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ELLIES HOLDINGS LIMITED - Unaudited interim results for the six months ended 31 October 2016

Release Date: 29/12/2016 17:21
Code(s): ELI     PDF:  
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Unaudited interim results for the six months ended 31 October 2016

ELLIES HOLDINGS LIMITED
Registration number: 2007/007084/06
JSE share code: ELI
ISIN: ZAE000103081
(“Ellies or “the company” or “the group”)

Unaudited interim results for the six months ended 31 October 2016

Revenue (Continuing operations) down (26%)
LPS of (31,49 cents)
HLPS of (11,30 cents)
NAV per share 52,71 cents down (68,4%)
Deconsolidation of the infrastructure segment has commenced
Deconsolidation of the remaining Infrastructure segment companies will result in a
profit, on loss of control, in excess of R100 million
Material costs to be removed

Interim consolidated statement of financial position
                                                                   Unaudited           Unaudited           Audited
                                                                       as at               as at             as at
                                                                  31 October          31 October          30 April
                                                                        2016                2015              2016
                                                                       R'000               R'000             R'000
ASSETS
Non-current assets                                                   192 370             319 847           328 934
Property, plant and equipment                                        120 100              22 625           124 567
– Land and buildings                                                  76 683                   –            80 832
– Other                                                               43 417              22 625            43 735
Goodwill and other intangible assets                                  56 251             173 041            56 450
Investment in associate                                                9 963                   –            10 514
Other financial assets                                                     –               1 199           129 406
Trade and other receivables                                                –              35 196                 –
Amounts due from contract customers                                        –              36 350                 –
Deferred taxation                                                      6 056              51 436             7 997
Current assets                                                       640 939             473 293           934 461
Inventories                                                          385 962               5 510           503 659
Trade and other receivables                                          231 592             181 532           299 072
Amounts due from contract customers                                        –             264 925            73 202
Taxation receivable                                                    5 387                 162             3 489
Bank and cash balances                                                17 998              21 164            38 472
Non-current assets held for sale                                           –                   –            16 567
Group disposals held for sale/distribution                            23 584             964 530            27 922
Infrastructure segment (Note 1)                                       23 584              53 273            27 922
Consumer and property segment                                              –             911 257                 –
Total assets                                                         856 893           1 757 670         1 291 317
EQUITY AND LIABILITIES
Capital and reserves                                                 326 946           1 025 103           519 288
Stated capital                                                       837 212             837 213           837 212
Non-distributable reserves                                          (176 230)           (177 664)         (177 635)
Accumulated profits                                                 (334 107)            374 586          (138 834)
Equity attributable to equity holders of the parent                  326 875           1 034 135           520 743
Non-controlling interests                                                 71              (9 032)           (1 455)
Non-current liabilities                                               38 841             100 771           142 074
Interest-bearing liabilities                                          38 119              99 877           136 396
Deferred taxation                                                        722                 894             5 678
Current liabilities                                                  442 696             204 406           589 726
Interest-bearing liabilities                                              62                 164            14 078
– payable within 12 months                                                62                 164            14 078
Vendor loans payable                                                   3 000               3 000             3 000
Shareholder loans payable                                              2 000                 342             2 098
Trade and other payables                                             164 948             190 829           419 576
Amounts due to contract customers                                          –               8 171             1 289
Provisions                                                            40 519               1 314            12 319
Taxation payable                                                         250                 551               708
Loans payable/Net inter-group loan balances*                          74 384                   –                 –
Shareholders for dividends                                                35                  35                35
Bank overdraft                                                       157 498                   –           136 623
Group disposals held for sale/distribution                            48 410             427 390            40 229
Infrastructure segment (Note 2)                                       48 410              13 029            40 229
Consumer and property segment                                              –             414 361                 –
Total equity and liabilities                                         856 893           1 757 670         1 291 317
* Net loans owing to Megatron SA (Pty) Ltd by the remaining
  entities in the Infrastructure segments
Supplementary information:
Net asset value per share (cents)                                      52,71              166,75             83,92
Net tangible asset value per share (cents)                             43,52              130,03             74,74
Number of shares in issue at the end of period                   620 158 235         620 158 235       620 158 235
Note 1 – Assets within the infrastructure
segment held for sale/distribution
Non-current assets                                                     1 822               2 050             3 742
Property, plant and equipment                                          1 822               2 050             3 742
– Other                                                                1 822               2 050             3 742
Current assets                                                        21 762              51 223            24 180
Inventories                                                            4 668              38 441            10 254
Trade and other receivables                                            9 534              12 782            13 926
Taxation receivable                                                      123                   –                 –
Bank and cash balances                                                 7 437                   –                 –
                                                                      23 584              53 273            27 922
Note 2 – Liabilities within the infrastructure
segment held for sale/distribution
Non-current liabilities                                                  940                   –                 –
Interest-bearing liabilities                                             183                   –                 –
Deferred taxation                                                        757                   –                 –
Current liabilities                                                   47 470              13 029            40 229
Shareholder loans payable                                                 62                   –                 –
Trade and other payables                                              15 881              13 029            40 229
Net inter-group loan balances*                                        31 527                   –                 –
                                                                      48 410              13 029            40 229
* Net loans owing to Megatron SA (Pty) Ltd by the remaining entities in the Infrastructure segments

Interim consolidated statement of comprehensive income
                                                                    Unaudited            Restated         Restated
                                                                   six months          six months             year
                                                                        ended               ended*           ended*
                                                                   31 October          31 October         30 April
                                                                         2016                2015             2016
                                                                        R'000               R'000            R'000
Revenue                                                               652 412             881 498        1 482 396
Profit/(loss) before interest, taxation, depreciation
and amortisation (“EBITDA”)                                           (11 025)             39 553         (208 151)
Depreciation                                                           (6 098)             (8 063)         (13 698)
Amortisation of intangibles                                              (198)               (365)            (397)
Impairment of goodwill and other intangibles                                –                   –         (170 416)
Impairment of loan to associate                                        (4 542)                  –                –
Impairment of receivables from related parties                         (4 712)                  –                –
Loss as a result of guarantees                                        (37 000)                  –                –
Loss as a result of loss of control                                  (123 955)                  –                –
Profit/(loss) before interest and taxation                           (187 530)             31 125         (392 662)
Interest received                                                          61               6 858           17 169
Interest paid                                                         (13 616)            (19 884)         (39 264)
Share of losses from associate                                           (550)               (327)          (2 601)
Net profit/(loss) before taxation                                    (201 635)             17 772         (417 358)
Taxation                                                                6 258              (5 397)         (59 833)
Profit/(loss) for the period from continued
operations                                                           (195 377)             12 375         (477 191)
Discontinued operations – Infrastructure
segment (Note 3)                                                        1 630             (21 297)         (37 574)
Loss for the period                                                  (193 747)             (8 922)        (514 765)
Other comprehensive income:
Items that may be reclassified subsequently to
profit or loss
– Foreign currency translation reserve                                   (116)                 99              128
– Foreign currency translation reserve as a result
  of loss of control                                                    1 521                   –                –
Total comprehensive loss for the period                              (192 342)             (8 823)        (514 637)
Attributable to:
Equity holders of the parent                                         (195 273)             (9 081)        (512 205)
Non-controlling interests                                               1 526                 159           (2 560)
– Continued operations                                                   (676)                861             (205)
– Discontinued operations                                               2 202                (702)          (2 355)
Net loss after taxation                                              (193 747)             (8 922)        (514 765)
Attributable to:
Equity holders of the parent                                         (193 868)             (8 982)        (512 077)
Non-controlling interests                                               1 526                 159           (2 560)
– Continued operations                                                   (676)                861             (205)
– Discontinued operations                                               2 202                (702)          (2 355)
Total comprehensive loss for the period                              (192 342)             (8 823)        (514 637)
* Restated – Refer to discontinued operations note
Supplementary information:
Basic loss per share (cents)                                           (31,49)              (1,56)          (87,78)
– Infrastructure continued operations                                   (2,60)              (0,29)          (84,49)
– Infrastructure discontinued operations                                (0,09)              (3,65)           (6,44)
– Holding company/consolidation                                        (25,95)                  –                –
– Consumer and property continued operations                            (2,84)               2,39             3,16
Headline loss per share (cents)                                        (11,30)              (1,02)          (57,35)
– Infrastructure continued operations                                   (2,60)              (0,27)          (54,11)
– Infrastructure discontinued operations                                (0,10)              (3,12)           (6,44)
– Holding company/consolidation                                         (5,72)                  –                –
– Consumer and property continued operations                            (2,87)               2,36             3,20
Weighted average number of shares in issue                        620 158 235         583 633 462      583 533 394
Ellies has no dilutionary instruments in issue
Note 3 – Infrastructure segment held for
sale/distribution
Revenue                                                                47 545             107 591          160 781
Profit/(loss) before interest, taxation, depreciation
and amortisation (“EBITDA”)                                             1 639             (16 902)         (34 351)
Depreciation                                                              (13)               (383)          (2 325)
Amortisation of intangibles                                                 –                 (19)            (352)
Impairment of intangibles                                                   –              (3 111)          (3 853)
Profit/(loss) before interest and taxation                              1 626             (20 415)         (40 881)
Interest received                                                          32                 110                –
Interest paid                                                             (28)             (1 287)          (2 844)
Net profit/(loss) before taxation                                       1 630             (21 592)         (43 725)
Taxation                                                                    –                 295            6 151
Net profit/(loss) after taxation                                        1 630             (21 297)         (37 574)
* Restated – Refer to discontinued operations note


Reconciliation of basic earnings and headline earnings
                                                                    Unaudited            Restated         Restated
                                                                   six months          six months             year
                                                                        ended               ended*           ended*
                                                                   31 October          31 October         30 April
                                                                         2016                2015             2016
                                                                        R'000               R'000            R'000
Net loss for the period attributable to equity holders
of the parent                                                        (195 273)             (9 081)        (512 205)
Adjusted for:
Loss/(profit) on sale of property, plant and equipment                   (355)                 14            6 097
– Infrastructure continued operations                                     (51)                219                –
– Infrastructure discontinued operations                                  (62)                  –            5 771
– Consumer and property continued operations                             (242)               (205)             326
Loss/(profit) on sale of component infrastructure
division                                                                    –                   –            3 789
Loss as a result of loss of control                                   123 955                   –                –
Foreign currency translation reserve as a result
of loss of control                                                      1 521                   –                –
Impairment of goodwill and other intangibles                                –               3 111          170 416
– Infrastructure continued operations                                       –                   –          170 416
– Infrastructure discontinued operations                                    –               3 111                –
Tax effect on adjustments                                                  99                  (4)          (2 768)
Headline loss attributable to ordinary shareholders                   (70 053)             (5 960)        (334 671)
* Restated – Refer to discontinued operations note

Interim consolidated statement of changes in equity
                                                                    Unaudited           Unaudited          Audited
                                                                   six months          six months             year
                                                                        ended               ended            ended
                                                                   31 October          31 October         30 April
                                                                         2016                2015             2016
                                                                        R'000               R'000            R'000
Balances at beginning of the period                                   519 288             855 047          855 047
Increase in stated capital through the issue
of shares                                                                   –             178 879          178 878
Total comprehensive loss for the period                              (192 342)             (8 823)        (514 637)
Balances at end of the period                                         326 946           1 025 103          519 288

Interim consolidated statement of cash flows
                                                                     Unaudited            Restated         Restated
                                                                    six months          six months             year
                                                                         ended               ended*           ended*
                                                                    31 October          31 October         30 April
                                                                          2016                2015             2016
                                                                         R'000               R'000            R'000
Cash flows from operating activities                                     5 531             (59 498)         (23 027)
  Cash (utilised by)/generated from operations                          30 406             (58 903)         (34 422)
  Interest received                                                         61               3 020           13 250
  Interest paid                                                        (13 616)            (19 842)         (39 264)
  Taxation received                                                      1 469              30 233           16 008
  Cash flows – continuing operations                                    18 320             (45 492)         (44 428)
  Cash flows – discontinued operations                                 (12 789)            (14 006)          21 401
Cash flows from investing activities                                      (274)               (822)            (463)
    Additions to property, plant and equipment                          (5 172)             (3 217)          (6 898)
    Proceeds on disposal of property,
    plant and equipment                                                  7 548               3 423           11 864
    Loss of control                                                     (3 126)                  –                –
    Loan to associate                                                      551              (1 028)          (3 104)
  Cash flows – continuing operations                                      (199)               (822)           1 862
  Cash flows – discontinued operations                                     (75)                  –           (2 325)
Cash flows from financing activities                                   (39 169)             36 183           31 747
    Repayment of interest bearing liabilities                          (39 316)           (142 726)        (146 063)
    Repayment of vendor loans                                                –                   –             (938)
    Shareholders loans (paid)/raised                                       (36)                 31             (130)
    Proceeds from issue of additional stated capital                         –             178 878          178 878
  Cash flows – continuing operations                                   (39 352)             36 183           31 747
  Cash flows – discontinued operations                                     183                   –                –
Net (decrease)/increase in cash and cash equivalents                   (33 912)            (24 137)           8 257
Cash and cash equivalents at the beginning of
the period                                                             (98 151)           (106 408)        (106 408)
Cash and cash equivalents at the end of the period                    (132 063)           (130 545)         (98 151)
* Restated – Refer to discontinued operations note.

Segmental analysis
                                                                    Unaudited            Restated         Restated
                                                                   six months          six months             year
                                                                        ended               ended*           ended*
                                                                   31 October          31 October         30 April
                                                                         2016                2015             2016
                                                                        R'000               R'000            R'000
Revenue                                                               699 957             989 089        1 643 163
  Infrastructure                                                       50 294             251 987          314 871
  – Total – continued operations                                        2 749             144 396          154 104
  – Total – discontinued operations                                    47 545             107 591          160 781
  – Inter-segment                                                           –                   –              (14)
  Consumer goods – continued operation                                649 663             737 102        1 328 292
  – Total                                                             649 663             737 102        1 328 292
  Property division – continued operation                                   –                   –                –
  – Total                                                               5 052               5 945           11 468
  – Inter-segment                                                      (5 052)             (5 945)         (11 468)
Segmental profits/(losses) from operations
Net profit/(loss) before interest and taxation                       (186 454)             10 383         (436 144)
  Infrastructure – continued operation                                (12 237)             (2 009)        (439 822)
  Infrastructure – discontinued operation                               1 626             (20 415)         (40 881)
  Consumer goods – continued operations                               (13 741)             28 692           37 116
  Property division – continued operation                                (597)              4 115            7 404
  Other – continued operation                                            (550)               (327)               –
  Holding company/consolidation                                      (160 955)                327               39
Interest received                                                          93               6 968           17 169
  Infrastructure – continued operation                                     11               5 571                –
  Infrastructure – discontinued operation                                  32                 110                –
  Consumer goods – continued operation                                     50               1 287           17 169
Interest paid                                                         (13 644)            (21 170)         (42 108)
  Infrastructure – continued operation                                 (3 938)             (4 703)          (3 899)
  Infrastructure – discontinued operation                                 (28)             (1 287)          (2 844)
  Consumer goods – continued operation                                 (7 854)            (11 045)         (26 021)
  Property division – continued operations                             (1 824)             (4 093)          (7 925)
  Deemed vendor interest – discontinued operations                          –                 (42)          (1 419)
Net loss before taxation                                             (200 005)             (3 819)        (461 083)
* Restated – Refer to discontinued operations note
Segment Assets
Infrastructure – continued operation                                   51 446             793 102          435 241
Infrastructure – discontinued operation                                23 584              53 273           40 229
Consumer goods and property division –
continued operation                                                   781 820             911 257          815 847
Holding company/consolidation                                              43                  38                –
Total Assets                                                          856 893           1 757 670        1 291 317
Segment Liabilities
Infrastructure – continued operation                                  135 562             300 553          410 265
Infrastructure – discontinued operation                                48 410              13 029           40 229
Consumer goods and property division –
 continued operation                                                  308 919             414 361          321 535
Holding company/consolidation                                          37 056               4 624                –
Total Liabilities                                                     529 947             732 567          772 029

Notes to the unaudited interim results

Basis of preparation and accounting policies

The unaudited interim results for the six months ended 31 October 2016 have been prepared in
accordance with International Financial Reporting Standards (“IFRS”), and comply with IAS 34 –
Interim Financial Reporting, the SAICA Financial Reporting Guides as issued by the Accounting
Practices Board or its successor, 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 2016, are
consistent with those applied in the audited financial statements for the year ended 30 April 2016.

During the current interim period the group adopted those standards and interpretations in issue
and effective for the interim period. The adopting of these new and amended standards and
interpretations has not had a significant impact on the group's accounting policies.

These results have been compiled under the supervision of the Chief Financial Officer,
A L Bock CA(SA). The interim results have not been reviewed or reported on by the group's auditors,
Grant Thornton Johannesburg Partnership.

Deconsolidation loss as a result of a loss of control

The company has applied IFRS 10 – Consolidated Financial Statements, in the preparation of these
results due to the following:

1.  On the 12th August 2016, by way of an Order from the High Court of South Africa, Megatron SA
    (Pty) Ltd (“Megatron SA”) was placed under supervision and business rescue proceedings
    commenced on the same date in terms of Section 131 (1) of the Companies Act, 71 of 2008. The
    effect of the Order is the control of Megatron SA and its subsidiaries vests with the business
    rescue practitioner and in terms of IFRS 10, should be deconsolidated.

Discontinued operations and group disposals held for sale/distribution (“Discontinued
operations”)

The proposed separate listing that was envisaged and reported on last year did not materialise
as Megatron's performance could not warrant a standalone listing. Accordingly, the application of
IFRS 5: Non-current Assets Held for Sale and Discontinued Operations is no longer appropriate and
as a result the results of the Ellies Electronics goods business and property division have been
included in continuing operations in the consolidated statement of comprehensive income and
consolidated statement of financial position, with the comparative statement of comprehensive
income reclassified as required to aid comparability.

Management has committed to a plan to wind down its exposure in respect of the Infrastructure
segment, and to do so in a manner that best protects the company and the respective stakeholders.
Those entities (Megatron Engineering Namibia (Pty) Ltd and Megatron Towers (Pty) Ltd) where it is
possible to sell immediately and there is an active market for the same, have been classified in terms
of IFRS 5 as group disposals held for sale. The remaining operating entities (Ellies Infrastructure
(Pty) Ltd and Botjheng Water (Pty) Ltd (“Botjheng”)) are classified as continuing operations until
such time as management deems it in the best interest to dispose of the same, and commits to
such disposal.

Subsequent events

1.  Pursuant to the committed plan to wind down its exposure to the Infrastructure segment
    Megatron Engineering Namibia (Pty) Limited, was sold on the 18th November 2016, for a
    consideration of R1.5 million.

2.  On the 9th December 2016, Lombard Insurance Company Limited (“Lombard”), notified
    Ellies, that a demand guarantee against Botjheng had been presented by its joint venture
    partner. A provision of R17 million has been made for this claim which management deems
    to be adequate. Botjheng is in turn pursuing legal remedies against its joint venture partner;
    the potential inflows in respect thereof have not been included in these results. Lombard and
    Ellies have negotiated a deferred repayment plan, in respect of the demand guarantee payment
    that is due to Lombard.

Changes to the board

Executive director Raymond Berkman and non-executive director Malcolm Goodford resigned
from the board of directors with effect from 30 November 2016 in order to facilitate the reduction
of the size of the board of directors. We thank them for their many years of service and dedication
to the company.


Commentary

Introduction

Ellies is a leading South African manufacturer, wholesaler, importer and distributor in diversified
sectors servicing the local and African markets. The business comprises two main operating
segments, namely Infrastructure "Megatron" and Consumer goods and services "Ellies Electronics",
with a Holding Company segment, which includes the effects of deconsolidation and where the group
assumes liabilities for issued guarantees that are not in the normal course of activities of the two
main operating segments.

Overview

The predominant theme for the period under review is the commencement of the unwinding
of the Infrastructure segment and the financial effects thereof. The results include a provision
of R20 million, being the expected residual amount owing to The Standard Bank of South Africa
Limited (“Standard Bank”) after the expected sale proceeds of Megatron SA's assets net of costs and
disbursements, together with a provision for guarantee to Lombard in the amount of R17 million.
This coupled with the deconsolidation of Megatron SA and it's subsidiaries resulted in a loss, on
loss of control, of R123,9 million, which amount includes loans forfeited amounting to R88,9 million,
giving a combined loss of R160,9 million.

It should be noted that the deconsolidation of the remaining Infrastructure segment companies will
result in a profit, on loss of control, in excess of R100 million.

Operations

The first six months of the financial period have been very challenging. Trading conditions in general
were poor with a noticeable drop in spending by consumers.

Ellies Electronics

The continuing downturn in the economy and reduction of consumer spending severely affected
Ellies Electronics, with revenue at R649 million, down from R737 million for the same period ended
31 October 2015. We have seen the slowdown in both our independents and retail sectors where
we play in the electronic and general merchandise sectors. The consumers' purchases have been
subdued and only when there are specials do we really see larger movements of stock. The segment
returned a loss for the period before interest and tax of R14 million. This includes a loss for
the impairment of a loan to an associate, as a result of a bank guarantee that was called up of
R4,5 million. The profit for the same period ended 31 October 2015 was R29 million.

With this in mind the board acknowledges that the company must adjust itself to the business before
it and therefore is in the process of removing significant costs from its operations in order to make
the Ellies Electronics cost base match where the business and economy is at present. The cost
reduction exercise will be implemented aggressively over the next six months and also includes the
centralizing of its computer and accounting system. We believe that these measures will not only
reduce our costs significantly but will make us more efficient and broaden our customer base with a
concentration on the independent market. It was in this market where Ellies Electronics started and
grew, and so for all intent and purposes its a return to basics and the core business. It will also enable
a real time consolidated view on major working capital cycle drivers, and will assist management in
executing its stated aim of reducing working capital cycles year on year going forward.

The satellite market has seen a slight increase in numbers compared to last year, however the
reduction in selling price has influenced the increase in turnover in this category. This together with
increased costs due to increased landed costs, largely as a result of Rand volatility and weakness,
has resulted in a reduction in GP margin compared to the past. ElSat continues to work closely
with MultiChoice to seek innovative ways in growing the market. We believe the introduction of a
fully installed Explora will find a new market in the middle LSM as people enjoy the convenience of
recoding and catch up viewing. Multichoice has also launched a 3rd viewing environment with should
stimulate sales in the future. Multichoices transmission from a new satellite opens the opportunity
for our corporate division, as people in apartments and complexes will need upgrading to a fibre
viewing network in order to enjoy all of the channel offerings on the Explora. Our domestic electrical
range has shown some increase in the six months reported, although we have lost some market
share to competitors and to retail home brands. Ellies Electronics received some negative press with
regards to claims by a competitor who claimed that we stole his surge idea. Ellies Electronics went
to court and proved these claims were unfounded and obtained an interdict against the competitor
with costs. This caused reputational damage at the time but we are confident that our excellent surge
range will continue to grow and we will soon regain whatever market share that was lost. We are
confident that we will continue to grow in this category and have new products that are innovative and
waiting approval from the national regulator.

Ellies Electronics continues to grow in the lighting segment with both our Lamp for Life and
Residential ranges. The Ellies Electronics Lamp for Life is still one of the best value for money
lamps that offers a 25 year warrantee while remaining very competitive in price. We believe that we
have set the new benchmark in lighting for innovation, warranties and price. Our Residential range
addresses the mass market with one of the lowest price points. Retailers are selling this lamp for as
little as R25 per lamp and there have been tremendous sales of this product. Ellies Electronics aim
is to become a dominate player in this category and will continue to be innovative.

The digital migration continues to stop and start as a result of the ongoing litigation between Etv and
the Communications Minister. Ellies Electronics is still manufacturing satellite dish kits for the
rollout as the means of satellite transmission is not being disputed. Ellies Electronics will complete
its manufacture in January 2017. We hope that once the dispute on encryption of the terrestrial
signal is finalised, which is expected to be in February 2017, we would be able to start with the
promotion of antennas to both government and retail although we don't expect there to be a large
uptake in the beginning. These delays have seen our antenna and antenna accessories category
virtually grind to a halt, leaving our local manufacturing of these products running at a loss. We will
however maintain these production facilities albeit with a lower staff compliment as the migration
is essential for the ICT sector of South Africa. We have already invested in the IP and machinery to
produce the products needed.

Ellies Electronics and ElSat remain strong South African brands that are trusted and found in most
homes in Southern Africa. We will endeavour to grow the brand and remain a trusted technology
leader in all of our categories.

Megatron

As detailed in the notes above, this segment has been deconsolidated and all material contamination
to the group has been provided for based on information provided by the Business Rescue
practitioner. The provision for the shortfall from Megatron SA to Standard Bank, which the group has
stood surety for, may exceed the provided amount of R20 million as indicative offers for Megatron
SA's assets are not binding at this stage.

Holding Company

This segment had the biggest bearing on the results for the period under review, and is fully detailed
in the overview above.

Dividend policy

The dividend policy will be reviewed periodically taking into account prevailing circumstances and
future cash requirements. In view of the group's financial position, no dividend is proposed at this
stage.

Appreciation

The directors and management once again continue to recognise and appreciate the focused efforts
and hard work of the group's staff and also continue to appreciate the support its customers,
business partners, advisors, suppliers, funders and most importantly shareholders provide.

By order of the board

ER Salkow                                          WMG Samson
Chairman                                           CEO

29 December 2016

Directors:

Executive Directors
ER Salkow (Chairman)
WMG Samson (Chief executive officer)
AL Bock (Chief financial officer)

Non-executive Director
MJ Kuscus

Lead independent non-executive Director
OD Fortuin

Independent non-executive Directors
FS Mkhize
S Goldberg

The following directors resigned during the period, and up to release date:
RH Berkman (30 November 2016)
MR Goodford (30 November 2016)

Registered office
94 Eloff Street Ext, Village Deep, Johannesburg, 2001
(PO Box 57076, Springfield, 2137)

Sponsor: Java Capital

Auditors: Grant Thornton Johannesburg Partnership

Company secretary: CIS Company Secretaries (Pty) Ltd

Transfer secretaries: Link Market Services South Africa (Pty) Ltd

Date: 29/12/2016 05:21:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE'). 
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