Ann: FLLYR: HBY: Hellaby Annual Result Announcement

• Release Date: 28/08/14 13:22
• Summary: FLLYR: HBY: Hellaby Annual Result Announcement
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					HBY
28/08/2014 13:22
FLLYR

REL: 1322 HRS Hellaby Holdings Limited

FLLYR: HBY: Hellaby Annual Result Announcement

Hellaby delivers record operating earnings

Hellaby Holdings' group performance highlights for the 12 months to 30 June
2014:

- Trading EBITDA up 49% to $56.1 million
- Group NPAT (normalised[1]) up 44% to $26.8 million
- Earnings per share (normalised[1]) up 20% to 27.4 cents
- 25.4% return on funds employed
- Three acquisitions completed
- Revaluation of Footwear retail businesses
- Total dividend for year up 15% to 15c cents per share, fully imputed

Investment company Hellaby Holdings Limited (Hellaby, NZX:HBY) today posted a
record group trading EBITDA[2]  of $56.1 million for the 12 months to 30
June 2014, up 49% on the prior year, and slightly ahead of recent market
guidance.

Group revenue rose 35% to $736.4 million against last year's $545.8 million.
This includes the first full year contribution from oil and gas services
business Contract Resources and a partial year's results from three recent
acquisitions. Trading EBIT[3]  was $42.7 million, 44% up on last year's $29.7
million.  Normalised group NPAT (net profit before tax excluding the impact
of goodwill impairment)[1] was $26.8 million, 44% ahead of last year's $18.6
million.  Group NPAT including the goodwill impairment was ($0.1) million.

The goodwill impairment was for the full $26.9 million goodwill in Hannahs
and Number One Shoes, and was driven by changed market conditions and
corresponding under-performance over the past two years.  While both retail
businesses continue to trade profitably, the revised carrying values better
reflect market conditions and performance.

Managing Director John Williamson said the improved operating result included
the positive impact of recent acquisitions as well as creditable performances
by Hellaby's longer-held businesses.  "Four of our five divisions performed
ahead of last year, and within those divisions most businesses improved
year-on-year.  The Equipment division had a particularly stellar year."

Mr Williamson said continued focus on profitable market share, operating
efficiency and tight financial control was demonstrated in Hellaby's strong
key financial indicators.

"Trading EBITDA margins[4] were up by 10% to 7.6%; our return on funds
employed[5] (ROFE) was 25.4%, well ahead of the 22.9% recorded last year and
well above our target of 20%.  Return on invested capital[6] (ROIC) was 15.9%
against last year's 14.0% and our normalised earnings per share increased by
20% to reach 27.4 cents per share."

The board has declared a final dividend of 9.5 cents per share, fully
imputed, taking the total dividend for the year to 15 cents per share, 15%
higher than last year's 13 cents.  Chairman John Maasland said the final
dividend had been determined as if no goodwill impairment had occurred.  "The
board took this decision in recognition of the company's record earnings
growth, its strong positive outlook and because the impairment had no impact
on group cash flow."

The dividend will be paid on 3 October 2014, with a record date of 26
September 2014.  Mr Maasland said for this final dividend the board has
retained a 2.5% discount in calculating the Dividend Reinvestment Plan strike
price, although the company may in future suspend the Plan depending on its
capital requirements at the time.

Mr Williamson said the three acquisitions made during the year - Federal
Batteries, Dasko and New Zealand Trucks - were all integrating well and
performing as expected.  These acquisitions are collectively expected to
deliver an annualised EBITDA of around $5.5 million.

Contract Resources completed its first full year under Hellaby's 85%
ownership, generating $16.4 million EBITDA on $165.2 million sales.  Although
this result was not as high as originally forecast, it was nonetheless 28%
ahead of the same period last year and higher than recent market guidance.
Contract Resources is expected to deliver $20 million EBITDA in the financial
year to 30 June 2015, with further growth coming from Australia and the
Middle East.

The Automotive division continued to perform solidly, with a 9% increase in
sales to $185.2 million, and a 12% lift in EBITDA to $24.1 million.  Having
successfully acquired and integrated two bolt-on businesses during the year,
the division is continuing to assess growth opportunities on both sides of
the Tasman, and has also made significant investment in strengthening its
leadership resources and capability.

The Equipment division not only continued to benefit from a buoyant capital
equipment sector, but also began reaping the rewards of business improvement
initiatives implemented over the past two years.  Sales increased by 45% to
$195.2 million and EBITDA rose by 88% to $12.1 million.  The division
continues to drive a number of growth strategies including the recent entry
into heavy transport servicing through the acquisition of New Zealand Trucks
during the year.

While the Packaging division continued to experience tight market conditions
and flat sales of $44.8 million, operating efficiencies drove a 12% EBITDA
increase to $3.6 million.  Mr Williamson said business development remains a
key focus for Packaging and recent performance improvements were encouraging.

The Footwear division experienced very difficult trading conditions
throughout the year with tight consumer spending on apparel and footwear,
competition from online sales and a late start to cold winter weather. Sales
declined by 6% to $145.7 million, and EBITDA was $6.2 million against last
year's $9.1 million.

Mr Williamson said Hellaby had actively assessed a number of opportunities
during the year in addition to the three completed acquisitions.  "We
invested $0.6 million in business evaluation and due diligence during the
year, and while some opportunities didn't come to fruition, others are still
in the pipeline.  With our gearing[7] still at only 23.3%, Hellaby has ample
capacity to fund significant growth opportunities within its gearing policy."

Looking ahead, Mr Williamson said the company is expecting to see increased
contributions from its recent acquisitions, solid performances from its
longer-held subsidiaries, and continued focus on reshaping its portfolio.

"We're in excellent financial shape with a very strong balance sheet to
support further acquisitions and currently have some interesting
opportunities in play. We remain committed to improving total shareholder
return, and are confident that our growth strategy will deliver the higher
earnings to drive this."

1 'Normalised' refers to the exclusion of the impact of the goodwill
impairment of the Footwear retail businesses, which was booked effective 30
June 2014
2 Trading EBITDA = Net trading surplus before interest, tax, depreciation,
amortisation and other non-trading transactions
3 Trading EBIT = Net trading surplus before interest, tax and other
non-trading transaction
4 Trading EBITDA margin = Trading EBITDA / total revenue
5 ROFE or return on funds employed = Trading EBIT as a percentage of average
working capital plus fixed assets
6 ROIC or return on invested capital = Trading EBIT as a percentage of
average working capital plus fixed assets and intangible assets
7 Gearing = Total net debt to total net debt plus total equity

Comparisons are to prior financial year ended 30 June 2013.
Please refer to the 2014 Annual Report for terms and definitions.
Reconciliations of non-GAAP financial measures are included on pages 3 to 7
of the 2014 Annual Report.

ENDS

For further information please contact:

John Williamson
Chief Executive Officer
T +64 9 307 6844
M +64 21 271 4960

Richard Jolly
Chief Financial Officer
T +64 9 307 6844
M +64 27 497 6710

www.hellabyholdings.co.nz

Hellaby at a glance

Hellaby Holdings is an NZX-listed investment holding company, which owns a
diversified portfolio of 15 industrial, distribution and retail businesses.

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's core purpose is to generate long-term shareholder value by building
better businesses. We achieve this through a combination of performance
improvement and organic growth in the businesses we own, as well as smart
acquisitions and divestments. We describe this strategy simply as 'Buy,
Build, Harvest'.

Our investment portfolio is structured through five divisions - Oil & Gas
Services, Automotive, Equipment, Packaging and Footwear - with 3,000 people
across New Zealand, Australia, Middle East and North America. We have a
variable investment horizon, and our portfolio will evolve as opportunities
arise in target investment areas.

We actively manage our investments through a lean corporate office, and
decentralise leadership and performance accountabilities to our companies.

We seek to generate total shareholder returns superior to the NZX50.
End CA:00254539 For:HBY    Type:FLLYR      Time:2014-08-28 13:22:28