Knutsford raises $100 million
LUXURY coach provider Knutsford Express successfully raised nearly $100 million through an initial public offer (IPO) of 20 million shares or 20 per cent of the company last Friday.
The offer, which closed the same day it opened, received 66 applications for which almost all shares applied for will be allocated.
"Applicants for the general pool of 5,000 or less units will receive 100 per cent of the application amount," said a statement issued by Proven Wealth to the Jamaica Stock Exchange on Monday.
The lead broker for the deal said that "the remaining applications will be allocated at 97.5 per cent of the application amount".
Knutsford operates its bus services along Jamaica's two major corridors for ground travel. Its offering comprises scheduled coach transportation, courier service, private hire, and special event shuttles.
According to the company's prospectus, the proceeds from the issue will be used for working capital support, acquisition of a new coach, and upgrade of the existing fleet of 14 buses, as well as payment of the IPO expenses.
The transportation company was incorporated in 2006, launching with 28 departures weekly between Montego Bay and Kingston, the island's two major cities. The company now has 105 departures weekly and has expanded its reach to Falmouth, Negril, Savanna-la-Mar, and Mandeville.
It consolidated its operations and acquired routes across the south coast of Jamaica with its acquisition of Southcoast Express earlier this year.
The current shareholders in the company are Oliver Townsend (44 per cent), Anthony Copeland (32 per cent) and Gordon Townsend (24 per cent).
The company's prospectus reveals that Knustford has grown annual revenues by an average of 27 per cent the last five years up to $203.2 million for the 2013 financial year. Net profit stood at $51.1 million at the end of the review period.
At the end of the 2013 financial year, Knutsford's asset base was $133 million, with annual growth of 52 per cent the last five years attributed to increase in its coach fleet. Total liabilities, consisting mainly of trade payables and bank debt, has risen from $15 million to $50 million over the period, the prospectus indicated.
Over the same period, selling, general and administrative expenses have increased by an average of 19 per cent to $139 million, with the company attributing the increase primarily to fuel charges "that have risen in relation to operational demand and general increases in the price of fuel".
"While our fuel costs increased by 30 per cent in 2013 compared to 2012 and by a CAGR (compound annual growth rate) of 35 per cent from 2009 to 2013, as a percentage of revenues, our fuel costs have moved from 15 per cent in 2009 to 19 per cent in 2013," the company said in its prospectus.
"We are comforted that this would have been significantly higher had we not aggressively pursued our acquisition of new highly efficient coaches which deliver a 25 per cent unit over unit improvement," the company added, stressing that its "fuel-efficient buses and the unfortunate reality of fuel price increases actually provide the strongest barrier to competition".
Interim results for the first quarter ending August 31, 2013, show revenues for the period amounting to $71 million, a 31 per cent increase over the corresponding period last year.
The company projects that its future performance will be boosted by the maturation of routes acquired from SouthCoast and greater efficiencies. Its investment in renewable energy should yield 40 per cent reduction in electricity costs, according to the prospectus, which added that the fuel cost to revenue ratio should also fall with the addition of more fuel-efficient vehicles.