Shares in ferry and resort operator SeaLink Travel Group (ASX: SLK) have risen 6 per cent in early trading after the company reported a 54 per cent increase in underlying earnings to $73.7 million.
The encouraging result comes despite a hit to the tourism sector and reduced movement from commuters who normally use its services, with government contracts helping to cushion the blow.
In statutory terms SeaLink reported a loss of $13.5 million, although results would have been in the black if it weren't for $17.5 million in costs related to the $635 million acquisition of Transit Systems Group (TSG).
TSG is Australia's largest private operator of metropolitan public bus services, and an established international bus operator in London and Singapore.
Today SeaLink confirmed the newly incorporated business has contributed positively to the result despite the pandemic, and has traded in line with base case acquisition metrics.
The Adelaide-headquartered company also reported a further $10.8 million in negative exceptional items including impairment of certain vessels, Fraser Island goodwill due to impacts in FY20 and costs associated with an unsuccessful bid for Sydney Ferries in the previous financial year.
Servicing destinations ranging from Rottnest Island to Kangaroo Island to the Sydney Harbour, in the current financial year SeaLink has also boosted its Queensland presence by securing the contract for Brisbane CityCat services.
The group highlights decisive action was taken to cut costs, conserve cash and scale back its marine and tourism business due to COVID-19 travel restrictions, helping it end the year with a cash balance of $120 million and net senior debt of $151 million.
Some of SeaLink's services needed to be wound down for three months or more as the pandemic took hold, but most marine links to its island destinations continued to operate as essential transport links and, in some cases, attracted additional government subsidies.
Group CEO Clint Feuerherdt notes "exceptional cost control", a renewed intrastate marketing focus, and sensibly bringing these assets back online actually led the marine and tourism division to deliver a positive result. This was however helped by a strong performance in the pre-COVID first half.
Feuerherdt says the successful acquisition and integration of the Transit System Group in FY20 has transformed SeaLink into an integrated, resilient, international multi-modal transport business.
"Despite the impacts of bushfires across much of Australia during January 2020 and the ongoing COVID-19 pandemic, the result reflects the strong underlying nature of the essential services that SeaLink delivers to the cities and islands that it serves," he says.
"Our performance is also a credit to our global network of transport experts who have collaborated to leverage international learnings and experiences, critically analysing and improving services, adapting safely and rapidly to changing and challenging operating conditions.
"Approximately 87 per cent of SeaLink's revenue is currently contracted to mostly large government clients and we are proud to have renewed and expanded many of these operating contracts, a testament to our focus on providing safe, efficient, convenient and sustainable travel."
The CEO says while business has had a laser focus on operational risk management and financial prudency, it has not lost sight of the "immense opportunities" in its various markets.
"We are thrilled to have secured contracts representing over $3.8 billion in revenue for future years, all since the completion of the TSG acquisition in January," he says.
"We are really pleased with the support we have received from Australians travelling to our unique island destinations. Many are semi-local to these destinations and experiencing an island getaway for the first time.
"SeaLink is beginning to see many of its island centric operations recovering well but they are likely to continue to be affected by the changing pandemic conditions and ongoing travel restrictions."
He adds the outlook for the group continues to be positive, with a strong pipeline of bus contracting opportunities being pursued, attractive and unique tourism assets for domestic travellers, and a strong balance sheet.
"I am particularly pleased with the way we are positioned to navigate the year ahead," he says.
Around 15 per cent of the group's Australian workforce have been eligible for JobKeeper, receiving around $8.6 million in payments in the three months to June. Similar wage subsidies have been received overseas to the tune of around $6.3 million.
Directors have also announced a final dividend of 4.5 cents per share.Never miss a news update, subscribe here. Follow us on Facebook, LinkedIn, Instagram and Twitter.
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