138SL cashflow strained under online modalityWednesday, February 17, 2021
BY DAVID ROSE
With the first semester of The University of the West Indies (UWI), Mona being fully online, 138 Student Living Limited's (138SL) cashflow came under further pressure as the company only generated $12.8 million from operations in the first quarter despite the 90 per cent occupancy guarantee in the concession agreement with UWI.
This is in sharp contrast to $74.4 million generated in the prior 2019 period against a backdrop of $182.7 million in net profit versus the current quarter's 64 per cent drop to $65.9 million. Even with the concession agreement requiring UWI to pay any variation between the 90 per cent guarantee and what occurs in any period, UWI had not reduced its receivables balance which was 87 per cent of the gross $962.3 million at the end of the financial year (FY) ending September 30, 2020.
Receivables for 138SL rose by $158.3 million during the quarter as revenue dipped by 40 per cent to $276.1 million. Despite expenses falling by 31 per cent to $141.7 million and management's attempt to curtail general costs under optimistic prospects, 138SL reduced its short-term deposits by 65 per cent to $91.3 million in order to support interest and loan repayments of $114.2 million and $76.5 million, respectively. Details from 138SL's management and discussion analysis highlighted the company's focus on negotiating with its bankers and financiers on financing options to mitigate the impact of COVID-19.
Although chairman of 138SL Ian Parsard provided no new guidance since the FY publication, he did indicate that the company was encouraged by the recent uptick in occupancy for the second semester of the university.
138SL's total assets were down 10 per cent year over year to $10.1 billion with cash and cash equivalents standing at $27.1 million.
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