138SL reports six months net profit of $270.20 million

May 14, 2020

138SL’s income increased by 71% to $733.59 million relative to the $428.15 million recorded for the corresponding six months period the year prior. Other operating income also increased for the period under review, growing 19% to $19.57 million relative to $16.40 million a year earlier.  Income for the quarter rose by 32% to $278.35 million (2019: $211.36 million), while other operating income climbed 7% for the quarter to $10.86 million (2019: $10.11 million).

Administrative expenses decreased by 8% for the period amounting to $357.57 million (2019: $387.09 million). As for the quarter, there was a 17% decrease to $152.57 million versus $183.70 million reported in the prior year’s corresponding period. Thus, operating profit for the six months ended March 31, 2020 amounted to $395.58 million, an increase of 588% compared to $57.47 million that was recorded for the comparative period in 2019. Operating profit for the quarter closed at $136.65 million (2019: $37.77 million).

The Company reported finance costs of $134.47 million (2019: $137.82 million), a 2% decline year over year. For the quarter, finance cost dropped 4% to close at $66.79 million (2019: $69.42 million).

Profit before taxation for the six months period amounted to $261.11 million compared with a loss before taxation of $80.35 million for the similar period last year. Management stated that, “This result was positively impacted by three main items: (i) effective management of operating costs (primarily utilities) (ii) increased occupancies for long-term and short-term rentals and (iii) variation claims relating to Irvine Hall. The latter item includes a variation claim for the full year 2019 as well as a first and second quarter claim for the year 2020. Adjusting for the variation claims, the group recorded year-to -date profit amounting to $71M. ”

Following tax credits of $9.09 million (2019 tax credit: $36.61 million), net profit totalled $270.20 million versus a net loss of $43.74 million recorded in 2019. Net profit for the quarter closed at $87.34 million relative to a net loss of $95,000 the prior year.

Total comprehensive income for the six months ended March 31, 2020 amounted to $270.01 million relative to a loss of $66.56 million last year. For the second quarter, total comprehensive income summed to $87.15 million versus a total comprehensive income of $239,000 the prior year.

Earnings per share (EPS) for the six months ended March 31, 2020 amounted to $0.65 relative to a loss per share of $0.11 a year earlier. The EPS for the quarter totalled $0.21 relative to an EPS of $0.0002. The twelve-month trailing EPS $0.81. The number of shares used in this calculation was 414,500,000. As at May 18, 2020, the stock traded at $7.07.

Notably, 138SL stated that “during the period under review, 138SL continued to operate 1,460 world-class rooms at its 4 locations on the UWI Mona Campus consisting of 1,692 beds. As part of its contribution to the welfare of students we offer 18 rooms, free of charge, to Resident Advisors who are charged by UWI to motivate students to participate in campus activities amongst other things. Average occupancy across all three Halls for the quarter was 99%. ”

Management also mentioned,”138SL like many other institutions globally have been affected by the COVID-19 pandemic. This pandemic has resulted in students being asked to vacate the Halls of Residence by the University resulting in our occupancy being reduced to 25% in April. These turn of events will no doubt impact the revenue of the business however the impact on the long term occupancy revenue is mitigated somewhat by the Concession Agreement which provides a 90% Occupancy Guarantee.” Furthermore, 138SL has, moved swiftly to consolidate the business operations, reduce cost and defer planned capital expenditures. 138SL’s consolidation activities includes, “the relocation of the remaining student on Hall to occupy one block at each 4 locations which is being achieved while maintaining the Government’s COVID-19 protocol of social distancing and restrictive movement.”

Balance Sheet at a Glance:

As at March 31, 2020, total assets increased by 25% to $11.14 billion (2019: $8.89 billion). This increase was primarily driven by ‘Financial asset-service concession’  which closed at $10.19 billion (2019: $7.96 billion).

Shareholders’ equity totalled $5.82 billion (2019: $3.27 billion) which resulted in a book value per share of $14.03 (2019: $7.90).

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