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ASX-listed Bapcor happy with Hellaby's automotive unit, selling resources, footwear

Wednesday 23rd August 2017

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ASX-listed Bapcor is pleased with the "upside potential" from the automotive unit acquired with the takeover of Hellaby Holdings and is actively seeking buyers for its New Zealand resources and footwear divisions.

Hellaby Automotive performed better than Bapcor was expecting, delivering a 16 percent gain in revenue to A$146.7 million in the six months ended June 30 and a 28 percent boost in earnings before interest, tax, depreciation and amortisation to A$15.1 million, the Australian company said in its annual results. The report was the first since Bapcor successfully acquired Hellaby for $352 million and delisted the company from the NZX.

"Bapcor is very pleased with the quality and upside potential of this asset," chief executive Darryl Abotomey said in a statement. "Integration and optimisation of Hellaby Automotive is well underway, including an optimisation programme targeting an annual ebit (earnings before interest and tax) of between A$8 million and A$11 million." 

Those savings are on top of the removal of A$5 million of head office costs Hellaby operated with. 

Hellaby had been trying to shed its reputation as a diversified investment firm to focus on long-term positions in the automotive and resources space, but that metamorphosis hit the skids when Bapcor's offer emerged, eventually enticing cornerstone investors including the Green family's Castle Investments.

The Australian firm was only ever interested in the auto division, and today said while the footwear and resource services divisions had performed well, both are "being actively marketed and are at various stages through a potential divestment programme". 

The footwear unit, which includes Hannah's and No 1 Shoes, has been up for sale numerous times over the years as Hellaby held out for an offer that never eventuated. The division's ebitda climbed 29 percent to A$5.9 million in the six months under Bapcor ownership, while the resources division almost doubled earnings to A$11 million due to Hellaby's acquisition of TBS before the subsequent takeover. 

Bapcor's accounts put a value of A$27.4 million on the footwear division as at June 30 and A$151.5 million on the resource services division. The sale of both businesses is expected to be completed in the first half of the 2018 financial year. 

The Australian company's group profit, including the former Hellaby assets up for sale, rose 23 percent to A$53.7 million on a 48 percent gain in revenue to A$1.01 billion. The board declared a fully franked final dividend of 7.5 Australian cents per share, taking the annual return to 13 cents, 18 percent higher than a year earlier. 

Bapcor shares rose 2.8 percent to A$5.59, having declined 8.1 percent so far this year. 


Bond Offer: Infratil Ltd, 7.2 year & 10.2 year unsecured unsubordinated bond

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