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OLI
OLI
OLI - O-line - Unaudited Interim Financial Results For The Six Months Ended 31
December 2008
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 O-line group" or "the company")
Unaudited Interim Financial Results for the six months ended 31 December 2008
- Revenue up 41%
- Profit for the period up 80%
- Headline earnings per share up 28%
CONDENSED CONSOLIDATED INCOME STATEMENTS
Six Six Year
months months ended 30
ended 31 ended 31 June 2008
December December
2008 2007
Unaudited Unaudited Audited
R`000 R`000 R`000
Sales 118 213 83 699 172 529
Cost of sales (76 215) (55 102) (109 151)
Gross profit 41 998 28 597 63 378
Other income 1 055 152 738
Operating expenses (24 084) (17 914) (37 690)
EBIT 18 969 10 835 26 426
Investment revenue 1 323 696 3 286
Finance costs (1 562) (870) (1 884)
Profit before taxation 18 730 10 661 27 828
Taxation (5 259) (3 162) (7 662)
Profit for the period 13 471 7 499 20 166
RECONCILIATION OF HEADLINE
EARNINGS
Basic earnings 13 471 7 499 20 166
Profit on sale of fixed
assets - (38) (346)
Headline earnings 13 471 7 461 19 820
EARNINGS PER SHARE
Number of shares in issue
(`000) 196 500 150 000 150 000
Weighted average number of
shares in issue (`000) 157 329 111 813 130 738
Basic earnings per share
(cents) 8.56 6.71 15.42
Basic headline earnings per
share (cents) 8.56 6.67 15.16
Fully diluted earnings per
share (cents) 8.56 6.71 15.42
Fully diluted headline
earnings per share (cents) 8.56 6.67 15.16
CONDENSED STATEMENTS OF CHANGES IN EQUITY
for the six months ended 31 December 2008
Share Share Retained Total
capital premium income equity
R`000 R`000 R`000 R`000
Balance at 31 December
2007(restated) * 47 371 31 941 79 312
Profit for the period - - 12667 12 667
Balance at 1 July 2008 * 47 371 44 608 91 979
Issue of shares * 44 412 - 44 412
Profit for the period - - 13 471 13 471
Balance at 31 December * 91 783 58 079 149 862
2008
* less than R1 000
CONDENSED CONSOLIDATED BALANCE SHEETS
As at 31 As at 31 As at 30
December December June 2008
2008 2007
Restated
Unaudited Unaudited Audited
R`000 R`000 R`000
ASSETS
Non-current assets 135 103 22 142 24 785
Property, plant and
equipment 71 348 21 621 23 871
Goodwill 62 066 - -
Deferred taxation 1 689 521 914
Current assets 164 113 105 430 115 736
Inventories 65 154 31 407 36 788
Current tax receivable 5 - 5
Trade and other receivables 43 378 17 677 32 015
Cash and cash equivalents 55 576 56 346 46 928
TOTAL ASSETS 299 216 127 572 140 521
EQUITY AND LIABILITIES
Equity and reserves 149 862 79 312 91 979
Non-current liabilities 74 353 12 316 12 588
Other financial liabilities 67 258 7 167 7 091
Finance lease obligations 2 734 1 188 1 570
Deferred taxation 4 361 3 961 3 927
Current liabilities 75 001 35 944 35 954
Loans from shareholders 3 000 12 181 12 181
Other financial liabilities 11 352 2 000 1 626
Current taxes payable 9 427 2 262 2 680
Finance lease obligations 1 283 510 675
Trade and other payables 49 939 18 991 18 792
TOTAL EQUITY AND
LIABILITIES 299 216 127 572 140 521
CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
Six months Six months Year ended
ended 31 ended 31 30 June
December December 2008
2008 2007
Restated
Unaudited Unaudited Audited
R`000 R`000 R`000
Net cash flows from
operating activities 46 108 11 135 4 293
Cash generated from
operations 52 424 16 674 12 637
Interest income 1 323 696 3 286
Finance costs (1 246) (750) (1 630)
Taxation paid (6 393) (5 485) (10 000)
Net cash flows from
investing activities (130 422) (105) (1 883)
Purchases of property,
plant and equipment (5 628) (143) (2 765)
Sale of property,
plant and equipment 5 023 38 882
Acquisition of
businesses (129 817) - -
Net cash flows from
financing activities 92 962 52 037 51 239
Proceeds on shares
issued 44 412 47 371 47 371
Proceeds from
shareholders loans (9 181) - -
Repayment from other
financial liabilities 58 349 5 180 4 730
Finance lease payments (618) (514) (862)
Total cash movement
for period 8 648 63 067 53 649
Cash and cash
equivalents at the
beginning of period 46 928 (6 721) (6 721)
Cash and cash
equivalents at end of 55 576 56 346 46 928
period
SEGMENT REPORT
Unaudited for the six months ended 31 December 2008
Revenue
O-line 105 580
Armco 12 633
118 213
Gross Profit
O-line 38 614
Armco 3 384
41 998
Operating Profit
O-line 18 035
Armco 934
18 969
Assets
O-line 119 506
Armco 179 710
299 216
Liabilities
O-line 47 785
Armco 101 569
149 354
The group distinguishes its segments between divisions. As the results of the
Armco group are included only for a one month period from 1 December 2008 no
comparative figures are shown for the prior periods.
Basis of preparation
The unaudited and un-reviewed consolidated interim financial results have been
prepared in accordance with International Financial Reporting Standards ("IFRS")
and comply with IAS34: Interim Financial Reporting, the South African Companies
Act, as amended, and the JSE Limited Listings Requirements. The principal
accounting policies used in the preparation of the financial results are
consistent with those applied in the annual financial statements for the year
ended 30 June 2008.
PRIOR PERIOD ERRORS
Property acquired in a business combination was fair valued and the tax effect
was not taken into account. Goodwill relating to the acquired business does not
form part of the net identifiable assets acquired. The amount calculated as
negative goodwill was revised.
COMMENTARY ON INTERIM RESULTS
PROFILE
O-line provides a basket of offerings to infrastructure development consisting
of Cable Management and Structural Support Systems, Galvanizing, Construction
Products, Road Safety Products and Signage under the well known Brands of
O-line and Armco. The Group boasts a sophisticated distribution network with
branches in all major cities and agents and stockists having been appointed
internationally throughout Southern Africa
FINANCIAL PERFORMANCE
The O-line group is pleased to report a substantial growth in revenue during the
first six months of the current financial year which increased by 41% from R83.7
million to R118.2 million. Gross margin has increased from 34.17% to 35.53%. The
increase in gross margin is attributable to raw material fluctuation. Pre-tax
profit of R18.7 million exceeded the previous comparative six month period of
R10.6 million by R8.1 million (76.42%). Headline earnings per ordinary share
increased by 28.34% from 6.67 cents to 8.56 cents. There has been an increase in
current assets and current liabilities in line with trading activity and as a
result of the Armco acquisition.
OPERATIONAL PERFORMANCE AND PROSPECTS
As predicted, demand for the full spectrum of O-line`s product has remained
strong and although O-line anticipates a slight drop in the third and fourth
quarter the group feels confident it will be regained from opportunities within
export. Prices have remained relatively robust, whilst O-line has experienced
some volatility in both prices and currencies, due to O-line`s internal policies
there has been little risk or exposure to these fluctuations. O-line`s future
plans lie in the consolidation of offerings of both O-line and Armco into one
basket and to ensure the availability of products and services to all partaking
in infrastructure expansions both locally and abroad. In addition, the continued
establishment of new branches will maintain its momentum accompanied by further
identification of international agents and stockists in continuing with the
group`s strategy of growing it`s footprint throughout Africa. At current the
group continues its supply to the roads development sector as well as mining and
preparations are underway to ensure it plays a major role in the up and coming
expansions within the Power sector.
ARMCO ACQUISITION
O-line acquired the Armco business as a going concern with effect from 1 June
2008 ("the effective date") for an amount of R142 million. The Armco
consolidated revenue and profit after tax for the six month period 1 July 2008
to 31 December 2008 amounted to R147.2 million and R16.8 million, respectively.
However, IFRS provides 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.
The pro forma consolidated turnover and profit after tax of the O-line group for
the six month period ended 31 December 2008 would have been R252.8 million and
R30.1 million, respectively if O-line could have consolidated the Armco results
from the commencement of the interim financial period namely 1 July 2008. The
pro forma headline earnings per share would have been approximately 17.68 cents
for the six month period based on 170 168 478 shares that would have been in
issue.
CAPEX AND FORECAST
Capital expenditure has been minimal and O-line has no major capital expenditure
plans for the year ending 30 June 2009.
O-line management is confident that the forecast results as set forth in the O-
line circular to shareholders dated 6 November 2008 will be achieved.
For and on behalf of the board
G.S. Smart (Chief Executive Officer)
E.A. Jay (Chairman)
Johannesburg
12TH March 2009
Designated Advisor:
QuestCo Sponsors (Proprietary) Limited
Date: 12/03/2009 08:43:32 Produced by the JSE SENS Department.
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