Considerable restructuring is taking place at Australian company Hills as it carries out recommendations from an operational review which took place earlier this year.

Among the changes are: an increased focus on the health business and streamlining of its distribution business; a reduction in board directors’ fees; and an exit from the underperforming communications assets.

The review was undertaken in February of this year with a view to returning the AV distribution business to profitability. The subsequent strategic review, commenced in May, explored other options to improve performance and growth.

Hills will exit its Antenna and STEP satellite services businesses and will not renew its contract with Foxtel. As a result, manufacturing at the Hills O’Sullivan Beach facility in Adelaide will cease by the end of the calendar year.

Hills chief executive and managing director David Lenz says: “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.”

The FY2019 results will include one-off provisions and costs of $7.7 million related to distribution business restructuring and non-cash impairment of approximately $6.5 million of intangibles and non-current assets following a review of asset carrying values. The company made a statutory loss of approximately $8.8 million (preliminary, unaudited) after one-off provisions. An underlying profit of $0.5 million (preliminary, unaudited) is expected to be recorded.

As of 1 July, non-executive directors’ fees were reduced from $80,000 to $60,000; the chair fee dropped from $160,000 to $100,000; and the audit committee chair fee was reduced from $16,000 to $10,000.

Hills chairman Jennifer Hill-Ling says: “The results of our strategic and operational reviews will restore sustainable profitability and ensure the market correctly values the company for the benefit of all shareholders.”

She adds: “While we are disappointed by the write-downs, to effect the required turnaround in performance and refocusing of the business, the results are starting to show, particularly in health where profitable growth is very pleasing.”

A further update will be provided to shareholders as appropriate or at the Annual General Meeting.