| Thu 18 Sep 2008, 8:09 | | OLI - O-line Holdings Limited - Audited abridged financial information, change |
|
OLI
OLI
OLI - O-line Holdings Limited - Audited abridged financial information, change
statement and notice of annual general meeting
O-line Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/034685/06)
JSE share code: OLI
ISIN Number: ZAE0000110730
("O-line" or "the Company" or "the Group")
HIGHLIGHTS
REVENUE up 18%
Headline earnings up 58%
HEPS 15.05 cents
NAV 61.31 cents
Audited Abridged Financial Information, Change Statement and Notice of Annual
General Meeting
1 Posting of Annual Report
Shareholders are informed that O-line`s Annual Report will be posted on 29
September 2008.
2 Audited Financial Information
Condensed Group balance sheet
As at As at
30 June 30 June
2008 2007
Audited Audited
R`000 R`000
ASSETS
Non-current assets 24 783 22 668
Property, plant and equipment 23 869 21 835
Deferred tax 914 833
Current assets 115 735 65 614
Inventories 36 789 32 971
Current tax receivable 5 -
Trade and other receivables 32 013 28 000
Cash and cash equivalents 46 928 4 643
TOTAL ASSETS 140 518 88 282
EQUITY AND LIABILITIES
Equity 91 972 24 442
Share capital 47 371 -
Retained income 44 601 24 442
Liabilities
Non-current liabilities 12 589 5 373
Other financial liabilities 7 091 -
Finance lease obligations 1 570 1 343
Deferred taxation 3 928 4 030
Current liabilities 35 957 58 467
Loans from shareholders 12 181 12 181
Other financial liabilities 1 626 3 987
Current taxation payable 2 680 4 829
Finance lease obligation 675 630
Trade and other payables 18 795 25 476
Bank overdraft - 11 364
Total liabilities 48 546 63 840
Total equity and liabilities 140 518 88 282
Financial Analysis
As at 30 As at 30
June 2008 June 2007
Audited Pro forma
R`000 R`000
% Increase (18%)
Sales 172 530 146 356
Cost of Sales (109 151) (94 772)
Gross Profit 63 376 51 584
Other Income 736 424
Operating Expenses (37 694) (33 175)
EBIT 26 421 18 832
Finance Costs (1885) (877)
Investment Revenue 3 286
Profit before taxation 27 882 17 955
Taxation (7 663) (5 270)
Profit after taxation 20 159 *12 686
The pro forma income statement
illustrates the results of the
listed Group as if the restructuring
happened as at 01 July 2006.
Audited Profit Reconciliation to
pro forma profit 20 159 12 685*
Profit after taxation
Reversal of profit earned prior to
acquisition 25/06/07 - (12 685)
Add: Negative goodwill arising on
the acquisition of Hardware
Industries (Pty) Ltd
- 24 442
Audited profit after tax 20 159 24 442
Actual shares in issue 150 000 100 000
130 738 130 738
Average number of share in issue
15.42 18.70
Earnings per share
15.05 N/A
Headline and Diluted earnings per
share
*Once off negative goodwill amounting to R24.442 million is included in the
financial year ended 30 June 2007. The goodwill was created and recognised on
the restructuring of the group for listings purposes. The holding company
purchased the underlying entities at less than the fair market value of the
assets owned by the subsidiaries.
Illustrative Reconciliation of
earnings and headline earnings
Profit after taxation 20 159 12 686
Less: Profit on sale of fixed (479) (256)
assets
Headline earnings 19 680 12 430
Increase as % 58%
Illustrative Weighted Average 130 738 130 738
number of shares
Headline and diluted earnings per 15.05 9.51
share (cents)
Earnings per share (cents) 15.42 9.70
Increase % of EPS 59%
Condensed Group statement of changes in equity
Share Share Total Retaine Total
Capital premium share d equity
capital income
R`000 R`000 R`000 R`000 R`000
Balance at 1 July - - - - -
2006
Profit for the - - - 24 442 24 442
year
Issue of shares *- - - - -
Balance at 1 July *- - - 24 442 24 442
2007
Profit for the - - - 20 159 20 159
year
Issue of shares *- 50 000 50 000 - 50 000
Share issue - (2 629) (2 629) - (2 629)
expenses
Balance at 30 June *- 47 371 47 371 44 601 91 972
2008
*Less than R1 000
Condensed Group cash flow statement
As at 30 As at 30
June 2008 June 2007
Audited Audited
R`000 R`000
Cash flows from operating activities
Cash generated by operations 12 637 -
Interest income 3 286 -
Finance costs (1 631) -
Taxation paid (10 001) -
Net cash from operating activities 4 291 -
Cash flows from investing activities
Purchase of property, plant and (2 763) -
equipment
Sale of property, plant and 882 -
equipment
Acquisition of businesses - (18 902)
Net cash from investing activities (1 881) (18 902)
Cash flows from financing activities
Proceeds on share issue 47 371 -
Proceeds from of other financial 4 731 -
liabilities
Proceeds from shareholders loans - 12 181
Finance lease payments (864) -
Net cash from financing activities 51 238 12 181
Total cash movement for the year 53 648 (6 720)
Cash at the beginning of the year (6 720) -
Total cash at end of year 46 928 (6 720)
3 Basis of preparation
The financial information has been prepared in accordance with International
Financial Reporting Standards, the International Financial Reporting
Interpretations Committee interpretations adopted by the Accounting Practices
Board and the Companies Act of South Africa. The financial information has been
prepared under the historical cost convention.
The financial information set out above has been prepared from the annual
financial statements for the year ended 30 June 2008 which have been audited by
AM Smith and Company Inc. and their unmodified audit opinion is available for
inspection at O-line`s registered office.
4 Notes
Major Changes to Balance Sheet
Non Current Assets
Non-current assets increased in accordance with additional plant acquired of R3
million.
Current Assets
Current assets increased considerably from R65 million to R115 million mainly
attributed to equity raised of R47 million. Inventory and trade receivable
increased in line with increased turnover.
Equity
Equity increased from R24 million to R91 million attributed to 47 million equity
raised and current profit of R20 million.
Liabilities
Bank overdrafts and creditors were dramatically reduced and funded by the raised
equity together with long term liabilities. This was done in order to maximize
settlement discounts.
5 Dividends
O-line has undertaken a strategy of expansion and growth to enable positioning
for current and planned infrastructure demand. The board therefore does not
propose a dividend in respect of the 2008 financial year as earnings generated
by the Group will be re-invested in the acquisition of Armco as per post balance
events. It is the intension of the Board to periodically consider the dividend
policy and to take account of the prevailing circumstances in determining the
declaration of dividends in respect of a particular financial reporting period.
6 Commentary
The O-line group designs, manufactures and supplies quality products that meet
the needs, wants and requirements of the cable management and structural support
systems industry both locally and abroad. O-line Support Systems (Proprietary)
Limited ("O-line Support Systems"), a wholly owned subsidiary of O-line, has
developed into a leading supplier of cable management and structural support
systems in Southern Africa and elsewhere around the world. O-line Support
System`s internationally tried and tested products still make up the backbone of
the business. Today, a sophisticated distribution network, consisting of branch
offices and stockists in all main centres, ensures that O-line branded products
are a household name throughout the region.
The key to the Company`s success is a passion for innovation, a culture of
accountability and a consistent channel of open communication with its
customers, suppliers and stakeholders. O-line prides itself in the fact that its
product range features innovative use of the latest technologies, thereby
positioning its products as a best choice in its sector.
The Group successfully listed on the Altx on 26 November 2007. The listing on
Altx has increased the number of shares in issue from 100 000 000 to 150 000 000
through the private placement of 50 million shares at R1 per share.
O-line provides a comprehensive range of standard, non-standard, industrial and
commercial products. In terms of O-line`s market focus, it has specifically
designed products to satisfy industrial and commercial requirements and boasts
within its range product finishes for all environmental conditions. O-line`s
products are designed to customer requirements and meet the most stringent
quality standards.
O-line currently purveys over 3,000 products and prides itself in the fact that
it has material finishes that will accommodate all corrosive and hazardous
environments.
7 Results
Overall financial performance by the Group, notwithstanding the assistance of
forced increases due to high material costs, was pleasing. Monthly revenue
streams were maintained at fairly stable levels, with the exception of the
December/January period which declined in line with historic trends due to the
closure of the construction industry during this period. There are no revenue
and sustainable operating profit figures in the previous year, refer to pro
forma.
8 Cash Flow
The excess cash generated out of O-line and the raised equity has been spent on
capital expenditure and working capital. The balance is being held in reserve
for the Armco acquisition.
9 Operational Overview
After the successful listing, O-line`s strategic objective has been to enhance
the Group`s current production capacity through the purchase and replacement of
out-dated equipment with new state-of-the-art technology. O-line`s continued
success rests on product turn-around time and availability. Successful
construction projects are based on good scheduling and provided that O-line
meets, and, where possible, betters these schedules, the Company will maintain
its hard-won reputation for fast delivery and good customer service. The Company
has opted to purchase new technology from Germany, which is renowned for its
design and innovation in the structural support machinery environment. Some of
the purchases from Germany to date have been a Trumpf CNC punch press and the
IDEAL Mesh machine capable of producing a length every 40 seconds. In addition,
O-line is pleased to announce that the first Robot welding machine was purchased
from a proudly South African company. To date, with the exception of one piece
of equipment, all the new machinery have been commissioned and is in operation
and the improved production efficiencies are beginning to bear fruit. The Mesh
machine which the Company was awaiting has now arrived on our shores and will be
commissioned and in full operation within the first week of October 2008.
In addition the Company has opted to restructure its business units with a view
to limiting inefficiencies between its widely displaced operations. The first
will be the relocation of its current powder coating plant to the manufacturing
premises in City Deep. This will allow the coated products to move straight from
production line into the coatings line. Secondly, we will be relocating the
welding and cleaning lines adjacent to the Galvanizing plants - again resulting
in fewer logistical problems and greater efficiencies.
To counteract the threat of past and possible future steel shortages, the
Company has endeavoured to increase the number of its steel suppliers and
vendors, thereby increasing the potential availability of material. This has
been followed by a strategy of re-engineering certain products to use common
stock sizes, stockholdings of which were then increased. As a backup to these
arrangements, the Company is also undertaking investigations into the
possibility of importing certain steel components from overseas suppliers. In
order to limit the negative effect of interruptions to the power supply, the
Company has installed electricity back-up systems, wherever practically
possible, so that critical systems such as computers and telephones can continue
to operate during power outages. Production losses were limited by the re-
arrangement of staff shifts and, in a worst-case scenario, O-Line is insured
against prolonged loss of production through a loss of power supply.
10 Prospects
O-line remains bullish about the total value of African infrastructure spend,
which the Company believes has only started to filter through to companies which
supply the construction sector. The Company is of the opinion that the demand
for commodities and resources will spark the development of a number of new
mines across Africa, in addition to those which are currently in an expansion
phase. The Company also believes that this resurgence is an important phenomenon
and that it will last far longer than previous booms in the mining sector. These
developments will be followed by an improvement in road and power infrastructure
and finally further industrialisation for at least the next ten to fifteen
years.
We can substantiate this by looking at some of the recent significant
developments in our neighboring African countries, such as
* Angola`s rising infrastructure spending on oil, mines, power and road
requirements;
* The power stations and mine that are on drawing boards in Botswana;
* Mozambique`s new oil refinery, mines and its new development corridor from
its new ports to the mining heartland of Zambia and Kenya;
* DRC`s new mining and power turbine developments; and
* the increased activity in Nigeria`s oil and mining sector.
All of these developments require infrastructure commencing with roads,
airports, ports, commercial sectors and hotels in supporting and servicing these
various industries.
O-Line services all of these industries and thus, we are extremely bullish about
Africa`s development potential.
South Africa`s petrochemical, power and mining industries are long term projects
which will give sustainable growth for O-line`s products. This growth excludes
the shorter term projects such as road, rail, commercial, airports, pipeline and
port activities. Power is generally required for all of the above aspects and
this is where O-line`s product services all the above mentioned industries which
deliver and carry power from point A to B. O-line`s prospects thus look
extremely promising and rewarding for the future.
Notice of Annual General Meeting
The AGM of O-line shareholders will be held at 14-16 Prop Street, Selby Ext 11,
Johannesburg, 2001, South Africa, on Friday 14 November 2008, at 10h00. Details
of the proceedings and resolutions are contained in the Annual Report.
For and on behalf of the board
G.S. Smart (Chief Executive Officer)
E.A. Jay (Chairman)
CORPORATE INFORMATION
Executive directors: G.S Smart, E.A.C Verseput and G.A Driver
Non-executive directors: E.A Jay and R.I Jay
Registration number: 2006/034685/06
Registered address: 14/16 Prop Street, Selby Ext 11, Johannesburg 2001
Postal address: PO Box 6457, Johannesburg, 2001
Company Secretary: Natalie Van Der Merwe
Transfer Secretaries: Computershare Investor Services (Proprietary) Limited
Auditors: AM Smith and Company Inc
Designated Advisor: QuestCo Sponsors (Proprietary) Limited
Date: 18/09/2008 08:09:01 Produced by the JSE SENS Department.
The SENS service is an information dissemination service administered by the
JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or
implicitly, represent, warrant or in any way guarantee the truth, accuracy or
completeness of the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
