Transport companies improve their bottom line with JobKeeper
Linfox is estimated to have accumulated a total of $ 45.6 million in JobKeeper payments through September 2020.
ASX-listed companies would go out of their way to repay JobKeeper’s payments, despite making large profits in the past two years.
According to a report from the leading business advisory group Ownership Matters, 58 of the 66 ASX 300 companies that received the $ 89.3 billion JobKeeper grant from the government between July and December of last year reported positive profits.
At the time of writing, only a small handful have paid him back, prompting Deputy Greens Leader Nick McKim to introduce a private member’s bill to the Federal Senate called the 2021 Bill of Rights. ‘Coronavirus Economic Response Package Amendment (Ending JobKeeper Profiteering) Bill.
If passed, the bill would require the Australian Tax Office (ATO) to publish a list of all entities that have received JobKeeper payments and the amount they have received, excluding those whose annual turnover is less than $ 10 million.
McKim’s bill would also require companies with annual sales of over $ 50 million that participated in the JobKeeper program and subsequently made a profit, to reimburse at least a portion of JobKeeper’s payments. .
If these companies paid dividends to shareholders or paid bonuses to executives, they would also have to reimburse certain payments from JobKeeper.
Our research shows some of the top trucking companies on this list, many of which thrived during Covid as freight demand reached unprecedented levels.
Transportation and logistics giant K&S Corporation has benefited more than most, based on its annual reports.
Citing concerns about the longer-term impacts of the pandemic on operations, K&S charged $ 28.6 million in JobKeeper grants in calendar year 2020, Ownership Matters reveals.
On June 30, 2020, however, it was boasting that its profits had doubled from the previous year, and in the six months leading up to December 31, 2020, K&S had more than tripled its pre-pandemic numbers and profits. had almost quintupled.
By the end of the year, it was able to pay shareholders a strong peak dividend of 50%, with some $ 1.3 million of the loot going to Linfox, which owns 18% of the company, and $ 5 million. of dollars to the descendants of founder Allan Scott via their 65% stake.
In total, K&S had recorded a 63% increase in net profits to $ 18.1 million from $ 11.1 million last year, supported by a pre-tax employment subsidy of 16.2 million. million dollars earned in the September quarter.
Ownership Matters co-founder Dean Paatsch said the accounts suggested K&S only used $ 344,000 in JobKeeper for workers who were not working.
“This suggests that 98.8 percent of the $ 28.6 million received by JobKeeper was intended to subsidize the wages of people who worked and would increase K&S profits.”
Big rigs’ Requests to K&S to ask if the company intended to repay any of JobKeeper’s grants have gone unanswered.
The Australian Financial Review (AFR) reports that a general purpose financial statement recently filed with ASIC for FY20 shows Linfox received a total of $ 22.8 million in government grants related to Covid-19.
Based on the insistence of Linfox director Peter Fox on the road transport investigation led by the committee headed by Glenn Sterle that the group as a whole was not qualified for JobKeeper, the AFR also assumes that all taxpayer money must have gone to the company’s money transfer subsidiary, Armaguard.
“Given the first phase of JobKeeper evenly split between the last three months of FY20 and the first three of FY21, it’s almost certain that the business of Australia’s 25th richest man has cashed in a total. of $ 45.6 million in JobKeeper until September, after which he stopped receiving the grant, ”the newspaper reports.
Requests for comment from Linfox media representatives also went unanswered.
Among the biggest players in transport, it seems that only Qube repaid JobKeeper’s subsidies. Earlier this year, Qube announced that he would return the $ 16.8 million he received in the second half of last year after reporting a 10% increase in profits from the same period a year earlier.
“Other companies may make different decisions and choose not to reimburse because, like Qube, they have no legal obligation to do so,” the company statement said.
“Overall, however, the Qube board felt that JobKeeper’s return was the right move.”
As of this writing, however, Qube has not repaid the $ 13.5 million it received in the program’s first few months, while the company has also reportedly paid nearly $ 2.8 million. dollars in executive bonuses over the same period.
Although its payments were more modest in comparison, Lindsay Australia also received a noticeable boost from JobKeeper in 2020 with a total of $ 2.93 million pumped into vaults for the benefit of around 150 employees.
This amount was allocated only to its “Fees” division, with $ 870,000 until the end of June 2020, and an additional $ 2.06 million during the year until June 30, 2021, which represents almost – Full increase in underlying net income before tax of Lindsay. over the two fiscal years – up to $ 1.05 million in 2020 (10.5% change) and $ 2.7 million in 2021, a jump of 24.3%.
Lindsay Australia also did not return a request for comment.
Financial statements filed for interstate giant CTI Logistics, formerly marketed as JAYDE Transport, also show significant gains from the subsidy program.
At the end of June 30, 2020, CTI had received just $ 561,000 in JobKeeper in a less than brilliant year, but in the following fiscal year, the company backed the truck for an additional $ 1.312 million while the profits were skyrocketing.
As of June 30, 2021, the company had pre-tax profit of $ 11.565 million, compared to $ 2.471 million in 2020.
CTI also did not return our request for comment.
Trailer giants MaxiTRANS, now marketed as MaxiPARTS on the ASX, received a total of $ 9.5 million in JobKeeper payments: $ 4.9 million in fiscal year 20 and 4, An additional $ 6 million in the last fiscal year.
Its underlying after-tax net profit was $ 0.5 million in FY20 before rebounding to an impressive $ 10.487 million in FY21. The company did not respond directly to our questions about the reimbursement of payments from JobKeeper, but at least responded with an explanatory statement, citing the impacts of the drought and the decline in business confidence during the year. 20.
“This was further extended at the start of the Covid-19 pandemic, with MaxiPARTS being subject to a disruption in the global supply chain and the majority of transport companies, which use the company for its equipment and services, highlighting waiting for short-term investment plans. The statement reads.
“It is thanks to JobKeeper that Australian companies like MaxiPARTS have been able to continue operating despite the direct impact of Covid-19, so that we can continue to support our customers, while keeping our local workforce employed.
“The JobKeeper payments received by the group were only received in the area of trailer solutions, with the Spare Parts business continuing to operate without any assistance from JobKeeper.
“While MaxiPARTS posted a favorable result in FY21, JobKeeper was used as it was intended to enable the local workforce to be retained at a time when the company was implementing measures to reduce the impact of Covid-19, including forced closures and pay cuts. ”
• Under the JobKeeper program, employers received a minimum of $ 19,500 for each employee between April and September 2020, whether or not they were working. Qualifying criteria were a percentage decrease in sales in March (compared to the previous year) or an expected decrease in April-June. For companies with annual sales over $ 1 billion, the required drop was 50%, for those under $ 1 billion, the drop was 30%.