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OLI
OLI
OLI - O-line Holdings Limited - Unaudited interim results for the six months
ended 31 December 2010
O-line Holdings Limited
(Incorporated in the Republic of South Africa)
JSE share code: OLI
ISIN Number: ZAE000110730
("O-line" or "the Group")
UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2010
Revenue increased from R157.6 million, for the six months ended 31 December
2009("the comparative period"), to R213.8 million, for the six months ended 31
December 2010 ("the current period"), as a result of trading volume growth
across all divisions. This represents a 36% increase in revenue for the
current period compared to the comparative period. Gross profit increased from
R53.3m in the comparative period to R66.3m over the current period.
O-line Support Systems (Pty) Limited ("O-line Support Systems") and Armco
Superlite (Pty) Limited ("Armco")achieved gross profit margins for the current
period of 35% and 25% respectively, while O-Line Holdings (Mocambique)
Limitada ("O-line Mocambique")achieved a gross profit margin of 31% for the
current period. The Group`s operating profit for the current period increased
by 58.5%, from R17.1m in the comparative period to R27.2m in the current
period, whilst operating expenses increased by 8.4% from R36.6m to R39.7m.
Finance costs decreased from R3.4m in the comparative period to R2.7m in the
current period, this is mainly attributable to the decrease in borrowings as
Group debt has been settled and also due to a decrease in interest rates.
At 31 December 2010, Armco Management owed O-line R 27.6m (R13 million at 31
December 2009) ("the Loans"). The Loans are secured by the pledge of 25 076
250 O-line shares and bear interest at the prime bank overdraft rate. At year-
end, 30 June 2010, these Loans were impaired as the share price of O-line had
fallen below R1.00 per share. Although at 31 December 2010 the O-line share
price had recovered to levels above R1.00 the board felt it prudent to only
review the impairment at the next year-end.
Cash and cash equivalents have decreased from R71.8m in the comparative period
to R35.2m in the current period as the Group utilised its available cash to
finance operations, for expansion and to settle debt. The Group also
experienced the following decreases / increases, compared to the comparative
period:
- Borrowings reflect a net decrease of R14m from R64.8m to R50.8m, this is
in line with repayments in terms of loan agreements entered into by the
Group. A new medium term loan of R8m was drawn down to purchase the
property for the powder coating facility;
- Trade and other payables remained constant;
- Trade and other receivables increased by R26.3m to R53.3m following the
upward trend in sales volumes;
- Cash generated from operations decreased from R37.3m to R1.6m mainly as a
result of increased trade as reflected in the increases in debtors and
inventory at the current period end compared to the corresponding period.
While the timing of the period end resulted in a negative impact on trade
payables and receivables, working capital management remains a key area
of focus for the Group;
- Inventory also increased from R63.3m to R72.6m to support the increase in
trade and the stocking up of O-line Mocambique; and
- Capital expenditure decreased marginally from R2.2m in the comparative
period to R2m as there was no major additional capital expenditure in the
current period.
Capex and forecast
Contracts have been entered into for the purchase of plant and machinery for
the City Deep manufacturing plant of approximately R2.2m. This expenditure
will be financed by the raising of a medium term loan.
Condensed Statement of Comprehensive Income
for the six months ended 31 December 2010
Six months Six months Year
ended ended ended
31 Dec 2010 31 Dec 2009 30 June 2010
Unaudited Unaudited Audited
R`000 R`000 R`000
Continuing operations
Revenue 213 834 157 642 351 368
Cost of Sales (147 546) (104 327) (235 692)
Gross Profit 66 288 53 315 115 676
Other Income 578 464 721
Operating expenses (39 686) (36 627) (75 482)
Operating profit 27 180 17 152 40 915
Investment revenue 1 889 1 701 4 093
Impairment - - (8 053)
Finance costs (2 719) (3 489) (6 798)
Profit before taxation 26 350 15 364 30 157
Taxation (7 404) (5 325) (9 468)
Profit for the period 18 946 10 039 20 689
from continuing
operations
Loss for the period from - (3 799) (4 805)
discontinued operations
(Note 1)
Profit for the period 18 946 6 240 15 884
Other comprehensive
income
Exchange difference on 2 - 38
translating foreign
operations
Total comprehensive 18 948 6 240 15 922
income for the period
Net profit attributable
to:
Owners of the parent:
Profit for the period 18 946 10 039 20 689
from continuing
operations
Loss for the period from - (3 799) (4 805)
discontinued operations
Profit for the period 18 946 6 240 15 884
attributable to owners of
the parent
Reconciliation of basic
to headline earnings
Headline earnings - 18 902 10 039 20 769
Continuing operations
Basic earnings 18 946 10 039 20 689
Loss / (Profit) on sale (44) - 80
of fixed assets
Headline earnings - - (3 591) (3 844)
Discontinued operations
Basic earnings - (3 799) (4 805)
Loss / (Profit) on sale - 208 961
of fixed assets
Total shares in issue 238 500 000 238 500 000 238 500 000
Weighted average of 238 500 000 201 293 478 219 743 836
shares in issue
Basic earnings per share 7.94 3.10 7.23
(cents)
Continuing operations 7.94 4.99 9.42
Discontinued operations - (1.89) (2.19)
Basic headline earnings 7.93 3.20 7.70
per share (cents)
Continuing operations 7.93 4.98 9.45
Discontinued operations - (1.78) (1.75)
Fully diluted earnings 7.94 3.10 7.23
per share (cents)
Continuing operations 7.94 4.99 9.42
Discontinued operations - (1.89) (2.19)
Fully diluted headline 7.93 3.20 7.70
earnings per share
(cents)
Continuing operations 7.93 4.98 9.45
Discontinued operations - (1.78) (1.75)
Condensed Statement of Changes in Equity
for the six months ended 31 December 2010
Share Share Foreign Retaine Total
capital premium Currenc d equity
y income
Transla
tion
Reserve
R`000 R`000 R`000 R`000 R`000
Balance at 31 December * 132 254 79 557 211 811
2009
Share issue expenses (37) (37)
Total comprehensive 38 9 644 9 682
income for the period
Balance at 1 July 2010 * 132 217 38 89 201 221 456
Total comprehensive 2 18 946 18 948
income for the period
Balance at 31 December * 132 217 40 108 147 240 404
2010
* less than R1 000
Condensed Statement of Financial Position
at 31 December 2010
31 31 30 June
December December 2010
2010 2009
Unaudited Unaudited Audited
R`000 R`000 R`000
Assets
Non-Current Assets
Property, plant and equipment 75 831 69 042 76 783
Goodwill 64 632 64 632 64 632
Other financial assets 19 645 12 357 18 702
Deferred taxation 4 478 2 382 5 753
164 586 148 413 165 870
Current Assets
Inventories 72 595 63 346 75 672
Other financial assets 1 009 - 2 292
Current tax receivable 3 766 3 348 1 781
Trade and other receivables 53 341 27 043 56 012
Cash and cash equivalents 35 210 71 832 56 748
165 921 165 569 192 505
Non Current Assets Available - 3 036 -
For Sale
Total Assets 330 507 317 018 358 375
Equity and Liabilities
Equity and reserves 240 404 211 811 221 456
Non-Current Liabilities
Borrowings 36 378 43 858 43 551
Finance lease obligation 2 160 2 487 2 841
Deferred taxation 8 570 8 728 8 514
47 108 55 073 54 906
Current Liabilities
Borrowings 14 384 21 001 18 750
Current tax payable 148 941 591
Finance lease obligations 1 786 1 741 1 852
Trade and other payables 26 677 26 196 60 820
Provisions - 255 -
42 995 50 134 82 013
Total Equity and Liabilities 330 507 317 018 358 375
Condensed Statement of Cash
Flows
for the six months ended 31
December 2010
31 31 30 June
December December 2010
2010 2009
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash flows from operating
activities
Cash generated from operations 1 610 37 263 57 218
Interest income 1 889 1 701 4 093
Finance costs (2 505) (3 268) (6 407)
Taxation paid (8 510) (18 574) (25 088)
Cash flows of discontinued - (3 366) (3 721)
operations
Net cash flows from operating (7 516) 13 756 26 095
activities
Cash flows from investing
activities
Purchases of property, plant (1 760) (2 030) (12 297)
and equipment
Sale of property, plant and 211 128 1 378
equipment
Sale of business 2 292
Sale / (purchases) of 341 1 496 (15 194)
financial assets
Net cash flows from investing (1 208) (406) (23 821)
activities
Cash flows from financing
activities
Proceeds on shares issued - 40 587 40 551
Repayment of borrowings (11 539) (23 090) (25 649)
Finance lease payments (1 292) (1 114) (2 565)
Dividends paid - (9 825) (9 825)
Net cash flows from financing (12 831) 6 558 2 512
activities
Total cash movement for period (21 555) 19 908 4 786
Cash and cash equivalents at 56 748 51 924 51 924
beginning of period
Effect of exchange rate 17 - 38
movement on cash balances
Cash and cash equivalents at 35 210 71 832 56 748
end of period
Segment Report
for the six months ended 31 December 2010
31 31 30 June
December December 2010
2010 2009
Unaudited Unaudited Audited
R`000 R`000 R`000
Revenue
O-Line 96 906 70 405 157 806
Armco 125 495 94 111 214 707
Corporate - - -
South African operations 222 401 164 516 372 513
O-Line Mozambique 436 - -
Eliminations (9 003) (6 874) (15 541)
213 834 157 642 356 972
Operating Profit
O-Line 11 906 3 064 6 295
Armco 16 743 14 819 29 274
Corporate (200) (212) (359)
South African operations 28 449 17 671 35 210
O-Line Mozambique (588) - -
Eliminations (681) (519) (969)
27 180 17 152 34 241
Assets
O-Line 108 377 82 762 111 660
Armco 168 121 164 074 190 941
Corporate 141 128 139 903 137 205
South African operations 417 626 386 739 439 806
O-Line Mozambique 2 143 - -
Eliminations (89 262) (69 721) (81 431)
330 507 317 018 358 375
Liabilities
O-Line 39 826 24 174 51 042
Armco 139 565 153 351 170 429
Corporate 316 1 055 312
South African operations 179 707 178 580 221 783
O-Line Mozambique 2 799 - -
Eliminations (92 403) (73 373) (84 864)
90 103 105 207 136 919
Capital expenditure
O-Line 692 1 265 12 513
Armco 1 390 1 022 1 787
Corporate - - -
South African operations 2 082 2 287 14 300
O-Line Mozambique 9 - -
Eliminations - - -
2 091 2 287 14 300
For management purposes the Group is organised into three major operating
divisions namely, O-line Support Systems, Armco and Corporate. It represents
the basis on which the Group reports its primary segment information.
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1: Loss for the period from discontinued operations
31 31 30 June
December December 2010
2010 2009 Audited
Unaudited Unaudited
R`000 R`000 R`000
Revenue - 5 277 5 604
Expenses - (10 553) (12 278)
Loss before taxation (5 276) (6 674)
Taxation - 1 477 1 869
Loss for the period from - (3 799) (4 805)
discontinued operations
Basis of preparation
These interim financial statements have been prepared in accordance with IAS
34 - Interim Financial Reporting, International Financial Reporting Standards
(IFRS), the Companies Act of South Africa and the JSE Limited Listings
Requirements.
The accounting policies and methods of measurement, recognition and
computation applied in the preparation of these interim financial statements
are consistent with those applied in the Group`s most recent audited annual
financial statements for the year ended 30 June 2010.
The results for the period are not necessarily indicative of the results for
the entire year, and interim financial statements should be read in
conjunction with the audited annual financial statements for the year ended 30
June 2010.
The board acknowledges its responsibility for the preparation of these interim
financial statements in accordance with IFRS, the Companies Act of South
Africa and the JSE Limited Listings Requirements.
The financial information on which these interim results are based has not
been reviewed or reported on by the O-line`s auditors.
For and on behalf of the Board
G.S. Smart (Chief Executive Officer)
E.A. Jay (Chairman)
01 March 2011
Designated Advisor: QuestCo Sponsors (Proprietary) Limited
Date: 01/03/2011 11:13:02 Produced by the JSE SENS Department.
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