Hills to exit communications business

Hills to exit communications business

Expects loss of $8.8 million

David Lenz

David Lenz

Credit: Hills Limited

Hills Limited has announced it will exit the communications business following a review of the business.

Specifically, the publicly-listed distributor will exit the antenna and Step satellite services business and will not renew its contract to supply satellite dishes to Foxtel. The company attributed the decision to a decline in profitability and continue fall in Foxtel  volumes.

Hills received an offer for the antenna business set to ensure the continue manufacture of the Black Arrow range of antennas in Australia.

To deliver a profitable and sustainable distribution business and to exit the communications business, Hills has incurred pre-tax one-off provisions of $6.3 million in FY2019 related to inventory and property. It has also recorded one-off redundancy costs of $1.4 million in FY2019.

Hills has also incurred an impairment of approximately $6.5 million (pre-tax) in FY2019 for intangibles and other non-current assets.  

Hills also revealed plans to streamline its distribution business in Australia and New Zealand, which provides audio visual, security and IT systems. It will continue to review the distribution business and provide further updates after 8 November.

Meanwhile, the board decided to increase focus on the health business as a result of the review of the business and also of its 50 per cent increase in earnings.

"The strategic review has delivered the roadmap to focus on the exciting potential of Hills Health business, with a streamlined distribution business expected to return to profitability as early as the first half of FY2020," Hills CEO and managing director David Lenz said.

In May, Hills announced it could save up to $5 million in operational costs over the next two financial years.

The operational review began in February across the distribution business with the goal of returning it to profitability while maintaining the performance of the Hills Health and Communications businesses. 

In August 2018, Hills reported a net profit after tax (NPAT) for the first time since 2014. The distributor closed the 2018 financial year with NPAT of $400,000, a considerable turnaround compared to the previous year's $7.9 million loss.

In 2015, Hills closed the year at an $85.9 million loss, which was reduced to $68.3 million the following year. Further uplift came in 2017, when net loss fell to $7.9 million.

Hills started to see financial improvement after the appointment of David Lenz as the company's CEO in August 2016, who was previously the distributor's chief operations officer and head of Hill's building technologies division.

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