Johannesburg - Johannesburg - Ellies shares tumbled on the JSE yesterday after the company announced that it had reported a loss and revenue had dropped sharply in its latest financial year.
The shares fell as much as 8.75 percent to 73c, before closing 2.5 percent down at 78c.
The troubled wholesaler and distributor of a range of products including TV aerials, satellite dishes and electrical generators, said it had set up a ‘separation committee’ to test the viability of hiving off and listing its consumer business and the Megatron infrastructure business separately.
The committee, comprising non-executive and executive directors, was expected to explore all options to ensure that “a separate listing is done timeously and in a manner that maximises value for shareholders”, the company said.
Ellies said the unbundling would allow its consumer business and the Megatron infrastructure business to access different sources of funding, better suited to their respective needs and cash flow profiles.
Results
“The unbundling and simultaneous separate listing of Ellies consumer (business) will also provide greater investment flexibility,” the company said.
Chief executive Wayne Samson said the separate listing was on condition that the value of shareholders was not destroyed. “If the listing goes ahead, Ellies is going to return to its 2007 form when it debuted on the JSE,” he said.
Ellies reported a basic loss a share of 92.33c for the year to April compared with 24.66c in the year to April last year.
The group withheld its dividend citing the company’s financial position. Ellies paid a dividend of 5c a share last year.
“Due to the fixed cost structure of the company, operating profit was severely impacted by the reduced revenue,” it said.
It had completed two capital raisings, including a general issue in November and a rights offer that was concluded in January. It indicated that about R100m from the capital raises was used to reduce the company’s debt with Standard Bank, with the balance of the money used to fund working capital.
Before the finalisation of the January rights offer, Ellies had embarked on numerous other short-term initiatives to further reduce the Standard Bank debt, but these had failed.
As a result, the company had to come up with a further rights offer in order to enter into an arrangement with Standard Bank, “in terms of which the company would be restructured into its two main segments, being consumer goods and infrastructure and, thereafter, to be funded and operated separately”, the company said.
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