Hills Limited has confirmed its underlying net profit will be $11 million for the 2015 financial year – at the lower end of guidance provided to the market in April.
In a statement to the stock exchange today, Hills also announced a write-down of assets of about $94 million.
“The group has carried out comprehensive review of the carrying value of its assets as part of the year-end process having due consideration to Hills market capitalisation, market growth assumptions and cash flows from ongoing operations,” the company said.
“As part of the this review, the company has determined that the accounting carrying values of goodwill, other intangible assets, deferred tax assets and freehold property as at 30 June 2015 should be reduced by approximately $94 million in total.”
Hills insisted the write-down had no impact on the economics of the business, nor future operating cash flows.
Hills CEO Grant Logan, who replaced predecessor Ted Pretty in a swift handover in May, said today the impairment was related to growth rates in the company’s health and technology businesses.
“We are working hard to improve the experience for Hills customers and vendors and are continuing to drive cost reductions and productivity improvements,” he said.
“For ate least the rest of the calendar year, our focus will be on the efficiency and profitability of our health and technology businesses.”
In April, Hills warned the market that its full-year underlying profit could be up to 40 per cent lower than expected, at between $11 million and $14 million. This revised forecast was well below the $18.5 million to $19.5 million range flagged in February.