Figures can talk, and the latest financial results for Hellaby Holdings shout out loud.
Revenue from continuing operations rose 2.5% in the year to June 30, but trading profit rose 22.7% to $34 million. Profit after tax rose 48.5% to $15.3 million and the total dividend paid soared 25% to 10c per share.
Nursing a long black at a cafe in Dunedin, a satisfied chief executive John Williamson told the Otago Daily Times he was very pleased with the result.
"We knew we had to turn around the company to get to the starting line. It has taken longer than expected, driven by the effect of the recession and the state of some of the companies.
"But business is good and we have a chance to grow our business."
Hellaby was finally in a position to restart the "buy" component of its corporate strategy, and in recent months it had been actively seeking investment opportunities.
Hellaby had a "rudely healthy" balance sheet and a strong culture of financial discipline.
There was a chance for many of the Hellaby businesses to grow organically.
Even businesses traditionally seen as mature still had organic growth potential.
"Organic growth is difficult in a recession as it comes out of expected sales growth from those companies. It means using the top two inches."
Asked about his expansion plans, Mr Williamson said Hellaby was looking for bolt-on acquisitions, particularly in auto parts and packaging.
Hellaby was less likely to buy into sectors it believed were underperforming.
An investment in one new sector was possible.
He said investment would be patient and selective. Hellaby was not interested in acquiring simply to demonstrate traction.
The footwear division was often seen as a strange part of the mix for the company, which mainly invested in auto parts, packaging and distribution.
But Mr Williamson said the division, which included Number One Shoes, Hannahs, Hush Puppies and Pulp, had generated $12 million free cash in the past year on 1% of same-store growth, something he was happy about.
The spectacular cash flow had come despite the Christchurch earthquakes and a tornado in Auckland nearly demolishing the company's largest Number One store.
The Number One stores all had new management teams in place and those teams were performing well.
The stores were undergoing a restyling in terms of both furnishings and better styles of footwear. The Dunedin store would be one of the last to be re-styled. Number One was also moving into accessories, such as socks.
"We are targeting a broader demographic. Every New Zealander should be able to find something in Number One. People will notice more targeted discounting than across the board."
That was not meant to demean Hannahs, which had always performed well with its existing team of managers, he said.
"We have flagged to the market that we are not looking to invest in new retail, but we want to see our performance lift in our existing operations."
Mr Williamson described the other industrial-focused divisions of Hellaby as the non-sexy parts of the business. What made them so to Hellaby were the financial ratios.
"We are always attracted to sectors with reasonable industry structures that give us the opportunity to aggregate. It needs to create shareholder value by running a well-disciplined business.
"What is attractive to us will look different to others, but judge us on our financial results and the improved financial ratios," he said.
It had been four years since the current management team of four had come together at Hellaby.
Mr Williamson joined the company as a director without any intention of becoming the managing director. He was a board member for 18 months before deciding he could help turn around the company through leadership changes.
"What was attractive for me was the size of the problem. I knew there was a turnaround opportunity to restructure Hellaby into a better business."
Chief financial officer Richard Jolly joined in 2006; chief operating officer Neil MacCulloch joined in 2008; and chief investment officer Greg Batkin joined in 2010.
The team delegates the running of the 10 Hellaby businesses to the respective chief operating officers. In return, the management team runs a culture of "no surprises".
Asked about the future, Mr Williamson said the next big strategy was mergers and acquisitions and the market would judge the success of that.
"The big thing for me is more around people. We raised the bar in Hellaby when this management team came together four years ago."
Of the 70 senior managers spread across their businesses, 30 were new, he said.
As as soon as Hellaby started acquiring new businesses, there would be a shortage of talent, he said.
Mergers and acquisitions gave him the opportunity to move people around the group, but the challenge would be to bring in new people and keep them.
"The major core characteristic that will define Hellaby long term will be the quality of its management. We will be judged by the quality of our team."
