| Wed 7 Nov 2007, 15:47 | | ELI - Ellies Holdings Limited - Unaudited interim |
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ELI
ELI
ELI - Ellies Holdings Limited - Unaudited interim results for the six months
ended 31 August 2007
Ellies Holdings Limited
(formerly Everlight Investments (Pty) Ltd)
(Incorporated in the Republic of South Africa)
(Registration number: 2007/007084/06)
JSE code: ELI & ISIN: ZAE000103081
("Ellies" or "the group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 AUGUST 2007
HIGHLIGHTS OF FIRST INTERIM RESULTS REFLECTING 4 MONTHS TRADING
- Revenue up 7.14% on forecast
- NPAT up 12.82% on forecast
- EPS of 7.26 cents (on 4 months trading)
- BEE shareholding in excess of 10%
GROUP INCOME STATEMENT
Unaudited 6 Pro forma profit % change
months ended 31 forecast for the on
August 2007 (4 6 months ended 31 forecast
months trading) August 2007 (4
months trading)
R R
Revenue 222,793,917 207,950,514 7.14%
Cost of goods sold (137,453,836) (123,171,916)
Gross profit 85,340,081 84,778,598
Administration and other (58,514,911) (61,186,896)
expenses
Profit from operations 26,825,170 23,591,702 13.71%
Net financing costs (2,591,495) (2,070,512)
Profit before taxation 24,233,675 21,521,190
Taxation (7,284,664) (6,498,043)
Profit for the period 16,949,011 15,023,146 12.82%
Weighted average number of 233,526,089 233,526,089
shares in issue
Headline earnings 16,949,011 15,023,146
Headline earnings per share 7.26 6.43
(cents)
Earnings per share (cents) 7.26 6.43
Fully diluted earnings per 7.26 6.43
share
GROUP BALANCE SHEET AS AT 31 AUGUST 2007
Assets
Non-current assets 80,412,840
Property, plant and equipment 26,618,974
Goodwill 53,477,626
Deferred taxation 316,240
Current assets 283,307,890
Inventories 99,999,475
Trade and other receivables 105,208,424
Cash and cash equivalents 78,099,991
Total assets 363,720,730
Equity and liabilities
Capital and reserves 195,983,036
Share capital 2,335
Share premium 356,463,358
Non distributable reserve (177,431,668)
Accumulated profit 16,949,011
Non-current liabilities 3,867,636
Interest-bearing liabilities 3,867,636
Current liabilities 163,870,058
Trade and other payables 153,030,555
Current portion of interest-bearing 1,169,658
liabilities
Bank overdraft 1,480,721
Taxation owing 8,189,124
Total equity and liabilities 363,720,730
NAV per share (cents) 83.92
NTAV per share(cents) 61.02
GROUP CASH FLOW STATEMENT FOR THE 6 MONTHS ENDING 31 AUGUST 2007
R
Cash utilised in operations (2,363,589)
Cash utilised in investing activities (1,088,159)
Cash generated from financing activities 80,071,018
Increase in cash and cash equivalents 76,619,270
GROUP STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY for the 6 months ended 31
August 2007
R
Share capital and share premium 356,465,693
Issued during period 360,606,327
Share issue expenses written off (4,140,634)
Net profit for the period 16,949,011
Business purchased under common control (177,431,668)
Total capital and reserves 195,983,036
INTRODUCTION
Ellies listed on the Alternative Exchange of the JSE Limited ("JSE") on 5
September 2007, and is pleased to report the company`s maiden interim results
for the six months ended 31 August 2007.
On listing Ellies changed its year-end from February to April and consequently
will have a 14 month financial year ending 30 April 2008.
The acquisition of Ellies` operating subsidiaries was effective on 1 May 2007.
In compliance with IFRS 3, Ellies only began accounting for the profits of its
subsidiaries from 1 May 2007. Consequently, the interim results for the six
months ended 31 August 2007 reflect a 4 month trading period from 1 May to 31
August 2007.
PROFILE
Ellies was established in 1979 in Johannesburg by the current Chairman, Elliot
Salkow. The group has grown from an entrepreneurial one-man operation and is now
the largest manufacturer, wholesaler and distributor in Southern Africa of
television reception-related products, a dominant player in domestic electronic
and industrial audio products and is a leading importer of associated products.
The group has a range of over 10 000 products, from terrestrial antennae and
satellite equipment to television, audio, domestic electrical and telephone
accessories.
The group controls the packaging, marketing, sales and distribution of its own
manufactured and its imported products.
Ellies has twelve operations:
Manufacturing & Engineering
- Aluminium & Plastics Manufacturing
- Electronics Manufacturing
- Light Metal Engineering
Manufacture, Import and Distribution Of:
- Terrestrial Television Reception Products
- Satellite Television Reception Products
- Electrical & Surge Safe
- Audio Equipment & Accessories
- Corporate Services
- Elsat Full Maintenance Finance and Rentals
- Packaging & Marketing
- Sales & Merchandising
- Distribution/Logistics
NATIONAL INFRASTRUTURE
Ellies operations are geographically situated to service Johannesburg, Pretoria,
Namibia, Botswana, Nelspruit, Polokwane (formerly Pietersburg), Bloemfontein,
Upington, East London, Port Elizabeth and Cape Town. The group`s principal
infrastructural and industrial activities are at its head office in Gauteng
which extracts operational and managerial synergies across all products and
service offerings and controls dealings with the common customer base serviced
by distribution branches.
FINANCIAL RESULTS
Ellies has maintained strong and consistent growth in revenue and profitability
and has exceeded its forecast earnings for the first six months (4 trading
months). It has achieved its objective of listing on the JSE and management has
integrated well into the new corporate reporting structure. Growth in revenue to
R222.8 Million for the 4 trading months May to August was driven by increased
demand in the retail and DIY sectors and Rugby World Cup promotions.
The gross margin variance of 2.46% resulted from the mix between the greater
revenue contributions of the satellite division which is traditionally lower
margin business, influenced largely by promotions aimed at the Rugby World Cup.
Net profit after taxation for the period was R16.95 million against forecasted
net profit after taxation of R15,02 million. Earnings per share increased from
forecast 6.43 cents to 7.26 cents.
Ellies increased its stock levels significantly in order to meet customer demand
as well as taking advantage of competitive pricing from suppliers on favourable
terms. Despite the increase in stock and trade receivables, resulting from the
revenue and trade growth and the decline in payables, the group`s cash and cash
equivalents from operating activities declined by R2.36 Million. The share
capital and share premium increased as a result of the capital raising
undertaken at the time of listing.
BASIS OF PREPARATION
The interim results have been prepared in accordance with IAS 34 (Interim
Financial Reporting). The accounting policies applied in preparing these interim
financial statements are in accordance with International Financial Reporting
Standards (IFRS). These financial results have not been audited or reviewed by
the groups`s auditors.
PROSPECTS
Ellies is experiencing high levels of demand for its products and services
reflecting growth in its consumer base and increased spending by its customers.
Organic growth has been achieved through motivated and professional sales and
service teams, efficiencies in production and diversification in Ellies` product
range and customer base. The board does not expect that any general economic
slowdown will diminish the group`s prospects.
The listing of Ellies and broad-based employee share participation have
contributed to high levels of motivation in management and employees at all
levels and to cohesion between all divisions and branches nationwide. This
augurs well for continued out-performance.
The Ellies Corporate Services division is beginning to expand and mature, as
expected, with recent contracts concluded with Famous Brands, Vodacom shops,
Sportsman Warehouse, Outdoor Warehouse and Shell Forecourts, to name a few. This
burgeoning division is expected to continue to be the catalyst for the growth of
Ellies rentals division.
Likewise the expansion to the existing range of electrical and surge products,
from adaptors to extension reels, have been well received. The electrical and
surge product sales have increased exponentially, quarterly from 2006 to date,
in keeping with forecast, as one of the bigger growth areas for Ellies.
Exports have increased despite the strength of the Rand. Ellies has secured
substantial additional orders from multiple Satellite Content Providers in
Africa. These orders are currently being delivered to numerous countries, north
of our borders.
As forecasted, Ellies has opened two new trade counters, one in Pretoria and the
other in Upington. Both have exceeded their targets while finding new customers,
predominantly from the informal sector. This success will prompt the
establishment of additional trade counters in various growth areas of South
Africa.
Ellies as a group is acquisitive and intends to announce it`s first acquisition
by December 2007.
The directors are aware of the current low gearing in the group and expect to
consider optimising the funding of the group in light of the current cost of
capital, acquisitive intent and investor interest.
BEE SHAREHOLDING
A BEE transaction was concluded between existing shareholders of Ellies and
Famaatla Industries (Proprietary) Limited ("Famaatla"), at no cost to the group.
Famaatla is 100% black-owned and its directors are: - Mziwamahlubi Mazwi (BCom
CA(SA)), who has a back-ground in corporate finance and is a non-executive
director on the board of Ellies; - Jack Phalane (BA, LLB, LLM), an attorney and
a partner at Fluxmans Inc. Famaatla has purchased 15 million shares in the
company comprising approximately 6,5% of shares in issue. Famaatla has committed
not to dispose of any of its shares in the next 5 years and to acquire
additional shares over time with the objective of increasing its shareholding to
approximately 10% of shares in issue.
As other black shareholders hold approximately 4,2% of the company, currently
more than 10,7% of the issued shares of Ellies are black-owned.
To give effect to a broad based empowerment component of the BEE transaction,
20% of Famaatla is held for the benefit of the Ellie`s installer school, which
has been established to train historically disadvantaged individuals to start
installation business as outsourced service providers to Ellies.
DIVIDEND POLICY
The dividend policy will be reviewed periodically taking into account prevailing
circumstances and future cash requirements. Initially, all earnings generated by
the company will be utilised to fund future growth. Accordingly, in line with
group policy, no dividend has been declared for the interim period.
APPRECIATION
We thank our loyal staff for their commitment and hard work which contributed to
Ellies`s achievement of its milestone listing on the JSE. We also thank our
customers, business partners, advisors, suppliers and most importantly our
shareholders for their ongoing support and faith in the group.
By order of the board
Elliot Salkow Wayne Samson
Executive Chairman Chief Executive Officer
Michael Levitt James Murray
Chief Financial Officer Executive Director
Raymond Berkman Hilton Epstein
Executive Director Non-Executive Director
Andrew Brooking Mziwamahlubi Mazwi
Non-Executive Director Non-Executive Director
5 November 2007
Business address:
94 Eloff Street Ext, Village Deep, Johannesburg, South Africa
Business Postal Address:
P O Box 57076, Springfield, 2137, South Africa.
Company Secretary:
PROBITY BUSINESS SERVICES (Pty) Ltd.
Telephone: (011) 327-7146
Facsimile: (011) 327-7149
Transfer Secretaries:
Link Market Services South Africa (Pty) Ltd
Visit our website: www.elliesholdings.com
Johannesburg
7 November 2007
Designated advisor:
Java Capital (Proprietary) Limited
Date: 07/11/2007 15:47:01 Produced by the JSE SENS Department.
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