Transcript Slide 1

Today’s Agenda
1.
YTD performance and year-end
2.
Capital structure, and how we will fund growth
3.
Stakeholder relations
4.
Hellaby interaction with subsidiaries
5.
Inter-company opportunities, leveraging off the Hellaby valuechain
6.
Growth opportunities – subsidiaries changing gear
7.
Strategic/business planning timeline/process for subsidiaries
8.
Hellaby strategy
9.
Other things you would like to raise
2
YTD performance and year-end
3
Hellaby Group Operating Result September 2010
Actual
Year to date
Budget Last Year
$'000
$'000
3,576
127
326
451
0
90
(36)
(29)
610
194
(1,299)
0
4,010
3,760
157
280
550
0
30
140
(30)
774
(677)
(1,143)
0
3,840
$'000
Forecast
Full Year
Budget Last Year
$'000
$'000
$'000
14,918
605
1,495
1,956
0
69
450
(67)
5,541
4,116
2,650
0
31,734
14,832
620
1,145
2,100
0
157
582
(69)
5,529
3,103
2,650
0
30,648
15,021
610
973
1,625
(23)
(2,346)
577
(158)
5,058
2,006
1,242
(16)
24,571
Subsidiaries (EBIT)
Brake & Transmission
Diesel Distributors
Diesel Distrib Australia (NZD)
TRS Tyre & Wheel
TRS Australia (NZD)
AB Equipment
Eurolift
TradedEquipment.com
Elldex Packaging
Number 1 Shoes
Hannahs
Retail Properties 2008
3,560
180
148
385
(13)
(982)
50
(56)
788
(1,233)
(1,622)
(7)
1,198
4
YTD performance and Year-end
000's
BNT
DDL
DDAL
ABE
Eurolift
TRS
No 1
Hannahs
Elldex
2011
Year End
Forecast $
15,767
633
1,749
1,332
609
2,070
6,090
4,578
6,235
39,063
EBITDA
2012
Pro Rata
$
50,000 Difference
20,182
4,415
810
177
2,239
490
1,705
373
780
171
2,650
580
7,795
1,705
5,860
1,282
7,981
1,746
50,000
10,937
%
28%
28%
28%
28%
28%
28%
28%
28%
28%
28%
5
Profit Comparison
$M
50.0
40.0
30.0
EBITDA
EBIT
20.0
Interest
NPAT
10.0
0.0
2004
(10.0)
2005
2006
2007
2008
2009
2010
2011
6
ROFE
($000'S)
Actual
Actual
Actual
2007
2008
2009
2010
2011
Inventory
Debtors
Creditors
Software
Fixed Assets
Funds Employed
126,685
53,984
(51,496)
2,071
36,932
168,176
132,590
56,817
(66,510)
1,648
34,482
159,027
107,124
33,963
(46,527)
1,733
28,320
124,613
100,452
34,031
(53,809)
2,086
26,153
108,914
98,253
35,081
(56,228)
1,308
26,349
104,763
Trading EBITDA
33,989
(9,829)
24,160
40,567
(10,608)
29,959
26,443
(8,286)
18,157
27,667
(7,351)
20,316
33,897
(7,784)
26,113
14.7%
18.3%
12.8%
17.4%
24.4%
Depreciation & amortisation
Trading EBIT
ROFE (Trading EBIT / Average Funds Employed)
Actual Sept Forecast
7
Capital structure, and how we will fund growth
8
Westpac Debt
180,000
100.0%
Core
160,000
140,000
Capital Notes
Gearing %
90.0%
80.0%
70.0%
60.0%
100,000
50.0%
80,000
40.0%
60,000
30.0%
40,000
20,000
0
Hellaby – stated maximum gearing ratio 45% (Debt : Debt + Equity)
20.0%
10.0%
0.0%
Gearing %
Total Net Debt
120,000
9
Westpac Banking Covenants
5.00
4.50
4.00
3.50
3.00
2.50
ICC
Debt Cover
2.00
1.50
1.00
0.50
-
ICC target
> 2.5 (EBIT : Funding Costs)
Debt cover target < 3.0 (Total Debt : EBITDA)
Project Acorn
•
3 : 7 pro-rata renounceable rights issue
•
$1.30 issue price
•
Interest expense saving in FY2011 $950k
•
Underwriting - Castle
- Forsyth Barr
- Sub-underwriters
Outcome
•
Raised $28.4 million (less costs)
•
Rights traded at 50 cents
•
Oversubscriptions facility
•
3,570 (46.4%) of 7,700 shareholders took up entitlement
•
19.1 million (87.3%) of 21.8 million rights were taken up (prior to
oversubscriptions)
11
Capital Notes
• 5 year subordinated capital notes created 18 May 2006, maturing 15 June
2011
• 8.50% coupon rate, paid quarterly in arrears
• Funded BBQ Factory !
• 1,300 note holders
• Advised market did not intend converting to shares 7 July 2010
• Rationale for redeeming / options
• Interest expense saving in FY 2011 $950k
12
Capital structure and how we will fund growth
• Working capital – still the cheapest option
• Bank debt – have significant headroom in existing facilities and covenants
• Equity raising - Project Acorn very successful
- could raise $20m -$25m any time in next 6-24 months
- Alternatives include placement, rights issue, SDP,
combination
• Senior bonds or other instrument – capital notes repaid on 15 December
2010
13
Stakeholder relations
14
Stakeholder relations
• Significant management focus
• Rebuilding investor confidence  share price and funding flexibility
• More proactive communication of ‘Hellaby story’, performance and
strategy
• Total shareholder return (TSR) superior to NZX50
• TSR up 39.5% last year; up 40% YTD
15
Number of Hellaby Shareholders
12,000
11,000
10,000
9,000
8,000
7,000
6,000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
16
Spread of Hellaby Shareholders
Number of
Shareholders
% Shareholders
Number of
Shares held
% of Shares held
Less 2,000
4,557
59.1
2,892,057
4.0
2,000 - 5,000
1,511
19.6
4,666,911
6.4
5,000 - 10,000
834
10.8
5,703,820
7.8
10,000 - 50,000
714
9.3
13,104,740
17.8
50,000 - 100,000
50
0.7
3,437,949
4.7
Greater 100,000
49
0.6
43,036,086
59.1
7,715
100.00
72,841,563
100.00
Total
•
Average shareholding 9,441 (excluding Castle average is 6,566)
•
Minimum holding per NZX is 200 shares
•
279 shareholders holding 30,660 shares - minimum holding
Top 20 Hellaby Shareholders
Rank Name
Units
% of Units
22,184,136
30.46
1.
Castle Investments Limited
2.
3.
Superlife Trustee Limited
Accident Compensation Corporation
2,414,929
2,143,272
3.32
2.94
4.
Custody and Investment Nominees Limited
1,529,925
2.10
5.
NZ Guardian Trust Investment Nominees
1,053,641
1.45
6.
Custodial Services Limited
967,436
1.33
7.
Citibank Nominees (New Zealand) Limited
807,793
1.11
8.
Leveraged Equities Finance Limited
767,174
1.05
9.
10.
Haynes Investment
Forsyth Barr Custodians Limited
746,555
659,049
1.02
0.90
11.
Generator Investments No 1 Limited
637,472
0.88
12.
13.
Paul Anthony Byrnes
Highbury Holdings Limited
529,481
500,000
0.73
0.69
14.
Custodial Services Limited
473,494
0.65
15.
16.
17.
18.
ASB Nominees Limited
William John Falconer
J & D Sands Limited
Forsyth Barr Custodians Limited
450,000
450,000
400,000
396,142
0.62
0.62
0.55
0.54
19.
Paddock Holdings Limited
368,698
0.51
20.
Robert & Irene Carter
363,938
0.50
18
Dividends
•
Previous approach to paying dividends
•
Current policy to pay 50% of NPAT, imputed where able
•
5 cps dividend payable 12 November 2010
•
Interim dividends
Dividend History
Year
Interim
Final
Total
2010
3
5
8
2009
-
-
-
2008
5
6
11
2007
10
-
10
2006
15
16
31
2005
19
20
39
2004
16
19
35
2003
11
15
26
2002
8
10
18
2001
7
8
15
2000
7
7
14
19
Dividend Reinvestment Plan
• Introduced March 2006
• Strike price = VWAP – dividend – 5% discount
• 30 – 35% uptake
• Castle pro-rata participation
20
Hellaby interaction with subsidiaries
21
Hellaby interaction with subsidiaries
• Statement of Intent good reference point
• Respective Hellaby roles
• Effectiveness of monthly reviews
• Growth now a key agenda item
• What can Hellaby do better or differently with subsidiaries?
• Talent development programme
22
Intercompany opportunities,
leveraging off the Hellaby value-chain
23
Intercompany opportunities
• How do I organically grow my business? - Customer clusters
• How do I grow Hellaby business ? - Opportunities identified
• Think services as well as customers !
24
Growth opportunities – subsidiaries
changing gear
25
Executing profitable growth – ‘changing gear’
• Hellaby very serious about profitable growth
• Arguably bigger challenge for CEOs than turnaround
• Subsidiaries must compete for capital, justify projects and expenditures,
obtain buy-in for strategy and direction
• Is your business committed to driving profitable growth?

will revenues therefore exceed budget?
• Do you each have a clear plan?
26
Strategic / business planning timeline /
process for subsidiaries
27
Business Planning Review
• New process in Hellaby – moving from “panel beating” to “growth”
– Part of strategic framework agreed with Board
• Timing
– Info request / topics for discussion to CEO’s by mid December
– Workshop with each CEO and relevant senior team members first half of
February
– Market assessment in put into early budgeting process
– Strategic options (as relevant) into budgeting process by late April
• Resourcing
– Lead by Greg
– Support from John, Neil and Richard
• Looking for growth  Subsidiary EBITDA $50m in FY2012
28
Business Planning Review
• Overview of process
– Start with assessment of market environment
– Build assessment of each subsidiary’s:
•
Environment
•
Competitive forces
•
Industry structure
•
Opportunities and threats
•
Capability
 Strategic position
– Identify and evaluate options
– Implementation
– Review and repeat update 12 monthly
• Deliberate strategy and superb execution = superior returns
29
Hellaby strategy
30
Hellaby strategy – ‘buy build harvest’
• Strategic framework development – two distinct investment portfolios
• Core investment portfolio

specialised ‘core’ sectors / divisions

sectors may migrate over time

ultimately trans-Tasman
• Generator Fund
 Expansion capital portfolio
 Co-investor partnerships in strong SMEs
 Agnostic about investment sectors
• Portfolio will change over next 3-5 years
31
Other things you would like to raise
32
Risk Framework
Stage 1 D Lucas Exercise (Complete 2009/10)
–
Identify risks
–
Assess the risk value
–
Matrix
Stage 2 Quantate (Start Oct 10)
–
–
–
–
Set up Quantate from the D Lucas exercise
Handover with basic definitions and training given (Nov & Dec 10)
Subsidiaries to complete their set up and to review risks uploaded into Quantate
Board report limited to matrix and a description of the top risks (with the first report due 14th
February 2011 & the second on the 13th May 2011)
Stage 3 Expand Risk Management (Start at the Finance Workshop)
–
–
Add mitigating controls
New Board report developed (due with July 10th day reporting, and quarterly thereafter)