Ellies close to looking at plug-in acquisition

Lighting and electrical products company Ellies, which on Monday reported its first annual profit in four years, is nearly ready to look at acquisitions and other growth opportunities again, says financial director and interim joint CEO Adrian Bock.

“I’m a big proponent that Ellies has to grow,” said Bock. He will step down from his dual role at the end of December after largely fulfilling his mandate to stabilise the group, whose shares plummeted from nearly R10 in 2013 to 34c on Monday.

The company would have to be “calculated and risk-averse” as it looked to add new products and businesses, Bock said.

While the group now had “lots of headroom” in terms of funding, it would probably not consider hefty deals.

“But there will come a time when Ellies will have to make a bolt-on acquisition to look to grow, and I think that time is imminent.”

The group was not yet looking at any meaningful deals, but would discuss its new strategy at an upcoming board meeting, he said.

Ellies’s revenue for the year to April rose 8% to R1.4bn while it recorded a total comprehensive profit for the year of R38m, from a loss of R249.9m the year before.

Overhead costs fell R26m, mostly as a result of the group’s new centralised shared-services model.

Bock expected similar savings in the 2019 financial year as Ellies began to automate and digitise certain headoffice functions.

“That will come from efficiencies in terms of procurement, but also there will be some human capital consequences as well.”

Meanwhile, the new business unit that provided lighting, satellite and solar products to companies was “starting to gain traction”, he said.

“We’ve got a pipeline in excess of R60m or R70m of potential deals.”