Stanching the bleeding

Amputation has been around since ancient times, but it really only picked up in the American Civil War, when lead Minié ball bullets caused such extensive damage that doctors lopped off

50,000 limbs, gaining the nickname “sawbones” in the process. Without a sterile environment, results were mixed, with one in four patients failing to survive — but it was worth a try when there was no alternative.

This is a situation that will be more than a little familiar to shareholders of the walking wounded Ellies.

The amputation in question is of its ill-fated dabble in infrastructural power through its acquisition in 2007 of Megatron Federal. This has been something of a disaster, with the discontinued operations chipping in an operational loss of R174.8m this year on top of last year’s R448.1m, and ending up with Megatron in business rescue and Megatron Towers in liquidation. Now the group’s exposure to the infrastructure segment is limited to Botjheng Water, which should be deconsolidated by April.

The plan with an amputation is that you chop off what’s beyond repair and are left with a healthy core. But the problem for Ellies is that its remaining consumer segment is feeling the bite from the downturn in the economy. It slumped to a loss of R43m against last year’s R47m profit.

Its electrical segment suffered from new competitors hitting the market with products that do not conform to regulatory standards, which is a little alarming for low-cost consumers. The group has managed to restructure its banking facilities, but it needs to return to profit — pronto.