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OLI - O-line Holdings Limited - Audited Abridged Results for the Year Ended

Release Date: 19/09/2011 08:30
Code(s): OLI
Wrap Text

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 Supplied by www.sharenet.co.za 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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