Wrap Text
Unaudited interim results for the six months ended 31 October 2017
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 2017
- Revenue (Continuing operations) up 8,1%
- PAT (Continuing operations) up 159,3%
- Cash flows from operating activities up 137,7%
- EPS of 3,3 cents up 110,5%
- HEPS of 3,05 cents up 166,4%
- NAV per share 48,26 cents down (8,4%)
- NTAV per share 39,97 cents down (8,4%)
Interim consolidated statement of financial position
Unaudited Unaudited Audited
as at as at as at
31 October 31 October 30 April
2017 2016 2017
R'000 R'000 R'000
ASSETS
Non-current assets 138 849 192 370 148 691
Property, plant and equipment 74 771 120 100 76 492
Goodwill and other intangible assets 51 438 56 251 51 438
Investment in associate - 9 963 -
Deferred taxation 12 640 6 056 20 761
Current assets 618 746 640 939 612 723
Inventories 360 153 385 962 374 502
Trade and other receivables 234 288 231 592 221 840
Taxation receivable 233 5 387 1 161
Bank and cash balances 24 072 17 998 15 220
Non-current assets held for sale/distribution 15 040 - 27 130
Consumer segment 15 040 - 27 130
Group disposals held for sale/distribution 11 131 23 584 -
Infrastructure segment (Note 1) - 23 584 -
Consumer and property segment (Note 1) 11 131 - -
Total assets 783 766 856 893 788 544
EQUITY AND LIABILITIES
Capital and reserves 289 439 326 946 270 906
Stated capital 837 212 837 212 837 212
Non-distributable reserves (175 784) (176 230) (176 532)
Accumulated Losses (362 140) (334 107) (382 594)
Equity attributable to equity holders of the
parent 299 288 326 875 278 086
Non-controlling interests (9 849) 71 (7 180)
Non-current liabilities 20 003 38 841 32 806
Interest-bearing liabilities 17 888 38 119 30 689
Deferred taxation 2 115 722 2 117
Current liabilities 466 060 442 696 484 832
Interest-bearing liabilities 6 631 62 6 700
Vendor loans payable 3 000 3 000 3 000
Loans payable to subsidiary external
shareholder - 2 000 2 000
Trade and other payables 186 179 164 948 200 300
Provisions 70 436 40 519 75 576
Taxation payable 1 406 250 886
Third party loan 74 970 74 384 75 960
Shareholders for dividends - 35 -
Bank overdraft 123 438 157 498 120 410
Group disposals held for sale/distribution 8 264 48 410 -
Infrastructure segment (Note 2) - 48 410 -
Consumer and property segment (Note 2) 8 264 - -
Total equity and liabilities 783 766 856 893 788 544
Supplementary information:
Net asset value per share (cents) 48,26 52,71 44,84
Net tangible asset value per share (cents) 39,97 43,64 36,55
Number of shares in issue at the end of period 620 158 235 620 158 235 620 158 235
Unaudited Unaudited Audited
as at as at as at
31 October 31 October 30 April
2017 2016 2017
R'000 R'000 R'000
Note 1 - Group disposals held for
sale/distribution
Non-current assets 76 1 822 -
Property, plant and equipment 42 1 822 -
Deferred taxation 34 - -
Current assets 11 055 21 762 -
Inventories 5 857 4 668 -
Trade and other receivables 250 9 534 -
Taxation receivable 14 123 -
Bank and cash balances 4 934 7 437 -
11 131 23 584 -
Note 2 - Group disposals held for
sale/distribution
Non-current liabilities - 940 -
Interest-bearing liabilities - 183 -
Deferred taxation - 757 -
Current liabilities 8 264 47 470 -
Shareholder loans payable 2 000 62 -
Trade and other payables 6 264 15 881 -
Net inter-group loan balances - 31 527 -
8 264 48 410 -
Interim consolidated statement of comprehensive income
Unaudited Unaudited Restated
six months six months year
ended ended* ended*
31 October 31 October 30 April
2017 2016 2017
R'000 R'000 R'000
Revenue 696 687 644 529 1 311 492
Cost of sales (487 259) (460 285) (977 369)
Gross profit 209 428 184 244 334 123
Other income 1 618 11 538 9 550
Operating expenses (166 722) (206 444) (357 507)
Profit/(loss) before interest, taxation,
depreciation and amortisation ("EBITDA") 44 324 (10 662) (13 834)
Depreciation (6 245) (6 094) (10 547)
Amortisation of intangibles - (198) (397)
Reversal of impairments 1 210 - -
Impairment of goodwill - (2 234)
Impairment of intangibles - - (2 381)
Impairment of Assets - - (17 181)
Impairment of investment in associate (1 505) (4 542) (15 380)
Impairment of receivables from related parties - (4 712) -
Profit/(loss) before interest and taxation 37 784 (26 208) (61 954)
Interest received 1 556 59 2 883
Interest paid (10 410) (13 616) (23 446)
Share of losses from associate - (550) (2 427)
Net profit/(loss) before taxation 28 930 (40 315) (84 944)
Taxation (8 750) 6 258 14 225
Profit/(loss) for the period from continued
operations 20 180 (34 057) (70 719)
Discontinued operations - Infrastructure
segment (Note 3) - (159 690) (178 766)
Discontinued operations - Consumer and
property segment (Note 3) (2 395) - -
Profit/(loss) for the period 17 785 (193 747) (249 485)
Other comprehensive income:
Items that may be reclassified subsequently
to profit or loss
- Foreign currency translation reserve 490 1 405 (449)
Total comprehensive profit/(loss) for the
period 18 275 (192 342) (249 934)
Attributable to:
Equity holders of the parent 20 454 (195 273) (245 986)
Non-controlling interests (2 669) 1 526 (3 499)
- Continued operations (1 471) (676) (3 499)
- Discontinued operations (1 198) 2 202 -
Net profit/(loss) after taxation 17 785 (193 747) (249 485)
Attributable to:
Equity holders of the parent 20 944 (193 868) (246 435)
Non-controlling interests (2 669) 1 526 (3 499)
- Continued operations (1 471) (676) (3 499)
- Discontinued operations (1 198) 2 202 -
Total comprehensive profit/(loss) for the
period 18 275 (192 342) (249 934)
* Restated - Refer to discontinued operations note
Supplementary information:
Basic earnings/(loss) per share (cents) 3,30 (31,49) (39,67)
- Infrastructure continued operations (0,17) (2,60) (3,25)
- Infrastructure discontinued operations 0,00 (26,05) (28,83)
- Consumer continued operations 3,86 (2,81) (7,57)
- Consumer discontinued operations (0,39) (0,03) (0,02)
Headline earnings/(loss) per share (cents) 3,05 (4,60) (7,45)
- Infrastructure continued operations (0,17) (2,60) (2,89)
- Infrastructure discontinued operations 0,00 (0,10) (2,47)
- Consumer continued operations 3,61 (1,87) (2,07)
- Consumer discontinued operations (0,39) (0,03) (0,02)
Weighted average number of shares in issue 620 158 235 620 158 235 620 158 235
Ellies has no dilutionary instruments in issue
Note 3 - Discontinued Operations
Revenue 5 885 55 428 71 268
(Loss)/profit before interest, taxation,
depreciation and amortisation ("EBITDA") (2 387) 1 276 (11 511)
Depreciation (8) (17) (55)
Loss on loss of control - (160 955) (163 373)
Loss before interest and taxation ("PBIT") (2 395) (159 696) (174 939)
Interest received - 34 102
Interest paid - (28) (3 951)
Loss before taxation ("PBT") (2 395) (159 690) (178 788)
Taxation - - 22
Loss after taxation ("PAT") (2 395) (159 690) (178 766)
* Restated - Refer to discontinued operations note
Reconciliation of basic earnings and headline earnings
Unaudited Unaudited Restated
six months six months year
ended ended* ended*
31 October 31 October 30 April
2017 2016 2017
R'000 R'000 R'000
Net profit/(loss) for the period attributable to
equity holders of the parent 20 454 (195 273) (245 986)
Adjusted for:
Profit on sale of property, plant and equipment (2 544) (355) (1 063)
- Infrastructure continued operations - (51) (51)
- Infrastructure discontinued operations - (62) -
- Consumer continued operations (2 544) (242) (1 012)
Reversal of impairments (1 210) - -
Impairment of intangibles 2 381
Impairment of goodwill - - 2 234
Loss as a result of loss of control - 160 955 163 373
Foreign currency translation reserve as a
result of loss of control - 1 521 -
Impairment of assets - - 17 181
Impairment of investment in associate 1 505 4 542 15 380
Tax effect on adjustments 712 99 298
Headline profit/(loss) attributable to ordinary
shareholders 18 917 (28 511) (46 202)
* 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
2017 2016 2017
R'000 R'000 R'000
Balances at beginning of the period 270 906 519 288 519 288
Realisation of foreign currency translation
reserve - - 1 402
Share based payment reserve 258 - 150
Total comprehensive income/(loss) for the
period 18 275 (192 342) (249 934)
Balances at end of the period 289 439 326 946 270 906
Interim consolidated statement of cash flows
Unaudited Unaudited Restated
six months six months year
ended ended* ended*
31 October 31 October 30 April
2017 2016 2017
R'000 R'000 R'000
Cash flows from operating activities 13 147 5 531 52 546
Cash generated from operations 23 463 30 769 103 620
Interest received 1 556 59 2 885
Interest paid (10 410) (13 616) (23 419)
Taxation received 768 1 469 884
Dividends paid - - (35)
Cash flows - continuing operations 15 377 18 681 83 935
Cash flows - discontinued operations (2 230) (13 150) (31 389)
Cash flows from investing activities 10 481 (274) (19 012)
Additions to property, plant and equipment (5 232) (5 168) (9 065)
Proceeds on disposal of property, plant and
equipment 15 713 7 548 6 976
Loss of control - (3 126) (9 575)
Loan to associate - 551 (7 293)
Cash flows - continuing operations 10 481 (195) (18 957)
Cash flows - discontinued operations - (79) (55)
Cash flows from financing activities (12 870) (39 169) (40 573)
Repayment of interest bearing liabilities (12 870) (39 316) (39 863)
Loans paid to subsidiary external shareholders - (36) (98)
Cash flows - continuing operations (12 870) (39 352) (39 961)
Cash flows - discontinued operations - 183 (612)
Net increase/(decrease) in cash and cash
equivalents 10 758 (33 912) (7 039)
Cash and cash equivalents at the beginning of
the period (105 190) (98 151) (98 151)
Cash and cash equivalents at the end of the
period (94 432) (132 063) (105 190)
* Restated - Refer to discontinued operations note
Segmental analysis
Unaudited Unaudited Restated
six months six months year
ended ended* ended*
31 October 31 October 30 April
2017 2016 2017
R'000 R'000 R'000
Revenue 702 572 699 957 1 382 760
Infrastructure - continued operations - 2 749 1 285
Infrastructure - discontinued operations - 47 545 51 494
Consumer - continued operations 695 709 610 891 1 268 727
Consumer - discontinued operations 5 885 7 883 19 774
Manufacturing - continued operation 64 392 103 814 166 668
Inter Segment (63 414) (72 925) (125 188)
Segmental profits/(losses) from operations
Net profit/(loss) before interest and taxation 35 389 (185 904) (236 893)
Infrastructure - continued operation (970) (12 237) (19 156)
Infrastructure - discontinued operation - (159 329) (174 817)
Consumer goods - continued operations 34 251 (16 282) (25 674)
Consumer - discontinued operation (2 396) (367) (121)
Property division - continued operation 4 752 (597) (14 703)
Manufacturing - continued operation (248) 2 908 (2 422)
Interest received 1 556 93 2 985
Infrastructure - continued operation - 11 18
Infrastructure - discontinued operation - 32 100
Consumer goods - continued operation 6 968 7 706 18 119
Consumer goods - discontinued operation - 2 2
Inter Segment (5 412) (7 658) (15 254)
Interest paid (10 410) (13 644) (27 397)
Infrastructure - continued operation (83) (3 938) (677)
Infrastructure - discontinued operation - (28) (3 951)
Consumer goods - continued operation (8 317) (9 678) (18 043)
Property division - continued operations (2 010) (1 824) (8 592)
Manufacturing - continued operation (5 412) (5 834) (11 388)
Inter Segment 5 412 7 658 15 254
Share of losses in Associate - (550) (2 427)
Net profit/(loss) before taxation 26 535 (200 005) (263 732)
* Restated - Refer to discontinued operations note
Segment Assets
Infrastructure - continued operation 29 010 51 446 31 710
Infrastructure - discontinued operation - 23 584 -
Consumer Goods and Services - continued
operation 589 907 568 309 585 145
Consumer Goods and Services - discontinued
operation 11 131
Property division - continued operations 55 640 77 087 66 891
Manufacturing - continued operation 98 078 136 467 104 798
Total Assets 783 766 856 893 788 544
Segment Liabilities
Infrastructure - continued operation 113 127 135 562 118 733
Infrastructure - discontinued operation - 48 410 -
Consumer goods and property division -
continued operation 310 152 259 428 313 717
Consumer Goods and Services - discontinued
operation 8 264
Property division - continued operations 24 709 50 017 38 643
Manufacturing - continued operation 38 075 36 530 46 546
Total Liabilities 494 327 529 947 517 639
Notes to the unaudited interim results
Basis of preparation and accounting policies
The unaudited interim results for the six months ended 31 October 2017 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 2017, are consistent with those applied in the audited financial statements for the
year ended 30 April 2017.
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,
AL Bock CA(SA). The interim results have not been reviewed or reported on by the Group
auditor, Grant Thornton Johannesburg Partnership.
Group disposals held for sale/distribution
Management continues to review the company's structure in order to streamline the
business and to ensure that it remains fit for purpose. The business has identified that we are
increasingly competing with one of our minor subsidiaries, African Solar Power Proprietary
Limited, and as such management has committed to a plan to wind down its exposure in
respect of the entity and to subsequently close the business and to do so in a manner that
best protects the company and the respective stakeholders. This process is expected to be
completed by the end of April 2018.
The statement of profit and loss and other comprehensive income and statement of cash
flows are restated for the comparative period in terms of IFRS 5 as a result of discontinued
operations.
Non-current assets held for sale and disposal
This relates to the remainder of the properties identified at the end of April 2017 as being
non-core, which are Erf 195 Selby and portions 1, 2 and 3 of Erf 347 Chloorkop extension 19,
of which transfer occurred subsequent to 31 October 2017 on 20 November 2017. There is
interest in the Selby property and potential buyers have engaged with engineers to assist in
this process.
Subsequent events
1. The transfer of Chloorkop extension 19 occurred on 20 November 2017 at the carrying
value of R9,5 million.
2. As announced on SENS on 20 November 2017, the Chief Executive Officer, Wayne Samson,
resigned in order to pursue new interests. He remains available to the executive until the
end of February 2018, in order to facilitate an orderly hand over. The Board thanks him for
his many years of service and dedication to the company.
3. As announced on SENS on 28 November 2017, dispensation has been granted by the JSE
for the financial director Adrian Bock to act as the Interim joint CEO with Elliot Salkow,
until such time as either a new CEO or CFO is appointed, the process of which is under the
control of the Board and has commenced.
Changes to the board
1. Refer to subsequent events, note 2 and 3.
Commentary
Overview
The predominant theme for the period under review is that the turnaround strategy is resulting
in the expected outcomes. What is pleasing is that the turnaround has been driven not only
by the reduction of costs as expected but also top line growth. The state of the economy and
reduced consumer spending remain a concern and management remains vigilant in driving
efficiencies and exploring growth opportunities, without taking on undue risk.
Operations
Consumer
Notwithstanding the trying conditions of the economy and reduction in consumer spending
the Consumer segment increased its turnover to R703 million, up from R650 million for the
same period ended 31 October 2016. What is pleasing is that we managed to grow the top
line whilst still being able to increase the gross profit percentage by a percent from 29% to
30% and on a significantly reduced cost base. Operating expenses were down to R166 million
from R203 million for the same period ended 31 October 2016. The segment returned a profit
before interest and tax of R35 million for the period from a loss of R15 million for the same
period ended 31 October 2016, with consumer continuing operations returning earnings per
share of 3,86 cents, up from a loss per share of 2,81 cents.
The satellite market remains robust and exceeded our internal forecasted numbers, whilst
our other product lines held their own, in a highly competitive environment. Our corporate
division is starting to show traction, and is very much expected to be the catalyst for growth
going forward.
Ellies is embracing the green movement and is gradually becoming a recognised brand in
the Renewable/Energy efficient sector, mainly focusing on PV and alternative energy efficient
products and solutions. In the corporate lighting division a number of blue chip clients
(Growthpoint, EOH, Investec and Glencore amongst others) have signed up where our product
offering is considered technically advanced and innovative. We expect to make significant
strides in this area.
Ellies 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.
Infrastructure
The only operating entities in the infrastructure segment (Ellies Infrastructure (Pty) Ltd and
Botjheng Water (Pty) Ltd ("Botjheng")) are classified as continuing operations until such time
as inter alia, the arbitration that Botjheng is involved in has been heard in February 2018,
whereafter management will commit to disposal and or wind down as applicable. 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 R80 million.
Update of restructuring of debt with Standard Bank of South Africa Limited
We are in the final stages of agreeing the facilities agreement and security sharing agreement,
more fully disclosed in the Integrated Report of 30 April 2017, all of which will be signed by
the end of April 2018.
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 AL Bock
Chairman and Interim joint CEO Interim joint CEO and CFO
4 December 2017
Executive directors
ER Salkow (Chairman and interim joint CEO)
WMG Samson (Chief executive officer) - resigned 20 November 2017
AL Bock (Chief financial officer and interim joint CEO)
Lead independent non-executive:
OD Fortuin
Independent non-executive directors:
S Goldberg
FS Mkhize
Non-executive directors:
MJ Kuscus
www.elliesholdings.com
www.ellies.co.za
Date: 04/12/2017 02:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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