Elementis lobbing out cash to shareholders

Results from speciality chemicals group Elementis galvanised the share price on Tuesday after the cash-rich group announced plans to return surplus funds to shareholders on a regular basis.

Profit before tax in the first half of 2012 rose 12% to $79.0m from $70.6m the year before, on the back of a marginal improvement in revenue to $401.3m from $396.0m in the first half of 2011.

The operating margin improved considerably, from 18.2% in the first half of last year to 20.1% in the first half of this, as the strategy of replacing sales of low margin surfactants with value added coatings additives continued.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

"Elementis has delivered another record financial performance in the first half of 2012," trumpeted Elementis Chief Executive, David Dutro.

The group ended the reporting period sitting on $29.9m of cash, a sharp turnaround from a year earlier when it had net debt of $54.4m.

The healthy cash position has encouraged the group to institute a special dividend programme that will provide a return to shareholders of up to 50% of year-end net cash on the balance sheet. That's in addition to the group's commitment to a progressive regular dividend which will see pay-outs roughly a third of earnings per share before exceptional items.

The interim dividend of 2.45 cents per share is equivalent to a sterling amount of 1.5643 pence per share and represents an increase of 5% over the dividend declared at this time last year.

"The board is confident that the group is well placed to generate further shareholder value over the medium term, and expects to make progress in the second half of 2012," revealed Robert Beeston,

JH