Ellies back from the brink
Ellies back from the brink
Published Date: 2018-07-31 | Source: Stephen Gunnion | Author: Stephen Gunnion | Comments
The consumer and commercial electronics group says its 2018 results present a solid base from which to grow
Ellies has been brought back from the brink as a turnaround strategy aimed at reversing significant losses delivered the expected outcomes.
The consumer and commercial electronics group has been through a torrid couple of years, which led to the unbundling of its unprofitable infrastructure business and a bigger focus on consumer goods. Wayne Samson left the group at the end of February after helping to implement the turnaround. It says its 2018 results present it with a solid base from which to grow.
Revenue rose 8% in the year to end-April rose 8% to R1.42 billion as its Goods and Services segment lifted turnover by 14%. Although the weak economy continued to exert pressure on trading margins, an improved product mix and margin management resulted in average margins increasing to 28% from 26% and management believes it can improve further to 30%. Despite once-off costs related to its turnaround, it reduced overheads by 7.3% to R332 million. Headline earnings per share increased by 206% to 7.89c from a loss of 7.45c last year.
It says its focus on working capital management ensures that its operations remained cash generative, resulting in increased headroom of R30 million in its working capital facility from a year ago. It says this remains a key focus as the cost of funding and interest paid remains a drag on its earnings.
Within its consumer division, it says the satellite market remains strong, while other product lines held their own. It says it is also gradually becoming a more recognised brand in the renewable/energy efficient sector, mainly focusing on PV and alternative energy-efficient products and solutions.
In the Corporate Lighting division, Ellies says investment in the product line is starting to bear fruit, with several blue-chip clients having been signed up.
The group finalised a restructuring of its bank facilities with Standard Bank last week. It says new covenants have been set to reduce its debt to earnings ratio over the next three years.
It will still evaluate potential acquisitions if they meet certain risk criteria, fit strategically with the group and enhance value for shareholders on an ongoing basis.
Its shares closed unchanged at 34c yesterday after rising as much as 8.8% earlier. They have more than doubled since reached a closing low of 15c last July.
Pretty good Ellies FY18 results. Recovery well-underway. HEPS 8.07cps way top end guidance +263%-- Small Talk Daily (@SmallTalkDaily) July 30, 2018
I've a private lunch with exiting CEO Thursday in Cape Town to unpack results and gauge future prospects & of course see who new CEO is https://t.co/392RTC8Ce4