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Hellaby profit surges as group taps shareholders for $28.4m

Thursday 26th August 2010

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Hellaby Holdings said profit surged as it cut costs, which may encourage shareholders to participate in the diversified investment group’s discounted $28.4 million capital raising.

Net profit was $10.3 million, or 20.3 cents per share, in the 12 months ended June 30, compared to $707,000, or 1.4 cents, a year earlier, the company said in a statement. Revenue dropped 4.8% to $454.2 million amid soft consumer demand.

The investment firm cut its total net debt 29% to $73.3 million, and is asking shareholders to inject some $28.4 million in a three-for-seven pro-rata renounceable rights issue at $1.30 a share, a 30% discount to today’s price, to help it adopt a more conservative capital structure.

The issue is underwritten by cornerstone investor Castle Investments, which will keep its 30.46% stake, and Forsyth Barr. Hellaby’s year-end cash shrank to $1.4 million from $4.6 million 12 months earlier.

“Although we have seen few ‘green shoots’ to date, our businesses are now so lean that we believe an improvement in sales will have a disproportionately positive impact on our profits,” said managing director John Williamson.

“Following this equity raise, we are confident that Hellaby will be appropriately capitalised in the current economy and trading environment and will be well-placed to improve shareholder returns.”

The shares dropped 0.5% to $1.85 in trading today, and have gained 14% this year. The company will pay a fully-imputed final dividend of 5 cents a share once the rights issue is complete.

Last month, Hellaby said its debt reduction programme proceeded quicker than expected, and meant its balance sheet was strong enough to rule out converting capital notes to stock.

Chairman John Maasland said the board expects to add at least one bolt-on acquisition in the year ahead, probably in selected automotive, industrial or distribution sectors.

The board voted to lift directors’ fees 5% effective from July 1 2010. That lifts directors’ fees to $52,500 a year, and the chairman’s fee to $84,000. The board also agreed to introduce a $10,000 per annum fee for the chairman of the company’s audit and risk committee.

This was the first increase since 2008, and the board said it will review fees every second year.

Businesswire.co.nz

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