African Oxygen Limited - Media Release
Release Date: 04/02/2002 17:26:18 Code(s): AFX
Share code : AFX
ISIN : ZAE000030920
AHEALTH GETS 100% OF 700-BED, FOUR-HOSPITAL GROUP
The R3 billion a year private healthcare provider group, Afrox Healthcare
Limited (AHealth), has increased its 20 percent stake in Amalgamated
Hospitals Limited (Amahosp) by acquiring the remaining Amahosp shares. The
purchase of this KwaZulu-Natal based 700-bed, four-hospital group, is for
R135,2 million in cash and about the same in debt.
The acquisition, effective as from 1 January 2002, is expected to be
earnings enhancing for the first full year ending September 2003.
AHealth's gearing will increase from the present six percent to 21 percent
after the cost of the acquisition is brought on to the company's balance
Says AHealth's recently appointed managing director, Mike Flemming, "The
Amahosp acquisition is strategically important. First, it has increased our
presence in KwaZulu-Natal from two hospitals with 368 beds, to six hospitals
with just over 1 000 beds. This gives AHealth 26 percent of the private
hospital market in the province, and the opportunity to grow even more from
a larger hospital and doctor network base."
"Second, the acquisition will give us the critical mass to unlock increased
operating efficiencies. These will lead to cost savings and other benefits
of around R10 million over the next two and a half years as we incorporate
the new hospitals fully into our management matrix. Efficiency as well as
cost benefits will come from pharmaceuticals and hospital equipment
procurement, patient care and nurse training programmes, and also from
AHealth's centralised management functions, such as IT, finance and human
"The Amahosp management, nurses and supporting doctors will contribute
significantly to AHealth as a whole," adds Flemming, "so we look forward to
merging AHealth's operations in KwaZulu-Natal quickly and efficiently with
the Amahosp business to enhance our quality healthcare delivery in the
province even more."
"Finally, the acquisition helps us to develop our world-class centres of
excellence even further by consolidating disciplines such as neurosurgery,
cardiology, cardio-thoracic surgery and acute rehabilitation."
Internationally, the trend is for private sector healthcare providers to
consolidate. This also applies to medical funders in their attempts to
achieve economics of scale as increased costs put upward pressure on prices.
"For all these reasons, it was vitally important for us to increase our
critical mass in the province", explains Flemming, "and the only way to
achieve this was by ensuring the successful acquisition of Amahosp. The
price tag, at R135,2 million plus similar debt, is less than if we had to
build and equip four new hospitals."
Amahosp has four modern acute care hospitals in KwaZulu-Natal, all in the
greater Durban area. They are The Chatsmed Garden, The Crompton, Mount
Edgecombe, and Westville Hospitals. The group also provides ancillary
healthcare services, including a 24-hour emergency rescue service, operated
by Amahosp Medical Rescue, and a 24-hour high-tech emergency and casualty
facility at the Hillcrest Medical Centre.
AHealth has two acute care hospitals in KwaZulu-Natal; the Entabeni in
Durban and the Empangeni Garden Clinic.
Note: Effective today, Afrox Healthcare has 98,2 percent in Amahosp; a
further 1,8 percent will be acquired by 14 February 2002.
Issued by Afrox Healthcare Limited
For further information please contact:
Chris Fieldgate (Investor Relations) on (011) 490-0430, or cell: 082-495-