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Buses drive SeaLink profit spike

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Transport and tourism operator SeaLink Travel Group has announced a $32 million profit for the first half of the financial year, driven by its newly-acquired Australian and international bus business.

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The result is more than triple the $8.7 million profit the South Australian company made in the six months to December 31, 2019, and has resulted in a more than 20 per cent jump in its share price.

As part of yesterday’s announcement to the Australian Securities Exchange, the company declared a 7 cents per share fully-franked interim dividend payable on March 31.

SeaLink, which operates the Kangaroo Island ferry service and similar operations around Australia, acquired bus operator Transit Systems Group in January 2020 for $635 million.

The bus arm, which operates 18 government contracts in Australia and 23 in Singapore and London, generated $472 million in revenue for the six months to tale the company’s total revenue to $570.8 million, up from $132.9 million 12 months ago.

However, the success of the new bus business was offset by the sluggish performance of SeaLink’s marine and tourism division, which reported a 25 per cent revenue fall to $98.9 million for the period.

The $34 million fall in revenue was matched by a $35.4 million fall in operating costs, helping to achieve a 4 per cent increase in underlying Earnings Before Interest, Tax, Depreciation & Amortisation for the period for the marine and tourism arm to $34.7 million.

“As borders opened and restrictions eased, strong demand from the interstate markets was received with new bookings increasing almost immediately, complementing the already strong intrastate demand,” the company said in its announcement to the ASX yesterday.

“Due to the volatility in travel restrictions, bookings tend to be short notice and require greater flexibility, which translates into greater levels of cancellations, deferrals and refunds than we would typically experience.”

During the half, SeaLink also commenced ferry service contracts in Brisbane and Hayman Island.

It also received a $2.2 million insurance payout for bushfire damage to its Vivonne Bay Lodge property on Kangaroo Island, $8.6 million in JobKeeper payments from the Australian Government and $5.6 million in grants from the Singapore Government under its Jobs Support Scheme.

“In London, the six-month period has been dominated by the continuing effects of COVID-19 in the United Kingdom, which ended the half-year with another national lockdown as a new more virulent strain of the virus emerged,” the company said.

“Despite this, services continue to operate at 100 per cent and operational performance is being maintained.”

SeaLink also commenced a joint venture with John Holland Adelaide Trams in the six-month period to operate the new Adelaide Tram. It also commenced a new Outer North bus contract in Adelaide in July 2020. The new SA contracts are in addition to the three existing bus contracts SeaLink has in the state.

In terms of outlook, SeaLink said trading in 2021 was slightly ahead of expectations.

“As an integrated, resilient, international multi-modal transport business with over 91 per cent of our revenue fully contracted or non-discretionary providing essential transport services, we expect our balance sheet strength and performance to be stable moving forward.

“The Marine and Tourism division continues to rebuild its revenue base from domestic travel and is well placed to capitalise on domestic tourism opportunities regardless of whether international border restrictions remain in place.”

SeaLink’s share price was up more than 21 per cent to $8.58 at noon today after opening at $7.06 ahead of the announcement yesterday.

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