Ellies share plunges as concern about Megatron unit takes toll
ELLIES’S share price crashed as much as 37.5% to 30c on Wednesday morning following the release of results after the market close on Tuesday.The electronics group’s after-tax loss widened to R515m in the year to end-April from the prior year’s R334m loss. Its revenue declined marginally to R1.58bn from R1.59bn.A problem highlighted in an emphasis of matter by auditors Grant Thornton is that Ellies agreed to stand surety for its Megatron subsidiary for up to R100m with Standard Bank.Its ability to continue as a going concern now depends on Standard Bank not demanding immediate repayment.A plan to unbundle Megatron into a separate listing had been abandoned because its performance was not strong enough, Ellies said in the results statement.Setbacks for Megatron included the cancellation of the Kiri Dam project in Nigeria and the Sicogi economic housing project in the Ivory Coast due to political risk factors, Ellies said.Ellies bought Megatron in 2008 for R180m. Over the past few year...
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