Hills CEO and managing director, David Lenz.

HILLS Limited, Austrlaia’s largest electronic security distributor, announced its FY18 full year results today, which showed the company has returned to profitability, delivering a $A8.3m improvement on the previous year’s results.

Margins remained steady, despite a revenue decline of $A26.3m for the full year following the decision to exit NBN satellite installations, as well as lower antenna sales in the competitive Pay TV market in Australia and New Zealand. The majority of this impact was felt early FY18.

The FY18 net profit after tax (NPAT) result of $0.4m was an $8.3m improvement on the FY17 NPAT result and represents a significant turnaround for the business.

“In recent years the Company instigated a strategy to redefine and restructure the business and I am pleased for our shareholders, customers, vendors and employees that Hills has returned to profitability. Hills’ chief executive officer and managing director, David Lenz, said.

“In FY18 Hills set about delivering on key initiatives outlined in detail at our AGM, and it was pleasing to see the business deliver against these objectives during the year, in particular the e-Commerce platform and the establishment of a National Distribution Centre and Trade Centre at Seven Hills in New South Wales.

“Hills will continue to deliver the best possible customer experience and we remain focussed on implementing key business improvements in FY19,” Lenz said.

During the year, Hills strengthened relationships with existing vendors and customers, including:

* An extension of the agreement with Ericsson for the installation of fixed wireless services associated with the NBN rollout until 2020; and

* An extension of the agreement with Genetec, a leading provider of security and public safety solutions, for exclusive distribution across Australia and New Zealand until 2020.

Hills Security, Surveillance and IT business, had a solid result, delivering 2 per cent sales growth over FY17. The business also saw strong growth in its Enterprise and IT business areas which is expected to continue into FY19 based on a strong pipeline.

Hills SMB business continued to be impacted by its product portfolio mix which will see improvement in FY19 following the signing of Dahua Technologies and the pending release of new products from United Technologies Corporation.

“I am encouraged by our overall progress and with improvements in our vendor portfolio and the continued sales momentum of exclusive vendors Genetec and UTC, we expect to continue to grow in FY19,” Lenz said.

Highlights from FY18 include supply of:

* AXIS IP Cameras and Ipsotek analytics through SAAB for Queensland Corrections;

* Genetec unified IP security solution together with Axis IP Cameras to Siemens for Brisbane Airport; together with Siemens, Genetec unified IP security solutions and AXIS IP Cameras to Woodside Petroleum HQ Perth; and Vivotek IP cameras at Sydney Trains together with Indra Australia.

“While we still have work to do, we are confident that the strategies undertaken in FY18 and the continued focus on reducing operating expenses, strengthening customer and vendor partnerships and the rollout of our digital transformation project will deliver an increased profit in FY19,” Lenz said.

Financial Summary:

* NPAT of $0.4m represents a significant turnaround from prior year loss of $7.9m

* Expenses down $21.2m or 20.1% from $105.6m prior year to $84.4m

* Net debt down $3.1m from 30 June 2017 to $16.9m

* Significant turnaround in operating cash flow generating $12.0m up by 12.8m from FY17

* Inventory reduced from $46.5m to $44m

* Stronger overall company gross margins at 31.9 per cent, up 2.4 per cent on prior year.

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