“The board of directors of the company has resolved to separate the two operating divisions of Ellies in order for the Ellies consumer business and the company's Megatron infrastructure business to be held by separate wholly-owned subsidiaries of the company,” it said.
According to the JSE-listed company, this is in preparation for a further restructuring whereby the capital required by each business will be funded on a stand-alone basis going forward.
“The company is of the view that the separate listings of the Ellies Electronics business and the Megatron infrastructure business will allow for increased focus on their respective core operations,” [DATA ELI:Ellies] said.
“It will enable the Ellies consumer business and the Megatron infrastructure business to access different sources of funding, better suited to their respective needs. The unbundling and simultaneous separate listing of Ellies Electronics will also provide greater investor flexibility.”
Ellies reported a 26.3 per cent drop in revenue from continuing operations for the six months ending 31 October 2014.
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“The past six months have been the most challenging the group has experienced in its 30-year history. In the last few months, the company has come under severe cash flow restrictions, which have impacted significantly on its results,” it said.
“The results of the consumer goods business and property division have been reclassified to discontinued operations in the income statement and its assets and liabilities reclassified to disposal groups held for sale and/or distribution in the statement of financial position.”
The company reported a loss before taxation of 39 million rand in the 2014 period from a profit of 38 million rand for the same period in 2013.
It also reported a total comprehensive loss for the period of 42 million rand in 2014 from a profit of 76 million rand in 2013 and a headline loss per share of 13.17 cents.
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“The infrastructure division intends to place greater focus on its export earnings during the coming periods. Access to working capital as well as equity capital for future investments will be of paramount importance in the future,” said Ellies.
“The management of the consumer goods business believes that the Ellies group’s strategic and logistical footprint, diversified interests and brands are strong differentiators, off the back of which Ellies Electronics will continue to be a dominant player in its chosen consumer fields.”