THE Australian Wool Testing Authority has reported a record loss of $8.7 million for 2008-09.
But AWTA managing director Michael Jackson said the loss was not as bad as the headline number might indicate.
Mr Jackson said $7.4 million of the losses were "extraordinary items", including a revaluation of assets and a $1.6 million cost associated with the closure of AWTA's Sydney laboratory.
Nevertheless, Mr Jackson said the $1.9 million operating and administrative loss was of concern.
Most of the operating loss was the result of a 10 per cent decline in wool production and reduced testing throughput.
Earlier this year AWTA opted to close its Sydney laboratory and conduct all eastern states testing at its Melbourne laboratory in Kensington.
AWTA also raised its test fees by 3.5 per cent, its first rise in several years.
Mr Jackson said that although AWTA was a unique company limited by the guarantee of its members, free of a company tax liability and the need to pay dividends, the company strove to be profitable.
He said the company would continue to "tighten its belt" and pursue diversification.
This diversification included the expansion of AWTA's products testing division, servicing the industrial sector, and Agrifood Technology, the grain-testing company it acquired from AWB Limited last year.
This year AWTA reported non-wool activities accounted for 25 per cent of the company's revenue, considerably up on 5 per cent a decade ago.
AWTA is also counting on the FeedTest business, which was acquired from the Victorian Department of Primary Industries in September, to add to AWTA's diversification.
AWTA also reported difficult operating conditions in New Zealand, where its wholly owned subsidiary NZWTA had to cope with a 9 per cent fall in the nation's clip.
AWTA's other major offshore venture is in China, where it has a 50 per cent stake in JinAo Testing Company Ltd.
Mr Jackson said business in China had been slow.
As well as offering a testing service for China's semi-processed wool, JinAo has also been contracted by Australian Wool Innovation to conduct testing of apparel manufactured by Woolmark licensees in Asia.
