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31th October 2003
Chairman’s Address at the
33rd Annual General Meeting on 31 October 2003<<br>
Ladies and Gentlemen,
Welcome to the 33rd Annual General Meeting of Lemarne Corporation Limited.
On behalf of the directors, I submit for your consideration the directors’ report and
audited financial statements for the 12 months ended 30 June 2003. These have been circulated
to shareholders and with your permission I will therefore take them as read. Before formally
moving the adoption of the 2002/2003 financial statements I would like to briefly comment on
the past year and our initiatives to reposition the group for future growth, before handing
over to our Managing Director, Darryl Rainsbury, who will comment on the past year and the
group’s future prospects.
The highlights of 2002/2003 were:
- Operating profit before tax increased to a record $15.4 million.
- Earnings per share increased to 57 cents, compared with a negative 17 cents in the prior
year.
- Net tangible asset backing increased 21% to $2.24 per share.
- Fully franked dividends have been increased to 15 cents per share, which includes the
final dividend of 7.5 cents per share declared on 19 August 2003.
- Pacific Composites’ sales revenues increased 12% to $34.6 million and EBIT
increased 88% to $2.2 million.
- Lemvest achieved a record after tax profit of $13.5 million, which includes the profit
on the sale of Richardson Pacific. This result enabled substantially all of the tax losses
incurred in 2001/2 to be utilised.
- Lemvest sold its subsidiary Richardson Pacific for $22.1 million realising a profit on
sale of $9.9 million
- Lemvest’s two continuing subsidiaries, Lemtronics and C10 Communications, both
recorded improved results with EBIT increasing to $387,000 and $1.1 million
respectively.
- Lemarne has net cash reserves of $30.9 million at year end, compared to a gearing of 5%
in the prior year.
In short most of the objectives set for 2002/2003 were achieved. In addition we took
further important steps in restructuring and repositioning the group.
Two years ago the group was in a much broader range of industries with a wider geographical
spread, which made it difficult for investors to analyse and very challenging for management
to successfully control and grow. It is now a smaller, more focussed group, with cash reserves
in excess of $25 million in contrast to net borrowings of $29 million two years ago.
The challenge now is to rebuild a strong, more predictable earnings base, reduce costs in line
with our reduced size and utilise our cash reserves for the maximum benefit of
shareholders.
In September 2003 we used some $5.9 million of those funds to buy back the 3.3 million Lemarne
shares acquired by HGL Limited prior to their unsuccessful takeover bid for the Company. The
buy back price was $1.80 per share and the completion of this selective buy back increased
Lemarne’s NTA to approximately $2.35 and reduced the number of shares on issue to 13.2
million.
On 27 October 2003, Lemarne made a takeover offer for the 3.8 million shares that it
doesn’t currently own in Lemvest Limited. Lemarne’s offer is 6 fully paid ordinary
shares in Lemarne for every 5 fully paid ordinary shares in Lemvest. This is the next planned
step in simplifying the group and reducing costs and Lemarne’s board believes that its
successful completion is in the best interest of shareholders in both Lemarne and Lemvest.
Documentation including our Bidder’s Statement, Lemvest’s Target Statement and its
Independent Expert’s Report, is expected to be distributed to Lemvest shareholders on 7
November 2003.
The operating results for the first quarter are mixed but before handing over to Darryl to
tell you more about this and the prospects for the remainder of the year, I should like to
thank all shareholders for their continuing support particularly in this time of significant
change. I hope the increase in the share price of 66% over the past 12 months and the
declaration of a final fully franked dividend of 7.5 cents per share, together with the other
recent achievements have gone some way to restoring your confidence in the future of the
group.
BRIAN NOXON
Chairman, 31 October 2003
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