Ellies stays solvent despite TV migration delays and Megatron divorce
Electronics group Ellies managed to remain solvent despite delays in SA’s migration from analogue to digital television and its divorce from Megatron, its interim results released on Thursday showed.
Ellies reported current assets of R641m as at October 31, higher than its current liabilities of R443m.
By placing Megatron into business rescue in August, Ellies freed itself from the "emphasis of matter" included in its year to end-April results, which warned shareholders the group’s going concern status depended on Standard Bank’s willingness to roll over Megatron’s debt.
Thursday’s results statement included a R20m provision for the expected residual amount still owed to Standard Bank after selling Megatron’s assets. Divesting itself of Megatron along with its infrastructure division contributed a R160.9m loss, taking Ellies net loss for the six months to end-October to R194m from R9m in the matching period.
"It should be noted that the deconsolidation of the remaining infrastructure segment companies will result in a profit, on loss of control, in excess of R100m," the results statement said.
The group’s interim revenue declined by 26% to R652m.
"The digital migration continues to stop and start as a result of the ongoing litigation between e.tv and the Communications Minister [Faith Muthambi]," the results statement said.
"We hope that once the dispute on encryption of the terrestrial signal is finalised, which is expected to be in February 2017, we would be able to start with the promotion of antennas to both government and retail although we don’t expect there to be a large uptake in the beginning.
"These delays have seen our antenna and antenna accessories category virtually grind to a halt, leaving our local manufacturing of these products running at a loss. We will however maintain these production facilities, albeit with a lower staff complement, as the migration is essential for the ICT sector of SA. We have already invested in the intellectual property and machinery to produce the products needed," Ellies said.