Wormaid Int corporate ashes clear

Press, 19 December 1989, Page 28

Wormaid Int corporate ashes clear

NZPA-AAP Sydney Wormaid International has survived its own trial by fire to become Australia’s most visible corporate phoenix. The global fire protection services company has faced one crisis after another over the last three years in the form of management problems, takeover bids and poor results. But the company’s ownership has stabilised in recent months, allowing management to focus on overseas and local expansion. Its executives said in an interview that the December 11 agreement to buy West German fire protection group Total Walther Feurerschutzh (TWF) for sAustlOO million (5NZ131.57M) is evidence of a new direction. “Before the TWF acquisition we were the largest fire protection services group in France and the United Kingdom,” Wormaid executive director, Mr John Wilson, said. “With the TWF acquisition we are now the market leader in Germany as well,” he said. Wormaid also said earlier this month that it had bought Australian National Industries O’Donnell Griffin electrical and fire protection division for 557.5 M — a move which increased its local market share to about 45 per cent.

The managing director, Mr Bob Mansfield, who is strongly backed by controlling shareholder AFP Group, said that having established Wormaid’s position in Europe, the group was looking to expand its U.S. operations. “Our strategy in the U.S. is to pick up regional contractors to lift that side of our business,” Mr Mansfield said. Wormaid already has a significant presence in U.S. fire protection manufacturing through its wholly owned Ansul operation, acquired in 1979. “Ansul is a world leader in dry chemical technology, with 300 independent distributors,” Macquarie Equities analyst, Mr Tim Buckley, said. “However, a drawback with this distribution structure is that profitable service contracts do not follow on from Wormaid’s initial installation and supply work,” he said. “This could provide Wormaid with an easy area of expansion.” Mr Mansfield said that although Wormaid was number three in the U.S. fire protection contracting market, it only had 3 per cent of the market. “Most of the business there is carried out by small independent operators,” he said. “Looking out to the future, we expect our revenue to be sourced 20 per cent from Australia/

New Zealand, 40 per cent U.S. and 40 per cent Europe,” Mr Mansfield said. “Because of this structure, Wormaid will clearly benefit from any fall in the Australian dollar,” Mr Buckley added. Wormaid’s 1988-89 net profit of S2IM signalled its revival after posting a dismal S72M loss a year earlier. Mr Mansfield admits the company was fortunate to survive its years of uncertainty and was not so much on the ropes as “dead.” “We went through three or four years of absolute turmoil,” he said. “If we had a competitor in that weak a state we would act in such a way that would ensure he did not survive."

Wormaid’s problems started with the emergence of Lee Ming Tee's Sunshine Australia as a major shareholder in 1986, which led to a reverse takeover of Sunshine at an inflated price and scrutiny by the National Companies and Securities Commission.

With uncertain ownership and direction, the company reported an extraordinary loss of 5276 M for the half ended December, 1987. “This revolving door in management has had a serious impact on the company’s performance,” Mr Buckley said. “This was compounded by the continued changes in, and uncertainty over, Wormaid’s ownership and control,” he said. “But with AFP Group having recently consolidated its control of Wormaid, the company can expect to benefit from the contribution it will make to management.” AFP gained control earlier this year when it purchased a 20 per cent stake from Chase Corp and later made a successful takeover bid for Reil Corp, which had a further 23 per cent.

Chairman of the new look Wormaid board is Mr Peter Scanlon, former director of planning and strategy for Elders IXL.

“Wormaid is now focussed solely on its core operation as a global fire protection services group,” Mr Buckley said. “We anticipate earnings to rise by 145 per cent to $53 million for the year to June 1990 and by a further 32 per cent to $69 million in 1991," he said. Executive director John Wilson said that by the end of the current financial year the group’s debt would be down to between S3OM to S4OM, giving the company a gearing level of about 32 per cent.

“We’re planning a long way ahead, not just for a year or so. and it’s our intention to be number one in whatever market we operate in,” Mr Wilson said.