KEY POINTS:
A loss, no final dividend and an admission of over-paying for a business made for a bad news day for Hellaby Holdings Ltd shareholders.
The investment company's share price fell 30c, or 9.84 per cent, to $2.75 in afternoon trading after Hellaby reported a $9.8 million loss in the year to June 30 after writing $18.8m off its investment in BBQ Factory.
Since Hellaby paid $25m for BBQ Factory it has reported two years of $2m operating losses.
"This does clearly indicate that Hellaby overpaid for BBQ Factory," said chief executive John Williamson.
"Having said that we believe that we can turn it around."
The retailer was being repositioned as a specialist retailer of things for the backyard, new outlets were being opened and unprofitable outlets closed, he said.
The company did not rule out selling BBQ Factory after its makeover and generally indicated a more proactive approach to buying and selling assets.
The writeoff was made up of $7.2m relating to the brand and $11.6m relating to goodwill.
Hellaby also failed to sell its shoe retailing business, which includes No 1 Shoe Warehouse and Hannahs, during a strategic review.
"We believe that both Hannahs and No 1 Shoes have the potential for further profit growth and our ownership is being retained in those businesses for the time being."
Both experienced a weak Christmas and first half but there had been an improvement in the second half.
Second-half same-store sales for No 1 Show Warehouse were up 8 per cent in the second half and ebit (earnings before interest and tax) was up 20 per cent on last year.
The company was positive about its automotive and packaging business.
This year's accounts were also affected by changes to accounting rules which were behind a $2.4m cost associated with forward exchange contracts.
"It is really a double whammy because in 2006 there was $2m profit in the accounts," said chief financial officer Richard Jolly said of accounting for foreign exchange contracts.
The overall loss was a turnaround from a $23.1m profit last year when $3.9m of ebit was contributed by the Rodd & Gunn business, since sold.
The company is forecasting earnings before interest, tax, depreciation and amortisation and one-time transactions of $45m in 2008 compared to $34m this year.
Chairman Bill Falconer said the company was understandably disappointed with the result.
The company also book $400,000 of severance costs for departing chief executive David Holdsworth. Mr Williamson started on July 2.
- NZPA
