43 million which was “in line with management’s drive to reduce expenses and increase profitability. The company is getting more efficient operationally and further increase in profitability is expected as a result.”
As such, Profit from Operations rose 90% to total $5.71 million relative to $3.01 million booked for the corresponding period of 2018. Finance and depreciation costs went up by 7%, moving from $4.91 million last year to $5.24 million for the first quarter of 2019.
Consequently, Profit before tax for the quarter amounted to $472,000 million relative to a loss before tax of $1.90 million in 2018.
Following taxation of $275,000 for the quarter (2018: nil), KLE reported net profit of $197,000 relative to a net loss of $1.90 million reported in 2018.
Earnings per share for the three month ended March 31, 2019 amounted to $0.002, while for the corresponding quarter of 2018, a loss per share of $0.02 was recorded. The twelve month trailing LPS is $0.24. The number of shares used in our calculations is 100,000,000. KLE’s stock price closed on May 20, 2018 at $2.40.
KLE further added, “KLE has had a positive trajectory over the past 3 years. The investment made in 2018 to establish new revenue streams may have affected the financial results in that year but have certainly put the business in a great position to reap the benefits as we take on this new year. In addition, the efforts made in 2018 to refinance the high cost debt and reduce payables carrying from previous years has improved the company’s financial position and will enable us to capitalize on growth opportunities ahead. Also, in 2018 much of the groundwork needed to get the Bessa project to the finish line was successfully completed. This put the project in a position to accelerate all aspects of the precontract works and ultimately clear the path for construction, sales and delivery. As a result, in this period Rovenne Construction was selected to build the pool villas which are now well underway. All is on track for a June 2020 delivery. Evident in the Q1 2019 results is the fact that KLE Group is moving aggressively towards realizing its potential and capitalizing on the solid equity and value that has been created. As we continue our focus on the global markets, we will attack the opportunities in front of us and continue to seek out new ones on our mission to return shareholder value.”
Balance Sheet at a Glance:-
As March 31, 2019, the company reported total assets of $221.92 million (2018: $205.73 million). The main contributors to this increase was ‘Related Parties’ which amounted to $60.82 million (2018: $31.93 million) and ‘Cash & Cash Equivalent’ moving up by $14.02 million to end the period at $19.28 million (2018: $5.26 million). However, ‘Property, Plant & Equipment’ tempered this movement decreasing 35% from $42.39 million in 2018 to $27.56 million.
Shareholder’s Equity closed at $114.51 million (2018: $137.88 million) resulting in a book value per share of $1.15 (2017: $1.38).
Analyst Certification -The views expressed in this research report accurately reflect the personal views of Mayberry Investments Limited Research Department about those issuer (s) or securities as at the date of this report. Each research analyst (s) also certify that no part of their compensation was, is, or will be, directly or indirectly, related to the specific recommendation (s) or view (s) expressed by that research analyst in this research report.
Company Disclosure -The information contained herein has been obtained from sources believed to be reliable, however its accuracy and completeness cannot be guaranteed. You are hereby notified that any disclosure, copying, distribution or taking any action in reliance on the contents of this information is strictly prohibited and may be unlawful. Mayberry may effect transactions or have positions in securities mentioned herein. In addition, employees of Mayberry may have positions and effect transactions in the securities mentioned herein.