K&S : 21/02/2017 ~ K&S Corporation Limited – Half Year Report

Appendix 4D

Half Year report

Appendix 4D Half Year report

Name of entity

K&S Corporation Limited

ABN Half yearly

(tick)

Preliminary final (tick)

Half year/financial year ended ('current period')

67 007 561 837



31st December 2016

$A'000

Appendix 4D Page1

as at

Pages 2-4 Directors' Report

Page 5 Statement of Comprehensive Income Page 6 Statement of Financial Position

Page 7 Statement of Changes in Equity Page 8 Statement of Cash Flows

Pages 9-19 Notes to the Financial Statements Page 20 Directors' Declaration

Pages 21-22 Independent Review Report

Page 23 Auditor's Independence Declaration

K&S CORPORATION LIMITED

ABN 67 007 561 837

Your Directors submit their report for the half-year ended 31 December 2016.

DIRECTORS

The names of the Company's Directors in office during the half-year and until the date of this report are as below. Directors were in office for this entire period unless otherwise stated.

Tony Johnson (Chairman - Non-executive Director) Paul Sarant (Managing Director)

Ray Smith (Non-executive Director) Legh Winser (Non-executive Director)

CONSOLIDATED RESULTS

Financial overview 6 month

period to Dec 2016

6 month period to

Dec 2015 % change

REVIEW AND RESULTS OF OPERATIONS

The consolidated net profit before tax of the economic entity for the half year was $5.8 million. The result is 13.6% higher than the previous corresponding period underlying performance.

Profit after tax was $4.0 million compared to previous years underlying profit after tax of $3.6 million.

We have maintained our strong commitment to safety with the Lost Time Injury Frequency Rate (LTIFR) reducing 16.8% over the previous corresponding period.

Operating revenue for the period was $352.0 million, down 0.9% on the previous corresponding period.

Revenue from our resource based businesses, supporting iron ore and coal, continued to decline. This decline was partly offset by increased revenue from fuel and aviation transport realised through the operating divisions of K&S Energy and Aero Refuellers.

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K&S CORPORATION LIMITED

ABN 67 007 561 837

Commodity prices have improved significantly during the last quarter of 2016. To date we have not realised any material increase in associated activity.

The performance of our east coast operations during the first half year period has improved; this includes both intermodal and contract logistics operations. New Zealand performance continues to be strong.

Cost reduction strategies have continued to be implemented across the business, including the rationalisation and replacement of specific fleet, employee reductions and IT solutions introduced to improve customer service, operational efficiencies and cost reduction initiatives. The cost reduction strategies have had a positive impact on the result for the first half year period.

Operating cash flow for the half year was $19.1 million, down 29.0% on the previous corresponding period. The reduction is predominantly as a result of the timing of some large debtor receipts, which have subsequently been collected.

Interim Dividend

A fully franked interim dividend of 1.5 cents per share (2016, 1.5 cents per share) has been declared by the Directors.

The interim dividend will be paid on 4th of April 2017, with the date for determining entitlements being 21st of March 2017. The last election date for participation in the Dividend Reinvestment Plan (DRP) is the 22nd of March 2017. Shares issued under the DRP will rank equally with the Company's Ordinary Fully Paid Securities.

The DRP will apply to the interim dividend and the issue price for the shares under the DRP will be based on the volume weighted average price of K&S shares in the 5 trading days ended 21st March 2017, with a discount of 2.5%.

Outlook

Providing earnings guidance for the second half remains difficult.

Our new contracts that have recently commenced will provide additional revenues.

We currently anticipate FY17 second half earnings will be lower than the FY17 first half, but higher than the previous corresponding period.

We are confident the business is well positioned for growth as economic conditions improve.

SIGNIFICANT CHANGES IN THE STATE OF AFFAIRS

There have been no significant changes in the state of affairs of the economic entity during the half-year under review.

EVENTS SUBSEQUENT TO BALANCE DATE

On 21 February 2017, the Directors of K&S Corporation Limited declared an interim dividend on ordinary shares in respect of the 2017 financial year. The total amount of the dividend is $1,818,020 which represents a fully franked dividend of 1.5 cents per share. The dividend has not been provided for in the 31 December 2016 financial statements and is payable on 4 April 2017.

The Dividend Reinvestment Plan (DRP) will apply to the 4 April 2017 interim dividend and the issue price for shares under the DRP will be based on the volume weighted average trading price of K&S shares in the five business days ending on 21 March 2017 (the record date for the interim dividend), less a discount of 2.5%.

On 30 January 2017, K&S Corporation Limited merged the business of Scott's Transport Industries Pty Ltd (STI) via the transfer of certain assets into K&S Corporation's subsidiary K&S Freighters Pty Ltd. STI was established more than 60 years ago by the late Allan Scott AO and is recognised as one of Australia's largest privately owned transport companies. STI operates a general freight and fuel cartage division, having several blue chip customers within the manufacturing, Fast Moving Consumer Goods and fuel sectors. K&S Corporation views this as an excellent opportunity to further expand its K&S Energy division through increased fuel cartage operations and provide additional volume and competitiveness in its existing intermodal and contract logistics divisions.

Other than the above matters, there has not arisen in the interval between the end of the financial period and the date of this report, any item, transaction or event of a material and unusual nature likely, in the opinion of the Directors of the Company, to affect significantly the operations of the consolidated entity, the results of those operations, or the state of affairs of the consolidated entity in future financial years.

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