Wed | May 22, 2019

Bus company Knutsford Express to set up new hub at Drax Hall

Published:Thursday | April 18, 2019 | 12:30 AM
File 
Oliver Townsend, CEO of Knutsford Express Services Limited.
File Oliver Townsend, CEO of Knutsford Express Services Limited.

Luxury coach Knutsford Express Services Limited will build a new terminal at Drax Hall, St Ann, in proximity to the exit point for the highway, financed in part by a $150-million bond.

“We are looking to do a hub-and-logistics-type development in Drax Hall. It will add a lot of value to the area,” said CEO Oliver Townsend in an interview with the Financial Gleaner.

The cost of the development and time line for execution were not disclosed. The company awaits planning approval from the municipal corporation.

Knutsford Express, which has been investing continuously in its growth since listing on the Jamaica Stock Exchange five years ago, spent $335 million on acquisition of plant and equipment over nine months ending February.

That included the quiet roll-out of a foreign subsidiary. KE Connect US, which launched in January, will offer charter services in the South Florida market.

Townsend said half of the $335 million was spent on the lands in Drax Hall, which will become a regional hub for the luxury service, and on KE Connect US. The other half was spent on additional buses, which grew the Knutsford fleet to about 30, he said.

The planned hub development is expected to save commuters nearly half an hour’s drive by bypassing the town traffic in Ocho Rios.

“That was not adding value,” Townsend said.

It will result in Knutsford relocating facilities from the Island Village complex in the centre of Ocho Rios to Drax Hall, in close proximity to other popular businesses, including Scotches and Kaya Inc. That area is becoming a hub of retail and commercial Knutsford wants to partake in the growth of that zone, he said.

The game changer for the community was the opening of the Drax Hall leg of the North-South Highway in 2016.

“We have outgrown the operation in Island Village,” said Townsend. “Ochi is also looking to extend the town limits to include Drax Hall and our relocation will fit into that drive,” he said.

The debt being used to finance the hub comes from a five-year bond arranged by Proven Wealth.

As for the US operations, Townsend said it would take time to realise value for the group.

“The first year is really for us to get our feet planted,” he said. “It is important to diversify our sources of revenues and we feel we have something to offer over there.”

In its February earnings report, Knutsford recorded revenue of $842 million over nine months, up 46 per cent from $577 million due to ‘strong ridership’ of the buses. Knutsford also opened a terminal at the Sangster International Airport a year ago, which contributed to ride volumes.

Net profit climbed 23 per cent to $157 million in the same period.

However, increased costs associated with acquisitions dampened third-quarter profit, which fell nine per cent to $33.9 million or a flat seven cents per share.

The bus service now holds just over $1 billion in total assets, up from $662 million a year earlier, while its net book value climbed from $577 million to $749.2 million.

steven.jackson@gleanerjm.com