Shannon-based industrial diamonds maker Element Six, a unit of De Beers, increased its dividend by almost 450 per cent to $89 million (€72.51 million) in 2004, new accounts reveal.
The company is one of the biggest employers in mid-west region with a staff of 530 in a manufacturing and sales operation in the Shannon Free Zone. Staff were paid $42.5 million in 2004.
Filings in the Companies Registration Office show that Element Six Ltd increased the dividend from $20 million in 2003 in the year after an associate company, Element Six (Production), forgave a loan for $73.7 million. The inclusion of that sum as "operating revenue" in 2003 provided a significant boost to the bottom line at Element Six Ltd.
On sales of $185.57 million in 2003, the company's operating profit was $94.8 million. The operating profit was $21.18 million when the $73.7 million was excluded from revenues, implying an operating profit margin of 11.41 per cent for 2003.
The operating profit margin fell to 8.55 per cent in 2004, when operating profits dropped back to $20.35 million in spite of a 28 per cent rise in sales to $237.99 million. This followed an increase in administrative costs, which rose to $90.3 million from $54.99 million, and an increase in selling and distribution costs, which rose to $12.67 million.
The pretax profit in 2004 was $17.81 million, down from $93.23 million in 2003. The rise in sales was reported after a big increase in the number of sales and marketing staff to 48 from 25. The directors of Element Six said in a report that the company maintained its position in the diamond market in 2004. The company's products are used for cutting, grinding, drilling and polishing metal, concrete, glass, plastics, and other materials.
"The directors expect the general level of activity to improve in the foreseeable future," they said.
"The company has no major developments planned for either the commercial or the manufacturing side of the business."
A spokesman for the company declined yesterday to comment on the results, stating that Element Six is a privately-owned company. Referring to the company's inventories, the accounts state: "The total value of inventory (excluding provisions) as at 31 December 2004 amounted to $97,395,000 (2003: $90,371,000). Deducting the provisions provided for inventories which are not saleable inventory results in a value of $64,951,000 (2003: $38,372,000). The replacement cost of inventory is not materially different from the figure stated above."
The accounts indicate that that interest-free loans were advanced to three directors "to assist with the acquisition of housing". They were: Carmel Sexton, Dr Thomas Spooner and Edward Brooks. Each had a loan of $43,000. The company's pension fund for employees was deficient by $59.75 million in 2004. "The trustees have formulated a funding proposal to the Pension Board to address the deficit. The proposal involves increasing the contribution rate and reducing certain scheme benefits."
