Ellies confident of profit this year

ELLIES Holdings has put the troubles of the past behind it and is focusing on a brighter future after undergoing restructuring.

The group managed to cut its losses for the year to end April as it positions itself to report profits in the year ahead.

Ellies, a manufacturer, wholesaler, importer and distributor in diversified sectors, reported a R249.49 million loss, an improvement from the R514.77m loss reported a year ago, while headline loss per share came in at 7.45 cents a share, down from 57.35c loss as compared to April 2016.

Chief executive Wayne Samson said the group had managed to clean the business after a successful restructuring. “The year under review has been enormously challenging for Ellies, which is reflected in the poor results for the period,” he said.

However, he said there have been positive aspects in the results, like maintaining revenue at R1.3 billion.

The group, which services the local and African markets, said it managed to maintain this revenue despite the top-line pressures and the difficulty in operating in an import-driven inflationary environment, coupled with the depressed macro-economic environment in South Africa, and the significant restructuring of its business.

Samson added that a predominant theme during the financial year was the effects of the unwinding of the infrastructure segment, which was put into effect during the previous financial year to de-risk the group.

“The unwinding resulted in R163.4m being declared a net loss as a result of loss of control in the respective companies that were deconsolidated and a R17.5m performance guarantee that was presented on Botjheng by Lombard Insurance Company,” he said.

The group operates two segments: infrastructure and consumer goods segments.

The consumer segment started a course of restructuring its operations in the last financial year. “We have embarked on a path of centralising computer systems, debtors, creditors and human resources and are also busy outsourcing the warehousing and distribution of our products to our retailers via Super Group. The warehousing and distribution to independents and installers will remain at the Ellies branches.”

The group believes this restructuring will bring significant savings to the company, with a reduction in both employee and infrastructure costs.

The group did not declare a dividend during the year. Ellies shares gained 47.06 percent on the JSE on Friday to close at 25c.