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Afrox Healthcare Interim Results For Six Months Ended 31 March 2000

Release Date: 03/05/2000 16:41:47      Code(s): AFX
AFROX HEALTHCARE LIMITED
(FORMERLY PRESIDENT MEDICAL INVESTMENTS LIMITED "PRESMED")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2000
ON TARGET TO MEET PRE-LISTING FORECAST
MANAGEMENT INTEGRATION ACHIEVED
SYNERGY BENEFITS EXCEED EXPECTATIONS
STRONG ORGANIC GROWTH
HEADLINE EARNINGS PER SHARE UP 30%
DIVIDENDS PER SHARE UP 20%
DEAR SHAREHOLDERS
PERFORMANCE
AFROX HEALTHCARE HAS PERFORMED EXCEEDINGLY WELL DURING THE FIRST SIX MONTHS. WE
ARE PLEASED TO REPORT THAT THE COMPANY IS WELL POSITIONED TO MEET ITS
PRE-LISTING FORECAST TURNOVER OF R2,3 BILLION, ATTRIBUTABLE EARNINGS OF R141,4
MILLION AND HEADLINE EARNINGS PER SHARE OF 63,9 CENTS, FOR THE FIRST FULL YEAR
AFTER THE MERGER.
THE FUNDAMENTALS OF THE MERGER BETWEEN PRESMED AND AFROX HEALTHCARE WERE A
COMPLEMENTARY MANAGEMENT AND GEOGRAPHIC FIT. THESE HAVE BEEN IMPLEMENTED DURING
THE FIRST SIX MONTHS WHICH IS A SIGNIFICANT ACHIEVEMENT IN BEDDING DOWN SUCH A
LARGE GROUP. THIS HAS ALSO BEEN COMPLEMENTED BY A STRONG FINANCIAL PERFORMANCE
IN A TRADITIONALLY WEAK FIRST HALF.
THE INTERIM RESULTS SHOULD BE VIEWED AS A MAIDEN INTERIM. NEVERTHELESS, THE NEW
MERGED GROUP PRODUCED INCREASED REVENUES OF R1 157 MILLION
(R242 MILLION), UP 378 PERCENT. OPERATING PROFIT WAS 331 PERCENT HIGHER AT
R106,1 MILLION (R24,6 MILLION) WITH PROFIT AFTER TAX HIGHER BY 371 PERCENT AT
R75,4 MILLION (R16,0 MILLION). PROFIT ATTRIBUTABLE TO SHAREHOLDERS WAS R64,8
MILLION (R14,2 MILLION).
THE MERGER OF AFROX'S HEALTHCARE INTERESTS WITH THOSE OF PRESMED HAS CREATED AN
EFFICIENT AND PROFESSIONAL HEALTHCARE PROVIDER GROUP. IT IS A COMMENDABLE
MANAGEMENT ACHIEVEMENT THAT ALL ORGANISATION AND MANAGEMENT STRUCTURES ARE
ALREADY IN PLACE AND OPERATING HOLISTICALLY.
MANAGEMENT HAS PURSUED IMPROVED PROFITS FROM SYNERGISTIC BENEFITS, AND HAS ALSO
SET ABOUT ACHIEVING OTHER OPERATING IMPROVEMENTS.
HOSPITALS HAVE BEEN ORGANISED WITHIN REGIONAL MANAGEMENT STRUCTURES, ALL
HOSPITAL SUPPORT SERVICES HAVE BEEN UNIFIED, FINANCIAL REPORTING AND CONTROL
HAS BEEN STANDARDISED AND STANDARDISED HUMAN RESOURCES PROCESSES ARE IN PLACE.
CONSISTENTLY HIGHER THAN ANTICIPATED SYNERGISTIC BENEFITS ARE BEING REALISED,
AND AT LEAST R10 MILLION SHOULD BE ACHIEVED THIS YEAR.
THE BALANCE SHEET IS STRONG WITH GEARING AT 31,1 PERCENT.
BUSINESS REVIEW
AFROX HEALTHCARE OPERATES ACUTE CARE HOSPITALS AND SAMEDAY SURGICAL CENTRES,
AND HEALTHCARE SERVICES COMPANIES.
THE ACUTE CARE HOSPITALS AND SAMEDAY SURGICAL CENTRES COMPRISE 60 UNITS WITH
INTERESTS IN A FURTHER 11 FACILITIES. IN TOTAL, THE GROUP HAS ACCESS TO 7100
BEDS.
STRONG GROWTH WAS EXPERIENCED AS A RESULT OF EXPANDING OR BRINGING ON STREAM
NEW FACILITIES AT A NUMBER OF THE GROUP'S HOSPITALS. ADMISSIONS AND THEATRE
CASES IMPROVED WITH OCCUPANCIES SLIGHTLY HIGHER. THE TREND OF SHORTER-STAYS,
BROUGHT ABOUT BOTH BY THE INFLUENCE OF MANAGED CARE AND ADVANCES IN TECHNOLOGY
AND NURSING CARE, CONTINUED. THIS INDICATES CONTINUED IMPROVEMENT IN THE
UTILISATION OF OUR HOSPITAL ASSETS.
HEALTHCARE'S STRONG GROWTH IN SALES AND PROFITS WAS ACHIEVED DESPITE LOWER THAN
INFLATION TARIFF INCREASES WHICH WERE AGREED AFTER A RATHER PROTRACTED AND
UNFORTUNATE PUBLIC DEBATE. WE ARE HOPING TO ESTABLISH MECHANISMS TO AVOID THIS
PUBLIC WRANGLE IN FUTURE YEARS.
SIGNIFICANT DEVELOPMENTS PLANNED IN THE PAST FEW YEARS ARE NOW FULLY
OPERATIONAL AND SHOULD CONTRIBUTE TO INCREASED GROWTH IN THE FUTURE. THESE
DEVELOPMENTS INCLUDE THE VINCENT PALLOTTI HOSPITAL IN CAPE TOWN WHICH IS
MEETING EXPECTATIONS, THE OPENING OF A NEW WING AT THE SUIKERBOSRAND HOSPITAL
IN HEIDELBERG, WHICH DOUBLES ITS BED CAPACITY, UPGRADING THE KINGSBURY AND
CLAREMONT HOSPITALS IN THE WESTERN CAPE AND OPENING A NEW PAEDIATRIC WING AND
ICU AT ST DOMINIC'S IN EAST LONDON.
STATE-OF-THE-ART UNITS COMMISSIONED WERE THE ONCOLOGY CENTRE AT THE FLORA,
JOHANNESBURG, THE ENT CENTRE AT THE ENTABENI HOSPITAL, DURBAN, AND AN ONCOLOGY
CENTRE AND NEW MEDICAL CENTRE AT THE GABORONE PRIVATE HOSPITAL.
DIVIDEND
THE DIRECTORS HAVE DECLARED AN INTERIM DIVIDEND OF 9,6 CENTS (8 CENTS) PER
SHARE WHICH IS AN INCREASE OF 20 PERCENT.
THE DIVIDEND IS COVERED 3,1 TIMES BY EARNINGS, WELL WITHIN OUR FORECAST OF 2,5
AND 4 TIMES IN OUR PRE-LISTING STATEMENT.
DIVIDEND DECLARATION
NOTICE IS HEREBY GIVEN THAT AN INTERIM DIVIDEND OF 9,6 CENTS PER ORDINARY SHARE
HAS BEEN DECLARED, PAYABLE ON 28 JULY 2000 TO SHAREHOLDERS REGISTERED IN THE
BOOKS OF THE COMPANY AT THE CLOSE OF BUSINESS ON 30 JUNE 2000.
YEAR 2000
AS ANTICIPATED, THE COMPANY DID NOT EXPERIENCE ANY PROBLEMS RELATED TO THE DATE
CHANGE TO 2000. THE DATE CHANGE, HOWEVER, DID ALLOW US TO UPGRADE SYSTEMS WHICH
HAVE BEEN VERY SUCCESSFULLY COMMISSIONED IN THE BUSINESS.
PROSPECTS
THE MERGER BETWEEN PRESMED AND AFROX'S HEALTHCARE INTERESTS WAS EFFECTIVE
1 APRIL 1999. AS A RESULT, THE GOOD GROWTH EXPERIENCED THIS SIX MONTHS WILL BE
MORE COMPARABLE ON A LIKE FOR LIKE BASIS FOR THE SECOND HALF.
THE GROUP, NEVERTHELESS, HAS FORGED A STRONG POSITION AS A MAJOR HEALTHCARE
PROVIDER, WITH MANAGEMENT AND OPERATIONAL STRUCTURES IN PLACE AND ONGOING
SYNERGESTIC BENEFITS BEING REALISED. IN ADDITION, ABOVE INDUSTRY ORGANIC GROWTH
IS BEING ACHIEVED WHICH WILL BE BOOSTED BY THE NEW FACILITIES AT OUR HOSPITALS.
EARNINGS EQUAL TO OR ABOVE PRE-LISTING FORECAST OF 63,9 CENTS PER SHARE SHOULD
BE ACHIEVED.
ROYDEN VICE           RICK HOGBEN
CHAIRMAN              MANAGING DIRECTOR
JOHANNESBURG
3 MAY 2000
THE DIRECTORS REPORT THAT THE CONSOLIDATED RESULTS FOR THE SIX MONTHS ENDED 31
MARCH 2000 ARE AS FOLLOWS:
INCOME STATEMENT
                                                   6 MONTHS TO  6 MONTHS TO
                                                     31.3.2000    28.2.1999
                                                    (UNAUDITED)   UNAUDITED)
                                                         R'000        R'000
REVENUE                                              1 157 406      242 061
OPERATING PROFIT BEFORE INTEREST                       122 271       21 281
  EXCEPTIONAL ITEMS                                          -          127
  INTEREST RECEIVED                                      5 980        8 801
  INTEREST PAID                                        (22 131)      (5 613)
OPERATING PROFIT                                       106 120       24 596
OUTSIDE PARTNERS' INTEREST                               3 361        1 893
                                                       102 759       22 703
SHARE OF PROFITS/(LOSSES) OF ASSOCIATES                  6 633         (675)
PROFIT BEFORE TAXATION                                 109 392       22 028
TAXATION                                                34 011        6 020
PROFIT AFTER TAXATION                                   75 381       16 008
MINORITY INTEREST                                        9 824          614
PREFERENCE DIVIDEND PAID BY SUBSIDIARY                     807        1 223
NET PROFIT FOR THE PERIOD                               64 750       14 171
HEADLINE EARNINGS IS DETERMINED AS FOLLOWS:
  NET PROFIT FOR THE PERIOD                             64 750       14 171
  ADJUSTMENTS FOR:
    GOODWILL WRITTEN OFF IN ASSOCIATES                     289            -
    LOSS ON CLOSURE OF DISCONTINUED OPERATION                -           30
    PROFIT ON SALE OF FIXED PROPERTY                         -         (157)
HEADLINE EARNINGS                                       65 039       14 044
BALANCE SHEET
ASSETS
NON-CURRENT ASSETS                                   1 002 918      254 976
CURRENT ASSETS                                         683 664      144 850
TOTAL ASSETS                                         1 686 582      399 826
EQUITY AND LIABILITIES
CAPITAL AND RESERVES                                   866 308      276 542
OUTSIDE EQUITY HOLDERS' INTEREST                       116 703       41 801
NON-CURRENT LIABILITIES                                272 279       11 711
CURRENT LIABILITIES                                    431 292       69 772
TOTAL EQUITY AND LIABILITIES                         1 686 582      399 826
CASH FLOW STATEMENT
CASH GENERATED FROM OPERATIONS                          58 254       12 094
NET INTEREST PAID                                      (16 151)       3 188
TAXATION PAID                                           (9 259)     (12 424)
DIVIDENDS PAID                                         (18 366)      (4 913)
CASH (OUTFLOW)/INFLOW FROM OPERATING ACTIVITIES         14 478       (2 055)
ACQUISITION OF SUBSIDIARIES                                  -            -
SUNDRY INVESTING ACTIVITIES                             (7 302)      (4 278)
PURCHASE OF FIXED ASSETS                               (90 971)     (16 391)
CASH OUTFLOW FROM INVESTING ACTIVITIES                 (98 273)     (20 669)
PROCEEDS FROM SHARES ISSUE                                   4            -
OTHER MOVEMENT IN FINANCING ACTIVITIES                  65 791          198
CASH INFLOW FROM FINANCING ACTIVITIES                   65 795          198
NET DECREASE IN CASH AND CASH EQUIVALENTS              (18 000)     (22 526)
STATISTICS AND RATIOS
STATISTICS
WEIGHTED AVERAGE NUMBER OF SHARES
IN ISSUE ('000)                                        219 480       61 505
HEADLINE EARNINGS PER SHARE (CENTS)                       29,6         22,8
FULLY DILUTED HEADLINE EARNINGS PER SHARE (CENTS)         29,4         22,2
DIVIDEND PER SHARE (CENTS)                                 9,6          8,0
RATIOS
DIVIDEND COVER (TIMES)                                     3,1          2,9
INTEREST COVER (TIMES)                                     5,8          5,4
NET ASSET VALUE (CENTS)                                  390,2        415,2
GEARING (%)                                               31,1          6,5
IMPORTANT EVENTS THIS PERIOD
AHEALTH LISTED ON JSE
AFROX HEALTHCARE LIMITED WAS LISTED
ON THE JOHANNESBURG STOCK EXCHANGE
ON MONDAY, 4 OCTOBER 1999.
ORGANISATION IN PLACE
THE ORGANISATION AND MANAGEMENT STRUCTURE IS IN PLACE. SUPPORT FUNCTIONS HAVE
BEEN RATIONALISED AND HOSPITALS INTEGRATED INTO REGIONS. ENABLING FUNCTIONS,
INCLUDING HUMAN RESOURCES, FINANCE AND ADMINISTRATION, INFORMATION MANAGEMENT,
AND PHARMACY MANAGEMENT, ARE COMPLETE, OR NEARING COMPLETION.
SYNERGY BENEFITS
R10 MILLION IN SYNERGY BENEFITS SHOULD BE ACHIEVED THIS YEAR. EARLIER FORECASTS
OF R30 MILLION TO R40 MILLION SHOULD BE MET OR EXCEEDED WITHIN THREE YEARS.
"NEW"  VINCENT PALLOTTI HOSPITAL OPENED
THE VINCENT PALLOTTI HOSPITAL, CAPE TOWN, WAS OPENED IN OCTOBER 1999 AFTER
EXTENSIONS, REFURBISHMENT AND UPGRADING. THE HOSPITAL NOW HAS SOME OF THE MOST
SOPHISTICATED MEDICAL FACILITIES IN SOUTHERN AFRICA, AND INCLUDES AN INTEGRATED
CARDIAC UNIT WITH TWO SPECIALISED THEATRES, INTENSIVE CARE UNITS AND A
REHABILITATION UNIT. MATERNITY FACILITIES HAVE BEEN TOTALLY REFURBISHED AND AN
ORTHOPAEDIC UNIT HAS BEEN ADDED.
MEDICAL  VILLAGE
THE DALVIEW CLINIC, BRAKPAN, OPENED A NEW MEDICAL VILLAGE IN APRIL 2000.
ANNCRON CLINIC UPGRADE
THE UPGRADE AT ANNCRON CLINIC, KLERKSDORP, INCLUDES A NEW 120 BED WING, SIX
THEATRES, AN INTENSIVE CARE UNIT AND A SAMEDAY SURGICAL CENTRE.
SUIKERBOSRAND CLINIC
IN MARCH 2000, A NEW 30 BED WING WAS OPENED AT THE SUIKERBOSRAND CLINIC,
HEIDELBERG.
EYE LASER CLINIC
THE ENTABENI HOSPITAL, DURBAN, OPENED A NEW EYE LASER CLINIC, AN ENT UNIT AND
MEDICAL SUITES.
MAJOR UPGRADE FOR CLAREMONT
THE CLAREMONT HOSPITAL, CAPE TOWN, HAS BEEN COMPLETELY RENOVATED AND UPGRADED.
KINGSBURY EXPANSION
THE KINGSBURY HOSPITAL, CAPE TOWN, HAS INSTALLED CRYO EQUIPMENT FOR LIVER
RESECTION, REFURBISHED THE MATERNITY WARD AND INSTALLED A SPA BATH FOR WATER
DELIVERIES.
NEW FACILITIES IN EAST LONDON
IN APRIL, ST DOMINICS, EAST LONDON, OPENED A NEW PAEDIATRIC WARD AND INTENSIVE
CARE UNIT.
24 HOUR EMERGENCY
EMERGENCY UNITS WERE OPENED OR UPGRADED AT SEVERAL HOSPITALS. AFROX HEALTHCARE
LIMITED NOW HAS 32 UNITS OF WHICH FIVE ARE LEVEL-ONE UNITS.
REGISTERED OFFICE
AFROX HOUSE, 23 WEBBER STREET
SELBY, JOHANNESBURG, 2001
PO BOX 5404, JOHANNESBURG, 2000
TELEPHONE (27 11) 490-0400
AFROX HEALTHCARE LIMITED
REGISTRATION NUMBER 85/01313/06
DIRECTORS: RT VICE (CHAIRMAN), RL HOGBEN (MANAGING DIRECTOR),
AEISAAC (BRITISH), JM MARRIOTT, DMJ NCUBE, CJPG VAN ZYL
COMPANY SECRETARY: IMMATTHEE
TRANSFER SECRETARY: MERCANTILE REGISTRARS LIMITED
ANGLO BUILDING, 8TH FLOOR, 11 DIAGONAL STREET, JOHANNESBURG, 2001
TELEPHONE (27 11) 370-5000
THESE RESULTS CAN ALSO BE VIEWED ON THE WEBSITE WWW.AFROX.COMHEALTHCARE



                                        
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