| Mon 17 Feb 2003, 12:12 | | Chemical Services Limited - Audited Group Results |
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Chemical Services Limited - Audited Group Results for the year ended 31 December
2002
Chemical Services Limited
(Registration No. 1967/003338/06)
(Incorporated in the Republic of South Africa)
(Share Code:CHE ISIN Code: ZAE00009908)
("the Company")
Audited Group Results for the year ended 31 December 2002
Revenue +26% Trading profit +37% Headline earnings per share +30% Dividend per
share +33%
Group Income Statement
Year ended Year ended
31 Dec 31 Dec
2002 2001 Change
Rm Rm %
Revenue 3036,5 2414,8 +26
Trading profit 317,8 232,4 +37
Net financing costs 37,4 32,4
Amortisation of goodwill 42,9 40,9
Exceptional expenses 0,4 52,6
Associated company`s
earnings 0,9 1,4
Profit before taxation 238,0 107,9
Taxation 86,6 47,6
Profit after taxation 151,4 60,3
Attributable to outside
shareholders (2,5) (0,2)
Attributable profit 148,9 60,1 +148
Earnings per share
(cents):
Headline 235,2 180,7 +30
Attributable 181,3 73,7 +146
Final dividend per share
(cents) - declared 36,0 27,0 +33
Interim dividend per share
(cents)- paid 22,0 17,5 +26
Dividend cover (times) 4,1 4,1
Depreciation/amortisation
(excluding goodwill) (Rm) 46,0 46,0
Trading margin (%) 10,5 9,6
EBITDA margin (%) 12,0 11,5
Abridged Group Balance Sheet 2002 2001
Rm Rm
Shareholders` equity 692,8 592,5
Outside shareholders` interest 14,8 25,5
Interest-bearing debt - net 102,7 221,7
Capital employed 810,3 839,7
Property, plant, equipment and
intellectual property 320,9 307,1
Goodwill 123,3 166,2
Deferred taxation 22,0 24,6
Long-term provisions (53,7) (44,4)
Trade working capital 531,9 449,2
Other current liabilities (134,1) (63,0)
Net assets 810,3 839,7
Total shares in issue (millions) 82,1 81,5
Weighted average shares in issue
(millions) 81,7 81,5
Capital expenditure (Rm) 66,5 97,4
Net asset value per share (cents) 844 727
Gearing ratio (%) 15 37
Abridged Group Cash Flow Statement
2002 2001
Rm Rm
Trading profit 317,8 232,4
Add: non-cash items 63,8 54,0
Less: cash exceptional expenses (0,4) (50,1)
381,2 236,3
Increase in working capital (54,0) (15,3)
Cash generated from operations 327,2 221,0
Net financing costs 37,4 32,4
Taxation paid 74,7 44,8
Cash available from operations 215,1 143,8
Dividends paid 40,2 32,2
Cash retained from operations 174,9 111,6
Utilised in investing activities (60,7) (313,8)
Fixed assets - additions (66,5) (97,4)
- proceeds from disposals 3,5 2,8
Acquisitions and disposals of businesses 2,3 (219,2)
Total disposals/(acquisitions) 2,3 (322,1)
Less: settled by issue of shares - 102,9
Surplus/(deficit) 114,2 (202,2)
Financed by:
(Decrease)/increase in net borrowings (119,0) 201,4
Shares issued for cash 4,8 0,8
Changes in Shareholders` Equity
2002 2001
Rm Rm
Attributable profit 148,9 60,1
Dividends (40,0) (32,2)
Shares issued 4,8 103,7
Unrealised (losses)/gains on hedging
activities (13,4) 8,2
Net increase in equity 100,3 139,8
Equity at beginning of year 592,5 452,7
Equity at end of year 692,8 592,5
Made up as follows:
Share capital and premium 230,2 225,4
Non-distributable reserves 2,4 14,8
Distributable reserves 460,2 352,3
692,8 592,5
Reconciliation of Headline Earnings
Attributable profit 148,9 60,1
Goodwill amortisation 42,9 40,9
After tax effect of charges on closure
and sale of operations 0,4 46,2
Headline earnings 192,2 147,2
Comment
Chemical Services extended its proud earnings record by achieving a 30 per cent
increase in headline earnings per share in 2002. This represented the 10th
consecutive year of earnings growth, and lifted the 10-year compound growth rate
in headline earnings per share to 22 per cent per annum, demonstrating the
company`s ability to sustain earnings growth during volatile conditions in the
external environment.
Sales revenue exceeded R3 billion for the first time as a result of strong
demand in the local manufacturing sector, notably from those export-focused
businesses that benefited from the weaker Rand. The specialised nature of the
group`s products, services and "value add" to customers enabled gross margins to
be maintained. A dramatic turnaround of AECI Coatings, significant improvements
in Crest Chemicals and Chemserve Technical Products and excellent results from
other group operations resulted in an increased trading margin of 10,5 per cent.
Stringent working capital management and prudent capital expenditure, in both
maintenance and expansion categories, contributed to the group`s positive cash
flow and allowed net borrowings to be reduced to R103 million by year end.
The resultant gearing ratio of 15 per cent is at the lower end of the group`s
target range.
Changes in Group Portfolio
On 1 October 2002, in terms of a prior undertaking, Chemical Services sold a
further 20 per cent of its shareholding in Crest Chemicals to Brenntag, thereby
rendering Brenntag and Chemical Services equal joint venture partners.
Consequently, from that date the results of Crest Chemicals have been
proportionately consolidated. Ongoing optimisation of the group`s structure led
to the closure of Chemserve Trio and the incorporation of Chemserve Polymer
Sciences into Chemserve Systems.
Outlook
The group has entered 2003 in a healthy state, and it is expected that the
momentum built up in recent years will continue. The diversity of the group`s
specialised products and services protects it from fluctuations in demand from
any particular sector of the local economy. This diversity will be further
enhanced by the acquisition of the mining chemicals and alkylates business of
Sentrachem Limited, which remains subject to approval by the Competition
Commission. The expected implementation date of this transaction is 1 April
2003.
The impact of the recent strengthening of the Rand on the level of activity in
the South African mining and manufacturing sectors, and the consequent demand
for the group`s products, is uncertain. Management is nevertheless aiming for a
headline earnings target of 265 cents per share in 2003.
Directorate
Monhla Hlahla was appointed to the board on 1 January 2003 as an additional
independent non-executive director. On 1 April 2003 Frank Baker will assume the
post of Managing Director of Chemical Services Limited in place of Schalk
Engelbrecht, who will on the same date take up the position of Chief Executive
of AECI Limited and will also be appointed as non-executive Chairman of Chemical
Services Limited. Lex van Vught, who will retire as Chairman on 1 April 2003,
will remain on the board as an independent non-executive director.
Accounting policies
The accounting policies used are in accordance with South African statements of
GAAP and are consistent with those applied in the previous financial year.
Segmental reporting
No segmental reporting is provided as all the group operations are in the
specialty chemicals industry and the group operates predominantly in southern
Africa.
Dividend
The directors have declared a final dividend of 36,0 cents per share, the formal
announcement of which has been published elsewhere.
Audit opinion
The auditors, PricewaterhouseCoopers Inc, have issued their opinion on the group
financial statements for the year ended 31 December 2002. A copy of the
auditors` unqualified report is available for inspection at the company`s
registered office.
Annual report
The company`s annual report will be posted to shareholders towards the end of
March 2003, and may also be viewed on the company`s website,
www.chemserve.co.za. For a copy of the report please contact the Group
Secretary, Private Bag X137, Bryanston, 2021.
Lex van Vught Schalk Engelbrecht
Directors 18 February 2003
Declaration of dividend
The directors have declared an interim dividend (No.72) of 36,0 cents per share
in respect of the year ended 31 December 2002. The last date to trade in the
company`s shares for purposes of entitlement to the dividend will be Friday, 28
March 2003. The shares will commence trading ex-dividend on Monday, 31 March
2003 and the record date will be Friday, 4 April 2003. The dividend will be paid
on Monday, 7 April 2003.
Share certificates may not be dematarialised or rematerialised from Monday 31
March 2003 to Friday 4 April 2003 both days inclusive.
By order of the Board Sponsor
S J Hughes PricewaterhouseCoopers
17 February 2003 Corporate Finance (Pty) Limited
Date: 17/02/2003 11:23:36 AM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
