| Mon 19 Feb 2001, 0:00 | | Chemical Services Limited - Audited Group Results |
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CHEMICAL SERVICES LIMITED
Audited Group Results for the year ended 31 December 2000
Revenue + 13%
Trading profit + 12%
Headline earnings per share + 25%
Dividend per share + 20%
Group Income Statement
2000 1999 Change
Rm Rm %
Revenue 1575,7 1400,1 +13
Trading profit 167,0 149,0 +12
Financing costs 10,3 25,0 -59
Exceptional (expenses)/income (14,6) 2,9
Profit before taxation 142,1 126,9 +12
Taxation 47,1 43,4 +8
Profit after taxation 95,0 83,5 +14
Attributable to outside shareholders (0,7) 1,6
Associated companies' earnings 1,3 1,2
Attributable profit 95,6 86,3 +11
Earnings per share (cents):
Headline 149,2 118,9 +25
Attributable 130,3 123,5 +6
Dividends per share (cents) 37,0 30,9 +20
Dividend cover (times) 4,0 3,8
Depreciation/amortisation
(excluding goodwill) (Rm) 29,5 24,8
Trading margin (%) 10,6 10,6
EBITDA margin (%) 12,4 12,4
Summarised Group Balance Sheet
2000 1999
Rm Rm
Shareholders' equity 434,5 325,7
Outside shareholders' interest 2,3 1,5
Interest-bearing debt 17,9 73,8
Capital employed 454,7 401,0
Fixed assets and investments 246,6 183,2
Current assets 562,9 499,8
Total assets 809,5 683,0
Deferred taxation 8,9 8,7
Interest-free liabilities (363,7) (290,7)
Net operating assets 454,7 401,0
Total shares in issue (millions) 73,5 69,9
Weighted average shares in issue (millions) 73,5 69,9
Capital expenditure (Rm) 26,6 28,8
Net asset value per share (cents) 591 466
Gearing ratio (%) 4 23
Summarised Group Cash Flow Statement
2000 1999
Rm Rm
Trading profit 167,0 149,0
Add: dividends received 1,4 1,6
non-cash items 27,2 20,8
195,6 171,4
Decrease in working capital 36,3 19,3
Cash generated from operations 231,9 190,7
Financing costs 10,3 25,0
Taxation paid 51,2 37,9
Cash available from operations 170,4 127,8
Dividends paid 27,7 20,6
Cash retained from operations 142,7 107,2
Utilised in investments 82,1 13,6
Fixed assets - additions 26,6 28,8
- proceeds from disposals (1,2) (2,6)
Acquisitions/(disposals)of businesses 56,7 (12,6)
Surplus 60,6 93,6
Financed by:
Decrease in net borrowings (62,5) (93,9)
Increase in share capital and premium 1,9 0,3
Changes in shareholders' equity
2000 1999
Rm Rm
Attributable profit 95,6 86,3
Dividends (27,2) (22,2)
Shares issued 41,9 0,3
Cost of control written off - (5,3)
Non-distributable reserve adjustment (1,0) -
Foreign currency translation differences (0,5) (1,0)
Net increase in equity 108,8 58,1
Equity at beginning of year 325,7 267,6
Equity at end of year 434,5 325,7
Made up as follows:
Share capital and premium 121,7 79,8
Non-distributable reserves 6,6 9,6
Distributable reserves 306,2 236,3
434,5 325,7
Comment
The group increased headline earnings by 25 per cent to 149,2 cents per share.
This was the eighth consecutive year of record earnings, resulting in compound
earnings growth over this period of 21 per cent per annum.
These pleasing results for 2000 were achieved notwithstanding the local economy
having performed below expectations, characterised by weak demand in the
manufacturing sector, and a difficult year for specialty chemicals globally.
The bulk of the 13 per cent growth in sales was contributed by businesses
acquired in January 2000. With few exceptions, the group's portfolio of
specialty businesses performed satisfactorily, and ongoing attention to costs
and service allowed us to maintain the quality of earnings reflected in the
consistent trading and EBITDA margins.
Tight control of capital expenditure and a further reduction in working capital
ratios contributed to excellent cash flow, which enabled us to reduce
borrowings and hence finance costs. Gearing was reduced to 4 per cent by year
end.
The exceptional item of R14,6 million consists mainly of amortisation of
goodwill.
Additions to group portfolio
During the year we successfully integrated the businesses of Performance
Masterbatch and Custom Colour, as well as AECI Limited's 50 per cent
shareholdings in Resinkem and Specialty Minerals South Africa, which were all
acquired on 1 January 2000.
Further additions to the group's portfolio came into effect on 1 January 2001
when we purchased, for a consideration of R272 million, the business operations
of Industrial Urethanes and Kynochem from AECI, as well as its 80,1 per cent
interest in AECI Coatings. Subject to Competition Commission approval, we will
acquire the local operations of the Plaaskem group with effect from 1 March
2001. Plaaskem is a manufacturer and supplier of specialised agricultural
products.
These latest acquisitions will broaden and enhance the existing group
portfolio, in line with our strategy of controlled growth.
Outlook
The businesses acquired in 2001 are expected to contribute significantly to
group sales and trading profit this year, but only marginally to headline
earnings because of the additional borrowings as well as the dilution of
earnings per share arising from 8 million new shares issued. We expect these
new acquisitions to make an increasing contribution from 2002 onwards and to
enhance the group's robust earnings profile. The gearing ratio increased to
almost 50 per cent on payment for the acquisitions, but is expected to reduce
by year end as the group continues to generate good trading cash flow.
Management's current forecast headline earnings for the year ending 31 December
2001 is 167 cents per share, which assumes a modest upturn in the manufacturing
sector.
Dividend
The directors have declared a final dividend of 22 cents a share in respect of
the year ended 31 December 2000, payable on or about 2 April 2001 to
shareholders registered at the close of business on Friday, 16 March 2001.
The company's annual report will be posted to shareholders on or about 12 March
2001, and will also be available on our website, www.chemserve.co.za. For a
copy of the report please contact the Group Secretary, P O Box 47002,
Parklands, 2121.
Lex van Vught Schalk Engelbrecht
Directors 19 February 2001
