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02/03/2012 : 15:07:02
OLI - O-Line Holdings Limited - Unaudited interim results for the six months
OLI
Posted Fri, 02 Mar 2012

OLI OLI OLI - O-Line Holdings Limited - Unaudited interim results for the six months ended 31 December 2011 O-LINE HOLDINGS LIMITED (Incorporated in the Republic of South Africa) (Registration number 2006/034685/06) Share code: OLI ISIN: ZAE000110730 ("O-line" or "the Company" or "the Group") UNAUDITED INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 CONDENSED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 31 DECEMBER 2011 Six months Six Year ended Ended 31 months 30 June Dec 2011 ended 31 2011 unaudited Dec 2010 audited R`000 unaudited R`000 R`000 Revenue 209,313 213,834 427,358 Cost of Sales (143,456) (147,546) (291,282) Gross Profit 65,857 66,288 136,076 Other Income 627 578 820 Operating expenses (44,075) (39,686) (87,763) Operating profit 22,409 27,180 49,133 Investment revenue 862 1,889 2,628 Impairment - - 8,053 Finance costs (2,202) (2,719) (4,933) Profit before taxation 21,069 26,350 54,881 Taxation (7,076) (7,404) (16,123) Profit for the period 13,993 18,946 38,758 Other comprehensive income Exchange difference on (122) 2 (45) translating foreign operations Taxation related to 39 - 2 components of other comprehensive income Other comprehensive (loss) (83) 2 (43) income for the period net of taxation Total comprehensive income 13,910 18,948 38,715 for the period Total comprehensive income attributable to: Owners of the parent: 13,910 18,948 38,715 Reconciliation of basic to headline earnings Headline earnings 13,976 18,902 38,942 Basic earnings 13,993 18,946 38,758 Loss / (Profit) on sale of (17) (44) 184 fixed assets Total shares in issue 213,423,750 238,500,000 213,424,000 Weighted average of shares 213,423,750 238,500,000 235,339,705 in issue Basic earnings per share 6.56 7.94 16.47 (cents) Basic headline earnings per 6.55 7.93 16.55 share (cents) Fully diluted earnings per 6.56 7.94 16.47 share (cents) Fully diluted headline 6.55 7.93 16.55 earnings per share (cents) CONDENSED STATEMENT OF CHANGES IN EQUITY for the six months ended 31 December 2011 Share Share Foreign Retained Total capital premium Currency income equity Translation Reserve R`000 R`000 R`000 R`000 R`000 Balance at 31 * 132,217 40 108,147 240,404 December 2010 Total (45) 19,812 19,767 comprehensive income for the period Share buy back (26,136) (26,136) Dividends paid (4,770) (4,770) Balance at 1 * 106,081 (5) 123,189 229,265 July 2011 Total (83) 13,993 13,910 comprehensive income for the period Dividends paid (10,671) (10,671) Balance at 31 * 106,081 (88) 126,511 232,504 December 2011 * less than R1 000 CONDENSED STATEMENT OF FINANCIAL POSITION at 31 December 2011 31 December 31 December 30 June 2011 2010 2011 Audited Unaudited Unaudited R`000 R`000 R`000 Assets Non-Current Assets Property, plant and equipment 96,046 75,831 88,591 Goodwill 64,632 64,632 64,632 Other financial assets - 19,645 - Deferred tax 3,601 4,478 4,720 164,279 164,586 157,943 Current Assets Inventories 87,359 72,595 79,332 Other financial assets - 1,009 - Current tax receivable 1,432 3,766 279 Trade and other receivables 44,759 53,341 60,809 Cash and cash equivalents 44,630 35,210 34,420 178,180 165,921 174,840 Total Assets 342,459 330,507 332,783 Equity and Liabilities Equity and reserves 232,504 240,404 229,265 Non-Current Liabilities Borrowings 27,875 36,378 29,500 Finance lease obligation 3,681 2,160 4,296 Deferred tax 9,485 8,570 9,226 41,041 47,108 43,022 Current Liabilities Borrowings 16,331 14,384 13,957 Current tax payable 521 148 801 Finance lease obligations 2,520 1,786 2,675 Trade and other payables 49,542 26,677 43,063 68,914 42,995 60,496 Total Liabilities 109,955 90,103 103,518 Total Equity and Liabilities 342,459 330,507 332,783 CONDENSED STATEMENT OF CASH FLOWS for the six months ended 31 December 2011 31 December 31 December 30 June 2011 2010 2011 Unaudited Unaudited Audited R`000 R`000 R`000 Cash flows from operating activities Cash generated from 40,463 1,610 28,878 operations Interest income 862 1,889 2,628 Finance costs (1,919) (2,505) (4,472) Tax paid (7,033) (8,510) (12,642) Net cash flows from operating 32,373 (7,516) 14,392 activities Cash flows from investing activities Purchases of property, plant (10,498) (1,760) (13,955) and equipment Sale of property, plant and 28 211 466 equipment Sale of financial assets - 341 - Repayment of loan - - 2,911 Net cash flows from investing (10,470) (1,208) (10,578) activities Cash flows from financing activities Repayment of borrowings (7,307) (11,539) (18,844) Proceeds from borrowings 8,056 - - Finance lease payments (1,580) (1,292) (2,459) Dividends paid (10,671) - (4,770) Net cash flows from financing (11,502) (12,831) (26,073) activities Total cash movement for 10,401 (21,555) (22,259) period Cash and cash equivalents at 34,420 56,748 56,748 beginning of period Effect of exchange rate (191) 17 (69) movement on cash balances Cash and cash equivalents at 44,630 35,210 34,420 end of period SEGMENT REPORT for the six months ended 31 December 2011 31 December 31 December 30 June 2011 2010 2011 Unaudited Unaudited Audited R`000 R`000 R`000 Revenue O-Line 86,186 96,906 203,849 Armco 131,934 125,495 240,589 Corporate - - - South African operations 218,120 222,401 444,438 O-Line Mozambique 2,032 436 1,529 Eliminations (10,839) (9,003) (18,609) 209,313 213,834 427,358 Operating Profit O-Line 4,194 11,906 20,684 Armco 18,555 16,743 30,258 Corporate (8) (200) (928) South African operations 22,741 28,449 50,014 O-Line Mozambique 260 (588) (275) Eliminations (592) (681) (606) 22,409 27,180 49,133 Assets O-Line 109,816 108,377 115,497 Armco 204,233 168,121 188,629 Corporate 114,946 141,128 123,388 South African operations 428,995 417,626 427,514 O-Line Mozambique 4,418 2,143 3,114 Eliminations (90,954) (89,262) (97,845) 342,459 330,507 332,783 Liabilities O-Line 34,941 39,826 42,874 Armco 163,571 139,565 157,438 Corporate 389 316 439 South African operations 198,901 179,707 200,751 O-Line Mozambique 4,860 2,799 3,611 Eliminations (93,807) (92,403) (100,844) 109,954 90,103 103,518 Capital expenditure O-Line 1,417 692 4,302 Armco 9,608 1,390 13,920 Corporate - - - South African operations 11,025 2,082 18,222 O-Line Mozambique - 9 9 Eliminations - - - 11,025 2,091 18,231 For management purposes the Group is organised into four major operating divisions namely, O-line Support Systems, Armco Superlite, Corporate and O- line Mozambique. It represents the basis on which the Group reports its primary segment information. BASIS OF PREPARATION These interim financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting, International Financial Reporting Standards (IFRS), AS 500 Standards, 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 applies in the Group`s most recent audited annual financial statements for the year ended 30 June 2011. 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 2011. The interim financial statements have been prepared under the supervision of the group financial director, Mr. Gary Driver. COMMENTARY Financial performance Revenue decreased from R213.8 million, for the six months ended 31 December 2010("the comparative period"), to R209.3 million, for the six months ended 31 December 2011 ("the current period"), mainly as a result of trading volume decline in O-line Support Systems (Pty) Limited ("O-line Support Systems") of 11.06%. Armco Superlite (Pty) Limited ("Armco") experienced a trading volume increase of 5.13% and O-Line Holdings (Mocambique) Limitada ("O-line Mocambique") also experienced a trading volume increase. This represents a net 2.11% decrease in revenue for the current period compared to the comparative period. Gross profit decreased from R66.3 million in the comparative period to R65.9m over the current period. O-line Support Systems and Armco Superlite achieved gross profit margins for the current period of 32.5% and 28.6% respectively, while O-line Mocambique achieved a gross profit margin of 14% for the current period, excessive transportation costs impacting negatively on their gross margin. The Group`s operating profit for the current period decreased by 17.6%, from R27.2 million in the comparative period to R22.4 million in the current period, whilst operating expenses increased by 11.1% from R39.7 million to R44.1 million. Finance costs decreased from R2.7 million in the comparative period to R2.2 million in the current period, this is mainly attributable to the decrease in borrowings as Group debt has been settled. Cash and cash equivalents have increased from R35.2 million in the comparative period to R44.6 million in the current period. The Group will continue to utilise 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 R6.6 million from R50.8 million to R44.2 million, this is in line with repayments in terms of loan agreements entered into by the Group. A new medium term loan of R8 million was drawn down to purchase the property for the Randfontein galvanising facility; * Trade and other payables increased by R22.8 million to R49.5 million, a substantial portion of the increase being attributable to advance payments received by Armco; * Trade and other receivables decreased by R8.6 million to R44.8 million following the overall downward trend in sales volumes for the period and better debtors collections; * Cash generated from operations increased from R1.6 million to R40.5 million mainly as a result of a decreased cash investment in working capital as reflected in the decrease in trade receivables and an increase in trade payables 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 R72.6 million to R87.4 million to support the increase in trading activities at Armco and O-line Mocambique; and * Capital expenditure increased from R2.1 million in the comparative period to R11 million mainly as a result of the acquisition of the Randfontein property for the new galvanising facility. Operational Performance and Prospects Operational performance of the Group pertaining to the period were heavily subdued as a result of diminishing margins relating to continuous increases in Power, Gas and labour. Further aggravation came in the form of the Metal Workers Union strikes forcing the Group to evacuate manufacturing premises for a period due to the violence and intimidation. O-line Support Systems was severely affected due to the extended time lines of materials flow from order to expediting resulting in increased inventory levels. Armco`s ability of quick recovery helped lessen the affect and fared well in providing a fair set of results. The first quarter resulted in some divisional losses relating to the above, this left the Group with a mere three months of proper operations considering taking into play December is construction close down. In order to manage the deficit the Group will focus around savings and efficiencies through the reduction of overtime and downsizing of the work force, although this will not allow for total recovery it will assist in reducing operating costs of which in turn will provide for some relief. Looking ahead to the third and fourth quarters both Armco and O-line will continue the strategic approach of cost saving through mechanisations and will focus on the start of supply of goods and services to the Kusile Power Stations accompanied by the future Renewable Energy Projects and Roads Infrastructure Development in Africa. Directors Mr David Adomakoh resigned as a director of the Company on 18 August 2011. Mr William ("Bill") Cosby was appointed as a non-executive director of the Company on 23 August 2011. 02 March 2012 Designated Advisor Sasfin Capital (a division of Sasfin Bank Limited) Date: 02/03/2012 15:07:01 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.


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