Ellies Holdings (ELI) on Thursday announced diluted headline earnings per share (HEPS) of 15.12 cents for the six months ending in October 2010, from 14.47 cents previously.

Ellies is a manufacturer, wholesaler and distributor of electronic products related to television reception, including satellite and terrestrial aerial ranges.

It noted diluted earnings per share of 15.16 cents from 14.47 cents earlier.

Ellies recorded diluted core headline earnings per share of 16.06 cents, from 16.16 cents in 2009.

Revenue advanced to 652.56 million rand, from 590.2 million rand.

“With overall revenue up 11% on the comparative period and profit before tax up by 19% to 66.8 million rand, the group achieved strong growth during the period under review,” it said.

With effect from November 26, 2010, Ellies Holdings transferred its listing from the alternative exchange to the main board of the JSE.

Ellies said that the growth evident in revenue and pretax profit was diluted at the level of earnings per share, as an additional 32.8 million shares were issued in April 2010 pursuant to a rights offer.

“By underwriting the rights offer, at a premium to the market price, the senior management and vendors of Megatron converted the balance of the purchase price payable in cash, in order to increase their shareholding in Ellies,” it said.

The group said that, at the start of the period, it began implementing a strategy to own and, where appropriate, to enhance efficiencies, by upgrading its operating premises countrywide.

“This resulted in the start of a new 'property division', which has acquired and/or refurbished some existing and new premises. The group anticipates that, over time, the resultant capitalisation of property value growth will deliver a sound return on investment,” Ellies said.

The property investment by the group, included in “property, plant and equipment”, at October 31 2010 was 25 million rand. This is expected to increase to about 43 million rand by year-end, as registration of certain transfers is still pending. This investment would be financed through a new ten-year facility of 40 million rand, Ellies said.

“Pleasing growth in the Ellies and Elsat divisions has been the result of an increased market in consumer demand for both electrical goods and satellite equipment, while gross margins have been stable,” the group said.

However, it pointed out that the performance of the “infrastructural division” reflected the depressed conditions in the building and mining sectors.

Looking ahead, Ellies said it would continue to grow and diversify its operations by investing in new ventures.

With the recent approval of a digital standard by both the South African government and Southern African Development Community (SADC), Ellies said it was closer to the implementation of the digital terrestrial television migration. “Through the strategic alliance between Ellies and Altech UEC, digital terrestrial television will materially benefit the group”.

The infrastructural division's contribution is expected to improve dramatically in the short term.

“The board remains positive with regard to the group's continued organic growth, current ventures and new opportunities which continue to present themselves,” Ellies concluded. - I-Net Bridge