Hello and goodbye

It did not stay long. After little more that two years on the JSE, cellphone accessories distributor Celcom is leaving the bourse.

The AltX-listed company has not had an easy stay in its short life on the junior board. Its share price has rarely traded above its listing price of 100c, the total value of share trades for the past 12 months was only R4,09m and earnings for the year to end-June were below expectations.

Investors have ignored it as the average volume in shares traded monthly is only 680000. This is not surprising considering only 10% of its shares were actually listed on the exchange — the bare minimum.

The end of Celcom’s tenure as a listed company was instigated by management at its retail subsidiary, V Cellular Stores, making an offer to buy out the chain. It made a cash bid of R49m.

Nonparticipating shareholders will get 50c/share — a 56,25% premium on the closing price of 32c on December 11 2008 — coming to a total cost of R18,9m.

The remaining businesses of the company founded by CEO Stefano Brachini and his younger brother, Luca, in 1994 will continue to operate under private ownership.

The older Brachini does not think listing was a mistake but admits that he underestimated the pressures of running a listed company.

It did not help that the global credit crisis dried up funding for small companies and the economy turned on it.

Celcom’s stint as a listed entity was not all bad. When it joined the JSE, it became part of the AltX listing boom, with its shares being 10 times oversubscribed and its share price hitting the 155c mark shortly after listing.

But even with revenue increasing 46% to R1bn, there were signs its margins were taking strain as gross profit rose only 43% to R98m for the year.

The problems for Celcom arose from the slowing economy reducing its margins and its high overheads taking a bite out of its profits.

It also incurred a loss in setting up an operation in Uganda.

The listing might not have worked out for the group but Brachini says it did provide Celcom with a higher profile in the investment community.

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Hello and goodbye