Sea Pearl bleeds with interest burden

The listed company -- Sea Pearl Beach Resort and Spa Ltd -- has eaten up in just three months the profit it earned in the first nine months of Fiscal Year 2019-20.

As the company incurred a heavy loss, it paid only 1% cash dividend to the shareholders excluding its directors at the end of the year.

The company made Tk4.25 crore profit in the first nine months of Fiscal Year 2019-20. However, at the end of the year it registered Tk1.10 crore loss – while the loss per share stood at Tk0.09.

Sea Pearl profited Tk4.44 crore in the year it went public while its earnings per share was Tk0.41. In 2018, the company's profit stood at Tk4.60 crore.         

Sea Pearl said it paid nearly Tk4 crore for loan interest, and had to rely on the profit it made in last three months as the income was almost zero. The fixed expenditure amid the pandemic-led business slump in the last quarter put the company in loss in the end.         

As of June 30, 2019, the company had a short-term loan of Tk2.76 crore and Tk80 lakh long-term loan. However, the company's loan in 2020 could not be known. 

"The company incurred the loss due to the impact of interest," Julhas Biswas, chief financial officer (CFO) of Sea Pearl Beach Resort, told The Business Standard. He said, "About Tk4 crore was spent on payment of loan interest. Fixed cost forced the company to incur the loss amid the virus-led shutdown when the income was almost zero."

Sea Pearl began its stock transactions at the Dhaka Stock Exchange on July 16, 2019. The company raised Tk15 crore by floating 1.50 crore shares with a face value of Tk10 for each. It spent Tk2.66 crore for land acquisition, Tk10.68 crore for interior, finishing and furniture purchase and Tk1.65 crore for initial public offering.

Sea Pearl's income comes from room rent, food and beverage, minor operating department, space rental and others. More than 50% of the total income comes from room rent.

Tourism sector also took the brunt of the pandemic that hit the country in March and during the subsequent 66-day countrywide shutdown. The sector started getting back the guests as businesses reopened in June.

The company also hopes to turn around counteracting the virus fallout. Sea Pearl says although the number of foreign guests is to increase, the current rush of local tourists is quite satisfactory.

In the nine months of Fiscal Year 2019-2020, the total income of Sea Pearl was Tk44.47 crore.

The net profit stood at Tk4.26 crore excluding the administrative and other costs, distribution and selling expenses, provident fund of employees and tax payment.

Sea Pearl profited Tk1.03 crore in the January-March period of this year while the year-on-year profit was Tk2.75 crore. The company made a profit of Tk3.22 crore in the first and second quarter.

At the end of the 2019-2020 fiscal year, the total income of the company stood at Tk45.85 crore. However, the cost of finance was more than Tk19 crore. After paying all the expenses and taxes, the net loss of the company is Tk1.10 crore.

CFO Julhas Biswas said their income almost nosedived in the last quarter. Although the income was positive until the third quarter, it became negative in the end. Even though the financial year ended in June, now the number of guests to the hotel has increased.

"The highest number of guests came last month. Foreign guests are not coming as many flights are still suspended. If more and more local guests continue arriving at the hotel, it will be possible to make up the losses," he added.