K&S : 7/10/2016 ~ K&S Corporation Limited – Annual Report

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Annual General Meeting 22 November 2016 Half-year results and interim

dividend announcement 21 February 2017

Full-year result and final

dividend announcement 22 August 2017

Annual report mailed

to Shareholders 7 October 2017

Annual General Meeting 21 November 2017

ORATIO TED

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K& S COR LIMI

To be the leading

• Generates revenue of $689 million
• Achieves significant new contracts with Caltex

  provider of transport

  within our target

  and logistic solutions

  and New Zealand.

  markets in Australia

• Completes acquisition of Aero Refuellers
• Comcare Licence renewed for 8 years
• Safety focus delivers better outcomes
• Operating cash flow is $41.1 million

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K & S C O R P O RA T I O N L I M I T E D a n n u a l r e p o r t 2 0 1 6

S

RMAN'

CHAI

On behalf of the Board of K&S Corporation, I am pleased to present the Company's Annual Report.

This year has been a difficult and challenging one for the Company.

Our results have been impacted by the continued severe downturn in the resource sector throughout Australia and a softening of related chemical demand.

We have recorded a statutory after tax loss of $104.2 million for the year ended 30 June 2016, this included pre tax asset impairments of $115.3 million. The underlying profit before tax was $5.4 million.

Operating revenue for the year was $688.8 million, a decrease of 1.5% on the previous corresponding period.

Below is a econciliation of statutory loss before tax to underlying profit before tax:

$m

Statutory loss before tax (109.9)

Impairment of intangibles 86.6

Impairment of physical assets 16.9

Impairment of receivables (Arrium) 11.8

Underlying profit before tax 5.4

We have written off intangible assets in the Australian Transport CGU of $86.6 million. The non cash write off was made up of $77.8 million of goodwill, $6.2 million of brand names, $1.8 million customer contracts and

$0.8 million of software.

The carrying value of land and buildings surplus to our requirements was also written down by $8.2 million.

We have also written down the carrying value of some Western Australian based heavy haulage equipment that has been impacted by the downturn in the resource sector.

TONY JOHNSON

Chairman K&S Corporation Limited

In addition we have written down the value of some further surplus equipment. The total adjustment to the carrying value of equipment was $8.7 million.

In March 2016, we completed an independent revaluation of freehold land and buildings that resulted in an increase to the asset revaluation reserve of $8.9 million for core land and buildings.

Our underlying profit after tax was $3.9 million, 70.0 % lower than the prior corresponding period.

Operating cashflow for the year was $41.1 million.

As a result of our largest customer Arrium entering into Administration, we have written off the carrying value of our receivable of $11.8 million. KordaMentha, the administrators of the Arrium Group, have commenced a process to sell the various divisions of Arrium. The timing and size of any recoveries out of the administration of Arrium is unknown.

On a positive note, our Comcare self insurance licence was extended by Comcare for a further eight years to June 2024.

The performance of our New Zealand business continues to improve, as have a number of our other business units.

The acquisition of Aero Refuellers has made a positive contribution to the Group and will provide growth opportunities.

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