ALS LIMITED — Annual Report 2012

May 20, 2012

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asx/media release

21 May 2012

Strong growth propels Campbell Brothers to record result

Global testing services group Campbell Brothers Limited (ASX Code: CPB) today announced a record financial result for the year ended 31 March 2012, with a net profit after tax attributable to equity holders of $222.4 million, a 68 percent increase on the previous years’ net profit of $132.4 million. The profit result was in line with guidance given to the market in November 2011.

The result was generated from revenue of $1.406 billion, up 27% on the previous

years’ revenue of $1.108 billion.

The translation of foreign earnings was impacted by a stronger Australian dollar during the year, with the average exchange rate against the US dollar of USD 1.05 compared with USD 0.95 in the previous year.

The Chairman of Campbell Brothers, Geoff McGrath, said all divisions within the ALS testing and inspection services business recorded increased profit contributions and margins over the previous year.

“In particular, strong growth in global mineral exploration activity lifted demand for the analytical testing services provided by ALS Minerals division.

“Increased sample flow, combined with earnings generated by ALS Metallurgy and Stewart Group (acquired July 2011) served to deliver a 92% increase in segment profit contribution over the March 2011 year” he said.

ALS Life Sciences division (formerly known as ALS Environmental) delivered strong gains in revenue and profit contribution, particularly within the Australian and North American regions.

ALS Energy (formerly known as ALS Coal) and ALS Industrial (incorporating ALS Tribology) divisions all recorded solid growth in earnings contribution compared with the previous year.

Directors have declared a final partly franked (50%) dividend for the year of $1.30 per share (2011: 75 cents partly franked) bringing the total partly franked (50%) dividend to $2.25 (2011: $1.40 partly franked). The dividend is payable on 2 July 2012 to all shareholders on the company’s register as at close of business on 8 June 2012. As previously announced, shareholders have been advised that Campbell Brothers has re-instated its Dividend Reinvestment Plan (DRP) for the full year dividend, with DRP shares to be issued at a 5% discount to market price.

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Result Overview

The Managing Director of Campbell Brothers, Greg Kilmister, said the Group experienced strong increases in revenues, profits and margins, with ALS Minerals and ALS Environmental (now known as ALS Life Sciences) divisions achieving the strongest growth.

“The ALS Minerals division delivered exceptional growth in financial performance during the year, processing a record number of samples in an environment of increasing global mineral exploration activity.

“Strategic expansion by the division over the past two years, in the form of both acquisitions and capital investment, has improved its capacity, breadth of service offering and market reach - thus enabling the business to service a growing market successfully.

“The acquisition of the Stewart Group, completed in July 2011, added a valuable suite of metallurgical and inspection services as well as expanded geographical reach to the division’s capabilities” he said.

The ALS Life Sciences division posted solid growth in revenue and profit contribution during the year, particularly in the Australian and North American regions. This was primarily the result of increased market share and government project work.

Margin performance improved in most regions, representing an ability to contain variable costs while growing the business and integrating acquisitions.

The acquisition in October 2011 of Columbia Analytical Services, an environmental analytical group operating in the US, will add to future earnings of the division in the North American region.

The ALS Energy division (formerly ALS Coal) delivered improved revenue and margin performance during the year on the back of contracts for new work in the South African and Canadian operations, and the addition of coal analytical services in Mongolia.

Mr Kilmister said the Australian business performed well ahead of the previous year, recovering well from the floods along the east coast which contributed to a slow start to the year.

“Also, significant capacity and operational efficiency has been added to the Australian operations following the relocation of the Ipswich laboratory to Brisbane”.

The ALS Industrial division’s Asset Care business reported solid growth in revenue, profit contribution and operating margin, despite the divestment of its asset management business in July 2011. Austpower Engineering, acquired in October 2011, contributed strongly to increased profit contribution and margin improvement in the second half.

The Tribology business, now incorporated into the ALS Industrial division, delivered increased revenue and profit contributions in all regions, primarily the result of growth of existing client relationships and disciplined cost management.

Campbell Chemicals delivered an improved profit result on lower revenue following the sale of the Cleantec business in December 2010 and the Reward Distribution hospitality supplies division returned to profitability during the year delivering a strong result in a very tight and competitive market.

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The divisional results are as follows:

Financial Results $’000 ALS Minerals ALS Life Sciences (formerly Environmental) ALS Energy (formerly ALS Coal) ALS Industrial (incorporating ALS Tribology) Campbell Chemicals Reward Distribution Intra-group revenue Total divisional	Revenue	Contribution
	FY2012 FY2011 + / - 591,338 334,477 76.8% 360,661 308,281 17.0% 87,848 73,023 20.3% 152,532 142,372 7.1% 90,056 130,322 (30.9%) 123,174 123,869 (0.6%) - (4,015)	FY2012 FY2011 + / - 214,655 111,796 92.0% 78,110 66,195 18.0% 23,720 17,151 38.3% 24,453 16,617 47.2% 8,124 7,386 10.0% 3,664 (1,811) n/a - -
	1,405,609 1,108,329 26.8%	352,726 217,334 62.3%
Net finance expenses Unallocated corporate costs Acquisition costs Net (profit)/loss attributable to non- controlling interests Income tax expense	(15,623) (10,244) (21,758) (18,228) (3,387) (2,840) (2,274) 64 (87,271) (53,732)
Net profit after tax	222,413 132,354 68.0%

Note: ALS was restructured from five to four divisions, effective 1 April 2012.

Outlook

Mr Kilmister said the Group will benefit greatly from the acquisitions made during the year and the restructure of the ALS Group into four key divisions as of 1 April 2012.

“It is expected that the acquisitions finalised during the financial year, along with the recent acquisition of the Eclipse Scientific Group in April 2012, will contribute strongly to the Company’s result in the 2012/13 financial year. Capacity increases, the introduction of new technology, and the continued refurbishment of existing facilities will contribute to further strong organic growth through the year.

“ALS has been reorganised into four global business divisions which reflect the industry sectors the Group believes are fundamental to its future growth and expansion strategies – Minerals, Life Sciences, Energy and Industrial. An important component of these strategies is the establishment of a global presence in servicing the Food & Pharmaceutical (within ALS Life Sciences) and Oil & Gas (within ALS Energy) sectors.”

“This new structure creates the platform from which the Company can continue to grow successfully, by increasing its prominence as a leading global provider of testing, inspection and certification services across these four key divisions”.

ENDS:

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For further information: Greg Kilmister, Managing Director, Campbell Brothers Limited, +61 7 3367 7900

About Campbell Brothers Limited (ASX: CPB)

Campbell Brothers is a leading commercial services company, operating one of the world’s largest analytical and testing services businesses. Founded in 1863 and listed on the ASX in 1952, Campbell Brothers currently employs over 12,000 staff operating from 300 sites in 55 countries worldwide.

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