Australia and New Zealand transport and logistics firm K&S Corporation has posted full year net profit after tax of A$11.2 million, up 384.1% compared to $2.3m the previous year.
A $12.4m JobKeeper subsidy and $1.3m in NZ wage subsidy was included in the group’s result for the 12 months to June 30.
The group’s result also included $9.6m of non‐recurring costs, largely related to hire purchase break costs from its debt refinancing totalling $3.6m, $3.4m in redundancy costs and a further $1.4m of costs associated with the sale of the Western Australia based Regal General Freight business that was concluded in August 2019.
Operating revenues decreased by 12.7% to $790.6m for the period. The directors declared a fully franked final dividend of 3 cents per share following an interim dividend of 2 cents per share.
The company says safety remains a key focus and its lost time injury rate improved for the year.
COVID‐19 also required “considerable resourcing and was the major area of employee welfare and safety focus in the second half of FY20”.
“Cognisant of the group’s large and mobile workforce which services numerous customer sites, it is pleasing that at this point in time the group has had nil employee COVID‐19 cases,” it says.
The Australian Transport business delivered a strong improvement in results compared to FY19. Full year revenue declined due to a combination of the cessation of contracts, divestment of underperforming business units and customer activity reduction consequent to COVID‐19.
The implementation of cost reduction strategies continued across the business, contributing strongly to improved underlying profit, it says.
The New Zealand business realised “a sound result” for the period, despite the stage 4 COVID‐19 lockdowns put in place from March 23 to April 26.
“The New Zealand business continues to realise growth through the provision of its integrated and value adding service offering, with further business diversification also being achieved,” the company says.
As part of the ongoing cost reduction focus, the group completed a number of restructuring activities during the year:
- General freight – The Western Australia based Regal General Freight business was sold in August 2019 to Centurion Transport Co. Pty Ltd. Under the agreement, Regal transferred to Centurion its rights and entitlements under customer contracts and Centurion made offers of employment to the majority of the employees of K&S working in the Regal General Freight business. The sale was completed on 30 August 2019.
- Bulk transportation ‐ The Port Kembla based bulk transportation business was closed in January 2020 following the exit of the Illawarra Coal contract. The closure of the Port Kembla bulk business resulted in an improvement in Group underlying performance in the second half of FY20.
- Chemical and energy transportation – A number of underperforming operations were exited during the year.
The group recorded a total restructuring expense of $3.4m in relation to these initiatives.
The company says it is “not possible to forecast with any certainty the magnitude of the COVID‐19 impact on the Australian and New Zealand economies or upon the group itself”.
In the June 2020 quarter it experienced reduced revenues in a number of business units in Australia and New Zealand as a result of COVID‐19.
“At a minimum, the group expects revenues to be adversely impacted by COVID‐19 in the first half of FY21,” it says.
“With the exception of the stage 4 lockdown imposed in New Zealand … the group’s operations have not been subject to any Government mandated shutdowns or state border closures.
“The group has enacted pandemic protocols to assist manage the safety of employees. The group has also implemented measures to mitigate potential impacts of COVID‐19 upon its continued ability to fulfil core managerial, administrative, and operational functions.
“Pleasingly, for the June 2020 quarter, the group was able to maintain near pre‐COVID‐19 levels of workforce participation with nil major stand down actions. The receipt of the JobKeeper wage subsidy has further strengthened the group’s financial position and will assist it to withstand the longer term impacts of COVID‐19 on operations,” it says.
