| Tue 24 Jan 2012, 7:05 | | ELI - Ellies Holdings Limited - Unaudited interim results for the six months |
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ELI
ELI
ELI - Ellies Holdings Limited - Unaudited interim results for the six months
ended 31 October 2011
Ellies Holdings Limited
Registration number 2007/007084/06
Share code: ELI
ISIN: ZAE000103081
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2011
Revenue up 10.5%
PAT up 36%
EPS up to 21.01 cents
HEPS up to 20.98 cents
NAV per share up to 217.93 cents
Abridged consolidated statement of financial position
Unaudited Unaudited Audited
as at as at as at
31 October 2011 31 October 2010 30 April 2011
R`000 R`000 R`000
ASSETS
Non-current assets 326 512 291 190 309 553
Property, plant and equipment 91 226 60 824 76 584
- Land and buildings 48 825 25 013 41 353
- Other 42 401 35 811 35 231
Goodwill and other
intangible assets 225 472 224 684 223 988
Investment in associate 2 358 - 1 039
Deferred taxation 7 456 5 682 7 942
Current assets 826 293 551 307 655 240
Inventories 455 211 367 449 358 895
Trade and other receivables 327 765 172 460 224 319
Taxation receivable 344 93 418
Bank and cash balances 42 973 11 305 71 608
Total assets 1 152 805 842 497 964 793
EQUITY AND LIABILITIES
Capital and reserves 658 699 547 961 596 079
Share capital and premium 501 494 501 494 501 494
Non-distributable reserves (178 630) (178 799) (178 875)
Accumulated profits 338 577 225 266 274 824
Equity attributable to
equity holders of the parent 661 441 547 961 597 443
Non-controlling interests (2 742) - (1 364)
Non-current liabilities 39 283 44 967 44 059
Interest-bearing liabilities 38 992 44 967 43 913
Deferred taxation 291 - 146
Current liabilities 454 823 249 569 324 655
Interest-bearing liabilities 130 248 26 444 29 672
Trade and other payables 233 158 169 775 245 182
Provisions 1 992 1 600 2 258
Taxation payable 22 596 7 847 1 099
Shareholders for dividend 188 221 188
Bank overdraft 66 641 43 682 46 256
Total equity and liabilities 1 152 805 842 497 964 793
Supplementary information:
Net asset value per share (cents) 217.93 180.54 196.40
Net tangible asset value
per share (cents) 143.44 106.24 122.81
Number of shares in issue 303 505 691 303 505 691 303 505 691
Abridged consolidated statement of comprehensive income
Unaudited six Unaudited six Audited
months ended months ended year ended
31 October 2011 31 October 2010 30 April 2011
R`000 R`000 R`000
Revenue 721 200 652 562 1 316 055
Profit before depreciation,
amortisation, interest and
taxation ("EBITDA") 105 481 78 966 159 786
Depreciation (8 170) (6 390) (12 229)
Amortisation of intangibles (279) (807) (1 502)
Profit before interest
and taxation ("PBIT") 97 032 71 769 146 055
Interest received 84 518 548
Interest paid (7 698) (5 437) (12 819)
Share of losses from associate (2 034) - (531)
Net profit before
taxation ("PBT") 87 384 66 850 133 253
Taxation (25 009) (20 835) (39 044)
Net profit after taxation ("PAT") 62 375 46 015 94 209
Other comprehensive income:
Foreign currency
translation reserve 245 (132) (208)
Total comprehensive
income for the period 62 620 45 883 94 001
Attributable to:
Equity holders of the parent 63 753 46 015 95 573
Non-controlling interests (1 378) - (1 364)
Net profit after taxation 62 375 46 015 94 209
Attributable to:
Equity holders of the parent 63 998 45 883 95 365
Non-controlling interests (1 378) - (1 364)
Total comprehensive
income for the period 62 620 45 883 94 001
Supplementary information
Basic earnings per share (cents) 21.01 15.16 31.49
Headline earnings per
share (cents) 20.98 15.12 31.42
Weighted average number
of shares in issue 303 505 691 303 505 691 303 505 691
Reconciliation of basic earnings and headline earnings
Unaudited six Unaudited six Audited
months ended months ended year ended
31 October 2011 31 October 2010 30 April 2011
R`000 R`000 R`000
Net profit after taxation
attributable to equity
holders of the parent 63 753 46 015 95 573
Adjusted for:
Profit on sale of property,
plant and equipment (98) (172) (301)
Tax effect on adjustment 27 48 84
Headline earnings attributable
to ordinary shareholders 63 682 45 891 95 356
Abridged consolidated statement of cash flows
Unaudited six Unaudited six Audited
months ended months ended year ended
31 October 2011 31 October 2010 30 April 2011
R`000 R`000 R`000
Cash flows from
operating activities (116 747) 14 715 93 290
Cash (utilised by)/generated
from operations (106 326) 53 158 166 000
Interest received 84 518 548
Interest paid (7 698) (5 476) (12 338)
Taxation paid (2 807) (18 531) (45 932)
Dividends paid - (14 954) (14 988)
Cash flows from
investing activities (27 928) (34 155) (57 177)
Cash flows from
financing activities 95 655 316 2 492
Net (decrease)/increase
in cash and cash equivalents (49 020) (19 124) 38 605
Cash and cash equivalents at
the beginning of the period 25 352 (13 253) (13 253)
Cash and cash equivalents
at the end of the period (23 668) (32 377) 25 352
Abridged consolidated statement of changes in equity
Unaudited six Unaudited six Audited
months ended months ended year ended
31 October 2011 31 October 2010 30 April 2011
R`000 R`000 R`000
Balances at beginning
of the period 596 079 517 254 517 254
Total comprehensive
income for the period 62 620 45 883 94 001
Dividends declared - (15 176) (15 176)
Balances at end of the period 658 699 547 961 596 079
Segmental analysis
Unaudited six Unaudited six Audited
months ended months ended year ended
31 October 2011 31 October 2010 30 April 2011
R`000 R`000 R`000
Revenue 721 200 652 562 1 316 055
Wholesale distribution
of consumer goods and services 466 300 567 036 1 095 946
Infrastructural electrification 251 098 85 526 216 540
Property division 2 862 711 3 131
Other 3 802 - 3 569
Holding company/consolidation (2 862) (711) (3 131)
Segmental profits/(losses)
from operations
Net profit before
interest and taxation 94 998 71 769 145 524
Wholesale distribution
of consumer goods and services 60 281 63 204 124 772
Infrastructural electrification 38 157 8 270 22 821
Property division 2 563 573 2 646
Other (5 723) - (4 289)
Holding company/consolidation (280) (278) (426)
Net finance costs (7 614) (4 919) (12 271)
Operating segments (combined) (5 918) (4 004) (10 108)
Property division (1 696) (434) (1 682)
Deemed vendor interest - (481) (481)
Profit before taxation 87 384 66 850 133 253
Notes to the unaudited interim results
Basis of preparation and accounting policies
The unaudited interim results for the six months ended 31 October 2011 have been
prepared in accordance with International Financial Reporting Standards
("IFRS"), and comply with IAS 34 - Interim Financial Reporting, the AC 500
series of interpretations, the requirements of the Companies Act, No. 71 of 2008
of South Africa, and the Listings Requirements of the JSE Limited. The
accounting policies used in the preparation of the unaudited interim results for
the six months ended 31 October 2011, are consistent with those applied in the
audited financial statements for the year ended 30 April 2011. These results
have been compiled under the supervision of the Chief Financial Officer, MF
Levitt CA (SA). The interim results have not been reviewed or reported on by the
group auditors, PKF (Jhb) Inc.
Commentary
Introduction
Ellies Holdings Limited ("Ellies" or the "group") is a leading South African
manufacturer, wholesaler, importer and distributor in diversified sectors,
including consumer goods, renewable and energy savings and infrastructural power
and telecommunications, servicing the local and African market.
Overview
Overall, group results reflect excellent growth in earnings, albeit with higher
gearing and debt to equity ratios.
The group`s Megatron division delivered growth with impressive earnings
contributing substantially to the group`s results. Megatron grew PBIT by 361% on
the prior corresponding period, resulting in the group`s reported increase in
EPS of 39%. Megatron`s earnings growth is largely the result of its improved
product offering across the various sectors in which it operates, with
significant investments having been made in new products and in improving
production facilities and skills. This has resulted in increased orders from an
expanded customer base, primarily from African mining clients.
PBIT of the Ellies` consumer goods segment declined by some 5% against the prior
corresponding period. The board considers this satisfactory, as the prior
corresponding period included the effects of the World Cup. Although the
division`s decline in revenue was around 18%, the division improved its gross
profit percentage to 48% (2010: 38%). Both the decline in revenue and the
improvement in gross profit percentage were largely the result of a change in
the satellite pricing and distribution models, which did not impact on volumes
sold or on market share.
The group`s statement of financial position remains strong, with NAV and NTAV
per share improving to 217 cents (2010: 181 cents) and 142 cents (2010:
106 cents) respectively.
At 30 April 2011, the group`s positive cash position was largely due to creditor
financing and significant cash receipts against contract orders placed prior to
the year-end. Soon thereafter a significant portion of this cash was utilised
for the fulfilment of these contract orders.
During the period under review interest-bearing bank debt, which includes
property term finance of R49 million (2010: R25 million), grew by
R116 million, to R235.8 million, resulting in a total interest-bearing debt to
equity ratio of 28% (2010: 16%). Excluding property term finance, which is
appropriate in that the group`s investment in its operating properties is
strategic and long-term, interest-bearing debt to equity is at 22% (2010: 12%).
The group`s interest cover to EDITDA remains at a satisfactory level of 14
times.
The group`s working capital came under pressure by as much as R211 million as
compared to 30 April 2011. In Ellies, the consumer goods division, initial
stocking requirements of new product lines increased inventory and seasonal
influences required early ordering to alleviate historic shipping delays at the
ports. This seasonal influence resulted in short-term extended debtors and
inventory days. The growth in the Megatron business added to the working capital
pressure.
The group`s capital demands, additional investments in plant and equipment and
the construction of new production facilities on existing land and buildings has
been financed through the additional gearing. Negotiations are being finalised
with the group`s bankers for the restructuring of short-term funding into term
debt.
On 11 November 2011, Mr MS Mazwi resigned from the board. The Ellies board
wishes him well in his endeavours. A process is underway to appoint additional
independent non-executive directors to the board.
The group remains BEE compliant with a current Level 6 rating.
Prospects
The group`s diversification into new product development and ventures continues
to build on its existing skills, infrastructure and customer base.
Ellies expects that implementation of the Digital Terrestrial Television
("DTT") migration rollout through Southern Africa is imminent. Ellies, together
with the group`s strong strategic partners and alliances, will be positioned to
participate in and benefit from the DTT roll out.
The group`s initiatives in energy conservation, making use of renewable energy
products, are achieving traction. Ellies` energy efficient lighting products are
proving to be an important component of these initiatives and are successfully
penetrating the consumer market, with expected further ongoing growth in this
sector.
Ellies has established a close working relationship with Eskom, in an effort to
assist in the reduction of energy consumption in the domestic home. With the
group`s technology partners in the lighting and energy saving environment,
Ellies is seeing pleasing uptake of its technology and household products.
With the continued weakening of the Rand, greater penetration into Africa is
anticipated. Management is planning aggressive expansion into export markets. It
is expected that Ellies` existing manufacturing capacity will facilitate this
drive.
SkyeVine has been slow to achieve its initial objectives. Ellies management has
adopted a conservative approach to its future involvement.
Megatron`s growth is expected to continue. This is supported by Megatron`s
current order book and new business opportunities in South Africa and the rest
of Africa. These new opportunities include the development of alternate power
solutions, telecommunication towers and data centre infrastructure. Substantial
alliances with international technology and product leaders in industrial
battery power storage, modular data centres, telecommunications and
telecommunication towers have been secured.
Megatron`s traditional business of customised solutions for power generation,
transmission and distribution for utilities continues to recover. The group is
reviewing mechanisms to confer operating independence on Megatron, particularly
given its capital requirements in this growth phase.
The board remains positive as regards the group`s continued organic growth, new
ventures and product opportunities, which continue to present themselves.
Dividend policy
The payment of dividends is reviewed periodically, taking into account
prevailing circumstances and future cash requirements. No dividend is proposed
at this stage due to short-term funding requirements to support working capital
needs.
Appreciation
The directors and management, as always, continue to recognise and appreciate
the focused efforts and hard work of the group`s staff and also continue to
appreciate its customers, business partners, advisors, suppliers and most
importantly shareholders.
By order of the board
ER Salkow WMG Samson
Chairman CEO
24 January 2012
Directors
Executive directors: ER Salkow (Chairman), WMG Samson (Chief Executive Officer),
MF Levitt (Chief Financial Officer), RH Berkman, RE Otto
Lead independent non-executive director: OD Fortuin
Independent non-executive directors: MR Goodford, MS Mazwi
(resigned 11 November 2011)
Non-executive director: AC Brooking
Registered office: 94 Eloff Street Ext, Village Deep, Johannesburg, 2001
(PO Box 57076, Springfield, 2137)
Sponsor: Java Capital
Company secretary: Probity Business Services (Pty) Limited
Transfer secretaries: Link Market Services South Africa (Pty) Limited
www.elliesholdings.com
Date: 24/01/2012 07:05:01 Produced by the JSE SENS Department.
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