Symex on roller-coaster ride
Chairman Alan Stockdale faces a battle to remain upbeat about the company. By Christopher Webb.
When Alan Stockdale joined the board of Symex Holdings in mid-2000, he was bullish on the future of the company that was about to go public.
The former state treasurer (pictured), who less than a year earlier had gone to work for Macquarie Bank, told prospective shareholders that Symex - which produces oleo products, used in personal care, plastics and textiles, from tallow - was a proven business and the $11 million the company was raising would be used for expansion.
Investors who bought the story and put up 50 cents for each Symex share were delirious little more than a year later as the shares shot up to $2.14. Stockdale shared in the bonanza; he had earlier been issued with 2 million free options, exercisable at 50 cents apiece. He collects $100,000 a year in directors’ fees.
In those early days, profits were up, and Stockdale was upbeat, telling shareholders he was excited about the future and the company’s potential growth.
But the days of a $2-plus share price were brief. The company failed to perform as planned and in 2002 Stockdale told shareholders the year was “one of the most difficult in the history of our company” and profits were significantly below expectations. He blamed sharp rises in the price of raw materials, and problems with an upgrade of the company’s plant. Shareholders saw their shares plummet to 68 cents. At that price, Symex was valued at $64 million, compared with $200 million at its peak.
Stockdale advised shareholders that the board was acting to restore the company’s historical strength. As good as his word, Symex’s fortunes started to recover, and over the next three years to 2005, profits improved from $7 million to $12.3 million.
The shares more than doubled as investors concluded the early problems were things of the past. Symex paid $21 million for Pental Soap, which had brands such as Country Life and Natural Selections. It later bought the rights to brands such as Sunlight, Velvet, Lux Flakes and Softly.
Early last year, directors told shareholders full-year profit would be lower and, in April, reckoned tax-paid profit for 2005-06 would be about $7.5 million. It came in at $7.7 million.
Last August, directors forecast that profit for 2006-07 would be $8 million to $10 million. But, in December, that forecast was slashed, with directors blaming higher oils and fats prices and the strengthening of the Australian dollar against the $US and the yen. Profit, they said, would be $2 million to $4 million. By early this year, Symex shares had slid to 60 cents and they weren’t helped by the interim result that showed profit had fallen by 74 per cent to $1.5 million.
Against a background of liabilities exceeding assets by $33 million, the company’s auditors drew attention to the accounts under the heading: “Inherent uncertainty regarding continuation as a going concern.” The bad news saw the share price fall to a new low of 45 cents, meaning that anyone who hung on to their shares through nearly seven years of thick and thin was now looking at a loss on their original 50 cents-a-share outlay.
Big management changes were afoot. Michael Newton, managing director since day one, resigned in late May. Gregory Tremewen and Allister Tomkins, executives who resigned as directors in 2003, unexpectedly returned to the fold, and Symex bought their chemicals and soap-related products importing business. Gary Weiss’ and Sir Ronald Brierley’s investment company and corporate niggler, Guinness Peat, emerged as a substantial shareholder, helping Symex shares improve from 48 cents to 67 cents. They closed last week at 61.5 cents.
The latest forecast is that Symex will make, after big restructuring costs, from zero to $500,000 for the latest June year, and between $7.5 million and $8.5 million this year.
Stockdale didn’t return a telephone call last week.
