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Afrox Audited Results For The Year Ended 30 September 1999

Release Date: 28/10/1999 17:16:14      Code(s): AFX
AFROX OXYGEN LIMITED
AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 1999
TURNOVER UP 30%
HEADLINE EARNINGS UP 20%
CASH GENERATED FROM OPERATIONS UP 49% TO R594 MILLION
LISTING OF AFROX HEALTHCARE THROUGH PRESMED ACQUISITION
COMPLETION OF MAJOR PRODUCTIVITY AND RESTRUCTURING INITIATIVES.
DEAR SHAREHOLDERS
PERFORMANCE
I AM PLEASED TO ANNOUNCE A VERY STRONG PERFORMANCE IN ALL RESPECTS, WITH SALES
INCREASING 30 PERCENT AND HEADLINE EARNINGS UP 20 PERCENT. WE HAVE RETAINED THE
QUALITY OF OUR BALANCE SHEET IN SPITE OF THE FOCUS ON GROWTH. CASH GENERATED
FROM OPERATIONS HAS INCREASED BY A SUBSTANTIAL 49 PERCENT TO R594 MILLION AND
THE GEARING RATIO HAS BEEN KEPT AT AN ACCEPTABLE 42 PERCENT.
THERE HAVE BEEN CHANGES IN ACCOUNTING POLICIES DURING THE CURRENT FINANCIAL
YEAR REGARDING THE VALUATION OF CERTAIN CATEGORIES OF FIXED ASSETS AT HISTORIC
COST AND THE INCLUSION OF THE TURNOVER OF CERTAIN HEALTHCARE SERVICES
COMPANIES. RESULTS, AS PRESENTED, ARE ON A LIKE-FOR-LIKE BASIS, BUT IF COMPARED
DIRECTLY TO THE PREVIOUS YEAR, TURNOVER HAS INCREASED BY 39 PERCENT AND
HEADLINE EARNINGS HAVE INCREASED BY 32 PERCENT.
THE RECORD SALES ACHIEVEMENT OF R3,647 MILLION WAS UP 30 PERCENT ON THE SALES
OF R2,801 MILLION ACHIEVED IN 1998. THE MAIN FOCUS OF THE COMPANY'S AGGRESSIVE
GROWTH STRATEGY HAS SEEN THE ACQUISITION OF BOTH PRESMED AND LIFECARE, AND THE
SUBSEQUENT LISTING OF AFROX HEALTHCARE LIMITED. THE EFFECT HAS BEEN IMMEDIATELY
BENEFICIAL, RESULTING IN AN EARNINGS PER SHARE INCREASE OF FIVE CENTS.
ANTICIPATED FUTURE SYNERGISTIC SAVINGS SHOULD MAKE THIS A REWARDING INVESTMENT.
PROFIT AFTER TAX BEFORE EXCEPTIONAL ITEMS IMPROVED 26 PERCENT TO R322 MILLION
(1998: R255 MILLION). THE MAJOR PRODUCTIVITY AND RESTRUCTURING INITIATIVES
WITHIN THE INDUSTRIAL BUSINESS HAVE BEEN COMPLETED AT A COST OF R16 MILLION
THIS YEAR. OVER A TWO-YEAR PERIOD, OPERATING COSTS WITHIN THE INDUSTRIAL
DIVISION HAVE BEEN REDUCED BY R40 MILLION A YEAR. ASIDE FROM THESE
RESTRUCTURING INITIATIVES, EXCEPTIONAL COSTS OF R45 MILLION, RELATING TO THE
DISPOSAL OF NON-CORE BUSINESSES AND ASSETS, WERE INCURRED THIS YEAR.
DESPITE HIGHER BORROWINGS AND OVERALL HIGH AVERAGE INTEREST RATES FOR THE
CURRENT FINANCIAL YEAR, INTEREST WAS KEPT AT R122 MILLION, 10 PERCENT UP ON THE
PREVIOUS YEAR'S R111 MILLION. THIS RESULTED FROM A COMBINATION OF GOOD ASSET
AND BORROWINGS MANAGEMENT.
THE REDUCED EFFECTIVE TAX RATE OF 30 PERCENT (1998: 33 PERCENT) WAS A DIRECT
RESULT OF THE REDUCTION IN THE COMPANY TAX RATE FROM 35 PERCENT TO 30 PERCENT
DURING THE CURRENT FINANCIAL YEAR.
THE SIGNIFICANT EXPANSION ACTIVITIES UNDERTAKEN IN THIS PERIOD ARE REFLECTED IN
THE INCREASE IN CAPITAL EMPLOYED, FROM R1,792 MILLION IN 1998 TO R2,403 MILLION
IN 1999. NOTWITHSTANDING THIS INCREASE, THE GEARING RATIO WAS REDUCED BY 2
PERCENT TO 42 PERCENT. WHILE SOME OF THE CAPITAL EXPENDITURE RELATED TO
EXPANSIONS, THE MAJORITY OF THE R438 MILLION SPENT, WAS USED FOR ACQUIRING
PRESMED, LIFECARE AND A CHRONIC MEDICATION MANAGEMENT COMPANY.
PRODUCTIVITY INITIATIVES
THE MAJOR PRODUCTIVITY AND RESTRUCTURING PROGRAMME WHICH WAS DESIGNED TO
INCREASE SALES, IMPROVE EFFICIENCIES AND REDUCE COSTS HAS BEEN COMPLETED.
ANNUALISED SAVINGS OF R40 MILLION IN COSTS HAVE ALREADY BEEN ACHIEVED FROM OUR
PRODUCTIVITY INITIATIVES. THE EFFICIENCY ENHANCEMENTS HAVE RESULTED IN A MORE
STREAMLINED STRUCTURE AND SHORTENED THE LINES OF COMMUNICATION. OUR BRANCH
NETWORK IS NOW CONSIDERABLY MORE SALES AND CUSTOMER FOCUSSED. WE HAVE
RATIONALISED OUR SALES REGIONS AND HAVE COMPLETED THE CENTRALIZING OF OUR
FINANCE, HUMAN RESOURCES AND CUSTOMER SERVICE FUNCTIONS.
OVERHEADS FOR THE YEAR IN THE INDUSTRIAL BUSINESS AMOUNTED TO R302 MILLION, 2
PERCENT BELOW THE PREVIOUS YEAR'S R308 MILLION.
ALTHOUGH THE ABOVE INITIATIVES HAVE LARGELY BEEN FOCUSSED ON THE INDUSTRIAL
BUSINESS, HEALTHCARE'S WARD AND THEATRE MANAGEMENT PROGRAMME AND OUTSOURCING OF
CERTAIN SERVICES HAVE REALISED SAVINGS OF R13 MILLION IN THE CURRENT FINANCIAL
YEAR. WE ALSO ANTICIPATE SYNERGISTIC BENEFITS OF R10 MILLION IN THE FIRST YEAR
AND R30 MILLION OVER A THREE YEAR PERIOD, ARISING FROM THE INTEGRATION OF AFROX
HEALTHCARE AND PRESMED.
BUSINESS REVIEW
IN RECESSIONARY TRADING CONDITIONS THE INDUSTRIAL BUSINESS (GASES, WELDING
PRODUCTS AND HANDBAGS) MANAGED TO GROW MARKET SHARE AND INCREASED BOTH SALES
AND PROFIT.
ALL COST CONTROL, EFFICIENCY AND RESTRUCTURING INITIATIVES HAVE BEEN COMPLETED
AND THE BUSINESS IS WELL POSITIONED TO TAKE FULL ADVANTAGE OF INCREASED
ECONOMIC ACTIVITY.
NEW MARKETS AND BUSINESS OPPORTUNITIES WERE AGGRESSIVELY DEVELOPED. NOTABLE
SUCCESSES INCLUDE SIGNIFICANT GLOBAL GAS WELDING EQUIPMENT ORDERS WHICH SHOULD
REALISE ANNUAL SALES OF R100 MILLION A YEAR BY 2001, COMMISSIONING A R10
MILLION AEROSOL PROPELLANT FACILITY, EXPANDING REFRIGERANT OFFERINGS,
INTRODUCING HANDBAGS INTO FIVE NEW AFRICAN COUNTRIES WHICH SHOULD INCREASE
SALES BY OVER R100 MILLION IN THE NEXT FEW YEARS, BRINGING ON-STREAM FIVE LARGE
BULK HANDBAGS CONTRACTS, SIGNING THE TWO LARGEST LIQUID OXYGEN CONTRACTS IN
SOUTHERN AFRICA AND SUBSTANTIALLY INCREASING THE CARBON DIOXIDE BUSINESS IN
SOUTH AFRICA AND SUB-SAHARAN AFRICA.
OUR HEALTHCARE BUSINESS PERFORMED EXCEPTIONALLY WELL, WITH BOTH SALES AND
PROFITS SHOWING INCREASES OF OVER 50 PERCENT. THIS PHENOMENAL GROWTH WAS PARTLY
DUE TO THE PRESMED AND LIFECARE MERGER AND ACQUISITION.
MERGING AFROX'S HEALTHCARE INTERESTS WITH THOSE OF PRESMED WAS DONE WITH SPEED
AND EFFICIENCY. THE NEW LISTED COMPANY IN WHICH AFROX NOW HAS AN 77 PERCENT
SHARE IS KNOWN AS AFROX HEALTHCARE LIMITED AND IS A MAJOR HEALTHCARE PROVIDER
GROUP IN SOUTHERN AFRICA.
THE ENLARGED GROUP NOW HAS 60 ACUTE CARE HOSPITALS AND SAMEDAY SURGICAL CENTRES
AND INTERESTS IN A FURTHER 11 HOSPITALS. THESE REPRESENT 7100 BEDS. IN
ADDITION, THE GROUP HAS SEVERAL SPECIALIST HEALTHCARE SERVICES COMPANIES.
FURTHERMORE THE VINCENT PALLOTTI HOSPITAL IN CAPE TOWN WAS EXPANDED AND
REFURBISHED AT A COST OF R75 MILLION, SEVERAL HOSPITALS, INCLUDING THE ENTABENI
IN DURBAN, THE FLORA CLINIC IN JOHANNESBURG AND THE SUIKERBOSRAND CLINIC IN
HEIDELBERG, ARE BEING EXPANDED AND UPGRADED, STATE-OF-THE-ART MEDICAL
FACILITIES WERE OPENED AT SEVERAL HOSPITALS INCLUDING ONCOLOGY UNITS AT THE
GLYNNWOOD AND FLORA CLINIC, DIRECT MEDICINES, OUR CHRONIC MEDICATION MANAGEMENT
COMPANY, ACQUIRED HOME MEDICATION SERVICES (HMS) WITH ANNUAL SALES OF R150
MILLION, AND, OUR PRIMARY AND OCCUPATIONAL HEALTHCARE COMPANY, AFROHC, WON
MAJOR CONTRACTS.
DIVIDENDS
YOUR BOARD OF DIRECTORS HAS DECLARED AN INCREASED DIVIDEND AS A RESULT OF THE
VERY SOLID PERFORMANCE. SHAREHOLDERS WILL HAVE THE OPPORTUNITY OF EITHER A CASH
DIVIDEND OR TAKING UP CAPITALISATION SHARES. THE DIVIDEND IS UP 13 PERCENT TO
42,5 CENTS (1998: 37.7 CENTS) PER SHARE.
YEAR 2000 COMPLIANCE
THE DIRECTORATE AND MANAGEMENT HAVE BEEN COMMITTED TO ADDRESSING, EVALUATING
AND MANAGING THE RISK ASSOCIATED WITH THE YEAR 2000. THE COMPLIANCE PROGRAMME
STARTED IN NOVEMBER 1996. I AM PLEASED TO REPORT THAT OUR COMPLIANCE PROGRAMME
HAS BEEN COMPLETED. TO THE BEST OF MY KNOWLEDGE I CAN STATE THE FOLLOWING:
- OUR COMMERCIAL, FINANCIAL, HUMAN RESOURCE AND MATERIALS MANAGEMENT SYSTEMS
ARE ALL YEAR 2000 COMPLIANT.
- OUR COMPUTER HARDWARE, INCLUDING NETWORK EQUIPMENT AND WORKSTATIONS, HAVE
BEEN UPGRADED AND CERTIFIED AS COMPLIANT BY THE RELEVANT SUPPLIERS.
- ALL EMBEDDED CHIPS WITHIN BOTH HEALTHCARE AND INDUSTRIAL OPERATIONS HAVE BEEN
IDENTIFIED AND APPROPRIATE SUPPLIER GUARANTEES OBTAINED AFTER TESTING.
- WE HAVE DEVELOPED CONTINGENCY PLANS AROUND HIGH IMPACT RISK SCENARIOS.
INTERNAL RISKS HAVE BEEN ADDRESSED, AND MANUAL PROCESSES ARE IN PLACE IN CASE
OF SYSTEM FAILURE.
- EXTERNAL RISKS HAVE BEEN ADDRESSED WITH CRITICAL SUPPLIERS AND CUSTOMERS.
- THE COSTS THAT HAVE BEEN INCURRED ASSOCIATED WITH YEAR 2000 COMPLIANCE IS R37
MILLION.
FUTURE PROSPECTS
THIS PAST YEAR HAS BEEN ONE OF EXCEPTIONAL ACHIEVEMENT FOR AFROX. WE HAVE
IMPROVED EFFICIENCIES, ENSURING WE CAN COMPETE AT HOME AND ABROAD WITH THE BEST
IN THE WORLD. WE HAVE REDUCED OUR COST BASE IN OUR INDUSTRIAL BUSINESS BY R40
MILLION. WE WILL SEE SIMILAR SAVINGS IN HEALTHCARE OVER THE NEXT TWO TO THREE
YEARS. WE HAVE A STRONG BALANCE SHEET AND CASH FLOW AND CAPACITY FOR GROWTH,
BOTH ORGANICALLY AND BY ACQUISITION.
AFROX IS WELL POSITIONED TO BENEFIT FROM THE LONG-AWAITED UPTURN IN ECONOMIC
ACTIVITY. WE EXPECT A CONTINUED IMPROVEMENT IN TURNOVER, PROFITS AND EARNINGS
PER SHARE FOR THE YEAR AHEAD.
ROYDEN T VICE
CHAIRMAN AND MANAGING DIRECTOR
ANNUAL REPORT
THE AUDITED ANNUAL FINANCIAL STATEMENTS WILL BE POSTED TO MEMBERS ON OR ABOUT
26 NOVEMBER 1999 TOGETHER WITH THE NOTICE OF THE 72ND ANNUAL GENERAL MEETING TO
BE HELD ON 20 JANUARY 2000.
CAPITALISATION SHARE AWARD AND CASH OPTION
THE BOARD OF DIRECTORS OF AFRICAN OXYGEN LIMITED (AFROX) HAS RESOLVED TO MAKE
AN AWARD OF NEW FULLY PAID ORDINARY SHARES ('THE NEW SHARES') BY WAY OF A
CAPITALISATION OF DISTRIBUTABLE RESERVES TO SHAREHOLDERS IN THE COMPANY AT
CLOSE OF BUSINESS ON FRIDAY, 19 NOVEMBER 1999 ("THE RECORD DATE") ACCORDING TO
THE FOLLOWING FORMULA PER SHARE.
                      26,0 CENTS
----------------------------------------------
97,5% OF RULING PRICE AT CLOSE OF BUSINESS ON
THE JOHANNESBURG STOCK EXCHANGE (JSE) ON 19 NOVEMBER 1999.
SHAREHOLDERS WILL BE ENTITLED TO ELECT TO DECLINE THE AWARD IN RESPECT OF ALL
OR PART OF THEIR SHAREHOLDING AND INSTEAD MAY ELECT TO RECEIVE A CASH DIVIDEND
OF 26,0 CENTS PER ORDINARY SHARE (1998: 23,5 CENTS).
ALL FRACTIONS OF NEW SHARES WILL BE AGGREGATED AND SOLD ON THE JSE FOR THE
BENEFIT OF THE RELEVANT SHAREHOLDERS. SUBJECT TO THE APPROVAL OF THE JSE AND
THE NAMIBIAN STOCK EXCHANGE (NSX) A LISTING OF THE NEW SHARES TO BE ISSUED
PURSUANT TO THE AWARD WILL COMMENCE ON WEDNESDAY, 26 JANUARY 2000.
DOCUMENTATION, WHICH IS SUBJECT TO THE APPROVAL OF THE JSE AND NSX, DEALING
WITH THE CAPITALISATION AWARD AND ELECTION FORMS IN RESPECT OF THE CASH
DIVIDEND WILL BE POSTED TO AFROX SHAREHOLDERS ON 29 NOVEMBER 1999. IN ORDER TO
BE VALID, COMPLETED ELECTION FORMS MUST BE RECEIVED BY THE TRANSFER SECRETARIES
BY NO LATER THAN 12H00 ON FRIDAY, 21 JANUARY 2000. IT IS EXPECTED THAT THE
SHARE CERTIFICATES IN RESPECT OF THE NEW SHARES AND/OR PAYMENTS WILL BE
ISSUED/MADE ON OR ABOUT WEDNESDAY, 26 JANUARY 2000. A FURTHER ANNOUNCEMENT WILL
BE PUBLISHED ON WEDNESDAY, 26 JANUARY 2000, DETAILING THE RESULTS OF THE
CAPITALISATION SHARE AWARD AND CASH ELECTION.
BY ORDER OF THE BOARD.
I MATTHEE
COMPANY SECRETARY
JOHANNESBURG
28 OCTOBER 1999
THE DIRECTORS REPORT THAT THE AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER
1999 ARE AS FOLLOWS:
INCOME STATEMENT
                                                   1999     %         1998
                                                   RM       CHANGE    RM
TURNOVER                                           3 647    30        2 801
OPERATING PROFIT                                   569      17        487
NET INTEREST PAID                                  (109)             (99)
PROPERTY FINANCE LEASE CHARGES                     (13)              (12)
PROFIT BEFORE EXCEPTIONAL ITEMS                    447      19       376
EXCEPTIONAL ITEMS                                  (45)              (22)
PROFIT BEFORE TAXATION                             402      13       354
TAXATION                                           (121)             (116)
PROFIT AFTER TAXATION                              281      18       238
OUTSIDE SHAREHOLDERS' INTEREST                     (41)              (18)
SHARE OF PROFIT OF ASSOCIATED COMPANIES            6                 1
PROFIT ATTRIBUTABLE TO SHAREHOLDERS                246      11       221
ADJUSTMENT FOR HEADLINE EARNINGS
- EXCEPTIONAL ITEMS                                45                22
- TAX EFFECT                                       (4)               (5)
HEADLINE EARNINGS                                  287      20       238
DIVIDEND AND CAPITALISATION SHARE AWARD            (134)    15       (117)
BALANCE SHEET
EMPLOYMENT OF CAPITAL
FIXED ASSETS                                       1 895             1 396
ASSOCIATE COMPANIES AND TRADE INVESTMENTS          165               36
OTHER LONG-TERM ASSETS                             164               157
                                                   2 224             1 589
CURRENT ASSETS (EXCLUDING CASH)                    1 200             923
CURRENT LIABILITIES
(EXCLUDING SHORT-TERM BORROWINGS)                  (1 015)           (720)
                                                   2 409             1 792
CAPITAL EMPLOYED
SHAREHOLDERS' FUNDS                                1 237             1 078
OUTSIDE SHAREHOLDERS' INTEREST                     394               69
DEFERRED TAXATION                                  61                73
POST RETIREMENT BENEFITS                           10                25
NET BORROWINGS                                     620               460
FINANCE LEASES                                     87                87
                                                   2 409             1 792
CASH FLOW STATEMENT
CASH GENERATED FROM TRADING ACTIVITIES             707               583
DECREASE/(INCREASE) IN WORKING CAPITAL             80                (111)
REPLACEMENT OF FIXED ASSETS                        (193)             (74)
CASH GENERATED FROM OPERATIONS                     594               398
INTEREST AND TAXATION PAID                         (228)             (209)
DIVIDENDS PAID                                     (88)              (81)
CASH RETAINED FROM OPERATIONS                      278               108
NET INVESTMENT ACTIVITIES                          (438)             (29)
NET CASH FLOW                                      (160)             79
STATISTICS AND RATIOS
STATISTICS
TOTAL NUMBER OF SHARES IN ISSUE (MILLION)          315               310
NUMBER OF ORDINARY SHARES ON WHICH
EARNINGS PER SHARE ARE BASED (MILLION)             313               309
HEADLINE EARNINGS PER SHARE (CENTS)                92,0     19       77,6
EARNINGS PER SHARE (CENTS)                         78,7     9        72,1
DIVIDEND AND CAPITALISATION SHARE
AWARD PER SHARE (CENTS)                            42,5     13       37,7
RATIOS
INTEREST COVER                                     4,7 TIMES       4,4 TIMES
EFFECTIVE TAX RATE                                 30,1%           32,8%
GEARING                                            41,6%           43,9%
DIVIDEND COVER - HEADLINE                          2,1 TIMES       2,0 TIMES
REGISTERED OFFICE
AFROX HOUSE, 23 WEBBER STREET
SELBY, JOHANNESBURG, 2001
PO BOX 5404, JOHANNESBURG, 2000
TELEPHONE (011) 490-0400
WEBSITE: WWW.AFROX.COM
AFRICAN OXYGEN LIMITED
REGISTRATION NUMBER 04/00089/06
TRANSFER SECRETARY
MERCANTILE REGISTRARS LIMITED
ANGLO BUILDING
8TH FLOOR
11 DIAGONAL STREET
JOHANNESBURG, 2000
TELEPHONE (011) 370-5000
DIRECTORS:
RT VICE (CHAIRMAN AND MANAGING DIRECTOR), DF BEATTIE*, AE ISAAC*, LA MACNAIR,
JM MARRIOTT, EQ MOHAPI#, DB RILEY, GS SIBIYA, CB STRAUSS.
*BRITISH    #LESOTHO
AFROX MEDIA RELEASE
28 OCTOBER 1999
AFROX: 20 PERCENT INCREASE IN EARNINGS AND READY FOR Y2K ECONOMIC UPTURN
RECORD SALES UP 30 PERCENT, HEADLINE EARNINGS 20 PERCENT HIGHER, A STRONG
BALANCE SHEET AND COST SAVINGS OF R40 MILLION ARE FEATURES OF AFRICAN OXYGEN
LIMITED'S (AFROX) RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 1999.
CHAIRMAN AND MANAGING DIRECTOR OF THE GASES, WELDING AND HEALTHCARE GROUP,
ROYDEN VICE SAYS, "IN THE PAST 18 MONTHS WE HAVE COMPLETELY RENEWED AFROX WITH
CONSIDERABLE SUCCESS. WE ARE NOW EXTREMELY WELL POSITIONED TO BENEFIT FULLY
FROM THE LONG-AWAITED UPTURN IN ECONOMIC ACTIVITY. AS A RESULT, WE EXPECT A
CONTINUED IMPROVEMENT IN TURNOVER, PROFITS AND EARNINGS PER SHARE IN THE YEAR
AHEAD."
IN AN EXTREMELY TOUGH ECONOMIC PERIOD WITH INTENSE COMPETITION, AFROX INCREASED
SALES TO R3,6 BILLION (R2,8 BILLION). PROFIT AFTER TAX AND BEFORE EXCEPTIONAL
ITEMS WAS 26 PERCENT HIGHER AT R322 MILLION (R255 MILLION) AND HEADLINE
EARNINGS WERE UP 20 PERCENT AT R287 MILLION (R238 MILLION).
"THIS PAST YEAR," SAYS VICE, "HAS SEEN GROWTH COME FROM ACQUISITIONS,
PRODUCTIVITY AND COST SAVING INITIATIVES AND BY GROWING EXISTING BUSINESS AND
PRODUCTS. WE SET OUT EARLY LAST YEAR TO COMPLETELY RENEW AFROX BY INCREASING
EFFICIENCIES AND REDUCING COSTS. WE HAVE DONE JUST THAT. WE ARE NOW CONFIDENT
THAT WE WILL BE ABLE TO COMPETE AT HOME AND GLOBALLY WITH THE BEST IN THE
WORLD."
IN SPITE OF THE FOCUS ON GROWTH WITH CAPITAL EMPLOYED INCREASING 33 PERCENT TO
R2,409 MILLION, THE BALANCE SHEET REMAINS STRONG. CASH GENERATED FROM
OPERATIONS IS 49 PERCENT HIGHER AT R594 MILLION AND GEARING KEPT TO AN
ACCEPTABLE 42 PERCENT.
AS A DIRECT COMPARISON WITH LAST YEARS PUBLISHED FIGURES, HEADLINE EARNINGS PER
SHARE WERE 32 PERCENT HIGHER. THIS YEAR, HOWEVER, HEADLINE EARNINGS PER SHARE
HAVE BEEN RESTATED AT 92,0 CENTS (77,6 CENTS), UP 19 PERCENT, AS A RESULT OF
CHANGE IN ACCOUNTING POLICY.
ROYDEN VICE SAYS, "WITH SINGLE DIGIT INFLATION, AFROX NO LONGER SEES THE NEED
FOR INFLATION ACCOUNTING, WHICH WE IMPLEMENTED BY CHARGING ADDITIONAL
DEPRECIATION ON CERTAIN FIXED ASSETS. THIS CONSERVATIVE POLICY, IMPLEMENTED BY
ONLY A HANDFUL OF JSE LISTED COMPANIES, WAS TO ENSURE REAL EARNINGS IN TIMES OF
HIGH INFLATION.
REFERRING TO THE 30 PERCENT INCREASE IN TURNOVER, VICE SAYS THAT THE GROUP HAS
INCLUDED, FOR THE FIRST TIME, SALES OF CERTAIN HEALTHCARE SERVICES COMPANIES,
IN A MOVE TO ACHIEVE MORE MEANINGFUL TOTAL SALES DISCLOSURE. "MARGINS, ALTHOUGH
TIGHT, WERE NEVERTHELESS VERY ACCEPTABLE AS THE TURNOVER NOW ALSO REFLECTS
SALES FROM HIGH VOLUME, LOWER MARGIN, DISCOUNT CHRONIC MEDICATION DRUGS."
THE SOUND RESULTS HAS MEANT THE BOARD OF DIRECTORS HAVE DECLARED AN INCREASED
DIVIDEND, 13 PERCENT HIGHER AT 42,5 CENTS (37,7 CENTS). SHAREHOLDERS WILL HAVE
THE OPTION OF EITHER A CASH DIVIDEND OR TAKING UP CAPITALISATION SHARES.
EXCEPTIONAL ITEMS OF R45 MILLION, COMPRISE A R16 MILLION ONCE OFF COST FOR THE
RESTRUCTURING AND PRODUCTIVITY INITIATIVES WHICH HAVE REALISED THE INDUSTRIAL
DIVISION R40 MILLION IN ANNUALISED SAVINGS. THE OTHER COSTS RELATE TO
PROVISIONS AND WRITE-OFFS OF CERTAIN PROPERTIES AND THE DISPOSAL OF NON-CORE
BUSINESSES.
"OUR INDUSTRIAL, GASES AND WELDING SUCCESSES INCLUDE REDUCING THE COST BASE BY
R40 MILLION, AND STREAMLINING AND SLIMMING DOWN THE ORGANISATION. AT THE SAME
TIME, WE HAVE GROWN MARKET SHARE, ENTERED NEW AND EXCITING MARKETS WITH OUR
HANDIGAS LIQUEFIED PETROLEUM GAS BRAND AND OUR NEW GASEOUS CHEMICALS BUSINESS
AND, ACHIEVED CONSIDERABLE EXPORT SUCCESS WITH OUR GAS EQUIPMENT AND WELDING
CONSUMABLES IN EUROPE, AUSTRALIA AND PACIFIC RIM COUNTRIES."
"WE NOW ALSO HAVE HIGHLY COST EFFECTIVE CENTRALISED SERVICE CENTRES IN PLACE.
THESE CENTRES INCLUDE CUSTOMER SERVICE, INFORMATION MANAGEMENT, FINANCIAL AND
HUMAN RESOURCES AND ARE ALL BENCHMARKED AGAINST SIMILAR GLOBAL SERVICE CENTRES.
ON THE HEALTHCARE BUSINESS SIDE, WE NEEDED TO ACHIEVE ECONOMIES OF SCALE A
LARGER GROUP OFFERS. THE MAIN FOCUS, WAS THEREFORE, GROWTH BY ACQUISITION AND
WE HAVE NOW LISTED AFROX HEALTHCARE LIMITED AFTER THE SUCCESSFUL TAKE-OVER OF
LIFECARE AND THE MERGER WITH PRESMED. AFROX HEALTHCARE LIMITED, REPORTED
YESTERDAY FOR THE FIRST TIME AND MET, AND EXCEEDED ITS PRE-LISTING FORECASTS.
THE EFFECT OF THIS FINE PERFORMANCE HAS BEEN IMMEDIATELY BENEFICIAL, RESULTING
IN AN EARNINGS PER SHARE INCREASE OF 5 CENTS. ANTICIPATED SYNERGISTIC BENEFITS
OF UP TO R40 MILLION OVER THE NEXT THREE YEARS SHOULD MAKE THIS AN EXTREMELY
REWARDING INVESTMENT.
BUSINESS REVIEW
THE INDUSTRIAL BUSINESS OF GASES, WELDING PRODUCTS AND HANDIGAS, MANAGED TO
HOLD OR GROW MARKET SHARE IN ALL SIGNIFICANT PRODUCT AREAS AND INCREASED BOTH
SALES AND PROFIT.
NEW MARKETS AND BUSINESS OPPORTUNITIES WERE AGGRESSIVELY DEVELOPED. NOTABLE
SUCCESSES INCLUDE SIGNIFICANT GLOBAL GAS WELDING EQUIPMENT ORDERS,
COMMISSIONING A R10 MILLION AEROSOL PROPELLANT FACILITY, EXPANDING REFRIGERANT
OFFERINGS, INTRODUCING HANDIGAS INTO FIVE NEW AFRICAN COUNTRIES WHICH SHOULD
INCREASE SALES BY OVER R100 MILLION IN THE NEXT FEW YEARS, BRINGING ON-STREAM
FIVE LARGE BULK HANDIGAS CONTRACTS AND SUBSTANTIALLY INCREASING THE CARBON
DIOXIDE BUSINESS IN SOUTH AFRICA AND SUB-SAHARAN AFRICA.
THE HEALTHCARE BUSINESS PERFORMED EXCEPTIONALLY WELL, WITH BOTH SALES AND
PROFITS SHOWING INCREASES OF OVER 50 PERCENT. THIS PHENOMENAL GROWTH WAS
LARGELY DUE TO PRESMED AND LIFECARE FORMING A PART OF THE GROUP.
MERGING AFROX'S HEALTHCARE INTERESTS WITH THOSE OF PRESMED WAS DONE WITH SPEED
AND EFFICIENCY. THE NEW LISTED COMPANY, AFROX HEALTHCARE LIMITED, IS NOW A
MAJOR PRIVATE HEALTHCARE PROVIDER IN SOUTHERN AFRICA.
THE ENLARGED GROUP NOW HAS 60 ACUTE CARE HOSPITALS AND SAMEDAY SURGICAL CENTRES
AND INTERESTS IN A FURTHER 11 HOSPITALS. THESE REPRESENT 7 100 BEDS. IN
ADDITION, THE GROUP HAS SEVERAL SPECIALIST HEALTHCARE SERVICES COMPANIES.
FURTHERMORE THE VINCENT PALLOTTI IN CAPE TOWN WAS EXPANDED AND REFURBISHED AT A
COST OF R75 MILLION, SEVERAL HOSPITALS INCLUDING THE ENTABENI IN DURBAN, THE
FLORA CLINIC IN JOHANNESBURG AND THE SUIKERBOSRAND CLINIC IN HEIDELBERG, ARE
BEING EXPANDED AND UPGRADED, STATE-OF-THE-ART MEDICAL FACILITIES WERE OPENED AT
SEVERAL HOSPITALS INCLUDING ONCOLOGY UNITS AT THE GLYNNWOOD AND FLORA CLINIC,
DIRECT MEDICINES, A CHRONIC MEDICATION MANAGEMENT COMPANY, ACQUIRED HOME
MEDICATION SERVICES (HMS), AND THE PRIMARY AND OCCUPATIONAL HEALTHCARE COMPANY,
AFROHC, WON MAJOR CONTRACTS.
ISSUED BY AFROX OXYGEN LIMITED (AFROX)
FOR FURTHER INFORMATION:
CHRIS FIELDGATE (INVESTOR RELATIONS) (011) 490-0554 CELL: 082-495-1481
ROYDEN VICE (CHAIRMAN) (011) 490-0590 CELL: 082-491-7162
BACKGROUND INFORMATION ON AFROX IS AVAILABLE ON INTERNET:
WWW.AFROX.COM



                                        
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Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.