El­lies con­fi­dent of profit this year

The Star Early Edition - - COMPANIES - Sandile Mchunu

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.

PHOTO: SIMPHIWE MBOKAZI

El­lies Hold­ings of­fices in Johannesburg. The com­pany says that it is fo­cus­ing on a brighter fu­ture af­ter un­der­go­ing re­struc­tur­ing.

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