Ellies limps in half-year as low DSTV installations hit
Diminished demand for new DStv installations, the growing video streaming market and depressed economy impacted negatively on Ellies Electronics in the six months ended 31 October.
The JSE-listed company sells and distributes various products, including satellite dishes, terrestrial aerials, TV brackets, mounts and shelving solutions.
Yesterday, Ellies reported its half-year financial performance, saying with local unemployment at record levels, reflective of a depressed economy and a low growth environment, lower demand for new DSTV installations was recorded from MultiChoice, a long-standing Ellies partner.
Added to this, the company says, the global microchip shortage impacted MultiChoice’s ability to deliver decoders for three months and meet the existing demand from Ellies, resulting in a further two-month delay to get the boxes ready for distribution to its retail partners.
“These installations still make up a meaningful percentage of Ellies’s group revenue and the trend has intensified through the heightened accessibility of streaming video entertainment,” says Ellies Group CEO Dr Shaun Prithivirajh.
“In response, Ellies continues to identify and pursue alternative revenue streams, as well as grow its existing direct-to-customer and third channel segments.”
Ellies adds that global and local supply chain challenges emanating from the COVID-19 pandemic, exacerbated by the July civil unrest and weak trading conditions, negatively impacted its operational performance.
As a result, the group reported an EBITDA loss for the six months of R19.5 million, attributable to a 38.2% decrease in gross profit when compared to the comparative reporting period.
In the period, other key financial metrics included revenue decreasing from R654.9 million to R481.9 million. Profit after tax decreased from a profit of R12.9 million to a loss of R20.2 million, earnings per share decreased from a profit per share of 2.56c to a loss of 3.06c and headline earnings per share decreased from a profit per share of 2.37c to a loss of 4.36c.
Further, Eskom’s reduced load-shedding schedule in the period had an impact on its energy solutions business.
During the six months under review, Ellies says, electricity supply had stabilised, resulting in lower year-on-year demand for its alternative solar and inverter solutions.
Nevertheless, it says, the pressure on South Africa’s electricity grid is likely to continue into the near future and Ellies is well-poised to take advantage of the growing demand for more reliable energy sources, from both the commercial and household consumer market.
“We are acutely aware of the debilitating effect of load-shedding on ordinary South Africans and their businesses. Small, medium and micro enterprises (SMMEs) are the life blood of any economy, and we are well-positioned, through our range of alternative solar power and inverter solutions, to assist our struggling SMMEs and to benefit from the large-scale growth the sector is experiencing,” says Prithivirajh.
Commenting on the overall performance, he says: “On a positive note, capital and reserves increased against the comparative period. This was largely attributable to the profitable second half of FY2021, which also included the creation of deferred tax assets. The group’s financial position remains strong, ending the half-year with capital and reserves of R156.9 million and net asset value per share was 19.5c (H1 FY2021: 20.8c).
“In addition, large-scale progress was made during the period in collecting overdue accounts, which positively impacted cash flow. Added to this, the group had in recent years written off substantial quantities of inventory, whereas in the six months under review, the inventory write-off was negligible.
“In this regard, the group’s decision to migrate to a third-party logistics and warehousing provider has borne fruit. We are confident we will continue to see further efficiencies in our own supply chain through the remediation of our embedded ERP system.”