Ann: FLLYR: HBY: Hellaby Holdings Annual Result A

• Release Date: 27/08/12 16:11
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HBY
27/08/2012 14:11
FLLYR

REL: 1411 HRS Hellaby Holdings Limited

FLLYR: HBY: Hellaby Holdings Annual Result Announcement

HELLABY HOLDINGS LIMITED - NZX / MEDIA RELEASE:  27 August 2012

HELLABY HOLDINGS DELIVERS STRONG 2012 RESULT; THIRD YEAR OF PROFIT GROWTH

Hellaby group performance highlights for the year to 30 June 2012:
- Trading EBITDA up 10% to $37.4 million
- Trading EBIT up 13% to $30.1 million
- NPAT up 26% to $19.3 million
- Net debt 59% lower at $10.1 million
- $28.9 million free cash flow generated
- 30% return on funds employed
- 29% total shareholder return

Investment company Hellaby Holdings Limited today reported significantly
improved results for the 12 months to 30 June 2012, despite challenging
trading conditions.

Net profit after tax (NPAT) for the year to 30 June 2012 rose by 26% to $19.3
million from $15.3 million a year earlier, even though revenues rose by only
6.1% to $497.7 million.

Hellaby chairman John Maasland said: "Hellaby's board and management are
pleased to report a solid operational performance for a year which marked the
company's third successive year of significant profit improvement."

"Despite strong economic headwinds, we achieved our goal to outpace the
markets in which we operate. Sales growth was well ahead of broader economic
growth and we saw a satisfactory uplift in profits, margins and return on
funds from most subsidiaries."

The board has declared a final dividend of 8 cents per share, fully imputed,
for the year ended 30 June 2012, payable 19 October 2012. This brings the
total dividend for the year to 13 cents from 10 cents per share last year.
This is in line with the company's dividend policy to pay around 50 percent
of after tax profit.

Hellaby Managing Director John Williamson said: "The 2012 result clearly
demonstrates the benefits to shareholders of Hellaby's diverse portfolio.
Hellaby has delivered a strong group result through outstanding performances
from our Equipment and Footwear divisions, a steady performance from our
Automotive division and a disappointing result from our Packaging business."

Hellaby's on-going focus on operational improvement saw Trading EBITDA (group
trading surplus before interest, tax, depreciation, amortisation and one-off
transactions) increase by 10% to $37.4 million from $34 million in 2011. This
represents an EBITDA margin on sales of 7.5%, ahead of Hellaby's 7% target.
Trading EBIT (trading surplus before interest, tax and one-off transactions)
increased by 13% to $30.1 million from $26.8 million.

Net debt fell to $10.1 million from $24.5 million in 2011, taking gearing
(total net debt to total net debt plus equity) to 6.3% from 15.5% in 2011,
well within the company's target gearing levels of 45% or below.  Net
interest costs nearly halved from $4.2 million to $2.2 million.

"This debt reduction was primarily driven by higher operating profits, which
generated $28.9 million in free cash flow during the year. The group has
generated a total of $178.5 million free cash flow during the five years
since mid-2007 under the present management team and board. We believe this
is an outstanding achievement," said Mr Williamson.

Hellaby's earnings per share were 25.9 cents compared to 22.6 cents per share
last year.  The full year result represents a 13.5% return on average
shareholders' funds, compared to last year's 13.1%.

Divisional performance

All four divisions are now meeting key performance criteria to deliver a
Return on Funds Employed (ROFE) - an internal measure of EBIT as a percentage
of average working capital plus fixed assets (excluding goodwill) - in excess
of 20.0%. For the 2012 year, group ROFE was 29.6%.

The Footwear division achieved a 21% EBITDA improvement to $11.8 million in
tight trading conditions. Despite zero same store sales growth, both the
Hannahs and Number One Shoes subsidiaries delivered considerably higher
margins, profitability and free cash flow.

The Equipment division achieved an exceptionally strong profit improvement,
due mainly to the operational restructuring of AB Equipment and 29% revenue
growth following a severe downturn in the heavy equipment sector over recent
years. EBITDA improved to $6.4 million from $2.6 million last year, with a
corresponding improvement in working capital ratios.

The Automotive division continued to improve its profit performance in
difficult and relatively flat market conditions. EBITDA for the year was
$21.6 million, 3.7% ahead of the previous year. Revenues were likewise 3.7%
above last year.

The Packaging division, Elldex Packaging Group, returned a disappointing
result. EBITDA decreased to $3.6 million and revenues declined by 4.3% with
lower volumes into the supermarket, horticulture and dairy sectors. Steps
have been taken to strengthen the company's operational capability in both
New Zealand and Australia.

As signalled at the half year, profitability was also impacted by one-off
costs relating to the consolidation of Elldex Packaging's manufacturing into
its larger Christchurch plant. This optimisation of the company's
manufacturing footprint is expected to improve future performance.

Investment approach

Mr Williamson noted that while there were no acquisitions during the year,
Hellaby was actively seeking investment opportunities.

"With the business turnaround completed and our balance sheet reformed, we're
now looking to enhance our portfolio.  As identified in our investment
strategy, we're targeting clearly defined sectors which complement our
business mix, and will only make an acquisition that meets our shareholder
value criteria."

"While we haven't yet secured a target that ticks all our boxes, we'll
continue to be patient and selective.  We are confident that portfolio growth
will begin in this financial year."

In late 2011 a leadership development programme commenced to develop and grow
Hellaby's talent pool. While this programme will require a considerable
investment of time and money over several years, Mr Williamson said that the
board believes it will be a quality long-term investment in building better
businesses.

"Hellaby will ultimately be judged by the quality of its management teams."

Outlook

Looking ahead, Mr Williamson said the company was very positive about its
future. Hellaby's immediate operational focus was to further improve the
profitability of all its businesses regardless of economic conditions. The
company was looking for particular improvement from Packaging, following the
restructuring investment made over recent months.

"The New Zealand economy remains stubbornly flat. This however is simply the
reality our businesses must deal with, and our challenge is to outpace our
markets. We have taken considerable pride in achieving EBIT growth of 66%
over the past three years despite revenue growth of only 4%."

Mr Williamson noted that Hellaby's total shareholder returns were 29% for the
year to 30 June 2012, compared to a negative NZX50 Gross Index return of (1%)
for the same period.

"Hellaby is in good shape to continue to deliver on our investors' higher
expectations."

ENDS

For further information please contact:

John Williamson
Chief Executive Officer
Hellaby Holdings Limited
Phone: 09 307 6844
Mobile: 021 271 4960

Richard Jolly
Chief Financial Officer
Hellaby Holdings Limited
Phone: 09 307 6844
Mobile: 0274 976 710

About Hellaby Holdings:

Hellaby Holdings ('Hellaby') is an NZX-listed investment holding company,
which owns a diversified portfolio of New Zealand and Australian industrial,
distribution and retail businesses. We structure our investment portfolio
through four divisions - Automotive, Equipment, Packaging and Footwear.

Our vision is to be a leading Australasian investor, based on the value we
add to our portfolio, the returns we deliver to our shareholders and the
calibre of our people. Hellaby will generate attractive long-term shareholder
value through a combination of performance improvement and organic growth in
the businesses we own, and through smart acquisitions and divestments. We
describe this strategy simply as 'Buy, Build, Harvest'. We seek to generate
total shareholder returns superior to the NZX50 Gross Index.

We have a variable investment horizon, and our portfolio will evolve over
time. We actively manage our investments through a lean corporate office, and
decentralise leadership and performance accountabilities to our companies.
End CA:00226499 For:HBY    Type:FLLYR      Time:2012-08-27 14:11:02