K&D canvassing options with prime city site on the block

A SMALL private hospital is among the options being considered by Hobart hardware firm Kemp and Denning Limited for its Melville St site.

K&D’s hardware store in Murray St, Hobart, is being considered as a site for a private hospital. Picture: MATHEW FARRELL

A SMALL private hospital is among the options being considered by Hobart hardware firm Kemp and Denning for its Melville St site.

Chairman Greg Goodman told the company’s annual meeting in Hobart on Thursday that directors were considering options to improve shareholder value, including the sale of the $25 million site.

“To continue hardware operations is not an acceptable yield on the underlying assets,” Mr Goodman said.

His comments signal a likely end to K&D’s hardware operations.

Mr Goodman said a Hobart City Council rezoning of the site next year would enable the construction of a higher structure at the key city site.

Apart from selling the site, other options being considered are a private hospital, large format retail, small retail, student accommodation, and outright sale.

K&D has been running hardware operations since Andrew Kemp and Victor Denning established a small timber merchant business in Hobart in 1902.

Mr Goodman said directors had commissioned PricewaterhouseCoopers to assess the options.

“Interest has been shown by a number of parties,” he said .

“All work so far suggests the site is significantly under-utilised.”

It is understood approaches have come from Bunnings, Woolworths, Queensland firm McDuck properties and the University of Tasmania.

The company recorded a $1.2 million profit after tax in the year to May 2018.

However, when directors took questions, a shareholder, Alan McKinlay, suggested the true result from continuing operations should have been a loss of $800,000 to $1 million.

He said the inclusion of funds from the $3.6 million sale of a separate site at 90 Melville St should not have been booked to continuing operations.

But Mr Goodman said the profit was reported as per the accounting standards and confirmed by auditors BDO.

A spokesman for BDO said the site had been surplus to requirements.

“There was no intent to mislead shareholders,” Mr Goodman said

In the past year, Kemp and Denning has closed stores at Cambridge, Glenorchy and Kingston and sold its Mitre10 interests to Tasmania Hardware, trading as Clennetts. It closed its Devonport store in early 2017.

Shareholders were told that a profit of $150,000 to $300,000 was expected this financial year after a solid first quarter.

A shareholder asked if there were any plans to upgrade the company website, saying “it is an embarrassment”.

General manager Jason Hutton agreed it was an embarrassment but the company would tweak it soon.

“I don’t think it is harming sales but it doesn’t help,” he said.

Mr Goodman told the meeting that the company had $7.4 million in cash.

Mr Goodman was re-elected as chairman and Charles Kemp re-elected as a director.