A N N U A L R E P O R T
ABN 67 007 561 837
Contents Page
Highlights 1
Chairman’s Overview 2
Financial Overview 4
Managing Director’s Report 5
Board of Directors 12
Five-Year Financial History 14
Directors’ Report 15
Remuneration Report 21
Corporate Governance 32
Financial Report 43
Corporate Directory 98
FINANCIAL CALENDAR
Final dividend payment
(3.5 cents per share) 2 November 2015
Annual General Meeting 24 November 2015
Half-year results and interim
dividend announcement 24 February 2016
Interim dividend payment 4 April 2016
Full-year result and final
dividend announcement 24 August 2016
Annual report mailed
to Shareholders 7 October 2016
Final dividend payment 2 November 2016
Annual General Meeting 22 November 2016
K&S CORPORATION
HIGHLIGHTS
• Revenue increased 19.3% to $699.2 million
• Profit after tax is $13.3 million, an increase of 49.4%
• Operating cash flow is $48.1 million
• Dividend per share increased 16.7% to 7 cents, representing
a franked yield of 5.3%
• Synergies from Scott Corp acquisition exceeds expectation
• Completes acquisition of NTFS
• Total workplace safety incidents reduce by 19%
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
1
CHAIRMAN’S
OVERVIEW
On behalf of the Board of K&S Corporation, I am
pleased to present the Company’s Annual Report.
We previously announced a net profit after tax of
$13.3 million, up 49.4% on the previous year.
Operating revenue for the year was $699.2 million, an
increase of 19.3% on the previous corresponding period.
Earnings per share were 11.4 cents per share.
This result included a number of one off pre tax costs related
to re-organisation costs of $1.3 million and fraud related
recoveries of $1.7 million.
Underlying profit before tax after allowing for these one off
costs was $18.4 million.
Reconciliation of statutory profit before tax to underlying
profit before tax:
Statutory profit before tax
Add back reorganisation costs
Less non-recurring fraud related recovery
Underlying profit before tax
$m
18.8
1.3
(1.7)
18.4
Safety performance continued to improve. Excluding the
business of Scott Corporation, our total workplace incidents
reduced by 19% in 2014/15. Our combined Group LTIFR
was 6.0.
The business of Scott Corporation will be integrated into our
Comcare self insurance license for workers’ compensation
in the 2015/16 financial year, subject to final approval
from Comcare.
During the year we continued the integration of the
Scott Corporation business and synergies achieved have
materially exceeded our integration targets.
The performance of our NZ business was extremely strong.
Both revenue and underlying profit materially improved. We
expect this business to provide similar ongoing performance.
Organic growth has been strong throughout the year; we
achieved annualised revenues in excess of $63 million.
These revenues will have a favourable impact in the 2015/16
financial year.
Our Western Australian business was adversely impacted by
the continued slowing of the resource sector. With declining
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
Tony Johnson
Chairman
K&S Corporation Limited
commodity prices, the miners have reduced their costs and
scaled back projects and this had a significant impact on the
profitability of our Regal business unit during the year.
Specific cost reduction strategies to partly offset this decline
have been implemented. They include property lease cost
reductions, the establishment of a new transport facility at
Hazelmere which was fully operational in September 2015,
the rationalisation and replacement of specific motorised
fleet, employee reductions and the introduction of new IT
solutions to support customer service and operational
efficiency and cost reduction initiatives.
The structural decline of manufacturing continued during
the year with the closure of Alcoa’s Port Henry and Yennora
operations. The closure of these business units had a
negative impact on our operations which was partly offset
with the awarding of Alcoa’s Portland logistics contract
effective from April 2015.
Imports are still impacting the demand for locally
manufactured goods, which in turn reduces demand for
long haul transport services.
Our capital expenditure programme has been targeted to
support new business growth, improve productivity and
reduce costs in our existing business.
In March 2015 we acquired the business and assets of
Northern Territory Freight Services (“NTFS”). NTFS is one
of the largest rail freight forwarders on the Adelaide - Alice
Springs - Darwin corridor. This acquisition presented
immediate opportunities for K&S to expand our service
offerings to Darwin and also in the north west region of
Western Australia. The acquisition was funded from our
cash balance.
The dividend reinvestment plan (DRP) will once again apply
in respect of the fully franked final dividend of 3.5 cents per
share payable on 2 November 2015. The last election date
for participation in the DRP is 20 October 2015.
The terms of the DRP will remain unchanged with the issue
price under the DRP based on the weighted average trading
price for K&S shares in the five business days ending on
19 October 2015 (the record date of the final dividend) less
a discount of 2.5%.
Greg Boulton retired from the Board in August after 19 years
of service as a Director. I would like to thank Greg who has
been one of the longest serving Directors and has served
variously in the roles of Deputy Chairman, member of the
Audit Committee and a member of the Nomination and
Remuneration Committee. We wish him well in his future
endeavours. I know that Greg will continue to take a close
interest in the affairs of the Company.
On behalf of the Board, I thank our customers, suppliers and
employees, who have contributed to the continuing success
of the business.
In particular, I thank the senior management team, led by
Paul Sarant, for their ongoing commitment and dedication
under difficult and challenging circumstances.
Tony Johnson
Chairman
Operating cash flow for the year was $48.1 million.
Our gearing at year end is 25.0%, which is well within our
target range. Our net debt is $98.1 million.
Fraudulent Misappropriations
As previously disclosed to the ASX on 25 February 2015,
the Company has been the subject of a fraudulent
misappropriation spanning the period from 2007 to 2014.
Forensic investigation undertaken by McGrathNicol has
determined that the total quantum of the fraud is $7.0 million.
Approximately $400,000 of the fraudulent misappropriations
occurred in the year ended 30 June 2015.
The company has a comprehensive crime insurance policy
with available cover of $5.0 million. The underwriters
of the comprehensive crime insurance policy have granted
indemnity and have paid the sum of $5.0 million to the
Company in August 2015.
The Company has commenced steps to recover losses
sustained under the fraudulent misappropriations. At this
stage, any recoveries to the Company are not expected to
be material.
A provision for expenses, claims costs and potential liabilities
has been made in the Company’s accounts.
Victoria Police have arrested and charged two former
employees of the Company for alleged fraudulent
misappropriations of approximately $4.8 million.
Dividend
We have declared a fully franked final dividend of 3.5 cents
per share (last year 3.0 cents per share). This follows the
interim dividend of 3.5 cents per share paid in April 2015,
making a total dividend of 7.0 cents per share. The final
dividend will be paid on 2 November 2015, with the date for
determining entitlements being 19 October 2015.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
FINANCIAL
OVERVIEW
2015 2014 % change
OPERATING CASH FLOW
Revenue $m 699.2 586.2 19.3
2015
$48.1m
Operating profit before interest, $m 62.7 43.6 43.7
tax and depreciation
Operating profit before interest and tax $m 26.1 18.7 39.2
2014
Statutory profit before tax $m 18.8 12.4 51.6
Less non-recurring fraud related recovery $m 1.7 - -
Add back reorganisation costs $m 1.3 2.1 -
Underlying profit before tax $m 18.4 14.5 26.7
Operating profit after tax $m 13.3 8.9 49.4
Total assets $m 536.3 540.6 (0.8)
Net borrowings $m 98.1 96.0 (2.2)
Shareholders’ funds $m 294.5 287.2 2.5
Depreciation and amortisation $m 36.6 24.9 (47.1)
Earnings per share cents 11.4 9.0 26.7
Dividends per share cents 7.0 6.0 16.7
Net tangible assets per share $ 1.73 1.69 2.4
Operating cash flow $m 48.1 47.3 1.8
Return on Shareholders’ funds % 4.5 3.1 45.2
Gearing % 25.0 25.2 0.8
Employee numbers 2,004 2,050 (2.2)
Lost time injuries 0 25.0 (100.0)
Lost time injuries frequency rate 6.0 5.8 (3.4)
OPERATING REVENUE
$699.2m
$586.2m
$564.8m
$554.8m
$523.4m
2015
2014
2013
2012
2011
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
2013
2012
2011
2015
2014
2013
2012
2011
2015
2014
2013
2012
2011
$47.3m
$46.4m
$38.9m
$34.1m
SHAREHOLDERS’ FUNDS
GEARING
$294.6m
$287.2m
$239.6m
$224.9m
$213.6m
25.0%
25.2%
17.6%
21.6%
26.4%
MANAGING DIRECTOR’S
REPORT
We have continued during 2014/15 to realise financial
benefits derived from reforming and refocussing
K&S Corporation.
Paul Sarant
Managing Director
K&S Corporation Limited
Significant work has been undertaken to improve internal
efficiencies, workplace health and safety, consolidate and
rationalise properties and aggressively pursue new work in
both traditional and non-traditional areas. The growth in
non-traditional areas has been strong, and serves to provide
improved market segment balance.
The acquisition and integration of Northern Territory
Freight Service (“NTFS”) and Scott Corporation have been
fundamental to these changes. These acquisitions have
further diversified our business and provided customer
integration opportunities.
Consequent to the business restructuring, we are now
a more financially efficient and organisationally effective
company. We are well positioned for continued strong
growth, both organically or through acquisition.
Revenue for 2014/15 increased (19.3%) to $699.2 million,
market capitalisation exceeded $155.2 million and
operating cash flow was $48.1 million. Profit after tax was
$13.3 million, compared with $8.9 million for 2013/14.
Total dividends for the year were 7 cents per share, an
increase from 6 cents per share in 2013/14. This represents
a franked yield of 5.3%.
Safety continues to be a major focus for the Group. While
our Lost Time Injury Frequency Rate remained stable, the
severity rate of injuries reduced significantly. The Group’s
LTIFR for this year also incorporated Scott Corporation and
NTFS for the first time.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
While the Australian domestic economy has continued to
soften K&S has successfully reduced costs and actively
pursued new work. More than $63 million in new work has
been won, offsetting declines in traditional linehaul activity
as the traditional manufacturing sector slows. At the same
time, more than $130 million in ongoing contracts have
been renewed.
Activity in Western Australia slowed dramatically with the
downturn in the mining sector. We remain optimistic about
improvement in the medium term.
New Zealand has performed above expectations and
continues to provide solid growth opportunities.
Business Development
Organic revenue growth was strong throughout the year.
We were awarded new annualised revenues in excess of
$63 million. These revenues will have a favourable impact
in the 2015/16 financial year.
The new contracts, many of them in non-traditional areas,
assist to offset revenue reduction incurred consequent to
the closure of Alcoa operations that we serviced at Geelong
and Yennora in late 2014, and other customer account
shrinkage pertaining to their own softer market related
trading conditions. The Company is well placed for organic
growth when general economic conditions improve.
In New Zealand, a multi-modal facility is being developed
in Christchurch to support additional intermodal transport
services recently secured on the South Island.
A new warehouse facility was opened in Brisbane at
Fisherman’s Island to support the growth of warehousing
and import/export activities.
MANAGING DIRECTOR’S
REPORT
Business Development
The purchase of Scott Corporation in 2014 enabled K&S
to expand its services offering, which has assisted to secure
new contracts. This includes work in the mining, oil and
gas sectors.
The purchase of NFTS during the year will generate new
opportunities, particularly with the integration of existing
K&S customers.
K&S has renewed a major steel finished products linehaul
contract with OneSteel for an additional four years.
Solid growth in the petroleum segment has been achieved.
The integration of Scott Corporation has progressed well,
and has provided a significant basis of improved earnings
performance.
It is planned to incorporate Scott Corporation into the
Group self-insurance programme by the end of the 2015
calendar year.
One major contributor was the return of equipment that
had been in use in the mining and manufacturing sectors,
to which make-good work was to be completed.
Scott Corporation is heavily involved in the mining sector
which has been adversely impacted by the downturn in
commodity prices.
There has been an unprecedented number of tenders
being offered by both encumbered and non-encumbered
customers as they actively seek to reduce their cost base.
Throughout this process we have maintained a disciplined
approach to commercial sustainability.
Fuel volumes transported in central Queensland were
noticeably impacted by the mining downturn in the first half
of the year.
The volume of acid transported in north Queensland also
declined due to lower production activity by miners in
response to weaker commodity prices. Our Perth-based
Chemtrans business has incurred a similar softening of the
market and, in addition, increased competitive pressure.
Pursuant to higher mass approvals being granted, operational
improvements were realised with our specialised A-double
tipper fleet deployed for coal haulage in the Illawarra.
The Hyde Park tank wash and repair business in Melbourne
realised an improved year with higher year on year volumes.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
Slow economic conditions continued to impact the
traditional freight business, particularly on the east coast.
Interstate transport volumes between Melbourne
and Sydney remained subdued, largely due to a shrinking
manufacturing sector and changes to ordering patterns.
Overseas sourced goods are being increasingly shipped
directly into the state of final destination. Previously
containerised product was predominantly landed to a single
port location, deconsolidated and the goods transported
to their final destination by road.
While this change has reduced interstate road transport
volumes, it has provided increased wharf cartage and
local delivery. We have increased volumes in wharf cartage,
storage and distribution of imported goods.
A highlight for the year was the opening of a new 10,000
square metre warehouse facility at Fishermans Island in
Brisbane. The facility will be used for warehousing and cross
docking of imports and exports for multiple customers.
Products being handled typically include paper reels, timber
board and aluminium coils.
The closure of the Alcoa plants in Sydney and Geelong
adversely impacted on revenues. This was partially offset
by securing new Alcoa Portland transport.
Work for long term clients such as Arrium, BlueScope,
Orrcon, Perth Waste, CHEP and Fletcher Building Products
has either been retained or extended.
The acquisition of NTFS has enabled K&S to provide new
services between Darwin and Kununurra in northern Western
Australia. NTFS has depots in Adelaide, Darwin and Alice
Springs. We now directly provide total Australian coverage.
During the year, K&S replaced approximately 40% of its
linehaul fleet with new prime movers, as part of the ongoing
fleet replacement programme. The remaining fleet will be
replaced over the next two years. The new vehicles are
equipped with advanced fatigue management and onboard
vehicle safety technology. It is believed K&S is one of the
first major transport companies in Australia to introduce this
technology as a base standard for all long haul fleet.
New Zealand
Increased steel industry activity underpinned the strong
performance of our New Zealand business in 2014/15.
Steel volumes transported exceeded our original
expectation, predominantly as a result of the strong
domestic and commercial property market in Auckland
and surrounding area, and the ongoing redevelopment
of Christchurch following the 2011 earthquake.
K&S was also awarded a steel contract in the South Island
which has predicated the establishment of a full intermodal
facility that will commence operation in October 2015.
Work from the timber sector also increased to meet the
growing demands of the domestic and export markets.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
Volume in the dairy sector has been firm. Kiwifruit volumes
have returned to normal levels after two years where supply
was hit by drought and viral infection.
We continued our fleet replacement and upgrade
programme. All the new vehicles added to the fleet are able
to operate under the applicable new maximum load limits.
This has realised a material improvement in utilisation.
The Company was re-accredited to the highest level under
the Accident Compensation Commission’s Workplace Safety
Management Practices, and maintained NZ Transport
Authority certificate of fitness as a 5-star carrier.
MANAGING DIRECTOR’S
REPORT
DTM, as a specialist 3PL captive fleet provider, sustained
some revenue shrinkage as several clients’ incurred reduced
market related activity.
In the latter part of the year several new contracts were
won, the full benefits of which will be realised in 2015/16.
They include several new long term fuel distribution
contracts in regional South Australia and Victoria.
A new purpose built bulk lubricants storage facility was
constructed for Caltex at our New South Wales Enfield site.
We were also successful in being awarded the associated
interstate and local transport services. Western Australian
services pertaining to the warehousing and distribution of
packaged products, and bulk lubricants were also secured.
DTM also established new materials handling business with
keg rental company Kegstar Holdings, to transport and
warehouse beer kegs servicing predominantly the growing
craft breweries in Australia.
In NSW, DTM continues to review its warehouse capacity to
ensure it can support an increase in demand in CHEP pallet
storage. A second transportable pallet maintenance facility
has been relocated to Truganina in Melbourne. The second
plant will incorporate a pallet repair facility, further expanding
the value-add services provided to CHEP.
The Air Liquide contract remains steady with volumes largely
influenced by activity in the industrial manufacturing sector.
A new contract was won for the transport of medical gas
bottles for Air Liquide Health on the Eastern Seaboard.
The distribution agreement with Shell in Queensland
continues to operate well.
SERVICE ALL THE WAY
Regal Transport experienced a softening year, reflective of
the slowdown in the Western Australian economy.
Weakness in both private and public sector spending has
resulted in fewer major capital expenditure projects, which
has had an impact on both general freight and heavy
haulage activities.
This has been particularly noticeable in the resources
sector with miners reducing both project and operational
expenditure in the face of falling commodity prices.
As a result, the WA transport sector has significant spare
capacity, which has placed strong competitive pressure
on pricing.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
We have continued to proactively reduce our cost base and
concentrate on realising improved operational efficiencies
and increased customer partnering. Property cost reductions
have been realised.
General freight operations were particularly impacted by
Mt Gibson Iron placing its Koolan Island pit on care and
maintenance following the collapse of a seawall in October
2014. This was further exacerbated by a reduction in
building projects in regional centres.
Heavy haulage work was less impacted, largely as a result
of strong ongoing relationships with existing partners,
including Westrac.
Considerable work is being undertaken to secure new
clients in the oil and gas sector and customers who
can provide ongoing, constant volume within our strong
regional network.
K&S Fuels
K&S completed the development of a new refuelling facility
for the Port MacDonnell commercial fishing fleet in the
south east of South Australia in June this year. The new
facility is part of the expanded Port MacDonnell wharf and
boat ramp development and replaces the previous
equipment that was located at the end of the nearby jetty.
The relocation was part of a $2.8 million upgrade of the
wharf and boat ramp undertaken by the District Council of
Grant to minimise environmental risks and improve facilities
for both commercial and amateur fishers. Commercial and
recreational fishing vessels now have 24/7 access to the
new refuelling facility using a swipe card system. As part of
the upgrade, K&S has also provided new petrol and diesel
fuel facilities for public use.
Diesel fuel sales to farmers and the commercial fishing fleet
increased during the year. Retail volumes grew, but margins
were subject to strong competitive market pressure.
Work to rationalise and improve the supply of fuel has been
completed. Fuel sourcing methods have been simplified in
both New Zealand and Australia.
Safety
K&S has maintained its strong commitment to safety with
the Lost Time Injury Frequency Rate (LTIFR) remaining
stable, despite the integration of Scott Corporation and
NTFS into the overall K&S reporting regime.
We are progressing the integration of Scott Corporation’s
operations to meet Tier 3 status under the Commonwealth
Safety, Rehabilitation and Compensation Act. This will
enable its incorporation into the K&S self-insurance licence
under the Comcare system. It is anticipated this work will
be completed by the end of calendar year 2015.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
In March 2015, a Company employee survey of our K&S
safety programme “Everybody Safe, Everyday” was
undertaken. An overview of the results was distributed to
all employees.
The results clearly demonstrated that Company-wide there
is a very strong commitment to safety, support for training
and associated underpinning methods such as functional
area toolbox meetings, and a 100% understanding of our
safety rules and values.
The survey also showed very high support for workplace
drug and alcohol testing. We have continued our random
drug and alcohol testing during the year. We apply this to
all levels of the business.
K&S held its annual OHS&E conference in October, finalising
its 12 month HS&E plan. Continuous improvement
of processes and procedures has continued with wide
consultation from stakeholders, and input from staff across
all levels of the business. In excess of 280 processes have
been reviewed as part of this process.
K&S continued and expanded its e-learning training delivery
modules during the year, adding a number of significant
units to its library of training.
MANAGING DIRECTOR’S
REPORT
Monthly tool box sessions continued covering workplace
topics ranging from falls prevention, safe coupling and
uncoupling, hazard identification and near-miss reports,
fitness for work, fatigue and manual handling through
to contractor management and rehabilitation. Health topics,
including diabetes, high blood pressure and cardiac health,
sleep problems, sugar and salt, dehydration, sun smart and
medication were also included.
K&S has commenced the roll-out of new vehicle in
cab infra-red based “seeing - eye” technology throughout
its long haul operations to proactively manage fatigue.
The operation of this technology is monitored 24/7 and
provides real time event management.
In the coming year, K&S will be subject to a number of
external audits by Comcare as part of its self-insurance
licence renewal process.
Human Resources
The continued integration of Scott Corporation and NTFS
post its acquisition, into the K&S business has been a key
focus during the year.
The purchase of Scott Corporation was completed in
February 2014. The work to integrate the business has
now largely been completed. This has resulted in
meaningful expanded development and career opportunities
for employees.
NTFS was purchased in March 2015, and while work to
integrate human resources functions has progressed
smoothly, the full benefits will be realised during the 2015/16
financial year. As with Scott Corporation, expanded
development and career opportunities for employees have
been realised.
In October 2014 solar panels were installed on the
Truganina workshop and corporate administration buildings.
The power generation capacity was designed to reduce our
net base power demand, as opposed to generating daily
export capacity, and as such reduce our carbon footprint.
A total of $30.1m was spent on motorised fleet replace-
ments, generally upgrading Euro 3 or 4 emissions standard
vehicles to Euro 5 standard.
During 2013/14, K&S generated a total of 165,000 tonnes
of carbon dioxide equivalent. This was above the previous
year’s total of 119,000, however these figures now include
a full years operations of Scott Corporation.
K&S continues to place a large focus on employee
development and competency training. During the year, a
number of new e-learning modules were developed to
further enhance this programme. Its ongoing development
remains a core focus.
As part of our normal business other environmental initiatives
are identified and realised at an operational level. Typically,
major areas of focus include increased mass per kilometre
travelled reducing total trips, drag reduction testing and
vehicle aero dynamic improvements.
Pursuant to the general economy industrial relations
wage pressures has decreased and labour turnover
figures reduced.
Compliance
Environment
Across all facets of our business we have continued to
work to minimise our environmental impact, and improve
our energy efficiency.
K&S maintained its ISO 9001 accreditation and continues
to be a member of the Australian Trucking Association,
including membership of the ATA’s Safety and Transport
Economics Committees.
Following a series of audits, K&S has maintained and
renewed WA Main Roads accreditation, National Heavy
Vehicle Accreditation Scheme – Mass, Maintenance
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
Summary
In soft economic conditions the Company has responded
well. Strong revenue growth has been achieved through
both organic and acquisition streams.
Our safety performance has continued to improve with total
workplace safety incidents reducing by 19%. Our Company
LTFIR was 6.0.
The integration of Scott Corporation has provided benefits
materially above our original expectation of $3m. In a similar
method we are now focussing strongly on the integration of
the recently acquired NTFS.
Specific cost reduction strategies, some of which we
highlighted last year, have been implemented. They include
property lease cost reductions, site rationalisation, the
rationalisation and replacement of specific motorised fleet,
employee reductions and the introduction of new IT systems
to support customer service and operational efficiency, and
cost reduction initiatives.
We have continued to focus strongly on our cash flow.
Our capital expenditure programme has been targeted to
support new business growth, improve productivity and
reduce costs in our existing business.
We have maintained a strong balance sheet with low
gearing. Potential acquisition opportunities will be pursued
within our strategic guidelines.
Having achieved improved year on year performance in
the majority of all key business measures, our management
focus remains firmly on realising sustainable outcomes in
all facets of our business. We will continue to focus on the
improvement of our safety performance, revenue growth
and reduction of our operating costs.
I would like to take this opportunity to express my sincere
thanks to all the employees, and supporters of K&S, who set
against tough market conditions have worked exceptionally
hard to improve our Company.
and Basic Fatigue Management, accreditation for Food
Safety/HACCP and TruckSafe accreditation.
Post acquisition the NTFS business has also been incorpo-
rated into K&S’ WA Main Roads and NHVR accreditation for
mass, maintenance and basic fatigue management.
Paul Sarant
Managing Director and CEO
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
BOARD OF
DIRECTORS
Legh Winser
Age 67, Director since August 2013
Legh Winser is a former Managing Director of the Company,
a position which he held for 14 years. He has extensive
knowledge of the transport and logistics industry with more
than 40 years experience. Mr Winser is also an alternate
director of several companies with the Scott Group
of Companies.
Member of: • Environmental Committee
• Nomination and Remuneration Committee
Ray Smith
Age 68, Director since 2008
Ray Smith FCPA, FAICD, Dip Com is a Director of listed
entity Transpacific Industries Limited and a former Director
of Warrnambool Cheese and Butter Factory Company
Holdings Limited and Crowe Horwath Australasia Ltd.
Mr Smith is a director of Hy-Line Australia and 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: • Audit Committee (Chairman)
Secretary
Chris Bright BEc, LLB, Grad Dip CSPM, FCIS
Age 44, Secretary since 2005
Chris Bright has held the position of General Counsel for
13 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.
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 68, Director since 1986
Tony Johnson BA, FAICD, LLB, LLM (Companies & Securities),
is a lawyer and an accredited mediator. Mr Johnson is a
founder and former 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, the largest
Shareholder of K&S Corporation Limited and a Director of
Adelaide Community Healthcare Alliance.
Member of: • Environmental Committee (Chairman)
• Nomination and Remuneration Committee
• Audit Committee (appointed 1 September 2015)
Paul Sarant Managing Director
Age 46, Director since April 2014
Paul Sarant, Bachelor of Engineering (B.Eng.), has extensive
experience in the transport and logistics sector. Mr Sarant
occupied the position of Executive General Manager DTM
for seven years at K&S Corporation prior to his appointment
as Managing Director and Chief Executive Officer. Before
that, Mr Sarant occupied a range of senior management
roles, including general management and senior logistics
roles, in the course of his fifteen years at Amcor Printing
Paper Group/PaperlinX and former General Manager Spicer
Stationery Group.
Member of: • Environmental Committee
Greg Boulton AM Deputy Chairman
Age 65, (Resigned 31 August 2015)
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 the transport related industry.
Member of: • Audit Committee
• Nomination and Remuneration Committee
(Chairman)
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
Tony Johnson
Chairman
Non-Executive Director
Paul Sarant
Managing Director
Legh Winser
Non-Executive Director
Ray Smith
Non-Executive Director
Chris Bright
Secretary and General Counsel
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
FIVE-YEAR FINANCIAL
HISTORY
($A Millions unless
otherwise indicated) 2015 Variation 2014 2013 2012 2011
%
Group Revenue 699.2 19.3 586.2 564.6 554.8 523.4
Operating Profit before Individually
Significant Items, Interest and Tax 26.0 39.8 18.6 27.8 30.5 29.6
Interest Expense 7.2 16.1 6.2 5.5 7.1 8.4
Profit Before Tax 18.8 51.6 12.4 22.3 23.4 21.2
Income Tax Expense 5.5 52.8 3.6 6.4 7.0 6.3
Operating Profit after Tax 13.3 49.4 8.9 15.9 16.4 14.8
Earnings per
Ordinary Share (cents) 11.4 26.7 9.0 17.6 18.7 18.3
Dividends per Share (cents) 7.0 16.7 6.0 11.0 11.0 10.0
Return on
Shareholders Funds 4.5% 45.2 3.1% 6.6% 7.3% 6.9%
Paid Up Capital 147.7 1.6 145.4 101.2 97.7 94.3
Shareholders Funds 294.5 2.5 287.2 239.6 224.9 213.6
Total Assets 536.3 (0.8) 540.6 403.7 401.0 388.0
Net Tangible Assets
(book value) per Share $1.73 2.4 $1.69 $1.85 $1.75 $1.65
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
DIRECTOR’S
REPORT
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 2015 and the Auditor’s
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 Board presents the 2015 Operating and Financial
Review, which has been designed to provide Shareholders
with a clear and concise overview of the Company’s
operations, financial position, business strategies and
outlook. The review complements the financial report and
has been prepared in accordance with the guidelines set
out in ASIC RG247.
The consolidated profit for the year attributable to the
members of K&S Corporation Limited (“K&S”) is shown
below, along with comparative results for 2014.
Financial Overview 2015 2014 % Movement
Operating revenue $m 699.2 586.2 19.3
Operating profit after tax $m 13.3 8.9 49.4
Net borrowings $m 98.1 96.0 (2.2)
Shareholders’ funds $m 294.5 287.2 2.5
Earnings per share (basic) cents 11.4 9.0 26.7
Dividends per share cents 7.0 6.0 16.7
Net tangible assets per share $ 1.73 1.69 2.4
Cash flow per share $ 0.41 0.40 2.5
Return on Shareholders’ funds % 4.5 3.1 45.2
Gearing % 25.0 25.2 0.8
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
K&S is a mid-sized logistics company, recognised as a
leader in the development and provision of specialist
logistics solutions for customers. The Group operates in
the Australian and New Zealand markets. It’s success is
underpinned by a strong focus on safety, service and
continuous improvement.
The Directors announce a net profit after tax of $13.3 million,
an increase of 49.4% on the previous year. Operating
revenue for the year was $699.2 million, an increase of
19.3% on the previous corresponding period.
Earnings per share increased to 11.4 cents per share.
This result included a number of one off items related
to re-organisation costs of $1.3 million and fraud related
recoveries of $1.7 million.
Underlying profit before tax, after allowing for these one off
costs, increased to $18.4 million.1
Reconciliation of statutory profit before tax to underlying
profit before tax:
$m
Statutory profit before tax 18.8
Add back reorganisation costs 1.3
Less non-recurring fraud related recovery (1.7)
Underlying profit before tax 18.4
1 Underlying earnings are categorised as non-IFRS financial information and therefore have been
presented in compliance with ASIC Regulatory Guide 230 – Disclosing non-IFRS information, issued
in December 2011. Underlying adjustments have been considered in relation to their size and nature,
and have been adjusted from the Statutory information for disclosure purposes to assist readers
to better understand the financial performance of the underlying business in each reporting period.
These adjustments include reorganisation costs and transaction costs associated with the current
merger with Scott Corporation Limited. The exclusion of these items provides a result which, in the
Directors’ view, is more closely aligned with the ongoing operations of the Consolidated Group.
The non-IFRS information has been subject to review by the auditor.
DIRECTOR’S
REPORT
Operating and Financial Review
The combined Group LTIFR was 6.0 and our safety
performance continued to improve with total workplace
incidents reducing 19%.
Scott Corporation will be integrated into our Comcare self
insurance licence for workers’ compensation in the 2015/16
financial year, subject to final approvals from Comcare.
The performance of our NZ business was extremely strong.
Both revenue and underlying profit materially improved. We
expect this business to provide similar ongoing performance.
During the year we continued our integration of Scott
Corporation. Synergies achieved have materially exceeded
our integration targets.
Organic revenue growth has been strong throughout the
year, we were awarded annualised revenues in excess of
$63 million. These revenues will have a favourable impact
in the 2015/16 financial year.
Our Western Australian business was adversely impacted by
the continued slowing of the resource sector. With declining
commodity prices, the miners have reduced their costs
and scaled back projects. This had a significant impact on
activity levels and the profitability of our Regal business unit
during the year.
Specific cost reduction strategies to partly offset this decline
have been implemented. They include property lease cost
reductions, the establishment of a new transport operations
facility at Hazelmere which was fully operational in
September 2015, the rationalisation and replacement of
specific motorised fleet, employee reductions and the
introduction of new IT solutions to support customer service
and operational efficiency and cost reduction initiatives.
The structural decline of manufacturing continued during
the year with the closure of Alcoa’s Port Henry and Yennora
operations. The closure of these business units had a
negative impact on our operations which was partly offset
with our award of the Portland logistics contract effective
from April 2015.
Imports are still impacting the demand for locally
manufactured goods, which in turn reduces demand for
long haul transport services.
Our capital expenditure programme has been targeted to
support new business growth, improve productivity and
reduce cost in our existing business.
In March we acquired the business and assets of Northern
Territory Freight Services (“NTFS”). NTFS is one of the largest
rail freight forwarders on the Adelaide – Alice Springs – Darwin
corridor. This acquisition presented immediate opportunities
for K&S to expand our service offerings to Darwin and also
in the north west region of Western Australia. The acquisition
was funded from our cash balance.
Operating cash flow for the year was $48.1 million.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
Our gearing at year end is 25.0%, which is well within our
target range. Our net debt is $98.1 million.
During the course of the year, we acquired fleet totaling
$55.9 million. Funding of this equipment was
$39.7 million via hire purchase agreements and the balance
of $16.2 million was settled from our cash balance.
Our net asset position increased by 2.5% to $294.5 million.
The Foreign Currency Reserve reduced in value by
$0.7 million during the year. Profit after tax of $13.3 million
for FY15 was offset by dividends paid of $7.6 million (Final
FY14 and Interim FY15). As part of the Employee Share
Scheme and Dividend Reinvestment Plan $2.2 million of
new shares were issued in FY15.
Fraudulent Misappropriations
As previously disclosed to the ASX on 25 February 2015,
the Company has been the subject of a fraudulent
misappropriation spanning the period from 2007 to 2014.
Forensic investigation undertaken by McGrathNicol has
determined that the total quantum of the fraud is
$7.0 million. Approximately $400,000 of the fraudulent
misappropriations occurred in the year ended 30 June 2015.
The Company has a comprehensive crime insurance policy
with available cover of $5.0 million. The underwriters
of the comprehensive crime insurance policy have granted
indemnity and have paid the sum of $5.0 million to the
Company in August 2015 under the policy.
The Company has commenced steps to recover losses
sustained under the fraudulent misappropriations. At this
stage, any recoveries to the Company are not expected to
be material.
A provision for expenses, claims costs and potential liabilities
has been made in the Company’s accounts.
Victoria Police have arrested and charged two former
employees of the Company for alleged fraudulent
misappropriations of approximately $4.8 million.
Dividend
We have declared a fully franked final dividend of 3.5 cents
per share (last year 3.0 cents per share). This follows
the interim dividend of 3.5 cents per share paid in April
2015, making a total dividend of 7.0 cents per share.
This represents an annualised yield of 5.3%. The final
dividend will be paid on 2 November 2015, with the date
for determining entitlements being 19 October 2015.
The dividend reinvestment plan (DRP) will once again apply
in respect of the fully franked final dividend of 3.5 cents
payable on 2 November 2015. The last election date for
participation in the DRP is 20 October 2015.
The terms of the DRP will remain unchanged with the issue
price under the DRP based on the volume weighted average
price for K&S shares in the five business days ending on
19 October 2015 (the record date of the final dividend) less
a discount of 2.5%.
Outlook
Providing earnings guidance going forward remains a difficult
task. We are well placed with a strong balance sheet, low
gearing and secure customer contracts. Opportunities
for potential acquisitions will also be closely evaluated within
strategic guidelines.
Environmental Regulation
and Performance
The consolidated entity’s operations are subject to
environmental regulations under both Commonwealth and
State legislation in relation to its transport and storage
business and its fuel business.
The consolidated entity has a Board Committee which
monitors compliance with environmental regulations.
Climate Change
Reporting under the Energy Efficiency Opportunity Program
(EEOP) was completed and submitted in December 2014.
The Energy Efficiency Opportunity compliance report for
June 2014 is available on the K&S website.
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 several incidents during the year, none of
which has the potential to result in any material restrictions
being placed upon the Company’s ability to continue its
operations in their current form.
Significant Changes in the State of Affairs
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.
Significant changes in the state of affairs of the consolidated
entity during the financial year were as follows:
On 2 March 2015, K&S Corporation Limited acquired the
business and assets of Northern Territory Freight Services
(“NTFS”). NTFS is one of the largest rail freight forwarders on
the Adelaide – Darwin corridor. The acquisition enables us to
provide additional services and diversify our business. At the
time of acquisition NTFS generated $50 million in revenues
and employed 100 people.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
DIRECTOR’S
REPORT
Dividends
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
3.0 cents per share amounting to $3,482,774 in respect
of the year ended 30 June 2014 was declared on
26 August 2014 and paid on 31 October 2014;
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 2014 was declared on
26 August 2014 and paid on 31 October 2014.
3 An interim fully franked ordinary dividend (taxed to 30%)
of 3.5 cents per share in respect of the year ended
30 June 2015 was declared on 25 February 2015 and
paid on 3 April 2015 amounting to $4,095,511.
The final dividend declared by the Directors of the Company
on 21 August 2015 and payable on 2 November 2015
in respect of the year ended 30 June 2015 comprises:
1 A fully franked ordinary dividend (taxed to 30%) of
3.5 cents per share amounting to $4,116,582 (based on
the Company’s current total issued share capital); and
2 A fully franked preference dividend (taxed to 30%) of
4.0 cents per share amounting to $4,800.
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 volume weighted average price of K&S
shares in the five business days ending on 19 October 2015
(the record date of the final dividend), less a discount of
2.5%. The last election date for participation in the DRP is
20 October 2015.
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.
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 preference share dividends are included as interest
expense in determining Net Profit.
General Disclosures
K&S Corporation Limited is a company limited by shares
that is incorporated and domiciled in Australia.
Directors
The Directors of the Company in office at any time during
or since the end of the financial year are:
Tony Johnson Chairman
Paul Sarant Managing Director
Greg Boulton AM Deputy Chairman – resigned 31 August 2015
Legh Winser appointed 23 August 2013
Ray Smith
Secretary – Chris Bright
With the exception of Mr Sarant, all Directors are
Non-Executive Directors. Particulars of Directors’
qualifications, experience, special responsibilities and
other relevant Directorships are on page 12 of the
Annual Report.
Dividends paid to Shareholders
12
10
8
6
4
2
0
5.0
6.0
5.0
5.0
4.5
6.5
Final
Interim
3.0
3.0
3.5
3.5
2011 2012 2013 2014 2015
Events Subsequent to Balance Date
On 21 August 2015, the Directors of K&S Corporation
Limited declared a final dividend on ordinary shares in
respect of the 2015 financial year. The total amount of the
dividend is $4,116,582 (based on the Company’s current
total issued share capital) which represents a fully franked
dividend of 3.5 cents per share. The dividend is payable
on 2 November 2015 and has not been provided for in the
30 June 2015 financial statements.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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 L Winser 39,194
Mr P Sarant 50,000
Directors of the Company have relevant interests
in additional shares as follows:
Ordinary Shares
Mr T Johnson 493,178
Mr G Boulton 277,983
Mr L Winser 1,124,870
Mr R Smith 40,154
Mr P Sarant 91,603
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:
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 Officers and Secretaries of the Company and its
controlled entities, except where the liability arises out of
conduct involving a lack of good faith.
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 - - 1 1 4 4
Mr G Boulton 11 11 4 4 1 1 - -
Mr R Smith 11 11 4 4 - - - -
Mr P Sarant 11 11 - - - - 4 4
Mr L Winser 10 11 - - 1 1 3 4
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
DIRECTOR’S
REPORT
Indemnification and Insurance of
Directors and Officers
Insurance Premiums
Since the end of the previous financial year, the Company
has paid insurance premiums of $51,252 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:
• Costs and expenses incurred by the relevant officers
in successfully defending proceedings, whether civil or
criminal; and
• 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, L Winser, R Smith and
P Sarant.
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.
Indemnification of Auditors
To the extent permitted by law and excluding in
circumstances of negligence, the Company has agreed to
indemnify its auditors, Ernst & Young, as part of the terms
of its audit engagement agreement against claims by third
parties arising from the audit (for an unspecified amount).
No payment has been made to indemnify Ernst & Young
during or since the financial year.
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 32 of the Annual Report.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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 95 of this report.
Non-Audit Services
The following non-audit services were provided by the
entity’s Auditor, Ernst & Young. The Directors are satisfied
that the provision of non-audit services is compatible with
the general standard of independence for auditors imposed
by the Corporations Act. The nature and scope of
each type of non-audit service provided means that auditor
independence was not compromised.
Ernst & Young received or are due to receive the following
amounts for the provision of non-audit services:
Scott Corporation Limited acquisition assistance $59,493.
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.
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 Key Management Personnel are:
i) Directors
Mr T Johnson Non-Executive Chairman
Mr G Boulton Non-Executive Deputy Chairman – Resigned 31 August 2015
Mr R Smith Non-Executive
Mr L Winser Non-Executive
Mr P Sarant Managing Director
ii) Executives
Mr B Walsh Chief Financial Officer
Mr C Bright General Counsel & Company Secretary
Mr G Everest Executive General Manager Regal Transport – Resigned 14 November 2014
Mr S Hine Executive General Manager Business Development
Mr S Skazlic General Manager HS&E / Compliance
Ms K Evans General Manager Human Resources
Mr R King Executive General Manager Western Australia
Mr D Keane Executive General Manager Scott Corporation
Mr K Cope Executive General Manager Commercial – Resigned 6 February 2015
Mr M Kohne Executive General Manager DTM
Mr G Beurteaux Executive General Manager K&S Freighters – Appointed 14 July 2014
Remuneration Philosophy
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:
• Remuneration is set at levels that will attract and retain good performers and motivate and reward them
to continually improve business performance.
• Remuneration is structured to reward employees for increasing Shareholder value.
• 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 appropriateness 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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
REMUNERATION
REPORT(AUDITED)
Remuneration Structure
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
Objective
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 maximum aggregate remuneration of
Non-Executive Directors’ shall be determined from time to time by a general meeting of Shareholders.
The latest determination was at the Annual General Meeting held on 20 November 2012 when Shareholders
approved a maximum aggregate remuneration of $600,000 per year, comprising an increase of $100,000
to the cap on the maximum aggregate remuneration payable to non-Executive Directors.
The amount of aggregate remuneration sought to be approved by Shareholders and the amounts paid to
Directors is reviewed annually. The Board considers the fees paid to Non-Executive Directors of comparable
companies when undertaking the annual review, as well as periodically taking advice from external
recruitment consultants. No advice was taken from external recruitment consultants in relation to the fees
paid to Non-Executive Directors in 2014/15. Each Non-Executive Director receives a fee for being a Director
of the Company.
The Board deferred any consideration of whether to increase the fees payable to Non-Executive Directors
in the 2014/15 financial year until December 2014. Accordingly, the fees payable to Non-Executive Directors
in the first half of the 2014/15 financial year remained at the level paid in the 2012/13 financial year, with no
increases to the fees payable to Non-Executive Directors occurring in the 2013/14 financial year.
The fees payable to Non-Executive Directors were increased by 3% with effect from 1 January 2015.
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 2014 is detailed on page 28 and
29 of this report.
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:
• reward Executives for Company, business unit and individual performance against targets set by reference
to appropriate benchmarks;
• align the interests of Executives with those of Shareholders;
• link reward with performance of the Company; and
• ensure total remuneration is competitive by market standards.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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 makeup and eligibility criteria for short term incentives are approved by the
Board prior to the commencement of each financial year.
For the year ended 30 June 2015, the adoption of at risk short term incentives of up to 20% of the base
emolument of the Managing Director and Executives was approved by the Board. The payment of such short
term incentives was to be 50% in cash and 50% in shares in the Company. The share component of any
short term incentives was to comprise new fully paid up ordinary shares issued by the Company.
Payment of the short term incentive in respect of the 2014/15 financial year was conditional upon
outperformance by the Company of its 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) (but including any one-off or non-trading
items that have been included in the budget). The short term incentive scheme is self funding (ie, amounts
accrued to fund the payment of any short term incentives will be expensed in the Company’s normalized
net profit after tax) and no incentives were payable unless at least 100.5% of the Company’s budgeted net
profit after tax on a normalized basis for the 2014/15 financial year was achieved.
The total short term incentives payable to the Managing Director and Executives for the year ended
30 June 2015 if eligibility criteria were met was $73,168, up to a maximum of $731,680 if all out-performance
criteria were met.
The short term incentives available to the Managing Director and the Executives as a percentage of their base
salary were based on the following scale of outperformance to budgeted profit after tax on a normalized basis:
PERFORMANCE TARGET
PROFIT
< Budget
Budget
Budget
Budget
Budget
Budget
Budget
Budget
Budget
Budget
Budget
Budget
AFTER
TAX
+0.5%
+2.0%
+4.0%
+6.0%
+8.0%
+10.0%
+12.0%
+14.0%
+16.0%
+18.0%
to
to
to
to
to
to
to
to
to
1.99%
3.99%
5.99%
7.99%
9.99%
11.99%
13.99%
15.99%
17.99%
STI
0%
0%
2%
4%
6%
8%
10%
12%
14%
16%
18%
20%
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
REMUNERATION
REPORT(AUDITED)
The Company’s Managing Director, Mr Sarant, did not qualify for the payment of any short term incentive in
respect of the 2014/15 financial year. If Mr Sarant had satisfied all of the outperformance criteria for his short
term incentive, the maximum amount payable to him would have been $120,000.
The Executive General Managers of the Company did not qualify for the payment of any short term incentive
in respect of the 2014/15 financial year. If the Executive General Managers had satisfied all of the
outperformance criteria for their short term incentive, the maximum aggregate amount payable to them
would have been $611,680.
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 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 after tax on a normalised basis is appropriate and in the interests
of Shareholders.
The Board also believes that having all of the Company’s Executive Team aligned to the common goal of
achieving budgeted operating profit after tax drives positive behaviours amongst the Executive Team in
maximizing group wide benefits from operating activities.
For the 2015/16 financial year, the short term incentive scheme will again be based upon outperformance by
the Company of its 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) (but including any one-off or non-trading items that have been
included in the budget).
The short term incentive scheme remains self funding (ie, amounts accrued to fund the payment of any short
term incentives will be expensed in the Company’s normalized net profit after tax) and no incentives will be
payable unless at least 100.5% of the Company’s budgeted net profit after tax on a normalized basis for the
2015/16 financial year is achieved.
The total short term incentives payable to the Managing Director and Executives for the year ended 30 June
2016 if eligibility criteria are met will be $67,522, up to a maximum of $675,220 if all out-performance criteria
are met.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
Employment Contracts
It is the Nomination and Remuneration Committee’s current policy that fixed term contracts are not entered into
with members of the Executive Team.
The Managing Director, Mr Sarant, has a contract of employment, key terms of which for 2014/15 were:
• A total remuneration package of $712,000 per annum (excluding short term incentive (STI) but including
long service leave).
• Eligible for an STI of up to $120,000 (20% of base salary) against annual performance criteria set by the
Board. For the year ended 30 June 2015, payment of the STI was dependent upon the outperformance
by the Company of its 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) (but including any one-off or non-trading items that
were included in the budget), with the amount of the STI determined in accordance with the sliding scale
set out in the table on page 23 of the remuneration report. For the year ended 30 June 2016, payment of
an STI is again dependent upon outperformance by the Company of its 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) (but
including any one-off or non-trading items that were included in the budget).
• If the Board introduces a long term incentive scheme (LTI), Mr Sarant will be eligible to participate in the
scheme. However, there is not presently any LTI scheme in place.
• In accordance with best practice, the Board may require Mr Sarant to repay all or part of any bonus,
STI or LTI paid in circumstances where there has been a material misstatement in relation to the financial
statements of the Company in any qualifying period relevant to the payment of that bonus, STI or LTI.
• Either of Mr Sarant and the Company may terminate Mr Sarant’s employment on the giving of three months
notice or, in the case of the Company, payment in lieu of the three months notice.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
REMUNERATION
REPORT(AUDITED)
Employee Share Plan
At the Company’s Annual General meeting on 21 November 2006, Shareholders approved the introduction of
an Employee Share Plan (‘the Plan”). Employees who have been with the Company for more than one year
are entitled to participate in the plan and the purpose of the Plan is to attract, retain and motivate employees
by giving them a stake in the future growth of the Company. Non-executive Directors of the Company are not
eligible to participate in the plan.
Offers were made to eligible employees on 16 September 2014 under the Plan. Acceptances under the offer
were 402,200 shares at $1.46 per share.
The issue price of the shares offered under the Plan was the weighted average price of the Company’s
shares on the first 5 trading days immediately following the announcement of the Company’s full year results
for 2013/14 on 26 August 2014.
For the 2014/15 financial year, eligible employees’ annual entitlements to participate in the Plan were set
by the Company Directors as follows, in line with the entitlements notified to Shareholders at the Company’s
Annual General meeting on 21 November 2006.
Annual Salary
Less than $50,000
$50,000 to $100,000
$100,001 to $150,000
$150,001 to $200,000
Greater than $200,000
Number of Shares
1,000
2,000
5,000
7,000
10,000
Directors have approved the making of offers by the Company to eligible employees under the Plan in the year
ended 30 June 2016.
Directors’ Retirement Benefits
A change to the Non-Executive Directors’ Retirement Benefits calculation was made in July 2004 to freeze
accumulation of years of service of Directors as at 30 June 2004. No Non-Executive Director commencing
after 1 July 2004 is eligible for any benefits under the retirement scheme. Mr Johnson is the only remaining
Non-Executive Director eligible to receive retirement benefits under the scheme.
The expenditure provided (not paid) during the year ended 30 June 2015 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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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 (EBIT), and net operating profit before individually significant
after tax (NPAT).
■ EBIT ■ NPAT
$m
35
30
25
20
15
10
5
0
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
In addition, Dividends paid to Shareholders are disclosed on page 16 of the Directors’ report.
The next graph highlights the performance of the share price of K&S Corporation Limited against the Australian
Securities Exchange All Ordinaries Index, the Australian Securities Exchange Industrials Index, Toll Holdings
Limited* and McAleese Limited over the past 5 years.
* Toll Holdings Limited securities ceased to be quoted on ASX on 29 May 2015.
Notwithstanding the difficult trading conditions that have persisted since the onset of the global financial
crisis in 2008, the Company’s financial results and share price performance has not achieved the set targets.
In that context, the Board notes that short term incentives have been paid only once to the Executive Team
(in respect of the 2009/10 financial year) since advent the global financial crisis. The Board believes that short
term incentives should only be paid in circumstances of outperformance by the Executive Team.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
REMUNERATION
REPORT(AUDITED)
Remuneration of Key Management Personnel of the Company and the Group
Table 1: Remuneration for the year ended 30 June 2015
Short-Term
Incentives
$
Non-Cash
Benefits
$
Termination
$
Other Long-Term
Long Service
Benefit
$
Post Employment
Retirement
Benefits
$
Super
Contributions
$
Total
$
Performance
Related
%
Salary &
Fees
$
119,770
71,050
71,050
71,050
332,920
Non-Executive
Directors
T Johnson
G Boulton#
R Smith
L Winser
Total Non-Executive
Directors
Executive Director
P Sarant
645,600
Other Key
Management Personnel
301,285
237,405
131,585
216,000
209,960
298,668
229,000
B Walsh
C Bright
G Everest ##
R King*
K Evans
S Hine
S Skazlic
D Keane
K Cope**
M Kohne
G Beurteaux***
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
31,541
27,417
27,553
9,320
-
22,466
26,853
20,556
-
-
-
-
-
-
-
-
-
-
-
-
-
-
489,396 100,000
22,090
353,709
56,000
9,060
167,500
208,828
349,764
-
-
27,951
27,071
-
-
-
-
-
-
-
10,001
7,437
5,900
1,781
3,600
3,500
4,845
3,817
7,848
3,639
3,385
5,627
8,000
2,500
-
-
13,176
140,946
7,815
7,815
7,815
81,365
78,865
78,865
10,500
36,621
380,041
-
-
-
-
-
-
-
-
-
-
-
-
-
30,000
717,142
35,000
30,000
12,609
25,920
25,195
30,000
27,480
21,500
14,862
28,231
34,511
371,139
300,858
155,295
245,520
261,121
360,366
280,853
640,834
604,770
268,395
416,973
315,308
4,623,266
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Total Executive KMP 3,671,200 156,000 251,878
167,500
61,380
Totals
4,004,120 156,000 251,878
167,500
61,380
10,500
351,929
5,003,307
*** Mr Beurteaux was appointed on 14 July 2014.
## Mr Everest resigned on 14 November 2014.
** Mr Cope resigned on 6 February 2015.
* Mr King was appointed on 26 March 2015.
# Mr Boulton resigned on 31 August 2015.
The retention payments made to both Mr Keane and Mr Cope were based on contractual agreements with Scott Corporation that were put in place prior to the merger
on 24 February 2014 and ratified by K&S.
Termination benefits paid to Mr Cope were based on existing contractual agreements with Scott Corporation that were in place prior to the merger on 24 February 2014.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
Table 2: Remuneration for the year ended 30 June 2014
Non-Executive
Directors
T Johnson
G Boulton
R Smith
R Nicholson*
L Winser #
B Grubb §
Salary &
Fees
$
118,000
70,000
70,000
5,833
59,695
23,333
Total Non-Executive
Directors
346,861
Executive Director
G Stevenson>
P Sarant<
Other Key
Management Personnel
B Walsh
C Bright
G Wooller†
G Everest
K Evans
S Hine
S Skazlic
D Keane+
K Cope^
M Kohne**
G Beurteaux***
426,800
464,804
297,285
230,735
391,591
306,128
220,695
299,006
221,400
114,864
109,899
4,687
-
Total Executive KMP 3,087,894
Totals
3,434,755
Short-Term
Incentives
$
Non-Cash
Benefits
$
Termination
$
Other Long-Term
Long Service
Benefit
$
Post Employment
Retirement
Benefits
$
Super
Contributions
$
Total
$
Performance
Related
%
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000
240,000
28,327
27,265
28,066
24,509
21,794
22,447
26,951
20,517
18,726
10,146
593
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
6,084
7,226
7,125
5,625
6,112
4,745
3,334
4,745
3,667
1,979
2,201
-
-
254,341
240,000
52,843
8,000
2,500
-
-
-
-
12,980
138,980
7,700
7,700
642
6,566
2,567
80,200
77,700
6,475
66,261
25,900
10,500
38,155
395,516
-
-
-
-
-
-
-
-
-
-
-
-
-
-
25,000
25,000
722,884
525,357
25,000
25,000
24,526
25,000
25,000
25,000
25,000
7,614
7,438
634
-
356,675
289,426
446,738
357,667
271,476
355,702
270,584
143,183
129,684
5,914
-
240,212
3,875,290
254,341
240,000
52,843
10,500
278,367
4,270,806
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
* Mr Nicholson retired on 23 July 2013.
# Mr Winser was appointed Non-Executive Director on 23 August 2013.
§ Mr Grubb retired on 22 October 2013.
* Mr Keane was appointed on 24 February 2014.
^ Mr Cope was appointed on 24 February 2014.
> Mr Stevenson resigned as Managing Director on 22 April 2014.
< Mr Sarant was appointed on 22 April 2014.
† Mr Wooller resigned on 30 May 2014.
** Mr Kohne was appointed on 23 June 2014.
*** Mr Beurteaux was appointed on 14 July 2014.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
REMUNERATION
REPORT(AUDITED)
Table 3: Loans to Key Management Personnel
Details of aggregates of loans to Key Management Personnel are as follows:
Total
2015
2014
Balance at Beginning of Period
$’000
Write-off
$’000
Balance at End of Period
$’000
Number in Group
290
346
-
-
326
290
7
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. Loans to Key Management Personnel under the Plan are required to be repaid in
full upon the cessation of the employment of the Key Management Personnel with 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.
Table 4: Shareholding of Key Management Personnel at 30 June 2015
Shares held in K&S Corporation Limited: 30 June 2015
Balance 1 July 2014
Ordinary
Net Change
Ordinary
Balance 30 June 2015
Ordinary
472,358
266,248
38,459
1,164,064
20,820
11,735
1,695
-
493,178
277,983
40,154
1,164,064
96,603
45,000
141,603
134,020
41,000
10,000
30,000
22,000
3,205
-
-
-
-
-
2,277,957
13,396
-
(10,000)
10,000
-
-
10,000
-
-
-
7,000
109,646
147,416
41,000
-
40,000
22,000
3,205
10,000
-
-
-
7,000
2,387,603
Non-Executive Directors
T Johnson
G Boulton#
R Smith
L Winser
Executive Director
P Sarant<
Other Key Management Personnel
B Walsh
C Bright
G Everest ##
S Hine
K Evans
S Skazlic
D Keane
K Cope**
M Kohne
G Beurteaux***
R King*
Total
*** Mr Beurteaux was appointed on 14 July 2014.
## Mr Everest resigned on 14 November 2014.
** Mr Cope resigned on 6 February 2015.
* Mr King was appointed on 26 March 2015.
# Mr Boulton resigned on 31 August 2015.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
Table 5: Shareholding of Key Management Personnel at 30 June 2014
Shares held in K&S Corporation Limited: 30 June 2014
Balance 1 July 2013
Ordinary
Net Change
Ordinary
Balance 30 June 2014
Ordinary
Non-Executive Directors
T Johnson
G Boulton
R Smith
L Winser #
R Nicholson*
B Grubb §
Executive Director
G Stevenson>
P Sarant<
Other Key Management Personnel
B Walsh
C Bright
G Wooller†
G Everest
S Hine
K Evans
S Skazlic
D Keane+
K Cope^
M Kohne**
G Beurteaux***
Total
300,021
254,724
36,794
1,151,199
30,907
125,205
-
96,603
120,687
41,000
60,069
10,000
20,000
22,000
3,205
-
-
-
-
2,272,414
172,337
11,524
1,665
12,865
-
-
-
-
13,333
-
(46,408)
-
10,000
-
-
-
-
-
-
175,316
472,358
266,248
38,459
1,164,064
30,907
125,205
-
96,603
134,020
41,000
13,661
10,000
30,000
22,000
3,205
-
-
-
-
2,447,730
* Mr Nicholson retired on 23 July 2013.
# Mr Winser was appointed Non-Executive Director on 23 August 2013.
§ Mr Grubb retired on 22 October 2013.
> Mr Stevenson resigned as Managing Director on 22 April 2014.
< Mr Sarant was appointed on 22 April 2014.
† Mr Wooller resigned on 30 May 2014.
* Mr Keane was appointed on 24 February 2014.
^ Mr Cope was appointed on 24 February 2014.
** Mr Kohne was appointed on 23 June 2014.
*** Mr Beurteaux was appointed on 14 July 2014.
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.
Signed in accordance with a resolution of the Directors.
T Johnson
Chairman
21 August 2015
Paul Sarant
Managing Director
21 August 2015
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
CORPORATE
GOVERNANCE
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 2
Structure the board to add value
Principle 3
Act ethically and responsibly
Principle 4
Safeguard integrity in corporate reporting
Principle 5
Make timely and balanced disclosure
Principle 6
Respect the rights of shareholders
Principle 7
Recognise and manage risk
Principle 8
Remunerate fairly and responsibly
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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 Board is also responsible for appointing,
overseeing and evaluating the performance of, and
ultimately for the removal of, the Managing Director.
The Managing Director is responsible to the Board for the
day to day management of the Company. Matters delegated
to the Managing Director by the Board include:
• developing business plans, budgets and strategies for
consideration by the Board and (where approved by
the Board) the implementation of such business plans,
budgets and strategies;
• identifying and managing operational risks that could
have a material impact on the Company and its
operations and implementing internal controls and
procedures to ensure that the Company’s business
operates within legislative requirements and the
risk parameters approved by the Board from time to
time; and
• ensuring that transactions, commitments and
arrangements that exceed thresholds set by the Board
from time to time are approved by the Board.
The Company’s Board Charter which sets out the full
roles and responsibilities of the Board and Management
respectively is available on the Company’s website
(www.ksgroup.com.au).
Non-Executive Directors have written agreements with the
Company setting out the terms of their appointment.
The Company Secretary is accountable directly to the
Board, through the Chairman, for the proper administration
and functioning of the Board.
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), HS&E management, and
achievement of specific strategic and business objectives.
Structure of the Board
The Board currently comprises of three 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 page 12 of the
Annual Report.
Directors are expected to bring independent views and
judgment to the Board’s deliberations. Consistent with
the ASX Principles, the Board Charter requires the Board
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
judgment. 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 Directors
in office at the date of this report and considers the following
Directors of the Company to be independent:
Name
G Boulton*
R Smith
Position
Non-Executive Director
Non-Executive Director
* Mr Boulton retired as a Director with effect on 31 August 2015. While
Mr Boulton has been a Director since 1996, the Board was of the view
that Mr Boulton continued to bring to bear an independent mind to Board
deliberations and to act in the best interests of the Company and the
Company’s shareholders as a whole.
The Board assesses the independence of new Directors
upon appointment and reviews their independence, and the
independence of the other Directors, as appropriate.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
CORPORATE
GOVERNANCE
Structure of the Board
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:
P Sarant Managing Director
T Johnson Non-Executive Director (Chairman)
Mr Johnson is a Director of AA Scott Pty Ltd, the largest
Shareholder of K&S Corporation Limited.
L Winser Non-Executive Director
Mr Winser was appointed as a Director of the Company on
23 August 2013. Mr Winser formerly occupied the position
of Managing Director of the Company until his retirement
on 25 May 2012. Mr Winser is also an alternate director of
several companies with the Scott Group of Companies.
The date of appointment of each Director of the Company
is set out on page 12 of the Company’s 2015 annual report.
The Board structure is consistent with ASX Principle 2, with
the exception of:
• Recommendation 2.4 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 Director 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 page 33), Directors
have regard to the balance of independent and
non-independent Non-Executive Directors.
• Recommendation 2.5 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. Mr Johnson however is a
non-executive Chairman and does not also share the
role of CEO. The Board considers that the skills and
experience that Mr Johnson brings as Chairman add
value to the deliberations and functioning of the Board.
The Company has a Diversity Policy which is consistent
with ASX Principle 1. The objective of the Diversity Policy is
to promote a corporate culture within the Company where
the diverse experiences, perspectives and backgrounds of
people are valued and embraced and which is conducive
to the recruitment of well qualified and diverse employees,
senior management and Board members.
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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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. Senior Management attend and are
a vital ingredient to the sub-committees, making presenta-
tions, 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 stand for re-election at the next Annual General
Meeting, but 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.
The Company will disclose all material information in its
possession relevant to the decision of Shareholders whether
to re-elect Directors in the explanatory notes to the
Company’s notice of annual general meeting. In particular,
the Company will provide details of Directors’ relevant
experience and qualifications, tenure, other material director-
ships, independence, shareholding, and any associations
with and/or interests in the Company. The Company will
also include a recommendation to Shareholders from the
Board (excluding always the relevant Director standing for
re-election) on whether to vote in favour of the re-election
of Directors.
The Board has delegated to the Audit Committee the
responsibility overseeing the financial reporting process of
the consolidated entity and ensuring the competency
and independence of the Company’s external auditors,
consistent with ASX Principle 4.
The Audit Committee provides the Board with additional
assurance regarding the reliability of the financial information
for inclusion in the financial reports.
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, reviews any comments
and recommendations by the external auditors in relation
to the company’s systems for internal compliance and
control, and risk management, advises on the appointment,
performance and remuneration of the external auditors,
and reviews the work program for and reports and
recommendations of the internal audit function.
The members of the Audit Committee during the year were:
Mr Smith (Chairman)
Mr Boulton*
Mr Johnson*
* Mr Boulton ceased to be a Director on 31 August 2015 and was replaced
on the Audit Committee by Mr Johnson.
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 also considered Mr Boulton to be independent
using the ASX Council’s definition of independence.
The Board does not consider Mr Johnson to be independent.
The ASX Council Recommendation 4.1 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
knowledge of the current members of the Audit Committee.
The Managing Director, the Chief Financial Officer, the
Company Secretary, the Group Accountant, the Chief
Internal Auditor, 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 and also the Chief
Internal Auditor, independent of management.
The Audit Committee met on four occasions during
the course of the year. Messrs Smith and Boulton both
attended all four meetings.
Review of Board Performance
The Board has implemented a process for the regular
review of its overall performance, consistent with ASX
Recommendation 1.6. 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 Recommen-
dation 1.6 as the review is conducted by the full Board,
and not the Nomination and Remuneration Committee.
As the Board is comprised of only four Directors, the Board
considers this the most effective way to address its own
performance.
Committees of the Board
Three standing Board Committees assist the Board in the
discharge of its responsibilities.
These committees are:
• The Audit Committee
• The Nomination and Remuneration Committee
• 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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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GOVERNANCE
Committees of the Board
Nomination and Remuneration Committee
Consistent with ASX Principles 2 and 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
comply with Recommendations 2.1 and 8.1 as only
Mr Boulton was considered by Directors to be independent.
However, as the only Director on the Nomination and
Remuneration Committee considered to be independent,
Mr Boulton was Chairman of that committee.
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 four Directors,
Directors are of the view that the nomination and
appointment of new Directors is most efficiently discharged
by the Board. For this reason, Directors are of the view
that the presence of a majority of Directors considered not
to be independent did not compromise the effectiveness
of the Nomination and Remuneration Committee or the
integrity of the decision making process by the Board as a
whole on matters relating to nomination and remuneration.
When appointing new Directors, the Board has regard to
the spread of skills and qualifications, experience, and
independence of both the potential appointee and the
existing members of the Board. The Board does not have
a formalised skills matrix that it uses when considering
Board composition and the appointment of new Directors.
However, the Board is of the view that a good depth
of transport industry exposure and expertise is an integral
element of the skills to be represented on the Board.
The Board also views accounting and legal expertise as
important elements to allow it to effectively discharge
its duties and responsibilities. The Board also has regard to
whether a potential director has contacts or networks that
may enable the Company to access new markets or industry
sectors and/or to generate new business opportunities.
The Board recognises that a diversity of backgrounds and
experience in its members will contribute to the Board
functioning at its optimum.
Where considered appropriate, prior to appointing new
Directors, the Board will arrange for appropriate background
and reference checks to be undertaken. These checks
may include the proposed Director’s character (via reference
checks), education and qualifications, and any criminal
convictions, bankruptcy or insolvency that may preclude
the proposed Director from appointment.
The Company currently does not have a formal induction
program for new Directors. The most recently appointed
Non-Executive Director, Mr Winser, already had a wealth of
knowledge about the business and operations of the
Company by virtue of his previous role as Managing Director.
The Company does however make available to new
Directors past board papers and board minutes as well as
the Company’s constitution and key policies and codes of
practice. When new appointments of Non-Executive
Directors are contemplated, the Company will review the
desirability of a more structured induction program.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
In the case of ongoing development, the Company
schedules some monthly board meetings at different
operational sites to enable Non-Executive Directors
to familiarise themselves with the Company’s business and
activities. The Board also receives regular presentations
from members of the Executive Team on the Company’s
various business units.
Executive Directors. The Non-Executive Directors received
$71,050 each and the Chairman was paid $119,770 in
2014/15. While the fees payable to Non-Executive Directors
in the first half of 2014/15 were frozen at 2012/13 levels, a
3% increase to those fees was implemented with effect from
1 January 2015. Committee membership does not entitle a
Director to additional fees.
Remuneration levels are competitively set to attract and
retain appropriately qualified and experienced Directors and
Senior Executives.
The Nomination and Remuneration Committee periodically
obtains independent advice on the appropriateness of
remuneration packages, as well as benchmarking
comparable company remuneration data. No external
advice was sought in relation to remuneration in the course
of the 2014/15 financial year.
The Nomination and Remuneration Committee also plays a
role in evaluation of the performance of the Managing
Director and management succession planning. This role
includes the responsibility for incentive performance
packages, superannuation entitlements, and retirement and
termination entitlements.
The members of the Nomination and Remuneration
Committee during the year were:
Mr Boulton* (Chairman)
Mr Johnson
Mr Winser
* Mr Boulton ceased to be a Director on 31 August 2015.
The Nomination and Remuneration Committee meets as
required. The Committee met formally once in 2014/15, but
also informally on several other occasions during the year.
Messrs Winser, Boulton and Johnson all attended the formal
meeting of the Committee.
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 periodically, 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.
An increase in the Directors’ fee pool limit of $100,000 to a
total of $600,000 for Non-Executive Directors was approved
by Shareholders at the Annual General Meeting on
20 November 2012. This fee pool is only available to Non-
The Board has again decided not to increase the fees
payable to Non-Executive Directors from 1 July 2015. The
Board has elected to defer any consideration of the level of
fees payable to Non-Executive Directors until October 2015.
Details of the employment contract of Mr Sarant can be
found on page 25 of the Remuneration Report.
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
Non-Executive Directors appointed after 30 June 2004
are not eligible to participate in the retirement benefits
scheme. Mr Johnson is the only remaining Director eligible
to participate in the retirement benefit 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 21 to 31.
Diversity
The measurable objectives for achieving gender diversity
set by the Board and progress towards achieving those
objectives are:
• The Nomination and Remuneration Committee must
review participation rates for women across all levels
of the workforce not less than annually. That review
was undertaken by the Committee in 2014/15.
The Company saw participation rates for women
remain static at all levels of the organisation.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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Committees of the Board
Nomination and Remuneration Committee
Diversity continued
• The Nomination and Remuneration Committee is
to review pay parity data for women and men across
all levels of the workforce not less than annually to
determine whether there is any unconscious bias.
To the extent that the review suggests that unconscious
bias may exist, Management is to investigate and report
to the Committee the causes of that bias, as well as to
develop recommendations to address any bias.
• The Committee reviewed pay parity data in 2014/15
and Management has investigated whether unconscious
bias exists. As women are over-represented in some
areas of the Company’s workforce (eg, administration)
and under-represented in other areas of the work-force
(eg, operational), the data requires careful analysis.
• Management is required to report to the Nomination
and Remuneration Committee not less than annually
participation rates for women compared to men
in externally provided training programs. A particular
area of focus is management training programs (eg,
Australian Institute of Management and equivalent) as
it is through these training programs that the pool of
future senior managers will be developed. Management
has reported to the Committee on training participation
rates in 2014/15. Participation rates in management
training do not reveal any bias.
• The Nomination and Remuneration Committee is to
review data re tenure and turnover levels for women
compared to men across all levels of the Company’s
workforce not less than annually as part of seeking to
understand the reasons for differing participation rates
for women and men. Tenure and turnover data was
reviewed by the Committee in 2014/15. Turnover rates
for men and women were equivalent across different
levels of the organisation.
The Company’s Workplace Gender Equality Act “Gender
Equality Indicators” report can be accessed via the
website of the Workplace Gender Equality Agency
(www.wgea.gov.au/public-reports). A summary of the
Company’s “Gender Equality Indicators” report is also
available on the Company’s website (www.ksgroup.com.au).
The Company notes that the transport and logistics
industry continues to have a stereotyped male dominated
environment, with a substantial proportion of the Company’s
workforce required to perform labour intensive/manual
handling tasks as well as significant overtime in the course of
their employment duties. While the Company is committed
to diversity, the nature of the work undertaken by many
employees has made it challenging to attract women to
these roles.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
The Company will review on an ongoing basis the
opportunities to overcome these impediments to higher
participation rates by women.
Other diversity initiatives pursued by the Company include:
• The Company is a participant in the indigenous
employment program overseen by the Commonwealth
Department of Education, Employment and Workplace
Relations, as well as a participant in the Australian
Employment Covenant which is also designed to secure
indigenous employment opportunities. In support
of these programs, the Company has an Indigenous
Recognition Policy which outlines the Company’s
commitment to build relationships with local and
land-connected indigenous persons to achieve mutually
beneficial outcomes.
• A number of strategic and tactical initiatives being
implemented under the Company’s five year strategic
plan aimed at attracting, developing and retaining
female employees. As part of that strategy,
the Company is reviewing a range of more flexible
employment practices.
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 Sarant*
* The Board considers it appropriate that the Managing Director be a
member of the Environmental Committee.
The Company Secretary acts as Secretary to the
Environmental Committee.
The Environmental Committee is responsible for:
• reviewing and recommending, as appropriate, changes
to the Company’s environmental policies;
• ensuring the adequacy of environmental procedures
and controls implemented by Management;
• reporting to the Board on Company compliance with
environmental procedures and controls;
• 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;
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.
Ernst & Young has a policy for the rotation of the lead audit
partner for their clients. Under that policy, the lead audit
partner and the audit review partner for the Company were
most recently rotated following completion of the audit for
the year ended 30 June 2012.
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), the Company’s current auditor,
Ernst & Young, attends and is available to answer questions
at the Company’s Annual General Meeting.
• monitoring conformance by the Company with
mandatory environmental reporting and improvement
regimes;
• regular monitoring of licence requirements, with
performance against licence conditions reported to the
various State regulators on a regular basis; and
• 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. Messrs Johnson and Sarant attended all four meetings
of the Committee. Mr Winser attended three of the meetings
of the Environmental Committee.
Financial Reporting
Consistent with the ASX Recommendation 4.2, the
Company’s financial report preparation and approval process
for the financial year ended 30 June 2015, 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 4.2, this sign off also
includes assurances as to the Company’s risk management
processes and internal compliance and control procedures.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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GOVERNANCE
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:
• Capital expenditure commitments above set limits
obtain prior Board approval.
• Financial exposures are controlled and the use of
derivatives is limited to interest rate swaps.
• Occupational health and safety standards and
management systems are monitored and reviewed
to achieve high standards of performance and
compliance with regulations.
• Business transactions are properly authorised
and executed.
• A comprehensive annual insurance programme,
including external risk management survey and
action plans.
• Annual budgeting and monthly reporting systems for
all business units, which enable the monitoring of
progress against performance targets and the evaluation
of trends.
• Appropriate due diligence procedures for acquisitions
and divestments, with post-acquisition reviews also
provided to the Board.
• Disaster management systems for key IT systems and
recovery plans.
• Documentation and regular review of business wide risk
identification and mitigation strategies.
• The completion by executive managers and divisional
managers of ‘representation letters’ in connection
with the certification by the Managing Director and
Chief Financial Officer 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.
• Review by the Audit Committee in conjunction with
Management of all findings and recommendations in
the Closing Report provided by the Company’s external
auditors, Ernst & Young, as part of the full year audit
and also half year review of the Company’s accounts.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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:
• 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.
• 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.
• The Company’s Administration Manual which sets out
the financial and administrative protocols for all staff.
• The Company’s HS&E Manual and supporting
documented policies and procedures which are
designed to minimise the risk of harm to employees
engaged in operational tasks.
• 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.
• The Company’s Disaster Recovery Manual which sets
out all of the protocols associated with the Company’s
externally hosted disaster recovery plan (DRP).
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
The Company also faces material exposures around
compliance with legislative obligations (including transport
laws) and the potential that a serious incident or accident
could result in death, serious injury and/or environmental
harm, as well as major reputational damage and the loss of
key customer contracts. The Company seeks to mitigate
this exposure via policies, procedures and training, as well
as a crisis response plan.
The Company’s comprehensive internal Risk Review
Statement catalogues key economic, environmental and
social sustainability risks in respect of which the Company
has identified a material exposure. The internal Risk
Review Statement documents risk mitigation strategies
employed by the Company.
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 Board 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.
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 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.
The Company is of the view that risk management is a key
governance function. As the Board is comprised of only four
Directors (including the Managing Director), the Board is of
the view that the setting of risk parameters and the oversight
of risk management is best discharged by the Board as a
whole. Consequently, the Company does not have a stand
alone risk committee.
In the 2014/15 financial year, the Company created an
internal audit role. The Chief Internal Auditor is independent
of Management of the Company and reports to both the
Managing Director and also the Chairman of the Audit
Committee. A copy of the Internal Audit Charter is available
on the Company’s external website (www.ksgroup.com.au).
A detailed draft internal audit work program was developed
by the Chief Internal Auditor in conjunction with the
Managing Director, Company Secretary, and Chief Financial
Officer. That detailed internal audit work program was then
submitted to the Audit Committee for review and approval.
The Company adopted a risk based approach in identifying
and prioritizing internal audit activities.
In light of the fraud detected in 2014/15, an immediate
priority for the internal audit function is to review any
potential internal control weaknesses that may have been
exploited in that fraud to minimize the possibility of the
Company being the victim of another fraud.
The Company operates in a highly competitive industry and
has a material exposure to a range of economic factors
including competitive forces, the decline of the domestic
manufacturing sector, falling commodity prices, and
key customer contract exposure. The Company seeks
to mitigate these risks by differentiating itself from its
competitors, diversifying the nature and scope of its
activities across a number of sectors, geographic regions,
and customer groups, as well as staggering the expiry
dates of key customer contracts.
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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:
• In the period of 60 days prior to the release of the
Company’s half year and annual results to the Australian
Securities Exchange.
• 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.
Ethical Standards
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
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.
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 subsequently 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.
The Company actively invites, and responds to, questions
from Shareholders at the Annual General Meeting. As the
Company’s Annual General Meetings have a comparatively
small number of attendees, Shareholders have a good
opportunity to put any questions to Directors. Shareholders
also have good access to Directors and the Executive Team
following the formal business of the meeting.
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.
Shareholders have the ability to receive communications
from the Company (eg, annual reports) and the Company’s
Share Registry, Computershare, (eg, dividend statements)
electronically.
Other Policies
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.
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 Group’s ethical standards are consistent with the
requirements of ASX Principle 3.
The Company’s Communication Policy is available on the
Company’s website: www.ksgroup.com.au.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
FINANCIAL
REPORT
TO COME IN DUE COURSE
Contents
Statement of Comprehensive Income 44
ABN 67 007 561 837
Statement of Financial Position 45
Statement of Changes in Equity 46
Statement of Cash Flows 47
Notes to the Financial Statements 48
Directors’ Declaration 95
Auditor’s Independence Declaration 95
Independent Auditor’s Report 96
Information on Shareholdings 97
43
STATEMENT OF
COMPREHENSIVE INCOME
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
2015 2014
Note $’000 $’000
Operating revenue 5(a) 699,213 586,226
Cost of goods sold (56,936)
(63,545)
Gross profit 642,277 522,681
Other income 5(b) 5,785 5,103
(151,184)
Contractor expenses (187,654)
(185,218)
Employee expenses 5(e) (219,172)
Fleet expenses (145,085)
(118,008)
Depreciation and amortisation expense 5(d) (36,601) (24,886)
Finance costs 5 (c) (7,261)
(6,177)
Other expenses (33,601) (29,867)
Share of profits of associates 13 110 103
Profit before income tax 18,798 12,547
Income tax (expense)/benefit 6 (5,490) (3,574)
Profit after income tax 13,308 8,973
Items that may be reclassified subsequently to profit or loss
Foreign currency translation (681) 1,315
Income tax effect - -
(681) 1,315
Other comprehensive income for the period, net of tax (681) 1,315
Total comprehensive income for the period 12,627 10,288
Earnings per share (cents per share) 7
• basic for profit for the year attributable to
ordinary equity holders of the parent 11.4 9.0
• diluted for profit for the year attributable
to ordinary equity holders of the parent 11.4 9.0
Dividends per share (cents per share) 8 7.0 6.0
The above Statement of Comprehensive Income should be read
in conjunction with the accompanying notes.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
44
STATEMENT OF
FINANCIAL POSITION
AS AT 30 JUNE 2015
Consolidated
2015 2014
Note $’000 $’000
ASSETS
Current assets
Cash and cash equivalents 9 7,326 23,532
Trade and other receivables 10 86,909 82,263
Inventories 11 3,963 3,730
Prepayments 8,117 8,542
Total current assets 106,315 118,067
Non-current assets
Other receivables 10 1,422 1,307
Investments in associates 13 413 303
Property, plant & equipment 14 326,842 316,740
Intangibles 15 91,088 93,502
Deferred tax assets 6 10,179 10,680
Total non-current assets 429,944 422,532
TOTAL ASSETS 536,259 540,599
LIABILITIES
Current liabilities
Trade and other payables 17 73,476 70,482
Interest bearing loans and borrowings 18 30,345 36,169
Income tax payable 6 1,302 1,677
Provisions 19 19,854 22,704
Total current liabilities 124,977 131,032
Non-current liabilities
Other payables 17 6,585 8,604
Interest bearing loans and borrowings 18 75,043 83,406
Deferred tax liabilities 6 28,716 27,150
Provisions 19 6,369 3,129
Total non-current liabilities 116,713 122,289
TOTAL LIABILITIES 241,690 253,321
NET ASSETS 294,569 287,278
EQUITY
Contributed equity 20 147,674 145,415
Reserves 31,877 32,558
Retained earnings 115,018 109,305
TOTAL EQUITY 294,569 287,278
The above Statement of Financial Position should be read
in conjunction with the accompanying notes.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
45
STATEMENT OF
CHANGES IN EQUITY
FOR THE YEAR ENDED 30 JUNE 2015
Asset Forex
Issued Retained Revaluation Translation Total
Capital Earnings Reserves Reserves Equity
$’000 $’000 $’000 $’000 $’000
CONSOLIDATED
At 1 July 2014 145,415 109,305 31,948 610 287,278
Profit for the year - 13,308 - - 13,308
Other comprehensive income - - - (681) (681)
Total comprehensive income for the year - 13,308 - (681) 12,627
Transactions with owners in their
capacity as owners:
Issue of share capital 2,259 - - - 2,259
Dividends paid - (7,595) - - (7,595)
At 30 June 2015 147,674 115,018 31,948 (71) 294,569
At 1 July 2013 101,187 107,205 31,948 (705) 239,635
Profit for the year - 8,973 - - 8,973
Other comprehensive income - - - 1,315 1,315
Total comprehensive income for the year - 8,973 - 1,315 10,288
Transactions with owners in their
capacity as owners:
Issue of share capital 44,228 - - - 44,228
Dividends paid - (6,873) - - (6,873)
At 30 June 2014 145,415 109,305 31,948 610 287,278
The above Statement of Changes in Equity should be read
in conjunction with the accompanying notes.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
46
STATEMENT OF
CASH FLOWS
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
2015 2014
Note $’000 $’000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash receipts from customers 755,691 653,983
Cash payments to suppliers and employees (674,245) (580,471)
Interest received 122 263
Borrowing costs paid (7,261) (6,177)
Income taxes paid (2,490) (2,992)
Net goods and services tax paid (23,661) (17,295)
Net cash provided by operating activities 9 48,156 47,311
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of non-current assets 11,052 5,477
Payments for property plant & equipment (11,329) (18,609)
Acquisition of business (2,688) (4,106)
Net cash used in investing activities (2,965) (17,238)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from share issue 586 1,177
Proceeds from borrowings 13,417
19,625
Repayments of borrowings (24,417) (13,409)
Repayment of lease and hire purchase liabilities (45,009)
Dividends paid, net of dividend reinvestment plan (5,918)
(24,193)
(5,786)
Net cash used in financing activities (61,341)
(22,586)
Net increase/(decrease) in cash held (16,151) 7,487
Cash at the beginning of the financial year 23,532
15,935
Effects of exchange rate variances on cash (55) 110
Cash at the end of the financial year 9 7,326
23,532
The above Statement of Cash Flows should be read
in conjunction with the accompanying notes.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
47
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
1 Corporate Information
The financial report of K&S Corporation Limited for the year
ended 30 June 2015 was authorised for issue in accordance with
a resolution of Directors on 21 August 2015.
K&S Corporation Limited is a company limited by shares
incorporated in Australia whose shares are publicly traded on the
Australian Securities 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 for a
for-profit entity, 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 2014.
Reference
Title
AASB 2012-3
Amendments to Australian Accounting Standards - Offsetting Financial Assets and
Financial Liabilities
AASB 2012-3 adds application guidance to AASB 132 Financial Instruments:
Presentationto address inconsistencies identified in applying some of the offsetting
criteria of AASB 132, including clarifying the meaning of "currently has a legally
enforceable right of set-off" and that some gross settlement systems may be
considered equivalent to net settlement.
Application
date of
standard
1 Jan 2014
Interpretation 21
Levies
1 Jan 2014
This Interpretation confirms that a liability to pay a levy is only recognised when the
activity that triggers the payment occurs. Applying the going concern assumption
does not create a constructive obligation.
AASB 2013-3
Amendments to AASB 136 – Recoverable Amount Disclosures for
Non-Financial Assets
1 Jan 2014
AASB 2013-3 amends the disclosure requirements in AASB 136 Impairment of
Assets. The amendments include the requirement to disclose additional information
about the fair value measurement when the recoverable amount of impaired assets
is based on fair value less costs of disposal.
AASB 2013-4
Amendments to Australian Accounting Standards – Novation of Derivatives and
Continuation of Hedge Accounting [AASB 139]
1 Jan 2014
AASB 2013-4 amends AASB 139 to permit the continuation of hedge accounting
in specified circumstances where a derivative, which has been designated as a
hedging instrument, is novated from one counterparty to a central counterparty as
a consequence of laws or regulations.
AASB 1031
Materiality
1 Jan 2014
The revised AASB 1031 is an interim standard that cross-references to other
Standards and the Framework (issued December 2013) that contain guidance
on materiality.
AASB 1031 will be withdrawn when references to AASB 1031 in all Standards and
Interpretations have been removed.
AASB 2014-1 Part C issued in June 2014 makes amendments to eight Australian
Accounting Standards to delete their references to AASB 1031. The amendments
are effective from 1 July 2014.
Application
date for
Group
1 July 2014
1 July 2014
1 July 2014
1 July 2014
1 July 2014
Impact on Group
financial report
Application of the
amendments has
not had any impact
on the Group’s
financial report.
Application of the
amendments has
not had any impact
on the Group’s
financial report.
Application of the
amendments has
not had any impact
on the Group’s
financial report.
Application of the
amendments has
not had any impact
on the Group’s
financial report.
Application of the
amendments has
not had any impact
on the Group’s
financial report.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
48
Reference
Title
AASB 2013-9
Amendments to Australian Accounting Standards – Conceptual Framework,
Materiality and Financial Instruments
The Standard contains three main parts and makes amendments to a number
Standards and Interpretations.
Part A of AASB 2013-9 makes consequential amendments arising from the issuance
of AASB CF 2013-1.
Part B makes amendments to particular Australian Accounting Standards to delete
references to AASB 1031 and also makes minor editorial amendments to various
other standards.
Part C makes amendments to a number of Australian Accounting Standards, including
incorporating Chapter 6 Hedge Accountinginto AASB 9 Financial Instruments.
Application
date of
standard
Impact on Group
financial report
Application
date for
Group
Application of the
amendments has
not had any impact
on the Group’s
financial report.
AASB 2014-1
Part A - Annual
Improvements
2010–2012 Cycle
AASB 2014-1 Part A: This standard sets out amendments to Australian Accounting
Standards arising from the issuance by the International Accounting Standards Board
(IASB) of International Financial Reporting Standards (IFRSs) Annual Improvements to
IFRSs 2010-2012 Cycle and Annual Improvements to IFRSs 2011-2013 Cycle.
1 July 2014
1 July 2014
Application of the
amendments has
not had any impact
on the Group’s
financial report.
Annual Improvements to IFRSs 2010-2012 Cycle addresses the following items:
► AASB 2 – Clarifies the definition of 'vesting conditions' and 'market condition' and
introduces the definition of 'performance condition' and 'service condition'.
► AASB 3 – Clarifies the classification requirements for contingent consideration in a
business combination by removing all references to AASB 137.
► AASB 8 – Requires entities to disclose factors used to identify the entity's
reportable segments when operating segments have been aggregated. An entity is
also required to provide a reconciliation of total reportable segments' asset to the
entity's total assets.
► AASB 116 & AASB 138 – Clarifies that the determination of accumulated
depreciation does not depend on the selection of the valuation technique and that
it is calculated as the difference between the gross and net carrying amounts.
AASB 124 – Defines a management entity providing KMP services as a related party
of the reporting entity. The amendments added an exemption from the detailed
disclosure requirements in paragraph 17 of AASB 124 for KMP services provided by
a management entity. Payments made to a management entity in respect of KMP
services should be separately disclosed.
Annual Improvements to IFRSs 2011-2013 Cycle addresses the following items:
► AASB13 - Clarifies that the portfolio exception in paragraph 52 of AASB 13 applies
to all contracts within the scope of AASB 139 or AASB 9, regardless of whether
they meet the definitions of financial assets or financial liabilities as defined in
AASB 132.
► AASB 140 - Clarifies that judgment is needed to determine whether an acquisition
of investment property is solely the acquisition of an investment property or
whether it is the acquisition of a group of assets or a business combination in the
scope of AASB 3 that includes an investment property. That judgment is based on
guidance in AASB 3.
AASB 2014-1
Part A - Annual
Improvements
2011–2013 Cycle
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
49
1 July 2014
1 July 2014
Application of the
amendments has
not had any impact
on the Group’s
financial report.
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Application
date of
standard
1 Jan 2018
Application
date for
Group
1 July 2018
Impact on Group
financial report
The amendments
are not expected
to have any impact
on the Group’s
financial report.
2 Summary of Significant Accounting Policies
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 2015, are outlined in the table on the
following pages:
Reference
Title
Summary
AASB 9
Financial Instruments
AASB 9 (December 2014) is a new Principal standard
which replaces AASB 139. This new Principal version
supersedes AASB 9 issued in December 2009 (as
amended) and AASB 9 (issued in December 2010) and
includes a model for classification and measurement, a
single, forward-looking ‘expected loss’ impairment
model and a substantially-reformed approach to hedge
accounting.
AASB 9 is effective for annual periods beginning on or
after 1 January 2018. However, the Standard is available
for early application. The own credit changes can be
early applied in isolation without otherwise changing the
accounting for financial instruments.
The final version of AASB 9 introduces a new
expected-loss impairment model that will require more
timely recognition of expected credit losses. Specifically,
the new Standard requires entities to account for
expected credit losses from when financial instruments
are first recognised and to recognise full lifetime
expected losses on a more timely basis.
Amendments to AASB 9 (December 2009 & 2010
editions and AASB 2013-9) issued in December 2013
included the new hedge accounting requirements,
including changes to hedge effectiveness testing,
treatment of hedging costs, risk components that can
be hedged and disclosures.
AASB 9 includes requirements for a simpler approach
for classification and measurement of financial assets
compared with the requirements of AASB 139.
The main changes are described below.
a Financial assets that are debt instruments will be
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.
b 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 measurement or recognition inconsistency that
would arise from measuring assets or liabilities, or
recognising the gains and losses on them, on
different bases.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
50
Reference
Title
Summary
Application
date of
standard
Impact on Group
financial report
AASB 9
continued
Financial Instruments
d Where the fair value option is used for financial
1 Jan 2018
Application
date for
Group
1 July 2018
The amendments
are not expected
to have any impact
on the Group’s
financial report.
liabilities the change in fair value is to be accounted
for as follows:
► The change attributable to changes in credit risk
are presented in other comprehensive income (OCI)
► The remaining change is presented in profit or loss
AASB 9 also removes the volatility in profit or loss that
was caused by changes in the credit risk of liabilities
elected to be measured at fair value. This change in
accounting means that gains caused by the deterioration
of an entity’s own credit risk on such liabilities are no
longer recognised in profit or loss.
Consequential amendments were also made to
other standards as a result of AASB 9, introduced by
AASB 2009-11 and superseded by AASB 2010-7,
AASB 2010-10 and AASB 2014-1 – Part E.
AASB 2014-7 incorporates the consequential
amendments arising from the issuance of AASB 9
in Dec 2014.
AASB 2014-8 limits the application of the existing
versions of AASB 9 (AASB 9 (December 2009) and
AASB 9 (December 2010)) from 1 February 2015 and
applies to annual reporting periods beginning on after
1 January 2015.
AASB 2014-3 amends AASB 11 to provide guidance on
the accounting for acquisitions of interests in joint
operations in which the activity constitutes a business.
The amendments require:
a the acquirer of an interest in a joint operation in
which the activity constitutes a business, as defined
in AASB 3 Business Combinations, to apply all of the
principles on business combinations accounting in
AASB 3 and other Australian Accounting Standards
except for those principles that conflict with the
guidance in AASB 11; and
b the acquirer to disclose the information required by
AASB 3 and other Australian Accounting Standards
for business combinations.
This Standard also makes an editorial correction to
AASB 11
AASB 2014-3
Amendments to Australian
Accounting Standards –
Accounting for
Acquisitions of Interests
in Joint Operations
[AASB 1 & AASB 11]
1 Jan 2016
1 July 2016
The amendments
are not expected
to have any impact
on the Group’s
financial report.
AASB 2014-4
Clarification of Acceptable
Methods of Depreciation and
Amortisation (Amendments
to AASB 116 and AASB 138)
AASB 116 and AASB 138 both establish the principle for
the basis of depreciation and amortisation as being the
expected pattern of consumption of the future economic
benefits of an asset.
1 July 2016
The IASB has clarified that the use of revenue-based
methods to calculate the depreciation of an asset is not
appropriate because revenue generated by an activity
that includes the use of an asset generally reflects
factors other than the consumption of the economic
benefits embodied in the asset.
The amendment also clarified that revenue is generally
presumed to be an inappropriate basis for measuring
the consumption of the economic benefits embodied in
an intangible asset. This presumption, however, can be
rebutted in certain limited circumstances.
1 July 2016
The amendments
are not expected
to have any impact
on the Group’s
financial report.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
51
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Application
date of
standard
1 Jan 2016
Application
date for
Group
1 July 2016
Impact on Group
financial report
The amendments
are not expected
to have any impact
on the Group’s
financial report.
1 Jan 2016
1 July 2016
The amendments
are not expected
to have any impact
on the Group’s
financial report.
1 Jan 2016
1 July 2018
The amendments
are not expected
to have any impact
on the Group’s
financial report.
2 Summary of Significant Accounting Policies
ii)
Accounting standards and interpretations issued
but not yet effective continued
Reference
Title
Summary
AASB 2014-9
Amendments to Australian
Accounting Standards –
Equity Method in Separate
Financial Statements
AASB 2014-10
Amendments to Australian
Accounting Standards –
Sale or Contribution of Assets
between an Investor and its
Associate or Joint Venture
AASB 15
Revenue from Contracts
with Customers
AASB 2014-9 amends AASB 127 Separate Financial
Statements, and consequentially amends AASB 1
First-time Adoption of Australian Accounting Standards
and AASB 128 Investments in Associates and Joint
Ventures, to allow entities to use the equity method of
accounting for investments in subsidiaries, joint ventures
and associates in their separate financial statements.
AASB 2014-9 also makes editorial corrections to
AASB 127.
AASB 2014-9 applies to annual reporting periods
beginning on or after 1 January 2016. Early adoption
permitted.
AASB 2014-10 amends AASB 10 Consolidated Financial
Statementsand AASB 128 to address an inconsistency
between the requirements in AASB 10 and those in
AASB 128 (August 2011), in dealing with the sale or
contribution of assets between an investor and its
associate or joint venture. The amendments require:
a a full gain or loss to be recognised when a
transaction involves a business (whether it is housed
in a subsidiary or not); and
b a partial gain or loss to be recognised when a
transaction involves assets that do not constitute
a business, even if these assets are housed in
a subsidiary.
AASB 2014-10 also makes an editorial correction
to AASB 10.
AASB 2014-10 applies to annual reporting periods
beginning on or after 1 January 2016. Early adoption
permitted.
In May 2014, the IASB issued IFRS 15 Revenue from
Contracts with Customers, which replaces IAS 11
Construction Contracts, IAS 18 Revenueand related
Interpretations (IFRIC 13 Customer Loyalty Programmes,
IFRIC 15 Agreements for the Construction of Real
Estate, IFRIC 18 Transfers of Assets from Customersand
SIC-31 Revenue–Barter Transactions Involving
Advertising Services).
The core principle of IFRS 15 is that an entity recognises
revenue to depict the transfer of promised goods or
services to customers in an amount that reflects the
consideration to which the entity expects to be entitled
in exchange for those goods or services. An entity
recognises revenue in accordance with that core principle
by applying the following steps:
a Step 1: Identify the contract(s) with a customer
b Step 2: Identify the performance obligations in
the contract
c Step 3: Determine the transaction price
d Step 4: Allocate the transaction price to the
performance obligations in the contract
e Step 5: Recognise revenue when (or as) the entity
satisfies a performance obligation
Early application of this standard is permitted.
AASB 2014-5 incorporates the consequential
amendments to a number of Australian Accounting
Standards (including Interpretations) arising from
the issuance of AASB 15.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
52
Reference
Title
Summary
AASB 2015-1
Amendments to Australian
Accounting Standards –
Annual Improvements
to Australian
Accounting Standards
2012–2014 Cycle
AASB 2015-2
Amendments to Australian
Accounting Standards –
Disclosure Initiative:
Amendments to AASB 101
The subjects of the principal amendments to the
Standards are set out below:
AASB 5 Non-current Assets Held for Sale and
Discontinued Operations:
(cid:129) Changes in methods of disposal – where an entity
reclassifies an asset (or disposal group) directly from
being held for distribution to being held for sale (or
visa versa), an entity shall not follow the guidance in
paragraphs 27–29 to account for this change.
AASB 7 Financial Instruments: Disclosures:
(cid:129) Servicing contracts - clarifies how an entity should
apply the guidance in paragraph 42C of AASB 7 to a
servicing contract to decide whether a servicing
contract is ‘continuing involvement’ for the purposes
of applying the disclosure requirements in paragraphs
42E–42H of AASB 7.
(cid:129) Applicability of the amendments to AASB 7 to
condensed interim financial statements – clarify that
the additional disclosure required by the amendments
to AASB 7 Disclosure – Offsetting Financial Assets
and Financial Liabilities is not specifically required for
all interim periods. However, the additional disclosure
is required to be given in condensed interim financial
statements that are prepared in accordance with
AASB 134 Interim Financial Reporting when its
inclusion would be required by the requirements of
AASB 134.
AASB 119 Employee Benefits:
(cid:129) Discount rate: regional market issue – clarifies that
the high quality corporate bonds used to estimate the
discount rate for post-employment benefit obligations
should be denominated in the same currency as
the liability. Further it clarifies that the depth of the
market for high quality corporate bonds should be
assessed at the currency level.
AASB 134 Interim Financial Reporting:
(cid:129) Disclosure of information ‘elsewhere in the interim
financial report’ – amends AASB 134 to clarify
the meaning of disclosure of information ‘elsewhere
in the interim financial report’ and to require
the inclusion of a cross-reference from the interim
financial statements to the location of this information.
The Standard makes amendments to AASB 101
Presentation of Financial Statements arising from the
IASB’s Disclosure Initiative project. The amendments are
designed to further encourage companies to apply
professional judgment in determining what information
to disclose in the financial statements. For example, the
amendments make clear that materiality applies to the
whole of financial statements and that the inclusion of
immaterial information can inhibit the usefulness of
financial disclosures. The amendments also clarify that
companies should use professional judgment in
determining where and in what order information is
presented in the financial disclosures.
Application
date of
standard
1 Jan 2016
Application
date for
Group
1 July 2016
Impact on Group
financial report
The amendments
are not expected
to have any impact
on the Group’s
financial report.
The amendments
are not expected
to have any impact
on the Group’s
financial report.
1 Jan 2016
1 July 2016
The amendments
are not expected
to have any impact
on the Group’s
financial report.
AASB 2015-3
Amendments to Australian
Accounting Standards
arising from the Withdrawal
of AASB 1031 Materiality
The Standard completes the AASB’s project to remove
Australian guidance on materiality from Australian Ac-
counting Standards.
1 July 2015
1 July 2015
The amendments
are not expected
to have any impact
on the Group’s
financial report.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
53
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2 Summary of Significant Accounting Policies
d) Basis of consolidation
e) Business combinations
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:
•
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.
•
•
•
•
•
•
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.
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;
•
•
Type or class of customer for the product or services; and
• 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”.
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g) Revenue
j) Trade and other receivables
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.
ii) Rendering of services
Service revenue from the distribution of customer goods is
recognised when goods are dispatched.
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.
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.
k) 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.
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NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2 Summary of Significant Accounting Policies
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:
•
•
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.
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$).
Transactions in foreign currencies are initially recorded in the
functional currency at the exchange rates ruling at the date of the
transaction. Monetary assets and liabilities denominated in foreign
currencies are retranslated at the rate of exchange ruling at the
reporting date.
All exchange differences in the consolidated financial report are
taken to profit or loss with the exception of differences on foreign
currency borrowings that provide a hedge against a net investment
in a foreign entity.
These are taken directly to equity until the disposal of the net
investment, at which time they are recognised in profit or loss.
Tax charges and credits attributable to exchange differences on
those borrowings are also recognised in equity.
Non-monetary items that are measured in terms of historical cost
in a foreign currency are translated using the exchange rate as at
the date of the initial transaction.
Non-monetary items measured at fair value in a foreign currency
are translated using the exchange rates at the date when the fair
value was determined.
The functional currency of the overseas subsidiaries
(K&S Freighters Limited and Cochrane’s Transport Limited) is
New Zealand dollars (NZ$).
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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:
•
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:
•
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
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.
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.
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.
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57
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2 Summary of Significant Accounting Policies
q) Income tax and other taxes continued
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:
•
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.
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.
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.
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.
Commitments and contingencies are disclosed net of the amount
of GST recoverable from, or payable to, the taxation authority.
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.
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) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction
or production of an asset that necessarily takes a substantial period
of time to get ready for its intended use or sale are capitalised as
part of the cost of the asset. All other borrowing costs are expensed
in the period in which they occur. Borrowing costs consist of
interest and other costs that an entity incurs in connection with the
borrowing of funds.
t) 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
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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.
u) Goodwill and intangibles
Goodwill
Goodwill is initially measured at cost, being the excess of the
aggregate of the consideration transferred and the amount
recognised for non-controlling interests, and any previous interest
held, over the net identifiable assets acquired and liabilities assumed.
If the fair value of the net assets acquired is in excess of the
aggregate consideration transferred, the Group re-assesses
whether it has correctly identified all of the assets acquired and all
of the liabilities assumed and reviews the procedures used to
measure the amounts to be recognised at the acquisition date.
If the re-assessment still results in an excess of the fair value of net
assets acquired over the aggregate consideration transferred, then
the gain 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 an 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.
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.
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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
59
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2 Summary of Significant Accounting Policies
t) Goodwill and intangibles continued
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 are 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.
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 estimated useful life for the current and comparative periods
are as follows:
Software and technology — 7 years
v) 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.
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.
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) 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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
60
y) 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.
z) 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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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.
aa) 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.
bb) 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:
•
•
Costs of servicing equity (other than dividends);
The after tax effect of dividends and interest associated with
dilutive potential ordinary shares that have been recognised
as expenses; and
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.
•
61
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
2 Summary of Significant Accounting Policies
cc) 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 dependant
on sufficient future profits.
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 (z), 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 entered
into derivative transactions, principally interest rate swap contracts.
The purpose was 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 net values of receivables, bank overdraft, trade creditors,
accruals, lease liabilities, hire purchase liabilities, credit facilities and
other loans, approximate their book value. The net fair value of
unlisted investments where there is no organised financial market
has been based on a reasonable estimation of the underlying net
assets. This approximates the book value.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
62
For other assets and liabilities the net fair value approximates their
book value
The following sensitivity analysis is based on the interest rate risk
exposures in existence at the Balance Sheet date:
No financial assets and liabilities are readily traded on organised
markets in standardised form.
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.
While 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 materially
exposed to counterparty risk with several of its major customers.
However, those major customers are blue chip organisations with
sound balance sheets and they are not considered to comprise a
significant credit risk. Concentration of credit risk on trade debtors
due from customers are: Transport 94% (2014: 94%) and Fuel 6%
(2014: 6%).
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
2015 2014
$’000 $’000
Financial assets
– Cash and cash equivalents 7,326 23,532
Financial liabilities
– Bank loans (13,625) (24,625)
Net exposure (6,299) (1,093)
Judgements
Post Tax Profit Equity
of reasonably
Higher/(Lower) Higher/(Lower)
possible
2015 2014 2015 2014
movements:
$’000 $’000 $’000 $’000
Consolidated
+ 1% (100 basis points) (44) (8) (44) (8)
– 0.5% (50 basis points) 22 4 22 4
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:
•
Reasonably possible movements in interest rates were
determined based upon the Group’s current credit rating and
debt mix in Australia and New Zealand.
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 2015. 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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
63
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
3 Financial Risk Management Objectives and Policies Liquidity risk continued
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 2015
Liquid financial assets
Cash and cash equivalents 7,326 - - - 7,326
Trade and other receivables 87,300 391 681 83 88,455
94,626 391 681 83 95,781
Financial liabilities
Interest bearing loans and borrowings (35,171) (36,356) (43,361) - (114,888)
Trade and other payables (73,476) (6,586) - - (80,062)
Financial guarantees (19,488) - - - (19,488)
(128,135) (42,942) (43,361) - (214,438)
Net inflow/(outflow) (33,509) (42,551) (42,680) 83 (118,657)
Year ended 30 June 2014
Liquid financial assets
Cash and cash equivalents 23,532 - - - 23,532
Trade and other receivables 82,580 316 632 156 83,684
106,112 316 632 156 107,216
Financial liabilities
Interest bearing loans and borrowings (41,862) (42,077) (45,861) - (129,800)
Trade and other payables (70,482) (8,604) - - (79,086)
Financial guarantees (19,579) - - - (19,579)
(131,923) (50,681) (45,861) - (228,465)
Net inflow/(outflow) (25,811) (50,365) (45,229) 156 (121,249)
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 Group holds no derivative liabilities at balance date.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
64
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 Executive Management determined that the Group has three
operating segments.
The Group’s internal management reporting systems and business
model, which monitors resource allocation and working capital fall
under the following three segments:
•
•
•
Australian Transport – The provision of logistical services to
customers within Australia.
Fuels – The distribution of fuel to fishing, farming and retail
customers within the South East of South Australia.
New Zealand Transport – The provision of logistical services
to customers within New Zealand.
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. Inter-segment loans receivable
and loans payable that earn or incur non-market interest are not
adjusted to fair value based on market interest rates.
The entity has one customer which contributes greater than
10% of total revenue ($78.5m) and falls within the Australian
Transport Segment.
The following table presents revenue and profit information
for reportable segments for the years ended 30 June 2015 and
30 June 2014.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
65
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
4 Operating Segments
Australian New Zealand
Transport Fuel Transport Total
$’000 $’000 $’000 $’000
Year ended 30 June 2015
Revenue
External customers 604,485 61,596 33,010 699,091
Finance revenue 96 - 26 122
Inter-segment sales 411 44,403 - 44,814
Total segment revenue 604,992 105,999 33,036 744,027
Results
Depreciation and amortisation expense (33,242) - (3,359) (36,601)
Finance costs (6,266) - (995) (7,261)
Share of profits of associates 110 - - 110
Segment net operating profit after tax 10,387 1,441 1,480 13,308
Operating assets 483,522 23,352 36,030 542,904
Operating liabilities 205,029 9,177 13,210 227,416
Other disclosures
Investments in an associate 413 - - 413
Capital expenditure (42,516) - (13,459) (55,975)
Inter-segment revenues of $44,814,000
are eliminated on consolidation
Year ended 30 June 2014
Revenue
External customers 491,769 68,259 25,935 585,963
Finance revenue 251 - 12 263
Inter-segment sales 661 45,164 - 45,825
Total segment revenue 492,681 113,423 25,947 632,051
Results
Depreciation and amortisation expense (22,030) (153) (2,703) (24,886)
Finance costs (5,585) - (592) (6,177)
Share of profits of associates 103 - - 103
Segment net operating profit after tax 8,054 642 277 8,973
Operating assets 495,267 19,640 29,160 544,067
Operating liabilities 217,234 6,896 14,632 238,762
Other disclosures
Investments in an associate 303 - - 303
Capital expenditure (40,412) - (6,794) (47,206)
Inter-segment revenues of $45,825,000
are eliminated on consolidation
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
66
4 Operating Segments
Consolidated
2015 2014
$’000 $’000
i) Segment revenue reconciliation to the
Statement of Comprehensive Income
Total segment revenue 744,027 632,051
Inter-segment sales elimination (44,814) (45,825)
Total revenue 699,213 586,226
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 666,177 560,291
New Zealand 33,036 25,935
Total revenue 699,213 586,226
ii) 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 542,904 544,187
Inter-segment eliminations (16,824) (14,268)
Deferred tax assets 10,179 10,680
Total assets per the Statement of Financial Position 536,259 540,599
The analysis of location on non-current assets other than financial instruments
and deferred tax assets is as follows:
Australia 389,976 387,223
New Zealand 29,788 24,629
Total assets per the Statement of Financial Position 419,764 411,852
iii) 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 Managing Director,
Chief Financial Officer and Directors review the level of debts for each segment
in the monthly board meetings.
Reconciliation of segment operating liabilities to total liabilities.
Segment operating liabilities 227,416 238,762
Inter-segment eliminations (16,824) (14,268)
Deferred tax liabilities 28,716 27,150
Income tax payable 1,302 1,677
Total liabilities per the Statement of Financial Position 240,610 253,321
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
67
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
2015 2014
$’000 $’000
5 Revenue and Expenses
Revenue
a) Rendering of services 637,495 517,704
Sale of goods 61,596 68,259
Finance revenue 122 263
Total revenue 699,213 586,226
b) Other income
– Net gains on disposal of property, plant and equipment 1,961 2,927
2,176
– Other
3,824
Total other income 5,785 5,103
c) Finance costs
– Related parties – other - 5
– Other parties 1,753 1,991
– Finance charges on hire purchase contracts 5,508 4,181
Total finance costs 7,261 6,177
d) Depreciation and amortisation expense
Depreciation
– Buildings 2,317
2,064
– Motor vehicles 29,491 19,280
– Plant and equipment
3,934 2,917
Amortisation
– Customer contracts 257 89
– IT development costs 602 536
Total depreciation and amortisation expense
36,601 24,886
e) Employee expense
– Wages and salaries 177,374
147,254
– Workers’ compensation costs 5,792 7,337
– Long service leave provision 1,675 1,110
– Annual leave provision 11,414 10,057
– Payroll tax 10,098 8,428
– Defined contribution plan expense 12,808 11,021
– Directors retirement scheme expense 11 11
Total employee expenses 219,172 185,218
f) Operating lease rental expense
– Property 14,236 12,592
– Plant and equipment 3,428 2,095
Total operating lease rental expense 17,664 14,687
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
68
Consolidated
2015 2014
$’000 $’000
6 Income Tax
The major components of income tax expense are:
Statement of Comprehensive Income
Current income tax
– Current income tax charge 4,416 3,403
– Adjustments in respect of current income tax of previous years (146) (214)
Deferred income tax
– Relating to origination and reversal of income tax expense reported in
the Statement of Comprehensive Income temporary differences 1,220 385
Income tax expense reported in the Statement of Comprehensive Income 5,490 3,574
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 - -
Income tax expense reported in equity - -
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 18,798 12,547
At the Group’s statutory income tax rate of 30% (2014: 30%) 5,639 3,728
– Expenditure not allowable for income tax purposes (3) 60
– Adjustments in respect of current income tax of previous years (146) (214)
Income tax expense reported in the Statement of Comprehensive Income 5,490 3,574
Consolidated
2015 2015 2014 2014
$’000 $’000 $’000 $’000
Current Deferred Current Deferred
Income Income Income Income
Tax Tax Tax Tax
Recognised deferred tax assets and liabilities
Opening balance (1,677) (16,470) (555) (13,503)
Charged to income (4,270) (1,220) (3,189) (385)
Scott Corporation Limited opening balance - - (922) (1,772)
Eliminations - - - (726)
Charged to equity 2,145 (880) - -
Other payments 2,496 - 2,932 -
Exchange rate 4 33 57 (84)
Closing balance (1,302) (18,537) (1,677) (16,470)
Tax expense in Statement of Comprehensive Income 5,490 3,574
Amounts recognised in the Statement of Financial Position:
Deferred tax asset 10,179 10,680
Deferred tax liability (28,716) (27,150)
(18,537) (16,470)
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
69
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
6 Income Tax
Statement of Financial Position
2015 2014
$’000 $’000
Deferred income tax
Deferred income tax at 30 June relates to the following:
Consolidated
Deferred tax liabilities
– Accelerated depreciation for tax purposes (10,818) (9,499)
– Revaluation of land and buildings to fair value (14,193) (14,193)
– Trade and other receivables not derived for tax purposes (2,771) (2,450)
– Intangibles (Brands and Customer Contracts) (934) (1,008)
(28,716) (27,150)
Deferred tax assets
– Equity raising costs - 34
– Accelerated depreciation for accounting purposes 637 840
– Trade and other payables not currently deductible 1,602 1,965
– Trade and other receivables not derived for tax purposes 177 217
– Employee entitlements not currently deductible 7,763 7,624
10,179 10,680
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 inter-company 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.
A Deferred tax Asset / Liability is recognised when there is a deductible/taxable temporary difference between the tax base of an asset or
liability and its carrying amount in the statement of financial position.
In preparing the accounts for K&S Corporation Ltd for the current year, the following amounts have been recognised as tax consolidation
adjustments:
Parent
2015 2014
$’000 $’000
Total increase/(reduction) to tax expense of
K&S Corporation Ltd (2,867) (1,853)
Total increase/(reduction) to inter-company assets of
K&S Corporation Ltd 2,867 1,853
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Consolidated
2015 2014
$’000 $’000
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:
Net profit attributable to ordinary equity holders of the parent
from continuing operations 13,308 8,973
Net profit attributable to ordinary equity holders of the parent 13,308 8,973
2015 2014
Thousands Thousands
Weighted average number of ordinary shares used in the calculation of the
basic earnings per share 116,842 98,275
Effect of dilution
– Ordinary Shares - -
Weighted average number of ordinary shares adjusted for the effect of dilution 116,842 98,275
Consolidated
2015 2014
$’000 $’000
8 Dividends Paid and Proposed
Declared and paid during the year:
Dividends on ordinary shares
Final franked dividend for 2014: 3.0 cents (2013: 4.5 cents) 3,499 4,112
Interim franked dividend for 2015: 3.5 cents (2014: 3.0 cents) 4,096 2,761
7,595 6,873
Proposed (not recognised as a liability as at 30 June):
Dividends on ordinary shares
Final franked dividend for 2015: 3.5 cents (2014: 3.0 cents) 4,117 3,483
Franking credit balance
The amount of franking credits available for the subsequent year are:
• franking account balance as at the end of the financial year at 30% (2014: 30%) 48,368 49,170
• franking credits that will arise from the payment of income tax payable as at
the end of the financial year 544 844
The amount of franking credits available for future reporting periods:
• impact on franking account of dividends proposed but not recognised as a
distribution to equity holders during the period (1,764) (1,493)
47,148 48,521
Tax rates
The tax rate at which dividends have been franked is 30% (2014: 30%).
Dividends proposed will be franked at the rate of 30% (2014: 30%).
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
2015 2014
$’000 $’000
9 Cash and Cash Equivalents
Cash 52 53
Cash deposits with banks 7,274 23,479
7,326 23,532
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 13,308 8,973
Add/(less) items classified as investing/financing activities:
– (Profit)/loss on sale of non-current assets (934)
(2,972)
Add/(less) non-cash items:
– Amortisation 252 625
– Amounts set aside to provisions (3,890) 366
– Depreciation 36,601 24,261
– Share of associates’ net profit (110) (103)
– Dividends received from associates - -
Net cash provided by operating activities before changes in assets and liabilities 45,227 31,150
CHANGE IN ASSETS AND LIABILITIES
42
(Increase)/decrease in inventories (233)
(393)
(Increase)/decrease in income tax benefit 494
(Increase)/decrease in prepayments 414
119
(Increase)/decrease in receivables (4,830) 8,754
6,678
(Decrease)/increase in trade creditors 4,627
1,266
(Decrease)/increase in income taxes payable (394)
(Decrease)/increase in deferred taxes payable 2,879
(288)
Exchange rate changes on opening cash balances (28) (17)
Net cash provided by/(used in) operating activities 48,156
47,311
Disclosure of financing facilities
Refer to Note 18.
Disclosure of non-cash financing and investing activities
Refer to Note 18.
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Consolidated
2015 2014
$’000 $’000
10 Trade and Other Receivables
Current
Trade debtors 78,232 77,379
Allowance for impairment loss (a) (588) (660)
77,644 76,719
Sundry debtors 9,265 5,544
86,909 82,263
Non-current
Related party receivables
– Employee share plan loans 1,422 1,307
1,422 1,307
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 660 355
Charge for the year 319 533
Amounts written off (391) (228)
At 30 June 588 660
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**
2015 78,232 56,599 16,538 2,922 - 1,585 588
2014 77,379 53,141 18,284 3,894 - 1,400 660
* 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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
2015 2014
$’000 $’000
11 Inventories
Consumable stores – at cost 1,314 1,071
2,659
Finished goods – fuel at cost 2,649
Total inventories at the lower of cost and net realisable value 3,963 3,730
a) Inventory expense
Inventories recognised as an expense for the year ended 30 June 2015
totalled $56,936,000 (2014: $63,545,000) for the Group. This expense
has been included in the cost of goods sold line item as a cost of fuel sold.
Parent
2015 2014
$’000 $’000
12 Other Financial Assets
Investments controlled entities
– Shares – unlisted at cost 78,552 78,552
78,552 78,552
Investment Carrying
Interest Owned Amount Consolidated
2015 2014 2015 2014
% % $’000 $’000
13 Investment in Associate
a) Investment details
Smart Logistics Pty Ltd 50 50 413
303
Investment in associate 413 303
Smart Logistics Pty Ltd is a provider of distribution services and consultant in
transport and distribution. Smart Logistics Pty Ltd was incorporated in Australia.
b) Movements in the carrying amount of the Group’s investment
in associate
Consolidated
2015 2014
$’000 $’000
Smart Logistics Pty Ltd
At 1 July 303 200
Share of profit/(loss) after income tax 110 103
Dividend payment - -
At 30 June 413 303
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13 Investment in Associate
Consolidated
2015 2014
$’000 $’000
c) 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 5,931 6,429
Non-current assets 44 54
5,975 6,483
Current liabilities (5,150) (5,868)
Non-current liabilities - (9)
(5,150) (5,877)
Net assets/(liabilities) 825 606
Proportion of Group’s ownership 50.0% 50.0%
Share of associates net assets/(liabilities) 413 303
Carry amount of the Investment 413 303
Extract from the associates’ Statement of Comprehensive Income:
Revenue 69,563 75,279
Net profit 232 201
Consolidated
Freehold Land Motor Plant &
and Buildings Vehicles Equipment Total
$’000 $’000 $’000 $’000
14 Property, Plant and Equipment
a) Reconciliation of carrying amounts at the beginning and
end of the period:
Year ended 30 June 2015
As at 1 July 2014 net of accumulated depreciation and impairment 118,039 185,837 12,864 316,740
Additions 428 48,886 6,661 55,975
Disposals - (9,316) (90) (9,406)
Depreciation charge for the year (2,317) (29,491) (3,934) (35,742)
Exchange adjustment - (715) (10) (725)
At 30 June 2015 net of accumulated depreciation and impairment 116,150 195,201 15,491 326,842
At 30 June 2015
Cost or fair value 125,209 403,624 59,516 588,349
Accumulated depreciation and impairment (9,059) (208,423) (44,025) (261,507)
Net carrying amount 116,150 195,201 15,491 326,842
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
14 Property, Plant and Equipment
Consolidated
Freehold Land Motor Plant &
and Buildings Vehicles Equipment Total
$’000 $’000 $’000 $’000
a) Reconciliation of carrying amounts at the beginning and
end of the period: continued
Year ended 30 June 2014
As at 1 July 2013 net of accumulated depreciation and impairment 104,390 119,595 10,765 234,750
Additions 13,448 32,579 1,179 47,206
Additions – Scott Corporation Limited 2,265 55,209 3,834 61,308
Disposals - (3,440) (7) (3,447)
Depreciation charge for the year (2,064) (19,400) (2,917) (24,381)
Exchange adjustment - 1,294 10 1,304
At 30 June 2014 net of accumulated depreciation and impairment 118,039 185,837 12,864 316,740
At 30 June 2014
Cost or fair value 124,781 384,207 54,742 563,730
Accumulated depreciation and impairment (6,742) (198,370) (41,878) (246,990)
Net carrying amount 118,039 185,837 12,864 316,740
b) Capitalised borrowing costs
The Group has received planning approval for the construction of a transport terminal from the City of Swan in Western Australia in
relation to property purchased at Bullsbrook in August 2013. The carrying amount of the property at 30 June 2015 was $14.2 million
(2014: $13.3 million). The borrowing costs capitalised during the year ended 30 June 2015 was $229,000 (2014: $409,000).
The capitalisation of interest ceased on 31 December 2014. The rate used to determine the amount of borrowing costs eligible for
capitalisation was 3.40%, which is the effective interest rate of the specific borrowing.
c) 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 2015 was determined based on an independent valuation
undertaken in March 2013 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.
The valuation technique used on valuing the freehold land and buildings consists of direct Comparison Approach and Capitalisation of
Net Income Approach. The adjustments to the methodology used will be based on location of each premises and age of buildings.
As the freehold land and buildings measured at fair value above are categorised as level 3, the valuation contains unobservable level 3
price inputs. The most significant unobservable input is dollar per square metre. The quantitative range, subject to location for the
calculation is based on a dollar per metre between $90 and $350.
Significant increases (decreases) in any of the significant unobservable valuation inputs under both the Direct Comparison Approach and
the Capitalisation of Net Income Approach in isolation would result in a significantly lower (higher) fair value measurement. There has been
no material change in fair value of land and buildings since the last independent valuation.
The Group’s Valuation Committee determines the process for periodical fair value measurement. The Valuation Committee comprises the
Chief Financial Officer and National Equipment Manager along with relevant General Managers. External valuers are utlised where required
to assist the Valuation Committee. At each reporting date the Valuation Committee will review the values of Fixed Assets to ensure values
are in line with group accounting policies and external standards.
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14 Property, Plant and Equipment
Consolidated
2015 2014
Freehold Land Freehold Land
and Buildings and Buildings
$’000 $’000
d) 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 87,397 86,969
Accumulated depreciation and impairment (13,007) (11,656)
Net carrying amount 74,390 75,313
e) Property, plant and equipment pledged as security
for liabilities
The carrying value of motor vehicles held under hire purchase
contracts at 30 June 2015 is $124,207,076 (2014: $120,074,111).
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.
Consolidated
IT Development Customer
Costs Goodwill Brands Contracts Total
$’000 $’000 $’000 $’000 $’000
15 Intangible Assets and Goodwill
Year ended 30 June 2015
At 1 July 2014 net of accumulated amortisation and impairment 1,974 82,990 6,209 2,329 93,502
Adjustments - (1,265) - - (1,265)
Amortisation (602) - - (257) (859)
Exchange adjustment - (290) - - (290)
At 30 June 2015 net of accumulated amortisation and impairment 1,372 81,435 6,209 2,072 91,088
At 30 June 2015
Cost (gross carrying amount) 4,190 81,435 6,209 2,418 94,252
Accumulated amortisation and impairment (2,818) - - (346) (3,164)
Net carrying amount 1,372 81,435 6,209 2,072 91,088
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
15 Intangible Assets and Goodwill
Consolidated
IT Development Customer
Costs Goodwill Brands Contracts Total
$’000 $’000 $’000 $’000 $’000
Year ended 30 June 2014
At 1 July 2013 net of accumulated amortisation and impairment 2,510 68,666 - - 71,176
Additions - 13,659 6,209 2,418 22,286
Amortisation (536) - - (89) (625)
Exchange adjustment - 665 - - 665
At 30 June 2014 net of accumulated amortisation and impairment 1,974 82,990 6,209 2,329 93,502
At 30 June 2014
Cost (gross carrying amount) 4,190 82,990 6,209 2,418 95,807
Accumulated amortisation and impairment (2,216) - - (89) (2,305)
Net carrying amount 1,974 82,990 6,209 2,329 93,502
IT development costs have been capitalised at cost and relate to
the development of the Group’s new core freight system (Panorama).
Goodwill is subject to annual impairment testing (see Note 16) no
impairment loss was recognised for continuing operations in the
2015 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 three individual cash generating units as follows: Goodwill
2015 2014
$’000 $’000
Australian Transport 75,413 76,677
Fuel 165 165
New Zealand Transport 5,857 6,148
81,435 82,990
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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16 Impairment Testing of Goodwill
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
2015 2014 2015 2014
% % % %
Australian Transport 14.14 13.71 3.0 3.0
Fuel 13.71 13.71 3.0 3.0
New Zealand Transport 13.38 13.38 2.5 2.5
Discount rate
The discount rate represent the current market assessment of the risks specific to each CGU, taking into consideration the time value
of money and individual risks of the underlying assets that have not been incorporated in the cash flow estimates. The discount rate
calculation is based on the specific circumstances of the Group and its operating segments and is derived from its weighted average
cost of capital (WACC). The WACC takes into account both debt and equity. The cost of equity is derived from the expected return
on investment by the Group’s investors. The cost of debt is based on the interest bearing borrowings the Group is obliged to service.
Segment specific risk is incorporated by applying individual beta factors. The beta factors are evaluated annually based on publicly
available market data.
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
The recoverable amount of the Australian Transport CGU currently exceeds its carrying value by $32.6m. This excess in recoverable
amount could be reduced should changes in the following key assumptions occur:
• Discount rate – an increase in the discount rate of over 1.0% would result in a reduction of the recoverable amount to below the
carrying value.
• Terminal growth rate – a decrease in the growth rate of over 0.85% would result in a reduction of the recoverable amount to below
the carrying value.
• Terminal cash flow – a decrease in terminal cash flow of over 11.9% would result in a reduction of the recoverable amount to below
the carrying value.
The recoverable amount of the New Zealand Transport CGU currently exceeds its carrying value by $18.2m. This excess in recoverable
amount could be reduced should changes in the following key assumptions occur:
• Discount rate – an increase in the discount rate of over 5.65% would result in a reduction of the recoverable amount to below the
carrying value.
• Terminal growth rate – a decrease in the growth rate of over 6.0% would result in a reduction of the recoverable amount to below
the carrying value.
• Terminal cash flow – a decrease in terminal cash flow of over 45.8% would result in a reduction of the recoverable amount to below
the carrying value.
Consolidated
2015 2014
$’000 $’000
17 Payables
Current
Trade creditors and payables 70,365 66,881
Self insured workers’ compensation liability 3,111 3,601
73,476 70,482
Non-current
Self insured workers’ compensation liability 6,585 8,604
6,585 8,604
i) Trade payables are non-interest bearing and are normally settled on
30 day terms
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
79
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
2015 2014
$’000 $’000
18 Interest Bearing Loans and Borrowings
Current
Hire purchase liabilities – secured 30,345 36,169
30,345 36,169
Non-current
Non redeemable preference shares 60 60
Hire purchase liabilities – secured 61,358 58,721
Bank loans – secured 13,625 24,625
75,043 83,406
Commitments in respect of hire purchase agreements are payable as follows:
Not later than one year 34,737 40,976
Later than one year but not later than five years 66,138 63,315
100,875 104,291
Deduct: future finance charges (9,172) (9,393)
Total hire purchase liability 91,703 94,898
Current 30,345 36,177
Non-current 61,358 58,721
91,703 94,898
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
$124,207,076 (2014: $120,074,111). The weighted average cost of these
facilities was 5.49% (2014: 5.84%).
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 $106,467,000
(2014: $108,932,000). The non-current bank loans are subject to annual review.
The Group has bank loan facilities available for a period beyond June 2015.
Maturity dates for the Group’s facilities are:
Facility amount ($‘000) Expiry
25,000 4 January 2017
33,000 26 November 2017
40,000 26 November 2016
The facilities bear interest at 3.40% (2014: 3.60%).
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80
18 Interest Bearing Loans and Borrowings
Consolidated
2015 2014
$’000 $’000
Financing facilities available
Total facilities available:
Bank overdrafts 7,000 4,000
Bank loans 84,000
80,421
Standby letters of credit 19,488 19,579
110,488
104,000
Standby letters of credit
The Group has the following guarantees at 30 June 2015:
• Bank guarantee of $16,877,000 has been provided by the Westpac
Banking Corporation to Comcare for the due discharge of liabilities to
pay compensation and other amounts under the Safety Rehabilitation
and Compensation Act 1988;
• Other bank guarantees of $1,338,250 have been provided by the
Westpac Banking Corporation Limited to suppliers.
• Other bank guarantees of $385,000 have been provided by the
Commonwealth Bank of Australia to suppliers.
• Other bank guarantees of $887,884 have been provided by Bank SA
to suppliers.
Facilities utilised at balance date:
Bank overdrafts - -
Bank loans 13,625 24,625
19,579
Standby letters of credit 19,488
33,113
44,204
Facilities not utilised at balance date:
Bank overdrafts 7,000 4,000
Bank loans 70,375 55,796
Standby letters of credit - -
77,375
59,796
Total facilities 110,488 104,000
Facilities used at balance date 33,113 44,204
Facilities unused at balance date 77,375 59,796
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 30 June 2016.
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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
81
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
18 Interest Bearing Loans and Borrowings
Consolidated
2015 2014
$’000 $’000
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 105,723 107,943
– Plant and equipment 744 989
Total non-current assets pledged as security 106,467 108,932
Non-cash financing and investment activities
During the financial year, the economic entity acquired property, plant and
equipment with an aggregate fair value of $39,772,000 (2014: $29,300,000)
and disposed of property, plant and equipment with an aggregate fair value of
$nil (2014: $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 19,854 22,704
19,854
22,704
Non-current
Employee benefits 5,564
2,261
Make good provision 346 419
449
Directors’ retirement allowance 459
6,369
3,129
No dividends have been provided for the year ended 30 June 2015. 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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19 Provisions
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 2014 419 449 868
Arising during the year - 10 10
Utilised 73 - 73
At 30 June 2015 346 459 805
Current 2015 - - -
Non-Current 2015 346 459 805
346 459 805
Current 2014 - - -
Non-Current 2014 419 449 868
419 449 868
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, South 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(z) and Note 2(cc) 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(z) for the relevant accounting policy and a discussion of the significant estimates and assumptions applied in the
measurement of this provision.
Consolidated
2015 2014
$’000 $’000
20 Contributed Equity and Reserves
a) Ordinary shares
Contributed equity
117,616,625 (2014: 116,092,472) ordinary shares fully paid 147,674 145,415
147,674 145,415
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
83
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
20 Contributed Equity and Reserves
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 2013 91,180 101,187
Issued through Employee Share Plan – 201,000 ordinary shares at $1.77 201 356
Issued through Dividend Re-investment Plan – 665,300 ordinary shares at $1.6384 665 1,090
Issued through Scott Corporation Limited Purchase – 23,573,818 ordinary shares at $1.78 23,574 41,961
Issued through Dividend Re-investment Plan – 433,984 ordinary shares at $1.7345 434 753
Issued through Scott Corporation Limited Purchase – 38,505 ordinary shares at $1.78 39 68
At 30 June 2014 116,093 145,415
Issued through Employee Share Plan – 402,000 ordinary shares at $1.46 402 587
Issued through Dividend Re-investment Plan – 519,914 ordinary shares at $1.4941 520 777
Issued through Dividend Re-investment Plan – 602,039 ordinary shares at $1.4878 602 895
At 30 June 2015 117,617 147,674
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 2015, the Group paid dividends of $7,595,000 (2014: $6,873,000).
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:
Consolidated
2015 2014
$’000 $’000
Total interest bearing loans and borrowings 105,388 119,583
Less cash and cash equivalents (7,326) (23,532)
Net debt 98,062 96,051
Net debt + Shareholders funds 392,631 383,201
Gearing ratio 25.0% 25.2%
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.
K & S C O R P O R A T I O N
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21 Derivative Financial Instruments
a) Hedging activities
The Group has no interest rate swap agreements in place at 30 June 2015.
b) Interest rate risk
Information regarding interest rate risk exposure is set out in Note 3.
Consolidated
2015 2014
$’000 $’000
22 Commitments
The estimated maximum amount of commitments not
provided for in the accounts as at 30 June 2015 are:
Capital expenditure commitments
The aggregate amount of contracts for capital expenditure
on plant and equipment due no later than one year 35,246
16,206
Lease rental commitments
Operating lease and hire commitments:
– Not later than one year 15,333 16,812
30,668
– Later than one year but not later than five years 30,344
12,478
– Later than five years 10,102
55,779 59,958
The consolidated entity leases property under non-cancellable
operating leases expiring from one to fifteen 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
The Company and all its subsidiaries have interlocking guarantees in support of the Company’s banking facilities with
Westpac Banking Corporation (“WBC”) and Commonwealth Bank of Australia (“CBA”). Details are:
• Interlocking guarantee and indemnity between WBC and the Company and its wholly-owned subsidiaries dated
23 September 2002, pursuant to which the Company and its wholly-owned subsidiaries jointly and severally
guarantee to WBC the performance by the Company and its wholly-owned subsidiaries of their respective obligations
under the WBC multi-currency multiple option facility agreement.
• Guarantee and indemnity between CBA and the Company and its wholly-owned subsidiaries dated 15 June 2007,
pursuant to which the Company and its wholly-owned subsidiaries jointly and severally guarantee to CBA the
performance by the Company and its wholly-owned subsidiaries of their respective obligations under the CBA
multiple option facility agreement.
Cross guarantees given by the Company and its wholly-owned controlled entities are described in Note 24.
Legal claim
DTM Pty Ltd (“DTM”), a subsidiary of the Company, was served with legal proceedings out of the Supreme Court of Victoria
in December 2013. DTM is one of five named defendants to those proceedings. DTM has also applied to join a further five
parties as defendants to those proceedings. The claims relate to property damage sustained in a fire at a DTM warehouse in
2007. The quantum of the claims the subject of those proceedings is $8.65 million. Liability has not been admitted and the
claims against DTM will be defended.
There are a number of minor legal actions pending against companies within the consolidated entity. Liability has not been
admitted and 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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NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
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
Scott Corporation Pty Ltd
Bulktrans Pty Ltd
Chemtrans 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 *
Hyde Park Tank Depot Pty Ltd
Energytrans Pty Ltd
* 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 2015 is set out below:
Closed Group
2015 2014
$’000 $’000
Statement of Comprehensive Income
Profit before income tax 18,798 12,547
Income tax expense (5,490) (3,574)
Profit after income tax 13,308 8,973
Retained profits at the beginning of the year 109,305 107,205
Transfer asset revaluation reserve - -
(6,873)
Dividends provided or paid (7,595)
Retained earnings at the end of the year 115,018 109,305
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24 Deed of Cross Guarantee
Closed Group
2015 2014
$’000 $’000
Statement of Financial Position
Cash 7,326 23,532
Trade and other receivables 86,909 82,263
Inventories 3,963 3,730
Prepayments 8,117 8,542
Total current assets 106,315 118,067
Other receivables 1,422 1,307
Investment in associates 413 303
Property, plant and equipment 326,842 316,740
Intangibles 91,088 93,502
Deferred tax assets 10,179 10,680
Total non-current assets 429,944
422,532
Total assets 536,259
540,599
70,482
Trade and other payables 73,476
Interest bearing loans and borrowings 30,345
36,169
Current tax liabilities 1,302 1,677
22,704
Provisions 19,854
Total current liabilities 124,977
131,032
Other payables 6,585 8,604
83,406
Interest bearing loans and borrowings 75,043
27,150
Deferred tax liabilities 28,716
3,129
Provisions 6,369
Total non-current liabilities 116,713
122,289
Total liabilities 241,690
253,321
Net assets 294,569
287,278
Contributed equity 147,674
145,415
Reserves 31,877 32,558
109,305
Retained earnings 115,018
Total equity 294,569 287,278
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NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Class of Country of % Equity Interest
Share Incorporation
2015 2014
25 Controlled Entities
Particulars in relation to controlled entities
Name
K&S Corporation Limited
Controlled Entities
Reid Bros Pty Ltd Ord Australia
Kain & Shelton Pty Ltd Ord Australia
K&S Freighters Pty Ltd Ord Australia
K&S Group Administrative Services Pty Ltd Ord Australia
Kain & Shelton (Agencies) Pty Ltd Ord Australia
K&S Transport Management Pty Ltd Ord Australia
Blakistons-Gibb Pty Ltd Ord Australia
K&S Logistics Pty Ltd Ord Australia
K&S Integrated Distribution Pty Ltd Ord Australia
K&S Group Pty Ltd Ord Australia
DTM Holdings (No. 2) Pty Ltd Ord Australia
Alento Pty Ltd Ord Australia
DTM Holdings Pty Ltd Ord Australia
DTM Pty Ltd Ord Australia
K&S Project Services Pty Ltd Ord Australia
Regal Transport Group Pty Ltd Ord Australia
Strategic Transport Services Pty Ltd Ord Australia
Vortex Nominees Pty Ltd Ord Australia
K&S Freighters Limited Ord New Zealand
Cochrane’s Transport Limited Ord New Zealand
Scott Corporation Pty Ltd Ord Australia
Bulktrans Pty Ltd Ord Australia
Chemtrans Pty Ltd Ord Australia
Hyde Park Tank Depot Pty Ltd Ord Australia
Energytrans Pty Ltd Ord Australia
26 Related Party Disclosures
DIRECTORS
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
100 100
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, L Winser, G Boulton, R Smith and P Sarant.
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
Zenaray Pty Ltd, the major shareholder of the following entities which provide goods and services to the economic entity are:
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 – prior to 24 February 2014 128 Bedford Street Pty Ltd
Northern Territory Freight Services Pty Ltd
Mr Winser has an interest as an alternate Director of several companies within the Scott Group.
128 Bedford Street Pty Ltd has an interest in a transport facility in Adelaide which the Company rents on a commercial basis.
Rent in 2015 was $415,538 (2014: First Radio Pty Ltd $402,000).
Mr Johnson has an interest as a Director of AA Scott Pty Ltd.
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26 Related Party Disclosures
Purchases Sales
2015 2014 2015 2014
$ $ $ $
The aggregate amount of dealings with these companies
during 2015 were as follows:
Ascot Haulage (NT) Pty Ltd 2,776,928 3,368,267 - -
Northern Territory Freight Services Pty Ltd 1,920 188,338 - -
Scott’s Transport Industries Pty Ltd 129,903 108,327 1,102,753 713,598
Scott’s Agencies Pty Ltd 68 480,559 - -
The Border Watch Pty Ltd 15,763 17,462 -
-
K&S Corporations Limited acquired the business and assets of
Northern Territory Freight Services on 2 March 2015 for $2,688,000.
Further details pertaining to the transaction are disclosed in Note 29.
Mr Johnson was founder and former 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 2015 was
$112,545 (2014: $76,812) in professional service fees.
Mr R Smith has an interest as Director of Transpacific Industries Limited.
Transactions with this company during 2015 were sales of $2,930
(2014: $72,788) and purchases of $126,998 (2014: $40,252).
Consolidated
2015 2014
$’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 90 34
-
Transpacific Industries Limited -
No provision for doubtful debts has been recognised in respect of these
balances as they are considered recoverable.
Current payables (included within trade payables)
157
Ascot Haulage (NT) Pty Ltd -
-
Scott’s Transport Industries Pty Ltd 194
3
Transpacific Industries Limited 4
Wholly-owned Group
Details of interests in wholly-owned controlled entities are set out at Note 25.
Parent
2015 2014
$’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 78,286 88,643
– Non-current 17,961 17,961
96,247 106,604
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
26 Related Party Disclosures
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.
Consolidated
2015 2014
DIRECTORS’ SHARE TRANSACTIONS
Shareholdings
Aggregate number of shares held by Directors and their Director-related
entities at balance date:
– Ordinary shares 1,975,379 1,941,129
– Preference shares - -
All share transactions were with the parent Company, K&S Corporation Limited.
2015 2014
$’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 135 82
– Preference shares - -
Directors' transactions in shares and share options
Purchases of shares by Directors and Director-related entities are
set out in the Directors’ Report.
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 (Resigned 31 August 2015)
Mr R Smith Non-Executive
Mr L Winser Non-Executive
Mr P Sarant Managing Director
ii) Executives
Mr B Walsh Chief Financial Officer
Mr C Bright General Counsel & Company Secretary
Mr G Everest Executive General Manager Regal Transport (Resigned 14 November 2014)
Mr R King Executive General Manager Western Australia
Mr S Hine Executive General Manager Business Development
Mr S Skazlic General Manager HS&E / Compliance
Ms K Evans General Manager Human Resources
Mr D Keane Executive General Manager Scott Corporation
Mr K Cope Executive General Manager Commercial (Resigned 6 February 2015)
Mr M Kohne Executive General Manager DTM
Mr G Beurteaux Executive General Manager K&S Freighters (Appointed 14 July 2014)
Consolidated
2015 2014
$ $
b) Compensation for Key Management Personnel
Short-term 4,423,498 3,929,096
Retention payments 156,000 -
Long-term 61,380 52,843
Post employment 362,429 288,867
5,003,307 4,270,806
28 Events Subsequent to Balance Date
On 21 August 2015, the Directors of K&S Corporation Limited declared a
final dividend on ordinary shares in respect of the 2015 financial year.
The total amount of the dividend is $4,116,582, which represents a fully
franked dividend of 3.5 cents per share. The dividend is payable on
2 November 2015 and has not been provided for in the 30 June 2015 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 19 October 2015 (the record date of the final dividend), less a discount of
2.5%. The last election date for participation in the DRP is 20 October 2015.
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.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
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NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
29 Business Combinations
Acquisitions in 2015
Acquisition of NTFS
On 2 March 2015, K&S Corporation Limited (K&S) acquired the business and assets of Northern Territory Freight Services (“NTFS”).
NTFS is one of the largest rail freight forwarders on the Adelaide-Alice Springs-Darwin corridor, while also providing road linehaul services
between Adelaide and Darwin.
No goodwill has been recorded.
The acquisition of NTFS presents immediate opportunities for K&S Corporation to expand its current service offering in the
Adelaide-Darwin corridor, while also allowing additional services to be provided to the north west regions of Western Australia in
conjunction with the Regal business.
The provisional fair values of identifiable assets and liabilities is as follows:
Fair Value at
Acquisition Date Carrying Value
$’000 $’000
Property, plant & equipment 6,294 6,294
Prepayments 142 142
Deferred tax assets 87 87
6,523 6,523
Provision for employee entitlements (646) (646)
Interest Bearing Loans and Borrowings (2,950) (2,950)
Deferred tax liability (239) (239)
(3,835) (3,835)
Provisional fair value of identifiable net assets 2,688
Cash payment 2,688
Direct costs relating to the acquisition -
Total outflow on acquisition 2,688
Transaction costs of nil have been expensed and included in other expenses.
From the date of acquisition, NTFS has contributed $15,330,159 of revenue
and $333,840 to the profit before tax from continuing operations of the Group.
If the combination had taken place at the beginning of the year, revenue from
continuing operations would have been $48,118,230 and the loss before tax
from continuing operations before rationalisation benefits for the Group would
have been $24,504.
Acquisitions in 2014
Acquisition of Scott Corporation Limited
On 24 February 2014, K&S Corporation Limited (K&S) obtained control of
Scott Corporation Limited via an off-market takeover bid. Scott Corporation
Limited is a national carrier with expertise in the transport of bulk solids,
liquids and explosives by road, rail and sea via four operating divisions
catering to a diverse range of transport and logistic needs. Scott Corporation
Limited has a blue chip contracted customer base.
The consideration transferred was a combination of scrip at 0.345 K&S Shares
or $0.59 per Scott Corporation Limited share.
Scott Corporation Limited operates in different functional and geographic
markets to K&S and expands the scope, scale and diversity of our business.
With its exposure to the resources sector, the Scott Corporation Limited
business is highly complementary to K&S.
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29 Business Combinations
Acquisition of Scott Corporation Limited continued
Fair Value at
Acquisition Date Carrying Value
$’000 $’000
The fair values of identifiable assets and liabilities is as follows:
Cash 3,719 3,719
Debtors 26,802 26,802
Inventories 732 732
Prepayments 3,374 3,374
Plant & equipment 61,936 64,831
Deferred tax assets 2,446 2,446
99,009 101,904
Trade creditors (16,972) (16,972)
Hire purchase – current (16,762) (16,762)
Provision for dividend (3,772) (3,772)
Provision for employee entitlements (6,247) (6,247)
Provision for Income tax payable (588) (588)
Hire purchase – non current (25,738) (25,738)
Deferred tax liability (5,081) (5,081)
(75,160) (75,160)
Fair value of identifiable net assets 23,849
Goodwill arising on acquisition 13,659
Brands 6,209
Customer contracts 2,418
Purchase consideration transferred 46,135
Acquisition-date fair-value of consideration transferred
Shares issued at fair value 42,029
Cash paid 4,106
Consideration transferred 46,135
Analysis of cash flows on acquisition
Direct costs relating to the acquisition (804)
Net cash acquired with the purchase 3,719
Cash paid (4,106)
Cash outflow on acquisition (1,191)
The initial accounting for the business combination requires the identification of fair values to be assigned to Scott Corporation Limited’s
identifiable assets, liabilities and contingent liabilities. Due to the acquisition occurring in the second half of the year, the fair values
assigned to Scott Corporation Limited’s assets were provisional. In accordance with Australian Accounting Standards, K&S has recognised
an adjustment to the provisional values as a result of completing the initial accounting within 12 months of the acquisition date.
The fair value of the trade receivables amounts to $26,802,000. The gross amount of trade receivables is $26,875,000. However, none of
the trade receivables have been impaired and it is expected that the full contractual amounts can be collected.
The goodwill of $13,659,000 (total excludes brands and contracts) comprises the value of expected synergies arising from the acquisition.
Goodwill is allocated entirely to the Australian Transport segment.
Transaction costs of $804,000 have been expensed and are included in other expenses.
From the date of acquisition, Scott Corporation has contributed $66,894,000 of revenue and $3,066,000 to the profit before tax from
continuing operations of the Group. If the combination had taken place at the beginning of the year, revenue from continuing operations
would have been $199,357,000 and the profit before tax from continuing operations for the Group would have been $5,292,000.
K & S C O R P O R A T I O N L I M I T E D A N N U A L R E P O R T 2 0 1 5
93
NOTES TO THE
FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2015
Consolidated
2015 2014
$’000 $’000
30 Auditor’s Remuneration
The auditor of K&S Corporation Limited is Ernst & Young.
Audit services:
Audit and review of the statutory financial reports 174,500 160,000
174,500 160,000
Other services:
Other services – Ernst & Young:
– Scott Corporation Limited acquisition assistance 59,493 137,355
59,493 137,355
Parent
2015 2014
$’000 $’000
31 Parent Entity Information
Current assets 79,350 88,643
Total assets 177,423 186,669
Current liabilities (1,210) (142)
Total liabilities (8,798) (12,719)
Issued capital 147,674 145,415
Asset revaluation reserve 161 161
Retained earnings 20,790 28,374
Total Shareholders’ equity 168,625 173,950
Profit after tax of the parent entity 5,434 10,422
Total comprehensive income of the parent entity 5,434 10,422
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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DIRECTORS’
DECLARATION
K&S CORPORATION LIMITED
FOR THE YEAR ENDED 30 JUNE 2015
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 is 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 2015 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.
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 Adelaide this 21st day of August 2015.
On behalf of the Board:
b) the financial statements and notes also comply
with International Financial Reporting Standards
as disclosed in Note 2 (b).
Tony Johnson
Chairman
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 2015.
Paul Sarant
Managing Director
AUDITOR’S INDEPENDENCE
DECLARATION
In relation to our audit of the financial report of
K&S Corporation Limited for the financial year ended
30 June 2015, 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
Mark Phelps
Partner
Adelaide
21 August 2015
A member firm of Ernst & Young Global Limited. Liability Limited by
a scheme approved under Professional Standards Legislation.
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INDEPENDENT AUDIT
REPORT
Report on the Financial Report
Independence
We have audited the accompanying financial report of
K&S Corporation Limited, which comprises the consolidated
statement of financial position as at 30 June 2015,
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.
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.
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 2015 and of its
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 21 to 31 of the directors’ report for the year ended
30 June 2015. 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 2015, complies with
section 300A of the Corporations Act 2001.
Ernst & Young
Mark Phelps
Partner
Adelaide
21 August 2015
A member firm of Ernst & Young Global Limited. Liability Limited by
a scheme approved under Professional Standards Legislation.
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INFORMATION ON
SHAREHOLDINGS
K&S CORPORATION LIMITED
DISTRIBUTION OF SHAREHOLDINGS
Ordinary Shares
Number of Shareholders
1-1,000 Shares 500
1,001 - 5,000 Shares 1,017
5,001 - 10,000 Shares 449
10,001 - 100,000 Shares 570
100,001 and more Shares 57
2,593
165 shareholders hold less than a marketable parcel (358 shares).
TWENTY LARGEST SHAREHOLDERS
Name
Number of Ordinary Shares Held
%
1 AA Scott Pty Ltd 65,673,057 55.84
2 Citicorp Nominees Pty Limited 5,673,267 4.82
3 Bell Potter Nominees Ltd 2,726,732 2.32
4 Ascot Media Investments Pty Ltd 2,297,175 1.95
5 JP Morgan Nominees Australia Limited 2,172,012 1.85
6 Zena Winser Pty Ltd 1,656,523 1.41
7 P Whitehead Nominees Pty Ltd 1,210,513 1.03
8 Oakcroft Nominees Pty Ltd 1,026,133 0.87
9 HSBC Custody Nominees (Australia) Limited GSCO ECA 809,116 0.69
10 Tribridge Holdings Pty Ltd 750,000 0.64
11 National Nominees Limited 748,742 0.64
12 Mr Eric Joseph Roughana 700,000 0.60
13 Winscott Investments Pty Ltd 621,438 0.53
14 Mr Barry William Page & Mrs Janice Mary Page 620,750 0.53
15 Tirroki Pty Ltd 493,178 0.42
16 HSBC Custody Nominees (Australia) Limited 459,358 0.39
17 Mr William Clifton Anderson 405,216 0.34
18 Mr John Irving Stepnell & Mrs Valerie Iris Stepnell 401,500 0.34
19 HSBC Custody Nominees Australia 376,147 0.32
20 Kailva Pty Ltd 375,000 0.32
89,195,857 75.85
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 75.85% 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 21 September 2015
Number % of Class
AA Scott Pty Ltd & Associated Companies 72,115,391 61.31
VOTING RIGHTS
The voting rights are as follows:
Preference Shares: Nil
Ordinary Shares: 1 vote per share
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CORPORATE
DIRECTORY
HEAD OFFICE
591 Boundary Road
Truganina Victoria 3029
Phone: (03) 8744 3500
Facsimile: (03) 8744 3599
REGISTERED OFFICE
141-147 Jubilee Highway West
Mount Gambier
South Australia 5290
Phone: (08) 8721 1700
Facsimile: (08) 8721 1799
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) 9473 2102
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
K&S Freighters
Melbourne
591 Boundary Road
Truganina VIC 3029
Phone: (03) 8744 3700
Facsimile: (03) 8744 3799
Portland
53 Fitzgerald Street
Portland VIC 3305
Phone: (03) 5523 4144
Facsimile: (03) 5523 5647
Geelong
325 Thompson Road
North Geelong VIC 3215
Phone: (03) 5278 5777
Facsimile: (03) 5278 5230
Ballarat
c/o Laminex Industries
16 Trewin Street
Wendouree VIC 3355
Phone: (03) 5338 1710
Facsimile: (03) 5338 1136
Sydney
1 Hope Street, Enfield NSW 2136
Phone: (02) 9735 2400
Facsimile: (02) 9735 2499
Brisbane
34 Postle Street
Coopers Plains QLD 4108
Phone: (07) 3137 4400
Facsimile: (07) 3137 4441
Bundaberg
Old Quanaba Mill, Grange Road
Bundaberg QLD 4670
Phone: (07) 4159 2150
Facsimile: (07) 4159 1825
Perth
Lot 1 Kewdale Freight Precinct
Off Fenton Street
Kewdale WA 6105
Phone: (08) 6466 6600
Facsimile: (08) 6466 6699
Bunbury
91 Moore Road
Dardanup WA 6236
Phone: (08) 9725 4400
Facsimile: (08) 9725 4949
Adelaide
30-32 Francis Street
Port Adelaide SA 5015
Phone:(08) 7224 5400
Facsimile:(08) 7224 5497
Mount Gambier
141-147 Jubilee Highway West
Mount Gambier SA 5290
Phone: (08) 8721 1700
Facsimile: (08) 8721 1799
New Zealand
Cambridge
3847 Te Awamutu Road
Cambridge NZ
Phone: (07) 827 6002
Facsimile: (07) 827 5606
Mount Maunganui
35 Portside Drive
Mount Maunganui NZ
Phone: (07) 575 8265
Facsimile: (07) 575 8480
Auckland
4 Tinley Street, Auckland NZ
Phone: (09) 307 0061
Facsimile: (09) 307 0027
Christchurch
40 Braeburn Drive,
Christchurch NZ
Phone: (03) 344 0171
DTM
Sydney
2 Hope Street, Enfield
NSW 2136
Phone: (02) 9735 2300
Facsimile: (02) 9735 2399
Melbourne
591 Boundary Road
Truganina VIC 3029
Phone: (03) 8744 3763
Facsimile: (03) 8744 3799
K&S CORPORATION LIMITED
Appin
West Cliff Colliery Weighbridge
Wedderburn Road
Wedderburn NSW 2560
Phone: (02) 4640 4109
Facsimile: (02) 4640 4197
Brisbane
34 Postle Street,
Coopers Plains QLD 4108
Phone: (07) 3718 4200
Facsimile: (07) 3272 6760
Darwin
c/o NTFS
8 College Road, Berrimah NT 0828
Phone: (08) 8995 8100
Facsimile: (08) 8984 3873
Lithgow
Cnr Wolgan Road & Duncan Street
Lidsdale NSW 2790
Phone: (02) 6355 1202
Facsimile: (02) 6355 1658
Padstow
55 Davies Road Padstow
NSW 2211
Phone: (02) 9792 9400
Facsimile: (02) 9792 9410
Port Kembla
Cnr King & Wattle Streets
Port Kembla NSW 2505
Phone: (02) 4267 9200
Facsimile: (02) 4267 9280
Newcastle
45 Greenleaf Road
Kooragang Island NSW 2304
Phone: (02) 4033 7000
Facsimile: (02) 4928 4368
Townsville
13 Pilkington Street
Garbutt QLD 4814
Phone: (07) 4431 2000
Facsimile: (07) 7425 1203
Gladstone
Lot 152 Red Rover Road
Gladstone QLD 4680
Phone: (07) 4973 1700
Facsimile: (07) 4972 6227
Perth
3 Central Avenue, Hazelmere
WA 6055
Phone: (08) 6274 9600
Facsimile: (08) 6274 9611
NTFS
Adelaide
30-32 Francis Street
Port Adelaide SA 5015
Phone: (08) 8240 1400
Facsimile: (08) 8240 1438
Alice Springs
196 North Stuart Highway
Alice Springs NT 0870
Phone: (08) 8952 6422
Facsimile: (08) 8953 0048
Darwin
8 College Road, Darwin NT 0828
Phone: (08) 8984 4922
Facsimile: (08) 8984 3732
Adelaide
30-32 Francis Street
Port Adelaide SA 5015
Phone: (08) 7224 5480
Facsimile: (08) 7224 5496
Brisbane
34 Postle Street,
Coopers Plains QLD 4108
Phone: (07) 3137 4400
Facsimile: (07) 3137 4441
Perth
Lot 1 Kewdale Freight Precinct
Off Fenton Street
Kewdale WA 6105
Phone: (08) 6466 6646
Facsimile: (08) 6466 6697
Regal Transport
Perth
160 Lakes Road
Hazelmere WA 6055
Phone: (08) 9376 9600
Facsimile: (08) 9376 9666
Broome
18 McDaniel Road
Broome WA 6725
Phone: (08) 9192 6599
Facsimile: (08) 9192 6588
Derby
23 Rodgers Street
Derby WA 6728
Phone: (08) 9193 1771
Facsimile: (08) 9191 2880
Karratha
Lot 1102 Mooligunn Road
Karratha WA 6725
Phone: (08) 9144 1151
Facsimile: (08) 9144 1122
Newman
Lot 1583 Woodstock Street
Newman WA 6753
Phone: (08) 9175 2300
Facsimile: (08) 9175 2878
Port Hedland
Lot 2521 Miller Street
Port Hedland WA 6721
Phone: (08) 9140 2778
Facsimile: (08) 9140 2740
Onslow
558 Beadon Creek Road
Onslow, WA 6710
Phone: (08) 9144 1151
Kununurra
33 Poinciana Street
Kununurra WA 6743
Phone: (08) 9169 3333
Scott Corporation
Altona
25-26 Salta Drive
Altona North VIC 3025
Phone: (03) 9282 2800
Facsimile: (03) 9282 2810
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www.ksgroup.com.au
www.ksgroup.com.au