A.B.N. 92 009 657 489
Half Year Financial Report - 30 September 2009
(Including additional ASX Appendix 4D disclosures)
Contents
Results for announcement to the market (including required Appendix 4D information)
Directors' half-year report
Consolidated interim financial report for the half year ended 30 September 2009
The attached Interim Financial Report for the half-year ended 30 September 2009 forms part of this document. This
half yearly report is to be read in conjunction with the Campbell Brothers Limited 2009 annual financial report and
the notes contained therein.
2
Campbell Brothers Limited and its Controlled Entities
Results for announcement to the market for the half-year ended 30 September 2009 Appendix 4D
(Previous corresponding period: half-year ended 30 September 2008)
$'000
Revenue from ordinary activities
Down
12.2%
to
400,906
Profit from ordinary activities after tax attributable to
members
Down 32.9%
to
38,259
Net profit for the period attributable to members
Down
32.9%
to
38,259
Dividends
Amounts per security
Franked amount per
Security
Interim dividend *
45.0
¢
22.5
¢
Previous corresponding period
50.0
¢
25.0
¢
* Payable on all shares, including those new shares issued in November 2009 pursuant to the Company's one-
for-six renounceable rights issue.
Record date for determining entitlements to the interim dividend: 3 December 2009
The last date for receipt of election notices for the company DRP: 3 December 2009
Additional dividend information
Details of dividends declared or paid during or subsequent to the half-year ended 30 September 2009 are as
follows:
Record date
Payment date
Type
Amount
Per security
Total dividend
$,000
Franked
amount per
security
Conduit
foreign
income per
security
13 June 2009
1 July 2009
Final 2009
50 cents
26,517
25.0 cents
25.0 cents
3 December 2009 16 December 2009 Interim 2010 45 cents
28,152
22.5 cents
22.5 cents
NTA Backing
Current period
Previous corresponding period
Net tangible asset per ordinary share
$2.96 $2.43
Review Opinion
The unqualified review report of the company's auditors, KPMG, is attached to this document and highlights no
areas of dispute.
Sign here:
............................................................ Date: 24/11/2009
Company Secretary
Tim Mullen
A.C.N 009 657 489
AND
ITS CONTROLLED ENTITIES
INTERIM FINANCIAL REPORT
FOR THE HALF YEAR ENDED
30 September 2009
2
Campbell Brothers Limited and its controlled entities
Directors' report
The directors present their report together with the consolidated interim financial report for the half year
ended 30 September 2009 and the review report thereon.
Directors
The directors of the Company at any time during or since the end of the half year are:
GEOFFREY J McGRATH MIIE
Chairman and Independent Non-Executive Director Age 67
Appointed a director in 2003 and was appointed chairman in 2004.
GREG F KILMISTER B Sc (Hons), FRACI, MAIG
Managing Director and Chief Executive Officer Age 53
Appointed Managing Director and Chief Executive of Campbell Brothers in 2005.
NEROLIE WITHNALL BA, LLB, FAICD
Independent Non-Executive Director Age 65
Appointed a director in 1994.
MARTIN D KRIEWALDT BA, LLB (Hons), FAICD
Independent Non-Executive Director Age 60
Appointed a director in 2001.
RAYMOND G HILL FAICD
Independent Non-Executive Director Age 67
Appointed a director in 2003.
BRUCE R BROWN B Com, AAUQ
Independent Non-Executive Director Age 65
Appointed a director in 2005.
MELVYN J BRIDGES B AppSc, FAICD
Independent Non-Executive Director Age 59
Appointed a director on 29 September 2009.
ANTONY J LOVE B Com, AAUQ, FAPI, FAICD
Independent Non-Executive Director Age 63
Retired as a director on 28 July 2009.
3
Campbell Brothers Limited and its controlled entities
Review of operations
Net profit
Directors are pleased to report that the Group achieved net profit after tax of $38.26 million in the half
year to September 2009, in line with recent guidance provided to the market. The result was down 33%
on the previous corresponding period and was generated from revenue of $400.91 million (down 12%
on the September 2008 half).
The September 2009 results compare favourably with those achieved in the corresponding period two
years ago - revenue was 9% ahead of that generated in the September 2007 half year ($366.60 million)
and net profit after tax was up 17% (September 2007 underlying net profit after tax excluding unusual
items: $32.66 million).
This represents a sound financial performance in an uncertain economic environment during the period.
The fall in revenue and profit was largely due to reduced global demand in mineral exploration markets
for analytical testing services provided by the ALS Minerals division. All other divisions of the ALS
Laboratory Group produced improved revenue and profit contribution compared with the September
2008 half year.
Recent data indicate there is stability and in some regions growth returning to the markets serviced by
the Group. In October and November 2009 the Company announced two important acquisitions in
Australia (refer Events subsequent to balance date below). The combination of these new businesses
and existing operational capacity will place the Group in a strong position to take advantage of
opportunities as business conditions improve.
Directors have declared a partly franked (50%) interim dividend of 45 cents per share, payable on all
ordinary shares including new shares issued in November 2009 pursuant to the Company's one-for-six
renounceable rights issue (2008: 50 cents, partly franked to 50%). It will be paid on 16 December 2009
on all shares registered in the Company's register at the close of business on 3 December 2009.
In thousands of AUD
Half year to
30 September
2009
Half
year
to
30 September
2008
Revenue
400,906
456,358
Profit before financing costs and income tax
59,553
88,603
Net
financing
costs
(5,786)
(7,600)
Income tax expense
(15,460)
(23,745)
Profit after income tax
38,307
57,258
Net profit attributable to minority interest
(48)
(214)
Profit after tax attributable to equity holders of the Company
38,259
57,044
Earnings per share
Basic earnings per share *
69.19c
105.27c
Diluted earnings per share
Diluted earnings per share *
69.12c
105.26c
* In accordance with the requirements of AASB133 Earnings per Share current and prior year earnings
per share have been adjusted for the effect of new shares allotted in November 2009 pursuant to the
Company's one-for-six renounceable rights issue (refer note 14).
4
Campbell Brothers Limited and its controlled entities
Review of operations (continued)
Contributions from business segments were as follows:
ALS Minerals
2009
$000
2008
$000
(Decrease)
Revenue
97,630
165,956 (41.2%)
Segment
Contribution
24,629
64,974 (62.1%)
Margin (segment contribution to revenue)
25.2%
39.2%
ALS Minerals experienced a significant reduction in sample volumes compared with the previous
corresponding period as global exploration activity fell in response to tight credit conditions. Whilst the
contribution margin as a percentage of revenue fell substantially from the previous year, the division's
ability to react quickly in reducing its variable costs produced a strong margin performance given the
difficult market conditions.
The division experienced improving business volumes in the September 2009 quarter.
ALS Environmental
2009
$000
2008
$000
Increase
Revenue
119,055
108,292 9.9%
Segment
Contribution
26,015
16,527 57.4%
Margin (segment contribution to revenue)
21.9%
15.3%
The ALS Environmental division produced a strong result for the half year to September 2009, with the
increase in revenue driven by both acquired and organic growth. Cost control initiatives across all
regions resulted in a significant improvement in contribution margin.
ALS Coal
2009
$000
2008
$000
Increase
Revenue
31,180
27,805 12.1%
Segment
Contribution
8,502
5,445 56.1%
Margin (segment contribution to revenue)
27.3%
19.6%
Increasing levels of global export activity driven by higher coal prices and improving industry sentiment
provided the impetus for a healthy performance by ALS Coal across all regions. The division
maintained its focus on efficiency during the half year producing a strong improvement in contribution
margin on revenue.
ALS Tribology
2009
$000
2008
$000
Increase
Revenue
15,435
7,494 106.0%
Segment
Contribution
2,683
931 188.2%
Margin (segment contribution to revenue)
17.4%
12.4%
ALS Tribology had the benefit of a full six months' contribution from its North American business
(acquired August 2008) in the half year to September 2009. When combined with organic growth in
other regions this enabled the division to more than double the half year revenue of the previous
corresponding period.
5
Campbell Brothers Limited and its controlled entities
Review of operations (continued)
Campbell Chemicals
2009
$000
2008
$000
(Decrease)
Revenue
79,137
81,940 (3.4%)
Segment
Contribution
4,074
5,216 (21.9%)
Margin (segment contribution to revenue)
5.1%
6.4%
The Campbell Chemicals division experienced varied economic conditions across its many markets in
Australasia and the Pacific. Tighter margins on sales and the weakening US dollar affected the
performance of the industrial chemicals business. A focus on client service and operational efficiency
enabled the Panamex trading business to produce an improved revenue and margin performance.
Reward Distribution
2009
$000
2008
$000
(Decrease)
Revenue
61,300
67,717 (9.5%)
Segment
Contribution
2,140
2,343 (8.7%)
Margin (segment contribution to revenue)
3.5%
3.5%
Reward Distribution realised reduced revenue as a result of tight tourism and hospitality markets, strong
competition and the continuing reassessment of target markets. The business is realising the benefits
of cost control initiatives of the previous twelve months as evidenced by maintaining contribution margin
on revenue despite falling sales.
The business has relocated its headquarters to a new centralised warehouse and administration centre
at Yatala (South East Queensland) replacing Brisbane and Gold Coast premises.
Events subsequent to balance date
On 1 October 2009, directors announced a one-for-six renounceable rights issue of ordinary shares in
the Company at $22.00 per share. The issue closed oversubscribed on 2 November 2009 and raised
approximately $191 million net of underwriting fees and other costs. A total of 8,939,575 new shares
were allotted on 11 November 2009.
On 27 October 2009 the Company through its wholly-owned subsidiary, Australian Laboratory Services
Pty Ltd (ALS) announced a cash takeover offer for all of the ordinary shares of PearlStreet Limited
(PST) at 75 cents per share. The directors of PST have unanimously agreed to recommend the offer in
the absence of a superior proposal. A Bidder's Statement and a Target's Statement were dispatched to
PST shareholders on 12 November 2009. As of 23 November 2009, ALS has received acceptances for
more than 60% of PST's ordinary shares, including acceptance from PST's major shareholder and
Managing Director, Mr Anthony Wooles, the directors of the PST board and a number of large
institutional shareholders.
Perth-based PST is listed on the Australian Securities Exchange and is the largest Non Destructive
Testing services provider in Australia. It provides testing, inspection, and asset care services to the
energy, resources and infrastructure sectors. The offer for PST represents total consideration of
approximately $108 million, comprising $64 million for equity and $44 million for net debt.
On 12 November 2009 the Company through its wholly-owned subsidiary, Australian Laboratory
Services Pty Ltd announced that it had executed an agreement to acquire 100 percent of Ecowise
Environmental Pty Limited (Ecowise) for a total consideration of $51 million. The consideration
comprises $40 million for equity and $11 million of assumed debt. Ecowise operates laboratories and
aligned environmental services in Australia, focusing on the water sector, across 17 east coast
laboratories and offices.
Other than the matters discussed above, there has not arisen in the interval between the end of the half-
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 Group, the
results of those operations or the state of affairs of the Group in subsequent financial periods.
6
Campbell Brothers Limited and its controlled entities
Lead Auditor's Independence Declaration under Section 307C of the
Corporations Act 2001
The lead auditor's independence declaration is set out on page 22 and forms part of the directors'
report for the half year ended 30 September 2009.
Rounding off
The entity 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.
Signed in accordance with a resolution of the directors:
G J McGrath
G F Kilmister
Chairman Managing
Director
Brisbane Brisbane
24 November 2009
24 November 2009
7
Campbell Brothers Limited and its controlled entities
Interim profit and loss statement
For the half year ended 30 September 2009
CONSOLIDATED
In thousands of AUD
30 September
2009
30 September
2008
Continuing operations
Revenue from sale of goods
137,307 146,524
Revenue from rendering of services
263,599 309,834
400,906 456,358
Other income
461 929
Changes in inventories of finished goods and work in progress
(4,880) 14,424
Raw materials and consumables purchased
(108,174) (135,521)
Employee expenses
(132,887) (141,447)
Warehousing and distribution costs
(12,701) (16,696)
Amortisation and depreciation
(19,746) (16,523)
Selling expenses
(3,874) (4,659)
Administration and other expenses
(60,559) (69,051)
Share of net profits of associates and joint ventures accounted for using
the equity method
1,007 789
Profit before financing costs and income tax
59,553 88,603
Financial income
87 365
Financial expenses
(5,873) (7,965)
Net financing costs
(5,786) (7,600)
Profit before income tax
53,767 81,003
Income tax expense
(15,460) (23,745)
Profit for the period
38,307 57,258
Attributable to:
Equity holders of the Company
38,259 57,044
Minority
interest
48 214
Profit for the period
38,307 57,258
Earnings per share
Basic earnings per share *
69.19c 105.27c
Diluted earnings per share *
69.12c 105.26c
* In accordance with the requirements of AASB133 Earnings per Share current and prior year earnings
per share have been adjusted for the effect of new shares allotted in November 2009 pursuant to the
Company's one-for-six renounceable rights issue (refer note 14).
The interim profit and loss statement is to be read in conjunction with the notes to the interim financial report set out on pages 13
to 19.
8
Campbell Brothers Limited and its controlled entities
Interim statement of comprehensive income
For the half year ended 30 September 2009
CONSOLIDATED
In thousands of AUD
30 September
2009
30 September
2008
Profit for the period
38,307 57,258
Other comprehensive income*
Foreign exchange translation differences
(22,856) 13,625
Gain/(loss) on hedge of net investments in foreign subsidiaries
5,894 (3,304)
Net gain/(loss) on cash flow hedges taken to equity
1,364 (562)
Other comprehensive income for the period, net of income tax
(15,598) 9,759
Total comprehensive income for the period
22,709 67,017
Attributable to:
Equity holders of the Company
22,661 66,803
Minority
interest
48 214
Total comprehensive income for the period
22,709 67,017
* All movements in comprehensive income are disclosed net of applicable income tax.
The interim statement of comprehensive income is to be read in conjunction with the notes to the interim financial report set out
on pages 13 to 19.
9
Campbell Brothers Limited and its controlled entities
Interim balance sheet
As at 30 September 2009
CONSOLIDATED
In thousands of AUD
30 September
2009
31 March
2009
Current assets
Cash and cash equivalents
52,092
60,260
Trade and other receivables
143,577
140,573
Inventories
65,328
73,562
Other
13,260
12,108
Total current assets
274,257 286,503
Non-current assets
Receivables
4,712
6,204
Investments accounted for using the equity method
18,697
11,383
Investment
property
11,222
11,255
Deferred tax assets
8,546
11,146
Property, plant and equipment
202,618
210,344
Intangible
assets
261,445
268,090
Other
investments
162
163
Total non-current assets
507,402
518,585
Total assets
781,659
805,088
Current liabilities
Bank
overdraft
3,680
746
Trade and other payables
70,558
84,729
Loans and borrowings
31,213
169,365
Income tax payable
8,196
12,289
Employee
benefits
17,650
18,192
Total current liabilities
131,297
285,321
Non-current liabilities
Loans and borrowings
223,441
99,723
Deferred tax liabilities
2,433
2,708
Employee
benefits
2,134
2,255
Other
2,014
2,013
Total non-current liabilities
230,022
106,699
Total liabilities
361,319
392,020
Net assets
420,340
413,068
Equity
Share
capital
253,557
242,724
Reserves
(15,332)
48
Retained
earnings
180,882
169,140
Total equity attributable to equity holders of the Company
419,107
411,912
Minority interest
1,233
1,156
Total equity
420,340
413,068
The interim balance sheet is to be read in conjunction with the notes to the interim financial report set out on pages 13 to 19.
10
Campbell Brothers Limited and its controlled entities
Interim statement of changes in equity
For the half year ended 30 September 2009
CONSOLIDATED
In thousands of AUD
Share Capital
Foreign
Currency
Translation
Hedging
reserve
Employee
share-based
awards
Retained
earnings
Total
Minority
Interest
Total Equity
Balance 1 April 2009
242,724
3,826
(3,975)
197
169,140
411,912
1,156
413,068
Total comprehensive income for the period
Profit or loss
-
-
-
-
38,259
38,259
48
38,307
Other comprehensive income
Foreign currency translation differences
-
(22,856)
-
-
-
(22,856)
-
(22,856)
Gain/(loss) on hedge of net investments in foreign
subsidiaries
5,894
-
-
-
5,894
-
5,894
Net gain/(loss) on cash flow hedge taken to equity
-
-
1,364
-
-
1,364
-
1,364
Total other comprehensive income
-
(16,962)
1,364
-
-
(15,598)
-
(15,598)
Total comprehensive income for the period
-
(16,962)
1,364
-
38,259
22,661
48
22,709
Transactions with equity holders, recorded directly in
equity
Contributions by and distributions to owners
Dividends to equity holders
-
-
-
-
(26,517)
(26,517)
-
(26,517)
Shares issued under dividend reinvestment plan
(587,486 ordinary shares at $18.44 per share)
10,833
-
-
-
10,833
-
10,833
Share-settled performance rights awarded during the period
-
-
-
218
-
218
-
218
Minority interest ownership of subsidiary acquired
-
-
-
-
-
-
29
29
Total contributions by and distributions to owners
10,833
-
-
218
(26,517)
(15,466)
29
(15,437)
Balance at 30 September 2009
253,557
(13,136)
(2,611)
415
180,882
419,107
1,233
420,340
11
Campbell Brothers Limited and its controlled entities
Interim statement of changes in equity (cont)
For the half year ended 30 September 2008
CONSOLIDATED
In thousands of AUD
Share Capital
Foreign
Currency
Translation
Hedging
reserve
Employee
share-based
awards
Retained
earnings
Total
Minority
Interest
Total Equity
Balance 1 April 2008
223,111
(5,331)
(681)
-
120,502
337,601
604
338,205
Total comprehensive income for the period
Profit or loss
-
-
-
-
57,044
57,044
214
57,258
Other comprehensive income
Foreign currency translation differences
-
13,625
-
-
-
13,625
-
13,625
Gain/(loss) on hedge of net investments in foreign
subsidiaries
-
(3,304)
-
-
-
(3,304)
-
(3,304)
Net gain/(loss) on cash flow hedge taken to equity
-
-
(562)
-
-
(562)
-
(562)
Total other comprehensive income
-
10,321
(562)
-
-
9,759
-
9,759
Total comprehensive income for the period
-
10,321
(562)
-
57,044
66,803
214
67,017
Transactions with equity holders, recorded directly in
equity
Contributions by and distributions to owners
Dividends to equity holders
-
-
-
-
(31,282)
(31,282)
-
(31,282)
Shares issued under dividend reinvestment plan
(441,505 ordinary shares at $26.71 per share)
11,793
-
-
-
11,793
-
11,793
Total contributions by and distributions to owners
11,793
-
-
-
(31,282)
(19,489)
-
(19,489)
Balance at 30 September 2008
234,904
4,990
(1,243)
-
146,264
384,915
818
385,733
The interim statement of changes in equity is to be read in conjunction with the notes to the interim financial report set out on pages 13 to 19.
12
Campbell Brothers Limited and its controlled entities
Interim statement of cash flows
For the half year ended 30 September 2009
CONSOLIDATED
In thousands of AUD
30 September
2009
30 September
2008
Cash flows from operating activities
Cash receipts from customers
420,180 477,983
Cash paid to suppliers and employees
(360,118) (397,282)
Cash generated from operations
60,062 80,701
Interest paid
(5,872) (7,965)
Interest received
87 365
Income taxes paid
(17,955) (20,038)
Net cash from operating activities
36,322 53,063
Cash flows from investing activities
Payments for property, plant and equipment
(27,231) (32,951)
Payments for net assets on acquisition of businesses and controlled
entities (net of cash acquired)
(462) (24,547)
Additional payment in respect of prior year acquisition of controlled entity
(1,222) -
Payment for investment in joint venture
(7,053) -
Dividend from associate
745 656
Repayment from joint venture entity
589 -
Proceeds from sale of other non-current assets
1,301 1,183
Net cash used in investing activities
(33,333) (55,659)
Cash flows from financing activities
Proceeds from borrowings
20,300 36,824
Repayment of borrowings
(12,876) (14,961)
Lease payments
(1,258) (1,556)
Lease receipts
416 416
Dividends paid
(15,275) (19,388)
Net cash from (used in) financing activities
(8,693) 1,335
Net decrease in cash and cash equivalents
(5,704) (1,261)
Cash and cash equivalents at 1 April
59,514 45,235
Effect of exchange rate fluctuations on cash held
(5,398) 2,571
Cash and cash equivalents at 30 September
48,412 46,545
The interim statement of cash flows is to be read in conjunction with the notes to the interim financial report set out on pages 13
to 19.
13
Campbell Brothers Limited and its controlled entities
Condensed notes to the consolidated interim financial report
1. Reporting
entity
Campbell Brothers Limited (the "Company") is a company domiciled in Australia. The interim financial
report of the Company as at and for the six months ended 30 September 2009 comprises the Company
and its subsidiaries (together referred to as the "Group") and the Group's interests in associates and
jointly controlled entities.
The consolidated annual financial report of the Group as at and for the year ended 31 March 2009 is
available upon request from the Company's registered office at Level 2, 299 Coronation Drive Milton
Qld 4064 or at www.campbell.com.au.
2.
Statement of compliance
The consolidated interim financial report is a general purpose financial report which has been prepared
in accordance with AASB 134 Interim Financial Reporting and the Corporations Act 2001.
The consolidated interim financial report does not include all of the information required for a full annual
financial report, and should be read in conjunction with the consolidated annual financial report of the
Group as at and for the year ended 31 March 2009.
This consolidated interim financial report was approved by the Board of Directors on 24 November
2009.
The Company is of a kind referred to in ASIC Class Order 98/100 dated 10 July 1998 and in
accordance with the Class Order, amounts in the financial report have been rounded off to the nearest
thousand dollars, unless otherwise stated.
3.
Significant accounting policies
`
Except as described below, the accounting policies applied by the Group in this interim financial report
are the same as those applied by the Group in its consolidated financial report as at and for the year
ended 31 March 2009.
Presentation of financial statements
The Group applied revised AASB 101 Presentation of Financial Statements (2007), which became
effective as at 1 April 2009. As a result, the Group presents in the consolidated statement of changes
in equity all owner changes in equity, whereas all non-owner changes in equity are presented in the
consolidated statement of comprehensive income. This presentation has been applied in this interim
financial report as of and for the six month period ended on 30 September 2009.
Comparative information has been re-presented so that it also is in conformity with the revised
standard. Since the change in accounting policy impacts only presentation aspects, there is no impact
on earnings per share.
Accounting for borrowing costs
In respect of borrowing costs relating to qualifying assets for which the commencement date is on or
after 1 April 2009, the Group capitalises borrowing costs that are directly attributable to the acquisition,
construction or production of a qualifying asset as part of the cost of the asset. Previously the Group
immediately recognised all borrowing costs as an expense. This change in accounting policy was due
to the prospective adoption of AASB 123 Borrowing Costs (2007) in accordance with the transitional
provisions of such standard; comparative figures have not been restated. The change in accounting
policy had no material impact on assets, profit or earnings per share in the interim period ended 30
September 2009.
14
Campbell Brothers Limited and its controlled entities
Condensed notes to the consolidated interim financial report
Determination and presentation of operating segments
For financial periods commencing on and after 1 April 2009 the Group determines and presents
operating segments based on information that internally is provided to the Chief Executive Officer
(CEO), who is the Group's chief operating decision maker. This change in accounting policy is due to
the adoption of AASB 8 Operating Segments. Previously operating segments were determined and
presented in accordance with AASB 114 Segment Reporting. The new accounting policy in respect of
segment operating disclosures is presented as follows.
Comparative segment information has been re-presented in conformity with the transitional
requirements of AASB 8. Since the change in accounting policy only impacts presentation and
disclosure aspects, there is no impact on earnings per share.
An operating segment is a component of the Group that engages in business activities from which it
may earn revenues and incur expenses, including revenues and expenses that relate to transactions
with any of the Group's other components. An operating segment's operating results are reviewed
regularly by the CEO to make decisions about resources to be allocated to the segment and assess its
performance, and for which discrete financial information is available.
Segment results that are reported to the CEO include items directly attributed to the segment as well as
those that can be allocated on a reasonable basis. Unallocated items comprise mainly corporate
assets, head office expenses, financing costs, and income tax expense.
Segment capital expenditure is the total cost incurred during the period to acquire property, plant and
equipment, and intangible assets other than goodwill.
4. Estimates
The preparation of the interim financial report requires management to make judgements, estimates
and assumptions that affect the application of accounting policies and the reported amounts of assets
and liabilities, income and expense. Actual results may differ from these estimates.
In preparing this interim financial report, the significant judgements made by management in applying
the Group's accounting policies and the key sources of estimation uncertainty were the same as those
that applied to the consolidated financial report as at and for the year ended 31 March 2009.
5.
Financial risk management
The Group's financial risk management objectives and policies are consistent with those disclosed in
the consolidated financial report as at and for the year ended 31 March 2009.
15
Campbell Brothers Limited and its controlled entities
Condensed notes to the consolidated interim financial report
6. Segment
reporting
In thousands of AUD
Revenue
Contribution
Segment margin *
2009 2008
2009
2008
2009 2008
ALS Minerals
97,630 165,956
24,629
64,974
25.2% 39.2%
ALS Environmental
119,055 108,292
26,015
16,527
21.9% 15.3%
ALS Coal
31,180 27,805
8,502
5,445
27.3% 19.6%
ALS Tribology
15,435 7,494
2,683
931
17.4% 12.4%
Campbell Chemicals
79,137 81,940
4,074
5,216
5.1% 6.4%
Reward Distribution
61,300 67,717
2,140
2,343
3.5% 3.5%
Eliminations **
(2,831) (2,846)
-
-
- -
Total Reportable
Segments
400,906 456,358
68,043
95,436
* Segment margin is calculated as segment contribution as a percentage of segment revenue.
** Intersegment revenue is generated by Campbell Chemicals from sales to other segments.
Reconciliation of reportable segment profit
In thousands of AUD
2009 2008
Contribution from reportable segments
68,043
95,436
Unallocated amounts :
Net financing costs
(5,786)
(7,600)
Other corporate expenses
(8,490)
(6,833)
Consolidated profit before income tax
53,767
81,003
The Group has 6 reportable segments, as described below, which are the Group's strategic business
units. The strategic business units offer different products and services, and are managed separately.
For each of the strategic business units, the CEO reviews internal management reports on at least a
monthly basis. The following summary describes the operations in each of the Group's reportable
segments:
·
ALS Minerals - provides assaying and analytical testing services for mining and mineral
exploration companies.
·
ALS Environmental - provides analytical testing data to assist consulting and engineering firms,
industry, and governments around the world in making informed decisions about their
environmental projects.
·
ALS Coal - provides specialist services to the coal industry such as coal sampling & analysis and
certification of export cargoes.
·
ALS Tribology - provides analysis of lubricating oil from a wide variety of mechanical equipment
for preventative maintenance purposes.
·
Campbell Chemicals - Manufacture and distribution of cleaning agents and chemicals for both
domestic and industrial customers.
·
Reward Distribution - Distribution of non-food consumables to the healthcare, building services,
hospitality and leisure industries.
16
Campbell Brothers Limited and its controlled entities
Condensed notes to the consolidated interim financial report
7.
Investments accounted for using the equity method
Investments in associates and joint ventures
During the period the Group along with an unrelated third party, incorporated a new company in Saudi
Arabia, Australian Laboratory Services Arabia Co. The Group contributed $7.053 million to the new
company, resulting in an ownership interest of 42%. The Group has joint control over the new
company and will account for its investment using the equity method. There were no other material
movements in carrying amounts during the period.
8.
Loans and borrowings
Bank Loans
During the period the Group refinanced a portion of its bank loan facilities resulting in the replacement
of tranches totalling $200 million (which matured in mid-November 2009) with $130 million worth of
facilities maturing in 2011 and 2012. Amounts drawn under those facilities which were not re-financed
have either been repaid or have been transferred to other available facilities subsequent to period
end.
9. Dividends
The following dividends were declared and paid by the Company:
For the six months ended 30 September
In thousands of AUD
2009 2008
Final dividend paid 1 July 2009 (1 July 2008)
26,517 31,282
Since 30 September 2009, directors have declared a partly franked (50%) interim dividend of 45 cents
per ordinary share, amounting to $28.152 million payable on 16 December 2009. The dividend is
payable on all ordinary shares including new shares issued in November 2009 pursuant to the
Company's one-for-six renounceable rights issue (refer note 14). The financial effect of this dividend
has not been brought to account in the financial report for the period ended 30 September 2009.
10. Capital
commitments
At 30 September 2009 the Group had not entered into any material capital commitments (31 March
2009: $17 million, 30 September 2008: $19 million).
11. Contingencies
In June 2009 additional purchase consideration of $1.222 million was paid pursuant to a purchase
agreement for Swedish laboratory group, Analytica AB. The additional purchase consideration paid
has been recognised as an increase in goodwill in the interim financial report. There is no further
amount payable under this agreement. Apart from the payment mentioned above there have been no
other significant changes in contingent liabilities since 31 March 2009.
17
Campbell Brothers Limited and its controlled entities
Condensed notes to the consolidated interim financial report
12.
Acquisition of subsidiaries
In thousands of AUD
Interest Acquired
Date acquired
Consideration
Six months ended 30 September
2009
ALS Laboratory Group New Caledonia
60%
31 July 2009
532
Six months ended 30 September
2008
IQA Laboratory Co., Ltd
100%
7 May 2008
8,786
Staveley Services North America Inc
100%
31 July 2008
15,693
Business assets acquired during the period
267
24,746
In the period to 30 September 2009 ALS Laboratory Group New Caledonia had not commenced trading
and therefore did not contribute to the Group's consolidated net profit.
For the comparative period six months ended 30 September 2008 the acquired entities contributed $432
thousand to the Group's consolidated net profit. If the acquisitions had occurred on 1 April 2008, Group
revenue for the 6 months ended 30 September 2008 from continuing operations would have been
$463.093 million, and net profit from continuing operations attributable to equity holders of the Company
would have been $57.337 million.
The acquisitions had the following effect on the Group's assets and liabilities:
Recognised values on acquisition
In thousands of AUD
2009 2008
Property, plant and equipment
- 4,643
Inventories
- 588
Trade and other receivables
- 3,724
Cash and cash equivalents
70 199
Trade and other payables
- (4,100)
Net identifiable assets and liabilities
70 5,054
Outside equity interest at acquisition
(29) -
Goodwill on acquisition
491 19,692
Consideration paid, satisfied in cash
532 24,746
Cash (acquired)
(70) (199)
Net cash outflow
462 24,547
The amounts recognised at acquisition for each class of acquirees' assets and liabilities were the same
as the carrying amounts of those items in the accounts of the acquired entities immediately before
acquisition as those carrying amounts approximate fair values.
The goodwill recognised on the acquisition is attributable mainly to the skills and technical talent of the
acquired business workforce and the synergies expected to be achieved from integrating the companies
into the Group's ALS Laboratory Group.
18
Campbell Brothers Limited and its controlled entities
Condensed notes to the consolidated interim financial report
13. Share-based
payments
Performance rights granted during the period
During the period the Group granted performance rights under its Long Term Incentive (LTI) plan which
was established in 2008 and is designed as a retention and reward tool for high performing personnel.
Under the plan key employees may be granted conditional performance rights to receive ordinary
shares in the Company at no cost to the employees (or in limited cases to receive cash-settled
awards). The terms and conditions of performance rights granted during the current and prior periods
are set out below:
Equity-settled Cash-settled
Date of grant
30 June 2009
3 Sept 2008
5 Aug 2008
3 Sept 2008
Number of performance rights
34,203
28,184
7,388 8,966
Testing date for performance
rights
31 March 2012
31 March 2011
31 March 2011 31 March 2011
Vesting date
1 July 2012
1 July 2011
1 July 2011
1 July 2011
Weighted average fair value at
date of grant
$17.29
$29.46
$24.16 $29.46
Vesting conditions in relation to the above rights:
Employees must be employed by the Group on the vesting date. The rights vest only if Earnings Per
Share ("EPS") and relative Total Shareholder Return ("TSR") hurdles are achieved by the Company
over the specified performance period. 50 percent of each employee's rights are subject to EPS
measurement and 50 percent are subject to the TSR measurement
The fair value of services received in return for performance rights granted is based on the fair value of
the rights granted measured using Binomial Tree (EPS hurdle) and Monte-Carlo Simulation (TSR
hurdle) valuation methodologies.
19
Campbell Brothers Limited and its controlled entities
Condensed notes to the consolidated interim financial report
14.
Events subsequent to balance date
On 1 October 2009, directors announced a one-for-six renounceable rights issue of ordinary shares in
the Company at $22.00 per share. The issue closed oversubscribed on 2 November 2009 and raised
approximately $191 million net of underwriting fees and other costs. A total of 8,939,575 new shares
were allotted on 11 November 2009.
On 27 October 2009 the Company through its wholly-owned subsidiary, Australian Laboratory Services
Pty Ltd (ALS) announced a cash takeover offer for all of the ordinary shares of PearlStreet Limited
(PST) at 75 cents per share. The directors of PST have unanimously agreed to recommend the offer
in the absence of a superior proposal. A Bidder's Statement and a Target's Statement were
dispatched to PST shareholders on 12 November 2009. As of 23 November 2009, ALS has received
acceptances for more than 60% of PST's ordinary shares, including acceptance from PST's major
shareholder and Managing Director, Mr Anthony Wooles, the directors of the PST board and a number
of large institutional shareholders.
Perth-based PST is listed on the Australian Securities Exchange and is the largest Non Destructive
Testing services provider in Australia. It provides testing, inspection, and asset care services to the
energy, resources and infrastructure sectors. The offer for PST represents total consideration of
approximately $108 million, comprising $64 million for equity and $44 million for net debt.
On 12 November 2009 the Company through its wholly-owned subsidiary, Australian Laboratory
Services Pty Ltd announced that it had executed an agreement to acquire 100 percent of Ecowise
Environmental Pty Limited (Ecowise) for a total consideration of $51 million. The consideration
comprises $40 million for equity and $11 million of assumed debt. Ecowise operates laboratories and
aligned environmental services in Australia, focusing on the water sector, across 17 east coast
laboratories and offices.
Other than the matters discussed above, there has not arisen in the interval between the end of the
half-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 Group,
the results of those operations or the state of affairs of the Group in subsequent financial periods.
20
Campbell Brothers Limited
Directors' declaration
In the opinion of the directors of Campbell Brothers Limited ("the Company"):
1.
the financial statements and notes set out on pages 7 to 19, are in accordance with the
Corporations Act 2001 including:
(a)
giving a true and fair view of the financial position of the Group as at 30
September 2009 and of its performance, as represented by the results of its
operations and cash flows for the half year ended on that date; and
(b)
complying with Australian Accounting Standard AASB 134 Interim Financial
Reporting and the Corporations Regulations 2001; and
2.
there are reasonable grounds to believe that the Company will be able to pay its debts as and
when they become due and payable.
Signed in accordance with a resolution of the directors:
G J McGrath
G F Kilmister
Chairman Managing
Director
Brisbane Brisbane
24 November 2009
24 November 2009
21
Independent auditor's review report to the members of Campbell Brothers Limited
We have reviewed the accompanying interim financial report of Campbell Brothers Limited (the
`Company'), which comprises the consolidated interim balance sheet as at 30 September 2009,
consolidated interim profit and loss statement, consolidated interim statement of comprehensive income,
consolidated interim statement of changes in equity and consolidated interim statement of cash flows for
the interim period ended on that date, a statement of accounting policies and other explanatory notes 1
to 14 and the directors' declaration of the Group comprising the Company and the entities it controlled at
the half year's end or from time to time during the interim period.
Directors' responsibility for the interim financial report
The directors of the Company are responsible for the preparation and fair presentation of the interim
financial report in accordance with Australian Accounting Standards (including the Australian Accounting
Interpretations) and the Corporations Act 2001. This responsibility includes establishing and maintaining
internal controls relevant to the preparation and fair presentation of the interim financial report that is free
from material misstatement, whether due to fraud or error; selecting and applying appropriate accounting
policies; and making accounting estimates that are reasonable in the circumstances.
Auditor's responsibility
Our responsibility is to express a conclusion on the interim financial report based on our review. We
conducted our review in accordance with Auditing Standard on Review Engagements ASRE 2410
Review of Interim and Other Financial Reports Performed by the Independent Auditor of the Entity, in
order to state whether, on the basis of the procedures described, we have become aware of any matter
that makes us believe that the interim financial report is not in accordance with the Corporations Act
2001 including: giving a true and fair view of the Group's financial position as at 30 September 2009 and
its performance for the interim period ended on that date; and complying with Australian Accounting
Standard AASB 134 Interim Financial Reporting and the Corporations Regulations 2001. As auditor of
Campbell Brothers Limited, ASRE 2410 requires that we comply with the ethical requirements relevant
to the audit of the annual financial report.
A review of an interim financial report consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other review procedures. A review is
substantially less in scope than an audit conducted in accordance with Australian Auditing Standards
and consequently does not enable us to obtain assurance that we would become aware of all significant
matters that might be identified in an audit. Accordingly, we do not express an audit opinion.
Independence
In conducting our review, we have complied with the independence requirements of the Corporations Act
2001.
Conclusion
Based on our review, which is not an audit, we have not become aware of any matter that makes us
believe that the interim financial report of Campbell Brothers Limited is not in accordance with the
Corporations Act 2001, including:
(a)
giving a true and fair view of the Group's financial position as at 30 September 2009 and of
its performance for the interim period
ended on that date; and
(b)
complying with Australian Accounting Standard AASB 134 Interim Financial Reporting and
the Corporations Regulations 2001.
KPMG
Mitchell C Petrie
Partner
Brisbane 24
November
2009
22
Lead Auditor's Independence Declaration under Section 307C of the
Corporations Act 2001
To: the directors of Campbell Brothers Limited
I declare that, to the best of my knowledge and belief, in relation to the review for the financial
period ended 30 September 2009 there have been:
(i) no contraventions of the auditor independence requirements as set out in the
Corporations Act 2001 in relation to the review; and
(ii) no contraventions of any applicable code of professional conduct in relation to the review.
KPMG
Mitchell C Petrie
Partner
Brisbane
24 November 2009
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