AFTER enduring two hard years of travel restrictions, curfews and capacity constraints associated with the novel coronavirus, Knutsford Express Services Limited (KEX) is anticipating a rapid rebound in business to new highs as it realigns its focus on Jamaica with multimillion-dollar investments.

The transportation and courier company’s consolidated revenue grew 77 per cent to $1.11 billion for its 2022 audited financial year (FY) which ended on May 31. This wasn’t far from its record 2019 FY where it earned $1.15 billion in revenue and $188.47 million in net profit. KEX saw a complete 360-degree turn of its $63.60 million net loss from continuing operations become a net profit from continuing operations of $110.66 million. However, the net profit declined to $77.83 million when its KE Connect US LLC subsidiary’s loss from discontinued operations of $32.84 million is included. The subsidiary hasn’t operated since March 2020 and ceased operations on May 31.

“COVID-19 created a situation which just brought that down. In that sub-industry of the bus-hireage business, it really hasn’t come back. It’s a write-off on the entire entity. Even that is proving difficult because in that industry there, buses are selling at cents on the dollar. The whole circumstances of that industry and coming back into it, a lot of drivers migrated as they had to survive during COVID-19. It’s a difficult matter and it was not worth the effort. We decided to put all of our efforts into Jamaica,” said Chief Executive Officer Oliver Townsend in a call with the Jamaica Observer on Thursday.

KEX acquired Davis Tours in 2019 where they booked goodwill of US$50,000 ($6.56 million) on the acquisition. KEX had $81.67 million as due from subsidiaries in its 2019 audited financials and an investment in subsidiary of $1.32 million. Davis Tours had been in operation since 1977 and was the oldest family-owned full-service destination management and charter bus company in South Florida. It had its registered office in Fort Lauderdale.

KE Connect US generated no revenue for the 2022 FY and generated a loss of $34.51 million. It had $291,416 in cash and $3.04 million in accrued payables and accrued charges.

Despite this negative development, Townsend is bullish on the company’s domestic market and growing the business again through its core operations and investment properties. Its Commercial Suites and Super Hub at Drax Hall, St Ann, is fully leased and has already started to see tenants such as Blake’s Water store, EyeQ Optical and Lizmel’s pharmacy. The company had 187 members of staff in 2019 before it shrunk to 112 in 2020. It now stands at 221 persons.

“We also pushed ahead with our Drax Hall development and our digital initiatives which have served us well. We see a lot more opportunity to do what we can here locally. There’s a lot of ground we have to cover and coming out of COVID-19, there’s a lot of demand that we’re happy to soak up. We are feeling good that we have come out of the hole and anything that weighed down on it was really associated with the pandemic. Going into this year, we don’t have anything lagging on us. COVID-19 changed a lot of things,” the CEO added.

When asked about the $51.17-million investment property acquisition of land in Mandeville, Manchester, Townsend told the Caribbean Business Report that more information would be afforded once certain processes are complete. KEX’s Drax Hall investment property land value is $110.45 million with the group’s leasehold buildings valued at $486.68 million.

Townsend noted that the team is still exploring the concept of meeting spaces at the Drax Hall development to make the locations extremely attractive to the growing north coast populace.

While fuel and toll fees came in slightly below 2019 at $150.72 million and $34.72 million, they were up more than 50 per cent compared to the prior year in a time when both expense items have experienced increases in recent times.

“We have been keeping a close eye on that. The by-product of that is we’re seeing local ridership go up. Even at our offices, you’ll see more higher end cars parking and riding with us for the day when going out for the day. Fuel and toll prices are having an impact on us, but it’s having a much larger effect on motorists,” Townsend said on the situation surrounding fuel prices.

To ensure that the company optimises its capital and improves its efficiency, the company is doing studies to ensure it matches its fleet more effectively with the demand rather than having a constant schedule for all times. This is one strategy to deal with the rising cost of fuel.

“I think the attractiveness of our offer is really reverberating here and from a demand point of view, we’re having a pickup there. From our own perspective, we’re really proud of what our team has done because during COVID-19, we had to do a lot of rationalising. People are really happy to be travelling again and you’re seeing the re-emergence of the marquee events. It’s going to increase even more as you’re going to see more events happening. We look forward to playing our role as when someone is considering to travel, we pop into mind,” Townsend said as the company’s ridership increased during the active summer full of events.

“A lot of entrepreneurs and small businesses have been using our service as part of their supply chain. We have been looking to see how we can actually build on that more as an opportunity. We have lockers physically installed in our two main locations and hope to be turning them on this quarter. We will have a small courier outlet at the Harbour View Shopping Centre,” Townsend added as the company improves its courier offerings across the island.

KEX’s total assets grew by 14 per cent to $1.41 billion with its cash balances rising to $105.77 million. KEX’s total liabilities and shareholders equity closed the period at $653.95 million and $751.10 million, respectively. Its stock price was up 10 per cent on Wednesday to $7, but it remains down year to date 16 per cent which leaves it with a market capitalisation of $3.50 billion. Its stock price is still trading below pre-COVID prices of $11.

While he couldn’t get into the intricate details, Townsend noted that the company has a plan for the $335 million in bonds maturing between 2023 and 2025. KEX’s 50 per cent tax remission ends in January 2024 with there being an expectation that the Junior Market cap of companies to be raised from $500 to $750 million in short order. The company generated $247.86 million in cash flow from operations during the year.

“We’re bullish as we had a very strong summer. Customer demand has been much higher since March heading into summer. We envision this demand continuing. We’re getting back to where we’ve left off prior to the hard times,” Townsend closed.