Knutsford Express books $96m loss on big impairments
Bus company Knutsford Express made a loss of $96 million for its financial year ended May 31 as it booked heavy impairments for the parent company and its subsidiaries amid a sharp downturn in passenger business during the ongoing COVID-19 pandemic.
Knutsford Express has spent the past year readjusting its business model with greater focus on its courier service, as well as drawing down on borrowed funds, hoping to ride out the recession and fallout in its attendant dampening of travel. The listed company’s manoeuvrings were, however, not enough to keep its earnings intact. The out-turn represents a major decline after last year’s profit of $34 million.
The business consists of two bus companies, KE Connect Limited and KE Connect US LLC as well as investment company Knutsford Express Investments Limited.
Group revenues, most of which came from the US operation, plummeted 38 per cent to $630 million.
Knutsford Express’ slide into red ink was in part tied to impairments of $16 million which the group absorbed from bus company KE Connect US LLC. KE Connect US was incorporated to take advantage of coach hireage and transportation opportunities in South Florida and was intended to serve as a key foreign currency earner for the group over the medium to long run. KE Connect US acquired bus company Davis Tours in 2019 for $55 million. That transaction saw goodwill of the group appreciating from $4.5 million in 2018 to $11.1 million at the start of the 2020 financial year.
Fast-forward to 2021 and Knutsford Express has scratched the $6.6 million it recognised in goodwill for KE Connect US on concerns that the company has not operated since March 2020 due to COVID-19 pandemic, and doubts abound when the operations will resume.
The group also booked $9.3 million in impairment losses on the fleet of KE Connect US and Knutsford Express Services Limited, as well another $102 million write down in related party impairment by KE Connect US.
“Based on assessment undertaken, the balance is deemed impaired,” Knutsford Express said in its financial report over the signature of directors Anthony Copeland and Oliver Townsend.
Still, Knutsford Express’ assets rose 13 per cent to $1.2 billion at the end of the financial year, due, in part, to the acquisition of new buses and lands in Drax Hall Estate, St Ann, which doubles as a terminus for Knutsford Express buses and office space for Knutsford Express Investments Limited.
Its assets also included the addition of $20 million in cash, moving the company’s cash and bank balances from $39.4 million in 2020 to just under $59 million at the close of the 2021 financial year.