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OLI
OLI
OLI - O-line Holdings Limited - Trading update
O-line Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 2006/034685/06)
JSE share code: OLI
ISIN Number: ZAE000110730
("O-line" or "the company)
TRADING UPDATE
Acquisition of the ARMCO Group ("ARMCO")
The consolidation ("the consolidation") of O-Line and Armco`s operations
countrywide post the acquisition of Armco as detailed in the O-line circular to
shareholders dated 6 November 2008 ("the circular") is now almost completed in
the Western Cape, Eastern Cape and KwaZulu Natal.
Benefits from the consolidation include:
* The integration with Armco has increased the company`s range of product and
service offerings from O-Line`s cable management and support systems to
include galvanizing; construction products; road safety products and
signage products within Armco.
* The re-engineering of production lines and the consolidation of the
respective businesses of ARMCO and O-Line is maximising the economic
benefits of selling a bigger basket of goods, rationalising the production
processes and thereby increasing shareholder value;
* Maximising logistical savings, utilising space more efficiently and
maximise transport cost savings and savings from a straight-line
manufacturing process in line with international trend;
* Utilising O-Line`s and ARMCO`s strategic relationships with local and
global mining, construction and engineering houses in order to offer
package deals to larger blue chip companies consisting of both galvanised
structural steel and cable racking accompanied with mechanical support
steel. This will result in increased revenue and profit margins and
strengthen the competitive position in the local and international market;
* Combining the established marketing and selling networks of ARMCO and O-
Line thereby enhancing their local and international footprint;
* Combining the expertise and capabilities of ARMCO and O-Line resulting in
the development and roll-out of numerous new products; and
* Combining the two entities buying power.
Interim results for the 6 month period ended 31 December 2008
O-line is in the process of finalising the interim results for the 6-month
period ended 31 December 2008. O-line acquired the ARMCO Group with effect from
1 June 2008 (the "effective date"). However, International Financial Reporting
Standards provide that O-line cannot consolidate the ARMCO results from the
effective date into the O-line results since the regulatory approval process for
the ARMCO acquisition was only completed on 1 December 2008. Illustrative pro
forma numbers ("Pro forma revenue and headline earnings") are included in this
trading statement to show the effect on revenue and headline earnings if O-line
could have consolidated the ARMCO results for the 6 month period commencing 1
July 2008 top 31 December 2008 into the O-line results.
IFRS revenue and headline earnings
Shareholders are advised that O-line anticipates an increase in revenue from
R83m for the six month period ended 31 December 2007 to approximately R118m for
the six month period ended 31 December 2008. This is an increase of
approximately 41% in revenue.
Headline earnings per share is expected to increase from 6.67 cents per share
for the six month period ended 31 December 2007 to approximately 8.76 cents per
share for the six month period ended 31 December 2008. This is an increase of
approximately 31% in headline earnings.
Pro forma revenue and pro forma headline earnings
The pro forma revenue and pro forma headline earnings number is calculated for
illustrative purposes to show the increase in O-line revenue and O-line headline
earnings per share if O-line could consolidate the ARMCO results for the six
month period ended 31 December 2008. The effective date from which O-line
received all the benefits (profits/losses/cash flow) from the ARMCO operations
is 1 June 2008.
Pro forma revenue has increased from the O-line actual reported revenue of R83m
for the six month period ended 31 December 2007 to approximately R253m for the
six month period ended 31 December 2008 and pro forma headline earnings per
share has increased from the actual reported O-line headline earnings per share
of 6.67 cents for the six month period ended 31 December 2007 to approximately
18.05 cents per share. This is an increase of approximately 171%.
Shareholders are advised that the above financial information has not been
reviewed or reported on by the company`s auditors.
Pipeline
The Armco road infrastructure division currently is a supplier on a number of
contracts, worth around R35m, for improvements being carried out on:
* the SA national roads network;
* for a road upgrade in Malawi between Chikwakwa and Bangula;
* between Moatize and Tete in Mocambique; and
* Soya and Cabinda in Angola.
In the mining sector, the group is currently active on projects at Anglo Coal`s
Phola Coal mine; Zimbabwe Platinum`s Ngezi mine; Anglo Platinum`s ISO Platinum
Mill, First Uranium`s Chem Wes in Zambia and Alrosa Russia`s Alrosa Diamond Mine
in northern Russia. These contracts are worth an estimated R25m.
Major projects in the pipeline for O-Line in the power sector include Eskom`s
new Medupi Power Station in the North West Province and the proposed upgrade to
the Koeberg Power Station. These contracts are estimated at R50m.
Despite the international economic downturn, O-Line continues to benefit from
the current infrastructure expansion on the African sub continent and the weaker
average rand/dollar exchange rate.
Forecast results for the year ending 30 June 2009
Shareholders are referred to the O-line circular to shareholders dated 6
November 2008 regarding the Armco Group acquisition. A forecast and pro forma
forecast headline earnings per share of 18.83 cents and 28 cents respectively
were included on page 6 of the circular ("the forecast").
O-Line is confident that the forecast will be achieved.
Results announcement for the 6 month period ended 31 December 2008
The release of the final results for the six month period ended 31 December 2008
is expected to
be published on or about 16 March 2009.
Johannesburg
5 March 2009
Designated Advisor: QuestCo Sponsors (Pty) Ltd
Date: 05/03/2009 08:44:02 Produced by the JSE SENS Department.
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