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ELLIES HOLDINGS LIMITED - Further trading statement and operational update

Release Date: 15/07/2015 09:30
Code(s): ELI     PDF:  
Wrap Text
Further trading statement and operational update

ELLIES HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 2007/007084/06)
JSE share code: ELI ISIN: ZAE000103081
(“Ellies”)


FURTHER TRADING STATEMENT AND OPERATIONAL UPDATE


1.    Further trading statement

      Shareholders are referred to the trading statement announced on SENS on 4 May 2015, wherein shareholders
      were advised that a reasonable degree of certainty existed that Ellies’ loss per share (“LPS”) for the year ended
      30 April 2015 (the “current financial period”) was expected to be more than 67 cents per share compared to
      the earnings per share (“EPS”) of 24.66 cents per share for the year ended 30 April 2014 (the “comparative
      period”), which was more than 370% lower than the EPS for the comparative period. The headline loss per
      share (“HLPS”) for the current financial period was expected to be more than 66 cents per share compared to
      the headline earnings per share (“HEPS”) of 23.46 cents per share for the comparative period, which was more
      than 380% lower than the HEPS for the comparative period.

      In terms of the Listings Requirements of the JSE Limited, in the event that a minimum percentage and number
      difference has been published under a trading statement, as is the case in the trading statement of 4 May 2015,
      once the company has reasonable certainty to enable it to do so, it must provide more specific guidance.

      Whilst in the process of finalising the financial results of the current financial period (which includes various
      audit impairment reviews) it has been determined that a reasonable degree of certainty exists that –

      -     Ellies LPS for the current financial period is expected to be between 88 and 93 cents per share, that is
            between 457% and 502% lower than the EPS for the comparative period; and
      -     Ellies HLPS for the current financial period is expected to be between 80 and 85 cents per share, that is
            between 441% and 462% lower than the HEPS for the comparative period.

      As previously reported, Ellies’ financial performance has been negatively affected by difficult trading
      conditions, severe liquidity constraints and higher interest charges. The financial results of the current financial
      period to be reported on include the following items that are not part of the results from normal business
      operations:

      Infrastructure division:
      1.     Impairment of goodwill and intangibles of approximately R28.8 million relating to Botjheng Water;
      2.     Reversal of prior year deferred tax assets of approximately R9,1 million;
      3.     Not raising of current year deferred tax assets of approximately R27,5 million;
      4.     Losses, including retrenchment costs of R3.1 million, from scaled down South African operations of
             approximately R25 million,
      5.     Impairments to accounts and construction receivables of approximately R60.6 million, including an
             onerous provision of R4.1 million;
      6.     Other retrenchment costs paid of approximately R1.2 million.

      Consumer division:
      1.   Inventory impairments mainly resulting from cancelled projects of R48.1 million;
      2.   Impairment of intangibles of R2.6 million relating to the Carbon Credit Program;
      3.   Reversal of prior year deferred tax assets of R0.4 million.

      Were it not for these items, the LPS and HLPS for the current financial period would both be expected to be
      between 32% and 34% lower than the comparative period.

2.   Operational update

     Further to the announcements dated 4 May 2015 and 17 June 2015, the company has completed its debt and
     corporate restructure, and the board of directors of Ellies is in the process of implementing a number of
     initiatives, which if successful, are expected to improve Ellies’ financial position. This includes the company
     having resolved to dispose of its property portfolio. The company has received various expressions of interest
     to acquire the company’s property portfolio. These expressions of interest are being considered by the company
     and once terms have been agreed the details thereof will be communicated to shareholders.

     With various capital raisings undertaken in the past six months, it is expected that the group’s term debt will be
     reduced by around R250 million, resulting in a reduction of interest paid of approximately R16.7 million.

     The Infrastructure division has scaled down its South African operations significantly to concentrate on higher
     margin African projects. Overheads have been significantly reduced for the business going forward with
     emphasis on improving operating margin in the future. The DRC, Nigeria and Ivory Coast will continue to be
     significant revenue drivers in the next period as the order book remains intact.

     Whilst the consumer market remains under pressure the Consumer division has experienced positive trading in
     the first two months of the new financial year, boosted by growth in standby power products. Management is
     positive that the prospects laid out in the previous announcement will materialise in the near future.

     The information on which this trading statement has been based has not been reviewed or reported on by the
     company’s auditors.

     The group's results for the year ended 30 April 2015 are expected to be released on SENS on or about 28 July 2015.
     
15 July 2015

Joint corporate advisor, joint transaction sponsor and sponsor         
Java Capital                                                           
                                                  
Joint corporate advisor and joint transaction sponsor
Standard Bank
Date: 15/07/2015 09:30:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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