Transport companies boost bottom line with JobKeeper

ASX-listed companies are reportedly digging in their toes when it comes to paying back JobKeeper payments, despite booking healthy profits over the last two financial years.

According to a report by leading corporate advisory group Ownership Matters, 58 of the 66 ASX 300 companies which received the government’s $89.3 billion JobKeeper subsidy between July and December last year reported positive earnings.

At the time of writing, only a small handful has paid it back, prompting the Greens deputy leader Nick McKim to introduce a private members’ bill to the Federal Senate called the Coronavirus Economic Response Package Amendment (Ending JobKeeper Profiteering) Bill 2021.

If passed the bill would require the Australian Tax Office (ATO) to publish a list of all entities that received JobKeeper payments and how much they received, excluding those with an annual turnover of less than $10m.

McKim’s bill would also force companies with an annual turnover of more than $50m that took part in the JobKeeper program, and made a profit afterwards, to repay at least some of the JobKeeper payments.

If those companies paid dividends to shareholders or paid executive bonuses, they would also have to repay some JobKeeper payments.

Our research shows some high-profile road transport companies on that list, many of whom flourished during Covid as freight demands surged to unprecedented levels.

Transport and logistics giant K&S Corporation benefited more than most, based on its annual reports.

Transport and logistics giant K&S Corporation benefited more than most, based on its annual reports.

Citing concerns around longer term impacts of the pandemic on operations, K&S loaded up on $28.6m in JobKeeper subsidies in the 2020 calendar year, reveals Ownership Matters.

On June 30, 2020, however, it boasted that earnings had doubled on the year prior, and in the six months to December 31, 2020, K&S had more than tripled its pre-pandemic numbers and profits were up almost five-fold.

By the year’s end, it was able to pay shareholders a healthy 50 per cent dividend spike with some $1.3m of the spoils going to Linfox, which owns 18 per cent of the company, and $5m to the descendants of founder Allan Scott via their 65 per cent stake.

In all, K&S had notched a 63 per cent rise in net profits to $18.1 million compared with last year’s $11.1 million, bolstered by a pre-tax jobs subsidy of $16.2 million gained in the September quarter.

Ownership Matters co-founder Dean Paatsch said the accounts suggested that K&S used only $344,000 in JobKeeper to workers who weren’t working.

“This suggests that 98.8 per cent of the $28.6m in JobKeeper received were to subsidise wages of people who were working and went to pad K&S profits.”

Big Rigs’ requests to K&S to ask whether the company intended to repay any of the JobKeeper subsidies went unanswered.

The Australian Financial Review (AFR) reports that a general-purpose financial statement recently lodged with ASIC for FY20 shows Linfox received a total of $22.8m in Covid-19 related government grants.

Based on Linfox executive Peter Fox’s insistence to the road transport inquiry by the Glenn Sterle-led committee that the broader group didn’t quality for JobKeeper, the AFR also surmises that the taxpayers’ money must have all gone to the company’s cash-moving subsidiary Armaguard.

“Given the first phase of JobKeeper divided evenly between the last three months of FY20 and the first three of FY21, it’s almost certain the business of Australia’s 25th richest man banked a total of $45.6 million in JobKeeper to September, after which it stopped receiving the subsidy,” the paper reports.

Requests to Linfox media reps for a comment, also went unanswered.

Qube is the only publicly-listed transport operation to have paid back a portion of JobKeeper.

Of the bigger transport players, it seems only Qube has paid any of the JobKeeper subsidies back. Earlier this year, Qube announced that it would return the $16.8 million it received in the second half of last year after reporting a 10 per cent increase in its profits compared to the same period a year earlier.

“Other companies may make different decisions and choose not to repay as, like Qube, they have no legal obligation to do so,” the company’s statement said.

“However, on balance, the Qube board felt returning JobKeeper was the right decision.”

At the time of writing, however, Qube has not returned the $13.5 million it received during the first few months of the scheme when the company also reportedly paid out nearly $2.8 million in executive bonuses during the same period.

Lindsay’s ‘Fresh’ division received a total of $2.93m in JobSeeker payments, according to financial records filed.

Although its payments were more modest in comparison, Lindsay Australia also received a notable boost from JobKeeper in 2020 with a total of $2.93m injected into the coffers for the benefit of an estimated 150 staff.

That amount was apportioned solely to its ‘Fresh’ division, with $870,000 to the end of June, 2020, and a further $2.06m bite in the year to June 30, 2021, which represents almost all of Lindsay’s increase in underlying net profit before tax in both financial years – up to $1.05m in 2020 (10.5 per cent change), and $2.7m in 2021, representing a 24.3 per cent jump.

Lindsay Australia has also not returned a request for comment.

Financial statements lodged for interstate behemoth CTI Logistics, formerly trading as JAYDE Transport, also show significant gains thanks to the subsidy scheme.

At the end of June 30, 2020, CTI had received just $561,000 in JobKeeper in a less than stellar year, but in the following financial year, the company backed up the truck for another $1.312m while profits soared.

By June 30, 2021, the company recorded a profit before tax of $11.565m, up from $2.471m in 2020.

CTI also didn’t return our request for a comment.

Trailer giants MaxiTRANS, now trading as MaxiPARTS on the ASX, received a total of $9.5m in JobKeeper payments: $4.9m in FY20 and another $4.6m in the last financial year.

Its underlying net profit after tax was a modest $0.5m in FY20 before rebounding to an impressive $10.487m in FY21. The company didn’t respond directly to our questions about repaying the JobKeeper payments, but did at least respond with an explanatory statement, citing the impacts of drought and reduced business confidence in FY20.

“This was further extended during the onset of the Covid-19 pandemic, with MaxiPARTS subject to global supply chain disruption and the majority of transport businesses, which utilise the business for its equipment and services, putting short term capital investment plans on hold,” the statement reads.

“It was thanks to JobKeeper that Australian businesses like MaxiPARTS could keep their operations going despite the direct impact of Covid-19, so that we could continue to support our customers, while keeping our local workforce employed. 

“The JobKeeper payments received by the group were only received within the Trailer solutions area with the Parts business continuing to operate without any JobKeeper support. 

“While MaxiPARTS posted a favourable result in FY21, JobKeeper was used as it was intended to allow the local workforce to be retained at a time the business was implementing measures to reduce the impact of Covid-19, including forced shutdowns and salary reductions.”

• Under the JobKeeper scheme, employers received a minimum of $19,500 for each employee between April-September 2020, regardless of whether they were working. The qualifying criteria was a percentage downturn in sales in March (compared to the prior year) or a forecast drop during April-June. For firms with an annual turnover of >$1bn, the downturn required was 50 per cent, for those under $1bn the fall was 30 per cent.

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