The migration to digital terrestrial television broadcasting in SA will bolster sales of set-top boxes beyond 2014, says electronics company Ellies.
Ellies and Altech subsidiary UEC have entered into a deal that will see Ellies distribute decoders made by UEC. SA is in the middle of a three-year dual-illumination period before the analogue broadcast signal is turned off in 2011. The international cut off is 2015.
CEO Wayne Samson says: “We are excited about the partnership and we expect it, together with increased aerial sales, to aid growth beyond 2014.”
The company yesterday reported its results for the year to April and says it experienced a shortage of available satellite decoder stock in the last four months of the year, which weighed on revenue and profit.
Ellies says satellite demand should increase, especially in the lower end of the market, due to value offerings from MultiChoice. Decoder sales are expected to recover and lost sales should be replaced.
Acquisition growth
Revenue was R976.8 million, an improvement on the previous year's R701.9 million. Operating profit was up to R131 million, from R96 million last year, while diluted headline earnings per share dropped to 24.18c, from 30.45c, as a result of more shares being in issue.
Growth in revenue was the result of its acquisition of Megatron and a continued increase in sales of its electrical and consumable ranges, despite the effects of the current economic conditions on consumers' spending habits.
During the year, Ellies consolidated the Megatron Federal business, which it acquired in May last year. The company manufactures transformer substations, medium-voltage switchgear, diesel generator sets and sheet metal products, used mostly in the mining industry and public sector.
Although the economic climate is expected to slow growth in the short-term, the company has diversified its presence outside of SA, which should aid growth.
“The establishment of Ellies' agents in Zambia and Zimbabwe has expanded our reach into the African market, which helps to balance our exposure to current local conditions,” says Samson.
Ellies did not declare a dividend, as earnings will be used to fund future growth.
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