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Nuplex Initiatives Refocus On Core Business

Published: Thu 1 Dec 2005 05:23 PM
1 December 2005
Nuplex Initiatives Refocus On Core Business
Nuplex Industries has advanced its intention to be a specialist, international coating and regional composites resin business with a strong Australasian specialties base by taking two new strategic initiatives.
It has
* purchased the chemicals and plastic raw material agency and distribution business of PML Holdings Limited for $44 million, and
* sold its Environmental Services business to ASX listed Transpacific Group Industries Limited for $56 million.
Both transactions are effective from 1 December 2005.
Managing Director, John Hirst, said both initiatives were consistent with Nuplex's stated strategy and represented good deals for the company.
"In terms of EBITDA, the contributions from the business being purchased will balance that of the business being sold, so it will not impact on Nuplex's forecast performance for the 2006 financial year.
"However, it will assist in consolidating our operations around a tighter skill set, and this will over time lead to greater efficiencies, the growth of expertise and the delivery of better services and products to our business partners."
He said the announcement of the two initiatives within 24 hours was co-incidental but reinforced the company's policy of concentrating on businesses where it anticipated being able to use its core skills to generate growth.
Polychem/Multichem
The raw materials business being purchased trades in New Zealand as Polychem Marketing, and has offices in Auckland, Wellington and Christchurch. In Australia it trades as Multichem, and operates from offices in Melbourne, Sydney and Brisbane.
Combined, the two operations employ 35 people.
In the financial year ending 31 December, 2005, sales are expected to be close to $100 million and EBITDA in the range $7 - 8 million.
In addition to the purchase price, the vendors of the business have the opportunity to earn a $4 million incentive based on meeting performance criteria over the next two and a half years.
The business is the exclusive agent for many of the world's leading chemical and plastic raw material suppliers, and a product range in excess of 1000 lines, which it supplies to a broad industry group. The business has been established for 40 years.
"We know the business well as it is one of our significant business partners," said Mr Hirst.
"It is well managed, has an extensive list of major clients and an excellent reputation for quality, service and reliability.
"We see the supply of world leading raw materials as a market sector that presents excellent opportunities for growth in New Zealand and Australia, and for forming a closer relationship with our existing business partners."
Environmental Services
Nuplex's Environmental Services business is made up of industrial waste operations in New Zealand and Australia, and quarantine and medical waste operations in New Zealand.
In the 2005 financial year the Environmental Waste Group made an EBITDA contribution to Nuplex's profit of $6.9 million on revenue of $30 million.
It employs 125 people.
"Environmental Services is a sound business, which we have grown significantly since our first involvement in 1995, but we have taken the business to its optimum under our ownership," said Mr Hirst
"Environmental Services is not core to our future business and we gave advice of our intention to seek a buyer for the medical waste segment of the business at our annual meeting in October.
"We believe it is in the best interests of Nuplex shareholders to exit this successful business at this time."
ENDS

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