New Zealand
28 August 2007
Hellaby Holdings shareholders are going without a final dividend this year after the investment company took an $18.9 million hit from its BBQ Factory business.
The share price slumped 40 cents, or 13 per cent, to $2.65.
Hellaby shares have lost 46 per cent of their value since the start of this year.
The write-down of goodwill and brand values on BBQ Factory means that virtually the entire $25.6 million Hellaby paid for the outdoor goods retailer three years ago has now been written off.
The company's new chief executive, John Williamson, conceded yesterday that Hellaby had overpaid for the business.
Hellaby reported a $9.8 million loss for the year to June compared with a $23.1 million profit last year.
BBQ Factory, which has about 20 outlets around the country, was bought from ASB Bank in August 2004.
The bank had ended up owning it a month earlier after a share float it had underwritten - and in which the BBQ Factory business was the main asset - was cancelled.
Mr Williamson said BBQ Factory had lost $2 million before interest and tax in each of the past two years.
Asked if the company was considering any legal action against any party to try to recover losses made on the acquisition, Mr Williamson said: "I would prefer not to comment on that."
Hellaby also disclosed yesterday that it would not be selling its No 1 Shoes and Hannahs shoe retailing businesses - at least for now.
The shoe businesses had been put up for "review" in May.
Last month Hellaby's recently departed chief executive, David Houldsworth, who had stayed on to handle the review, said the company had been looking for in excess of $80 million for the two businesses.
Mr Williamson confirmed yesterday that the businesses had been opened up for due diligence.
"We did receive some indicative offers. No formal offers."
The indicative offers had fallen "below the level that we deemed was appropriate".
He said that the company's short-medium term investment focus was now on industrial or distribution assets, rather than retail.
The strategy for BBQ Factory was to "position it as the specialist retailer for the backyard", Mr Williamson said.
This would include closing non-performing stores and rebranding and repositioning.
"It is our intention to fix BBQ Factory first and then we would consider selling BBQ Factory," he said.
ABN Amro Craigs analyst Selwyn Blinkhorne said Hellaby's trading result before write-offs was "in line" with what it had previously signalled.
"But passing on the dividend was a surprise because they had not alluded to that."
Other one-off costs incurred by Hellaby in the past year included $2.4 million on forward exchange contracts as a result of accounting rule changes, $900,000 for the review of the shoe businesses, and $400,000 "costs associated with" the retirement of Mr Houldsworth.
In the coming year Hellaby is targeting earnings before interest, tax, depreciation and amortisation of $45 million, which is in line with that achieved in previous years.
However, in the past year ebitda slumped to $33.9 million.
Chairman Bill Falconer said Hellaby had now comprehensively reviewed its direction.
This had confirmed that the core businesses were sound and could be expected to be resilient in the face of the current economic uncertainty.
"There are some businesses we will divest for the right price, and there are some where value can be added before divestment would be considered.
"Overall, however, the decks are being cleared and the company is moving forward with a strong focus on operational performance."
Source :
www.stuff.co.nz
