The LAB’s Q1 2025 Earnings Slip 17.6% Despite a 30% Revenue Lift.

  • Junior market production and media company Limners and Bards Limited (The Lab) reported a 17.6% profit decline for its first quarter of the 2025 Financial Year (Q1 2025) as higher expenses outshone revenue growth.
  • Revenues grew by 30.4% to 286.13Mn, driven by contributions from its core segments: Media ($142.50Mn), Production ($101.00Mn), and Agency ($42.60Mn). However, the bulk of the revenue growth came from its lower-margin Production and media segment.
  • Direct expenses outpaced revenue growth, rising 42.3% to $185.58Mn. This led to a 13.0% increase in gross profits – albeit at a lower gross margin of 35.1% relative to 40.6% in Q1 2024.
  • Total operating expenses also increased by 12.9% to $78.74Mn, driven by selling and distribution costs (S&D: +11.1%) to 76.94Mn. The increase in S&D was influenced by higher staff costs (+9.2%) following strategic investments in talent – including a Chief Business Development Officer – and enhanced client service support to drive new business acquisitions and strengthen the execution of key initiatives. 
  • The faster expense growth as well as a non-recurrence of impairment recoveries on financial assets totalling $6.02Mn in Q1 2024, resulted in a 9.8% decline in operating profits to $23.24Mn, with the operating margin falling from 11.7% to 8.1%. 
  • While the Lab benefited from a four-fold increase in finance income to $1.96Mn, taxation expenses further pulled net profits down. Having listed in July 26, 2019, the company spent more than 5 years on the Junior Market, meaning its tax rate increased from 0% to 12.5%, effective July 31, 2024.
  • This recent result reflects a broader earnings decline for the company with annual profits of $82.95Mn in FY2024, well below its $155.55Mn peak in FY21. To address the decline, The LAB is working to strengthen its position in the global content market by expanding its client base, securing industry recognition, and aligning its content strategy with the growing demand for diverse, high-quality storytelling, especially on major streaming platforms like Netflix.
  • At market close on March 19, 2025, The Lab’s stock is down 5.5% year-to-date and trading at $1.20 per share. Its P/E of 14.10x is below the Junior Market Average of 35.97x.

(Source: JSE & NCBCM Research)