ANNUAL
REPORT
2011
ABN 67 007 561 837
CONTENTS Page
Highlights 1
Chairman’s Overview 2
Financial Overview 4
Managing Director’s Report 5
Board of Directors 14
Five-Year Financial History 16
Directors’ Report 17
Corporate Governance 28
Financial Report 37
Corporate Directory 102
“ To be the
leading
provider of
transport
and logistic
solutions
within
our target
markets in
Australia
and New
Zealand.”
(cid:129) Revenue increased to $523 million
(cid:129) New contract with CHEP
(cid:129) Successful acquisition of Regal Transport Group
(cid:129) Integrated Regal and Pacific Transport into
one business unit
(cid:129) Perth rail terminal completed
(cid:129) Completed fully underwritten
1 for 6 Non-Renounceable Entitlement Offer
(cid:129) Opened new depot in Broome
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
On behalf of the Board of
K&S Corporation, I am pleased
to present the Company’s
annual report.
As a result of the higher A$ we
continue to see increased levels of
imported products that compete
with locally manufactured goods.
This has been a difficult year with
weaker trading conditions on the
east coast of Australia compounded
by the impact of floods, Cyclone Yasi,
the closure of the Wesley Vale and
Burnie paper mills in Tasmania and
the lane mix changes of OneSteel’s
distribution.
The continuing high value of the
A$ has had a serious impact for
the demand of locally manufactured
goods, both for domestic purposes
and export.
The continued contraction of
manufacturing and the softening of
the Australian economy throughout
the financial year has seen reduced
volumes and demand for transport
services which has impacted on net
profit after tax.
Net profit after tax for 2010 -11
was $14.8 million compared with
$18.7 million for the 2009-10
financial year.
The closure of the Tasmanian Paper
mills at Wesley Vale and Burnie
had a major impact on the utilisation
of our infrastructure across the
mainland states with the reduction
of over 320,000 tonnes of paper
distribution volume.
Changes in the distribution mix of
OneSteel’s production from an
interstate linehaul activity to a lower
yielding local movement supporting
the ongoing shift of volume to
Pacific National operated steel trains
also impacted our result negatively.
Earnings were impacted by the
Brisbane floods in January and cyclone
Yasi in early February. These two
weather related events stopped all
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
freight movements from the nation’s
manufacturing hub in Melbourne to
Queensland for a period of three
weeks. Flooding on the Nullarbor in
February also stopped rail movements
to Perth for a further two weeks.
The unusual climatic conditions in
January and February further
exacerbated the normal low seasonal
volumes to unprecedented levels
resulting in losses in both rail and
road operations for this period.
Interest costs were up $3.2 million
on higher debt levels and increased
interest rates as a direct result of our
recent acquisitions.
Operating revenue for the year was
$523.4 million, an increase of 15.2%
on the previous corresponding period.
The increase in revenue is a direct
result of our recent Western Australian
acquisitions of Regal and Pacific
transport whilst the traditional east
coast business revenues declined due
to the mill closures in Tasmania, shift
of product to the steel trains and
weather events.
Our gearing now stands at 26.4%,
which is within our target range.
Earnings per share were 18.3 cents.
Management is extremely focused on
winning new business and reducing
operating costs.
In December 2010 we merged the
operations of both Regal and
Pacific into a single large North West
focused business unit. During the
merger of these two businesses
we experienced some cultural and
people related issues. The majority of
these issues have been resolved and
the merged business has performed
strongly in recent months.
The performance of this business,
since acquisition, has been broadly
in line with our expectation.
We have commenced a fleet reduction
programme which will match the
local fleet size with current customer
demand. This fleet rationalisation will
improve productivity and utilisation
of our equipment.
All non critical capital expenditure
will be deferred until the economy
shows signs of a positive recovery.
These measures will result in a
reduction in our overall fixed costs.
Variable costs which include overtime,
subcontractors and agency labour are
being closely monitored to ensure
that costs are minimised.
On December 29, 2010, K&S
successfully completed a fully under-
written one for six Non-Renounceable
Entitlement Offer. The entitlement
offer raised net proceeds of $25.9
million which were used to retire debt.
We expect interest costs to reduce in
the new financial year as a result
of the equity raising and the reduced
capital spending.
We have declared a fully franked final
dividend of 5.0 cents per share (last
year 7.0 cents per share). This follows
the interim dividend of 5.0 cents per
share paid in March 2011, making a
total dividend of 10.0 cents per
share. The final dividend will be paid
on 31 October 2011, with the date
for determining entitlements being
17 October 2011.
The Dividend Reinvestment Plan
(DRP) will once again be part of the
October 2011 dividend. The DRP
will apply in respect of the fully
franked final dividend of 5.0 cents
payable on 31 October 2011.
The terms of the DRP will remain
unchanged with issue price under
the DRP based on the weighted
average trading price for K&S shares
in the five business days ending on
17 October 2011 (the record date
of the final dividend) less a discount
of 2.5%.
Providing earnings guidance going
forward remains difficult. The strong
A$ continues to impact on Australian
manufacturers.
The outlook for paper appears to be
subdued, while the impact of a
potential carbon tax remains another
issue that will need to be factored in
during the 2012 financial year.
The purchase of Perth-based Regal
Transport in July 2010 following the
earlier purchase of Pacific Transport
in January 2010 has provided
us with the capacity and resourcing
necessary to successfully target
opportunities arising from the large
gas, oil and resources developments
in Western Australia.
We see this as being a significant
area of growth for the Company in
the future.
Despite the difficulties of the past
12 months, K&S has a strong Balance
Sheet and low gearing with secure
customer contracts.
On behalf of the Board, I thank our
customers, suppliers and employees,
who have contributed to our
continuing success. In particular, I
thank the senior management team,
led by Legh Winser, for their ongoing
commitment and dedication in what
has been a testing period.
Tony Johnson
Chairman
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
2011 2010 % movement
Revenue $m 523.4 454.3 15.2
Operating profit before interest, tax $m 54.7 51.7 5.8
and depreciation
Operating profit before interest and tax $m 29.6 31.5 (6.2)
Operating profit before tax $m 21.2 26.3 (19.6)
Operating profit after tax $m 14.8 18.7 (20.9)
Dividends paid $m 8.4 7.7 9.1
Total assets $m 388.0 326.1 19.0
Net borrowings $m 76.7 52.3 46.7
Shareholders’ funds $m 213.6 179.1 19.3
Depreciation and amortisation $m 25.1 20.1 24.6
Earnings per share cents 18.3 26.3 (30.4)
Dividends per share cents 10.0 14.0 (28.6)
Net tangible assets per share $ 1.65 1.85 (10.8)
Cash flow per share $ 0.39 0.50 (22.0)
Return on Shareholders’ funds % 6.9 10.5 (34.3)
Gearing % 26.4 24.5 7.8
Lost time injuries 36.0 30.0 20.0
Lost time injuries frequency rate % 9.0 9.0 0.0
OPERATING REVENUE
OPERATING CASH FLOW
SHAREHOLDERS FUNDS
2011
2010
2009
2008
2007
$m
523
454
441
466
418
2011
2010
2009
2008
2007
GEARING
$m
213.6
179.1
156.2
146.5
136.1
2011
2010
2009
2008
2007
$m
34.1
35.9
39.2
31.3
31.4
%
26.4
24.5
22.6
27.9
27.4
2011
2010
2009
2008
2007
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Trading conditions in 2010-11
were extremely difficult for K&S.
The combination of a softening
economy, high exchange rates,
strong interest rates and natural
disasters slowed our east coast
operations significantly.
Lower steel volumes on the back of
reduced production, de-stocking and
a change in product and distribution
mix impacted on operations through
the first three quarters of the year.
However, by the fourth quarter
domestic steel volumes had shown
some recovery on the back of several
major infrastructure projects, while
our strategy of targeting work in
the oil, gas and resources sectors in
Western Australia progressed well.
The closure of the Wesley Vale
and Burnie paper mills in Tasmania
impacted on our paper operations,
while economic and climatic
conditions also affected operations
in New Zealand.
Net profit after tax was $14.8 million,
20.9% below the result for the
previous year, but in line with advice
provided to Shareholders during
the year.
Operating revenue for the year
was $523.4 million, after first half
earnings of $264.7 million, compared
with $454.3 million for the 2009-10
financial year.
Operations
The soft economic conditions, high
A$ and extreme weather events
early in 2011 adversely affected K&S’
core business operations.
Our steel operations in particular
were adversely affected with
volumes carried for BlueScope
and OneSteel falling significantly,
although OneSteel reported an
encouraging upswing in activity
after April.
K&S, through DTM, was successful
in converting a short term contract
with OneSteel to carry steel tubing
into a long term contract.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Our relationship with these
companies remains strong and places
us in a sound position to improve
our revenue base when the economy
recovers and volumes increase.
Despite the tough conditions,
K&S was able to retain all its major
customers and successfully extended
a number of major contracts
including:
(cid:129) Laminex – a new five year
contract for the national
transportation of product.
(cid:129) Pacific Steel – a 12 month
extension to its Australian
transport business.
(cid:129) Chep – K&S Freighters rolled
over parcels of linehaul business.
This is additional to the business
held by DTM in Western Australia
and New South Wales.
Bulk operations recorded an increase
in overall volumes, but were affected
by a number of external factors.
Queensland Magnesia, based at
Rockhampton, was impacted by
flooding in early 2011, while sugar
volumes were also down as a result
of Cyclone Yasi, which devastated
Queensland sugar plantations and
cut the season short.
Cement Australia operations
from Gladstone performed well,
as expected.
Holden’s introduction of its new
Cruze model this year has proven
beneficial for our contract with
GM Holden. This work involves the
storage and transport of steel coil
into Elizabeth and the provision
of local transport support to Business
Park operations and was recently
extended for three years.
Perth Rail Terminal
The construction of K&S’ new state-of-the-art
rail terminal in Perth on Pacific National land in
Kewdale was completed in January 2011 and is
now in operation. This was developed as part of
a five-year contract signed with Pacific National
in 2009 for its rail linehaul services.
The closure of the Wesley Vale and
Burnie paper mills in Tasmania and
the earthquake and subsequent
tsunami which hit Japan in March
affected our paper transport business.
PaperlinX volumes were affected by
the high A$ and increased levels
of imports, but increases in K&S’
warehousing operations have gone
some way to countering reductions
in road transport operations. The
Norske Skog contract remains solid.
The construction of K&S’ new
state-of-the-art rail terminal in Perth
on Pacific National land in Kewdale
was completed in January 2011
and is now in operation. This was
developed as part of a five-year
contract signed with Pacific National
in 2009 for its rail linehaul services.
The new facility, which involved
capital expenditure of $11 million,
provides K&S with additional
capacity and will help drive down
operating costs.
The Perth-based operations of
Brookes have now been located at
a K&S owned site at Kewdale,
providing additional efficiencies
and savings.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
While east coast operations were
depressed, the situation in Western
Australia was more positive with the
purchase of Regal Transport and the
consolidation of Regal and Pacific
into one North West business unit.
The Laminex and Wespine operations
performed to expectations and our
contract with Gunnersens for the
transport of imported timber across
Australia also remains strong.
Project Services/Oil & Gas
Logistics
In December 2010, K&S commenced
contracted linehaul services for French
oil and gas company, Total E&P, to
drill two wells off Darwin. During the
six month campaign, over 200,000
kilometres were travelled transporting
2,500 freight tonnes with no service
delivery failures. Due to the success
of this campaign, Total E&P has
awarded K&S the contract to perform
similar linehaul services to Broome in
2012 for a three well program.
K&S utilising Regal Transport,
provided heavy haulage transport for
Woodside Energy Limited from
Dampier to Perth supporting the
Pluto project. At the client’s request,
these 30 tonne valves were skated
into position undercover at the K&S
Sheffield Road depot.
K&S currently has long term storage
of core samples for Japanese oil &
gas company Inpex. K&S looks to
build on this relationship to support
the Ichthys project off Broome.
K&S is currently in discussion with
several major oil and gas companies
to provide supply base operations in
Broome. K&S is also working with
international freight forwarders who
are bidding on major projects in the
resource industry.
DTM
Earlier this year, DTM won a tender
to transport steel products within
New South Wales for BlueScope
Lysaght. This means DTM is now
one of only two major transporters
for BlueScope Lysaght distribution
in New South Wales.
DTM was also able to convert a
short term contract from OneSteel to
carry steel, tube aluminium and
stainless steel products from the
Geelong, Dandenong, Scoresby and
Newcastle sites into a long-term
agreement.
The original contract was awarded
at short notice in December 2009
after the collapse of the incumbent
carrier. OneSteel provided
DTM with a long-term extension,
recognising its outstanding
performance in providing cost and
service improvements.
Work with pallet and container
pooling group Chep in New South
Wales and Western Australia has
grown organically and we have been
able to achieve significant operational
improvements from the fleet
servicing this contract. Scheduling
services for both regions are now
also provided by DTM.
A new fleet of vehicles has been
introduced to handle the Air Liquide
Australia work in South Australia,
Victoria and New South Wales.
This fleet upgrade involved some
20 vehicles.
DTM has also begun work with
Caltex to distribute lubricating oil
and lubricants from Melbourne to
Adelaide, while work to distribute
lubricants for BP continues.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
The consolidation of our three
Sydney operations onto adjoining
properties at Enfield was also
completed during the year and is
producing significant operational
efficiencies and productivity
improvements. This facility is being
shared with DTM.
K&S’ fleet replacement program
was largely completed during
the year and is now on maintenance.
We continue to look at ways to
reduce energy use and have a number
of green trial tests underway.
A new freight management system
will be introduced to the DTM
business in the next 12 months,
providing a range of improvements
including further enhanced package
track and trace capabilities.
Regal/Pacific
The Regal Transport Group was
purchased by K&S in July 2010 and
in December amalgamated with
Pacific Transport, which K&S had
purchased earlier in the year, to form
Regal Transport.
The combined businesses provide
K&S with a range of transport
services including general freight
and heavy haulage in support of
businesses based in the Pilbara
and Kimberley regions of Western
Australia. These operations are
supported by depots in Perth, Port
Hedland, Karratha and Newman as
well as Broome and Derby.
Major customers include MacMahon,
Mount Gibson Iron, Kimberley
Diamond Company, HWE Mining,
Pilbara Manganese, Thiess, Emeco,
Westrac, Hitachi, BGC and OneSteel.
While initial activity following the
consolidation was weaker than
expected, this was largely the result
of slower economic conditions in
January and February. Since March,
Regal Transport has shown strong
growth with the major oil, gas and
resources projects in Western Australia
expected to underpin continued
improvement in the year ahead.
The operations are also now
benefitting from synergies achieved
as a result of the merger, including
the closure of the Pacific Transport
depot in Perth and consolidation of
its operations into the Regal depot.
The freight business currently services
mining, construction, oil and gas
and retail markets in the North West,
including retail outlets, mining work
camps, mine sites and the Curtin
Detention Centre. It also includes
a refrigerated transport component.
This work is also expected to grow
as construction commences on
planned infrastructure projects in
Western Australia.
The heavy haulage business in
particular offers good opportunities
with the movement of heavy
machinery to new mines and support
to infrastructure projects in the
State’s North West. The forecast is
for continued improvement in this
market sector.
Regal Transport’s compliance with
national safety and quality standards
is attracting greater attention
and helping it to win additional work
as the importance of compliance
becomes better understood.
Business Development
Western Australia is a major focus for
K&S, especially the rapidly expanding
oil, gas and resources sectors.
The acquisition of the Regal Group
provided us with the critical mass and
expertise to tender for this work and
we are currently bidding on a number
of major contracts on new gas and
resources developments.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Activity on the east coast of Australia
has been difficult with the impact
of the high A$ and slowing economy
affecting the volume of work.
However K&S has been able to retain
all its existing major customers,
including negotiating an extension
to its Pacific Steel contract.
This places the Company in a strong
position once the economy recovers
and transport volumes return to
previous levels.
New Zealand
Conditions in New Zealand through-
out 2010-11 were challenging with
the high NZ$ and abnormal
weather conditions impacting on
major export industries.
The forestry industry was affected by
volatility in the exchange rate with
export levels falling and major timber
mills shedding volume. Efforts during
the year to open new markets in Asia
were unrewarded, while domestic
sales were flat, reducing the amount
of timber carried by K&S.
Increased volumes of paper were
imported as a result of the high NZ$.
This resulted in Norske Skog
contracting K&S to carry all paper
that was previously carried by rail
to Auckland. This has been positive
for K&S and provides a solid
domestic base for our operations.
Drought conditions in New Zealand
reduced the amount of dairy product
produced by Fonterra for export in
the first half of the financial year.
However, good weather conditions
in February and March have boosted
feed levels and provide a more
optimistic outlook, although stock
numbers are currently at relatively
low levels.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
LOST TIME INJURIES (LTIFR) PER FINANCIAL YEAR
Kiwi fruit volumes rose 10% during
2010-11, but the year ahead will
depend on the success of efforts to
contain the bacterial infection PSA
which has devastated some kiwi fruit
orchards in the Bay of Plenty.
R
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80
70
60
50
40
30
20
10
0
Human Resources
Human resource management within
K&S was again challenged by the
slowing economy, which affected the
general transport industry.
This resulted in significant attention
being paid to retention and
development of our people to ensure
ongoing customer service focus and
stability within the Group.
Safety and skill development
remained a key commitment across
the broader workforce and we
made significant investment in
management development programs
to enhance the career progression
of key personnel within the business.
Our commitment to equal
opportunity across the Group was
strongly promoted.
The Company has broadened its
commitment to employment
opportunities with the formalisation
earlier this year of an Indigenous
Employment Policy and the
development of a relationship with
the Department of Education,
Employment Workplace Relations.
This relationship is designed to help
engage and develop indigenous
employees in key skill shortage areas
of our business nationally.
Industrially we have maintained
stability during a period of
increased union activity in pursuit of
wage claims.
99/00 00/01 01/02 02/03 03/04
04/05 05/06 06/07
07/08 08/09
09/10 10/11
K&S is continuing to work with the
Australian Trucking Association (ATA)
on a number of environmental
initiatives.
Our fleet upgrade program was
recently completed, ensuring we
have the latest model vehicles with
the lowest possible emissions.
Information Technology
The introduction of an on-line
induction program for agency drivers
was completed during the year.
This enables non K&S drivers to
complete their basic induction
on-line before entering K&S facilities,
reducing costs and improving
efficiency and safety.
Regal and Pacific telecommunications
were integrated within K&S,
providing significant cost savings on
fixed, mobile and data networks.
The integration of rail and sea
modules with the Panorama Transport
Management System was completed
and successfully deployed during the
year, providing K&S with a common
transport management system across
all modes of transport.
Environment
K&S has completed and submitted
its reporting obligations under
the National Greenhouse and Energy
Reporting Act and the Energy
Efficiency Opportunity Program.
During the full year 2010, K&S
generated 115,000 tonnes of CO2
equivalent and continues to look
for ways to reduce its emissions and
energy consumption.
The Government has announced
the details of its carbon tax which is
proposed to be implemented on
1 July 2012. The road transport
industry will be excluded from the
tax until July 2014. Carbon will be
priced initially at $23 per tonne
rising at 2.5% per year in real terms.
It will be replaced by an emissions
trading scheme from 1 July 2015.
The target of the tax is the 500
largest polluters. According to the
Government the most exposed
industries are steel, aluminium, zinc
and pulp and paper. These industries
will receive free permits to assist
them with the introduction of the
carbon tax.
These industries represent a
significant part of our customer base
and we will monitor with interest the
impact of the carbon tax on them.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Panorama provides an improved
ordering system, track and trace
capabilities and a flexible system able
to integrate with customer platforms.
A new freight management system
will be introduced to the DTM
business in the next 12 months which
will provide greater flexibility and
capacity for future growth.
Quality, Occupational
Health, Safety, Environment
and Compliance
K&S maintained its strong focus on
injury prevention, claims and
rehabilitation of injured employees.
This focus, driven by the strong
leadership of the Managing Director
and Executive Managers, has enabled
K&S to maintain lost time frequency
rates at industry low levels (refer
graph on page 10) while absorbing
new acquisitions.
Quality, OHS&E and Compliance
activities were integrated during
the year to improve efficiencies
within K&S.
The integration of these areas has
enabled common issues to be more
quickly identified and far more
efficient implementation of effort.
Following the acquisition of Regal
Transport in July 2010, a detailed
OHS&E training program was
undertaken to bring former Regal
staff and operations into line with
K&S standards nationally.
A significant amount of work has
been undertaken to maintain lost
time injury rates at current low levels,
despite the increase in staff and
movements as a result of the Regal
and Pacific Transport acquisitions.
Since 2005-06, staff levels at K&S
have almost doubled to 1900
nationally. However, the lost time
injury rate has continued to remain
in single digit levels.
This coincides with greater resources
being allocated to OHS&E and
Compliance matters.
Other key initiatives undertaken
during the year to maintain or
improve the strong focus on safety
include:
(cid:129) The Safety Walk, Safety Talk
program has been updated and
now incorporates KPI’s.
(cid:129) Monthly toolbox meetings
continue to raise training
awareness.
(cid:129) Audits of K&S’ prevention, claims
and rehabilitation processes
were completed. They were
found to be compliant with
relevant standards ensuring the
Company meets its conditions
as a self insurer under the
Commonwealth OH&S and
Workers Compensation Schemes.
(cid:129) Safety targets were set and
applied to all levels of the
organisation and to individuals.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
(cid:129) Performance against these
targets was tracked monthly to
identify specific areas requiring
improvement or a specific focus.
(cid:129) All policies and consultation
structures across the organisation
were reviewed to ensure
compliance and the development
of the company Health and Safety
Management arrangements.
(cid:129) A roadshow training program
in safety prevention and risk
management principles was
delivered to all managers and
supervisors, with a particular
focus on Regal and Pacific.
K&S was required to provide a
Licence Improvement Program to
Comcare under the terms of its
licence. This covers injury prevention,
rehabilitation and claims manage-
ment. The report was completed and
forwarded on time.
One key area of attention relates to
harmonisation of OH&S laws across
all Federal, State and Territory
jurisdictions. The policy is being
driven by COAG with Safe Work
Australia developing national
standards and codes of practice.
A draft model Work Health and
Safety Act (WHS) was released for
comment in September 2009 and
in December 2010.
K&S has participated in workshops
to discuss these draft codes
and regulations and is undertaking
considerable work to understand how
our obligations under Comcare will fit
in with the harmonisation process.
K&S has also taken a leading role
in the development of Loading
Unloading Exclusion Zones (LUEZ)
guidelines for industries within the
supply chain.
The LUEZ Steering Committee
consisted of K&S Freighters, Akzo
Nobel, OneSteel, Linfox and WorkSafe
Victoria supported by the Victorian
Transport Association and Transport
Workers Union Vic/Tas through
SafetyAssist.
Incidents arising from interaction
between equipment and people
during loading or unloading are
some of the most significant areas of
injury for truck drivers and mobile
plant equipment operators across
the transport and related industries.
Safety leadership and ongoing
integration of safety into daily
operating systems continues to be a
priority to reduce risk and injuries to
our employees.
Compliance
K&S continues to be accredited to
ISO 9001:2008 standards.
It has also maintained accreditation
under the National Heavy Vehicle
Accreditation scheme for Mass
Management and Fatigue and
Maintenance, TruckSafe, WA Heavy
Vehicle Accreditation and HACCP
(food safety). We continue to work
with our clients and the peak industry
body to ensure the application of
compliance obligations throughout
the transport industry and all other
affected industries.
Industry Representation
K&S remains a member of the ATA
Council, where it is represented on
the Safety Committee, the Skills
and Workforce Committee and the
Transport Economics Committee.
The Company has participated
in work involving the establishment
of a single national heavy vehicle
regulator.
The regulator has now developed
the Heavy Vehicle National Law Draft
Regulatory Impact Statement, which
addresses inconsistencies in road law
across Australia and has identified
some 368 different road rules or
inconsistencies across jurisdictions.
Efforts will be made to address these
inconsistencies to bring about
common road laws across all states
and territories.
New speed compliance laws
developed by the National
Transport Commission for the heavy
vehicle industry have now been
introduced across Australia with the
WA Government introducing the
regulations this year.
Training programs have been held
to ensure all K&S drivers are aware
of their responsibilities under the
new legislation.
12
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
The Year Ahead
We will continue to implement a
number of expansion initiatives aimed
mainly at the oil, gas and resource
sectors in Western Australia.
In conclusion, I extend my thanks to
our customers for their business and
support, the Board for their ongoing
support and, management and
employees for their commitment to
the business.
Legh Winser
Managing Director
13
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
The Directors of the Company in
office at the date of this report,
together with particulars of their
qualifications, experience and special
responsibilities, are set out below.
Tony Johnson Chairman
Age 64, Director since 1986
Legh Winser Managing Director
Greg Boulton AM Deputy Chairman
Tony Johnson BA, LLB, LLM, FAICD
(Companies & Securities), is a lawyer
and an accredited mediator.
Tony is Chairman of the national
law firm Johnson Winter & Slattery.
He has worked extensively in the
corporate advisory and commercial
disputes area. Mr Johnson is also
Chairman of AA Scott Pty Ltd, listed
entity Scott Corporation Limited and
Director of Adelaide Community
Healthcare Alliance.
Member of:
(cid:129) Environmental Committee
(Chairman)
(cid:129) Nomination and Remuneration
Committee
Age 63, Director since December 1999
Age 61, Director since January 1996
Legh Winser, has more than 39 years
experience in the transport industry.
Prior to his appointment as Managing
Director in January 1998 he previously
held other Executive positions within
the Company.
Member of:
(cid:129) Nomination and Remuneration
Committee
(cid:129) Environmental Committee
Greg Boulton BA(Accountancy), FCA,
FCPA, FAICD is Chairman of private
equity fund Paragon Equity Limited,
Chairman of Southern Gold Limited,
Director of Statewide Superannuation
and holds board positions on a
number of privately owned companies.
He has over 30 years experience in
transport related industry.
Member of:
(cid:129) Audit Committee
14
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Richard Nicholson
Age 68, Director since 1986
Richard Nicholson ACA, is a Chartered
Accountant in public practice. He was
previously the Company Secretary
and Finance Officer of the Scott
Group of Companies and is a former
Non-Executive Director of that Group.
Member of:
(cid:129) Nomination and Remuneration
Committee (Chairman)
Bruce Grubb
Age 61, Director since 2007
Bruce Grubb has over 30 years
experience in the transport industry
and is the former Chief Executive
and remains Executive Director of
Scott Transport Industries Pty Ltd.
Mr Grubb is also a Non-Executive
Director of the listed entity Scott
Corporation Limited and a Director
of DGL (Aust) Pty Ltd.
Member of:
(cid:129) Environmental Committee
Ray Smith
Secretary
Chris Bright Secretary since 2005
Chris Bright BEc, LLB, Grad Dip CSPM,
FCIS has held the position of Group
Legal Counsel for 9 years. Mr Bright
was admitted as a solicitor in South
Australia in 1997. He also has
experience working in private practice
in Adelaide, principally in commercial
dispute resolution.
Age 64, Director since 2008
Ray Smith FCPA, FAICD, Dip Com was
Chief Financial Officer of Smorgon
Steel Group for 11 years. During that
period Smorgon Steel Group was
at the forefront of the rationalisation
of the Australian Steel Industry.
Mr Smith is a Director of listed entity
WHK Group Ltd and Transpacific
Industries Limited. Mr Smith is a
trustee of the Melbourne and Olympic
Parks Trust. Mr Smith brings a wealth
of corporate and financial experience
in the areas of strategy, acquisitions,
treasury and capital raising.
Member of:
(cid:129) Audit Committee (Chairman)
15
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
($A Millions unless
otherwise indicated) 2011 Variation 2010 2009 2008 2007
%
Group Revenue 523.4 15.2 454.3 441.0 466.1 418.0
Operating Profit before
Individually Significant
Items, Interest and Tax 29.6 (8.9) 32.5 27.9 33.4 28.5
Individually Significant
Items & Fraud - - - 2.5 - 0.8
Operating Profit before
Interest and Income Tax 29.6 (7.3) 31.5 30.4 33.4 29.3
Interest Expense 8.4 61.1 5.2 5.3 5.4 5.0
Profit Before Tax 21.2 (19.6) 26.3 25.0 28.0 24.3
Income Tax Expense 6.3 16.3 7.6 6.9 8.3 7.3
Operating Profit
after Tax 14.8 (20.9) 18.7 18.2 19.7 17.0
Earnings per
Ordinary Share (cents) 18.3 (30.4) 26.3 26.1 28.6 25.3
Dividends per
Share (cents) 10.0 (28.6) 14.0 12.0 16.0 14.0
Return on
Shareholders Funds 6.9% (34.3) 10.5% 11.6% 13.4% 12.5%
Paid Up Capital 94.3 46.1 64.5 57.4 55.4 52.8
Shareholders Funds 213.6 19.3 179.1 156.2 146.5 136.1
Total Assets 388.0 19.0 326.1 287.6 297.4 281.2
Net Tangible Assets
(book value) per Share $1.65 (10.8) $1.85 $1.87 $1.76 $1.68
16
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Financial overview 2011 2010 % movement
Operating revenue $m 523.4 454.3 15.2
Operating profit after tax $m 14.8 18.7 (20.9)
Net borrowings $m 76.7 52.3 46.7
Shareholders’ funds $m 213.6 179.1 19.3
Earnings per share (basic) cents 18.3 26.3 (30.4)
Dividends per share cents 10.0 14.0 (28.6)
Net tangible assets per share $ 1.65 1.85 (10.8)
Cash flow per share $ 0.39 0.50 (22.0)
Return on Shareholders’ funds % 6.9 10.5 (34.3)
Gearing % 26.4 24.5 7.8
Lost time injuries 36.0 30.0 20.0
Lost time injuries frequency rate % 9.0 9.0 0.0
The Directors’ present their report,
together with the consolidated
financial report of K&S Corporation
Limited ("the Company") and
the consolidated entity, for the
year ended 30 June 2011 and the
Auditors’ Report thereon.
Principal Activities
The principal activities of the
consolidated entity during the course
of the financial year were transport
and logistics, contract management,
warehousing and distribution, and
fuel distribution.
There were no significant changes
in the nature of the activities of the
consolidated entity during the year.
Operating and
Financial Review
The Directors of K&S Corporation
Limited today announced a net profit
after tax of $14.8 million, a decrease
of 20.9% on the previous year.
This has been a difficult year with
weaker trading conditions on the
east coast of Australia compounded
by the impact of floods, Cyclone Yasi,
the closure of the Wesley Vale and
Burnie paper mills in Tasmania and
the lane mix changes of OneSteel’s
distribution patterns.
The continuing high value of the
$A has had a serious impact on the
demand for locally manufactured
goods, both for domestic purposes
and export.
As a result of the higher $A, we
also continue to see increased levels
of imported products that compete
with locally manufactured goods.
The continued contraction of
manufacturing and the softening of
the Australian economy throughout
the financial year have seen reduced
volumes and demand for transport
services which has impacted
on earnings.
17
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
The closure of the Tasmanian Paper
mills at Wesley Vale and Burnie had a
major impact on the utilisation of our
infrastructure across the mainland
states with the reduction of over
320,000 tonnes of paper distribution.
Changes in the distribution mix of
OneSteel’s production from an
interstate linehaul activity to a lower
yielding local movement supporting
the ongoing shift of volume to
Pacific National operated steel trains
also impacted our result negatively.
Earnings were impacted by
the Brisbane floods in January and
Cyclone Yasi in early February.
These two weather related events
stopped all freight movements from
the nation’s manufacturing hub
in Melbourne to Queensland for a
period of three weeks.
Flooding on the Nullarbor in February
also stopped rail movements to Perth
for a further two weeks.
The unusual climatic conditions in
January and February further
exacerbated the normal low seasonal
volumes to unprecedented levels
resulting in losses in both rail and
road operations for this period.
Interest costs were up $3.2 million
on higher debt levels and increased
interest rates as a direct result
of our recent Western Australian
acquisitions of Regal Transport and
Pacific Transport.
The traditional east coast business
revenue declined by 6.3% due to
the mill closures in Tasmania, shift
of product to the steel trains and
weather events.
Our gearing now stands at 26.4%,
which is within our target range.
Earnings per share were 18.3 cents.
Operating revenue for the year was
$523.4 million, an increase of 15.2%
on the previous corresponding period.
Management is extremely focused on
winning new business and reducing
operating costs.
The increase in revenue is a direct
result of the addition of Regal
Transport and Pacific Transport.
In December 2010, we merged the
operations of both Regal Transport
and Pacific Transport into a single
large North West focused business
unit. During the merger of these
two businesses, we experienced some
cultural and people related issues.
The majority of these issues have
been resolved and the performance
of the merged business has
performed strongly in recent months.
The performance of this business
since acquisition was broadly in line
with our expectation.
We have commenced a fleet reduction
programme which will match the
local fleet size with current customer
demand. This fleet rationalisation
will improve the productivity
and utilisation of our equipment.
18
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
We expect interest costs to reduce in
the new financial year as a result
of the equity raising and the reduced
capital spending.
Final Dividend
We have declared a fully franked final
dividend of 5.0 cents per share (last
year 7.0 cents per share). This follows
the interim dividend of 5.0 cents per
share paid in March 2011, making a
total dividend of 10.0 cents per share.
The final dividend will be paid on
31 October 2011, with the date for
determining entitlements being
17 October 2011.
The Dividend Reinvestment Plan
(DRP) will once again be part of the
October 2011 dividend. The DRP will
apply in respect of the fully franked
final dividend of 5.0 cents payable on
31 October 2011.
The terms of the DRP will remain
unchanged with issue price under
the DRP based on the weighted
average trading price for K&S shares
in the five business days ending on
17 October 2011 (the record date
of the final dividend) less a discount
of 2.5%.
Outlook
Providing earnings guidance going
forward remains difficult.
The strong $A continues to impact
on Australian manufacturers.
The outlook for paper appears to be
subdued, while the impact of a
potential carbon tax remains another
issue that will need to be factored in
during the 2012 financial year.
The purchase of Perth based Regal
Transport in July 2010 following the
earlier purchase of Pacific Transport
in January 2010 has provided
us with the capacity and resourcing
necessary to successfully target
opportunities arising from the large
gas, oil and resources developments
in Western Australia.
We see this as being a significant
area of growth for the Company in
the future.
Despite the difficult trading
environment of the past 12 months,
K&S has a strong Balance Sheet and
low gearing with secure customer
contracts.
Significant Changes in the
State of Affairs
Significant changes in the state
of affairs of the consolidated entity
during the financial year were
as follows:
On 8 July 2010, K&S Corporation
Limited acquired the Perth based
Regal Transport. Regal Transport
was formed in March 2009 with
the merger of N&L Transport and
Strategic Transport Services Pty Ltd.
At the time of acquisition, Regal
generated annual revenues of
$50 million and employed over
120 people. The Regal acquisition
will extend the footprint achieved
by the Pacific Transport acquisition
to the oil, gas and resources sectors
of Western Australia.
On December 29, 2010, K&S
successfully completed a fully under-
written one for six Non-Renounceable
Entitlement Offer. The entitlement
offer raised net proceeds of
$25.9 million which were used to
retire debt.
Environmental Regulation
and Performance
The consolidated entity’s operations
are subject to environmental regula-
tions under both Commonwealth
and State legislation in relation to its
transport and storage business and
its fuel business.
19
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
All non critical capital expenditure
will be deferred until the economy
shows signs of a positive recovery.
These measures will result in a
reduction in our overall fixed costs.
Variable costs which include overtime,
subcontractors and agency labour are
being closely monitored to ensure
that costs are minimised.
On December 29, 2010, K&S
successfully completed a fully under-
written one for six Non-Renounceable
Entitlement Offer. The entitlement
offer raised net proceeds of $25.9
million which were used to retire debt.
Dividends
DIVIDENDS PAID TO SHAREHOLDERS
The consolidated entity has a
Board Committee which monitors
compliance with environmental
regulations. The Directors are not
aware of any significant breaches
during the period covered by
this report.
Climate Change
Reporting under the National
Greenhouse and Energy Reporting
Act (NGER) and the Energy Efficiency
Opportunity Program (EEOP) were
completed and submitted in October
and December 2010. The NGER
reporting was introduced as part
of the development of an emissions
trading scheme, while the EEOP
continues and requires companies to
complete energy savings assessments
for up to 80% of total energy use to
the Federal Government by the end
of 2011.
Transport and Warehousing
The transport and warehousing
business is subject to the Dangerous
Goods Acts in Commonwealth and
State Legislation. The consolidated
entity monitors performance and
recorded a number of minor incidents
and no serious incidents during
the year.
Fuel
The fuel business is subject to the
South Australian Environmental
Protection Act 1993 and the South
Australian Dangerous Substances
Act 1979. The consolidated entity
monitors performance and recorded
a number of minor fuel related
incidents during the year. In all cases,
corrective actions have been taken.
Dividends paid or declared by the
Company to members since the end
of the previous financial year were:
1 A final fully franked ordinary
dividend (taxed to 30%) of
7.0 cents per share amounting to
$5,147,975 in respect of the
year ended 30 June 2010 was
declared on 24 August 2010
and paid on 29 October 2010;
2 A fully franked preference
dividend (taxed to 30%) of
4.0 cents per share amounting
to $4,800 in respect of the
year ended 30 June 2010 was
declared on 24 August 2010
and paid on 29 October 2010.
An interim fully franked ordinary
dividend (taxed to 30%) of 5.0 cents
per share in respect of the year
ended 30 June 2011 was declared
on 22 February 2011 and paid on
31 March 2011 amounting to
$4,303,180.
The final dividend declared by
the Directors of the Company on
18 August 2011 and payable on
31 October 2011 in respect of the
year ended 30 June 2011 comprises:
1 A fully franked ordinary dividend
(taxed to 30%) of 5.0 cents per
share amounting to $4,314,275;
and
2 A fully franked preference dividend
(taxed to 30%) of 4.0 cents per
share amounting to $4,800.
The preference share dividends
are included as interest expense in
determining Net Profit.
Interim (cents) Final (cents)
2011
2010
2009
2008
2007
5.0
5.0
7.0
7.0
8.0
7.0
10.0
14.0
12.0
7.0
5.0
8.0
16.0
7.0
14.0
Events Subsequent to
Balance Date
On 18 August 2011, the Directors
of K&S Corporation Limited declared
a final dividend on ordinary shares in
respect of the 2011 financial year.
The total amount of the dividend is
$4,314,275, which represents a fully
franked dividend of 5.0 cents per
share. The dividend is payable on
31 October 2011 and has not been
provided for in the 30 June 2011
financial statements.
The Dividend Reinvestment Plan
(DRP) will apply to the final dividend
and the issue price for shares under
the DRP will be based on the
weighted average trading price of
K&S shares in the five business days
ending on 17 October 2011 (the
record date of the final dividend),
less a discount of 2.5%.
Other than the matters above,
there has not arisen in the interval
between the end of the financial year
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.
20
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
1 July 2012, as currently drafted
heavy on-road transport activities will
be excluded from the carbon pricing
regime until 30 June 2014.
Under the exposure draft legislation,
from 1 July 2014 the amount of
the business fuel tax credit (“FTC”)
claimed by K&S in respect of
purchases of diesel fuel will be reduced
by the effective price on carbon.
Based on the carbon price of $25.40
per tonne to apply in 2014/15 under
the exposure draft legislation, the
effective price on carbon for diesel
fuel would be 6.858 cents per litre.
Under the exposure draft legislation,
the carbon pricing regime is to
move from a fixed price to a market
determined price on 1 July 2015.
From 1 July 2015, it is proposed that
the effective price on carbon would
be adjusted six monthly in line with
that market determined price.
K&S currently anticipates that any
reduction in the FTC that it is able
to claim in respect of diesel fuel
purchases for heavy on-road transport
activities from 1 July 2014 will be
passed through to customers via fuel
surcharges. In the intervening period
from 1 July 2012 to 30 June 2014,
K&S is likely to experience some
minor increases in its cost base as a
result of any introduction of a price
on carbon.
K&S is also unable to predict what
impact the imposition of the
proposed price on carbon may have
on its customer base generally, and
the manufacturing sector in particular.
Directors
The Directors of the Company in
office at any time during or since the
end of the financial year are:
Tony Johnson (Non-Executive Chairman)
Legh Winser
(Managing Director)
Greg Boulton (Deputy Chairman)
Richard Nicholson
Bruce Grubb
Ray Smith
Secretary – Chris Bright BEc, LLB,
Grad Dip CSPM, FCIS
With the exception of Mr Winser, all
Directors are Non-Executive Directors.
Particulars of Directors’ qualifications,
experience, special responsibilities and
other relevant Directorships are on
pages 14 and 15 of the Annual Report.
Directors’ Interests
The beneficial interest of each
Director in their own name in the
share capital of the Company
shown in the Register of Directors'
Shareholdings as at the date of this
report is:
Ordinary Shares
Mr R Nicholson 11,213
Mr B Grubb 17,034
Mr L Winser 423,750
Directors of the Company have
relevant interests in additional shares
as follows:
Ordinary Shares
Mr G Boulton 184,375
Mr T Johnson 257,789
Mr L Winser 669,274
Mr R Smith 20,789
Mr R Nicholson 15,345
Mr B Grubb 108,171
Likely Developments
It is anticipated that the consolidated
entity will continue to expand
transport and logistics operations
during the next financial year by
further extending its services
throughout Australia and adopting
the latest technology in the industry
to contain costs and enhance the
services offered to customers.
The Federal Government recently
released exposure draft legislation
designed to underpin its proposed
carbon pricing regime. While the
draft exposure legislation targets the
introduction of a carbon tax from
General Disclosures
K&S Corporation Limited is a
company limited by shares that
is incorporated and domiciled
in Australia.
21
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Board of Directors
Back row l to r:
Bruce Grubb,
Ray Smith,
Richard Nicholson,
Chris Bright (Secretary)
Front row l to r:
Greg Boulton,
Tony Johnson,
Legh Winser
Directors’ Meetings
The number of Directors' meetings (including meetings of Committees of Directors) and number of meetings attended by
each of the Directors of the Company during the financial year were:
Director
Directors’ Meetings
Audit Committee
Meetings
Nomination and
Remuneration
Committee Meetings
Environmental
Committee Meetings
No. attended No. held No. attended No. held No. attended No. held No. attended No. held
Mr T Johnson 11 11 - - 3 3 4 4
Mr G Boulton 11 11 4 4 - - - -
Mr R Smith 11 11 4 4 - - - -
Mr B Grubb 11 11 - - - - 4 4
Mr R Nicholson 11 11 - - 3 3 - -
Mr L Winser 11 11 - - 2* 3 4 4
In addition to the eleven regular meetings, there were sixteen other special meetings of Directors held during the course
of the year.
* Mr Winser was absent from one Nomination and Remuneration Committee meeting as it was in relation to his performance and salary package.
22
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Officers and Secretaries of the
Company and its controlled entities,
except where the liability arises out of
conduct involving a lack of good faith.
Insurance Premiums
Since the end of the previous
financial year, the Company has paid
insurance premiums of $39,972
in respect of Directors and Officers’
Liability insurance contracts for
current and former officers, including
Directors, Executive Officers and the
Secretaries of the Company and its
controlled entities.
The insurance premiums relate to:
(cid:129) Costs and expenses incurred
by the relevant officers in
successfully defending
proceedings, whether civil
or criminal;
(cid:129) Other liabilities that may arise
from their position, with the
exception of conduct involving a
wilful breach of duty or position
to gain a personal advantage.
The officers of the Company covered
by the policy include the current
Directors; T Johnson, G Boulton,
R Nicholson, R Smith, B Grubb and
L Winser.
Other officers covered by the
contract are Executive Officers and
the Secretaries of the Company
and Directors and the Secretaries
of controlled entities (who are not
also Directors of the Company),
General Managers and other Executive
Officers of controlled entities.
Tax Consolidation
Effective 1 July 2002, for the purposes
of income taxation, K&S Corporation
Limited and its domestic based 100%
owned subsidiaries formed a tax
consolidated group.
Members of the Group entered into
a tax sharing arrangement in order
to allocate income tax expense to
the wholly owned subsidiaries on a
pro-rata basis. In addition, the
agreement provides for the allocation
of income tax liabilities between the
entities should the head entity default
on its tax payment obligations.
Corporate Governance
In recognising the need for the
highest standards of corporate
behaviour and accountability, the
Directors of K&S Corporation Limited
support the principles of corporate
governance. The Company’s
Corporate Governance Statement
commences on page 28 of the
Annual Report.
Rounding Off
The Company is of a kind referred
to in ASIC Class Order 98/100 dated
10 July 1998 and in accordance
with that Class Order, amounts in
the Financial Report and Directors’
Report have been rounded off to
the nearest thousand dollars, unless
otherwise stated.
Auditor Independence and
Non-Audit Services
The entity’s Auditor, Ernst & Young
have provided the economic entity
with an Auditors’ Independence
Declaration which is on page 98 of
this report.
Non-audit Services
No non-audit services were provided
by the entity’s Auditor, Ernst &
Young.
23
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Indemnification and
Insurance of Directors
and Officers
Indemnification
The Company indemnifies current
and former Directors, Executive
Officers and the Secretaries of the
Company and its controlled entities
against all liabilities, costs and
expenses to another person (other
than the Company or a related body
corporate) to the maximum extent
permitted by law that may arise from
their position as Directors, Executive
REMUNERATION REPORT
(audited)
This remuneration report outlines the
Director and Executive remuneration
arrangements of the Company and
the Group in accordance with the
requirements of the Corporations Act
2001 and its Regulations.
For the purposes of this report, Key
Management Personnel (KMP) of the
Group are defined as those persons
having authority and responsibility for
planning, directing and controlling
the major activities of the Company
and the Group, directly or indirectly,
including any Director (whether
executive or otherwise) of the parent
company, and includes the five
executives in the Group receiving the
highest remuneration.
For the purposes of this report, the
term executive encompasses the
Managing Director, Senior Executives,
General Managers and Secretaries
of the Parent and the Group.
Details of the KMP (including the
five executives in the Group receiving
the highest remuneration) are:
i) Directors
Mr T Johnson Non-Executive Chairman
Mr G Boulton Non-Executive Deputy
Chairman
Mr R Smith Non-Executive
Mr R Nicholson Non-Executive
Mr B Grubb Non-Executive
Mr L Winser Managing Director
ii) Executives
Mr B Walsh Chief Financial Officer
Mr C Bright Group Legal Counsel &
Company Secretary
Mr G Wooller Chief Operating Officer
Mr P Sarant Executive General Manager
DTM
Mr G Everest Executive General Manager
Regal Transport –
Appointed 10 October 2010
Ms K Evans National Human
Resources Manager
Mr S Fanning General Manager
K&S Freighters –
Resigned 27 August 2010
Ms C De Gois Chief Information Officer –
Resigned 9 July 2010
Remuneration Philosophy
Remuneration Structure
The performance of the Company
depends upon the quality of its
Directors and Executives. To prosper,
the Company must attract, motivate
and retain highly skilled Directors and
Executives. To this end, the Company
adopts the following key principles in
its remuneration policy:
In accordance with best practice
corporate governance, the structure
of Non-Executive Director, Executive
Director and Senior Manager
remuneration is separate and distinct.
Non-Executive Director
Remuneration
(cid:129) Remuneration is set at levels
Objective
that will attract and retain good
performers and motivate and
reward them to continually
improve business performance.
(cid:129) Remuneration is structured to
reward employees for increasing
Shareholder value.
(cid:129) Rewards are linked to the
achievement of business targets.
The Nomination and
Remuneration Committee
The Nomination and Remuneration
Committee of the Board of Directors
of the Company is responsible
for reviewing compensation
arrangements for the Directors, the
Managing Director and the Senior
Management team.
The Nomination and Remuneration
Committee assesses the appropriate-
ness of the nature and amount of
remuneration of Directors and Senior
Managers on a periodic basis by
reference to relevant employment
market conditions, with the overall
objective of ensuring maximum
stakeholder benefit from the retention
of a high quality Board and Executives.
While the Nomination and
Remuneration Committee reviews the
remuneration paid to Non-Executive
Directors and the Managing Director,
and the aggregate remuneration
paid to the Senior Management team,
the Board of Directors has ultimate
responsibility for determining
these amounts.
The Board seeks to set aggregate
remuneration at a level which
provides the Company with the
ability to attract and retain quality
Directors, whilst incurring a cost
which is acceptable to Shareholders.
Structure
The Constitution and the ASX Listing
Rules specify that the aggregate
remuneration of Non-Executive
Directors’ shall be determined from
time to time by a general meeting.
The latest determination was at
the Annual General Meeting held
on 18 November 2007 when
Shareholders approved an aggregate
remuneration of $500,000 per year.
The amount of aggregate
remuneration sought to be approved
by Shareholders and the amounts
paid to Directors is reviewed annually.
The Board considers advice from
external consultants, as well as the
fees paid to Non-Executive Directors
of comparable companies when
undertaking the annual review. Each
Non-Executive Director receives a fee
for being a Director of the Company.
Non-Executive Directors have long
been encouraged by the Board to
hold shares in the Company
(purchased by the Director on the
market). It is considered good
corporate governance for Directors
to have a stake in the Company
whose Board he or she sits on.
The remuneration of Non-Executive
Directors for the period ended
30 June 2011 is detailed on page 27
of this report.
24
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Executive Director and
Senior Manager Remuneration
Objective
The Company aims to reward
Executives with a level and mix of
remuneration commensurate with
their position and responsibilities
within the Company to:
(cid:129) reward Executives for Company,
business unit and individual
performance against targets
set by reference to appropriate
benchmarks;
(cid:129) align the interests of Executives
with those of Shareholders;
(cid:129) link reward with the strategic
goals and performance of the
Company; and
(cid:129) ensure total remuneration is
competitive by market standards.
Structure
In determining the level and make
up of Executive remuneration, the
Nomination and Remuneration
Committee seeks external information
detailing market levels of comparable
executive roles from which the
Committee makes its recommendation
to the Board.
For the Managing Director and the
other Senior Executives, remuneration
programs are balanced with a mix of
fixed and variable rewards. The make
up and eligibility criteria for short
term incentives are recommended
to the Board by the Nomination
and Remuneration Committee prior
to the commencement of each
financial year.
For the year ended 30 June 2011,
the adoption of at risk short term
incentives comprising 20% and
10% of the base emolument of the
Managing Director and Executives
respectively was approved by
the Board.
The payment of such short term
incentives can either be as a cash
bonus or superannuation
contributions and is in addition to the
base emolument.
25
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
earnings per share, and improving
the Company’s capacity to pay
dividends, the Board believes that
aligning the payment of short term
incentives to the attainment by
the Company of budgeted profit
before tax on a normalised basis is
appropriate and in the interests of
Shareholders.
For the year ended 30 June 2011,
the eligibility criteria for the payment
of short term incentives were not
satisfied and no short term incentive
payment was made to the Managing
Director or Executives.
The Board has approved the adoption
of at risk short term incentives
comprising 25% and 10% of the
base emolument for the Managing
Director and Executives respectively
for the year ended 30 June 2012
and in all other respects on the same
basis as outlined above. The total
short term incentives payable to the
Managing Director and Executives
for the year ended 30 June 2012,
if eligibility criteria are met, will be
$347,760.
Employment Contracts
It is the Nomination and
Remuneration Committee’s policy that
fixed term contracts are only entered
into with the Managing Director and
with no other Executives.
The Managing Director, Mr Legh
Winser, has a contract of employment
with the Company. His remuneration
comprises a salary and allowances
package. On early termination,
Mr Winser would receive up
to 12 months salary and benefits.
The contract does not contain
express terms as to the duration of
the contract, periods of notice and
required termination details.
Mr Winser is not present whilst
discussions are held in relation to his
performance and salary package.
Employee Share Plan
In the year ended 30 June 2011, no
offers were made nor were any
shares issued to employees under
the Employee Share Plan (“the Plan”)
approved by Shareholders at the
Company’s Annual General Meeting
on 21 November 2006. Directors
will make offers to eligible employees
under the Plan in the year ended
30 June 2012.
Directors’ Retirement Benefits
A change to the Directors’ Retirement
Benefits calculation was made in July
2004 to freeze accumulation of years
of service of Directors as at 30 June
2004. No Director commencing after
1 July 2004 is eligible for any benefits
under the retirement scheme.
The expenditure provided (not paid)
during the year ended 30 June 2011
is attributable only to the method
of calculation which involves the
averaging of the fees paid to
Directors, as per the benefits scheme
in operation up to 30 June 2004.
Further details of the method of
calculating entitlements for eligible
Directors under the Retirement
Benefits Scheme are also set out in
the Corporate Governance Report
on pages 32 to 33.
Company Performance
The graph below shows the
performance of the Company, as
measured by the Company’s
operating profit before individually
significant items, interest and tax.
NORMALISED EBIT
2011
$m
29.6
In addition, Dividends paid to
Shareholders are disclosed on page 20
of the Directors’ report.
26
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Payment of the short term incentive
is conditional upon the achievement
by the Company of budgeted profit
after tax on a normalised basis and
excluding any one off or non-trading
items (eg, profit on the sale of real
estate). Where budgeted profit after
tax on a normalised basis is not
achieved, no short term incentive is
payable to the Managing Director
and Executives.
As the Company’s annual budget for
operating profit after tax is set
with a view to increasing the profit
generated by the Company, growing
Remuneration of Key Management Personnel and the five highest Paid Executives of the Company and the Group
Remuneration for the year ended 30 June 2011
Non-Executive
Directors
Salary &
Fees
$
Short-Term
Non-Cash
Benefits
$
Incentives+
$
Other Long-Term Post Employment Total
Long Service
Benefit
$
Retirement
Benefits
$
Super
Contributions
$
Performance
Related
%
$
T Johnson 2011 110,000 - - - 20,000 12,100 142,100 -
2010 90,000 - - - 10,000 9,900 109,900 -
G Boulton 2011 65,000 - - - 6,500 7,150 78,650 -
2010 52,000 - - - 3,500 5,720 61,220 -
R Smith 2011 65,000 - - - - 7,150 72,150 -
2010 33,000 - - - - 24,720 57,720 -
B Grubb 2011 65,000 - - - - 7,150 72,150 -
2010 52,000 - - - - 5,720 57,720 -
R Nicholson 2011 65,000 - - - 13,000 7,150 85,150 -
2010 52,000 - - - 7,000 5,720 64,720 -
Total 2011 370,000 - - - 39,500 40,700 450,200
2010 279,000 - - - 20,500 51,780 351,280
Executive Director
L Winser 2011 479,133 - 78,452 11,625 - 50,000 619,210 -
2010 375,550 74,000 79,743 9,389 - 45,066 583,748 12.68
Other Key
Management Personnel
B Walsh 2011 250,000 - 27,031 6,250 - 35,630 318,911 -
2010 213,150 21,000 22,527 5,329 - 28,055 290,061 7.24
C Bright 2011 206,193 - 27,545 5,000 - 25,000 263,738 -
2010 162,400 16,000 21,735 4,060 - 21,888 226,083 7.08
G Wooller 2011 320,679 - 26,298 5,334 - 50,000 402,311 -
2010 274,050 27,000 21,423 4,568 - 35,363 362,404 7.45
P Sarant 2011 329,451 - 28,804 5,167 - 25,000 388,422 -
2010 270,764 26,000 28,524 4,399 - 25,000 354,687 7.33
G Everest # 2011 173,846 - 9,531 2,882 - 20,862 207,121 -
2010 - - - - - - - -
K Evans 2011 180,692 - 16,750 3,000 - 23,537 223,979 -
2010 152,250 15,000 17,027 2,538 - 18,270 205,085 7.31
S Fanning** 2011 62,097 - 3,063 980 - 6,061 72,201 -
2010 327,408 31,000 26,951 5,322 - 25,000 415,681 7.46
C De Gois* 2011 3,962 - 2,284 85 - 682 7,013 -
2010 192,076 - 20,640 3,384 - 25,526 241,626 -
Total 2011 2,006,053 - 219,758 40,323 - 236,772 2,502,906
Executive KMP 2010 1,967,648 210,000 238,570 38,989 - 224,168 2,679,375
Totals 2011 2,376,053 - 219,758 40,323 39,500 277,472 2,953,106
2010 2,246,648 210,000 238,570 38,989 20,500 275,948 3,030,655
* C. De Gois resigned on 9 July 2010.
** S. Fanning resigned on 27 August 2010.
# G. Everest met the definition of a Key Management Person on his appointment as Executive General Manager Regal Transport on 10 October 2010.
+ Performance incentives accrued in the 2010 June accounts were paid in September 2010.
Executives qualified for 100% of the short-term incentive available for the year ended 30 June 2010.
Signed in accordance with a resolution of the Directors.
T Johnson
Chairman
18th August 2011
L Winser
Managing Director
18th August 2011
27
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
The Board of Directors of K&S
Corporation Limited is responsible
for the governance of the
consolidated entity. The Board
guides and monitors the business
and affairs of K&S Corporation
Limited on behalf of the
Shareholders by whom they are
elected and to whom they are
accountable.
In keeping with the Australian
Securities Exchange Corporate
Governance Council’s updated
Corporate Governance Principles
and Recommendations, this
statement outlines the Company’s
compliance with the ASX principles.
The K&S Corporation Limited
Corporate Governance Statement
is structured with reference to the
Corporate Governance Council’s
principles and recommendations,
which are as follows:
Principle 1
Lay solid foundations for
management oversight
Principle 4
Safeguard integrity in
financial reporting
Principle 5
Make timely and balanced disclosure
Principle 6
Respect the rights of shareholders
Principle 7
Recognise and manage risk
Principle 8
Principle 2
Remunerate fairly and responsibly
Structure the board to add value
Principle 3
Promote ethical and responsible
decision making
28
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
The Roles of the Board
and Management
The Board has a Charter which
establishes the relationship between
the Board and Management and
describes their functions and
responsibilities in a manner which is
consistent with ASX Principle 1.
The role of the Board is to oversee
and guide the Management of
K&S Corporation Limited and its
businesses with the aim of protecting
and enhancing the interests of
Shareholders while taking into
account the interests of employees,
customers, suppliers and the
community at large.
The Board is responsible for setting
and approving the strategic direction
of the Company, establishing goals
for Management and monitoring the
achievement of those goals.
The Managing Director is responsible
to the Board for the day to day
management of the Company.
All Management, including the
Managing Director, have clear
statements of roles and responsibilities.
The performance of Key Executives
is reviewed not less than annually by
the Managing Director.
The review involves an open exchange
of ideas between the Managing
Director and Key Executives.
The performance of Key Executives
is reviewed against matters including
financial targets (eg., budget),
OHS&E management, and
achievement of specific strategic and
business objectives.
Structure of the Board
The Board currently comprises five
Non-Executive Directors, including
the Chairman, and one Executive
Director, namely, the Managing
Director.
The qualifications, experience and
periods of service of each of the
Directors is set out on pages 14-15
of the Annual Report.
Directors are expected to bring
independent views and judgement to
the Board’s deliberations. In response
to the ASX Principles, the Board
Charter requires the Board to include
a majority of Non-Executive Directors,
a Non-Executive Chairman and to
have a different person filling the
roles of Chairman and Managing
Director. The Chairman of the Audit
Committee cannot be Chairman of
the Board.
Directors of the Company are
considered to be independent when
they are independent of management
and free from any business or other
relationship that could materially
interfere with or could reasonably
be perceived to materially
interfere with the exercise of their
unfettered independent judgement.
Materiality of business and other
relationships held by a Director is
considered from both the Company
and individual Director perspective.
The determination of materiality
requires consideration of both
quantitative and qualitative elements.
Quantitative factors relate to the
financial value of the business or
other relationship. Qualitative factors
considered include whether a
relationship is strategically important,
the competitive context of the
relationship, the nature of the
relationship and the contractual or
other arrangements governing it
or other factors which point to the
actual ability of the Director in
question to influence the direction
of the Company other than in
the best interests of the Company
as a whole.
The Board has reviewed the position
of each of the six Directors in office at
the date of this report and considers
the following Directors of the
Company to be independent:
Name
Position
G Boulton Non-Executive Director
R Smith
Non-Executive Director
R Nicholson Non-Executive Director*
*
In previous years, Mr Nicholson has been
considered by the Board as not being
independent as a result of his directorships
of a number of companies within the Scott
Group of privately owned companies until
25 February 2008, one of which (AA Scott
Pty Ltd) is the largest Shareholder of K&S
Corporation Limited. However, consistent
with the criteria in the ASX Principles,
the Board now considers Mr Nicholson
to be independent as more than three
years have passed since he ceased to be a
director of those entities and the Board is
of the view that he is free of any business
or other relationship that could materially
interfere with the independent exercise of
his judgment.
The Board assesses the independence
of new Directors upon appointment
and reviews their independence,
and the independence of the other
Directors, as appropriate.
The Board considers the following
Directors as not independent:
L Winser Managing Director
T Johnson Non-Executive Director
(Chairman)
Mr Johnson is a Director of AA Scott
Pty Ltd, as well as Chairman
of Scott Corporation Limited (a
company controlled by AA Scott Pty
Ltd, the largest Shareholder of K&S
Corporation Limited).
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
B Grubb Non-Executive Director
Mr Grubb is the former Chief
Executive and remains an Executive
Director of Scotts Transport
Industries Pty Ltd, a Director of Scott
Corporation Limited, and a Director
of a number of other companies
within the Scott Group of companies,
one of which (AA Scott Pty Ltd)
is the largest Shareholder of K&S
Corporation Limited.
The Board structure is consistent with
ASX Principle 2, with the exception of:
(cid:129) Recommendation 2.1 which
requires that the majority of the
Board be independent Directors.
The Board considers that the
mix of skills and experience of
and the contributions by the
non-independent Non-Executive
Directors offsets the benefits to
the Company of having a majority
of independent Non-Executive
Directors. However, as part of
the review of Board Performance
(refer this page), Directors
have regard to the balance of
independent and non-indepen-
dent Non-Executive Directors.
(cid:129) Recommendation 2.2 which
requires that the Chairman
of the Board be an independent
Director. Mr Johnson is
Chairman of the Board and is
not considered by Directors to
be independent. The Board
considers that the skills and
experience that Mr Johnson
brings as Chairman add value to
the deliberations and functioning
of the Board. Further, K&S
Corporation Limited’s Deputy
Chairman, Mr Boulton, is an
independent Non-Executive
Director who is able to fulfil the
role of Chairman where and to
the extent that any conflicts of
interest arise for Mr Johnson.
(cid:129) Recommendations 2.4 and 8.1
which require that the
Nomination and Remuneration
Committee have a majority
of independent Non-Executive
Directors as members.
Mr Nicholson was the Chairman
of the Nomination and
Remuneration Committee during
the course of the year and is
considered by Directors to be an
independent Director. However,
the other current members of the
Nomination and Remuneration
Committee (Messrs Johnson
and Winser) are not considered
by Directors to be independent.
As the Nomination and
Remuneration Committee is only
empowered to make
recommendations to the Board,
Directors are of the view that
any decisions as to nomination
and remuneration are still subject
to an appropriate level of scrutiny
by independent Non-Executive
Directors as those decisions are
reserved to the Board.
There are procedures in place, agreed
by the Board, to enable Directors,
in furtherance of their duties, to seek
independent professional advice at
the Company’s expense.
The Board meets formally eleven
times a year and on other occasions
as required. During the course of
the year, the Board’s sub-committees
meet on a number of occasions to
deal with their specific responsibilities
in relation to the Company’s
business. With the exception of the
Nomination and Remuneration
Committee, Senior Management
attend and are a vital ingredient to
the sub-committees, making
presentations, providing information
and responding to questions of the
Directors. All Directors have
unrestricted access to all employees
of the Group and, subject to the law,
access to all Company records and
information held by employees and
external advisers. The Board receives
regular financial and operational
reports from Senior Management to
enable it to carry out its duties and
responsibilities.
Retirement and Re-election
of Directors
The Company’s Constitution requires
one third of the Directors, other
than the Managing Director, to retire
from office at each Annual General
Meeting. Directors who have been
newly appointed by the Board
during the year are also required to
retire from office at the next Annual
General Meeting and are not taken
into account in determining the
number of Directors retiring at that
Annual General Meeting. Retiring
Directors are eligible for re-election
by Shareholders.
Review of Board Performance
The Board has implemented a process
for the regular review of its overall
performance, consistent with ASX
Recommendation 2.5. Regular review
involves both analysis by the Board
of the results of a questionnaire
completed by all Directors and
discussion between the Chairman
and each of the Directors.
The Board’s performance review
departs from Recommendation 2.5
as the review is conducted by the
full Board, and not the Nomination
and Remuneration Committee.
As the Board is comprised of only six
Directors, the Board considers this
the most effective way to address its
own performance.
30
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Committees of the Board
Three standing Board Committees
assist the Board in the discharge of
its responsibilities.
These committees are:
(cid:129) The Audit Committee
(cid:129) The Nomination and
Remuneration Committee
(cid:129) The Environmental Committee
Audit Committee
The Board has an established Audit
Committee, which operates under a
Charter approved by the Board.
It is the Board’s responsibility to
ensure that an effective internal
control framework exists within the
entity. This includes internal controls
to deal with both the effectiveness
and efficiency of significant business
processes, the safeguard of assets,
the maintenance of proper
accounting records, and the reliability
of financial information.
The Board has delegated to the Audit
Committee the responsibility for the
ongoing monitoring of a framework
of internal control and ethical
standards for the management of the
consolidated entity, consistent with
ASX Principle 4.
The Audit Committee also provides
the Board with additional assurance
regarding the reliability of the
financial information for inclusion in
the financial reports. All members of
the Audit Committee are currently
independent Non-Executive Directors.
Among the specific responsibilities
set out in the Audit Committee
Charter, the Audit Committee reviews
all published accounts of the Group,
reviews the scope and independence
of external audits, monitors and
assesses the systems for internal
compliance and control, and
risk management and advises on the
appointment, performance and
remuneration of the external auditors.
The members of the Audit Committee
during the year were:
Mr Smith (Chairman)
Mr Boulton
Mr Smith is Chairman of the Audit
Committee. The Board considers
Mr Smith to be independent using
the ASX Council’s definition of
independence.
The Board considers Mr Boulton to be
independent using the ASX Council’s
definition of independence.
The ASX Council Recommendation
4.2 recommends that the Audit
Committee consist of at least three
members who are all Non-Executive
and the majority independent.
The Board is of the view that the
current composition of the Audit
Committee is appropriate given
the size of the business, the extensive
financial skills, and industry knowl-
edge of the current members of the
Audit Committee.
31
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
The Managing Director, the Chief
Financial Officer, the Company
Secretary, the Group Commercial
Manager, the external Auditors
and any other persons considered
appropriate attend meetings of the
Audit Committee by invitation.
The Committee also meets from time
to time with the external Auditors,
independent of management.
The Audit Committee met on
four occasions during the course of
the year.
Nomination and
Remuneration Committee
Consistent with ASX Principle 8,
the Board has a Nomination and
Remuneration Committee with a
formal Charter. The role of the
Committee is to review and make
recommendations to the Board on
remuneration packages and policies
applicable to the Managing Director,
Senior Executives, Salaried Staff and
Directors themselves.
The Nomination and Remuneration
Committee does not make
recommendations to the Board as to
the nomination and appointment of
new Directors. As the Board of K&S
Corporation Limited is comprised
of only six Directors, Directors are of
the view that the nomination and
appointment of new Directors is most
efficiently discharged by the Board.
When appointing new Directors,
matters the Board have regard
to include the spread of skills and
qualifications, experience, and
independence of both the potential
appointee and the existing members
of the Board.
Remuneration levels are competitively
set to attract and retain appropriately
qualified and experienced
Directors and Senior Executives.
The Nomination and Remuneration
Committee obtains independent
advice on the appropriateness of
remuneration packages. It also plays
a role in evaluation of the perform-
ance of the Managing Director and
management succession planning.
This role includes the responsibility
for incentive performance packages,
superannuation entitlements,
retirement and termination
entitlements, fringe benefit policies,
professional indemnity and liability
insurance policies.
The members of the Nomination and
Remuneration Committee during the
year were:
Mr Nicholson (Chairman)
Mr Winser
Mr Johnson
The Nomination and Remuneration
Committee meets at least twice a
year and as required. The Committee
met formally three times, but also
informally on several other occasions
during the year.
The Company’s Non-Executive
Directors receive only fees and
superannuation for their services and
the reimbursement of reasonable
expenses. The fees paid to the
Company’s Non-Executive Directors
reflect the demands on, and
responsibilities of, those Directors.
The advice of independent
remuneration consultants is taken as
well as benchmarking against external
remuneration data for comparable
companies to establish that the
Directors’ fees are in line with market
standards. Non-Executive Directors
do not receive any shares, options or
other securities in addition to their
remuneration.
A Directors’ fee pool limit of
$500,000 for Non-Executive Directors
was approved by Shareholders
at the Annual General Meeting on
18 November 2007. This fee pool
is only available to Non-Executive
Directors. The Non-Executive
Directors received $65,000 each and
the Chairman was paid $110,000 in
2010/11. Committee membership
does not entitle a Director to
additional fees.
The Managing Director, Mr Legh
Winser, has a contract of employment
with the Company. His remuneration
comprises a salary and allowances
package. On early termination,
Mr Winser would receive up to
twelve months salary and benefits.
The contract does not disclose
the duration of the contract, period
of notice and required termination
details. Mr Winser is not present
while discussions are held in
relation to his performance and
salary package.
The Non-Executive Directors’
retirement benefits scheme
entitlements were frozen in years of
service as at 30 June 2004 and will
be paid on retirement. Under the
terms of the Non-Executive
Directors’ retirement benefit scheme,
participating Directors are entitled to
receive up to the total remuneration
paid to them in the last three years
upon their retirement in accordance
with the following formula:
RB = TR x (Y ÷ 15)
where
RB = retirement benefit payable to
the Director on retirement
TR = the total remuneration paid
to the Director in the last
three years
Y = the years of service of the
Director prior to 30 June 2004,
provided that Y shall not
exceed 15
32
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Non-Executive Directors appointed
after 30 June 2004 are not eligible
to participate in the retirement
benefits scheme.
The structure and disclosure of the
Company’s remuneration of
Non-Executive Directors is consistent
with ASX Principle 8.
Further details of Directors’
remuneration, superannuation and
retirement payments are set out
in the Directors’ Report on pages 24
to 27.
Environmental Committee
The Board has an Environmental
Committee, which operates under
a Charter approved by the Board.
The role of the Committee is
to monitor environmental incidents,
exposures and compliance with
environmental regulations.
The members of the Environmental
Committee during the year were:
Mr Johnson (Chairman)
Mr Winser
Mr Grubb
The Company Secretary acts
as Secretary to the Environmental
Committee.
The Environmental Committee is
responsible for:
(cid:129) reviewing and recommending,
as appropriate, changes to
the Company’s environmental
policies;
(cid:129) ensuring the adequacy of
environmental procedures
and controls implemented
by Management;
(cid:129) reporting to the Board on
Company compliance with
environmental procedures
and controls;
(cid:129) reviewing the adequacy and
effectiveness of resources
devoted to informing employees
of their environmental
obligations and to training
employees to operate within
Company guidelines and
legal requirements;
(cid:129) monitoring conformance by
the Company with mandatory
environmental reporting and
improvement regimes;
(cid:129) regular monitoring of licence
requirements, with performance
against licence conditions
reported to the various State
regulators on a regular basis; and
(cid:129) reviewing any environmental
incidents that have occurred
and monitoring actions taken
or to be taken.
To enable it to meet its responsibilities,
the Committee has established a
regular internal reporting process.
The Environmental Committee met
four times during the year.
Financial Reporting
Consistent with the ASX Principle 4
and Recommendation 7.3,
the Company’s financial report
preparation and approval process
for the financial year ended
30 June 2011, involved both the
Managing Director and Chief
Financial Officer certifying that the
Company’s financial reports present
a true and fair view, in all material
respects, of the Company’s financial
condition and operational results
and are in accordance with relevant
accounting standards.
In accordance with Recommendation
7.2, this sign off also includes
assurances as to the Company’s risk
management processes and internal
compliance and control procedures.
Audit Governance and
Independence
As part of the Company’s
commitment to safeguarding integrity
in financial reporting, the Company
has implemented a review process
to monitor the independence and
competence of the Company’s
external Auditor.
The Company’s current external
Auditors are Ernst & Young.
The effectiveness, performance and
independence of the external Auditor
is reviewed by the Audit Committee
at least annually. The format
of that review includes discussing
the performance of the External
Auditors with Management while the
Auditors are not present. The Audit
Committee also met with senior
members of Ernst & Young to
review the performance of the lead
audit partner.
If it becomes necessary to replace
the external Auditor for performance
or independence reasons, the
Audit Committee will then formalise
a process for the selection and
appointment of new Auditors.
Ernst & Young has a policy for the
rotation of the lead audit partner for
their clients. The lead audit partner
and the audit review partner for the
Company were last rotated at the
commencement of the year ended
30 June 2008.
The Audit Committee’s Charter
requires the provision of non-audit
services to the Company or its business
units by the external audit firm to be
approved by the Audit Committee.
In accordance with sections 249V and
250T of the Corporations Act 2001
(Cth), Ernst & Young attend and are
available to answer questions at the
Company’s Annual General Meetings.
33
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Risk Management
Consistent with ASX Principle 7,
the Company is committed to the
identification, monitoring and
management of material risks in the
business. Those material risks include
a full spectrum of financial, strategic,
compliance, and operational risks.
While not wishing to stifle the
entrepreneurial endeavours of Senior
Executives, the Board takes a relatively
conservative approach to risk.
The Board requires that Management
have in place a system to identify,
monitor, and manage the material
business risks faced by the Company.
The management systems in place
as part of the risk management
controls include:
(cid:129) Capital expenditure
commitments above set limits
obtain prior Board approval.
(cid:129) Financial exposures are controlled
and the use of derivatives is
limited to interest rate swaps.
(cid:129) Occupational health and safety
standards and management
systems are monitored and
reviewed to achieve high
standards of performance and
compliance with regulations.
(cid:129) Business transactions are properly
authorised and executed.
(cid:129) A comprehensive annual
insurance programme, including
external risk management survey
and action plans.
(cid:129) Annual budgeting and monthly
reporting systems for all
business units, which enable the
monitoring of progress against
performance targets and the
evaluation of trends.
(cid:129) Appropriate due diligence
procedures for acquisitions
and divestments.
(cid:129) Disaster management
systems for key IT systems
and recovery plans.
(cid:129) Documentation and regular
review of business wide risk
identification and mitigation
strategies.
The Company has a risk management
policy consistent with ASX Principle 7.
The Company also has a number of
policies and internal documents that
are central to the management of risk.
Those documents include:
(cid:129) The Risk Review Statement that
is designed to comprehensively
document and rate all material
business risks to which the
Company is exposed, as well as
setting out the actions being
undertaken by Management to
mitigate those risks.
(cid:129) The Company’s Levels of
Authority Statement which
sets out the different levels of
authority delegated to the
Managing Director, General
Managers, and Branch
Managers in relation to financial
and business matters such as
capital expenditure, acquisitions,
entering into contracts, treasury
issues, and employment
related issues.
34
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
(cid:129) The Company’s Administration
Manual which sets out the
financial and administrative
protocols for all staff.
(cid:129) The Company’s OHS&E Manual
and supporting documented
policies and procedures which
are designed to minimise the risk
of harm to employees engaged
in operational tasks.
(cid:129) The Company’s Quality
Management System coupled
with its extensive documented
operating and compliance
focused policies and procedures
which are designed to ensure
that the Company’s operations
are conducted using industry
best practice and in accordance
with the numerous legislative
regimes that apply.
Management is responsible to the
Board for the Group’s system of
internal control and risk management.
The Audit Committee through its
Charter assists the Board in monitoring
this role.
The Risk Review Statement is
designed to be a ‘living’ document
and is regularly updated to address
the emergence of new risks and
changes to the priority of existing
material business risks. The Risk
Review Statement is provided to both
the Audit Committee and the Board
on a quarterly basis. In addition,
a summary of the status of key risk
items identified in the Risk Review
Statement is provided to the Board
at its monthly meetings.
The Managing Director has reported
to the Board that Management
believes that the Company has in
place an effective system of oversight
and management and internal
controls. The Managing Director
and the Chief Financial Officer also
certify on an annual basis that the
Company has a sound system of risk
management and internal control,
and that the system is operating
effectively in all material respects in
relation to financial risks.
Continuous Disclosure
The Company understands and
respects that timely disclosure of price
sensitive information is central to the
efficient operation of the Australian
Securities Exchange securities market
and has adopted a comprehensive
policy covering announcements to
the Australian Securities Exchange.
The Company Secretary has the
responsibility for overseeing and
co-ordinating disclosure of
information to the Australian
Securities Exchange. The Company
Secretary also liaises with the
Managing Director, Chairman and
Chief Financial Officer in relation to
continuous disclosure matters.
The Chairman, or in his absence the
Deputy Chairman, approves all price
sensitive releases to the Australian
Securities Exchange prior to release.
The Company posts all price
sensitive releases to the Australian
Securities Exchange and media
on the Company’s website.
The Company’s Continuous
Disclosure Policy is consistent with
ASX Principle 5.
Conflict of Interest
In accordance with the Corporations
Act 2001 (Cth) and the Company’s
Constitution, Directors must keep the
Board advised, on an ongoing basis,
of any interest that could potentially
conflict with those of the Company.
Where the Board believes that
a significant conflict exists, the
Director concerned does not receive
the relevant Board papers and is not
present at the meeting whilst the
item is considered. Details of Director
related entity transactions with the
Company and consolidated entity
are set out in Note 26.
Director Dealing in
Company Shares
The Constitution permits Directors
and Officers to acquire shares in
the Company, subject to very
limited exceptions contemplated in
the Listing Rules. Company policy
prohibits Directors, Associates and
Officers from dealing in Company
shares or Executive options:
(cid:129) In the period of 60 days prior
to the release of the Company’s
half year and annual results
to the Australian Securities
Exchange.
(cid:129) Whilst in possession of price
sensitive information.
In accordance with the provisions
of the Corporations Act 2001 and
the Listing Rules of the Australian
Securities Exchange, the Company
advises the Exchange of any
transactions conducted by Directors
in shares in the Company.
International Quality
Standard ISO 9001
The consolidated entity strives to
ensure that its services are of
the highest standard. Towards this
aim, it has achieved ISO 9001
accreditation for its core business
segment and is well advanced in the
implementation of Occupational
Health & Safety systems to meet the
AS4801 Standard.
35
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Ethical Standards
Other Policies
In accordance with Principle 3, the
Board has adopted the Code of
Conduct produced by the Australian
Institute of Company Directors to
guide the Directors and promote high
ethical and professional standards.
The Board acknowledges the need
for continued maintenance of the
highest standards of Corporate
Governance practice and the ethical
conduct by all Directors and
employees of the Company and has
approved the following policies:
Code of Conduct
The Company has a Code of
Conduct for its employees to act
within the law, avoid conflicts of
interest, protect Company property,
keep information confidential
and act honestly and ethically in
all business activities. The Code
of Conduct is complemented by
a Whistle Blower Policy which
provides protection to employees
who report instances of malpractice,
impropriety, misconduct, or other
unethical or illegal conduct involving
the Company or its employees.
Trade Practices
The Company has a Trade Practices
Policy advising employees on the
legislative prohibitions on price fixing
and anti-competitive arrangements,
as well as other prohibited conduct.
Amongst other policies endorsed by
the Board in previous years are the
Occupational Health and Safety,
Environment Protection, Electronic
Communications Policies and the
Transport Law Compliance Policy.
The Group’s ethical standards are
consistent with the requirements of
ASX Principle 3.
Communication with
Shareholders
The Company places considerable
importance on communication
with Shareholders.
The Company’s communication
strategy promotes the communication
of information to Shareholders
through the distribution of
the Annual Report, announcements
through the Australian Securities
Exchange and the media regarding
changes to the business, the
Chairman’s and Managing Director’s
addresses at the Annual General
Meeting, and actively engaging the
investment community.
K&S Corporation Limited posts
all price sensitive reports, Australian
Securities Exchange releases and
media releases on the Company’s
website.
The communication strategy
is consistent with ASX Principle 6.
The Company’s Communication
Policy is available on the Company’s
website: www.ksgroup.com.au
36
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
ABN 67 007 561 837
Contents
Statement of Comprehensive Income 38
Statement of Financial Position 39
Statement of Changes in Equity 40
Statement of Cash Flows 41
Notes to the Financial Statements 42
Directors’ Declaration 97
Auditor’s Independence Declaration 98
Independent Auditor’s Report 99
Information on Shareholdings 101
37
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Consolidated
2011 2010
Note $’000 $’000
Operating revenue 5(a) 523,364 454,317
Cost of goods sold (57,765)
(53,656)
Gross profit 465,599 400,661
Other income 5(b) 5,218 3,626
(145,137)
Contractor expenses (157,475)
Employee benefits expenses 5(e) (147,875)
(121,169)
Fleet expenses (90,983)
(73,772)
Depreciation and amortisation expense 5(d) (25,089) (20,142)
(5,218)
Finance costs 5 (c) (8,404)
Other expenses (20,021) (12,771)
Share of profits/(losses) of associates 13 198 239
Profit before income tax 21,168 26,317
Income tax (expense)/benefit 6 (6,340) (7,578)
Profit after income tax 14,828 18,739
Other comprehensive income
Foreign currency translation (588) 151
Fair value revaluation of land and buildings - 5,314
Other comprehensive income for the period, net of tax (588) 5,465
Total comprehensive income for the period 14,240 24,204
Earnings per share (cents per share) 7
(cid:129) basic for profit for the year attributable to
ordinary equity holders of the parent 18.3 26.3
(cid:129) diluted for profit for the year attributable
to ordinary equity holders of the parent 18.3 26.3
Dividends per share (cents per share) 8 10.0 14.0
The above Statement of Comprehensive Income should be read
in conjunction with the accompanying notes.
38
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Consolidated
2011 2010
Note $’000 $’000
ASSETS
Current assets
Cash and cash equivalents 9 9,747 12,042
Trade and other receivables 10 67,496 56,747
Inventories 11 2,981 2,696
Prepayments 5,277 4,809
Total current assets 85,501 76,294
Non-current assets
Other receivables 10 2,034 2,093
Investments in associates 13 199 -
Property, plant & equipment 14 221,968 197,169
Intangibles 15 71,569 44,761
Deferred tax assets 6 6,731 5,776
Total non-current assets 302,501 249,799
TOTAL ASSETS 388,002 326,093
LIABILITIES
Current liabilities
Trade and other payables 17 46,457 44,596
Interest bearing loans and borrowings 18 15,070 16,462
Income tax payable 894 1,270
Provisions 19 13,353 11,190
Derivatives 712 1,123
Total current liabilities 76,486 74,641
Non-current liabilities
Other payables 17 4,929 4,340
Interest bearing loans and borrowings 18 71,331 47,889
Deferred tax liabilities 6 18,941 18,032
Provisions 19 2,709 2,122
Total non-current liabilities 97,910 72,383
TOTAL LIABILITIES 174,396 147,024
NET ASSETS 213,606 179,069
EQUITY
Contributed equity 20 94,276 64,528
Reserves 24,507 25,095
Retained earnings 94,823 89,446
TOTAL EQUITY 213,606 179,069
The above Statement of Financial Position should be read
in conjunction with the accompanying notes.
39
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Asset Forex
Issued Retained revaluation translation Total
capital earnings reserves reserves equity
$’000 $’000 $’000 $’000 $’000
CONSOLIDATED
At 1 July 2010 64,528 89,446 26,270 (1,175) 179,069
Profit for the year - 14,828 - - 14,828
Other comprehensive income - - - (588) (588)
Total comprehensive income for the year - 14,828 - (588) 14,240
Transactions with owners in
their capacity as owners:
Issue of share capital 29,748 - - - 29,748
Dividends paid - (9,451) - - (9,451)
At 30 June 2011 94,276 94,823 26,270 (1,763) 213,606
At 1 July 2009 57,425 79,174 20,956 (1,326) 156,229
Profit for the year - 18,739 - - 18,739
Other comprehensive income - - 5,314 151 5,465
Total comprehensive income for the year - 18,739 5,314 151 24,204
Transactions with owners in
their capacity as owners:
Issue of share capital 7,103 - - - 7,103
Dividends paid - (8,467) - - (8,467)
At 30 June 2010 64,528 89,446 26,270 (1,175) 179,069
The above Statement of Changes in Equity should be read
in conjunction with the accompanying notes.
40
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Consolidated
2011 2010
Note $’000 $’000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 578,279 493,552
Cash payments to suppliers and employees (513,036) (429,228)
Interest received 89 212
Borrowing costs paid (8,404) (5,218)
Income taxes paid (6,819) (7,414)
Net goods and services tax paid (15,979) (15,957)
Net cash provided by/(used in) operating activities 9 34,130 35,947
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of non-current assets 3,907 2,411
Payments for property plant & equipment (13,325) (4,662)
Acquisition of business (39,185) (23,995)
Net cash provided by/(used in) investing activities (48,603) (26,246)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue 25,870 4,936
Proceeds from borrowings 77,000
20,000
Repayments of borrowings (62,000) (12,000)
(17,626)
Lease and hire purchase liability repayments (20,256)
(7,700)
Dividends paid, net of dividend reinvestment plan (8,403)
Net cash provided by/(used in) financing activities 12,211
(12,390)
(2,689)
Net increase/(decrease) in cash held (2,262)
Cash at the beginning of the financial year 12,042
14,717
Effects of exchange rate variances on cash (33) 14
Cash at the end of the financial year 9 9,747
12,042
The above Statement of Cash Flows should be read
in conjunction with the accompanying notes.
41
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
1 Corporate Information
The financial report of K&S Corporation Limited for the year
ended 30 June 2011 was authorised for issue in accordance with
a resolution of Directors on 18 August 2011.
K&S Corporation Limited is a company limited by shares
incorporated in Australia whose shares are publicly traded on the
Australian Stock Exchange. The nature of the operation and
principal activities of the Group are described in Note 4.
2 Summary of Significant Accounting Policies
a) Basis of preparation
The financial report is a general purpose financial report, which
has been prepared in accordance with the requirements of
the Corporation Act 2001 and Australian Accounting Standards.
The financial report has also been prepared on a historical cost
basis, except for land and buildings which have been measured
at fair value. The carrying values of cash flow hedges are
also stated at fair value with the portion of the gain or loss on
the hedging instrument that is determined to be an effective
hedge recognised directly in equity and the ineffective portion
recognised in profit or loss.
The financial report is presented in Australian dollars and all
values are rounded to the nearest thousand dollars ($’000) unless
otherwise stated under the option available to the Company
under ASIC Class Order 98/0100. The Company is an entity to
which the class order applies.
b) Compliance with IFRS
The financial report complies with Australian Accounting
Standards and International Financial Reporting Standards (IFRS)
as issued by the International Accounting Standards Board.
c) New Accounting Standards and Interpretations
i)
Changes in accounting policy and disclosures
The accounting policies adopted are consistent with those of the
previous financial year except as follows:
The Group has adopted the following new and amended
Australian Accounting Standards and AASB Interpretations as
of 1 July 2010.
Title
date of
standard
Application
date of
standard
1 Jan 2010
1 July 2010
Reference
Title
AASB 2009-5
Further Amendments to Australian Accounting Standards arising from the Annual Improvements
Project – The subject of amendments to the standards are set out below:
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
AASB 5 – Disclosures in relation to non-current assets (or disposal groups) classified as held
for sale or discontinued operations
AASB 8 – Disclosure of information about segment assets
AASB 101 – Current/non-current classification of convertible instruments
AASB 107 – Classification of expenditures that does not give rise to an asset
AASB 117 – Classification of leases of land
AASB 118 – Determining whether an entity is acting as a principle or an agent
AASB 136 – Clarifying the unit of account for goodwill impairment test is not larger than an
operating segment before aggregation
AASB 139 – Treating loan prepayment penalties as closely related embedded derivatives,
and revising the scope exemption for forward contracts to enter into a business
combination contract
AASB 2009-8
Amendments to Australian Accounting Standards – Group Cash-settled Share-based Payment
Transactions [AASB 2]
1 Jan 2010
1 July 2010
AASB 2009-10
Amendments to Australian Accounting Standards – Classification of Rights Issues [AASB 132]
1 Feb 2010
1 July 2010
42
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Reference
Title
AASB 2010-3
Amendments to Australian Accounting Standards arising from the Annual Improvements Project
[AASB 3, AASB 7, AASB 121, AASB 128, AASB 131, AASB 132 & AASB 139]
Limits the scope of the measurement choices of non-controlling interest to instruments that are
present ownership interests and entitle their holders to a proportionate share of the entity’s net
assets in the event of liquidation. Other components of NCI are measured at fair value.
Requires an entity (in a business combination) to account for the replacement of the acquiree’s
share-based payment transactions (whether obliged or voluntarily), in a consistent manner
i.e., allocate between consideration and post combination expenses.
Clarifies that contingent consideration from a business combination that occurred before the
effective date of AASB 3 Revised is not restated.
Clarifies that the revised accounting for loss of significant influence or joint control (from the issue
of IFRS 3 Revised) is only applicable prospectively.
Title
date of
standard
Application
date of
standard
1 July 2010
1 July 2010
Interpretation 19
Interpretation 19 Extinguishing Financial Liabilities with Equity Instruments
1 July 2010
1 July 2010
This interpretation clarifies that equity instruments issued to a creditor to extinguish a financial
liability are “consideration paid” in accordance with paragraph 41 of IAS 39. As a result, the
financial liability is derecognised and the equity instruments issued are treated as consideration
paid to extinguish that financial liability.
The interpretation states that equity instruments issued as payment of a debt should be measured
at the fair value of the equity instruments issued, if this can be determined reliably. If the fair
value of the equity instruments issued is not reliably determinable, the equity instruments should
be measured by reference to the fair value of the financial liability extinguished as of the date
of extinguishment.
Annual Improvements Project
In May 2009 and June 2010 the AASB issued omnibus of
amendments to its Standards as part of the Annual Improvements
Project, primarily with a view to removing inconsistencies and
clarifying wording. There are separate transitional provisions
and application dates for each amendment. The adoption of the
following amendments resulted in changes to accounting
policies but did not have any impact on the financial position or
performance of the Group.
AASB 8 Operating Segments: Clarifies that segment assets and
liabilities need only be reported when those assets and liabilities
are included in measures that are used by the chief operating
decision maker. As the Group’s chief operating decision
maker does review segment assets and liabilities, the Group has
continued to disclose this information in Note 4.
AASB 136 Impairment of Assets: when discounted cash flows are
used to estimate “fair value less cost to self” additional disclosure
is required about the discount rate, consistent with disclosures
required when the discounted cash flows are used to estimate
“value in use”. The additional disclosure also clarifies the largest
unit permitted for allocating goodwill, acquired in a business
combination, is the operating segment as defined in AASB 8
before aggregation for reporting purposes. The amendment
has no impact on the Group as the annual impairment test is
performed before aggregation.
Other amendments resulting from the Annual Improvements
Project to the following Standards did not have any impact on
the accounting policies, financial position or the performance
of the Group.
AASB 5 Non-current Assets Held for Sale
AASB101 Presentation of Financial Statements
AASB 117 Leases
AASB 118 Revenue
AASB 139 Financial Instruments: Recognition and Measurement
43
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
ii) Accounting standards and interpretations
issued but not yet effective
Australian Accounting Standards and Interpretations that have
recently been issued or amended but are not yet effective and
have not been adopted by the Group for the annual reporting
period ending 30 June 2011, are outlined in the table on the
following pages:
Reference
Title
Summary
The amendments arise from the
issuance if AASB 9 Financial
Instruments that sets out
requirements for the classification
and measurement of financial assets.
The requirements in AASB 9 form
part of the first phase of the
International Accounting Standards
Board’s project to replace IAS 39
Financial Instruments: Recognition
and Measurement.
This standard shall be applied when
AASB 9 is applied.
AASB 2009-11
Amendments to Australian
Accounting Standards
arising from AASB 9
(AASB 1, 3, 4, 5, 7, 101,
102, 108, 112, 118, 121,
127, 128, 131, 132, 136,
139, 1023 & 1038 and
Interpretations 10 & 12)
AASB 2009-12
Amendments to Australian
Accounting Standards
(AASB 5, 8, 108, 110, 112,
119, 133, 137, 139, 1023
& 1031 and Interpretations
2, 4, 16, 1039 & 1052)
AASB 9
Financial Instruments
Application
date of
standard
1 Jan 2013
Impact on Group
financial report
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
Application
date for
Group
1 July 2013
This amendment makes numerous
editorial changes to a range of
Australian Accounting Standards
and Interpretations.
1 Jan 2011
The amendments are
not expected to have any
impact on the Group’s
financial report.
1 July 2011
1 Jan 2013
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
1 July 2013
AASB 9 includes requirements for
the classification and measurement
of financial assets resulting from the
first part of Phase 1 of the IASB’s
project to replace IAS 39 Financial
Instruments: Recognition and
Measurement (AASB 139 Financial
Instruments: Recognition and
Measurement).
These requirements improve and
simplify the approach for
classification and measurement of
financial assets compared with the
requirements of AASB 139.
The main changes from AASB 139
are described below.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Application
date of
standard
1 Jan 2013
Impact on Group
financial report
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
Application
date for
Group
1 July 2013
1 Jan 2011
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
1 July 2011
Reference
Title
Summary
AASB 9
continued
Financial Instruments
AASB 124
(Revised)
Related Party Disclosures
a) Financial assets are classified
based on; 1) the objective of
the entity’s business model for
managing the financial assets;
2) the characteristics of the
contractual cash flows.
This replaces the numerous
categories of financial assets in
AASB 139, each of which had its
own classification criteria.
b) AASB 9 allows an irrevocable
election on initial recognition to
present gains and losses on
investments in equity instruments
that are not held for trading in
other comprehensive income.
Dividends in respect of these
investments that are a return on
investment can be recognised
in profit or loss and there is no
impairment or recycling on
disposal of the instrument.
c) Financial assets can be designated
and measured at fair value
through profit or loss at initial
recognition if doing so eliminates
or significantly reduces a measure-
ment or recognition inconsistency
that would arise from measuring
assets or liabilities, or recognising
the gains and losses on them, on
different bases.
The revised AASB 124 simplifies
the definition of a related party,
clarifying its intended meaning and
eliminating inconsistencies from
the definition, including:
a) the definition now identifies a
subsidiary and an associate with
the same investor as related
parties of each other;
b) entities significantly influenced
by one person and entities
significantly influenced by a close
member of the family of that
person are no longer related
parties of each other; and
c) the definition now identifies that,
whenever a person or entity has
both joint control over a second
entity and joint control or
significant influence over a third
party, the second and third
entities are related to each other.
A partial exemption is also provided
from the disclosure requirements for
government-related entities.
Entities that are related by virtue of
being controlled by the same
government can provide reduced
related party disclosures.
45
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Application
date of
standard
1 July 2013
Impact on Group
financial report
The amendments are
not expected to have any
impact on the Group’s
financial report.
Application
date for
Group
1 July 2013
1 Jan 2011
The amendments are
not expected to have any
impact on the Group’s
financial report.
1 July 2011
Reference
Title
Summary
AASB 1053
Application of Tiers of
Australian Accounting
Standards
AASB 2009-14
Amendments to
Australian Interpretation –
Prepayments of a Minimum
Funding Requirement
This Standard establishes a differential
financial reporting framework
consisting of two Tiers of reporting
requirements for preparing general
purpose financial statements:
a) Tier 1: Australian Accounting
Standards
b) Tier 2: Australian Accounting
Standards – Reduced Disclosure
Requirements
Tier 2 comprises the recognition,
measurement and presentation
requirements of Tier 1 and
substantially reduced disclosures
corresponding to those requirements.
The following entities apply Tier 1
requirements in preparing general
purpose financial statements:
a) For-profit entities in the
private sector that have public
accountability (as defined in
this Standard)
b) The Australian Government
and State, Territory and Local
Governments
The following entities apply either
Tier 2 or Tier 1 requirements in
preparing general purpose financial
statements:
a) For-profit private sector
entities that do not have public
accountability
b) All not-for-profit private
sector entities
Public sector entities other than the
Australian Government and State,
Territory and Local Governments.
These amendments arise from the
issuance of Prepayments of a
Minimum Funding Requirement
(Amendments to IFRIC 14).
The requirements of IFRIC 14 meant
that some entities that were subject
to minimum funding requirements
could not treat any surplus in a
defined benefit pension plan as an
economic benefit.
The amendment requires entities to
treat the benefit of such an early
payment as a pension asset.
Subsequently, the remaining surplus
in the plan, if any, is subject to the
same analysis as if no prepayment
had been made.
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Reference
Title
Summary
AASB 1054
Australian Additional
Disclosures
AASB 2010-4
Further Amendments to
Australian Accounting
Standards arising from the
Annual Improvements
Project [AASB 1, AASB 7,
AASB 101, AASB 134 and
Interpretation 13]
AASB 2010-5
Amendments to Australian
Accounting Standards
[AASB 1, 3, 4, 5, 101, 107,
112, 118, 119, 121, 132,
133, 134, 137, 139, 140,
1023 & 1038 and
Interpretations 112, 115,
127, 132 & 1042]
This standard is as a consequence of
phase 1 of the joint Trans-Tasman
Convergence project of the AASB
and FRSB.
This standard relocates all Australian
specific disclosures from other
standards to one place and revises
disclosures in the following areas:
a) Compliance with Australian
Accounting Standards
b) The statutory basis or reporting
framework for financial statements
c) Whether the financial
statements are general purpose
or special purpose
d) Audit fees
e) Imputation credits
Emphasises the interaction between
quantitative and qualitative
AASB 7 disclosures and the nature
and extent of risks associated with
financial instruments.
Clarifies that an entity will present
an analysis of other comprehensive
income for each component of
equity, either in the statement of
changes in equity or in the notes to
the financial statements.
Provides guidance to illustrate how
to apply disclosure principles in
AASB 134 for significant events and
transactions.
Clarifies that when the fair value of
award credits is measured based on
the value of the awards for which
they could be redeemed, the
amount of discounts or incentives
otherwise granted to customers not
participating in the award credit
scheme, is to be taken into account.
This Standard makes numerous
editorial amendments to a range
of Australian Accounting Standards
and Interpretations, including
amendments to reflect changes
made to the text of IFRS by the IASB.
These amendments have no major
impact on the requirements of the
amended pronouncements.
Application
date of
standard
1 Jan 2011
Impact on Group
financial report
The amendments are
not expected to have any
impact on the Group’s
financial report.
Application
date for
Group
1 July 2011
1 Jan 2011
The amendments are
not expected to have any
impact on the Group’s
financial report.
1 July 2011
1 Jan 2011
The amendments are
not expected to have any
impact on the Group’s
financial report.
1 July 2011
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Reference
Title
Summary
AASB 2010-6
Amendments to Australian
Accounting Standards –
Disclosures on Transfers
of Financial Assets [AASB 1
& AASB 7]
AASB 2010-7
Amendments to Australian
Accounting Standards
arising from AASB 9
(December 2010)
[AASB 1, 3, 4, 5, 7, 101,
102, 108, 112, 118, 120,
121, 127, 128, 131, 132,
136, 137, 139, 1023, &
1038 and interpretations
2, 5, 10, 12, 19 & 127]
AASB 2010-8
Amendments to Australian
Accounting Standards –
Deferred Tax: Recovery
of Underlying Assets
[AASB 112]
The amendments increase the
disclosure requirements for
transactions involving transfers of
financial assets. Disclosures require
enhancements to the existing
disclosures in IFRS 7 where an asset
is transferred but is not derecognised
and introduce new disclosures for
assets that are derecognised but the
entity continues to have a continuing
exposure to the asset after the sale.
The requirements for classifying and
measuring financial liabilities were
added to AASB 9. The existing
requirements for the classification of
financial liabilities and the ability to
use the fair value option have been
retained. However, where the fair
value option is used for financial
liabilities the change in fair value is
accounted for as follows:
(cid:129) The change attributable
to changes in credit risk
are presented in other
comprehensive income (OCI)
(cid:129) The remaining change is
presented in profit or loss
If this approach creates or enlarges
an accounting mismatch in the profit
or loss, the effect of the changes in
credit risk are also presented in profit
or loss.
These amendments address the
determination of deferred tax on
investment property measured at
fair value and introduce a rebuttable
presumption that deferred tax on
investment property measured at
fair value should be determined on
the basis that the carrying amount
will be recoverable through sale.
The amendments also incorporate
SIC-21 Income Taxes – Recovery of
Revalued Non-Depreciable Assets
into AASB 112.
Application
date of
standard
1 July 2011
Impact on Group
financial report
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
Application
date for
Group
1 July 2011
1 Jan 2013
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
1 July 2013
1 Jan 2012
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
1 July 2012
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Reference
Title
Summary
Application
date of
standard
1 July 2011
Impact on Group
financial report
The amendments are
not expected to have any
impact on the Group’s
financial report.
Application
date for
Group
1 July 2011
This Standard makes amendments
to many Australian Accounting
Standards, removing the disclosures
which have been relocated to
AASB 1054.
AASB 2011-1
AASB 2011-2
AASB 2011-4
AASB 2011-5
****
Amendments to Australian
Accounting Standards
arising from the
Trans-Tasman Convergence
project [AASB 1, AASB 5,
AASB 101, AASB 107,
AASB 108, AASB 121,
AASB 128, AASB 132,
AASB 134, Interpretation 2,
Interpretation 112,
Interpretation 113]
Amendments to Australian
Accounting Standards
arising from the
Trans-Tasman Convergence
project – Reduced
disclosure regime
[AASB 101, AASB 1054]
Amendments to Australian
Accounting Standards
to remove individual key
management personnel
disclosure requirements
Amendments to Australian
Accounting Standards –
Extending Relief from
Consolidation, the Equity
Method and Proportionate
Consolidation [AASB 127,
AASB 128 & AASB 131]
Consolidated Financial
Statements
This Standard makes amendments
to the application of the revised
disclosures to Tier 2 entities, that
are applying AASB 1053.
1 July 2013
The amendments are
not expected to have any
impact on the Group’s
financial report.
1 July 2013
This Standard makes amendments
to AASB 124 Related Party
Disclosures to remove individual key
management personnel disclosure
requirements under section 334 of
the Corporations Act 2001.
1 July 2013
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
1 July 2013
These amendments result from
the proposals that were included in
Exposure draft ED205.
1 July 2011
1 July 2011
The amendments are
unlikely to have any
impact on the Group
since the relief criteria
are not met.
1 Jan 2013
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
1 July 2013
IFRS 10 establishes a new control
model that applies to all entities.
It replaces parts of IAS 27
Consolidated and Separate Financial
Statements dealing with the
accounting for consolidated financial
statements and SIC-12 Consolidation
– Special Purpose Entities.
The new control model broadens
the situations when an entity is
considered to be controlled by
another entity and includes new
guidance for applying the model to
specific situations, including when
acting as a manager may give
control, the impact of potential
voting rights and when holding less
than a majority voting rights may
give control. This is likely to lead
to more entities being consolidated
into the group.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Application
date of
standard
1 Jan 2013
Impact on Group
financial report
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
Application
date for
Group
1 July 2013
1 Jan 2013
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
1 July 2013
1 Jan 2013
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
1 July 2013
Reference
Title
Summary
****
Disclosure of Interests in
Other Entities
****
Fair Value Measurement
****
Joint Arrangements
IFRS 12 includes all disclosures
relating to an entity’s interests in
subsidiaries, joint arrangements,
associates and structures entities.
New disclosures have been
introduced about the judgements
made by management to determine
whether control exists, and to
require summarised information
about joint arrangements, associates
and structured entities and
subsidiaries with non-controlling
interests.
IFRS 13 establishes a single source of
guidance under IFRS for determining
the fair value of assets and liabilities.
IFRS 13 does not change when an
entity is required to use fair value,
but rather, provides guidance on
how to determine fair value under
IFRS when fair value is required
or permitted by IFRS. Application of
this definition may result in different
fair values being determined for the
relevant assets.
IFRS 13 also expands the disclosure
requirements for all assets or liabilities
carried at fair value. This includes
information about the assumptions
made and the qualitative impact of
those assumptions on the fair value
determined.
IFRS 11 replaces IAS 31 Interests in
Joint Ventures and SIC-13 Jointly-
controlled Entities – Non-monetary
Contributions by Ventures. IFRS 11
uses the principle of control in
IFRS 10 to define joint control, and
therefore the determination of
whether joint control exists may
change. In addition IFRS 11 removes
the option to account for jointly
controlled entities (JCEs) using
proportionate consolidation. Instead,
accounting for a joint arrangement
is dependent on the nature of the
rights and obligations arising from
the arrangement.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Reference
Title
Summary
****
continued
Joint Arrangements
Joint operations that give the
venturers a right to the underlying
assets and obligations themselves
is accounted for by recognising the
share of those assets and obligations.
Joint ventures that give the venturers
a right to the net assets is accounted
for using the equity method.
This may result in a change in the
accounting for the joint arrangements
held by the group.
Application
date of
standard
1 Jan 2013
Impact on Group
financial report
The Group has not yet
determined the extent
of the impact of the
amendments, if any.
Application
date for
Group
1 July 2013
**** The AASB has not issued this standard, which was finalised by the IASB
in May 2011.
d) Basis of consolidation
The consolidated financial statements comprise the financial
statements of K&S Corporation Limited and its subsidiaries
(“the Group”) as at 30 June each year.
The financial statements of subsidiaries are prepared for the
same reporting period as the parent company, using consistent
accounting policies. In preparing the consolidated financial
statements, all intercompany balances and transactions, income
and expenses and profit and losses resulting from inter-group
transactions, have been eliminated in full.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group and cease to be consolidated
from the date on which control is transferred out of the Group.
Investments in subsidiaries by K&S Corporation Limited are
accounted for at cost in the separate financial statements of the
parent less any impairment charges. Dividends received from
subsidiaries are recorded as a component of other revenues in
the separate statement of comprehensive income of the parent
entity, and do not impact the recorded cost of the investment.
Upon receipt of the dividend payments from subsidiaries, the
parent will assess whether any indicators of impairment of the
carrying value of the investment in the subsidiary exists. Where
such indicators exist, to the extent that the carrying value of the
investment exceeds its recoverable amount, an impairment loss
is recognised.
The acquisition of subsidiaries is accounted for using the
acquisition method of accounting. The acquisition method of
accounting involves recognising at acquisition date, separately
from goodwill, the identifiable assets acquired, the liabilities
assumed and any non-controlling interest in the acquiree.
The identifiable assets and the liabilities assumed are measured
at their acquisition date fair values.
The difference between the above items and the fair value
of the consideration, (including the fair value of any pre-existing
investment in the acquiree), is goodwill or a discount
on acquisition.
A change in the ownership interest of a subsidiary that
does not result in a loss of control, is accounted for as an
equity transaction.
Non-controlling interests are allocated their share of net profit
after tax in the Statement of Comprehensive Income and are
presented within equity in the Statement of Financial Position,
separately from the equity of the owners of the parent.
Losses are attributed to the non-controlling interest even if that
results in a deficit balance.
If the Group loses control over a subsidiary, it:
(cid:129)
Derecognises the assets (including goodwill) and liabilities
of the subsidiary.
Derecognises the carrying amount of any
non-controlling interest.
Derecognises the cumulative translation differences,
recorded in equity.
Recognises the fair value of consideration received.
Recognises the fair value of any investment retained.
Recognises any surplus or deficit in profit or loss.
Reclassifies the parent’s share of components previously
recognised in other comprehensive income to profit or loss.
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
e) Business combinations
Business combinations are accounted for using the acquisition
method. The consideration transferred in a business combination
shall be measured at fair value, which shall be calculated as the
sum of the acquisition date fair values of the assets transferred
to the acquirer, the liabilities incurred by the acquirer to former
owners of the acquiree and the equity issued by the acquirer,
and the amount of any non-controlling interest in the acquiree.
For each business combination, the acquirer measures the
non-controlling interest in the acquiree either at fair value or at
the proportionate share of the acquiree’s identifiable net assets.
Acquisition related costs are expensed as incurred.
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When the Group acquires a business, it assesses the financial
assets and liabilities assumed for appropriate classification and
designation in accordance with the contractual terms, economic
conditions, the Group’s operating or accounting policies and
other pertinent conditions as the acquisition date. This includes
the separation of embedded derivatives in host contracts by
the acquiree.
If the business combination is achieved in stages, the acquisition
date fair value of the acquirer’s previously held equity interest in
the acquiree is remeasured at fair value as at the acquisition date
through profit or loss.
Any contingent consideration to be transferred by the acquirer
will be recognised at fair value at the acquisition date.
Subsequent changes to fair value of the contingent consideration
which is deemed to be an asset or liability will be recognised
in accordance with AASB 139 either in profit or loss in
other comprehensive income. If the contingent consideration
is classified as equity, it shall not be remeasured.
f) Operating segments
An operating segment is a component of an entity that engages
in business activities from which it may earn revenues and
incur expenses (including revenues and expenses relating to
transactions with other components of the same entity), whose
operating results are regularly reviewed by the entity’s chief
operating decision maker to make decisions about resources to
be allocated to the segment and assess its performance and for
which discrete financial information is available. This includes
start up operations which are yet to earn revenues. Management
will also consider other factors in determining operating segments
such as the existence of a line manager and the level of segment
information presented to the board of directors.
Operating segments have been identified based on the
information provided to the chief operating decision makers –
being the executive management team.
The Group aggregates two or more operating segments when
they have similar economic characteristics, and the segments are
similar in each of the following aspects:
Nature of the product or services;
(cid:129)
(cid:129)
Type or class of customer for the product or services; and
(cid:129) Methods used to distribute the products or provide services.
Information about other business activities and operating
segments that are below the quantitative criteria are combined
and disclosed in a separate category for “all other segments”.
g) Revenue
Revenue is recognised to the extent that it is probable that the
economic benefits will flow to the Group and the revenue can
be reliably measured. The following specific recognition criteria
must also be met before revenue is recognised:
Sale of goods
i)
Revenue is recognised when the significant risks and rewards of
ownership of the goods have passed to the buyer and can be
measured reliably. Risks and rewards are considered passed to
the buyer at the time of delivery of the goods to the customer.
Sales revenue comprises revenue earned (net of returns, discounts
and allowances) from the provision of fuel products to entities
outside the consolidated entity. Sales revenue is recognised when
fuel is provided.
Rendering of services
ii)
Service revenue from the distribution of customer goods is
recognised when delivered or when services are fully provided.
Interest
iii)
Revenue is recognised as the interest accrues using the effective
interest method. This method calculates the amortised cost of a
financial asset and allocates the interest over the relevant period
using the effective interest rate, which is the rate that exactly
discounts estimated future cash receipts through the expected
life of the financial instrument to the net carrying amount of the
financial asset.
iv) Dividends
Revenue is recognised when the Group’s right to receive the
payment is established.
h) Cash and cash equivalents
Cash and cash equivalents in the Statement of Financial Position
comprise cash at bank and in hand and short-term deposits with
an original maturity of three months or less.
For the purposes of the Statement of Cash Flows, cash and cash
equivalents consist of cash and cash equivalents as defined above,
net of outstanding bank overdrafts.
i) Leases
Finance leases, which transfer to the Group substantially all the
risks and benefits incidental to ownership of the leased item, are
capitalised at the inception of the lease at the fair value of the
leased property or, if lower, at the present value of the minimum
lease payments.
Lease payments are apportioned between the finance charges and
reduction of the lease liability so as to achieve a constant rate of
interest on the remaining balance of the liability. Finance charges
are charged directly against income.
Capitalised leased assets are depreciated over the shorter of the
estimated useful life of the asset and the lease term if there is no
reasonable certainty that the Group will obtain ownership by the
end of the lease term.
Leases where the lessor retains substantially all the risks
and benefits of ownership of the asset are classified as
operating leases.
Operating lease payments are recognised as an expense on a
straight-line basis over the lease term.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
j) Trade and other receivables
Trade receivables, which generally have 30-90 day terms,
are recognised and carried at original invoice amount less an
allowance for any uncollectible amounts. An allowance for
doubtful debts is made when there is objective evidence that
the Group will not be able to collect the debts. Bad debts are
written off when identified.
l) Inventories
Inventories are valued at the lower of cost and net realisable value.
Costs incurred in bringing each product to its present location
and condition are accounted for as follows:
Consumables – purchase cost on a first-in, first-out basis;
Finished goods – weighted average cost.
Net realisable value is the estimated selling price in the ordinary
course of business, less estimated costs necessary to make the sale.
l) Derivative financial instruments
The Group uses derivative financial instruments such as interest
rate swaps to hedge its risks associated with interest rate
fluctuations. Such derivative financial instruments are stated at
fair value. The fair value of interest rate contracts is determined
by reference to market value for similar instruments.
For the purposes of hedge accounting, hedges are classified as
either fair value hedges when they hedge the exposure to
changes in the fair value of a recognised asset or liability; or cash
flow hedges where they hedge exposure to variability in cash
flows that is either attributable to a particular risk associated with
a recognised asset or liability or a forecasted transaction.
In relation to cash flow hedges (interest rate swaps) to hedge
firm commitments which meet the conditions for special hedge
accounting, the portion of the gain or loss on the hedging
instrument that is determined to be an effective hedge is
recognised directly in equity and the ineffective portion is
recognised in profit or loss.
When the hedged firm commitment results in the recognition
of an asset or a liability, then, at the time the asset or liability is
recognised, the associated gains or losses that had previously
been recognised in equity are included in the initial measurement
of the acquisition cost or other carrying amount of the asset
or liability.
For all other cash flow hedges, the gains or losses that are
recognised in equity are transferred to profit or loss in the same
year in which the hedged firm commitment affects the net profit
and loss, for example when the future sale actually occurs.
For derivatives that do not qualify for hedge accounting, any
gains or losses arising from changes in fair value are taken directly
to profit or loss.
Hedge accounting is discontinued when the hedging instrument
expires or is sold, terminated or exercised, or no longer qualifies
for hedge accounting. At that point in time, any cumulative gain
or loss on the hedging instrument recognised in equity is kept in
equity until the forecasted transaction occurs.
If a hedged transaction is no longer expected to occur, the
net cumulative gain or loss recognised in equity is transferred
to profit or loss.
m) Derecognition of financial assets and liabilities
Financial assets
A financial asset (or, where applicable, a part of a financial asset or
part of a group of similar financial assets) is derecognised when:
(cid:129)
(cid:129)
(cid:129)
The rights to receive cash flows from the asset have expired;
The Group retains the right to receive cash flows from
the asset, but has assumed an obligation to pay them in
full without material delay to a third party under a
“pass-through” arrangement; or
The Group has transferred its rights to receive cash flows
from the asset and either (a) has transferred substantially
all the risks and rewards of the asset, or (b) has neither
transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows
from an asset and has neither transferred nor retained
substantially all the risks and rewards of the asset nor transferred
control of the asset, the asset is recognised to the extent of
the Group’s continuing involvement in the asset. Continuing
involvement that takes the form of a guarantee over the
transferred asset is measured at the lower of the original carrying
amount of the asset and the maximum amount of consideration
received that the Group could be required to repay.
When continuing involvement takes the form of a written and/or
purchased option (including a cash-settled option or similar
provision) on the transferred asset, the extent of the Group’s
continuing involvement is the amount of the transferred asset that
the Group may repurchase, except that in the case of a written
put option (including a cash-settled option or similar provision)
on an asset measured at fair value, the extent of the Group’s
continuing involvement is limited to the lower of the fair value
of the transferred asset and the option exercise price.
Financial liabilities
A financial liability is derecognised when the obligation under the
liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from
the same lender on substantially different terms or the terms of an
existing liability are substantially modified, such an exchange or
modification is treated as a derecognition of the original liability
and the recognition of a new liability, and the difference in the
respective carrying amounts is recognised in profit or loss.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
n) Impairment of financial assets
The Group assesses at each reporting date whether a financial
asset or group of financial assets is impaired.
Financial assets carried at amortised cost
If there is objective evidence that an impairment loss on loans
and receivables carried at amortised cost has been incurred, the
amount of the loss is measured as the difference between the
asset’s carrying amount and the present value of estimated future
cash flows (excluding future credit losses that have not been
incurred) discounted at the financial asset’s original effective
interest rate (i.e. the effective interest rate computed at initial
recognition). The carrying amount of the asset is reduced either
directly or through use of an allowance account. The amount
of the loss is recognised in profit or loss.
The Group first assesses whether objective evidence of impairment
exists individually for financial assets that are individually
significant, and individually or collectively for financial assets that
are not individually significant. If it is determined that no objective
evidence of impairment exists for an individually assessed financial
asset, whether significant or not, the asset is included in a group
of financial assets with similar credit risk characteristics and that
group of financial assets is collectively assessed for impairment.
Assets that are individually assessed for impairment and for which
an impairment loss is or continues to be recognised are not
included in a collective assessment of impairment.
If, in a subsequent period, the amount of the impairment loss
decreases and the decrease can be related objectively to an event
occurring after the impairment was recognised, the previously
recognised impairment loss is reversed. Any subsequent reversal
of an impairment loss is recognised in profit or loss, to the extent
that the carrying value of the asset does not exceed its amortised
cost at the reversal date.
Financial assets carried at cost
If there is objective evidence that an impairment loss has been
incurred on an unquoted equity instrument that is not carried at
fair value (because its fair value cannot be reliably measured), or
on a derivative asset that is linked to and must be settled by
delivery of such an unquoted equity instrument, the amount of
the loss is measured as the difference between the asset’s carrying
amount and the present value of estimated future cash flows,
discounted at the current market rate of return for a similar
financial asset.
o) Foreign currency translation
Both the functional and presentation currency of K&S Corporation
Ltd and its Australian subsidiaries is Australian dollars (A$).
Transactions in foreign currencies are initially recorded in the
functional currency at the exchange rates ruling at the date
of the transaction. Monetary assets and liabilities denominated
in foreign currencies are retranslated at the rate of exchange
ruling at the reporting date.
All exchange differences in the consolidated financial report are
taken to profit or loss with the exception of differences on
foreign currency borrowings that provide a hedge against a net
investment in a foreign entity. These are taken directly to equity
until the disposal of the net investment, at which time they are
recognised in profit or loss.
Tax charges and credits attributable to exchange differences on
those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical
cost in a foreign currency are translated using the exchange rate
as at the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair
value was determined.
The functional currency of the overseas subsidiaries (K&S
Freighters Limited and Cochrane’s Transport Limited) is New
Zealand dollars (NZ$).
As at the reporting date, the assets and liabilities of these
overseas subsidiaries are translated into the presentation currency
of K&S Corporation Limited at the rate of exchange ruling at the
reporting date and the revenue and expenses are translated at the
weighted average exchange rates for the period. The exchange
differences arising on the retranslation are taken directly to a
separate component of equity.
On disposal of a foreign entity, the deferred cumulative amount
recognised in equity relating of that particular foreign operation
is recognised in profit or loss.
p) Investment in associates
The Group’s investment in its associates is accounted for under
the equity method of accounting in the consolidated financial
statements and at cost in the parent. The associates are entities
in which the Group has significant influence and that are neither
a subsidiary nor a joint venture.
Under the equity method, investments in associates are carried
in the consolidated Statement of Financial Position at cost plus
post-acquisition changes in the Group’s share of net assets
of the associate. Goodwill relating to an associate is included
in the carrying amount of the investment and is not amortised.
After application of the equity method, the Group determines
whether it is necessary to recognise any impairment loss with
respect to the Group’s net investment in associates. Goodwill
included in the carrying amount of the investment in associate
is not tested separately, rather the entire carrying amount of
the investment is tested for impairment as a single asset. If an
impairment loss is recognised, the amount is not allocated to
the goodwill of the associate.
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The Group’s share of associates’ post-acquisition profits or
losses is recognised in the Statement of Comprehensive
Income, and its share of post-acquisition movements in reserves
is recognised in reserves. The cumulative post-acquisition
movements are adjusted against the carrying amount of the
investment. Dividends receivable from the associates are
recognised in the parent entity’s Statement of Comprehensive
Income as a component of other income.
When the Group’s share of losses in an associate equals or exceeds
its interest in the associate, including any unsecured long-term
receivables and loans, the Group does not recognise further losses,
unless it has incurred obligations or made payments on behalf
of the associate.
The reporting dates of the associate and the Group are identical
and the associates’ accounting policies conform to those used by
the Group for like transactions and events in similar circumstances.
q) Income tax and other taxes
Current tax assets and liabilities for the current period and prior
periods are measured at the amount expected to be recovered
from or paid to the taxation authorities based on the current
period’s taxable income. The tax rates and tax laws used to
compute the amount are those that are enacted or substantively
enacted by the reporting date.
Deferred income tax is provided on all temporary differences at
the reporting date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.
Deferred income tax liabilities are recognised for all taxable
temporary differences except:
(cid:129)
(cid:129)
where the deferred income tax liability arises from the
initial recognition of an asset or liability in a transaction
that is not a business combination and, at the time of
the transaction, affects neither the accounting profit nor
taxable profit or loss; or
when the taxable temporary differences is associated with
investments in subsidiaries and associates and the timing of
the reversal of the temporary differences can be controlled
and it is probable that the temporary differences will
not reverse in the foreseeable future.
Deferred income tax assets are recognised for all deductible
temporary differences, carry-forward of unused tax credits and
unused tax losses, to the extent that it is probable that taxable
profit will be available against which the deductible temporary
differences, and the carry-forward of unused tax credits and
unused tax losses can be utilised, except:
(cid:129)
when the deferred income tax asset relating to the
deductible temporary difference arises from the initial
recognition of an asset or liability in a transaction that
is not a business combination and, at the time of the
transaction, affects neither the accounting profit nor
taxable profit or loss; or
(cid:129)
when the deductible temporary differences associated with
investments in subsidiaries, associates and interests in joint
ventures, deferred tax assets are only recognised to the
extent that it is probable that the temporary differences
will reverse in the foreseeable future and taxable profit will
be available against which the temporary differences can
be utilised.
The carrying amount of deferred income tax assets is reviewed
at each reporting date and reduced to the extent that it is no
longer probable that sufficient taxable profit will be available to
allow all or part of the deferred income tax asset to be utilised.
Unrecognised deferred income tax assets are reassessed at
each reporting date and are recognised to the extent that it has
become probable that future taxable profits will allow the
deferred tax asset to be recovered.
Deferred income tax assets and liabilities are measured at the
tax rates that are expected to apply to the year when the asset
is realised or the liability is settled, based on tax rates (and tax
laws) that have been enacted or substantively enacted at the
reporting date.
Income taxes relating to items recognised directly in equity are
recognised in equity and not in the profit or loss.
Deferred tax assets and deferred tax liabilities are offset only if a
legally enforceable right exists to set off current tax assets against
current tax liabilities and the deferred tax assets and liabilities
relate to the same taxable entity and the same taxable authority.
Other taxes
Revenues, expenses and assets are recognised net of the amount
of GST except:
(cid:129)
(cid:129)
when the GST incurred on a purchase of goods and services
is not recoverable from the taxation authority, in which case
the GST is recognised as part of the cost of acquisition of
the asset or as part of the expense item as applicable; and
receivables and payables are stated with the amount of
GST included.
The net amount of GST recoverable from, or payable to, the
taxation authority is included as part of receivables or payables
in the Statement of Financial Position.
Cash flows are included in the Statement of Cash Flows on a
gross basis and the GST component of cash flows arising from
investing and financing activities, which is recoverable from, or
payable to, the taxation authority are classified as operating
cash flows.
Commitments and contingencies are disclosed net of the amount
of GST recoverable from, or payable to, the taxation authority.
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r) Property, plant and equipment
Plant and equipment is stated at cost less accumulated
depreciation and any impairment in value.
Land and buildings are measured at fair value less accumulated
depreciation on buildings and less any impairment losses
recognised after the date of the revaluation.
Depreciation is calculated on a straight-line basis using the
following rates:
Land
Buildings
Motor vehicles
Plant and equipment
Not depreciated
2.5% p.a
5% – 40% p.a
5% – 27% p.a
i) Impairment
The carrying values of plant and equipment are reviewed for
impairment when events or changes in circumstances indicate
the carrying value may not be recoverable.
For an asset that does not generate largely independent
cash inflows, the recoverable amount is determined for the
cash-generating unit to which the asset belongs.
The recoverable amount of plant and equipment is the greater
of fair value less costs to sell and value in use. In assessing value
in use, the estimated future cash flows are discounted to their
present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks
specific to the asset.
Impairment exists when the carrying values of an asset or
cash-generating unit exceeds its estimated recoverable amount.
The assets or cash-generating units are written down to their
recoverable amount. For plant and equipment, impairment
losses are recognised in profit or loss. However, because land
and buildings are measured at revalued amounts, impairment
losses on land and buildings are treated as a revaluation
decrement.
ii) Revaluations
Following initial recognition at cost, land and buildings are
carried at a revalued amount which is the fair value at the date of
the revaluation less any subsequent accumulated depreciation
on buildings and accumulated impairment losses.
Fair value is determined by reference to market-based evidence,
which is the amount for which the assets could be exchanged
between a knowledgeable willing buyer and a knowledgeable
willing seller in an arm’s length transaction as at the valuation date.
Any revaluation increment is credited to the asset revaluation
reserve included in the equity section of the Statement of
Financial Position unless it reverses a revaluation decrease of the
same asset previously recognised in profit or loss.
Any revaluation decrease is recognised in profit or loss unless it
directly offsets a previous revaluation increase for the same asset
debited directly to the asset revaluation reserve.
In addition, any accumulated depreciation as at revaluation date
is eliminated against the gross carrying amount of the asset and
the net amount is restated to the revalued amount of the asset.
Upon disposal, any revaluation reserve relating to the particular
asset being sold is transferred to retained earnings.
Independent valuations are performed with sufficient regularity
to ensure that the carrying amount does not differ materially
from the asset's fair value at the reporting date.
iii) Derecognition and disposal
An item of property, plant and equipment is derecognised upon
disposal or when no future economic benefits are expected to
arise from the continued use of the asset.
Any gain or loss arising on derecognition of the asset (calculated
as the difference between the net disposal proceeds and the
carrying amount of the item) is included in profit or loss in the
period the item is derecognised.
s) Investments and other financial assets
Financial assets in the scope of AASB 139 Financial Instruments:
Recognition and Measurement are classified as either financial
assets at fair value through profit or loss, loans and receivables,
held-to-maturity investments, or available-for-sale investments,
as appropriate. When financial assets are recognised initially,
they are measured at fair value, plus, in the case of investments
not at fair value through profit or loss, directly attributable
transactions costs. The Group determines the classification of
its financial assets after initial recognition and, when allowed
and appropriate, re-evaluates this designation at each financial
year-end.
All regular way purchases and sales of financial assets are
recognised on the trade date i.e. the date that the Group
commits to purchase the asset. Regular way purchases or sales
are purchases or sales of financial assets under contracts
that require delivery of the assets within the period established
generally by regulation and convention in the marketplace.
Financial assets at fair value through profit or loss
Financial assets classified as held for trading are included in
the category “financial assets at fair value through profit or loss”.
Financial assets are classified as held for trading if they are
acquired for the purpose of selling in the near term. Derivatives
are also classified as held for trading unless they are designated
as effective hedging instruments. Gains or losses on investments
held for trading are recognised in profit or loss.
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Held-to-maturity investments
Non-derivative financial assets with fixed or determinable
payments and fixed maturity are classified as held-to-maturity
when the Group has the positive intention and ability to hold
to maturity. Investments intended to be held for an undefined
period are not included in this classification. Investments
that are intended to be held-to-maturity, such as bonds, are
subsequently measured at amortised cost.
This cost is computed as the amount initially recognised minus
principal repayments, plus or minus the cumulative amortisation
using the effective interest method of any difference between
the initially recognised amount and the maturity amount.
This calculation includes all fees and points paid or received
between parties to the contract that are an integral part of the
effective interest rate, transaction costs and all other premiums
and discounts.
For investments carried at amortised cost, gains and
losses are recognised in profit or loss when the investments
are derecognised or impaired, as well as through the
amortisation process.
Loans and receivables
Loans and receivables are non-derivative financial assets with
fixed or determinable payments that are not quoted in an active
market. Such assets are carried at amortised cost using the
effective interest method. Gains and losses are recognised in
profit or loss when the loans and receivables are derecognised or
impaired, as well as through the amortisation process.
The fair value of investments that are actively traded in organised
financial markets is determined by reference to quoted market
bid prices at the close of business on the reporting date.
For investments with no active market, fair value is determined
using valuation techniques. Such techniques include using
recent arm’s length market transactions; reference to the current
market value of another instrument that is substantially the same;
discounted cash flow analysis and option pricing methods.
t) Goodwill and intangibles
Goodwill
Goodwill acquired in a business combination is initially measured
at cost of the business combination, being the excess of the
consideration transferred over the fair value of the Group’s net
identifiable assets acquired and liabilities assumed. If this
consideration transferred is lower than the fair value of the net
identifiable assets acquired, the difference is recognised in profit
or loss.
Following initial recognition, goodwill is measured at cost less
any accumulated impairment losses.
Goodwill is reviewed for impairment, annually or more frequently
if events or changes in circumstances indicate that the carrying
value may be impaired.
For the purpose of impairment testing, goodwill acquired in a
business combination is, from the acquisition date, allocated to
each of the Group’s cash-generating units, or groups of
cash-generating units, that are expected to benefit from the
synergies of the combination, irrespective of whether other assets
or liabilities of the Group are assigned to those units or groups of
units. Each unit or group of units to which goodwill is allocated
represents the lowest level within the Group at which goodwill is
monitored for internal management purposes, and is not larger
than a operating segment determined in accordance with AASB 8.
Impairment is determined by assessing the recoverable amount
of the cash-generating unit (group of cash-generating units), to
which the goodwill relates.
When the recoverable amount of the cash-generating unit (group
of cash-generating units) is less than the carrying amount, an
impairment loss is recognised. When goodwill forms part of a
cash-generating unit (group of cash-generating units) and an
operation within that unit is disposed of, the goodwill associated
with the operation disposed of is included in the carrying amount
of the operation when determining the gain or loss on disposal of
the operation. Goodwill disposed of in this manner is measured
based on the relative values of the operation disposed of and
the portion of the cash-generating unit retained.
Impairment losses recognised for goodwill are not subsequently
reversed.
Intangibles
Intangible assets are initially measured at cost. Following
initial recognition, intangible assets are carried at cost
less any accumulated amortisation and any accumulated
impairment losses.
The useful lives of intangible assets are assessed to be either
finite or indefinite. Intangible assets with finite lives are amortised
over the useful life and assessed for impairment whenever
there is an indication that the intangible asset may be impaired.
The amortisation period and the amortisation method for
an intangible asset with a finite useful life is reviewed at each
financial year-end.
Changes in the expected useful life or the expected pattern of
consumption of future economic benefits embodied in the
asset are accounted for by changing the amortisation period or
method, as appropriate, which is a change in accounting
estimate. The amortisation expense on intangible assets with
finite lives is recognised in profit or loss in the expense category
consistent with the function of the intangible asset.
Intangible assets with indefinite lives are tested for impairment
annually either individually or at the cash-generating unit level.
Such intangibles are not amortised. The useful life of an intangible
asset with an indefinite life is reviewed each reporting period to
determine whether indefinite life assessment continues to be
supportable. If not, the change in the useful life assessment from
indefinite to finite is accounted for as a change in an accounting
estimate and is thus accounted for on a prospective basis.
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If that is the case, the carrying amount of the asset is increased to
the recoverable amount. That increased amount cannot exceed
the carrying amount that would have been determined, net
of depreciation, had no impairment loss been recognised for the
assets in prior years. Such reversal is recognised in the profit or
loss unless the asset is carried at revalued amount, in which case
the reversal is treated as a revaluation increase.
After such a reversal, the depreciation charge is adjusted in future
periods to allocate the asset’s revised carrying amount, less any
residual value, on a systematic basis over its remaining useful life.
v) Trade and other payables
Trade payables and other payables are carried at amortised costs
and represent liabilities for goods and services provided to the
Group prior to the end of the financial year that are unpaid and
arise when the Group becomes obliged to make future payments
in respect of the purchase of these goods and services.
w) Interest-bearing loans and borrowings
All loans and borrowings are initially recognised at cost, being
the fair value of the consideration received net of issue costs
associated with the borrowing.
After initial recognition, interest-bearing loans and borrowings
are subsequently measured at amortised cost using the effective
interest method. Amortised cost is calculated by taking
into account any issue costs, and any discount or premium on
settlement.
Gains and losses are recognised in profit or loss when the liabilities
are derecognised, as well as through the amortisation process.
x) Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event, it is
probable that an outflow of resources embodying economic
benefits will be required to settle the obligation and a reliable
estimate can be made of the amount of the obligation.
When the Group expects some or all of a provision to be
reimbursed, for example under an insurance contract, the
reimbursement is recognised as a separate asset but only when
the reimbursement is virtually certain. The expense relating
to any provision is presented in the profit or loss net of any
reimbursement.
If the effect of the time value of money is material, provisions
are discounted using a current pre-tax rate that reflects the risks
specific to the liability. When discounting is used, the increase
in the provision due to the passage of time is recognised as a
finance cost.
Development costs
An intangible asset arising from development expenditure on an
internal project is recognised only when the Group can
demonstrate the technical feasibility of completing the intangible
asset so that it will be available for use or sale, its intention to
complete and its ability to the use or sell the asset, how the asset
will generate future economic benefits, the availability of resources
to complete the development and the ability to measure reliably
the expenditure attributable to the intangible asset during
the development.
Following initial recognition of the development expenditure,
the cost model is applied requiring the asset to be carried at cost
less any accumulated amortisation and accumulated impairment
losses. Any expenditure so capitalised is amortised over the
period of expected benefits from the related project.
The carrying value of an intangible asset arising from
development expenditure is tested for impairment annually when
the asset is not yet available for use, or more frequently when
an indication of impairment arises during the reporting period.
u) Impairment of assets
The Group assesses at each reporting date whether there is an
indication that an asset may be impaired. If any such indication
exists, or when annual impairment testing for an asset is required,
the Group makes an estimate of the asset’s recoverable amount.
An asset’s recoverable amount is the higher of its fair value less
costs to sell or its value in use and is determined for an individual
asset, unless the asset does not generate cash inflows that are
largely independent from other assets or groups of assets and
the asset’s value in use cannot be estimated to be close to its fair
value. In such cases the asset is tested for impairment as part of
the cash-generating unit to which it belongs. When the carrying
amount of an asset or cash-generating unit exceeds its recoverable
amount, the asset or cash-generating unit is considered impaired
and is written down to its recoverable amount.
In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of
money and the risks specific to the asset. Impairment losses
are recognised in those expense categories consistent with the
function of the impaired asset unless the asset is carried at
revalued amounts (in which case the impairment loss is treated
as a revaluation decrease).
An assessment is also made at each reporting date as to whether
there is any indication that previously recognised impairment
losses may no longer exist or may have decreased.
If such indication exists, the recoverable amount is estimated.
A previously recognised impairment loss is reversed only if there
has been a change in the estimates used to determine the asset’s
recoverable amount since the impairment loss was recognised.
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y) Employee leave benefits
i) Wages, salaries, annual leave and sick leave
Liabilities for wages and salaries, including non-monetary benefits,
annual leave and accumulating sick leave expected to be settled
within 12 months of the reporting date are recognised in current
provisions in respect of employees’ service up to the reporting
date. They are measured at the amounts expected to be paid
when the liabilities are settled. Liabilities for non-accumulating
sick leave are recognised when the leave is taken and are
measured at the rates paid or payable.
ii) Long service leave
The liability for long service leave is recognised in the provision for
employee benefits and measured as the present value of expected
future payments to be made in respect of services provided by
employees up to the reporting date using the projected unit credit
method. Consideration is given to expected future wages and
salary levels, experience of employee departures, and periods of
service. Expected future payments are discounted using market
yields at the reporting date on national government bonds
with terms to maturity and currencies that match, as closely as
possible, the estimated future cash outflows.
iii) Defined contribution superannuation funds
The commitment to defined contribution plans is limited to
making contributions in accordance with the minimum statutory
requirements. The Group does not have any legal or constructive
obligation to pay further contributions if the fund does not hold
sufficient assets to pay all employee benefits relating to current
and past employee services.
Obligations for contributions to defined contribution
superannuation funds are recognised as an expense in profit
or loss as incurred.
iv) Directors retirement benefits
Directors commencing after 30 June 2004 are not eligible for
any benefit under the Directors Retirement Scheme. However,
Non-Executive Directors appointed before that date are eligible to
receive retirement benefits on retiring as a Director. In July 2004,
the Directors Retirement benefit calculation changed, to freeze
the accumulation of years of service for each Director.
z) Contributed equity
Ordinary shares are classified as equity. Any transaction costs
arising on the issue of ordinary shares are recognised directly in
equity as a reduction of the proceeds received.
aa) Earnings per share
Basic earnings per share is calculated as net profit attributable
to members of the parent, adjusted to exclude any costs of
servicing equity (other than dividends), divided by the weighted
average number of ordinary shares.
Diluted earnings per share is calculated as net profit attributable
to members of the parent, adjusted for:
(cid:129)
(cid:129)
(cid:129)
Costs of servicing equity (other than shares);
The after tax effect of dividends and interest associated with
dilutive potential ordinary shares that have been recognised
as expenses;
Other non-discretionary changes in revenues or expenses
during the period that would result from dilution of potential
ordinary shares;
divided by the weighted average number of ordinary shares and
dilutive potential ordinary shares.
bb) Significant account judgments, estimates
and assumptions
The preparation of the financial statements requires management
to make judgments, estimates and assumptions that affect the
reported amounts in the financial statements. Management
continually evaluates its judgments and estimates in relation to
assets, liabilities, contingent liabilities, revenue and expenses.
Management bases its judgments and estimates on historical
experience and on other various factors it believes to be
reasonable under the circumstances, the result of which form
the basis of the carrying values of assets and liabilities that are
not readily apparent from other sources.
Management has identified the following critical accounting
policies for which significant judgments, estimates and
assumptions are made. Actual results may differ from these
estimates under different assumptions and conditions and
may materially affect financial results or the financial position
reported in future periods.
Further details of the nature of these assumptions and conditions
may be found in the relevant notes to the financial statements.
i) Significant accounting judgments
Recovery of deferred tax assets
Deferred tax assets are recognised for deductible temporary
differences as management considers that it is probable
that future taxable profits will be available to utilise those
temporary differences. Significant management judgment is
required to determine the amount of deferred taxes that can
be recognised, based upon the likely timing and the level of
future taxable profits.
Taxation
The Group’s accounting policy for taxation requires management
judgment as to the types of arrangements considered to be a
tax on income in contrast to an operating cost. Judgment is also
required in assessing whether deferred tax assets and certain
deferred tax liabilities are recognised on the statement of financial
position. Deferred tax assets are recognised only where it is
considered more likely than not that they will be recovered, which
is dependent on sufficient future profits.
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ii) Significant accounting estimates and assumptions
Impairment of goodwill
The Group determines whether goodwill is impaired at least on
an annual basis. This requires an estimation of the recoverable
amount of the cash generating units to which the goodwill is
allocated. The assumptions used in this estimation of recoverable
amount and the carrying amount of goodwill are discussed
in Note 16.
Make good provisions
Provision is made for anticipated costs of future restoration of
leased storage premises. The future cost estimates are discounted
to their present value. The related carrying amounts are disclosed
in Note 19.
Allowance for impairment loss on trade receivables
Where receivables are outstanding beyond normal trading
terms, the likelihood of recovery of these receivables is assessed
by management. This assessment is based on supportable
past collection history and historical write-offs of bad debts.
The allowance for impairment loss is outlined in Note 10.
Long service leave provision
As discussed in Note 2 (y), the liability for long service is
recognised and measured at the present value of the estimated
future cash flows to be made in respect of all employees at
balance date. In determining the present value of the liability,
attrition rates and pay increases through promotion and inflation
have been taken into account.
Impairment of non-financial assets other than goodwill
The Group assesses impairment of all assets at each reporting
date by evaluating conditions specific to the Group and to the
particular asset that may lead to impairment. If an impairment
trigger exists the recoverable amount of the asset is determined.
This involves value in use calculations, which incorporate a
number of key estimates and assumptions.
3 Financial Risk Management Objectives
and Policies
The Group’s principal financial instruments, other than
derivatives, comprise bank loans and overdrafts, finance leases
and hire purchase contracts, and cash deposits.
The main purpose of these financial instruments is to raise
finance for the Group’s operations. The Group has various other
financial assets and liabilities such as trade receivables and trade
payables, which arise directly from its operations. The Group also
enters into derivative transactions, principally interest rate swap
contracts. The purpose is to manage the interest rate risk arising
from the Group’s operations and its sources of finance. The main
risks arising from the Group’s financial instruments are cash flow
interest rate risk, liquidity risk, foreign currency risk and credit risk.
The Board reviews and agrees policies for managing each of
these risks and they are summarised below.
Details of the significant accounting policies and methods
adopted, including the criteria for recognition, the basis of
measurement and the basis on which income and expenses are
recognised, in respect of each class of financial asset, financial
liability and equity instrument are disclosed in Note 2 to the
financial statements.
Risk exposures and responses
Fair Value
The Group uses various methods in estimating the fair value of a
financial instrument. The methods comprise:
Level 1 – the fair value is calculated using quoted prices in
active markets.
Level 2 – the fair value is estimated using inputs other than
quoted prices in level 1 that are observable for the asset or liability,
either directly (as prices) or indirectly (derived from prices).
Level 3 – the fair value is estimated using inputs for the asset or
liability that are not based on observable market data.
The fair value of the financial instruments as well as the methods
used to estimate the fair values are summarised in the table below.
Year ended 30 June 2011
Year ended 30 June 2010
Quoted Valuation Valuation Quoted Valuation Valuation
market price technique technique market price technique technique
(Level 1) – market – non-market (Level 1) – market – non-market
observable observable observable observable
inputs inputs inputs inputs
(Level 2) (Level 3) (Level 2) (Level 3)
$’000 $’000 $’000 $’000 $’000 $’000
CONSOLIDATED
Financial liabilities
Derivative instruments
– Interest rate swaps - (712) - - (1,123) -
- (712) - - (1,123) -
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For financial instruments not quoted in active market, the Group
uses valuation techniques such as present value techniques,
comparison to similar instruments for which market observable
prices exist and other relevant models used by market participants.
These valuation techniques use both observable and unobservable
market inputs.
The consolidated entity also minimises concentrations of credit
risk by undertaking transactions with a large number of customers
and counterparties in various states. The Group is not materially
exposed to any individual customer or individual state.
Concentration of credit risk on trade debtors due from customers
are: Transport 94% (2010: 93%) and Fuel 6% (2010: 7%).
There were no transfers between Level 1 and Level 2 during
the year.
Credit risk
Credit risk represents the loss that would be recognised if
counterparties failed to perform as contracted. It is the
Group’s policy that customers who wish to trade on credit more
than $1,000 per week are subject to credit verification procedures
including an assessment of their independent credit rating,
financial position, past experience and industry reputation.
In addition, receivable balances are monitored on an ongoing
basis with the result that the Group’s exposure to bad debts is
not significant.
Foreign currency risk
The Group’s exposure to currency risk is minimal.
Interest rate risk
The Group’s exposure to the risk of changes in market interest
rates relates primarily to the Group’s long term debt obligations
with a floating interest rate. The level of debt is disclosed in
Note 18.
At balance date, the Group had the following mix of financial
assets and liabilities exposed to variable interest rate risk that are
not designated in cash flow hedges:
Consolidated
2011 2010
$’000 $’000
Financial assets
– Cash and cash equivalents 9,747 12,042
Financial liabilities
– Bank loans (38,621) (23,803)
Net exposure (28,874) (11,761)
The Group’s policy is to manage its interest cost using a mix of
fixed and variable rate debt. To manage this mix in a
cost-efficient manner, the Group enters into interest rate swaps,
in which the Group agrees to exchange, at specified intervals,
the difference between fixed and variable rate interest amounts
calculated by reference to an agreed-upon notional principal
amount. These swaps are intended to hedge underlying debt
obligations, however derivatives held by the Group do not qualify
for hedge accounting and as a result any gains or losses arising
from changes in fair value are taken directly to the Statement
of Comprehensive Income. The net gain is reported within other
income and the net loss is reported within other expenses.
Interest rate swap contracts are outlined in Note 21.
The Group constantly analyses its interest rate exposure.
Within this analysis consideration is given to potential renewals
of existing positions, alternative hedging positions and the mix
of fixed and variable interest rates.
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The following sensitivity analysis is based on the interest rate risk
exposures in existence at the Balance Sheet date:
Judgements of reasonably possible movements: Post Tax Profit Equity
Higher/(Lower) Higher/(Lower)
2011 2010 2011 2010
$’000 $’000 $’000 $’000
Consolidated
+ 1% (100 basis points) (152) (27) (152) (27)
– 0.5% (50 basis points) 57 13 57 13
The movements in profit are due to higher/lower interest costs
from variable debt and cash balances.
Significant assumptions used in the interest rate sensitivity
analysis include:
(cid:129)
(cid:129)
(cid:129)
Reasonably possible movements in interest rates were
determined based upon the Group’s current credit rating
and debt mix in Australia and New Zealand.
A price sensitivity of derivatives has been based on
reasonably possible movements in the spot rate.
The net exposure at balance date is representative of what
the Group was and is expecting to be exposed to in the
next twelve months.
Liquidity risk
Liquidity risk arises from the financial liabilities of the Group and
the Group’s subsequent ability to meet their obligations to repay
their financial liabilities as and when they fall due.
The Group’s objective is to maintain a balance between
continuity of funding and flexibility through the use of bank
overdrafts, bank loans, finance leases and committed lines
of credit.
The Group’s policy in managing liquidity risk is to ensure the
Group always has sufficient liquidity to meet its financial
obligations when due, as well as to accommodate unforeseen
cash requirements over both the short and long term.
i) Non-derivative financial liabilities
The following liquidity risk disclosure reflect all contractually
fixed pay-offs, repayments and interest resulting from recognised
financial liabilities and financial guarantees as of 30 June 2011.
For the other obligations the respective undiscounted cash flows
for the respective upcoming fiscal years are presented. The timing
of cash flows for liabilities is based on the contractual terms of
the underlying contract.
However, where the counterparty has a choice of when the
amount is paid, the liability is allocated to the earliest period in
which the Group can be required to pay. When the Group
is committed to make amounts available in instalments, each
instalment is allocated to the earliest period in which the
Group is required to pay. For financial guarantee contracts, the
maximum amount of the guarantee is allocated to the earliest
period in which the guarantee can be called.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
The following table reflects a balanced view
of cash inflows and outflows of non-derivative
financial instruments:
Greater
Less than 1 to 2 2 to 5 than
1 year years years 5 years Total
$’000 $’000 $’000 $’000 $’000
Year ended 30 June 2011
Liquid financial assets
Cash and cash equivalents 9,747 - - - 9,747
Trade and other receivables 68,299 1,324 365 - 69,988
78,046 1,324 365 - 79,735
Financial liabilities
Interest bearing loans and borrowings (20,888) (21,551) (58,730) - (101,169)
Trade and other payables (46,457) (4,929) - - (51,386)
Financial guarantees (13,613) - - - (13,613)
(80,958) (26,480) (58,730) - (166,168)
Net inflow/(outflow) (2,912) (25,156) (58,365) - (86,433)
The Group’s available credit facilities
are outlined in Note 18.
ii) Derivative financial liabilities
Due to the unique characteristics and
risks inherent to derivative instruments,
the Group separately monitors the
liquidity risk arising from transacting
in derivative instruments.
The table below details the liquidity risk
arising from the derivative liabilities held
by the Group at balance date.
Year ended 30 June 2011
Derivative liabilities – net settled (712) - - - (712)
Net maturity (712) - - - (712)
63
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
4 Operating Segments
Accounting policies and inter-segment transactions
Identification of reportable segments
The Group has identified its operating segments based on the
internal reports that are reviewed and used by the Executive
Management team in assessing performance and in determining
the allocation of resources.
The operating segments are identified by Management based
on the nature of the services provided, the identity of the service
line manager and the country of origin. Discrete financial
information about each of these operating businesses is reported
to the Executive Management team on at least a weekly basis.
The reportable segments are based on aggregated operating
segments determined by the similarity of the services provided
and/or the products sold, as these are the sources of the Group’s
major risks and have the most effect on the rates of return.
The Group comprises the following main business segments,
based on the consolidated entity’s management reporting system:
K&S Aus – The provision of interstate and local logistical
services to customers under the brand K&S in Australia.
K&S Fuels – The distribution of fuel to fishing, farming and
retail customers within the South East of South Australia.
DTM – The provision of local logistical services to customers
under the brand DTM.
Regal/Pacific – The provision of logistical services to
customers under the brand Regal/Pacific Transport in
Western Australia.
(cid:129)
(cid:129)
(cid:129)
(cid:129)
(cid:129)
The accounting policies used by the Group in reporting segments
are the same as those contained in Note 2 to the accounts and in
the prior period except as detailed below:
Inter-entity sales
Inter-entity sales are recognised based on an internally set
transfer price. The price is set periodically and aims to reflect
what the business operations could achieve if they sold their
output and services to external parties at arm’s length.
Corporate charges
Corporate charges are allocated to each operating segment
on a proportionate basis linked to segment revenue so as to
determine a segmental result.
Segment loans payable and loans receivable
Segment loans are initially recognised at the consideration
received excluding transaction costs. Intersegment loans
receivable and loans payable that earn or incur non-market
interest are not adjusted to fair value based on market
interest rates.
It is the Group’s policy that if items of revenue and expense are
not allocated to operating segments then any associated assets
or liabilities are also not allocated to segments. This is to avoid
asymmetrical allocations within segments which Management
believe would be inconsistent.
The following items and associated assets and liabilities are not
allocated to operating segments as they are not considered part
of the core operations of any segment:
K&S NZ – The provision of logistical services to customers
under the brand K&S in New Zealand.
(cid:129)
(cid:129)
Finance costs.
Fair value gains/losses on derivative classified as held
for trading.
The following table presents revenue and profit information
for reportable segments for the years ended 30 June 2011 and
30 June 2010.
64
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K&S Regal/ K&S K&S Unallocated
Aust Pacific Fuels DTM NZ Items Total
$’000 $’000 $’000 $’000 $’000 $’000 $’000
Year ended 30 June 2011
Revenue
Sales to external customers 312,384 72,381 61,719 54,528 22,263 - 523,275
Inter-segment sales 504 850 38,929 433 - - 40,716
Total segment revenue 312,888 73,231 100,648 54,961 22,263 - 563,991
Segment net operating profit after tax 12,325 3,891 868 1,720 270 - 19,074
Interest revenue - - - - - 89 89
Interest expense - - - - - (8,404) (8,404)
Depreciation and amortisation (18,800) (3,683) (107) (93) (2,406) - (25,089)
Share of profit of associate 86 - - - 112 - 198
Income tax expense (3,635) (1,623) (372) (732) 22 - (6,340)
Segment assets 311,688 24,669 17,052 23,291 24,011 - 400,711
Investment in associate 86 - - - 113 - 199
Capital expenditure (27,603) - - - (6,638) - (34,241)
Segment liabilities (135,833) (14,584) (6,450) (1,661) (14,761) - (173,289)
Cash flow information
Net cash flow from operating activities 21,024 7,574 863 2,742 1,927 - 34,130
Net cash flow from investing activities (50,367) - - 816 948 - (48,603)
Net cash flow from financing activities 26,630 (7,574) (863) (3,558) (2,424) - 12,211
Year ended 30 June 2010
Revenue
Sales to external customers 317,730 10,773 58,629 46,833 20,140 - 454,105
Inter-segment sales 167 - 33,716 358 - - 34,241
Total segment revenue 317,897 10,773 92,345 47,191 20,140 - 488,346
Segment net operating profit after tax 17,245 564 1,124 1,547 172 - 20,652
Interest revenue - - - - - 212 212
Interest expense - - - - - (5,218) (5,218)
Depreciation and amortisation (17,004) (556) (117) (91) (2,374) - (20,142)
Share of profit of associate 225 - - - 14 - 239
Income tax expense (6,289) (241) (495) (644) 91 - (7,578)
Segment assets 278,305 4,546 15,612 16,204 21,309 - 335,976
Investment in associate - - - - - - -
Capital expenditure (17,481) - - - (1,008) - (18,489)
Segment liabilities (119,563) (3,982) (5,877) (2,233) (10,603) - (142,258)
Cash flow information
Net cash flow from operating activities 29,047 1,120 1,483 2,231 2,066 - 35,947
Net cash flow from investing activities (26,501) - - 270 (15) - (26,246)
Net cash flow from financing activities (4,657) (1,120) (1,483) (2,504) (2,626) - (12,390)
65
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Consolidated
2011 2010
$’000 $’000
i) Segment revenue reconciliation to the
Statement of Comprehensive Income
Total segment revenue 563,991 488,346
Interest revenue 89 212
Inter-segment sales elimination (40,716) (34,241)
Total revenue 523,364 454,317
Revenue from external customers by geographical location is
detailed below. Revenue is attributed to geographic location
based on the location of the customers. The Company does
not have external revenues from external customers that are
attributable to any foreign country other than as shown.
Australia 501,101 434,177
New Zealand 22,263 20,140
Total revenue 523,364 454,317
ii) Segment net operating profit before
tax reconciliation to the Statement of
Comprehensive Income
The Executive Management committee meets on a monthly
basis to assess the performance of each segment by analysing the
segment’s net operating profit after tax. A segment’s net
operating profit after tax excludes non operating income and
expense such as fair value gains and losses and gains on disposal
of assets. Income tax expenses are calculated as 30% (2010: 30%)
of the segment’s net operating profit.
Reconciliation of segment net operating profit after tax to
net profit before tax.
Segment net operating profit after tax 19,074 20,652
Income tax expense 30% (2010: 30%) 8,131 8,807
Fair value gain/(loss) on held for trading derivatives 401 668
Finance costs (8,404) (5,218)
Net gains on disposal of property plant and equipment 1,966 1,408
Total net profit before tax per Statement of Comprehensive Income 21,168 26,317
iii) Segment assets reconciliation to the
Statement of Financial Position
Segment assets are those operating assets of the entity that
the Executive Management committee views as directly
attributing to the performance of the segment. These assets
include plant and equipment, receivables, inventory, intangibles
and excludes deferred tax assets.
Reconciliation of segment operating assets to total assets.
Segment operating assets 400,711 335,976
Intersegment eliminations (19,440) (15,659)
Deferred tax assets 6,731 5,776
Total assets per the Statement of Financial Position 388,002 326,093
66
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Consolidated
2011 2010
$’000 $’000
The analysis of location on non-current assets other than
financial instruments and deferred tax assets is as follows:
Australia 275,226 226,006
New Zealand 20,544 18,085
Total assets per the Statement of Financial Position 295,770 244,091
iv) Segment liabilities reconciliation to the
Statement of Financial Position
Segment liabilities include trade and other payables and
debt. The Group has a centralised finance function that is
responsible for raising debt and capital for the entire
operations. Each entity or business uses this central function
to invest excess cash or obtain funding for its operations.
The Executive Management committee reviews the level of
debts for each segment in the monthly meetings.
Reconciliation of segment operating liabilities to total liabilities.
Segment operating liabilities 173,289 142,258
Intersegment eliminations (19,440) (15,659)
Deferred tax liabilities 18,941 18,032
Income tax payable 894 1,270
Derivatives 712 1,123
Total liabilities per the Statement of Financial Position 174,396 147,024
5 Revenue and Expenses
Revenue
a) Rendering of services 461,556 395,476
Sale of goods 61,719 58,629
Finance revenue 89 212
Total revenue 523,364 454,317
b) Other income
– Net gains on disposal of property, plant and equipment 1,966 1,408
2,218
– Other
3,252
Total other income 5,218 3,626
c) Finance costs
– Related parties – other 5 5
– Other parties 4,772 2,184
– Finance charges on hire purchase contracts 3,627 3,029
Total finance costs 8,404 5,218
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Consolidated
2011 2010
$’000 $’000
d) Depreciation and amortisation expense
Depreciation
– Buildings 1,920
1,491
20,081 16,176
– Motor vehicles
2,351
– Plant and equipment
2,627
Amortisation
124
– IT Development costs
461
Total depreciation and amortisation expenses
25,089
20,142
e) Employee benefits expense
– Wages and salaries 118,392 96,599
– Workers’ compensation costs 5,289 5,452
– Long service leave provision 1,493 627
– Annual leave provision 7,415 6,323
– Payroll tax 6,606 5,317
– Defined contribution plan expense 8,640 6,831
– Directors retirement scheme expense 40 20
Total employee benefits expense 147,875 121,169
f) Operating lease rental expense
– Property 10,148 5,782
– Plant and equipment 2,580 2,949
12,728 8,731
g) Derivatives
– Net (gain)/loss on derivatives classified as held for trading * (401) (668)
* Derivatives held by the Group do not qualify for hedge accounting and
as a result any gains or losses arising from changes in fair value are
taken directly to the Statement of Comprehensive Income. The net
gain is reported within other income and the net loss is reported within
other expenses. Interest rate swap contracts are outlined in Note 21.
6 Income Tax
The major components of income tax expense are:
Statement of Comprehensive Income
Current income tax
– Current income tax charge 6,438 7,891
– Adjustments in respect of current income tax of previous years 5 (245)
Deferred income tax
– Relating to origination and reversal of temporary differences (103) (68)
Income tax expense reported in the
Statement of Comprehensive Income 6,340 7,578
68
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Consolidated
2011 2010
$’000 $’000
Statement of Changes in Equity
Deferred income tax related to items charged or
credited directly to equity
– Net gain on revaluation of land and buildings - 2,277
Income tax expense reported in equity - 2,277
A reconciliation between tax expense and the product
of accounting profit before income tax multiplied
by the Group’s applicable income tax rate is as follows:
Accounting profit before income tax 21,168 26,317
At the Group’s statutory income tax rate of 30% (2010: 30%) 6,350 7,895
– Expenditure not allowable for income tax purposes (15) 53
– Adjustments in respect of current income tax of previous years 5 (245)
– Investment allowance - (125)
Income tax expense reported in the
Statement of Comprehensive Income 6,340 7,578
2011 2011 2010 2010
$’000 $’000 $’000 $’000
Current Deferred Current Deferred
Income Income Income Income
Tax Tax Tax Tax
Consolidated
Recognised deferred tax assets and liabilities
Opening balance (1,270) (12,256) (1,037) (10,114)
Charged to income (6,443) 103 (7,646) 68
Charged to equity - 170 - (2,277)
Other payments 6,819 - 7,413 -
Acquisitions/Disposals - (227) - 67
Closing balance (894) (12,210) (1,270) (12,256)
Tax expense in Statement of Comprehensive Income 6,340 7,578
Amounts recognised in the Statement of Financial Position:
Deferred tax asset 6,731 5,776
Deferred tax liability (18,941) (18,032)
(12,210) (12,256)
69
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Statement of Financial Position
2011 2010
$’000 $’000
Deferred income tax
Deferred income tax at 30 June relates to the following:
Consolidated
Deferred tax liabilities
– Accelerated depreciation for tax purposes (6,100) (5,390)
– Revaluations of land and buildings to fair value (11,258) (11,258)
– Trade and other receivables not derived for tax purposes (1,583) (1,384)
(18,941) (18,032)
Deferred tax assets
– Equity raising costs 136 -
– Accelerated depreciation for accounting purposes 633 474
– Trade and other payables not currently deductible 1,091 1,181
– Trade and other receivables not derived for tax purposes 89 128
– Employee entitlements not currently deductible 4,782 3,993
Gross deferred income tax assets 6,731 5,776
Tax consolidation
Effective 1 July 2002, for the purposes of income taxation, K&S Corporation Limited and its 100% owned Australian resident
subsidiaries formed a tax consolidated group. K&S Corporation Limited is the head entity of the tax consolidated group.
Members of the group entered into a tax sharing arrangement in order to allocate income tax expense to the wholly-owned
subsidiaries. In addition, the agreement provides for the allocation of income tax liabilities between the entities should the head
entity default on its tax payment obligations. At balance date, the possibility of default is remote.
K&S Corporation Limited formally notified the Australian Tax Office of its adoption of the tax consolidation regime when
lodging its 30 June 2003 consolidated tax return.
Tax effect accounting by members of the tax consolidated group
Members of the tax consolidated group have entered into a tax funding agreement. The tax funding agreement requires members
of the tax consolidated group to make contributions to the head company for tax liabilities and deferred tax balances arising
from transactions occurring after the implementation of tax consolidation. Contributions are payable following the payment of
the liabilities by K&S Corporation Limited. The assets and liabilities arising under the tax funding agreement are recognised as
intercompany assets and liabilities with a consequential adjustment to income tax expense or benefit.
In addition, the agreement provides for the allocation of income tax liabilities between the entities should the head entity default on
its tax payment obligations or upon leaving the Group.
In preparing the accounts for K&S Corporation Ltd for the current year, the following amounts have been recognised as tax
consolidation adjustments:
2011 2010
$’000 $’000
Parent
Total increase/(reduction) to tax expense of
K&S Corporation Ltd (6,712) (7,920)
Total increase/(reduction) to inter-company assets of
K&S Corporation Ltd 6,712 7,920
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
7 Earnings per Share
Basic earnings per share amounts are calculated by dividing net profit after tax for
the year attributable to ordinary equity holders of the parent by the weighted average
number of ordinary shares outstanding during the year.
Diluted earnings per share amounts are calculated by dividing the net profit attributable
to ordinary equity holders of the parent by the weighted average number of ordinary
shares outstanding during the year plus the weighted average number of ordinary shares
that would be issued on the conversion of all the dilutive potential ordinary shares
into ordinary shares.
The following reflects the income and share data used in the basic and diluted
earnings per share computations:
Consolidated
2011 2010
$’000 $’000
Net profit attributable to ordinary equity holders of the parent from continuing operations 14,828 18,739
Net profit attributable to ordinary equity holders of the parent 14,828 18,739
2011 2010
Thousands Thousands
Weighted average number of ordinary shares used in the calculation of the
basic earnings per share 80,849 70,281
Effect of dilution
– Ordinary Shares - -
Weighted average number of ordinary shares adjusted for the effect of dilution 80,849 70,281
Earnings per share calculations reflect the “bonus” element of the Rights Issue conducted
in December 2010. As such, an adjustment is required to the number of shares
outstanding before the share purchase plan to reflect the “bonus” element. Prior year
comparatives earnings per share figures have been restated to take account of this.
Consolidated
2011 2010
$’000 $’000
8 Dividends Paid and Proposed
Declared and paid during the year:
Dividends on ordinary shares
Final franked dividend for 2010: 7.0 cents (2009: 5.0 cents) 5,148 3,510
Interim franked dividend for 2011: 5.0 cents (2010: 7.0 cents) 4,303 4,957
9,451 8,467
Proposed (not recognised as a liability as at 30 June):
Dividends on ordinary shares
Final franked dividend for 2011: 5.0 cents (2010: 7.0 cents) 4,314 5,148
Franking credit balance
The amount of franking credits available for the subsequent year are:
(cid:129) franking account balance as at the end of the financial year at 30% (2010: 30%) 41,493 38,465
(cid:129) franking credits that will arise from the payment of income tax payable as at
the end of the financial year 1,630 2,262
71
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Consolidated
2011 2010
$’000 $’000
The amount of franking credits available for future reporting periods:
(cid:129) impact on franking account of dividends proposed but not recognised as a
distribution to equity holders during the period (1,849) (2,206)
41,274 38,521
Tax rates
The tax rate at which dividends have been franked is 30% (2010: 30%).
Dividends proposed will be franked at the rate of 30% (2010: 30%).
9 Cash and Cash Equivalents
Cash 46
Cash deposits with banks 9,701
9,747
42
12,000
12,042
Cash at bank earns interest at floating rates based on daily bank deposit rates.
Reconciliation of net profit after income tax to net cash flows from operations
Net profit after income tax 14,828 18,739
Add/(less) items classified as investing/financing activities:
(1,408)
– (Profit)/loss on sale of non-current assets (1,966)
Add/(less) non-cash items:
– Amounts set aside to provisions 1,661 569
– Depreciation 25,089 20,142
– Share of associates’ net profit (198) (239)
– Dividends received from associates - 268
Net cash provided by operating activities before changes in assets and liabilities 39,414 38,071
CHANGE IN ASSETS AND LIABILITIES
483
(Increase)/decrease in inventories (286)
(187)
(Increase)/decrease in income tax benefit (686)
(409)
(Increase)/decrease in prepayments (262)
(Increase)/decrease in receivables (2,821) (10,306)
7,943
Decrease)/increase in trade creditors (1,030)
235
(Decrease)/increase in income taxes payable (376)
(Decrease)/increase in deferred taxes payable 413
113
Exchange rate changes on opening cash balances (236) 4
Net cash provided by/(used in) operating activities 34,130
35,947
Disclosure of financing facilities
Refer to Note 18.
Disclosure of non-cash financing and investing activities
Refer to Note 14(d).
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Consolidated
2011 2010
$’000 $’000
10 Trade and Other Receivables
Current
54,052
Trade debtors 64,751
(446)
Allowance for impairment loss (a) (292)
64,459 53,606
3,141
Sundry debtors 3,037
67,496 56,747
Non-current
Sundry debtors 776 515
Related party receivables
– Employee share plan loans 1,258 1,578
2,034 2,093
a) Allowance for impairment loss
Trade receivables are non-interest bearing and are generally
on 30-90 day terms. An allowance for doubtful debts is
made when there is objective evidence that a trade receivable
is impaired. The amount of the allowance/impairment loss
has been measured as the difference between the carrying
amount of the trade receivables and the estimated future cash
flows expected to be received for the relevant debtors.
Movements in the provision for impairment loss were as follows:
At 1 July 446 478
Charge for the year 2 151
Amounts written off (156) (183)
At 30 June 292 446
At 30 June, the aging analysis of trade receivables is as follows:
Consolidated Total 0-30 days 31-60 days 61-90 days 61-90 days +91 days +91 days
PDNI* CI** PDNI* CI**
2011 64,751 41,281 16,374 6,075 - 729 292
2010 54,052 37,665 14,325 1,192 - 424 446
* Past due not impaired (‘PDNI’)
** Considered impaired (‘CI’)
Receivables past due but not impaired payment terms have not been re-negotiated. Each operating unit has been in direct contact
with the relevant debtor and is satisfied that payment will be received in full.
Other balances within trade and other receivables do not contain impaired assets and are not past due. It is expected that these
other balances will be received when due.
b) Fair value and credit risk
Due to the short term nature of these receivables, their carrying value is assumed to approximate their fair value.
The maximum exposure to credit risk is the fair value of receivables. Collateral is not held as security, nor is it the Group’s
policy to transfer (on-sell) receivables to special purpose entities.
73
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Consolidated
2011 2010
$’000 $’000
11 Inventories
Consumable stores – at cost 969 966
1,730
Finished goods – fuel at cost 2,012
Total inventories at the lower of cost and net realisable value 2,981 2,696
a) Inventory expense
Inventories recognised as an expense for the year ended
30 June 2011 totalled $57,765,000 (2010: $53,656,000)
for the Group. This expense has been included in the
cost of sales line item as a cost of inventories.
2011 2010
$’000 $’000
Parent
12 Other Financial Assets
Investments controlled entities
– Shares – unlisted at cost 32,418 32,418
32,418 32,418
Investment Carrying
Interest Owned Amount Consolidated
2011 2010 2011 2010
% % $’000 $’000
13 Investment in Associates
a) Investment details
Smart Logistics Pty Ltd 50 50 86
-
Dairy Transport Logistics Pty Ltd 24.5 24.5 113 -
Investment in associates 199 -
Both Smart Logistics Pty Ltd and Dairy Transport Logistics Pty Ltd
are providers of distribution services and consultants in transport
and distribution. Smart Logistics Pty Ltd was incorporated in
Australia. Dairy Transport Logistics Pty Ltd was incorporated in
New Zealand.
b) Movements in the carrying amount of the
Group’s investment in associates Consolidated
2011 2010
$’000 $’000
Dairy Transport Logistics Pty Ltd
At 1 July - 31
Share of profit after income tax 112 14
Exchange rate changes on opening balances 1 (2)
Dividend payment - (43)
At 30 June 113 -
74
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Consolidated
2011 2010
$’000 $’000
Smart Logistics Pty Ltd
At 1 July - -
Share of profit/(loss) after income tax 113 280
Dividend payment - (225)
Recovery of prior share losses not equity accounted (27) (55)
At 30 June 86 -
c) Share of associates’ commitments
Share of associates’ finance lease commitments:
Within one year 208 208
One year or later and no later than five years 105 313
Minimum lease payments 313 521
Less: Future finance charges (19) (51)
Total lease liability 294 470
d) Summarised financial information
The following table illustrates summarised financial
information relating to the Group’s associates:
Extract from the associates’ Statement of Financial Position:
Current assets 9,329 9,384
Non-current assets 277 764
9,606 10,148
Current liabilities (8,766) (9,591)
Non-current liabilities (204) (599)
(8,970) (10,190)
Net assets/(liabilities) 636 (42)
Share of associates net assets/(liabilities) 226 (21)
Adjustments arising from equity accounting
– Recovery of prior share losses not equity accounted (27) 21
199 -
Extract from the associates’
Statement of Comprehensive Income:
Revenue 118,618 116,009
Net profit 685 567
75
K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Freehold Land Motor Plant &
and Buildings Vehicles Equipment Total
$’000 $’000 $’000 $’000
Consolidated
14 Property, Plant and Equipment
a) Reconciliation of carrying amounts at the
beginning and end of the period:
Year ended 30 June 2011
As at 1 July 2010
net of accumulated depreciation and impairment 90,618 95,062 11,489 197,169
Additions 10,346 21,335 2,560 34,241
Additions – Regal Transport - 17,065 692 17,757
Disposals - (1,941) - (1,941)
Depreciation charge for the year (1,920) (20,081) (2,627) (24,628)
Exchange adjustment (20) (601) (9) (630)
At 30 June 2011
net of accumulated depreciation and impairment 99,024 110,839 12,105 221,968
At 30 June 2011
Cost or fair value 102,862 223,150 45,777 371,789
Accumulated depreciation and impairment (3,838) (112,311) (33,672) (149,821)
Net carrying amount 99,024 110,839 12,105 221,968
Year ended 30 June 2010
As at 1 July 2009
net of accumulated depreciation and impairment 83,613 91,324 10,871 185,808
Additions 874 14,879 2,758 18,511
Additions – Pacific Transport - 5,923 237 6,160
Reclassification of category 27 - (27) -
Revaluation 7,591 - - 7,591
Disposals - (1,003) - (1,003)
Depreciation charge for the year (1,491) (16,176) (2,351) (20,018)
Exchange adjustment 4 115 1 120
At 30 June 2010
net of accumulated depreciation and impairment 90,618 95,062 11,489 197,169
At 30 June 2010
Cost or fair value 92,538 199,113 42,915 334,566
Accumulated depreciation and impairment (1,920) (104,051) (31,426) (137,397)
Net carrying amount 90,618 95,062 11,489 197,169
b) Revaluation of freehold land and buildings
The freehold land and buildings are included in the financial
statements at fair value, except for capital expenditure subsequent
to the valuation which is recorded at cost. The fair value of land
and buildings in 2011 was determined based on an independent
valuation undertaken in March 2010 by Jones Lang LaSalle on the
basis of open market values of properties for the highest and best
use. Directors have adopted this independent valuation as fair
value. This resulted in an increase to the Asset Revaluation Reserve
of $5,314,000.
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Consolidated
2011 2010
Freehold Land Freehold Land
and Buildings and Buildings
$’000 $’000
c) Carrying amounts if land and buildings were measured
at cost less accumulated depreciation and impairment
If land and buildings were measured using the cost
model the carrying amounts would be as follows:
Cost 70,235 59,889
Accumulated depreciation and impairment (7,510) (6,258)
Net carrying amount 62,725 53,631
d) Property, plant and equipment pledged as security
for liabilities
The carrying value of motor vehicles held under hire purchase
contracts at 30 June 2011 is $64,451,196 (2010: $59,368,541).
Additions during the year include $21,094,000
(2010: $13,849,000) held under hire purchase contracts.
Hire purchase liabilities are secured by the relevant asset.
Included in the balances of freehold land and buildings are
assets on which mortgages have been granted as security over
bank loans. The terms of the mortgages preclude the assets
being sold or used as security for further mortgages without
the permission of the mortgage holder. The mortgage
also requires buildings that form part of the security to be fully
insured at all times.
IT Development
Costs Goodwill Total
$’000 $’000 $’000
Consolidated
15 Intangible Assets and Goodwill
Year ended 30 June 2011
At 1 July 2010
net of accumulated amortisation and impairment 3,829 40,932 44,761
Additions – Regal Transport - 27,528 27,528
Amortisation (461) - (461)
Exchange adjustment - (259) (259)
At 30 June 2011
net of accumulated amortisation and impairment 3,368 68,201 71,569
At 30 June 2011
Cost (gross carrying amount) 3,953 68,201 72,154
Accumulated amortisation and impairment (585) - (585)
Net carrying amount 3,368 68,201 71,569
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IT Development
Costs Goodwill Total
$’000 $’000 $’000
Consolidated
Year ended 30 June 2010
At 1 July 2009
net of accumulated amortisation and impairment 3,953 21,669 25,622
Additions – Pacific Transport - 19,201 19,201
Amortisation (124) - (124)
Exchange adjustment - 62 62
At 30 June 2010
net of accumulated amortisation and impairment 3,829 40,932 44,761
At 30 June 2010
Cost (gross carrying amount) 3,953 40,932 44,885
Accumulated amortisation and impairment (124) - (124)
Net carrying amount 3,829 40,932 44,761
IT development costs have been capitalised at cost and relate
to the development of the Group’s new core freight system
(Panorama).
As from 1 July 2005, goodwill is no longer amortised but is now
subject to annual impairment testing (see Note 16).
No impairment loss was recognised for continuing operations
in the 2011 financial year.
16 Impairment Testing of Goodwill
Cash generating units
For the purpose of undertaking impairment testing, the Group
identify cash generating units (CGU’s) according to the smallest
group of assets that generate cash inflows that are largely
independent of the cash inflows from the other assets or groups
of assets.
Goodwill acquired through business combinations have been
allocated across five individual cash generating units as follows: Goodwill
2011 2010
$’000 $’000
K&S Freighters Australia 3,993 3,993
K&S Fuels 165 165
Regal/Pacific Transport 46,729 19,201
DTM Logistics 12,207 12,207
K&S Freighters New Zealand 5,107 5,366
68,201 40,932
Impairment testing
The Group’s impairment testing compares the carrying value of each CGU with its recoverable amount as determined using a value in
use calculation.
The assumptions for determining the recoverable amount of each CGU are based on past experience and Senior Management’s
expectations for the future. The cash flow projections are based on financial budgets approved by Senior Management covering
a five-year period.
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The Group has used the following key assumptions in determining
the recoverable amount of each CGU to which goodwill has
been allocated:
Terminal Value
Discount Rate Growth Rate
2011 2010 2011 2010
% % % %
K&S Freighters Australia 13.75 12.77 3.0 4.0
K&S Fuels 13.75 12.77 3.0 4.0
Regal/Pacific Transport 13.75 12.77 4.0 5.0
DTM Logistics 13.75 12.77 3.5 4.5
K&S Freighters New Zealand 13.18 13.93 3.0 2.0
Discount rate
The discount rate represents the pre tax discount rate applied to
the cash flow projections. The discount rates reflect the market
determined, risk adjusted, discount rate relating to the cash
generating unit.
Terminal growth rate
The terminal growth rate represents the growth rate applied
to the extrapolated cash flows beyond the five year forecast
period. This is based on Senior Management expectations of
the cash generating units’ long term performance in their
respective markets.
i) Sensitivity to changes in assumptions
With regard to the assessment of the carrying amount of each of
the cash generating units, Management believe that no reasonably
possible change in any of the key assumptions would cause the
carrying value to materially exceed its recoverable amount.
Consolidated
2011 2010
$’000 $’000
17 Payables
Current
Trade creditors and payables 43,894 42,249
Self insured workers compensation liability 2,563 2,347
46,457 44,596
Non-current
Self insured workers compensation liability 4,929 4,340
4,929 4,340
i) Trade payables are non-interest bearing and are
normally settled on 30 day terms
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Consolidated
2011 2010
$’000 $’000
18 Interest Bearing Loans and Borrowings
Current
Hire purchase liabilities – secured 15,070 16,462
15,070 16,462
Non-current
Non redeemable preference shares 60 60
Hire purchase liabilities – secured 32,650 24,026
Bank loans – secured 38,621 23,803
71,331 47,889
Commitments in respect of hire purchase agreements are payable as follows:
Not later than one year 18,195 19,080
Later than one year but not later than five years 36,274 26,823
54,469 45,903
Deduct: future finance charges (6,749) (5,415)
Total hire purchase liability 47,720 40,488
Current 15,070 16,462
Non-current 32,650 24,026
47,720 40,488
Fair value disclosures
The carrying amount of the Group’s current and non-current borrowings, approximate
their fair value.
Details of the fair value of the Group’s interest bearing liabilities are set out in Note 3.
Hire purchase contracts
The consolidated entity leases plant and equipment under hire purchase agreements
for periods of one to five years. At the end of the term, the consolidated entity has
the option to purchase the equipment at the agreed residual value.
Hire purchase liabilities are secured by the relevant asset.
The written down value of assets secured by hire purchase agreements is
$64,451,196 (2010: $59,368,541). The weighted average cost of these facilities
was 7.76% (2010: 7.90%).
Bank loans
All bank loans are denominated in Australian dollars. Bank loans are secured by fixed
and floating charges over the assets of the consolidated entity. Bank loans are also
secured by registered mortgages over a number of properties of the consolidated entity
to the extent of $89,325,000 (2010: $91,435,000). The non-current bank loans are
subject to annual review.
The bank loan facility is available for a period beyond 22 June 2014.
The facility bears interest at 7.41% (2010: 7.68%).
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Consolidated
2011 2010
$’000 $’000
Financing facilities available
Total facilities available:
Bank overdrafts 4,000 4,000
44,160
Bank loans 72,387
11,840
Standby letters of credit 13,613
90,000 60,000
Standby letters of credit
The Group has the following guarantees at 30 June 2011:
(cid:129) Bank guarantee of $11,477,000 has been provided by the Westpac Banking
Corporation to Comcare for the due discharge of its liabilities to pay compensation
and other amounts under the Safety Rehabilitation and Compensation Act 1988;
(cid:129) A bank guarantee of $798,000 has been provided by the Westpac Banking
Corporation to the Victorian WorkCover Authority;
(cid:129) Other bank guarantees of $1,338,250 have been provided by the Westpac Banking
Corporation Limited to suppliers.
Facilities utilised at balance date:
Bank overdrafts - -
Bank loans 38,621 23,803
11,840
Standby letters of credit 13,613
52,234
35,643
Facilities not utilised at balance date:
Bank overdrafts 4,000 4,000
Bank loans 33,766 20,357
Standby letters of credit - -
37,766
24,357
Total facilities 90,000 60,000
Facilities used at balance date 52,234 35,643
Facilities unused at balance date 37,766 24,357
Bank overdrafts
The bank overdrafts within the consolidated entity are secured by a guarantee from
the Company. The bank overdraft is secured by fixed and floating charges over the
assets of the consolidated entity. The facilities are subject to annual review by the
banks concerned and have been extended to after 22 June 2014.
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Consolidated
2011 2010
$’000 $’000
Assets pledged as security
Included in the balances of freehold land and buildings are assets on which mortgages
have been granted as security over bank loans. The terms of the mortgages preclude
the assets being sold or used as security for further mortgages without the permission of
the mortgage holder. The mortgage also requires buildings that form part of the security
to be fully insured at all times.
The carrying amount of assets pledged as security for current and non-current interest
bearing liabilities are:
Non-current
First mortgage
– Freehold land and buildings 87,800 89,580
– Plant and equipment 1,525 1,855
Total non-current assets pledged as security 89,325 91,435
Non-cash financing and investment activities
During the financial year, the economic entity acquired property, plant and equipment
with an aggregate fair value of $21,094,000 (2010: $13,827,000) and disposed of
property, plant and equipment with an aggregate fair value of $nil (2010: $nil) by means
of finance lease or hire purchase arrangements. These acquisitions and disposals are not
reflected in the Statement of Cash Flows.
19 Provisions
Current
Employee benefits 13,353 11,190
13,353
11,190
Non-current
Employee benefits 2,044
1,618
Make good provision 121 -
504
Directors’ retirement allowance 544
2,709
2,122
No dividends have been provided for the year ended 30 June 2011. The extent to
which dividends were franked, details of the franking account balance at balance date
and franking credits available for the subsequent financial year are disclosed in Note 8.
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Directors’
Make Good Retirement
Provision Allowance Total
$’000 $’000 $’000
a) Movements in provisions
Movements in each class of provision during the financial
year, other than provisions relating to employee benefits,
are set out below:
CONSOLIDATED
At 1 July 2010 - 504 504
Arising during the year 121 40 161
Utilised - - -
At 30 June 2011 121 544 665
Current 2011 - - -
Non-Current 2011 121 544 665
121 544 665
Current 2010 - - -
Non-Current 2010 - 504 504
- 504 504
b) Nature and timing of provisions
i) Make good provision
In accordance with various lease agreements, the Group
must restore leased premises in Western Australia, Victoria
and New South Wales to their original condition at the
end of the leases.
Because of the long-term nature of the liability, the greatest
uncertainty in estimating the provisions is the costs that will
ultimately be incurred.
ii) Long service leave
Refer to Note 2(y) and Note 2(bb) for the relevant
accounting policy and a discussion of the significant
estimates and assumptions applied in the measurement
of this provision.
iii) Directors retirement allowance
Refer to Note 2(y) for the relevant accounting policy and
a discussion of the significant estimates and assumptions
applied in the measurement of this provision.
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K & S C O R P O R A T I O N L I M I T E D A N N UA L R E P O R T 2 011
Consolidated
2011 2010
$’000 $’000
20 Contributed Equity and Reserves
a) Ordinary shares
Contributed equity
86,285,496 (2010: 72,592,501) ordinary shares fully paid 94,276 64,528
94,276 64,528
Effective 1 July 1998, the Corporations legislation abolished the concepts of authorised
capital and par value shares. Accordingly the Company does not have authorised capital
nor par value in respect of its issued capital.
Fully paid ordinary shares carry one vote per share, either in person or by proxy, at a
meeting of the Company and carry the right to receive dividends as declared.
Thousands $’000
Movements in ordinary shares on issue
At 1 July 2009 69,870 57,425
Issued through Employee Share Plan – 330,500 ordinary shares at $2.40 per share 331 793
Issued through Dividend Re-investment Plan – 108,137 ordinary shares at $2.86 108 310
Issued to acquire Pacific Transport – 500,000 ordinary shares at $2.80 500 1,400
Issued through Dividend Re-investment Plan – 165,955 ordinary shares at $2.75 166 457
Issued through Share Purchase Plan – 1,618,199 ordinary shares at $2.56 1,618 4,143
At 30 June 2010 72,593 64,528
Issued to acquire Regal Transport – 950,000 ordinary shares at $2.80 950 2,660
Issued through Dividend Re-investment Plan – 225,552 ordinary shares at $2.68 225 604
Issued through Rights Issue – 12,295,560 ordinary shares at $2.15 12,296 26,435
Issued through Dividend Re-investment Plan – 221,883 ordinary shares at $2.00 222 444
Transaction costs – Rights Issue - (395)
At 30 June 2011 86,286 94,276
(b) Capital management
When managing capital, the Group’s objective is to ensure the entity continues as a
going concern as well as to maintain optimal returns to Shareholders and benefits to
other stakeholders. Management also aims to maintain a capital structure that ensures
the lowest cost of capital available to the entity. The Group is not subject to any
externally imposed capital requirements.
During 2011, the Group paid dividends of $9,451,000 (2010: $8,467,000).
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Consolidated
2011 2010
$’000 $’000
Management monitor capital through the gearing ratio
(net debt/net debt + Shareholders funds). The gearing ratios based
on continuing operations at 30 June were as follows:
Total interest bearing loans and borrowings 86,401 64,351
Less cash and cash equivalents (9,747) (12,042)
Net debt 76,654 52,309
Net debt + Shareholders funds 290,260 213,378
Gearing ratio 26.4% 24.5%
Nature and purpose of reserves
Asset revaluation reserve
The asset revaluation reserve is used to record increases in the fair value of land and buildings and decreases to the
extent that such decreases relate to an increase on the same asset previously recognised in equity.
Foreign currency translation reserve
The foreign currency translation reserve is used to record exchange differences arising from the translation of the
financial statements of foreign operations.
21 Derivative Financial Instruments
a) Hedging activities
Derivative financial instruments are used by the Group in the normal course of business in order to hedge exposure
to fluctuations in interest rates.
The Group has the following interest rate swap agreements in place at 30 June 2011:
– with a notional amount of $20,000,000 whereby it receives a variable rate equal to the AUS-BBR-BBSW and
pays a fixed interest rate of 7.68% on the notional amount. This agreement commenced in April 2009 and
expires in March 2012.
– with a notional amount of $4,000,000 NZD whereby it receives a variable rate equal to the NZD-BBR-BID and
pays a fixed interest rate of 7.97% on the notional amount. This agreement commenced in April 2009 and
expires in March 2012.
The interest rate swaps require settlement of net interest receivable or payable each 90 days. All swaps do not
qualify for hedge accounting and as a result any gains or losses arising from changes in fair value are taken directly
to profit or loss. The net loss is reported within other expenses.
b) Interest rate risk
Information regarding interest rate risk exposure is set out in Note 3.
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Consolidated
2011 2010
$’000 $’000
22 Commitments
The estimated maximum amount of commitments not
provided for in the accounts as at 30 June 2011 are:
Capital expenditure commitments
The aggregate amount of contracts for capital expenditure
on plant and equipment due no later than one year 3,253
14,974
Lease rental commitments
Operating lease and hire commitments:
– Not later than one year 9,980 6,916
13,433
– Later than one year but not later than five years 24,220
11,141
– Later than five years 17,228
51,428 31,490
The consolidated entity leases property under non-cancellable
operating leases expiring from one to ten years.
Leases generally provide the consolidated entity with a right
of renewal, at which time all terms are renegotiated.
Lease payments comprise a base amount plus an incremental
contingent rental. Contingent rentals are based on either
movements in the Consumer Price Index or operating criteria.
Finance lease commitments are disclosed in Note 18.
23 Contingent Liabilities
Guarantees
Cross guarantees given by the Company and its wholly owned
controlled entities are described in Note 24.
Legal claim
There are a number of minor legal actions pending against
companies within the consolidated entity.
Liability has not been admitted and the claims will be defended.
The Directors do not believe these actions will result in any
significant cost to the consolidated entity.
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24 Deed of Cross Guarantee
Pursuant to ASIC Class Order 98/1418 (as amended) dated 13 August 1998, the
wholly owned subsidiaries listed below are relieved from the Corporations Act 2001
requirements for preparation, audit and lodgement of financial reports, and
Directors' reports. It is a condition of the Class Order that the Company and each
of the subsidiaries enter into a Deed of Cross Guarantee. The effect of the Deed is
that the Company guarantees to each creditor payment in full of any debt in
the event of winding up of any of the subsidiaries under certain provisions of the
Corporations Act 2001. If a winding up occurs under other provisions of the Act,
the Company will only be liable in the event that after six months any creditor has
not been paid in full. The subsidiaries have also given similar guarantees in the
event that the Company is wound up.
The subsidiaries subject to the Deed are:
Reid Bros Pty Ltd
Kain & Shelton Pty Ltd
K&S Freighters Pty Ltd
K&S Group Administrative Services Pty Ltd
Kain & Shelton (Agencies) Pty Ltd
K&S Transport Management Pty Ltd
Blakistons-Gibb Pty Ltd
K&S Logistics Pty Ltd
K&S Project Services Pty Ltd
K&S Integrated Distribution Pty Ltd
K&S Group Pty Ltd
DTM Holdings (No. 2) Pty Ltd
Alento Pty Ltd
DTM Holdings Pty Ltd
DTM Pty Ltd
Regal Transport Group Pty Ltd
Strategic Transport Pty Ltd
Vortex Nominees Pty Ltd
K&S Freighters Limited *
Cochrane’s Transport Limited *
* Both K&S Freighters Limited and Cochrane’s Transport Limited are
New Zealand entities.
A consolidated Statement of Comprehensive Income and consolidated Statement
of Financial Position, comprising the Company and subsidiaries which are a party to
the Deed, after eliminating all transactions between parties to the Deed of Cross
Guarantee, at 30 June 2011 is set out below:
2011 2010
$’000 $’000
Closed Group
Statement of Comprehensive Income
Profit before income tax 21,168 26,317
Income tax expense (6,340) (7,578)
Profit after income tax 14,828 18,739
Retained profits at the beginning of the year 89,446 79,174
(8,467)
Dividends provided for or paid (9,451)
Retained earnings at the end of the year 94,823 89,446
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2011 2010
$’000 $’000
Closed Group
Statement of Financial Position
Cash 9,747 12,042
Trade and other receivables 67,496 56,747
Inventories 2,981 2,696
Prepayments 5,277 4,809
Total current assets 85,501 76,294
Other receivables 2,034 2,093
Investment in associates 199 -
Property, plant and equipment 221,968 197,169
Intangibles 71,569 44,761
5,776
Deferred tax assets 6,731
Total non-current assets 302,501
249,799
Total assets 388,002
326,093
44,596
Trade and other payables 46,457
16,462
Interest bearing loans and borrowings 15,070
1,270
Current tax liabilities 894
Provisions 13,353
11,190
Derivatives 712 1,123
Total current liabilities 76,486
74,641
Other payables 4,929 4,340
47,889
Interest bearing loans and borrowings 71,331
18,032
Deferred tax liabilities 18,941
2,122
Provisions 2,709
Total non-current liabilities 97,910
72,383
Total liabilities 174,396
147,024
Net assets 213,606
179,069
Contributed equity 94,276
Reserves 24,507
Retained earnings 94,823
64,528
25,095
89,446
Total equity 213,606 179,069
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Class of Country of % Equity Interest
2011 2010
Share Incorporation
25 Controlled Entities
Particulars in relation to controlled entities
Name
K&S Corporation Limited
Controlled Entities
Reid Bros Pty Ltd Ord Australia 100 100
Kain & Shelton Pty Ltd Ord Australia 100 100
K&S Freighters Pty Ltd Ord Australia 100 100
K&S Group Administrative Services Pty Ltd Ord Australia 100 100
Kain & Shelton (Agencies) Pty Ltd Ord Australia 100 100
K&S Transport Management Pty Ltd Ord Australia 100 100
Blakistons-Gibb Pty Ltd Ord Australia 100 100
K&S Logistics Pty Ltd Ord Australia 100 100
K&S Integrated Distribution Pty Ltd Ord Australia 100 100
K&S Group Pty Ltd Ord Australia 100 100
DTM Holdings (No. 2) Pty Ltd Ord Australia 100 100
Alento Pty Ltd Ord Australia 100 100
DTM Holdings Pty Ltd Ord Australia 100 100
DTM Pty Ltd Ord Australia 100 100
K&S Project Services Pty Ltd Ord Australia 100 100
Regal Transport Group Pty Ltd Ord Australia 100 -
Strategic Transport Services Pty Ltd Ord Australia 100 -
Vortex Nominees Pty Ltd Ord Australia 100 -
K&S Freighters Limited Ord New Zealand 100 100
Cochrane’s Transport Limited Ord New Zealand 100 100
26 Related Party Disclosures
DIRECTORS
The names of each person holding the position of Director of K&S Corporation Limited during the financial year and up to the date
of signing the financial report are Messrs. T Johnson, R Nicholson, G Boulton, B Grubb, R Smith and L Winser.
Apart from the details disclosed in this note, no Director has entered into a material contract with the Company or the consolidated
entity since the end of the previous financial year and there were no material contracts involving Directors' interests subsisting at year end.
Other transactions with the Company or its Controlled Entities
The estate of Mr A A Scott, the major Shareholder of the following entities which provide goods and services to the economic entity.
AA Scott Pty Ltd Scott’s Agencies Pty Ltd
Ascot Haulage (NT) Pty Ltd Scott’s Management Pty Ltd
The Border Watch Pty Ltd Scott’s Transport Industries Pty Ltd
Scott Corporation Limited First Radio Pty Ltd
Northern Territory Freight Services Pty Ltd
Mr Grubb has an interest as Director of AA Scott Pty Ltd, Scott’s Transport Industries Pty Ltd, Ascot Haulage (NT) Pty Ltd,
Northern Territory Freight Services Pty Ltd, Scott’s Agencies Pty Ltd, The Border Watch Pty Ltd and Scott’s Management Pty Ltd.
Transactions with these companies include sale and purchase of cartage services, advertising services, sale and purchase of fuel
and other related products.
First Radio Pty Ltd has an interest in a transport facility in Adelaide which the Company rents on a commercial basis. Rent in 2011
was $362,861 (2010: $352,170)
Mr Johnson has an interest as a Director of AA Scott Pty Ltd.
Mr Johnson has an interest as Chairman and Mr Grubb as Non-Executive Director in the publicly listed company Scott Corporation
Limited. Transactions with this company during 2011 included sales of $12,200 (2010: $24,717) and purchase of transport related
services totalling $5,060,208 (2010: $4,537,894).
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2011 2010 2011 2010
$ $ $ $
Purchases
Sales
The aggregate amount of dealings with these companies
during 2011 were as follows:
Ascot Haulage (NT) Pty Ltd 1,137,414 939,673 - -
Northern Territory Freight Services Pty Ltd 13,397 376,435 9,270 49,449
Scott’s Transport Industries Pty Ltd 190,398 179,593 1,987,179 1,152,772
Scott’s Agencies Pty Ltd 3,016,382 1,404,117 64,258 -
The Border Watch Pty Ltd 5,261 2,831 -
-
A Director of the Company, Mr Johnson, had an interest
during 2010/11 as a partner in Johnson, Winter & Slattery,
a firm of solicitors. This firm renders legal advice to the
economic entity. The aggregate amount of dealings with
this firm during 2011 was $1,879 (2010: $75,890) in
professional service fees.
The Managing Director of all wholly owned controlled
entities, Mr L Winser, had an interest as Director of Smart
Logistics Pty Ltd (an associated entity). Transactions with this
company include the sale of cartage. The aggregate amount
of sales to this company during 2011 was $30,521,000
(2010: $29,289,000).
The Managing Director of all wholly owned controlled entities,
Mr L Winser, has an interest as Director (resigned 19 July 2010
of Dairy Transport Logistics Ltd (an associated entity).
Transactions with this company include the sale of cartage.
The aggregate amount of sales to this company during 2011
was $6,046,000 (2010: $6,108,000).
Consolidated
2011 2010
$’000 $’000
Amounts payable to and receivable from Directors and
their Director related entities at balance date arising from
these transactions were as follows:
Current receivables (included within trade debtors)
Scott’s Transport Industries Pty Ltd 196 154
2
Northern Territory Freight Services Pty Ltd 2
Smart Logistics Pty Ltd 2,078
1,839
Dairy Transport Logistics Ltd 95 352
No provision for doubtful debts has been
recognised in respect of these balances as they
are considered recoverable.
Current payables (included within trade payables)
139
Ascot Haulage (NT) Pty Ltd 78
4
Scott’s Transport Industries Pty Ltd 17
-
Scott Corporation Ltd 508
Wholly-owned Group
Details of interests in wholly-owned controlled entities
are set out at Note 25.
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Parent
2011 2010
$’000 $’000
Details of dealings with these entities are set out below:
Balances with entities within the wholly-owned group
The aggregate amounts receivable from, and payable to,
wholly-owned controlled entities by the Company at balance date:
Receivables
– Current 110,690 99,003
– Non-current 17,961 17,961
128,651 116,964
Payables – Current
– Other loans 10,967 64,587
10,967 64,587
Terms and conditions of transactions within
the wholly-owned group
Sales to and purchases from within the wholly-owned group
are made at arm’s length. Terms and conditions of the
tax funding agreement are set out in Note 6. Outstanding
balances at year-end are unsecured and interest free.
Dividends
Dividends received or due and receivable by the
Company from wholly-owned controlled entities amount
to $10,000,000 (2010:$10,000,000).
Consolidated
2011 2010
$ $
DIRECTORS’ SHARE TRANSACTIONS
Shareholdings
Aggregate number of shares held by Directors and their
Director-related entities at balance date:
– Ordinary shares 1,707,740 967,595
– Preference shares - -
All share transactions were with the parent Company,
K&S Corporation Limited.
$’000 $’000
Dividends
Aggregate amount of dividends paid in respect of shares held
by Directors or their Director-related entities during the year:
– Ordinary shares 122 108
– Preference shares - -
Directors' transactions in shares and share options
Purchases of shares by Directors and Director-related entities
are set out in Note 27.
Ultimate parent entity
The immediate parent entity and ultimate controlling entity of
K&S Corporation Ltd is AA Scott Pty Ltd, a company incorporated
in South Australia.
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27 Key Management Personnel
a) Details of Key Management Personnel
i) Directors
Mr T Johnson Non-Executive Chairman
Mr G Boulton Non-Executive Deputy Chairman
Mr R Smith Non-Executive
Mr R Nicholson Non-Executive
Mr B Grubb Non-Executive
Mr L Winser Managing Director
ii) Executives
Mr B Walsh Chief Financial Officer
Mr C Bright Group Legal Counsel & Company Secretary
Mr G Wooller Chief Operating Officer
Mr P Sarant Executive General Manager DTM
Mr G Everest Executive General Manager Regal Transport
Ms K Evans General Manager Human Resources
Mr S Fanning General Manager – K&S Freighters
Ms C De Gois Chief Information Officer
– Appointed 10 October 2010
– Resigned 27 August 2010
– Resigned 9 July 2010
Consolidated
2011 2010
$ $
b) Compensation for Key Management Personnel
Short-term 2,595,811 2,695,218
Long-term 40,323 38,989
Post employment 316,972 296,448
2,953,106 3,030,655
c) Loans to Key Management Personnel
Details of aggregates of loans to Key Management Personnel
are as follows:
Balance at Balance at Number
Beginning of Period Write-off End of Period in Group
Total
$’000 $’000 $’000
2011 346 - 247 5
2010 224 - 346 6
There are no loans to any Key Management Personnel
above $100,000 in the reporting period.
Loans to Key Management Personnel are made pursuant to
the K&S Corporation Limited Employee Share Plan (“Plan”).
As part of the Plan, loans are interest free with K&S
Corporation, to fund the purchase of shares in the Company.
Shares issued under the Plan are subject to a holding lock
until the loan is repaid in full. Non-Executive Directors are
not eligible to participate in the Plan.
No other loans are made to any Key Management Personnel.
d) Remuneration options: granted and vested during the year
K&S Corporation Limited does not operate any option
based schemes for its executives, employees or Directors.
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e) Shareholding of Key Management Personnel
Balance Balance
1 July 2010 Net Change 30 June 2011
Shares held in K&S Corporation Limited: Ordinary Ordinary Ordinary
30 June 2011
Non-Executive Directors
T Johnson 210,088 47,701 257,789
G Boulton 150,258 34,117 184,375
R Smith 17,819 2,970 20,789
R Nicholson 21,642 4,916 26,558
B Grubb 107,317 17,888 125,205
Executive Director
L Winser 460,471 632,553 1,093,024
Other Key Management Personnel
B Walsh 73,860 11,472 85,332
C Bright 19,000 2,000 21,000
G Wooller 32,392 5,837 38,229
P Sarant 20,000 18,000 38,000
G Everest - - -
K Evans 15,000 - 15,000
Total 1,127,847 777,454 1,905,301
Balance Balance
1 July 2009 Net Change 30 June 2010
Shares held in K&S Corporation Limited: Ordinary Ordinary Ordinary
30 June 2010
Non-Executive Directors
T Johnson 195,749 14,339 210,088
G Boulton 138,403 11,855 150,258
R Smith 10,000 7,819 17,819
R Nicholson 15,128 6,514 21,642
B Grubb 107,317 - 107,317
Executive Director
L Winser 414,503 45,968 460,471
Other Key Management Personnel
B Walsh 53,483 20,377 73,860
C Bright 12,000 7,000 19,000
S Fanning 20,000 10,000 30,000
G Wooller 22,168 10,224 32,392
P Sarant 10,000 10,000 20,000
K Evans 10,000 5,000 15,000
C De Gois - - -
Total 1,008,751 149,096 1,157,847
All equity transactions with specified Directors and
specified Executives have been entered into under terms
and conditions no more favourable than those the entity
would have adopted if dealing at arm’s length.
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28 Events Subsequent to Balance Date
On 18 August 2011, the Directors of K&S Corporation Limited
declared a final dividend on ordinary shares in respect of
the 2011 financial year. The total amount of the dividend is
$4,314,275, which represents a fully franked dividend of
5.0 cents per share. The dividend is payable on 31 October 2011
and has not been provided for in the 30 June 2011 financial
statements. The Dividend Reinvestment Plan (DRP) will apply
to the final dividend and the issue price for shares under the
DRP will be based on the weighted average trading price of
K&S shares in the five business days ending on 17 October 2011
(the record date of the final dividend), less a discount of 2.5%.
Other than the matters above, there has not arisen in the interval
between the end of the financial year 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.
Consolidated
2011 2010
$ $
29 Auditor’s Remuneration
The auditor of K&S Corporation Limited is Ernst & Young.
Audit services:
Audit and review of the statutory financial reports 179,000 154,000
179,000 154,000
Other services:
Other services – Ernst & Young:
– GST review - 10,000
- 10,000
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30 Business Combinations
Acquisition of Regal Transport
On 8 July 2010, K&S Corporation Limited acquired the Perth based Regal Transport Group (“Regal”). Regal was formed in
March 2009 with the merger of N&L Transport and Strategic Transport Services Pty Ltd. At the time of acquisition, Regal generated
annual revenues of $50 million and employed over 120 people.
The consideration transferred was $41,845,000 and comprised an issue of equity instruments and cash. The Group issued 950,000
ordinary shares with a fair value of $2.80 each. The provisional fair value of identifiable net assets is $14,317,000.
Key factors contributing to the $27,528,000 of goodwill are the synergies existing within the acquired business and synergies expected
to be achieved as a result of combining Regal Transport with Pacific Transport and the rest of the Group. The Regal acquisition will
extend the footprint achieved by the Pacific Transport acquisition to the oil, gas and resources sectors of Western Australia.
The provisional fair values of identifiable assets and liabilities is
as follows:
Fair Value at
Acquisition Date Carrying value
$’000 $’000
Trade and other receivables 7,715 7,715
Plant & equipment 17,757 15,608
Prepayments 206 67
Deferred tax assets 269 -
25,947 23,390
Trade and other payables (3,110) (3,110)
Interest bearing loans and borrowings (7,048) (7,048)
Income tax payable (80) (80)
Provision for employee entitlements (896) (747)
Deferred tax liability (496) -
(11,630) (10,985)
Provisional fair value of identifiable net assets 14,317
Goodwill arising on acquisition 27,528
41,845
Acquisition-date fair-value of consideration transferred
Shares issued 2,660
Cash paid 39,185
Consideration transferred 41,845
Direct costs relating to the acquisition 150
Cash outflow on acquisition is as follows:
Cash paid (39,185)
Cash outflow on acquisition (39,185)
The consolidated Statement of Comprehensive Income includes
sales revenue and net profit before tax for the year ended
30 June 2011 of $60,450,000 and $4,329,000 respectively, as
a result of the acquisition of Regal Transport.
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Parent
2011 2010
$’000 $’000
31 Parent Entity Information
Current assets 110,690 99,003
Total assets 162,627 151,125
Current liabilities (12,695) (66,530)
Total liabilities (48,367) (67,163)
Issued capital 94,276 64,528
Asset revaluation reserve 161 161
Retained earnings 19,823 19,273
Total Shareholders’ equity 114,260 83,962
Profit after tax of the Parent entity 10,000 10,000
Total comprehensive income of the Parent entity 10,000 10,000
Guarantees
Cross guarantees given by the Company and its wholly owned
controlled entities are described in Note 24.
Contingent liabilities
Contingent liabilities of the Company and its wholly owned
controlled entities are outlined in Note 23.
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In accordance with a resolution of the Directors of K&S Corporation Limited,
we state that:
In the opinion of the Directors:
a) the financial report of the Company and of the consolidated entity are
in accordance with the Corporations Act 2001, including:
i) giving a true and fair view of the Company’s financial position
as at 30 June 2011 and of its performance for the year ended on
that date; and
ii) complying with Accounting Standards (including the Australian
Accounting Interpretations) and the Corporations Regulations 2001.
b) the financial statements and notes also comply with International
Financial Reporting Standards as disclosed in Note 2 (b).
c) there are reasonable grounds to believe that the Company will be able
to pay its debts as and when they become due and payable.
d) this declaration has been made after receiving the declarations required
to be made to the Directors in accordance with section 295A of the
Corporations Act 2001 for the financial period ending 30 June 2011.
e) as at the date of this declaration, there are reasonable grounds to
believe that the members of the Closed Group identified in Note 24 will
be able to meet any obligations or liabilities to which they are or may
become subject to, by virtue of the Deed of Cross Guarantee.
Dated at Sydney this 18th day of August 2011.
On behalf of the Board:
Tony Johnson
Chairman
Legh Winser
Managing Director
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In relation to our audit of the financial report of
K&S Corporation Limited for the financial year ended
30 June 2011, to the best of my knowledge and belief,
there have been no contraventions of the auditor
independence requirements of the Corporations Act 2001
or any applicable code of professional conduct.
Ernst & Young
David Sanders
Partner
Adelaide
18 August 2011
Liability Limited by a scheme approved under Professional
Standards Legislation
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Report on the Financial Report
We have audited the accompanying financial report of K&S Corporation Limited, which comprises
the consolidated statement of financial position as at 30 June 2011, the consolidated statement of
comprehensive income, the consolidated statement of changes in equity and the consolidated
statement of cash flows for the year then ended, notes comprising a summary of significant accounting
policies and other explanatory information, and the directors’ declaration of the consolidated entity
comprising the company and the entities it controlled at the year’s end or from time to time during
the financial year.
Directors’ Responsibility for the Financial Report
The directors of the company are responsible for the preparation of the financial report that gives a
true and fair view in accordance with Australian Accounting Standards and the Corporations Act 2001
and for such internal controls as the directors determine are necessary to enable the preparation of
the financial report that is free from material misstatement, whether due to fraud or error. In Note 2,
the directors also state, in accordance with Accounting Standard AASB 101 Presentation of Financial
Statements, that the financial statements comply with International Financial Reporting Standards.
Auditor’s Responsibility
Our responsibility is to express an opinion on the financial report based on our audit. We conducted
our audit in accordance with Australian Auditing Standards. Those Standards require that we comply
with relevant ethical requirements relating to audit engagements and plan and perform the audit
to obtain reasonable assurance about whether the financial report is free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures
in the financial report. The procedures selected depend on the auditor’s judgement, including the
assessment of the risks of material misstatement of the financial report, whether due to fraud or error.
In making those risk assessments, the auditor considers internal controls relevant to the entity’s
preparation and fair presentation of the financial report in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the entity’s internal controls. An audit also includes evaluating the appropriateness of accounting
policies used and the reasonableness of accounting estimates made by the directors, as well as
evaluating the overall presentation of the financial report.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our audit opinion.
Independence
In conducting our audit we have complied with the independence requirements of the Corporations Act
2001. We have given to the directors of the company a written Auditor’s Independence Declaration, a
copy of which is included in the directors’ report.
Liability Limited by a scheme approved under Professional Standards Legislation
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Opinion
In our opinion:
a. the financial report of K&S Corporation Limited is in accordance with the Corporations Act 2001,
including:
i) giving a true and fair view of the consolidated entity’s financial position at 30 June 2011
and of their performance for the year ended on that date; and
ii) complying with Australian Accounting Standards and the Corporations Regulations 2001; and
b. the financial report also complies with International Financial Reporting Standards as disclosed
in Note 2.
Report on the Remuneration Report
We have audited the Remuneration Report included in pages 24 to 27 of the directors’ report for
the year ended 30 June 2011. The directors of the company are responsible for the preparation and
presentation of the Remuneration Report in accordance with section 300A of the Corporations Act
2001. Our responsibility is to express an opinion on the Remuneration Report, based on our audit
conducted in accordance with Australian Auditing Standards.
Opinion
In our opinion, the Remuneration Report of K&S Corporation Limited for the year ended 30 June 2011,
complies with section 300A of the Corporations Act 2001.
Ernst & Young
David Sanders
Partner
Adelaide
18 August 2011
Liability Limited by a scheme approved under Professional Standards Legislation
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DISTRIBUTION OF SHAREHOLDINGS
Ordinary Shares
Number of Shareholders
1-1,000 Shares 409
1,001 - 5,000 Shares 899
5,001 - 10,000 Shares 382
10,001 - 100,000 Shares 468
100,001 and more Shares 46
2,204
140 shareholders hold less than a marketable parcel (376 shares).
TWENTY LARGEST SHAREHOLDERS
Name Number of Ordinary Shares Held %
1 AA Scott Pty Ltd 43,074,396 49.92
2 Citicorp Nominees Pty Limited 4,646,404 5.38
3 Bell Potter Nominees Ltd 2,726,732 3.16
4 National Nominees Limited 2,308,373 2.68
5 Ascot Media Investments Pty Ltd 1,801,016 2.09
6 HSBC Custody Nominees Australia 1,010,315 1.17
7 Diversified United Investment Limited 1,000,000 1.16
8 J P Morgan Nominees Australia Limited 998,046 1.16
9 Zena Kaye Winser 922,708 1.07
10 Winscott Investments Pty Ltd 870,992 1.01
11 Sabadin Petroleum Pty Ltd 758,746 0.88
12 Tribridge Holdings Pty Ltd 750,000 0.87
13 Mr Eric Joseph Roughana 700,000 0.81
14 Mirrabooka Investments Limited 690,595 0.80
15 Oakcroft Nominees Pty Ltd 574,670 0.66
16 Mr Adrian Keith & Mrs Samantha Jane Crook 500,000 0.58
17 Mr Barry William Page & Mrs Janice Mary Page 481,241 0.56
18 Mr William Clifton Anderson 435,000 0.50
19 John Legh Winser 423,750 0.49
20 Mr John Irving Stepnell & Mrs Valerie Iris Stepnell 421,500 0.49
65,094,484 75.44
AA Scott Pty Limited is the registered holder of all the 6% Non Redeemable Cumulative Preference Shares,
participating to 8%.
The 20 largest Shareholders hold 75.36% of the ordinary shares of the Company, and 100% of the preference shares.
The following is an extract from the Company’s Register of Substantial Shareholders as at 16th September 2011:
Number % of Class
Estate of Mr A A Scott 46,159,908 53.50
VOTING RIGHTS
The voting rights are as follows:
Preference Shares: Nil
Ordinary Shares: 1 vote per share
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REGISTERED OFFICE
Ballarat
Mount Maunganui
Brisbane
141-147 Jubilee Highway West
Mount Gambier
South Australia 5290
Phone: (08) 8721 1700
Facsimile: (08) 8721 1799
CORPORATE OFFICE
Cnr Boundary & Palmers Roads
Truganina, Victoria 3029
Phone: (03) 8744 3500
Facsimile: (03) 8744 3599
STOCK EXCHANGE
The Company is on the official
list of the Australian Stock
Exchange Limited. The Company’s
Home Exchange is Australian Stock
Exchange (Adelaide) Limited.
SHARE REGISTRY
c/o Computershare Investor
Services Pty Ltd
Level 5, 115 Grenfell Street
Adelaide, South Australia 5000
Phone: (08) 8236 2300
Facsimile: (08) 8236 2305
GPO Box 1903
Adelaide SA 5001
Enquiries within Australia:
1300 556 161
Enquiries outside Australia:
61 3 9415 5000
Email:
web.queries@computershare.com.au
Website: www.computershare.com
WEBSITE
www.ksgroup.com.au
OPERATIONS
ROAD, RAIL AND SEA
Melbourne
Cnr Boundary & Palmers Roads
Truganina, Victoria 3029
Phone: (03) 8744 3700
Facsimile: (03) 8744 3799
Portland
53 Fitzgerald Street
Portland, Victoria 3305
Phone: (03) 5523 4144
Facsimile: (03) 5523 5647
Geelong
325 Thompson Road
North Geelong, Victoria 3215
Phone: (03) 5278 5777
Facsimile: (03) 5278 5230
c/o Laminex Industries
16 Trewin Street
Wendouree, Victoria 3355
Phone: (03) 5338 1710
Facsimile: (03) 5338 1136
Sydney
1 Hope Street
Enfield, New South Wales 2136
Phone: (02) 9735 2400
Facsimile: (02) 9735 2499
Brisbane
34 Postle Street
Coopers Plains, Queensland 4108
Phone: (07) 3137 4400
Facsimile: (07) 3137 4441
Rockhampton
197-206 Wade Street
Parkhurst, Queensland 4702
Phone: (07) 4936 2272
Facsimile: (07) 4936 2972
Bundaberg
Old Qunaba Mill, Grange Road
Bundaberg, Queensland 4670
Phone: (07) 4159 2150
Facsimile: (07) 4159 1825
Perth
Lot 1 Kewdale Freight Precinct
Off Fenton Street
Kewdale, Western Australia 6105
Phone: (08) 6466 6600
Facsimile: (08) 6466 6699
Bunbury
91 Moore Road
Dardanup, Western Australia 6236
Phone: (08) 9725 4400
Facsimile: (08) 9725 4949
Adelaide
Cnr Bedford Street & Kapara Road
Gillman, South Australia 5013
Phone:(08) 7224 5400
Facsimile:(08) 7224 5497
Mount Gambier
141-147 Jubilee Highway West
Mount Gambier,
South Australia 5290
Phone: (08) 8721 1700
Facsimile: (08) 8721 1799
New Zealand
Cambridge
3847 Te Awamutu Road
Cambridge, New Zealand
Phone: (07) 827 6002
Facsimile: (07) 827 5606
35 Portside Drive
Mount Maunganui, New Zealand
Phone: (07) 575 8265
Facsimile: (07) 575 8480
34 Postle Street
Coopers Plains, Queensland 4108
Phone: (07) 3137 4406
Facsimile: (07) 3137 4441
Napier
Perth
31 Pandora Road
Ahuriri, Napier, New Zealand
Phone: (06) 835 0162
Facsimile: (06) 835 0192
16-30 Sheffield Road
Kewdale, Western Australia 6105
Phone: (08) 6466 6646
Facsimile: (08) 6466 6697
Regal Transport
5 Kalamunda Road
South Guildford,
Western Australia 6935
Phone: (08) 9376 9600
Facsimile: (08) 9376 9666
Broome
18 McDaniel Road
Broome, Western Australia 6725
Phone: (08) 9192 6599
Facsimile: (08) 9192 6588
Derby
23 Rodgers Street
Derby, Western Australia 6728
Phone: (08) 9193 1771
Facsimile: (08) 9191 2880
Karratha
Lot 102 Mooligun Road
Karratha, Western Australia 6714
Phone: (08) 9144 1151
Facsimile: (08) 9144 1122
Newman
Lot 1583 Woodstock Street
Newman, Western Australia 6753
Phone: (08) 9175 2300
Facsimile: (08) 9175 2878
Port Hedland
Lot 2521 Miller Street
Port Hedland,
Western Australia 6725
Phone: (08) 9140 2778
Facsimile: (08) 9140 2740
K&S Project Services
15 Meliador Way
Midvale, Western Australia 6936
Phone: (08) 9374 3777
Facsimile: (08) 9374 3799
Auckland
4 Tinley Street
Auckland, New Zealand
Phone: (09) 307 0061
Facsimile: (09) 307 0027
PAPER SERVICES
Maryvale
Maryvale Road
Maryvale via Morwell,
Victoria 3840
Phone: (03) 5134 1211
Facsimile: (03) 5136 0217
Shoalhaven
340 Bolong Road
Bomaderry,
New South Wales 2541
Phone: (02) 4428 6473
Facsimile: (02) 4428 6493
Townsville
121 Hubert Street
South Townsville,
Queensland 4810
Phone: (07) 4772 5651
Facsimile: (07) 4772 7433
Fisherman Islands
67-68 Bishop Drive
Fisherman Islands,
Queensland 4178
Phone: (07) 3137 4480
Facsimile: (07) 3137 4489
DTM
Sydney
2 Hope Street
Enfield, New South Wales 2136
Phone: (02) 9735 2300
Facsimile: (02) 9735 2399
Melbourne
2-10 Gaine Road
Dandenong Sth, Victoria 3175
Phone: (03) 9215 4700
Facsimile: (03) 9215 4799
Adelaide
128-138 Bedford Street
Gillman, South Australia 5013
Phone: (08) 7224 5480
Facsimile: (08) 7224 5496
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ABN 67 007 561 837
www.ksgroup.com.au
2011