Suitor would not surprise 'unloved' Nuplex

By PAUL PANCKHURST

When a shareholder at Nuplex Industries' annual meeting suggested the company was ripening into a takeover target, chairman Fred Holland did not argue.

The resin manufacturer and marketer is forging ahead, yesterday forecasting profit growth of 10 per cent or more this financial year.

But Nuplex lacks cornerstone shareholders - the annual report shows Tower Corporation's 9.4 per cent stake as the biggest after United States investor Shamrock sold out last year - and the company's share price is below some analysts' valuations.

Hence the speculation at the Auckland meeting on the company as a takeover candidate.

Holland said he was "greatly concerned" that New Zealand institutions seemed to be reducing their investments in strong local companies.

He could not explain why Nuplex was unloved.

"We're showing growth, we're showing good earnings, and we've got a pretty transparent, honest balance sheet."

He described the share price as disappointing.

Shareholders were not complaining, though. This meeting was sweeter than last year's, where directors received a grilling over the company's disastrous purchase of Australian medical waste business Medihold.

Nuplex has all but washed its hands of Medihold, saying last month that a would-be buyer had signed a heads of agreement.

Nuplex reported a net after-tax profit of $12.6 million for the year to June 30 after a one-off $6.8 million writedown connected with the Australian mishap.

That profit was up nearly 900 per cent on the previous year.

The company's biggest task is bedding down Asia Pacific Specialty Chemicals, the major Australian acquisition financed through a $75 million capital notes issue this year.

Holland said earnings from Asia Pacific were ahead of expectations and earnings for the whole Nuplex group were up more than 50 per cent in the first quarter on the same period last year.

That level of profit would not hold for the full year, for reasons including rising raw material costs, but the company expected "double-digit growth" in profit before abnormals.

Holland used the meeting to announce an agreement with American company Hercules to distribute paper process chemicals, "adding significantly to our paper industry business".

Managing director John Hirst explained to shareholders the different parts of the Asia Pacific business - the largest is Specialty Chemicals - and the synergies most divisions had with Nuplex's existing operations.

Nuplex is forecasting first-year sales for Asia Pacific of $205 million and earnings before interest, tax, depreciation and amortisation (ebitda) of $12 million.

Hirst said the dominance in sales and revenue by the Australian operation over the New Zealand and fledgling Vietnam arms would be accentuated this financial year.

The meeting passed special resolutions to: allow the conversion of capital notes into Nuplex shares; amend the constitution as a result of listing on the Australian Stock Exchange; and to reflect the new Takeovers Code.

On the topic of corporate governance, Holland said the board's audit committee would control the appointment of external auditors for non-audit tasks.

Nuplex had resisted the move to ban auditors from such work because they were useful for tax advice and other tasks.