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ELI - Ellies Holdings Limited - Unaudited interim results for the six months

Release Date: 24/01/2012 07:05
Code(s): ELI
Wrap Text

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 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). 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