May 13, 2020
Transjamaican Highway Limited (TJH), for the three months ended March 31, 2020, reported a 1% increase in revenue US$12.96 million relative to US$12.79 million in the corresponding quarter last year. TJH noted that, “revenue consists mainly of Toll Collections. Under the Concession Agreement, the Company also have the right to collect revenues generated from commercial exploitation of the areas surrounding the Toll Road, including gas stations and related ancillary services, electricity and telecommunication cables and fiber optics (collectively, the “Secondary Developments”).” Furthermore, ” It is to be noted that the traffic for March 2020 was negatively affected by the measures implemented by the Government of Jamaica in the fight against the Covid 19 pandemic.”
Other gains amounted to US$63,000 for the quarter ended March 31, 2020 (2019: US$1.23 million). The Company highlighted that, “Other gains and losses are comprised primarily of the gains produced by financial market operations and resulting financial income on investment instruments, amortization of the Shareholder Grant and the change in valuation of equity investments.” Moreover, TJH stated that, “this 95% decrease was primarily because other gains and losses for the period ended March 31, 2019 included a credit of US$0.95 million in respect of the amortization of the Shareholder Grant while there was no such amortization for the comparative period ended March 31, 2020 as the balance of this Grant was credited to Retained earnings in January of this year. Additionally, the temporary discontinuation of short-term investments of the balances held in our offshore reserve accounts during the process of negotiating the Secured Notes (see Note 4(b) to the interim condensed financial statements) also contributed to this decrease.”
For the three months ended March 31, 2020, operating expenses totalled US$8.61 million versus the US$8.35 million in the comparable quarter last year, a 3% increase year over year. The Company noted that operating expenses “consist primarily of operation and maintenance costs of the Toll Road, including the Operator’s (Jamaican Infrastructure Operator Limited’s) Monthly Fixed and Variable Fee and amortization of intangible assets.” Furthermore, the increase in operating expense was due to “increases in the Operator’s Monthly Fixed Fee and in the amortization recognized on intangible assets offset by a decrease in repairs and maintenance cost.”
Administrative expense increased 24% to US$309,000 (2019: US$249,000). TJH mentioned that, “administrative expenses are primarily comprised of staff costs and the depreciation of plant and equipment.” Notably, this increase in administrative expenses was “due to the additional expenses incurred during the arranging of the Secured Notes.”
Finance cost for the quarter ended March 31, 2020, equalled US$5.61 million when compared to US$3.85 million for the corresponding quarter last year. According to the Company, “finance costs are comprised mainly of interest on the long-term loans. This 47% increase was primarily due to the full write off of the unamortized fees and full repayment of the NCB Debt Bridge facility on March 10th, 2020.”
Loss before taxation closed at US$1.50 million versus profit before taxation of US$1.58 million as at March 2019. Furthermore, the Company highlighted that, “this decrease resulted primarily from increases in operating expenses, administrative expenses and finance costs.”
The Company reported a taxation credit of US$3.77 million for the three months ended March 13, 2020 (2019: nil), resulting in a net profit of US$2.27 million, a 43% increase on the US$1.58 million for the corresponding quarter last year which “resulted primarily from deferred tax credits recognized during the period,” as per the Company.
Consequently, earnings per share (EPS) amounted to US0.018 cents for the quarter ended March 31, 2020 relative to US0.013 cents last year. The twelve months trailing amounted to US0.072 cents. The number of shares used in this calculation was 12,501,000,000 shares. TJH traded on May 13, 2020 at JMD$1.39 while TJHUSD closed at US$0.01.
Management highlighted that, due to the coronavirus, the Company “observed a decline in traffic numbers since March 13, 2020 when the closure of all schools across the country was announced by the Jamaican Government.”
Moreover, Management stated, “this pandemic has brought many uncertainties including how soon it will be under control and what additional measures may be required by the authorities to help control its spread. In light of this, we anticipate that this impact on our traffic will continue into the next fiscal quarter, but it is not possible at this stage to establish new objectives. The Company will continue to monitor the traffic and we are putting measures in place to review cost across our operations in order to minimize the financial impact of this pandemic. Despite this context, on April 1, 2020, Fitch renewed the initial rating of TJH (BB-), having regard to the financial strength of the company.”
Balance Sheet at a Glance:
As at March 31, 2020, total assets closed at US$329.08 million relative to US$302.99 million the prior year. Notably, deferred tax assets totalled US$25.21 million (2019: nil) and restricted cash amounted to US$48.07 million (2019: US$37.63 million) as at March 31, 2020. Notably, the restricted cash consisted of “offshore reserve accounts which were funded from proceeds of the Senior Secured Notes issued by the company.”
Shareholders’ equity totalled US$67.78 million (2019: US$58.53) resulting in a book value of US$0.0054 (2019: US$0.0046).
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