| Wed 24 Feb 2010, 13:13 | | OLI - O-line Holdings Limited - Trading statement for the 6 month period |
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OLI
OLI
OLI - O-line Holdings Limited - Trading statement for the 6 month period
ended 31 December 2009
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 STATEMENT FOR THE 6 MONTH PERIOD ENDED 31 DECEMBER 2009
Trading statement
In terms of the Listings Requirements of the JSE Limited ("the JSE Listings
Requirements"), companies are required to publish a trading statement as soon
as they are satisfied that a reasonable degree of certainty exists that the
financial results of the period to be reported upon will differ by 20% or
more from the financial results of the previous corresponding period.
Shareholders are advised that the Company`s:
- profit after taxation from continuing operations will decrease with
approximately 25% from R13.471 million for the comparable 6 month period
ended 31 December 2008 to approximately R10.039 million;
- profit after taxation, after taking into account a loss on discontinued
operations amounting to R3.799 million (the "loss on discontinued
operations"), will decrease with approximately 54% from R13.471 million
for the comparable 6 month period ended 31 December 2008 to
approximately R6.240 million. The loss on discontinued operations
resulted from the discontinuance of the Armco Signage business
operations. Armco Superlite acquired the Nameplates business operations
just prior to O-line`s acquisition of the Armco business operations in
the 2008 financial year. The Nameplates business has been struggling
since acquisition given the low barriers of entry for competitors and
low profit margins;
- headline earnings is expected to decrease with approximately 52% from
R13.471 million for the comparable 6 month period ended 31 December 2008
(the "corresponding period") to approximately R6.448 million after
taking into account the loss on discontinued operations;
- basic earnings per share, basic earnings per share on continuing
operations, fully diluted earnings per share and fully diluted earnings
per share on continuing operations are expected to amount to
approximately 3.10 cents, 4.99 cents, 3.20 cents and 4.99 cents per
share compared to 8.56 cents per share for the corresponding period;
- basic headline earnings per share and fully diluted headline earnings
per share are expected to amount to approximately 3.2 cents per share
compared to 8.56 cents per share for the corresponding period; and
- the above calculations is based on the weighted average number of shares
in issue amounting to 201 293 478 (2008: 157 328 804) and actual number
of shares in issue amounting to 238 500 000 (2008: 196 500 000).
The financial information on which this trading statement is based:
- is management`s best estimate and may change; and
- has not been reviewed or reported on by the Company`s auditors.
Commentary on trading updated and prospects
As predicted demand for the full spectrum of O-lines products experienced a
decline within the first and second quarters due to economic factors
associated to the recession. A drop in revenue accompanied by discontinued
operations resulted in an immediate effect on the bottom line. Gross profits
within continued operations remained firm however the economic standstill and
approaching construction holidays had little to offer in revenue.
Looking forward the Group remains bullish as clear evidence shows the
approach of the next influx and as of the new year there has been increasing
demands across the spectrum of products, with emphasis on the project sectors
as well as road infrastructure both locally and abroad. The Group to date has
grown the order book and forward strategies are paying dividend as clear
evidence shows growing interest from international clients in the utilisation
of O-line commodities. National branches are underway as usual with the newly
opened Bloemfontein branch showing profitability followed by the
establishment of O-line Mozambique Limitada of which is sure to play a vital
role within the fourth quarter. Projects tendered as of January 2010 amount
to R270 Million with the following projects underway- Ambatovy Nickel
(Madagascar), Unki Platinum mine (Zimbabwe), Sishen South Iron Ore (SA),
Gauteng Freeway Improvement Project (SA), Wessel`s Manganese Mine (SA),
Forensic laboratories CPT (SA), Tonkolili mine (Sierra Leone), GTZ
Construction (South Sudan), Tonato / Ngoma roads(Botswana), Northern Corridor
Roads(Botswana).
General operations remain constant with the exception of the discontinuation
of the Signage division due to diminished profits as a result of easy market
entrance and fierce competition. Expansions of the O-line powder coating
facility were carried out through the purchase of new property and additional
production lines. This has been done with the intentions of making the
service available to the outside market but more so to accommodate an
increase in the demand for Duplex coated steel structures.
Effects pertaining to raw material variables of Steel and Zinc were minimal
and the manufacturing concerns have once again geared themselves for future
demands as indications give rise to the start of procurement for the long
awaited power stations which will provide a boost to income streams, focus
being on galvanizing and electrical carrying systems.
Selby
24 February 2010
Designated Advisor: QuestCo Sponsors (Pty) Ltd
Attorneys: Edwin Jay Inc
Auditors: AM Smith & Company Inc
Date: 24/02/2010 13:13:25 Produced by the JSE SENS Department.
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