Ellies collapse – from JSE darling to business rescue in 10 years

Ellies’ share price declined by 99% over the last decade, with the company now entering business rescue and being technically insolvent.

The company posted an R106.5 million loss for the six months that ended 31 October 2023, which was 205.2% worse than the R34.9 million loss in the prior period when it reported its latest financial results. 

These disappointing results may mark the end of Ellies as a business. Its board warns that it may be unable to continue as a going concern. 

Simply put, Ellies may not survive much longer despite its rich history. 

Ellies was founded by Ellie Salkow in 1979 in Johannesburg with five employees, selling only television aerials.

The company expanded rapidly and opened branches in Cape Town, Durban, Port Elizabeth, Windhoek, Polokwane, Gaborone, Nelspruit, East London, and Bloemfontein.

Ellies broadened its product range in the nineties to include remote controls and various other accessories.

In 1995, the company founded Elsat with the advent of satellite TV in the South African market, which soon became a household name. 

The next decade saw it adding renewable energy products, backup power, and other products to its portfolio.

Ellies was listed on the JSE’s Alternative Exchange in 2007. It issued its maiden dividend in 2010 and moved to the JSE’s main board in 2010.

The company became a firm favourite among investors and had an all-time high price of over R9.50 per share in May 2013.

There was tremendous excitement about its involvement in providing set-top boxes in partnership with Altech EUC as part of the digital terrestrial television (DTT) roll-out.

However, as the government started to fumble the DTT migration, so did the interest in Ellies and its prospects.

The share price declined by 80% between 2013 and 2014, and the company continued to lose value as it searched for new revenue streams.

Shaun Prithivirajh
Shaun Prithivirajh, Ellies CEO

By 2019, it was trading at 10c per share, and a plan was announced to buy Bundu Power for a maximum consideration of R202.6 million in 2023. 

Bundu Power was founded in 2005 and specialised in the distribution and rental of generators and the distribution and installation of solar and ancillary products.

Ellies initially planned to raise the R202.6 million it needed to pay for Bundu Power through a rights offer of 7c per share.

However, the share price plummeted to 5c per share, well below its planned rights offer price of 7c. It meant shareholders were better off not exercising their rights.

It was time for plan B. This time, Ellies tried to buy Bundu Power for R208 million and fund it through a debt facility.

However, at the beginning of the year, Ellies revealed that its bankers had advised that they would not fund the proposed transaction.

It was no surprise then that no bank was willing to fund the transaction as Ellies’ market cap by then had plummeted to R40 million, and the company was running consistent losses. 

In the same announcement, its board decided it would be in Ellies’ best interest to commence with voluntary business rescue proceedings on the 31 of January 2024. 

The table below shows the rapid decline in Ellies’ financial performance over the past year and emphasises the need for the company to enter business rescue. 

Ellies’ latest half-year results also show the company is technically insolvent, with its liabilities exceeding its assets. This means that even if Ellies sold all of its assets at their book value, it would not be able to pay off its debts. 

The company is currently trading at 1c per share. 

Ellies H1 2023 H1 2024% change
Gross profit R134,557R76,447-43%
Operating loss-R39,254-R58,54649%
Net loss-R34,942-R106,528205%
Equity R98,768-R58,545-159%
Total AssetsR402,769R235,560-42%
Operating CashflowR5,078R2,875-43%