August 11, 2020
Transjamaican Highway Limited (TJH), for the six months ended June 30, 2020, reported a 17% decrease in revenue to US$21.41 million relative to US$25.94 million in the corresponding period last year. Revenue for the second quarter amounted to US$8.45 million (2019: US$13.15 million), a 36% decrease year over year. TJH noted that, “revenue consists mainly of Toll Collections. This decrease resulted from the decline in Traffic we experienced as a result of the various measures implemented to help combat the spread of the Coronavirus.”
Other gains amounted to US$58,000 for the six months ended June 30, 2020 (2019: US$1.90 million). Whereas, for the quarter ended June 30, 2020 other losses totaled US$5,000 relative to a gain of US$653,000 for the same period in 2019. 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, “under the Concession Agreement, the Company also has 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, the decrease in other gains, “was primarily due to the impact of the amortization of the Discounted Shareholder grant which was offset by foreign exchange losses resulting from the continued devaluation of the Jamaican Dollar against its U.S Dollar counterpart,” as per Management.
For the six months ended June 30, 2020, operating expenses totalled US$17.23 million versus the US$16.86 million in the comparable period last year, a 2% increase year over year. Operating expenses for the second quarter rose 1% to close at US$8.62 million (2019: US$8.50 million). 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 “rises in the Insurance cost, the Operator’s Monthly Fixed Fee and in the amortization recognized on intangible assets. This was offset by a decrease in repairs and maintenance cost resulting from delays experienced because of the pandemic and a reduction in the Operator’s variable fee (tied to the decrease in traffic).”
Administrative expenses increased 23% to US$686,000 (2019: US$559,000) for the six months ended June 30, 2020. For the second quarter, there was a 22% increase in administrative expenses to total US$377,000 (2019: US$309,000). TJH mentioned that, “administrative expenses are primarily comprised of staff costs, depreciation of plant and equipment and other routine office expenses.” Notably, this increase in administrative expenses was, “due to the additional expenses arising from the issuance of the Secured Notes and the JSE listing.”
Finance cost amounted to US$9.46 million (2019: US$8.91 million) due to, “the cost incurred in the debt restructuring which saw our existing loans being repaid and the Secured Notes being issued during the first quarter of this year,” as per Management. Finance cost for the second quarter ended June 30, 2020, equalled US$3.86 million when compared to US$5.07 million for the corresponding quarter last year. According to the Company, this decrease in finance resulted from, “the difference in our loan portfolio (Interest on Secured Notes vs Multilateral Banks + loss on SWAP derivative).”
Loss before taxation closed at US$5.91 million versus profit before taxation of US$1.51 million as at June 2019. For the quarter, TJH reported loss before tax of US$4.41 million compared to losses of US$70,000 booked for the same quarter in 2019.
The Company reported a taxation credit of US$4.83 million for the six months ended June 30, 2020 (2019: nil), resulting in a net loss of US$1.08 million, relative to a profit of the US$1.51 million booked for the corresponding period last year. Net loss for the quarter amounted to US$3.35 million (2019: US$70,000).
Consequently, loss per share (LPS) amounted to US0.027 cent for the quarter ended June 30, 2020 relative to US0.0006 cent last year. For the six months ended June 30, 2020, LPS amounted to US0.009 cent relative to an earnings per share of US0.012 cent booked in the corresponding period last year. The twelve months trailing amounted to US0.046 cent. The number of shares used in this calculation was 12,501,000,000 shares. TJH traded on August 11, 2020 at JMD$1.34 while TJHUSD closed at US$0.01.
Management highlighted that, “Irrespective of the human and health consequences, the epidemic of the Coronavirus has resulted in a significant decline in economic activities and consequently, in a reduction in road traffic. The first two months of 2020 were marked by a 2.1% increase in toll transactions compared to the same period last year. However, the impact of health and safety measures taken to limit the spread of the virus have been weighing on our motorway traffic since mid-March 2020. The decrease for the month of March was 19.3% following the closure of schools, all island curfews and the ‘work from home’ order issued by the Government of Jamaica for non-essential workers.”
Moreover, Management stated, “The month of April 2020 saw a more significant decrease (-52% when compared with April 2019) due to additional restrictions introduced such as the lockdown of the parish of St Catherine, which started on April 15. The end of this confinement on May 1, was immediately followed by an increase in traffic on the motorway, as the decline fell to 34.2% when compared to May 2019.”
Nevertheless, “the trend observed for the month of June 2020 (-17.3% when compared to the previous year) confirms a gradual recovery in traffic and is anticipated to continue in the next weeks. However, given the uncertainties still hanging over the pace of economic recovery and the measures that could again be taken to stem the health crisis we are experiencing, it is difficult at this time to make a revised forecast for the second half of this year.”
Balance Sheet at a Glance:
As at June 30, 2020, total assets closed at US$327.49 million relative to US$303.30 million the prior year. Notably, deferred tax assets totalled US$26.27 million (2019: nil) and restricted cash amounted to US$49.92 million (2019: US$40.73 million) as at June 30, 2020.
Shareholders’ equity totalled US$64.43 million (2019: US$58.46) resulting in a book value of US$0.0052 (2019: US$0.0047).
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