Ellies reports R85-million loss
Ellies has released its results for the financial year that ended on 30 April 2023, reporting a loss after tax attributable to equity holders of the parent of R85 million.
Its loss worsened by nearly 95% compared to last year, when it posted a R43.7 million loss.
The company also reported a worsening in its loss before interest, taxation, depreciation, and amortisation of 27% to R46.9 million.
Ellies’ total comprehensive loss increased by 96% to R85.4 million, from R43.6 million last year.
“The Ellies Group, as reported in the trading statement, posted disappointing results for the year ended 30 April 2023,” the company said on Tuesday.
Revenue decreased by 7.7% on the prior year, Ellies said.
“Demand for Ellies’ satellite installation and a portion of its retail offering came under pressure due to difficulties facing the consumer, with rising inflation and interest rates,” it said.
“The Group saw an increase in demand for its products related to power due to the continual load shedding, being UPS backup solutions, generators, solar and surge protection products.”
Ellies blamed its constrained working capital for limiting its ability to capitalise on the surge in demand.
“The loss, as reported, includes once-off separation costs as a result of the restructuring of the business of R18 million,” it said.
“Ellies expects to see the benefits of the restructuring in the form of reduced operating costs, estimated at R30 million per annum.”
The company said deferred tax assets were created in previous years in respect of assessable losses and other temporary differences.
These are reflected in the Statement of Financial Position at R36.6 million.
“Based on the forecasts, the group expects to utilise this asset in the foreseeable future, usually three years,” Ellies said.
“The directors decided not to raise a further tax asset in the amount of R20,4 million as the realisation of the asset would likely extend beyond three years. In the prior year, the impact of the recognition of the temporary differences improved the loss by R13,1 million.”
Ellies said it is finalising an agreement with its bankers for an extension to its term loan, currently due on 30 April 2024, and an increased working capital facility to capitalise on increased demand for power-related products.
“Management expects this to be finalised during August 2023,” it said.
Ellies also highlighted its proposed acquisition of Bundu Power.
“This acquisition represents a pivotal step in the Group’s strategy to expand its offering into alternative power, and is further expected to bolster the balance sheet and enhance earnings,” it stated.
“The Board and management believe that with the acquisition of Bundu Power, the expected increase in working capital facilities and benefits from the restructuring, the Group will be well positioned for the next year.”
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