Tale of two halves for Hills as back to basics turnaround continues
FY16 has been a year of contrasting halves for Hills, which has returned to black in the second half of FY16, but still recorded a net loss after tax of $68.3 million.
The loss nevertheless comes as the company's ‘back to basics' turnaround appears to be showing benefits.
The second half FY16 NPAT result of $700,000 is a dramatic turnaround on the previous half year's loss of $69.0 million, with both results coming off similar sales - $164.2 million in the first half, and $164.7 million in the second half.
Overall revenue stood at $328.9 million for FY16, down from $428.8 million in 2015, with EBITDA of $11.7 million – some 8.3% higher than February guidance.
Hills says its net loss of $68.3 million for FY16 reflects impairments already booked in the first half of FY16. Net debt for the company also dropped significantly, down from $38.5 million in December to $24.2 million.
Hills says the back to basics turnaround is mostly complete, though ‘flattening' of the company structure continues.
The company has been transforming itself in recent years from a conglomerate dependent on low margin, capital intensive steel fabrication, to a higher margin value-added distributor of security, AV and health technology products and services.
Hills has been open that the process, while critical for the long term future of the company, has not been a smooth process.
It says the key focus for FY16 was to stabalise the business, changing its management team to focus on consolidating and growing the Hills businesses across Australia and New Zealand; building a deeper and stronger sales pipeline; improving margins and further reducing costs.
Replacing revenue from the loss of its Crestron distribution, following the vendor's move to a direct distribution model globally in FY15, also figured high.
Hills says new suppliers, including Tyco, Vivotech and Ipsotek are helping to just that.
The company's results note a number of successful wins for its Building Technologies division, including the supply of Ruckus wi-fi networks to Western Sydney University, the supply of Genetec unified IP security solutions and Auckland International Airport – done in partnership with Datacom NZ – and at Sydney Trains.
The Health Solutions business also clocked up some significant wins, and saw EBITDA move from a loss of $100,000 in H1 2016 to a $1.4 million profit in the second half. Those wins include contracts with Western Sydney Local Health District for the installation and maintenance of patient engagement solutions at Auburn, Blacktown, Westmead and Mt Druitt hospitals, and the supply of patient engagement solutions into the New Royal Adelaide Hospital.
A contract to supply Hills' nurse call solution at Sydney's new Northern Beaches Hospital has also been signed.
Hills says it will start to move beyond its ‘stabilisation phase' and focus on growth opportunities in FY17.