WA mining and resources resurgence helps drive increase
K&S Corporation has recorded annual profit before tax of $24.6 million, improvement on the previous corresponding period of 161.7 per cent for the full year ended June 30.
Operating revenues increased 13.2 per cent on the previous financial year to $854.6 million.
Underlying profit before tax was $11 million, an 1.8 per cent increase, while underlying profit after tax was $7.7 million, up 2 per cent.
“Included in our statutory result was a $16.1 million receivable relating to compensation arising out of the closure of Aurizon’s intermodal business in December 2017,” the firm says.
K&S says its claim is yet to be resolved but it is confident it will recover at least $16.1 million.
Statutory profit also included $1.4 million in returns to creditors paid by the administrators of Arrium following completion of the sale of Arrium to the Liberty Group.
Find out how K&S performed last year, here
Operating cash flow for the year was $40.8 million, 17.4 per cent lower than the prior year.
The major variation being Liberty OneSteel reverting to their pre-Administration payment terms following completion of the sale of Arrium to the Liberty Group.
“During the year we were successful in recovering $1.3 million of fuel tax credits that related to the period from 1 July 2014 to 30 June 2017,” the company says.
After copping grief on its Western Australian diversification earlier in the decade during the mining and resources boom, market activity in that business has started to gain momentum in the second half of the year.
“In addition, we were also awarded a contract for Roy Hill,” the company says.
“Activity levels are expected to continue to improve following the recent announcement of new mine developments.
“Trading margins remain under pressure from high levels of competition.”
South32 coal volumes have continued to fluctuate around lower than historical levels as a consequence of on-going mine issues experienced at the Appin colliery.
“We anticipate that South32 coal volumes will increase in FY19.
The chemical transport division, Chemtrans, also realised lower returns as a result of reduced market demand.
Both the DTM and New Zealand businesses, which are predominantly aligned to contract logistics, have continued to realise steady improvement with volumes and performance.
“Despite reduced agricultural demand the specialist aviation refuelling business Aero Refuellers has performed well realising further improvement.
“Similarly our fuel trading business, K&S Agencies, has continued to expand and realise solid financial results.”
The results revealed the financial value gained by the listed company of its takeover in January 2017 of allied private company Scotts Transport Industries (STI), founded by the late South Australian trucking mogul, Alan Scott, 60 years ago.
STI contributed $45.8 million in revenue and $1.25 million in profit before tax since the transaction, which cost $60,000.
Also helping the bottom line was the recovery of $1.3 million in fuel tax credits for the July 1 2014 and June 30, 2017.
Outgoings for the financial year were mostly up, with the contractors bill rising from $193.1 million to $208.7 million, fleet expenses up from $149.2 million to $162.7 million and employee expenses up from $249.7 million to $281 million.
The domestic transport arm saw net profits after tax rise from just shy of $2 million the previous year to $12.2 million while the fuel arm rose from $2 million to just under $2.9 million.
The carrying value of vehicles under hire purchase contracts also rose from $162.9 million to $178.7 million.