Nerolie Withnall Chairman ALS Limited Annual General Meeting 11am on 30 July 2013 Shareholders, on behalf of the Board, I d like to thank you for your attendance today, our first Annual General Meeting as ALS Limited. As you know, at last years AGM, the resolution was passed to change the name of the company from Campbell Brothers to ALS. That change became effective on 1st of August last year and has been enthusiastically supported by all - including clients, suppliers and shareholders. In my address today, I will present an overview of the Company s performance for the past financial year followed by the Managing Director, Greg Kilmister, who will provide an overview of last year s operational results and an update on recent developments. In Greg s address you will hear about the recent acquisitions of Reservoir Group and Earth Data and why we are so confident of the opportunities and the future growth those businesses present.
Before I give an overview of the Company s performance for the past financial year, I d like to outline some of the main developments that have taken place during the year and since year end. Following approval at last years AGM, the Company undertook a 5 for 1 share split, effective on the 9th of August. The merits of undertaking the share split were two-fold: to increase liquidity in the stock and to make smaller parcels of shares more affordable. During the year, the Company continued its strategy of business expansion and diversification in analytical laboratory and testing services. The Company made further progress in building its non-minerals businesses as well as making significant progress in diversifying its geographical base. The Company successfully completed several large acquisitions including - The acquisition of an 80 per cent holding in the CorpLab Group in South America in December last year. CorpLab is a market leading environmental testing business. The acquisition of Severn Trent Laboratories in the United Kingdom in February this year, provided the Company with a market leading position in the UK water testing sector. This complemented our existing food and pharmaceutical testing business there; and The acquisitions of Artek in Turkey and Milana in Denmark mid last year, which further extended our Life Sciences Division in mainland Europe. All these acquisitions were in line with the Company s strategy to diversify its testing services and become a leading global provider of Testing, Inspection and Certification services. Also, in September last year, the Company divested the Deltrex and Panamex businesses, which were part of our Chemical Division, a sector we have worked towards exiting for some years now. In July this year, the Company announced two strategic acquisitions in the Oil and Gas sector; the acquisition of Scottish-based Reservoir Group, for an Enterprise Value of 533 million US dollars, and Australian-based Earth Data for 18 million Australian dollars. Both of these acquisitions will be complete by early August, with the Reservoir acquisition dependent on meeting US regulatory approval. These acquisitions are in keeping with the Company s strategy to accelerate its growth in the oil and gas testing market. The Reservoir Group is a global provider of services and products to the oil and gas industry, while Earth Data is a provider of sampling and analysis services to Australia s oil, gas and coal industries. The Reservoir acquisition will be the single largest transaction undertaken by the Company to date and will be funded by a combination of debt, equity and cash. Greg will elaborate further on these acquisitions in his address.
Also in July, the Company announced a fully underwritten 1 for 11 renounceable rights issue at $7.80 per share to raise approximately 246 million dollars. To date, the rights issue has been well supported, with Eligible institutional shareholders taking up 92 per cent of their entitlements. The Company dispatched its Retail Offer Booklet and Entitlement forms to Eligible retail shareholders on the 25th of July. I encourage all retail shareholders to take up your rights, or sell them on market, before the offer closes at 5pm on the 12th of August. Now I'd like to give you an overview of the past years' results. As shown, the Company achieved record levels of revenue and earnings for the year ended 31st March 2013. Underlying net profit after tax for the full year was $237.9 million dollars, an increase of 7 per cent on the profit achieved in the previous financial year. Earnings before interest, tax, depreciation and amortisation were 406 million dollars, an increase of 8 per cent on the previous year. Revenue was up 7 per cent to 1.5 billion dollars.
The Group s performance has increased shareholder returns for the year. Earnings per share increased 5.5 per cent to 69.53 cents per share, in line with the increased profit. A final dividend of 27 cents per share, franked to 50 percent, was paid on the 2nd of July this year. This brought the total dividend paid to 48 cents per share, franked to 50 percent, an increase of 6.7 per cent on the previous year s dividend. The Company s dividend reinvestment plan was in operation for the final dividend, with DRP shares allotted at $8.92 per share, a 5% discount. As the Company operates in a global market place, and given the number and size of our overseas acquisitions, the capacity to maintain franking credits is a challenge. Current indications are that dividends for the next financial year will be franked to at least 50 percent.
Over the past three years, ALS shares have achieved a total shareholder return of 105 percent, ranking it number 6 out of the 18 companies in its peer group that is, ALS performance was ranked in the top 75th percentile of companies in its peer group. Correspondingly, diluted earnings per share over the same three year period achieved a compound annual growth rate of 39 percent EPS increasing from 26 cents to 69 cents over the 3 year period. Other measures relating to the Company s performance are shown in the Ten Year Summary at the back of the Annual Report.
The Company, in its efforts to minimise harm to workers, has set itself high standards in relation to reducing the Lost Time Injury Frequency Rate. In the financial year just ended, the Company reduced its Lost Time Injury Rate by over 20 percent to a result of 2.3, placing it in the best performing quartile of ASX Top 100 companies, where the average is 3.6. A further measure of safety performance is the Injury Duration Rate which measures the harm associated with incidents, by measuring the number of shifts lost relative to the severity of the incident. ALS has been successful in reducing the Company s Injury Duration rate in the reporting year by 30 percent to a rate of 11.4, which is substantially less than the average rate of 34.8 recorded for ASX Top 100 companies. It is pleasing to note that a number of ALS businesses have displayed exemplary performance in safety throughout the reporting year. Special mention goes to the ALS Industrial Division in Australia where ALS technicians based on ESSO contract sites, reached the milestone of 1 million man hours Lost time injury-free as at the end of December last year. Also worthy of mention was the team from ALS Life Sciences Indonesia who received an award from Chevron for working the entire year on their site without one recorded incident. A fine effort all round. During the year, we welcomed staff from seven new companies acquired during the year, adding richness to the ALS culture.
Key managers and staff participated in a range of programs to ensure that the ALS values and standards were quickly disseminated and ensuring new team members felt comfortable and engaged as soon as possible. I m pleased to report that during the year, under the guidance of our Managing Director and our Group Organisational Development Manager, the Company continued its drive in recruiting and preparing talented women professionals for higher roles, and this is expected to assist in sustaining Company performance over time. The metrics on the gender composition of the Company s global workforce are set out in the annual report. I would like to comment briefly on some improvements made to our Remuneration Report. We have reviewed the format of the report with the aim of making it comprehensive and informative, whilst also making it easier to review our approach to remuneration and outcomes. The Report sets out what the Board believes is a very balanced and measured set of remuneration outcomes that align with the performance of the Company and the role and contribution of our executives. On the 16th of July this year, the Company issued guidance for the half year to the 30th of September 2013. I will now reiterate that guidance.
ALS expects that underlying net profit after tax for the half year ending 30 September 2013 will be in the range of 95 million to 105 million dollars, including 4 to 5 million dollars from the acquisitions of Reservoir and Earth Data, net of transaction and additional funding costs. This represents a mid-point decrease of 26 per cent on the record underlying net profit after tax reported in the first half of financial year 2013 and is in line with underlying net profit after tax reported in the first half of financial year 2012 and the second half of financial year 2013. Markets for the Company s geochemical and coal services remain challenging, in an environment of falling commodity prices and a strong cost focus by most producers. Geochemical sample flows are down 33 per cent Year To Date compared to the same period last year, with North America the most impacted as had been expected. EBIT margins however, remain in the targeted range as the Company takes advantage of the cost flexibility provided by its hub and spoke model. Life Sciences Year To Date revenue is up 13 per cent with encouraging signs of market conditions improving in the US. Coal Year To Date revenue is slightly down on last year in a market that continues to tighten and Industrial Year To Date revenue is slightly ahead of last year. This guidance assumes no material change in market activity levels and no material adverse events in ALS business activities for the remainder of first half of financial year 2014. In closing, I'd like to take this opportunity say some thank you s to you, our shareholders - for your ongoing support; to Greg and his team for their excellent efforts in carrying out the Company's strategy, clearly reflected in the record results achieved in the latest financial year; and to the directors who have given me personally their unfailing and invaluable support. I will now hand over to Greg. Thank you.