A year ago we pointed out the impact the mining boom was having on Brisbane-based group, Campbell Brothers, when earnings jumped to more than $34 million.
The shares were trading around $15 at the time; yesterday they were more than $10 higher and closed 8c higher at $25.90, after touching a day's high of $26.59 in the wake of the very good full year profit.
Market cap has jumped sharply from just over $700 million to around $1.33 billion as the company has emerged, along with the likes of Orica, as a major provider of services to the resources boom here and around the world.
Campbell provides laboratory services which are in great demand.
That continued into the year to March when first half profits rose nearly 50 per cent to $26 million on revenue up 29 per cent to $342 million.
Yesterday it reported a net profit for the year to March 31 of $59.1 million (including an after tax profit on the sale of Campbell Brothers Services of $7.4 million).
That was up 69.5 per cent on the previous year.
Excluding the profit on the sale of Campbell Brothers Services, earnings from continuing operations rose 51.1 per cent to $51.6 million, compared to the $34.2 million reported for the March 2006 year.
Revenue was up nearly 27 per cent to more than $662 million, so profit margins are strong and staying that way.
The company said it would pay a final dividend of 42c a share (50 per cent franked), bringing the total full year dividend to 70c a share (50 per cent franked), up from 50c last year (fully franked).
The drop in the franking level gives a clue as to where much of the profit growth has come from: overseas where the company's ALS Laboratory Group has been expanding and making acquisitions.
The company said acquisitions made towards the end of the 2006 year, and a strong underlying growth, provided the boost to CPB's earnings, with ALS the major factor.
ALS contributed over 80 per cent of profit and over 50 per cent of group revenue.
Campbell Brothers CEO, Greg Kilmister said in a statement accompanying the profit announcement, that Laboratory Services division was the standout performer.
"The division has experienced ongoing demand for its environmental and minerals testing services in all geographic regions and continues with its strategy of becoming a global provider of a diverse range of analytical testing services.
"In particular, the operations in Australia, North America and South America showed strong organic growth and the maintenance of solid operating margins."
He said revenue from the Campbell Chemicals division fell slightly compared with 2006 following the finalization of contract manufacturing services temporarily provided to Colgate.
The area's earnings contribution was down on last year due to increased raw material, fuel and freight costs.
The Reward Distribution division enjoyed an increase in revenue but it had a lower contribution than last year due to significant one off costs involved in consolidating warehouse operations in Sydney, Melbourne and Perth, upgrading financial reporting systems, centralising back office functions and producing a national catalogue.
Mr Kilmister said the company's rationalisation program over the past 12 months had seen Campbell Brothers Services division sold as it was non-core to the Company's operations.
It contributed $27.78 million in revenue during the year, down from $37.17 million while its earnings contribution fell to $798,000 from $3.11 million. The company sold in January on this year.
The company said ALS expanded its service offering and geographic footprint during the year by acquiring new entities involved in the mineral, environmental, food and pharmaceutical testing areas. These acquisitions included Abilabs in Africa, Analytica in Sweden and Consulchem in Australia.
Reward Distribution made several acquisitions during the year to bolster its national presence in the hospitality distribution market with acquisitions of Pandee Services in South Australia and McCarthy's in New South Wales.
Mr Kilmister said the company will be concentrating its attention on the Laboratory Services division where Campbell Brothers has shown that it has a genuine competitive advantage and proven business model.
"Campbell Brothers expects that the Laboratory Services division will continue to be the key profit contributor. All indications are that the market for ALS's services will remain buoyant for some time, at least in the near term to 2010.
"The ALS Laboratory Group is gearing up to make further acquisitions to continue the diversification into new analytical services markets and is currently investigating opportunities in Europe, Asia and North America."
During the year the company moved into coal laboratory services via a number of greenfield start-ups.
Initial operations are under development in Newcastle and Gladstone in Australia, and will be followed by further coal laboratory developments in South Africa and Russia.
This move followed the acquisition of a substantial interest in small listed coal tester, CCI Holdings, in a failed takeover offer in 2006.
The company said it entered into an option agreement and a commitment to support a scheme of arrangement in March 2007, whereby Bureau Veritas SA would acquire CCI Holdings Ltd.
Mr Kilmister said that as the company had decided to enter the coal services market via a green-field start-up, the value in pursuing the full acquisition and integration of CCI would diminish over time. The Company sees the Bureau Veritas offer as attractive and is pleased to support the offer.
