African Oxygen Limited - Press Release
Release Date: 02/11/2001 07:03:48 Code(s): AFX
November 1, 2001
Afrox lifts attributable profit by 30%
Aggressive marketing initiatives, new products and focus on asset management
has resulted in African Oxygen Limited (Afrox) continuing its good
performance record, with revenue up 11 percent and a 30 percent increase in
net profit attributable to shareholders, for the year ended September 2001.
Managing director of Afrox, Jimmy Marriott, says, "The good performance was
achieved in a difficult and slowing economy, where the manufacturing sector
continues to remain depressed. Nevertheless, most of Afrox's revenue comes
from service sector related businesses and the company's broad business
base, coupled with a high annual rental income, enables Afrox to show growth
through all economic cycles. This is the 37th consecutive year that the
company has shown increases in revenues and profits since listing in 1963."
Growth was organic for both the Industrial gases and welding business, and
the Healthcare business. New products and services also contributed to this
year's growth. At the same time, several small acquisitions and joint
ventures were made during the year.
"On the Industrial side," says Marriott, "we purchased a major liquefied
petroleum gas distributor in Botswana, the assets of Messer / Fedgas in
Namibia, concluded a joint venture with the government in Mozambique and
another in Madagascar, and expanded into a further three African countries,
which now gives us operations in 16 sub-Saharan countries. Healthcare
bought out certain minorities in hospitals. The full effect of these
acquisitions, however, will only be realised in the coming financial year."
Turning to the future Marriott says that Afrox will continue to show sound
organic growth with its many revenue enhancing initiatives. This, together
with new initiatives and acquisitions, places the company in a good position
for future growth.
Revenue, at R5,2 billion, was 11 percent higher. Operating profit before
finance costs was up 18 percent at R789 million and included exceptional
items of R23,8 million, which were realised from an asset closure and
disposal programme. This programme also resulted in an additional cash
inflow of R167 million.
Net interest paid reduced by 10 percent to R146 million (2000: R162
million). Aside from the benefit of interest rates reducing by an average 1
percent over this year, borrowings were on average R100 million lower than
the previous year's levels. This was due to controlled capital expenditure
and improved working capital management, following the establishment of
world-class centralised service centres.
The tax rate declined from 32 percent to 29 percent during the year. This
arose predominantly from an increase in exempt income following the disposal
of certain assets in the Industrial business and also the utilisation of
assessed losses in both businesses.
Marriott says "The excellent revenue and profit growth, however, I feel was
overshadowed by prudent asset management, which has considerably enhanced
the financial structure of the company."
"Cash generated from operations increased by a significant 56 percent to
R982 million and excellent working capital management resulted in this area
declining by R7 million during the year. Particularly noteworthy
improvements were achieved in debtor and creditor management."
The greater focus on asset efficiency resulted in an additional cash inflow
of R167 million from certain disposals. The overall impact is that interest
bearing borrowings have declined by R313 million or 33 percent to R634
million at the financial year-end. Gearing has declined from 50 percent to
Afrox's consistent growth has meant the directors have declared a final
dividend of 31,5 cents per share, up by 13 percent. The total dividend of
52 cents is 11 percent higher and is covered 2 times by headline earnings
per share of 104 cents. Since listing in 1963, Afrox has declared increased
dividends each year, with the exception of one, which remained unchanged on
the previous year.
Afrox is structured along three lines of business to mirror the structure of
The BOC Group plc, Afrox's parent company. This structure gives Afrox
access to global best operating practices, the latest technology, and world
leading management practices.
Industrial operations consist of Industrial and Special Products (ISP)
comprising cylinder and liquid fabrication gases, special and medical gases,
Handigas and welding products. Process Gas Solutions (PGS) is made up of
large gas-producing plants, gas pipelines and bulk process gases. The
Healthcare business comprises hospitals and healthcare services businesses.
The gases and welding businesses (ISP and PGS) showed revenue and profit
growth, and maintained market share in a very competitive environment.
Significant ISP marketing initiatives led to a number of new large customers
and increased retail sales though re-imaged sales centres. Handigas
continued to show volume growth and five mega bulk contracts were signed
during the year. Growth was again realised in welding products exports,
gaseous chemicals, and in the PGS line of business, from increased nitrogen
and carbon dioxide volumes, mainly to the food and beverage industry. PGS
also signed several large oxygen contracts and commissioned two hydrogen
plants, which resulted in securing additional major business.
Again, Healthcare had an excellent year. The year was, however, one of
consolidation, following the merger, with focus on asset management,
realising operating synergies and improving efficiencies.
Although paid patient days remained relatively flat, there was organic
growth with admissions and theatre cases, both up one percent. Revenue and
profits for paid patient days were up as a result of efficiencies and
increased acuity levels. During the year, Afrox sold its interest in
Lifecare Group Holdings Limited (Lifecare) to its subsidiary company, Afrox
Healthcare Limited. This now consolidates Afrox's healthcare interest into
one company in which Afrox has an 82 percent interest.
Healthcare services' operations performed well. The ground work for a
number of innovative and exciting products was completed this financial year
and launches will take place early in 2002.
Issued by African Oxygen Limited (Afrox)
For further information contact:
Chris Fieldgate (Investor Relations) (011) 490-0430 or Cell: 082-495-1481