Chemby puts its losses behind

Press, 26 July 1984, Page 26

Chemby puts its losses behind

The future profitability of Chemby Industries, Ltd, will not be affected by the onceonly loss incurred by the manufactured products division of Chemby Engineering, Ltd, says the chairman, Mr B. L. Macedo, in the annual report. The decline in profit in the latest year reflects the trading and liquidation losses of the manufactured products division, which, as reported, was closed in March and its assets sold. “Chemby Engineering had been reporting results, which while not inconsistent with its development programme, were disappointing and of concern, in spite of small profits being reported,” he says. It became evident that the engineering company’s reported position was inaccurate when executive staff changes were made late in 1983. “Immediately this was established and the magnitude of the trading loss verified, it was decided to close the operation and inform the stock exchange and thus shareholders,” Mr Macedo says. “A most stringent investigation has been undertaken and the directors have no reason to believe that any other operation in the group is at risk from non-disclo-sure of the type experienced in Chemby Engineering.” The engineering company’s energy and textile

divisions traded profitably during the year and these have been moved to other companies in the group. All other subsidiaries and associates traded satisfactorily, he says. The managing director, Mr G. R. Smout, says that the selection of company developments is being based on the assumption that tariffs (already low by world standards) will replace import licensing in the next five years and that export incentives will end in 1987. “Already, the group is in a position to withstand the overnight dismantling of the licence system and indeed, in many ways, would benefit from this.” Developments include a new range of PVC injection moulding compounds, which will take PVC into products previously dominated by other material. Because of the signing of new contracts the sanitised process for bacteria and mould proofing will be built into many products from plastic houseware, shoes, and apparel, to carpet backing and foam mattresses. A West Australian wood waste to gas (from the Northwest shelf) conversion contract opened the year with a $500,000 contract, and it is intended to maintain the momentum in Australia. “Similarly, our promotional activities in China

will be stepped up with the conducting of technical seminars on wool scouring in Peking and Shanghai.” The company has already sold ?2M worth of equipment in China. “Excellent prospects in the group’s existing products for the current year, coupled with further expansion in these product areas, will be a base for a return to full profitability,” Mr Smout says. As reported, the total group net profit slumped to $23,018 in the year to March 31, compared with $1,160,958 in the previous period. Included in the result were extraordinary losses of $464,859 (niK previously) because of (dosing the manufactured products division. Equity profits totalled $117,266 ($28,292 loss). Sales increased 5.2 per cent to $48.8 million. The profit was after providing $192,116 more for depreciation and $173,113 for tax ($324,509 credit). A recommended final dividend of 5c a share gives a steady annual rate of 8.5 c a share (17 per cent). The dividend requirement is $442,156, but it is not covered by the profit. Shareholders’ funds fell $314,257 to $6,485,440, including steady ordinary capital at $2,600,917. Working capital eased $995,109 to, $3,870,403, and the current ratio declined from 1.5 to 1.3 to one.