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Unaudited interim results for the six months ended 31 October 2012
Ellies Holdings Limited
Registration number: 2007/007084/06
JSE Share Code: ELI ISIN: ZAE000103081
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 2012
- Revenue up 56%
- PAT up 106%
- EPS up to 42,59 cents
- NAV per share up to 284,08 cents
Abridged consolidated statement of financial position
Unaudited Unaudited Audited
as at as at as at
31 October 31 October 30 April
2012 2011 2012
R'000 R'000 R'000
ASSETS
Non-current assets 375 394 326 512 333 245
Property, plant and equipment 127 246 91 226 100 376
Land and buildings 78 047 48 825 56 546
Other 49 199 42 401 43 830
Goodwill and other intangible
assets 226 139 225 472 225 027
Investment in associate 8 967 2 358
Deferred taxation 13 042 7 456 7 842
Current assets 1 076 227 826 293 1 012 356
Inventories 630 582 455 211 506 377
Trade and other receivables 430 025 327 765 456 268
Taxation receivable 590 344 339
Bank and cash balances 15 030 42 973 49 372
Total assets 1 451 621 1 152 805 1 345 601
EQUITY AND LIABILITIES
Capital and reserves 862 206 658 699 760 450
Share capital and premium 501 494 501 494 501 494
Non-distributable reserves (178 522) (178 630) (178 907)
Accumulated profits 539 234 338 577 440 315
Equity attributable to equity
holders of the parent 862 206 661 441 762 902
Non-controlling interests (2 742) (2 452)
Non-current liabilities 162 936 39 283 164 714
Interest-bearing liabilities 161 179 38 992 163 150
Vendor loans payable 1 169 1 171
Deferred taxation 588 291 393
Current liabilities 426 479 454 823 420 437
Interest-bearing liabilities 4 310 130 248 11 190
Vendor loans payable 853 752
Trade and other payables 287 906 233 158 294 012
Provisions 20 147 1 992 12 710
Taxation payable 43 654 22 596 10 001
Shareholders for dividends 563 188 188
Bank overdraft 69 046 66 641 91 584
Total equity and liabilities 1 451 621 1 152 805 1 345 601
Supplementary information:
Net asset value per share (cents) 284,08 217,93 251,36
Net tangible asset value
per share (cents) 209,37 143,44 177,04
Number of shares in issue 303 505 691 303 505 691 303 505 691
Abridged consolidated statement of comprehensive income
Unaudited Unaudited Audited
six months six months year ended
31 October 31 October 30 April
2012 2011 2012
R'000 R'000 R'000
Revenue 1 125 748 721 200 1 711 252
Profit before interest, taxation,
depreciation and amortisation
("EBITDA") 198 157 105 481 273 371
Depreciation (8 202) (8 170) (15 074)
Amortisation of intangibles (279) (279) (557)
Profit before interest and taxation
("PBIT") 189 676 97 032 257 740
Interest received 413 84 139
Interest paid (10 983) (7 698) (23 510)
Share of losses from associate (417) (2 034) (4 401)
Net profit before taxation ("PBT") 178 689 87 384 229 968
Taxation (49 898) (25 009) (65 565)
Net profit after taxation ("PAT") 128 791 62 375 164 403
Other comprehensive income:
Foreign currency translation
reserve 385 245 (32)
Total comprehensive income
for the period 129 176 62 620 164 371
Attributable to:
Equity holders of the parent 129 270 63 753 165 491
Non-controlling interests (479) (1 378) (1 088)
Net profit after taxation 128 791 62 375 164 403
Attributable to:
Equity holders of the parent 129 655 63 998 165 459
Non-controlling interests (479) (1 378) (1 088)
Total comprehensive income
for the period 129 176 62 620 164 371
Supplementary information:
Basic earnings per share (cents) 42,59 21,01 54,53
Headline earnings
per share (cents) 42,46 20,98 54,45
Weighted average number
of shares in issue 303 505 691 303 505 691 303 505 691
* Ellies has no dilutionary instruments in issue.
Reconciliation of basic earnings and headline earnings
Unaudited Unaudited Audited
six months six months year ended
31 October 31 October 30 April
2012 2011 2012
R'000 R'000 R'000
Net profit for the period attributable
to equity holders of the parent 129 270 63 753 165 491
Adjusted for:
Profit on sale of property, plant
and equipment (379) (98) (322)
Profit on change of control from
subsidiary to associate (120)
Tax effect on adjustments 106 27 90
Headline earnings attributable
to ordinary shareholders 128 877 63 682 165 259
Abridged consolidated statement of cash flows
Unaudited Unaudited Audited
six months six months year ended
31 October 31 October 30 April
2012 2011 2012
R'000 R'000 R'000
Cash flows from operating
activities 32 958 (116 747) (123 145)
Cash generated from/(utilised by)
operations 97 236 (106 326) (43 729)
Interest received 413 84 139
Interest paid (10 903) (7 698) (23 416)
Taxation paid (23 812) (2 807) (56 139)
Dividends paid (29 976)
Cash flows from investing
activities (35 911) (27 928) (45 174)
Cash flows from financing
activities (8 851) 95 655 100 755
Net decrease in cash and
cash equivalents (11 804) (49 020) (67 564)
Cash and cash equivalents
at the beginning of the period (42 212) 25 352 25 352
Cash and cash equivalents
at the end of the period (54 016) (23 668) (42 212)
Abridged consolidated statement of changes in equity
Unaudited Unaudited Audited
six months six months year ended
31 October 31 October 30 April
2012 2011 2012
R'000 R'000 R'000
Balances at the beginning
of the period 760 450 596 079 596 079
Total comprehensive income
for the period 129 176 62 620 164 371
Change of control from subsidiary
to associate 2 931
Dividends declared (30 351)
Balances at the end of the period 862 206 658 699 760 450
Segmental analysis
Unaudited Unaudited Audited
six months six months year ended
31 October 31 October 30 April
2012 2011 2012
R'000 R'000 R'000
Revenue 1 125 748 721 200 1 711 252
Consumer goods and services 749 848 466 300 1 140 467
Infrastructure 368 799 251 098 559 240
Property division 3 861 2 862 6 342
Other 7 101 3 802 11 545
Holding company/consolidation (3 861) (2 862) (6 342)
Segmental profits/(losses)
from operations
Net profit before interest
and taxation 189 259 94 998 253 339
Consumer goods and services 127 759 60 281 164 607
Infrastructure 60 239 38 157 91 097
Property division 3 034 2 563 5 271
Other (1 461) (5 723) (6 863)
Holding company/consolidation (312) (280) (773)
Net finance costs (10 570) (7 614) (23 371)
Operating segments (combined) (8 242) (5 918) (19 557)
Property division (2 248) (1 696) (3 720)
Deemed vendor interest (80) (94)
Net profit before taxation 178 689 87 384 229 968
Notes to the unaudited interim results
Basis of preparation and accounting policies
The unaudited interim results for the six months ended 31 October 2012 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 2012 are consistent
with those applied in the audited financial statements for the year ended 30 April 2012.
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 energy, and power and telecommunications infrastructure, servicing the local
and African markets.
Overview
All the divisions within the group achieved excellent growth in earnings and capacity
utilisation.
PBIT of the Ellies consumer goods and services segment grew by 112% against the
prior corresponding period. This is partly the result of completion of the first phase of
the Eskom Project Power Save programme. The implementation of the "Green shop within
a shop" concept was substantially completed during the period and, together with the
growth of the lighting sector, contributed to the success of this consumer segment.
During this period, further important alignments and relationships were established,
including those with Aurora Lighting, a leading international lighting group, offering
solutions in the domestic, industrial and commercial space; and Efergy, a leading
energy-monitoring systems provider.
The Infrastructure division, Megatron, continued to deliver solid earnings for the period,
with Revenue and PBIT growth of 47% and 58%, respectively, on the prior corresponding
period. The power products sector achieved greater volumes due to the historical
investment in and testing of new product lines, while the telecommunications sector
increased in line with expectations. All sectors were able to conclude numerous new
projects during the period. Infrastructure projects further increased their scope by
collaborating with contractors in the water industry.
The group's statement of financial position remains solid, with NAV and NTAV per share
improving to 284 cents (2011: 218 cents) and 209 cents (2011: 143 cents), respectively.
The group's interest-bearing bank debt, which includes property term finance of
R62,3 million (2011: R48,5 million), results in a debt to equity ratio of 23% (2011: 28%).
The group's interest cover to EBITDA remains at a satisfactory level in excess of
18 times. Management considers the gearing to be at a satisfactory level under the
current economic climate.
The decline in cash of R11,8 million as compared to 30 April 2012, is considered
satisfactory by management, in view of the group's significant investment in advance
of the Digital Terrestrial Television ("DTT") and additional Eskom Project Power Save
programmes. This investment extends to local production capacity, raw materials and
inventory. The timing of both these projects has impacted on short-term working capital
demands. Ellies is well-positioned to rollout these projects with reduced further working
capital investment.
The group's growth and diversification has resulted in capital demands, additional ongoing
investments in property, plant and equipment and higher working capital requirements.
This has been financed through the additional long-term gearing.
Prospects
The group's diversification into new product development and ventures, together with
its alignments with leading technology partners, assists in building on its existing skills,
infrastructure and customer base.
The Consumer goods and services division
The DTT migration rollout through Southern Africa is imminent, subject to the Department
of Communication finalising its legal issues. Ellies, together with the group's strong
strategic partners and alliances, is well-positioned to participate in and benefit from
this rollout. DTT aerials and dishes are currently being exported to other African
countries with new production machinery being installed to increase local production
and employment. With the continued weakening of the Rand, greater export penetration
into Africa is expected to continue. With the growth of local production, trade within the
SADAC region is also expected to improve.
The group's initiatives in energy conservation and its introduction of new and innovative
renewable energy products has resulted in awards having been won over the past period
in recognition of these achievements. This has assured a steady growth in market share.
The "Green shop within a shop" concept and expansion in the lighting sector,
with additional products being added, will continue to contribute meaningfully to the
consumer segment.
Ellies continues its working relationship with Eskom, together with many of Eskom's
other service providers in the lighting and energy-saving environment.
Infrastructure division
The Infrastructure division's growth is expected to continue.
Within its power products sector, Megatron has been appointed as the preferred
equipment supplier for several solar and wind projects within the South African
Independent Power Producer's ("IPP") programme. This is expected to have a significant
effect on revenues for this division in the future. In addition, the product line of Miniature
sub-Stations achieved SABS certification during the period.
Within its telecommunications sector, the "proof-of-concept" testing for the Diesel
Generator Optimisation ("DGO") product is ongoing at several sites across Africa
and the Middle East. All tests completed to date have performed in line with
expectations and several contracts have been won. This is expected to be a substantial
area of growth in the future.
Within its Infrastructure projects sector, Megatron has won a number of tenders in its
traditional markets from both existing and new customers, while expanding into
additional geographical areas. Megatron is currently expanding its offering in this space
to include water-related infrastructure. Three contracts have been awarded in this field,
one in South Africa and two outside of the country.
The existing order book, including tenders won, as relates to both new diversified and
traditional sectors, remains solid. Export into Africa remains a large portion of the
Infrastructure division's revenue.
Strategic investments
Ellies management continues to adopt a conservative approach towards SkyeVine, while
cautiously optimistic of demand growth in this sector, as additional service providers
enter this space.
The group is always engaged with exciting prospects for organic growth, new ventures
and product opportunities. In addition, the appreciation in Ellies share price, better
positions it to consider strategic acquisitions.
Dividend policy
The payment of dividends is reviewed periodically, taking into account prevailing
circumstances and future cash requirements. No interim dividend is proposed
at this stage.
Appreciation
As always, the directors and management 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
22 January 2013
Directors:
Executive Directors Independent non-executive Directors
ER Salkow (Chairman) MR Goodford
WMG Samson (Chief executive officer) FS Mkhize
MF Levitt (Chief financial officer) M Moodley
RH Berkman
RE Otto
Non-executive Director
AC Brooking
Lead independent non-executive Director
OD Fortuin
Registered office:
94 Eloff Street Ext, Village Deep, Johannesburg, 2001
(PO Box 57076, Springfield, 2137)
www.elliesholdings.com
www.ellies.co.za
Sponsor:
Java Capital
Company secretary:
Probity Business Services (Pty) Limited
Transfer secretaries:
Link Market Services South Africa (Pty) Limited
CONSUMER INFRASTRUCTURE ENERGY COMMUNICATIONS
Date: 22/01/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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