| Tue 20 Jan 2009, 8:00 | | ELI - Ellies Holdings - Unaudited Interim Results For The Six Months |
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ELI
ELI
ELI - Ellies Holdings - Unaudited Interim Results For The Six Months
Ended 31 October 2008
Ellies Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration no. 2007/007084/06)
JSE code ELI & ISIN code ZAE000103081
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2008
ABRIDGED CONSOLIDATED BALANCE SHEET
Unaudited at Unaudited at Audited at
31 October 2008 31 August 2007 30 April 2008
R R R
ASSETS
Non-current assets 248,388,794 80,412,840 78,028,128
Property, plant and
equipment 34,054,817 26,618,974 26,582,766
Intangible assets 205,999,883 53,477,626 47,704,840
Deferred taxation 8,334,094 316,240 3,740,522
Current assets 521,429,368 283,307,890 400,138,058
Inventories 296,048,206 99,999,475 202,733,149
Trade and other
receivables 203,611,564 105,208,424 151,780,580
Bank and cash 21,769,598 78,099,991 45,624,329
769,818,162 363,720,730 478,166,186
EQUITY AND LIABILITIES
Ordinary shareholders`
interests 363,756,923 195,983,036 235,268,251
Share capital and
premium 437,556,100 356,465,693 355,171,918
Non-distributable
reserves (178,194,003) (177,431,668) (178,194,003)
Retained earnings 104,394,826 16,949,011 58,290,336
Non-current liabilities 97,169,886 3,867,636 22,665,281
Interest-bearing
liabilities 35,933,323 3,867,636 22,532,774
Vendor liabilities 61,116,841 - -
Deferred taxation 119,722 - 132,507
Current liabilities 308,891,353 163,870,058 220,232,654
Trade and other
payables 156,279,982 153,030,555 98,838,685
Provisions 21,494,118 - 13,726,308
Interest-bearing
liabilities 21,645,727 1,169,658 4,602,821
Taxation payable 44,042,144 8,189,124 17,174,357
Bank overdrafts 65,429,382 1,480,721 85,890,483
769,818,162 363,720,730 478,166,186
Shares in issue and to
be issued at end of
period 266,745,517 233,526,089 233,526,089
Shares in issue 245,713,589 233,526,089 233,526,089
Shares in to be issued 21,031,928 - -
Net asset value per
share (cents) 136.37 83.92 100.75
Net tangible asset
value per share
(cents) 59.14 61.02 80.32
ABRIDGED CONSOLIDATED INCOME STATEMENT
Unaudited
pro-forma
Unaudited eight months ended
six months ended (six months trading)
31 October 2008 31 October 2007
R R
Revenue 544,085,392 329,641,873
Profit before interest and
taxation ("PBIT") 77,389,752 43,261,781
Impairment of goodwill - -
Net finance costs (11,811,891) (3,590,546)
Net profit before taxation ("PBT") 65,577,861 39,671,235
Taxation (19,025,371) (12,589,416)
Net profit after taxation 46,552,490 27,081,819
SUPPLEMENTARY INFORMATION
Basic earnings per share (cents) 18.95 11.60
Headline earnings per share
(cents) 18.93 11.57
Diluted earnings per share (cents) 18.95 11.60
Diluted headline earnings per
share (cents) 18.93 11.57
Shares in issue
- at end of the period 245,713,589 233,526,089
- Weighted 245,713,589 233,526,089
- Diluted 245,713,589 233,526,089
Audited
Unaudited fourteen months
six months ended ended (twelve
(four months trading) months trading)
31 August 2007 30 April 2008
R R
Revenue 222,793,917 701,941,731
Profit before interest and
taxation ("PBIT") 26,825,170 89,101,157
Impairment of goodwill - (750,000)
Net finance costs (2,591,495) (6,367,260)
Net profit before taxation ("PBT") 24,233,675 81,983,897
Taxation (7,284,664) (23,693,561)
Net profit after taxation 16,949,011 58,290,336
SUPPLEMENTARY INFORMATION
Basic earnings per share (cents) 7.26 30.25
Headline earnings per share
(cents) 7.23 30.60
Diluted earnings per share (cents) 7.26 30.10
Diluted headline earnings per
share (cents) 7.23 30.44
Shares in issue
- at end of the period 233,526,089 233,526,089
- Weighted 233,526,089 192,682,775
- Diluted 233,526,089 193,656,600
RECONCILIATION OF HEADLINE EARNINGS
Unaudited
pro-forma
Unaudited eight months ended
six months ended (six months trading)
31 October 2008 31 October 2007
R R
Net profit after taxation 46,552,490 27,081,819
Adjusted for:
Profit on sale of property, plant
and equipment (67,249) (77,000)
Impairment of goodwill - -
Tax effect of adjustments 18,830 22,330
Headline earnings attributable to
ordinary shareholders 46,504,071 27,027,149
Audited
Unaudited fourteen months
six months ended ended (twelve
(four months trading) months trading)
31 August 2007 30 April 2008
R R
Net profit after taxation 16,949,011 58,290,336
Adjusted for:
Profit on sale of property, plant
and equipment (77,000) (88,387)
Impairment of goodwill - 750,000
Tax effect of adjustments 22,330 0
Headline earnings attributable to
ordinary shareholders 16,894,341 58,951,949
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Audited
Unaudited fourteen months
Unaudited six months ended ended (twelve
six months ended (four months trading) months trading)
31 October 2008 31 August 2007 30 April 2008
R R R
Cash flows
from
operating
activities (10,655,960) (2,363,589) (53,407,356)
Cash flow
from
investing
activities (29,200,438) (1,088,159) (20,928,877)
Cash flows
from
financing
activities 34,387,550 80,071,018 54,596,246
Net
(decrease) /
increase in
cash and
cash
equivalents (5,468,848) 76,619,270 (19,739,987)
Cash and
cash
equivalents
at the
beginning of
the period (40,266,154) - -
Cash
acquired as
part of
business
combinations 2,075,218 - (20,526,167)
Cash and
cash
equivalents
at the end
of the
period (43,659,784) 76,619,270 (40,266,154)
ABRIDGED STATEMENT OF CHANGES IN EQUITY
Share capital and Non-distributable
premium reserves
R R
Balance at 1 April 2006 41,848 (2,909)
Issue of shares at a premium 360,606,327 -
Listing expenses (4,140,634) -
Arising from comman control
transactions - (177,431,668)
Net profit for the six months
(4 months trading) - -
Balance at 31 August 2007 356,465,693 (177,431,668)
Issue of shares at a premium 1,176,116 -
Listing expenses (2,469,891) -
Arising from comman control
transactions - (762,335)
Net profit for the eight months - -
At 30 April 2008 355,171,918 (178,194,003)
Shares issued and to be issued 82,384,182 -
Net profit for the six months - -
At 31 October 2008 437,556,100 (178,194,003)
Retained earnings Total
R R
Balance at 1 April 2006 - 38,939
Issue of shares at a premium - 360,606,327
Listing expenses - (4,140,634)
Arising from comman control transactions - (177,431,668)
Net profit for the six months (4 months
trading) 16,949,011 16,949,011
Balance at 31 August 2007 16,949,011 195,983,036
Issue of shares at a premium - 1,176,116
Listing expenses - (2,469,891)
Arising from comman control transactions - (762,335)
Net profit for the eight months 41,341,325 41,341,325
At 30 April 2008 58,290,336 235,268,251
Shares issued and to be issued - 82,384,182
Net profit for the six months 46,552,490 46,552,490
At 31 October 2008 104,842,826 364,204,923
SEGMENTAL ANALYSIS
Unaudited six months ended
31 October 2008
Strategic Business Unit Revenue PBT
Wholesale distribution of consumer goods and
services 406,863,521 44,371,642
Infrastructural electrification 137,221,871 21,206,219
Group 544,085,392 65,577,861
BUSINESS COMBINATIONS EFFECTED DURING THE PERIOD
The following business combinations took place during the period ended
31 October 2008:
As disclosed as a post balance sheet event in the annual financial statements of
Ellies for the period ended 30 April 2008, Ellies acquired the business of
Megatron Federal (Pty) Ltd ("Megatron Federal") on 1 May 2008.
As disclosed in the Ellies Holdings Prospectus, the conditions precedent to the
acquisition of Ellies and Elsat Botswana were met during October 2008. The
effective date in terms of IFRS 3 has been taken as 31 October 2008.
Summary of carrying value of assets and liabilities acquired in terms of
business combinations:
Megatron Federal Ellies Botswana
1 May 2008 31 October 2008
R R
ASSETS
Non-current assets 4,632,180 3,098,890
Property, plant and equipment 4,632,180 3,029,173
Deferred taxation - 69,717
Current assets 45,649,910 17,166,266
Inventories 14,212,022 7,620,903
Trade and other receivables 31,395,045 7,321,037
Taxation - 26,470
Bank and cash 42,843 2,197,856
LIABILITIES
Non-current liabilities
Interest-bearing liabilities - 202,212
Current liabilities 49,653,980 16,776,578
Trade and other payables 48,410,005 16,334,875
Interest-bearing liabilities 1,078,494 441,703
Bank overdrafts 165,481 -
Carrying value of net assets acquired 628,110 3,286,366
Revenue PBT
Pro-forma amount as if the acquisitions occurred
at the beginning of the period 154,361,293 21,583,942
Actual amounts included in results 137,221,871 21,206,219
PURCHASE CONSIDERATION OF BUSINESS COMBINATIONS
Number of ordinary shares issued and to be
issued in terms of business combinations 33,219,428 999,151
Purchase consideration of business combinations:
Fair value of shares issued and to be issued
(cents) 248 200
Cash paid and to be paid at fair value
(including costs) 75,368,846 2,458,187
Total purchase consideration paid & payable 157,753,028 4,456,489
Goodwill arising from business combinations 157,124,917 1,170,123
NOTES TO THE UNAUDITED GROUP INTERIM RESULTS
UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2008
The unaudited results for the six months ended 31 October 2008 comprise the
historical business of Ellies for six months, together with the unaudited
results, since date of acquisition, of the business of Megatron Federal and
Ellies Botswana. These results have not been audited or reviewed by the external
auditors of Ellies.
BASIS OF PREPARATION AND ACCOUNTING POLICIES
The results for the six months ended 31 October 2008 have been prepared in
accordance with International Financial Reporting Standards ("IFRS"),
specifically IAS 34:Interim Financial Reporting, and comply with the
requirements of the South African Companies Act, 1973 and the Listing
Requirements of the JSE Limited. The accounting policies of the group are
consistent with those applied for the period ended 30 April 2008.
COMPARATIVES
Pursuant to a restructure before listing during the prior year, Ellies acquired
its operating subsidiaries on 1 May 2007 and changed its year end from February
to April, which resulted in a 14 month financial year ended 31 April 2008. As a
result, the prior 6 month interim period was set at 31 August 2008, which only
incorporated 4 months of trading results.
UNAUDITED PRO-FORMA PRIOR PERIOD RESULTS FOR THE EIGHT MONTHS ENDED 31 OCTOBER
2007 (6 MONTHS OF TRADING SINCE 1 MAY 2007)
The unaudited pro-forma prior period results for the six months ended 31 October
2007 comprise the historical business of Ellies assuming the group had been
trading for a six month period. These results do not include any information
relating to Megatron Federal and Ellies Botswana.
IFRS 3
The business combinations were accounted for using provisional figures, an
alternative allowed in terms of IFRS 3, as provided by Megatron and Ellies
Botswana. IFRS 3 allows a company to update these provisional figures within 12
months of the business combination date. The detailed assessment of Megatron
Federal`s assets, liabilities and contingent liabilities and hence the split and
valuation of goodwill and intangibles is in the process of being completed and
the required adjustment, if any, will be made in due course and reflected in the
year end results.
CONTINGENT MEGATRON FEDERAL VENDOR LIABILITY
In terms of the Megatron Federal acquisition agreement an amount of up to R32.5
million could become due to the vendor of Megatron Federal. This amount is
contingent on Megatron Federal achieving, for the year ending 30 April 2009, a
profit after taxation target of R30 million.
COMMENTARY
INTRODUCTION
Ellies Holdings Ltd ("Ellies") was listed on the Alternative Exchange of the JSE
Limited on 5 September 2007. Having changed its financial year end from February
to April, its "prior period" is for the 6 Months (4 Months trading) ended 30
August 2007.
Ellies is pleased to present its interim results for the six months ended
31 October 2008, with a comparative pro-forma income statement for six months
trading ended 31 October 2007 which includes the successful acquisition of the
Megatron Federal division, including its following business units
- Power management and electrical switch-gear and mini-substation manufacture
and supply.
- Large Power Generation.
- Facilities management and maintenance of the above and Office Environments.
FINANCIAL RESULTS AND PROSPECTS
Ellies has maintained strong and consistent growth in revenue and profitability
and has exceeded its forecast for the current financial six months and that
published in its Prospectus for 2009.
Growth in revenue to R544 million for the six trading months, May to October
2008, was driven by continued demand in satellite sales and consistent demand
for the electrical and consumable ranges offered by Ellies. Although consumer
power generation, which contributes some 5%, came under some pressure, corporate
demand continues steadily. This trend is expected to continue for the
foreseeable future.
The Megatron Federal division which was acquired and consolidated from May 2008,
exceeded expectations and is expected to continue this trend. The Ellies group
divisions, nationally all achieved pleasing organic growth, and together with
Megatron Federal produced very satisfactory results.
Net profit after taxation for the six months is R46.1 million, against the pro-
forma prior period of R27.1 million, translating to annualised earnings per
share ("eps") of 37.52 cents against pro-forma eps of 23.2 cents.
The cost of transport caused by the fuel price, a high interest rate and a very
weak Rand together, with a slower turnaround of the generator stock, impacted on
the overhead cost structure and put some pressure on gross margins. In spite of
these (interest of some R11.8 million, including IFRS required interest of R4
million) Ellies achieved exciting results with an EBITDA exceeding R82.5 million
for the period. With this sound "foundation" in place, and the expectant lower
fuel and interest costs alone, the group is somewhat insulated against possible
economic pressures ahead.
Interest bearing debt remained high mainly due to the bridging finance of R35
million for the cash payment for the acquisition/s, so as to avoid a share issue
under unfavourable market conditions. This together with a slower turnaround of
generator stock increased the interest bearing debt in the short term. The
Directors are confident in a steady reduction in gearing which will in turn
reflect in improved financing costs.
The board expects the current adverse economic climate to "test" Ellies in the
short term. However, Ellies` diversity of products and customer base will, to
some extent, hedge against much of this impact. Export growth also helps to
limit Ellies` exposure to current conditions, as with High Definition television
products. The government launch of Digital Terrestrial transmission this year,
should result in a marked increase in aerial product sales. Ellies, by the very
nature of its customer base remains well stocked, and thus hedged against
erratic movements in the exchange rate.
PROJECTIONS
The board remains optimistic with regard to the group`s continued organic
growth, with clear areas of cost savings. With the acquisition of CAT, pending
due diligence, and the resultant growth in the Corporate Security divisions and
in light of Megatron Federal`s forward order-book, the board expects to maintain
growth in revenue and profitability.
DIVIDEND POLICY
The dividend policy will be reviewed taking into account prevailing
circumstances and future cash requirements. Initially, all earnings generated by
the company will be utilised to fund future growth. Accordingly, no dividend has
been declared.
APPRECIATION
We welcome the management and staff of Megatron Federal and thank all our staff,
customers, business partners, advisors, suppliers to the Ellies group and most
importantly our shareholders for their support and faith in the group.
By order of the board:
ER Salkow WMG Samson
Chairman CEO
20 January 2009
Directors:
Executive Directors
E.R.Salkow (Chairman)
W.M.G.Samson (CEO)
M.F.Levitt (CFO)
J.H.Murray
R.Otto (Appointed 17 July 2008)
R.H.Berkman
Non-executive Directors
A.C.Brooking
H.S.Epstein (Independent)
M.S.Mazwi
M.R.Goodford (Appointed 1 November 2008)
Registered office:
94 Eloff Street Ext,Village Deep,
Johannesburg,2001
PO Box 57076, Springfield, 2137
Designated advisor.
Java Capital (Proprietary) Limited
Date: 20/01/2009 08:00:02 Produced by the JSE SENS Department.
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