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Audited group results for the year ended 30 April 2012
AUDITED GROUP RESULTS
FOR THE YEAR ENDED 30 APRIL 2012
Ellies Holdings Limited Registration No. 2007/007084/06 Share code: ELI ISIN: ZAE000103081
Revenue up 30% HEPS up 73% to 54,45 cents EPS up 73% to 54,53 cents
PAT up 75% NAV per share up 251,36 cents Dividend declared 10 cents
Abridged consolidated statement of financial position
Audited Audited
as at as at
30 April 2012 30 April 2011 % change
R'000 R'000
ASSETS
Non-current assets 333 245 309 553
Property, plant and equipment 100 376 76 584
Land and buildings 56 546 41 353
Other 43 830 35 231
Goodwill 217 554 217 554
Intangible assets 7 473 6 434
Investment in associate 1 039
Deferred taxation 7 842 7 942
Current assets 1 012 356 655 240
Inventories 506 377 358 895
Trade and other receivables 456 268 224 319
Taxation receivable 339 418
Bank and cash balances 49 372 71 608
Total assets 1 345 601 964 793
EQUITY AND LIABILITIES
Total shareholders' interests 760 450 596 079
Share capital and premium 501 494 501 494
Non-distributable reserves (178 907) (178 875)
Accumulated profits 440 315 274 824
Equity attributable to equity holders
of the parent 762 902 597 443
Non-controlling interests (2 452) (1 364)
Non-current liabilities 164 714 44 059
Interest-bearing liabilities 163 150 43 913
Vendor loan payable 1 171
Deferred taxation 393 146
Current liabilities 420 437 324 655
Interest-bearing liabilities 11 190 29 672
Vendor loan payable 752
Trade and other payables 294 012 245 182
Provisions 12 710 2 258
Taxation payable 10 001 1 099
Shareholders for dividends 188 188
Bank overdrafts 91 584 46 256
Total equity and liabilities 1 345 601 964 793
Shares in issue at end of the year
(number of shares) 303 505 691 303 505 691
Net asset value per share (cents) 251,36 196,40 28,0
Tangible net asset value
per share (cents) 177,04 122,81 44,2
Abridged consolidated statement of comprehensive income
Audited Audited
year ended year ended
30 April 2012 30 April 2011 % change
R'000 R'000
Revenue 1 711 252 1 316 055 30,0
Profit before interest, taxation,
depreciation and amortisation
("EBITDA") 273 371 159 785 71,1
Depreciation (15 074) (12 228)
Amortisation of intangibles (557) (1 502)
Profit before interest and taxation 257 740 146 055
Interest received 139 548
Interest paid (23 510) (12 819)
Share of losses from associate (4 401) (531)
Net profit before taxation ("PBT") 229 968 133 253
Taxation (65 565) (39 044)
Net profit after taxation 164 403 94 209 74,5
Other comprehensive income:
Foreign currency translation reserve (32) (208)
Total comprehensive income for the year 164 371 94 001
Attributable to:
Equity holders of the parent 165 491 95 573
Non-controlling interests (1 088) (1 364)
Net profit after tax 164 403 94 209
Attributable to:
Equity holders of the parent 165 459 95 365
Non-controlling interests (1 088) (1 364)
Total comprehensive income for the year 164 371 94 001
Supplementary information:
Basic earnings per share (cents) 54,53 31,49 73,2
Headline earnings per share (cents) 54,45 31,42 73,3
Shares in issue (number of shares):
At end of the year 303 505 691 303 505 691
Weighted 303 505 691 303 505 691
Reconciliation of earnings to headline earnings:
Audited Audited
year ended year ended
30 April 2012 30 April 2011 % change
R'000 R'000
Net profit for the year attributable
to equity holders of the parent 165 491 95 573 73,2
Adjusted for:
Profit on sale of property, plant
and equipment (322) (301)
Tax effect on adjustments 90 84
Headline earnings attributable to
ordinary shareholders 165 259 95 356 73,3
Abridged consolidated statement of cash flows
Audited Audited
year ended year ended
30 April 2012 30 April 2011
R'000 R'000
Cash flows from operating activities (123 145) 93 290
Cash (utilised by)/generated from
operations (43 729) 166 000
Interest received 139 548
Interest paid (in cash) (23 416) (12 338)
Taxation paid (56 139) (45 932)
Dividends paid (14 988)
Cash flows from investing activities (45 174) (57 177)
Cash flows from financing activities 100 755 2 492
Net (decrease)/increase in cash
and cash equivalents (67 564) 38 605
Cash and cash equivalents
at the beginning of the year 25 352 (13 253)
Cash and cash equivalents
at the end of the year (42 212) 25 352
Abridged statement of changes in equity
Audited Audited
year ended year ended
30 April 2012 30 April 2011
R'000 R'000
Balance at the beginning of the year 596 079 517 254
Total comprehensive income
for the year 164 371 94 001
Dividends declared during the year (15 176)
Balance at the end of the year 760 450 596 079
Segmental analysis
Audited Audited
year ended year ended
30 April 2012 30 April 2011 % change
R'000 R'000
Revenue 1 711 252 1 316 055
Consumer goods and services 1 140 467 1 095 946 4,1
Infrastructure 559 240 216 540 158,3
Property 6 342 3 131
Other 11 545 3 569
Holding company/consolidation (6 342) (3 131)
Segmental profits/(losses)
from operations
Profit/(loss) before interest
and taxation, after losses
from associate 253 339 145 524
Consumer goods and services 164 607 124 772 31,9
Infrastructure 91 097 22 821 299,2
Property 5 271 2 646 99,2
Other (6 863) (4 289)
Holding company/consolidation (773) (426)
Net finance costs (23 371) (12 271)
Operating segments (combined) (19 557) (10 108)
Property division (3 720) (1 682)
Deemed vendor interest (94) (481)
Profit before taxation 229 968 133 253
Business combinations effected during the year
The Megatron Federal division of Ellies Proprietary Limited, acquired the business of Andrew Wireless
Solutions Africa Proprietary Limited on 1 November 2011.
Summary of fair value of assets and liabilities acquired in terms of business combinations:
R'000
Fair value of net assets acquired
Property, plant and equipment 128
Inventories work in progress 4 597
Trade and other payables (1 122)
Total net assets acquired/purchase consideration 3 603
Purchase consideration discharged as follows:
Discharged as follows: 3 603
Cash payments made during the year
(excluding deemed interest) 1 719
Deferred payment due in the future 1 884
Loss
Revenue before tax
R'000 R'000
Pro forma amount as if the acquisitions occurred
at the beginning of the year 10 195 3 337
Actual amounts included in results 5 366 1 589
Notes to the audited year-end results
Audited results for the year ended 30 April 2012
The results for the year ended 30 April 2012 have been audited by PKF (Jhb) Inc. and their
unqualified audit report is available for inspection at the company's registered office.
Basis of preparation and accounting policies
These annual financial results have been prepared in accordance with International
Financial Reporting Standards ("IFRS"), the AC 500 series of Interpretations, the requirements
of IAS 34, the Listings Requirements of the JSE Limited and the Companies Act of South
Africa. The accounting policies used are consistent with those applied in the previous financial
year. These results have been compiled under the supervision of the Chief financial officer,
MF Levitt CA (SA).
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 energy, and power and telecommunications infrastructure, servicing the local and
African market.
Overview
The group continues to reflect excellent growth in earnings.
The Infrastructure division delivered impressive full-year earnings. Megatron grew revenue
by 158% and PBIT by 299% on the prior corresponding year. Megatron's earnings growth
is largely the result of its improved product offering across the various sectors in which it
operates, with significant investments made in new products as well as the improvement in
production facilities and an extended skills base. This has resulted in increased orders from
an expanding customer base.
The Ellies consumer goods and services segment grew revenue by 4% and PBIT by 32%. The
smaller revenue growth on the prior corresponding year was largely the result of a change in
the satellite pricing and distribution models, which did not impact on gross profit percentages,
volumes sold or on market share.
The combined success of both divisions resulted in a 73% growth in basic earnings per share
for the group. By continuing to cement market share in all divisions, improve capacity, skills,
systems and diversify products and services, the group is sustainably increasing profits.
The group's statement of financial position remains strong, with NAV per share and NTAV per
share improving to 251 cents (2011: 196 cents) and 177 cents (2011: 123 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 year under review, interest-bearing bank debt, which includes property term finance
of R57 million (2011: R49 million), grew by R100,8 million, to R265 million. The group's interest
cover to EBITDA remains at a satisfactory level of 12 times (2011: 13 times).
The group's working capital came under pressure by as much as R327 million as compared
to 30 April 2011, as a result of the consumer goods division's initial stocking requirements
for new product lines and the implementation of Eskom Project Power Save.
The growth in the infrastructure business added to working capital pressures due to an
increase in work in progress of R64 million and a substantial increase in debtors, in line with
revenue growth, with limited creditor funding.
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 additional gearing. The group continues implementing the strategy of acquiring
currently leased operating premises and building on vacant land, where it is deemed
appropriate, for own use requirements.
The group has made R120 million in capital investments over the last four years, which have
delivered a ROA exceeding 20% p.a. and improved the foundations for sustainability.
At the date of this report, the group's overall interest-bearing debt has improved by
approximately R80 million since year-end. With these inflows, the total interest-bearing debt
to equity ratio drops to 20% (and 16% excluding the group's investment in properties).
Prospects
Management remain optimistic on the growth prospects of the group through continued
diversification into new product development and ventures, with a focus on infrastructure
development and expansion of the group's customer base.
With approximately a third of the Eskom Project Power Save programme having been
completed by year-end, Ellies expects the completion of this programme and the roll out
of additional similar projects. The group looks forward to the implementation of the Digital
Terrestrial Television ("DTT") migration throughout Southern Africa, further developments
in the "Green shop within a shop" concept and expansion in the lighting sector to contribute
meaningfully to the consumer segment of the business.
Megatron's growth is expected to continue, and is supported by its 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 well.
Ellies management continues to adopt a conservative approach towards SkyeVine, while
cautiously optimistic of demand in this sector as additional service providers enter
this space.
The board remains positive towards the group's continued organic growth, new ventures and
product opportunities, which continue to present themselves.
Dividend declaration
The payment of dividends is reviewed periodically, taking into account prevailing circumstances
and future cash requirements.
Shareholders are advised that a cash dividend of 10 cents per share has been declared.
The salient dates of the dividend are as follows:
Last day to trade cum dividend Friday, 7 September 2012
Securities trade ex dividend Monday, 10 September 2012
Record date Friday, 14 September 2012
Payment date Monday, 17 September 2012
Share certificates may not be dematerialised or rematerialised between Monday, 10 September
2012 and Friday, 14 September 2012, both dates inclusive.
In terms of the Listings Requirements of the JSE Limited regarding the new Dividends Tax
effective 1 April 2012, the following additional information is disclosed:
1. The dividend has been declared out of income reserves;
2. The local dividend tax rate is 15%;
3. There are no Secondary Tax on Companies credits utilised against the dividend;
4. The gross local dividend amount is 10 cents per share for shareholders exempt from
paying the new Dividends Tax;
5. The net local dividend amount is 8,5 cents per share for shareholders liable to pay the
new Dividends Tax;
6. The issued share capital of Ellies is 303 505 691 shares of 0,001 cent each; and
7. Ellies' tax reference number is 9947/738/14/3.
Changes to the board of directors
Following the resignation of Mr MS Mazwi on 11 November 2011, the group is pleased
to welcome Mr M Moodley (appointed 25 April 2012) and Miss FS Mkhize (appointed
22 May 2012) as Independent Non-executive Directors.
Appreciation
The directors and management, as always, continue to recognise and appreciate the
focused efforts and hard work of the group's staff and the support and loyalty received from
customers, business partners, advisors, suppliers and, most importantly, shareholders.
By order of the board
ER Salkow WMG Samson
Chairman CEO
23 July 2012
Directors
Executive Directors Lead independent non-executive Director
ER Salkow (Chairman) OD Fortuin
WMG Samson (Chief executive officer)
MF Levitt (Chief financial officer) Independent non-executive Directors
RH Berkman MR Goodford
RE Otto MS Mazwi (resigned 11 November 2011)
FS Mkhize (appointed 22 May 2012)
Non-executive Director M Moodley (appointed 25 April 2012)
AC Brooking
Registered office: 94 Eloff Street Ext, Village Deep, Johannesburg, 2001
(PO Box 57076, Springfield, 2137)
Sponsor: Java Capital
Auditors: PKF (Jhb) Inc.
Company secretary: Probity Business Services (Pty) Limited
Transfer secretaries: Link Market Services South Africa (Pty) Limited
www.elliesholdings.com
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