Hellaby says it's back on track and hunting for acquisitions

John Williamson. File photo / Kenny Rodger

Hellaby Holdings has had a challenging few years, but its chief executive says a turnaround has been completed and the listed investment firm is in a position to add new businesses to its portfolio.

The Auckland-based company operates a range of subsidiaries in the industrial, retail and distribution sectors in New Zealand and Australia, including shoe retailers Hannahs and Number One Shoes.

A new management team led by chief executive John Williamson took over in 2007, the same year the firm posted its first loss - $9.8 million in the year to June - since relisting in 1994.

A restructuring then took place that included selling the BBQ Factory (which it acquired for $25 million in 2004) to Auckland-based private equity company Capital Group for $5.8 million.

"After a lot of hard work across the group, we now have the balance sheet and investor support to consider acquiring new businesses that complement our existing portfolio," Hellaby announced in an investor update.

"Given that we have been dealing with legacy issues in appalling economic conditions, we've emerged from this process relatively battle-hardened and determined to now move into a profitable growth phase."

The company said gearing at May 31, 2011 had reduced to below 25 per cent, which was a nine-year low and well within the firm's target gearing levels of 45 per cent or less.

Gearing had peaked at 65 per cent in 2007.

Williamson said it felt good to be considering new investments again.

"Unlike before, however, this new management team and board will be working to a clear strategic framework and we'll only invest in a few selected sectors," he said.

Williamson said the company was initially likely to consider "bolt-on" acquisitions that complemented its existing automotive parts and packaging businesses.

"Our approach to [mergers and acquisitions] will be low-key, well researched and we'll be patient."

Williamson said total shareholder returns for Hellaby investors, measured by share price increase plus dividends, was 74 per cent for the 17 months to May 31, 2011, compared with the NZX-50 gross return of 10 per cent.

Market demand and sales in most of its sectors remained flat.

But it was in a good position to take advantage of any uplift in the economy.

Hellaby reported a full-year net profit of $10.3 million last year. Shares closed down 3c at $2.22 yesterday.