HBY
19/02/2016 08:30
HALFYR
PRICE SENSITIVE
REL: 0830 HRS Hellaby Holdings Limited
HALFYR: HBY: Hellaby Holdings Ltd - Interim Results Announcement
Hellaby Holdings Limited - NZX / Media Release 19 February 2016
Hellaby first half earnings at the upper end of forecast - Down on the same
period last year - Full year expected to be broadly in line with last year
Hellaby Holdings' group performance for the six months to 31 December 2015
(comparisons to previous corresponding period):
- Total Revenue $379.9 million down 2%
- Trading EBITDA down 34% at $19.0 million
- Group NPAT down 65% to $4.7 million
- Earnings per share down 61% to 5.1 cents
- Interim dividend maintained in line with last year at 9.0 cents per share,
fully imputed
Continuing and discontinued operations
Hellaby Holdings Limited (Hellaby) today reported a result in line with the
earnings at the upper end of the guidance provided for the six months to 31
December 2015, with group Trading EBITDA[1] of $19.0 million, down 34% on the
$28.7 million posted in the same period last year, and NPAT[2] down 65% to
$4.7 million from $13.5 million. Revenue fell 2% to $379.9 million from
$388.5 million in the same period of the prior year.
Hellaby chairman Steve Smith said that, as signalled, the interim result was
down when compared with the same period of the previous year. The board
remained confident of a strong second-half performance and expected a full
year result that would be broadly in line with the record result achieved
last year.
Mr Smith said; "Three of our four business groups saw soft trading, affected
by contract timing and slow economic conditions. There was no contribution
from Elldex Packaging which was sold prior to the start of the period in
review, and we had a positive contribution from the acquisition of JAS
Oceania acquired in June 2015.
"Hellaby has new leadership with the appointment of Alan Clarke as Managing
Director and Chief Executive Officer in November 2015 after John Williamson
stepped down in October 2015. Alan has had four months to assess the business
and he is working closely with the board on our strategy for the future.
"Our balance sheet is strong with a conservative gearing ratio[3] at 29.7%,
compared to 28.3% at the same time last year, well below our target of 45%.
As a consequence Hellaby remains well-positioned to fund future growth
opportunities."
Mr Smith said the Hellaby board and management were confident of a strong
second half and accordingly shareholders would be pleased that the fully
imputed interim dividend of 9.0 cents per share would be maintained,
unchanged on the prior year. The record date for dividend entitlements is 23
March 2016 and the payment date is 1 April 2016. The dividend reinvestment
plan will remain suspended as Hellaby has a modest debt level and therefore
adequate capital and debt facilities to meet all our line of sight investment
opportunities.
Hellaby's newly appointed Managing Director Alan Clarke stated that, while it
was clearly disappointing that the first half result was down, he was
impressed with the calibre of the businesses and management teams in the
group.
Mr Clarke said; "Hellaby has great foundations with some very good businesses
and great management teams that I have been getting to know and I believe we
have a very good base to build on and an exciting future."
Resource Services Group (previously the Oil & Gas Services division)
The Resource Services Group delivered sales of $82.9 million, which were down
19% from the $102.5 million posted in the prior half year and a Trading
EBITDA of $4.7 million which was down 61% on the $12.1 million in same period
last year.
Mr Clarke commented; "While this is disappointing, timing of major refinery
shutdown contracts is the reason for this very soft result. I believe this
business has an attractive investment future for us despite the fact that the
Oil and Gas market saw a number of our clients in Australia, the Americas and
the Middle East postpone planned maintenance and scheduled refinery
shutdowns.
"The reason for these delays is refinery margins remained high through the
first half and as a result refinery owners elected to continue production.
With the oil price continuing to drop, and margins starting to decline as
pump prices fall, these refineries are now shutting down for their planned
and needed maintenance work. This means we are gearing up for an
exceptionally busy second half.
"While the earnings in the Resource Services Group are lumpy, they are in
fact predictable over a longer period, with sustained growth achieved in the
last twenty five years and margins available through these specialised
technical services that are attractive.
"Contract Resources is an internationally recognised and specialised
business. As such we are exploring several investment opportunities to
geographically expand and strengthen operations and add additional technical
competencies to provide a wider range of services for our multinational
clients.
"With expanded services and geographies, we will be able to deliver more
stable and predictable earnings while building on attractive business margins
which reflect the specialised nature of our services."
Automotive Group
The Automotive Group delivered sales of $126.5 million, up 27.5% on the $99.2
million posted for the same period a year ago and Trading EBITDA at $13.2
million up 7% on the $12.4 million posted in the prior first half.
Mr Clarke continued; "The Automotive Group is a delight. It is well managed
and the performance is predictable with good margins and it has grown well in
its core businesses. The investment made into the Australian auto electrical
sector with JAS Oceania has opened up this market and complemented our
existing businesses, adding scale, reach and experienced management.
"In New Zealand, BNT group has grown year on year and the new Truck and
Trailer Parts business is growing to plan. It will trade at an EBIT loss in
this financial year, but it has an attractive future with a bottom line
contribution expected from 2017 onwards.
"With the Australian auto electrical operations now established, there are a
number of excellent opportunities we are assessing for expansion. The
Automotive Group has positive growth prospects with good margins in large
markets."
Equipment Group
The Equipment Group delivered sales of $104.2 million, up 10.4% on the $94.4
million posted for the prior half year period, with Trading EBITDA of $4.5
million, down 14.2% on the $5.2 million posted in the prior half year period.
Mr Clarke said; "The Equipment Group did a sound job growing revenues and
maintaining market share but this came at the cost of margin, as sales of new
equipment were affected by a slowing economy.
"The group has a strong and experienced management team and has diversified
its reliance on selling heavy equipment by expanding its servicing
businesses. This diversification has provided an alternative income stream as
clients with new or old equipment still need to access experienced servicing
facilities.
"The challenge for this group is that margins are small and the investment is
large, and this is an important consideration for determining our future
strategy."
Footwear Group
The Footwear Group delivered sales of $66.6 million, down 2.8% on the $68.5
million posted for the prior half year period with a Trading EBITDA loss of
($0.2 million), down on the $0.9 million profit in the same period last year.
Mr Clarke commented; "Hannahs fared the best with some modest same store
sales growth. Number One Shoes fared less well with negative year on year
growth.
"The management teams in both businesses have done an exceptional job in a
very difficult environment and several restructuring initiatives have been
implemented.
"The Footwear Group is considered to be non-core, and Hellaby will seek to
divest its two footwear businesses at the appropriate time."
Outlook
Hellaby's board believes market conditions will remain challenging for the
rest of the financial year in all major markets. Nonetheless it expects
initiatives put in place to ensure the businesses are responding to the
current trading conditions will be effective and that group earnings for the
full year will be broadly in line with the record results achieved last year.
Mr Clarke concluded; "The Hellaby Group is moving to a new focus, building on
our existing base. I believe we have a great future as a long term business
builder and owner. We do not have to develop new sectors as some of the
current sectors we operate in offer considerable scope for attractive long
term expansion.
"Our shareholders want certainty and predictability in businesses that are
understood and that offer sound investment opportunities. We have a good base
of core businesses to build on, a strong balance sheet and some great
management teams."
Notes
[1] Trading EBITDA = Net trading surplus before interest, tax, depreciation,
amortisation and other non-trading transactions
[2] NPAT = Net profit after tax
[3] Gearing Ratio = Total net debt / (total net debt + total equity)
Note: Reconciliations of non-GAAP financial measures are included in the 2016
Interim Report.
ENDS
For further information please contact:
Alan Clarke
Managing Director
T +64 9 307 6844
M +64 21 368 818
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 company that is in the middle of a change
in strategic focus from an investment holding company to a long term
committed business builder and owner.
The investment portfolio is structured through four Business Groups:
- Automotive and Resource Services Groups, both of which have active organic
and acquisition growth strategies.
- Equipment Group which is now consolidating its sales operations while
expanding its servicing business.
- The Footwear Group with two national brands has been earmarked as non-core
and divestment options are being investigated.
The Hellaby Group currently has 3,000 staff across New Zealand, Australia,
Middle East and the Americas.
End CA:00277907 For:HBY Type:HALFYR Time:2016-02-19 08:30:01
