K&S : KSC Annual General Meeting

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ASX ANNOUNCEMENT

23 November 2021

K&S Corporation Limited

Annual General Meeting

The K&S Corporation Limited (ASX: KSC) annual general meeting ("AGM") commences at 2:00pm AEDST on 23 November 2021.

Please find attached for immediate release to the market:

• Chairman's AGM address;
• Managing Director's AGM address; and
• AGM slide show.

By authority of the Board of Directors

K&S Corporation Limited

Further Information:

Mr Chris Bright

Company Secretary

Ph: [phone]

[e-mail]

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CHAIRMAN'S ADDRESS - 2021 AGM

Good afternoon ladies and gentlemen, I am pleased to report on the performance of K&S Corporation Limited (ASX: KSC) and its subsidiaries (the "Group") for the year ended 30 June 2021.

Safety

Safety remains a key focus for the Group. The Group's lost time injury rate reduced from 6.6 at the end FY2020 to 4.9 in the current year.

Trading Performance

Trading conditions in the transport and logistics segments and regions the Group trades in remain challenging.

Operating revenues for the year were $688.5 million, 12.9% lower than the prior corresponding period.

The Group reported a statutory profit after tax of $18.1 million, 62.9% higher than the previous year statutory profit after tax of $11.1 million.

Included in the Group's statutory result for FY2021 was $16.2 million (before tax) attributable to the JobKeeper subsidy, which was received in the September 2020 quarter. The Group's statutory result also included $6.0 million of one-off costs treated as significant items. These largely relate to the impairment of the carrying value of buildings and land totalling $4.7 million and $0.9 million in miscellaneous restructuring costs mainly associated with the exiting of the Hyde Park Tank business.

After adjusting for the above significant items including government wage subsidies, the current year underlying profit before tax was $17.1 million, an increase of 44.4% on the prior corresponding period. The underlying profit after tax was $11.9 million, an increase of $3.7 million to the prior corresponding period.

Operating cash flow was $75.5 million, 9.2% lower than for the previous year.

Following strong FY2020 improvements, the Australian transport segment continued to realise further consolidation improvements to the majority of its operating divisions. The reduction of $1.1 million in depreciation expenses as a result of the change to the Group's depreciation policy partially offset the reduced contribution by our aviation refuelling business, Aero Refuellers. Full year revenue declined due to a combination of the cessation of contracts, exiting of underperforming business units and COVID-19 related reduced customer activity.

The New Zealand business produced a strong result, with the domestic economy proving to be resilient throughout the year. It continues to realise growth through the provision of its integrated and value adding service offering, with several key customer contracts extended or renewed in the course of the year.

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The fuel trading business has again provided sound financial results, despite reduced demand for fuel in FY2021 consequent to COVID-19. The fuel retailing and wholesaling markets remain dynamic and continue to exhibit high levels of competition. An expansion of our network and the completion of several key projects to enhance our retail offering are currently being progressed.

COVID-19

In FY2021 the Group experienced reduced revenues in a number of business units in Australia and New Zealand as a result of COVID-19. At a minimum, the Group expects to continue to be adversely impacted by COVID-19 in the first half of FY2022.

The Group's operations have not been subject to any Government mandated state border closures. However, COVID-19 continues to present a threat to the Group's operations and also to key industry sectors serviced by the Group, such as construction.

The Group has enacted pandemic protocols to assist manage the safety of employees. The Group has also implemented measures to mitigate potential impacts of COVID-19 upon its continued ability to fulfil core managerial, administrative, and operational functions.

Balance Sheet and Funding

Notwithstanding the ongoing impacts of COVID-19, the Group significantly strengthened its balance sheet in FY2021.

The Group's gearing ratio (excluding lease liabilities) reduced to 9.0% at 30 June 2021, compared to 22.5% in the prior year. The Group's net debt reduced to $26.6 million at 30 June 2021, the lowest since 2003.

During the course of the year, the Group acquired fixed assets totalling $35.1 million, compared to $20.6 million in the prior year, continuing the investment in a modern operating fleet.

Based upon independent valuations, the Group increased the carrying value of its freehold property portfolio by $27.6 million. The Group's property portfolio consists of high quality industrial assets that have not been adversely impacted by COVID-19.

On 5 November 2021, the Group extended the maturity profile of its debt facilities and negotiated improved terms with its panel of lenders. The Group's debt facilities now comprise funding in three year tranches totalling $125 million (inclusive of a $30 million bank guarantee facility) and five year tranches totalling $75 million. As part of that refinancing exercise, the Group also paid out its existing facilities with Bank of China and brought in ANZ as a new lender, in conjunction with existing lenders Westpac and NAB.

Dividend

The Group's underlying earnings improved significantly in FY2021 compared to the prior year. The final dividend declared was determined with reference to the underlying net profit after tax, as opposed to the statutory profit after tax, and specifically excludes any impact of government wage subsidies from the dividend calculation.

The Group paid a fully franked final dividend of 3.5 cents per share (2020: 3.0 cents per share) on 3 November 2021. This followed the fully franked interim dividend of 3.0 cents per share paid in April 2021, making the total fully franked dividend 6.5 cents per share in respect of the year ended 30 June 2021.

While the Group achieved record low debt levels at the end of FY2021, the Group has an extensive capital expenditure program for FY2022 which includes the development of a parcel of industrial land in Perth. Having regard to the ongoing uncertainty relating to the potential impacts of COVID-19 on the economy that could adversely impact the Group's operations, Directors were of the view that a conservative approach to balance sheet management was appropriate and elected to reinstate the dividend reinvestment plan in respect of the final dividend.

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Board Composition

Robert Dalton was appointed as a non-executive director with effect from 24 August 2021. Mr Dalton is considered by the board to be independent.

Mr Dalton's appointment continues a process of board renewal.

Trading Update

Providing earnings guidance for FY2022 remains difficult given the seasonality of our business. This has been exacerbated by the ongoing uncertainties created by COVID-19.

We currently expect first half underlying profit before tax for FY2022 to be in line with or exceed the prior corresponding period.

On behalf of the Board, I thank our customers, suppliers and employees, who have contributed to the continued success of the Group.

In particular, I thank the senior management team, led by Paul Sarant, for their ongoing commitment and dedication.

Tony Johnson

Chairman

23 November 2021

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MANAGING DIRECTOR'S ADDRESS - 2021 AGM

Thankyou Mr Chairman.

We continue to focus on initiatives that improve all facets of K&S Corporation Limited (ASX: KSC) and its subsidiaries (the "Group"), and in doing so provide increased shareholder and customer value.

The markets within which our divisions operate remain competitive, with COVID-19 providing additional challenges throughout FY2021.

Our safety performance has continued to improve, illustrated through a significant reduction in our lost time injury frequency rate.

I will now provide more detail on several components of the Group.

SAFETY

The lost time injury frequency rate across the Group decreased from 6.6 in the previous year to 4.9 at 30 June 2021. The improvement of all facets of safety performance remains a high priority for the Group.

Sadly, the Group sustained two fatality accidents in FY2021, as well as having a vehicle involved in a major on-road incident in Melbourne in May 2021 in which five pedestrians were injured. As with all safety incidents, the Group undertakes comprehensive investigations and will implement identified continuous improvement opportunities arising out of these accidents. The Group recognises that its social licence to operate is contingent upon achieving industry leading on-road behaviours and safety outcomes, for which we are respected as an industry leader.

The Group also rolled out its new online subcontractor registration portal, KasSub, in FY2021. KasSub provides a central portal to allow the Group to provide enhanced visibility on the licensing, accreditation, induction and insurance status of its subcontractors. We will continue to proactively invest in this, and any other, technology that assists to improve our performance.

COVID-19

The global COVID-19 pandemic continues to present the Group with a series of challenges concerning the ongoing safety of our employees and sub-contractors, and those who we interact with every day to provide transport and logistics services for our customers and communities.

The engagement, commitment and leadership displayed by all our workforce to ensure our workplace remained safe during this pandemic has been of the highest order. As an essential service provider, we have continued to operate throughout the pandemic, albeit with ongoing alterations to state and territory border crossing controls, ensuring supply chains remain in place for our customers and the broader community. Mandatory vaccination requirements have also been implemented by authorities in several jurisdictions which apply to many of our operations.

We have supported our employees to access vaccinations through the provision of paid leave. We thank the many employees in our workforce who have supported the national vaccination program.

Our primary concern remains the physical and mental wellbeing of our employees and their extended families.

AUSTRALIAN TRANSPORT

Intermodal and Import/Export

The intermodal and import/export operations again performed soundly, with eastern seaboard activity levels remaining firm despite COVID-19 impacts. Improving asset utilisation and the disposal of under-utilised or surplus assets continues to be a key focus.

Intermodal steel and timber volumes from our major customers were strong, with high activity levels in the construction sector and major infrastructure projects undertaken by the various state governments underpinning ongoing activity levels.

We continue to incur increased costs in our rail transport operations as a result of increased rail network costs. We have focussed on securing parcels of rail volumes that improve our rail network balance and performance.

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