| Wed 29 Jul 2009, 15:37 | | ELI - Ellies - Reviewed group results for the year ended 30 April 2009 |
|
ELI
ELI
ELI - Ellies - Reviewed group results for the year ended 30 April 2009
ELLIES HOLDINGS LIMITED
(Registration no. 2007/007084/06)
Share Code ELI
ISIN code ZAE000103081
("Ellies" or "the Company")
Reviewed group results for the year ended 30 April 2009
Abridged consolidated balance sheet
Reviewed as at Audited as at
30 April 2009 30 April 2008
R R
ASSETS
Non-current assets 251,195,286 78,028,128
Property, plant and equipment 31,383,675 26,582,766
Goodwill 210,280,295 47,704,840
Other intangible assets 4,893,754 -
Deferred taxation 4,637,562 3,740,522
Current assets 487,895,554 400,138,058
Inventories 301,190,864 202,733,149
Trade and other receivables 156,134,729 151,780,580
Taxation receivable 1,952,535 -
Other current assets 897,932 -
Bank and cash balances 27,719,494 45,624,329
Total assets 739,090,840 478,166,186
EQUITY AND LIABILITIES
Capital and reserves 384,513,761 235,268,251
Share capital and premium 439,389,667 355,171,918
Non-distributable reserves -178,335,326 -178,194,003
Retained earnings 123,459,420 58,290,336
Non-current liabilities 85,039,992 22,665,281
Interest-bearing liabilities 28,178,845 406,647
Vendor loans payable 55,305,490 22,126,127
Deferred taxation 1,555,657 132,507
Current liabilities 269,537,087 220,232,654
Interest-bearing liabilities 8,394,783 326,303
Vendor loans payable 30,885,482 4,276,518
Trade and other payables 130,242,536 95,149,974
Provisions 15,174,726 13,726,308
Taxation payable 3,552,974 20,863,068
Bank overdrafts 81,286,586 85,890,483
Total equity and liabilities 739,090,840 478,166,186
Shares in issue and to be issued at end of
year (number of shares) 269,504,398 234,499,914
Shares in issue 246,638,901 233,526,089
Shares to be issued 22,865,497 973,825
Net asset value per share (cents) 155.90 100.75
Net tangible asset value per share (cents) 70.64 80.32
Abridged consolidated income statement
Audited
fourteen months
Reviewed twelve ended (twelve
months ended months trading)
30 April 2009 30 April 2008
R R
Revenue 976,846,314 701,941,731
Profit before depreciation,
amortisation, interest and taxation
("EBITDA") 131,409,064 96,149,206
Depreciation (10,018,633) (7,048,049)
Amortisation of intangibles (8,202,663) -
Profit before impairments, interest and
taxation 113,187,768 89,101,157
Impairment of goodwill and intangibles - (750,000)
Net finance costs (23,458,279) (6,367,260)
Net profit before taxation ("PBT") 89,729,489 81,983,897
Taxation (24,560,405) (23,693,561)
Net profit after taxation 65,169,084 58,290,336
Supplementary information
Basic earnings per share (cents) 26.42 30.25
Headline earnings per share (cents) 26.42 30.60
Core headline earnings per share (cents) 32.16 32.15
Diluted earnings per share (cents) 24.18 30.10
Diluted headline earnings per share
(cents) 24.18 30.45
Diluted Core headline earnings per
share (cents) 29.43 31.98
Shares in issue
- at end of the year 246,638,901 233,526,089
- Weighted 246,638,901 192,682,775
- Diluted 269,504,398 193,656,600
Reconciliation of headline earnings and core headline earnings
Audited
fourteen months
ended (twelve
Reviewed twelve months trading)
months ended
30 April 2009 30 April 2008
R R
Net profit after taxation 65,169,084 58,290,336
Adjusted for:
Profit on sale of property, plant and
equipment (4,660) (88,387)
Impairment of goodwill - 750,000
Tax effect on adjustments 1,305 24,748
Headline earnings attributable to
ordinary shareholders 65,165,729 58,976,697
Adjusted for:
Amortisation of intangibles 8,202,663 -
IFRS implied interest on vendor
liabilities 8,238,889 2,962,645
Tax effect on adjustments (2,296,746) -
Core headline earnings attributable to
ordinary shareholders 79,310,535 61,939,342
Abridged consolidated cash flow statement
Audited
fourteen months
Reviewed twelve ended (twelve
months ended months trading)
30 April 2009 30 April 2008
R R
Cash flows from operating activities (13,098,741) (53,407,356)
Cash flow from investing activities (31,600,918) (20,928,877)
Cash flows from financing activities 29,323,503 54,596,246
Net decrease in cash and
cash equivalents (15,376,156) (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 year (53,567,092) (40,266,154)
Abridged statement of changes in equity
Share capital and Non-distributable
premium reserves
R R
Balance at 5 March 2007 (date of
incorporation) - -
Issue of shares at a premium 361,782,443 -
Listing expenses (6,610,525) -
Arising from common control transactions - (178,194,003)
Net profit for the fourteen months
(12 months trading) - -
Balance at 30 April 2008 355,171,918 (178,194,003)
Shares issued and to be issued
at a premium 84,217,749 -
Foreign currency translation reserve - (141,323)
Net profit for the year - -
Balance at 30 April 2009 439,389,667 (178,335,326)
Retained earnings Total
R R
Balance at 5 March 2007 (date of
incorporation) - -
Issue of shares at a premium - 361,782,443
Listing expenses - (6,610,525)
Arising from common control transactions - (178,194,003)
Net profit for the fourteen months
(12 months trading) 58,290,336 58,290,336
Balance at 30 April 2008 58,290,336 235,268,251
Shares issued and to be issued
at a premium - 84,217,749
Foreign currency translation reserve - (141,323)
Net profit for the year 65,169,084 65,169,084
Balance at 30 April 2009 123,459,420 384,513,761
Segmental analysis
Strategic Business Unit
Reviewed twelve months ended
30 April 2009
Revenue PBT
R R
Wholesale distribution of consumer goods and
services 759,713,152 66,586,280
Infrastructural electrification 217,133,162 23,143,209
Group 976,846,314 89,729,489
Audited fourteen months ended
30 April 2008
Revenue PBT
R R
Wholesale distribution of consumer goods and
services 701,941,731 81,983,897
Infrastructural electrification - -
Group 701,941,731 81,983,897
Business combinations effected during the period
The following business combinations took place during the year ended 30 April
2009:
- Ellies acquired the business of Megatron Federal (Pty) Ltd ("Megatron") on 1
May 2008.
- As disclosed in the Ellies Holdings Prospectus, the conditions precedent to
the acquisition of Ellies and Elsat Botswana ("Ellies 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 Ellies Botswana
1 May 2008 31 October 2008
R R
ASSETS
Non-current assets 4,961,600 3,098,890
Property, plant and equipment 4,632,180 3,029,173
Deferred taxation 329,420 69,717
Current assets 29,594,746 17,166,266
Inventories 14,212,022 7,620,903
Trade and other receivables 15,339,881 7,321,037
Taxation receivable - 26,470
Bank and cash balances 42,843 2,197,856
LIABILITIES
Non-current liabilities
Interest-bearing liabilities - 202,212
Current liabilities 33,598,816 16,776,578
Trade and other payables 32,354,841 16,334,875
Interest-bearing liabilities 1,078,494 441,703
Bank overdrafts 165,481 -
Carrying value of net assets acquired 957,530 3,286,366
Purchase consideration of business
combinations:
Number of ordinary shares issued and to be
issued in terms of business combinations 35,052,997 999,151
Purchase consideration of business
combinations 171,792,281 4,456,490
Carrying value of net assets acquired 957,530 3,286,366
Intangible assets acquired:
- Marketing and customer related intangible
assets acquired 13,096,417 -
- Deferred tax on intangible assets (3,666,997) -
- Residual goodwill from business
combination 161,405,331 1,170,124
Purchase consideration of business
combinations 171,792,281 4,456,490
Revenue PBT
R R
Pro forma amount as if the acquisitions occurred
at the beginning of the period 245,468,965 41,213,896
Actual amounts included in results 235,004,091 41,090,087
Notes to the reviewed year end results
Reviewed results for the year ended 30 April 2009
Ellies, which listed on the Alternative Exchange of the JSE Limited on 5
September 2007, presents its second reviewed annual results for the year ended
30 April 2009 ("the reviewed results").The reviewed results comprise the
historical business of Ellies for 12 months, together with the results, since
date of acquisition, of the businesses of Megatron and Ellies Botswana.
Megatron is a power generation, distribution and transmission division and its
products include transformer substations, medium voltage switchgear, diesel
generator sets and sheet metal products.
These results have been reviewed by the group`s auditors, PKF (Jhb) Inc and
their unqualified review opinion is available for inspection at the company`s
registered office.
Basis of preparation and accounting policies
The results for the year ended 30 April 2009 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 year numbers represent a fourteen month period, which only
incorporate twelve months of trading results.
Financial results
The acquisition of Megatron has driven growth in revenue to R976,8m (2008:
R701,9m). Sales of electrical and consumable products offered by Ellies
remained buoyant despite the consumers sales pressures currently being
experienced in the current economic slowdown.
Demand for Satellite Television continues unabated, with on-going demand from
both the lower LSM population, through the furniture stores, and National
Retail outlets. Ellies experienced severe shortages of available satellite
decoder stock during a four month period in the latter half of the year. This
impacted materially on both revenue and profits of the group during that
period. With stock availability resuming late April 2009, it is expected that
all lost unit sales will be recovered in the post April months.
Ellies achieved Headline Earnings of R65,2m (2008: R58,9m), translating into
fully diluted headline earnings per share ("heps") of 24.18 cents. (2008: 30.45
cents*).
* Due to the timing of the listing and the capital raising during the 2008
financial year, the calculation of the fully diluted shares amounted to 193.7m
shares, resulting in headline earnings of 30.45 cents per share as required by
IFRS. The total number of shares in issue at the 2008 year end amounted to
234.5m shares, thus equating to heps of 25.15 cents per share in issue.
Adjusting for amortisation of intangibles of R8,2m (2008: R nil) and IFRS
implied interest on vendor liabilities of R8,2m (2008 : R2,96m), core earnings
of R79,3m (2008: R61,9m) was achieved, translating into fully diluted core
earnings per share ("ceps") of 29.42 cents. (2008: 26.41 cents on shares in
issue*)
EBITDA of R131,4m (2008 : R96,1m) translates into a growth of 36.7%. The group
incurred a cash flow interest expense of R15,2 m, which converts into an
interest cover of 8.6 times of EBITDA.
Cash flows from operations were positive after taking into account that, with
the new acquisitions, working capital was increased by R80.7m and with the new
provisional tax legislation, a 2008 provisional top up and higher 2009
provisional taxes payments totalling R46.5m were made. These were funded from
normal working capital during the year.
The initial cash payment resulting from the acquisition of Megatron and the
further cash payments to the Ellies vendors of R28,2m were funded from
additional bank facilities.
The goodwill arising on the Megatron acquisition was tested for impairment by
an independent third party and it was determined that no impairment is
necessary.
In terms of the Megatron acquisition agreement, an additional amount is payable
in shares and cash if the business achieves a profit in excess of a warranted
profit. The determination of the additional amount payable has not been resolved
between the parties to the sale, who interpret the agreement differently. The
company has accounted for an amount of R10.3m in these reviewed results. This
may be adjusted depending on the outcome of a process to resolve issues of
interpretation. From the vendor`s perspective, a further amount of R12.5m could
become payable (payable in shares and cash), to the vendor. Any settlement of
this contingent liability will increase goodwill.
Prospects
The Megatron division exceeded expectations. In line with the declared strategy
of taking the Megatron offerings national through the Ellies existing
branch network, a new division called "Ellies Power" has been established. The
Ellies Power division is already proving the viability and benefits of this
concept and is expected, together with Megatron, to deliver organic growth in
the year ahead. Ellies will continue to expand its presence in the electrical
sector with expansion of product offerings including light commercial products.
Although the board expects the current adverse economic climate to test Ellies
in the short term, Ellies` diversity of products and customer base, should
hedge against much of this impact. With the establishment of representation in
Zambia and Zimbabwe, export growth helps to limit Ellies` exposure to current
local conditions, as does the High Definition and Digital Product advances and
the Corporate and Ellies Power divisions. Ellies, by the very nature of its
customer bases must remain well stocked, which affords some hedging against
erratic movements in the exchange rates.
With a Digital migration imminent which will see all terrestrial households
convert to digital reception, Ellies has entered into a strategic alliance with
Altech UEC securing distribution rights of their digital terrestrial decoders
for retail sector (see S.E.N.S dated 22 July 2009). This together with
increased aerial sales should assure Ellies of continued growth beyond 2014.
The board remains optimistic with regard to the group`s continued organic
growth and opportunities, with clear benefits from improved capacity
utilization.
Dividend policy
All earnings generated by the group are to be utilised to fund future growth in
the historical Ellies business, Megatron, the groups representation in Zambia
and Zimbabwe and the Digital reception migration. Accordingly, no dividend has
been declared. In future years, the dividend policy will be reviewed taking into
account prevailing circumstances and future cash requirements.
Appreciation
Once again, we would like to thank all our staff, customers, business partners,
advisors and suppliers and most importantly our shareholders for their
continued support and faith in the group.
By order of the board:
ER Salkow WMG Samson
Chairman CEO
29 July 2009
Ellies Holdings Limited
(Registration no. 2007/007084/06)
Share Code ELI
ISIN code ZAE000103081
Directors:
Executive Directors
E.R.Salkow (Chairman)
W.M.G.Samson (CEO)
M.F.Levitt (CFO)
J.H.Murray (Resigned 19 February 2009)
R.Otto (Appointed 15 July 2008)
R.H.Berkman
Non-executive Directors
A.C.Brooking
H.S.Epstein (Resigned 4 February 2009)
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 (Pty) Limited
2nd Floor, 2 Arnold Road, Rosebank, 2196
(PO Box 2087, Parklands, 2121)
Transfer secretaries:
Link Market Services South Africa Ltd
5th Floor, 11 Diagonal Street, Johannesburg, 2001
(PO Box 4844, Johannesburg 2000)
Auditors
PKF (Jhb) Inc.
42 Wierda Road West, Wierda Valley, Sandton, 2196
(Private Bag X10046, Sandton, 2146)
Company secretary:
Probity Business Services (Pty) Limited
3rd Floor, JHI House, Cradock Avenue, Rosebank, 2196
(PO Box 85392, Emmarentia, 2029)
Date: 29/07/2009 15:37:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
