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OLI
OLI
OLI - O-line Holdings Limited - Audited Abridged Results for the Year Ended
30 June 2011, 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")
Audited Abridged Results for the Year Ended 30 June 2011, Notice of Annual
General Meeting
HIGHLIGHTS:
- REVENUE UP 21.63%
- NET PROFIT AFTER TAX UP 87.33%
- HEADLINE EARNINGS UP 87.50%
- HEADLINE EARNINGS PER SHARE 16.55 CENTS
- NET ASSET VALUE PER SHARE 107.42 CENTS
1. Posting of Annual Report
Shareholders are informed that O-line`s Annual Report for the year ended 30
June 2011 will be posted to shareholders today.
2. Audited Financial Information
Condensed Group Statement of Financial Position
As at As at
30 June 30 June
2011 2010
Audited Audited
R`000 R`000
ASSETS
Non-Current Assets
Property, plant and equipment 88 591 76 783
Goodwill 64 632 64 632
Other financial assets - 18 702
Deferred tax 4 720 5 753
157 943 165 870
Current Assets
Inventories 79 332 75 672
Other financial assets - 2 292
Current tax receivable 279 1 781
Trade and other receivables 60 809 56 012
Cash and cash equivalents 34 420 56 748
174 840 192 505
Total Assets 332 783 358 375
EQUITY AND LIABILITIES
Equity
Share capital 106 081 132 217
Reserves (5) 38
Retained income 123 189 89 201
229 265 221 456
Liabilities
Non-Current Liabilities
Borrowings 29 500 43 551
Finance lease obligations 4 296 2 841
Deferred tax 9 226 8 514
43 022 54 906
Current Liabilities
Borrowings 13 957 18 750
Current tax payable 801 591
Finance lease obligation 2 675 1 852
Trade and other payables 43 063 60 820
60 496 82 013
Total Liabilities 103 518 136 919
Total Equity and Liabilities 332 783 358 375
Condensed Group Statement of Comprehensive Income
Year ended Year ended 30
30 June 2011 June 2010
Audited Audited
R`000 R`000
Continuing operations
% Increase (21.63%)
Revenue 427 358 351 368
Cost of Sales (291 282) (235 692)
Gross Profit 136 076 115 676
Other Income 820 721
Operating Expenses (87 763) (75 482)
Operating Profit 49 133 40 915
Investment Revenue 2 628 4 093
Impairment 8 053 (8053)
Finance Costs (4 933) (6 798)
Profit before taxation 54 881 30 157
Taxation (16 123) (9 468)
Profit from continuing operations 38 758 20 689
Discontinued operations - (4805)
Loss from discontinued operations
Profit for the year 38 758 15 884
Other comprehensive
income:
Exchange differences on
translating
foreign operations (45) 38
Taxation related to
components of other
comprehensive income
Other comprehensive 2 -
(loss) income for the
year net of taxation (43) 38
Total comprehensive
income 38 715 15 922
Earnings and headline
earnings per share
Earnings per share (cents) 16.47 7.23
- Continuing operations 16.47 9.42
- Discontinued operations - (2.19)
Headline and fully diluted
headline earnings per share (cents)
16.55 7.70
- Continuing operations 16.55 9.45
- Discontinued operations - (1.75)
Reconciliation of earnings and headline R`000 R`000
earnings
Headline earning
Continuing operations 38 942 20 769
Profit after taxation 38 758 20 689
Add: Loss/(Profit) on sale of fixed assets 184 80
Headline earnings
Discontinued operations - (3844)
Loss after taxation - (4 805)
Less: Loss on sale of fixed assets - 961
Total Headline Earnings 38 942 16 925
Weighted Average number of shares
(`000) 235 340 219 744
Actual number of shares in issue (`000)
Headline and diluted earnings per share 213 424 238 500
(cents)
16.55 7.70
Continuing operations 16.55 9.45
Discontinued operations - (1.75)
Condensed Group Statement of Changes in Equity
Share Share Foreign Retaine Total
Capital premium currenc d equity
y income
tranlat
ion
reserve
R`000 R`000 R`000 R`000 R`000
Balance at 1 July *- 91 667 - 83 142 174 809
2009
Total comprehensive
income for the year - - 38 15 884 15 922
Issue of shares *- 42 000 - - 42 000
Share issue expenses (1 450) - - (1 450)
Dividends - - - (9825) (9825)
Total changes *- 40 550 38 6059 46 647
Balance at 1 July
2010 *- 132 217 38 89 201 221 456
Total comprehensive
income for the year - - (43) 38 758 38 715
Share buy back *- (26 136) - - (26136)
Dividends - - - (4 770) (4 770)
Total changes - (26 136) (43) 33 988 7 809
Balance at 30 June
2011 *- 106 081 (5) 123 189 229 265
*Less than R1 000
Condensed Group Statement of Cash Flows
As at 30 As at 30
June 2011 June 2010
Audited Audited
R`000 R`000
Cash flows from operating activities
Cash generated from operations 28 878 57 218
Interest income 2 628 4 093
Finance costs (4 472) (6 407)
Taxation paid (12 642) (25 088)
Cash flows of discontinued operations
- (3721)
Net cash from operating activities 14 392 26 095
Cash flows from investing activities
Purchase of property, plant and equipment (13 955) (12 297)
Sale of property, plant and equipment 466 1 378
Sale of business - 2 292
Purchase of financial assets - (15 194)
Repayment of loan 2 911 -
Net cash from investing activities (10 578) (23 821)
Cash flows from financing activities
Proceeds on share issue - 40 551
Repayment of borrowings (18 844) (25 649)
Finance lease payments (2 459) (2 565)
Dividend paid (4 770) (9 825)
Net cash from financing activities (26 073) 2 512
Total cash movement for the year (22 259) 4 786
Cash at the beginning of the year 56 748 51 924
Effect of exchange rate movement on cash balances (69) 38
Total cash at end of year 34 420 56 748
3. Basis of preparation and corporate governance
The financial information has been prepared in accordance with International
Financial Reporting Standards ("IFRS"), the Companies Act of South Africa,
as amended, and the JSE Limited ("JSE") Listings Requirements. The financial
information has been prepared under the historical cost convention. The
principle accounting policies used in the preparation of the financial
information is consistent with those applied for the year ended 30 June
2010.
The financial information set out above has been prepared from the annual
financial statements for the year ended 30 June 2011 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.
The preparation of the Annual Financial Statements were supervised by: G.A.
Driver (Financial Director).
4. Notes
Major Changes to the Statement of Financial Position
Non Current Assets and Non Current Liabilities
Non-current assets decreased from R166 million to R158 million mainly as a
result of the settlement of the Armco management loans amounting to R27.2
million after reversal of the impairment provision of R8 million, by means
of set-off against the repurchase of 25 076 250 shares from the Armco
management and additional property and plant acquired of R17.5 million. Non
current liabilities decreased from R55 million to R43 million as a result of
a reduction in borrowings of R12.6 million.
Current Assets and Current Liabilities
Current assets decreased from R193 million to R175 million and current
liabilities decreased from R82 million to R60 million mainly attributable to
an increase in inventory of R3.7 million, a decrease in net taxes owing and
receivable of R1.3 million, a reduction in cash and cash equivalents of
R22.3 million with a corresponding reduction in borrowings of R4 million and
trade payables of R17.7 million. Trade receivable increased by R4.8 million.
Equity
Equity increased from R221 million to R229 million attributed to the
reduction in share capital of R26.1 million as a result of the buy back of
25 076 250 shares, whilst reserves increased by R33.9 million attributable
to the current profit of R38.7 million less the dividend paid of R4.8
million.
5. Dividends
The directors declared a dividend of 2 cents per share on the 17 December
2010, which was paid on Monday, 24 January 2011 to ordinary shareholders
recorded in the books of the company at the close of business on Friday, 21
January 2011.
Dividends are declared after consideration on the solvency and liquidity of
the Company and with due regard to the current funding status of the
company, future funding requirements and attributable cash flows.
Accordingly the Board of Directors have further declared a final cash
dividend of 5 cents per share. A detailed SENS announcement setting out the
dividend timetable will be released shortly.
6. Results and related party transactions
The overall financial performance of the Group was encouraging.
O-line and ARMCO management focused on the deliverance and enhancement of
synergistic values as a result of the ARMCO acquisition including the
amalgamation of all branches and outlets and the consolidation of the O-line
and ARMCO brand of product.
During the period, the Group entered into various transactions with its
related parties. Full disclosure is made in the O-line annual report for the
year ended 30 June 2011.
Abridged segmental results, assets and Year ended 30 Year ended
liabilities June 2011 30 June
2010
Revenue
O-line Support Systems
203 849 157 806
ARMCO Superlite 240 589 214 707
Corporate - -
South African operations
O-Line Mozambique 444 438 372 513
Eliminations 1 529 -
(18 609) (15 541)
Total 427 358 356 972
Operating profit
O-line Support Systems
20 684 6 732
ARMCO Superlite 30 258 29 274
Corporate (928) (358)
South African operations
O-Line Mozambique 50 014 35 648
Eliminations (275) (438)
(606) (969)
Total 49 133 34 241
Assets
O-line Support Systems
ARMCO Superlite
Corporate 115 497 111 162
188 629 190 941
119 754 137 205
South African operations
O-Line Mozambique 423 880 439 308
Eliminations 2 835 498
(93 932) (81 431)
Total 332 783 358 375
Liabilities
O-line Support Systems
42 874 50 279
ARMCO Superlite 157 438 170 429
Corporate 439 312
South African operations
O-Line Mozambique 200 751 221 020
Eliminations 3 611 763
(100 844) (84 864)
Total 103 518 136 919
Capital Expenditure
O-line Support Systems
4 302 12 471
ARMCO Superlite 13 920 1 787
Corporate - -
South African operations
O-Line Mozambique 18 222 14 258
Eliminations 9 42
- -
Total 18 231 14 300
7. Cash Flow
The excess cash generated out of the operating activities of O-line has
been spent on capital expenditure, working capital and the repayment of
debt. The buy back by the company of its shares from Armco management had no
impact on cash flow as the purchase price paid was discharged by way of set-
off against the Armco management loans.
8. Prospects
Chairman, E.A. Jay, market overview
O-line has produced a good performance in a very challenging environment.
Management has been particularly good in growing the business outside South
Africa whilst at the same time containing costs in the business. Margins in
the domestic market remain tight. This however is balanced by an
increasingly larger order book in the domestic market. The marginal and
unprofitable businesses were closed in the previous financial year. All the
current business units are performing well and are profitable. The capital
investments that were made over the past 2 years are all contributing to the
profitability. The powder coating plant is working to full capacity and the
newly purchased galvanising plant has been substantially revamped and we
expect it to add to the company`s bottom line in the new financial year.
Going Forward
The challenge for the company going forward will be to address the rising
labour and electricity costs which have risen out of proportion to
inflation. These costs cannot all be passed onto customers especially in
view of the fact that whilst the Rand remains strong, many products can be
imported at a lower cost. The company will continue to improve its
productivity by streamlining the business processes, working on productivity
and managing the variable costs.
Chief Executive Officer, Graeme Smart, view of future prospects
Prospects for the future are promising and although the 1st month of the
first quarter resulted in losses due to the Metal Workers Union strikes and
the entire operations having to vacate premises for a week, management is
endeavouring to make up the lost revenue. Galvanizers have a solid base
moving forward regardless of the Zincor story, the divisions have already
secured and strengthened existing and new relationships around the future
supply of zinc and management has no concern around shortages what so ever.
Future work will be attributed to the fabricated steel requirements for the
power stations. The division should see a further growth of approximately
20% through the introduction of the new Randfontein plant which should free
capacity within the Isando and Dunswart operations, allowing for a higher
allotment of external work.
Roads Safety Products took off with a bang through the awarding of a R11
Million project currently underway in the DRC for the installation of Wire
Rope. The division will endeavour to increase its revenue through aggressive
strategies within the branches and management is strongly of the opinion
that the competition currently at play should revert to normal which
ultimately will result in a good performance over the next financial year.
Construction products are expected to once again produce a great performance
as the division remains busy with possible project prospects amounting to
R82 million. The divisions focus will be on that of new export markets and
maintaining a visible presence within the SADC region.
The Cable Support Systems division has started the year well with orders on
hand amounting to R20 million in Projects, including the new Nigerian sugar
mill which has once again opened new doors for expansion. Furthermore the
projects group has begun diversifying through offerings related to the
manufacture and supply of services outside the current scope of work. From a
commercial division the year holds new prospects and exciting times as new
products are launched in conjunction with the companies` newly announced
partnership with the German based company OBO Bettermann. The innovative
products which allow for quick installations have attracted significant
interest in the market and have already been specified for various jobs
expected to take place this year.
9. 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, 25 November 2011, 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)
19 September 2011
Designated Advisor: QuestCo Sponsors (Proprietary) Limited
Date: 19/09/2011 08:30:27 Produced by the JSE SENS Department.
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