138SL reports net loss of $43.83 million for the three months ended December 2018

Date: February 15, 2019

138SL’s Revenue increased by 13% to $216.79 million relative to the $191.63 million recorded for the corresponding period last year.  Other operating income declined for the period under review, decreasing by 13% to $6.30 million compared to $7.27 million a year earlier. 138 SL noted that, “the uncertainties as regards matters affecting revenue generation remain, previously disclosed as associated with the computation of the 90% guarantee under the first concession and the reconfiguration of Irvine Hall under the second concession. These matters are under active discussion with UWI but remain unresolved and so continue to depress revenue booked.”

Administrative expenses increased grossly by 139% amounting to $203.39 million (2017: $85.17 million). Thus, Operating profit closed the period at $19.69 million, a decline of 83% compared to $113.73 million that was reported for the year prior. 138 SL mentioned that, “expenses have increased as the company has had to increase its operational footprint to manage the expanded business. The company is also facing extraordinarily high-water usage and costs for which suitable remedial measures are being actively pursued. Overall, utilities cost for the quarter was $61M compared to an amount of $25M for the similar reporting period in the 2017/2018 financial year.”

The company reported finance cost of $68.40 million (2017: $115.89 million), a 41% decline year over year.

Losses before taxation for the three months period amounted to $48.71 million compared with a loss of $2.16 million last year. Tax credits of $4.87 million was reported for the period (2017 tax credit: $7.04 million)

Consequently, net loss totalled $43.83 million compared to a profit of $4.88 million in the prior corresponding period.

Loss per share (LPS) for the period was recorded at $0.11 relative to earnings per share of $0.01 a year earlier. The twelve-month trailing LPS amounted to $0.16. The number of shares used in this calculation was 414,500,000. As at February 15, 2019, the stock traded at $5.46.

The company highlighted that, “the Arbitration Award which was received after the 2017/2018-year end audit was completed and resulted in a non-recurring expense of $44M being booked for the quarter; as well as the implementation of IFRS 9, which saw the Group booking an Expected Credit Loss [ECL] of $1.01M for the quarter; with $11.05M for prior years being charged to opening Retained Earnings.”

138 SL further stated that, “the Board and management are actively pursuing the discussions with UWI in order to resolve the fundamental issues affecting the profitability of the company and are optimistic of making some progress in the next quarter, as both parties to this cooperative arrangement, 138SL and UWI, remain committed to this novel project and the financial viability of the company.

Balance Sheet at a Glance:

As at December 31, 2018, Total Assets increased by 9% to $8.88 billion (2017: $8.13 billion). This increase was primarily driven by a 96% growth in ‘Cash and Cash Equivalents” to $51.08 million (2017: $26.12 million). Also, ‘Receivables’ and Financial asset-service concession’ contributed to this growth closing the period at $399.68 million (2017: $232.13 million) and $7.94 billion (2017: $7.26 billion), respectively.

Total Shareholders’ Equity’ totalled $3.27 billion (2017: $2.74 billion), which resulted in a book value of $7.90 (2017: $6.61).

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.