Trend to cashless society hits profit at Lindsay Fox’s Linfox

While the Linfox trucking and logistics business was busier than ever, Armaguard has suffered during the COVID-19 pandemic.

A drastic reduction in the use of cash by Australians during COVID-19 and a lack of events such as festivals and football matches has meant a big hit to the financial results of Lindsay Fox’s business empire.

Financial accounts covering the billionaire’s Linfox trucking and logistics empire reveal the business generated more revenue than ever, but profits fell markedly.

Linfox, according to accounts lodged by its parent company with the corporate regulator this week, increased revenue by more than $200m to about $2.96bn for the 2020 financial year but pre-tax profits plunged 64 per cent to $49m.

While expenses for the entire operation were generally up given the increased cost of doing business during the pandemic, Linfox’s results were also hit by a $45.5m impairment loss on its Armaguard cash business.

The impairment was a big contributor to net profit after tax for the entire group falling to only $16.8m, compared to a $96.4m result in 2019. Earnings before interest and tax for the year to June 30 were $80.2m, down from $150.6m for the previous 12 months. While Linfox’s logistics arms are busier than ever as e-commerce activity increases and more goods are shipped around Australia, the cash-handling business has taken a big hit.

There has been an increasing trend towards cashless transactions during COVID, but Armaguard’s business of moving and handling cash at festivals, concerts and sporting events has taken a dive as large-scale public gatherings have been banned or curtailed.

“The impairment charge of $45.5m in the cash logistics Australian business cash generating unit (was) due to a change in market conditions,” a note in the accounts said.

The accounts also reveal Linfox acquired an ATM network business from Cuscal last August in a $3.5m deal.

There was also a hint of another blow to the overall business, with a note saying that in July a “major customer formally notified the group it had not been successful in the recent bid to retain an existing contract”. However, the note did say the contract loss was “currently not expected to be material to the group”.

At almost $3bn revenue, Linfox is the third-biggest privately owned company in Australia behind Gina Rinehart’s Hancock Prospecting and Anthony Pratt and family’s Visy cardboard box manufacturing business, though grain storage co-operative CBH has a higher income than Linfox.

Mr Fox started the business with a single truck in 1956 and now oversees a family empire that employs more than 30,000 people across Australia, New Zealand and Southeast Asia, spanning more than 7500 trucks and vehicles.

The 82-year-old billionaire also owns Essendon Airport with friend Max Beck, who is a fellow member of The List — Australia’s Richest 250, Avalon Airport and other property holdings and assets, which are not included in the accounts for LEPGF Pty Ltd, the parent company for Linfox.

LEPGF was established earlier this year and is in turn owned by several entities carrying the initials of Mr Fox and wife Paula’s five children.

It is thought the new entity and its ownership structure could hint to an eventual carve-up of the Fox empire among the various wings of the family. For now, the sole directors of LEPGF Pty Ltd are Lindsay and Paula Fox, who signed the 2020 accounts.