Go Back Email this Link to a friend


Afrox - Interim Results For The Six Months Ended 31 March 2003

Release Date: 05/05/2003 08:25:01      Code(s): AFX
Afrox - Interim results for the six months ended 31 March 2003                  
AFRICAN OXYGEN LIMITED                                                          
African Oxygen Limited                                                          
(Incorporated in the Republic of South Africa).                                 
Registration number: 1927/000089/06.                                            
ISINCode: ZAE000030920.                                                         
South African share code: AFX.                                                  
Namibian share code: AOX.                                                       
("Afrox" or "the Company")                                                      
Interim results for the six months ended 31 March 2003                          
Afrox continues excellent earnings and cash flow performance                    
AFRICAN OXYGEN LIMITED                                                          
Revenue up 17%                                                                  
Operating profit up 23%                                                         
Headline earnings per share up 32%                                              
Cash generated from operations 58%                                              
The directors report that the interim results for the six months ended 31 March 
2003 are as follows:                                                            
Balance Sheet                                                                   
Unaudited       Unaudited     Audited                    
                       As at           As at         As at                      
                       31 March        31 March      30 Sept                    
R"000                  2003            2002          2002                       
ASSETS                                                                          
Non-current assets     3 127 790       2 829 091     2 988 843                  
Property, plant and                                                             
equipment              2 800 236       2 576 515     2 687 938                  
Other non-current                                                               
assets                 327 554         252 576       300 905                    
Current assets         1 863 071       1 830 730     1 662 426                  
Inventories            415 047         407 114       404 319                    
Receivables and                                                                 
prepayments            1 380 344       1 304 983     1 206 905                  
Cash and cash                                                                   
equivalents            67 680          118 633       51 202                     
Total assets           4 990 861       4 659 821     4 651 269                  
EQUITY AND LIABILITIES                                                          
Capital and reserves   2 109 610       1 688 005     1 892 528                  
Issued capital         16 834          16 277        16 515                     
Share premium          450 292         298 756       360 478                    
Accumulated profits                                                             
and reserves           1 642 484       1 372 972     1 515 535                  
Minority interest      565 227         489 500       560 342                    
Non-current                                                                     
liabilities            810 014         814 737       794 673                    
Borrowings             559 493         564 593       550 365                    
Other non-current                                                               
liabilities            250 521         250 144       244 308                    
Current liabilities    1 506 010       1 667 579     1 403 726                  
Current portion of                                                              
borrowings             338 821         639 064       201 067                    
Provisions for                                                                  
liabilities and                                                                 
charges                109 428         89 131        113 347                    
Other current                                                                   
liabilities            1 057 761       939 384       1 089 312                  
Total equity and                                                                
liabilities            4 990 861       4 659 821     4 651 269                  
Statistics and Ratios                                                           
6 months        6 months      12 months                  
                       to March        to March      to Sept                    
                       2003            2002          2002                       
Statistics                                                                      
Total number of shares                                                          
in issue ("000)        336 675         325 542       330 301                    
Number of ordinary                                                              
shares on which                                                                 
earnings per share                                                              
are based ("000)       330 715         325 542       326 363                    
Dividends and                                                                   
capitalisation                                                                  
share award                                                                     
per share (cents)      33,0            25,5          62,5                       
Ratios                                                                          
Interest cover (times) 7,3             5,3           5,7                        
Effective tax rate (%) 33,0            32,0          32,5                       
Gearing (%)            22,1            31,0          20,9                       
Dividend cover -                                                                
headline earnings                                                               
(times)                2,3              2,3           2,2                       
Income Statement                                                                
                     Unaudited              Unaudited   Audited                 
                     6 months    %          6 months    12 months               
to March               to March    to Sept                 
R"000                2003        Change     2002        2002                    
Revenue              3 582 180   17         3 053 643   6 511 510               
Cost of sales        (2 681 753)            (2 287 138) (4 732 843)             
Gross profit         900 427                766 505     1 778 667               
Administration and                                                              
other expenses       (372 813)              (336 727)   (882 191)               
Operating profit                                                                
before finance costs 527 614     23         429 778     896 476                 
Exceptional items    (703)                  (9 782)     (15 034)                
Finance costs        (72 372)               (81 537)    (157 275)               
Income from                                                                     
associates           17 999                 13 395      27 139                  
Profit before                                                                   
taxation             472 538     34         351 854     751 306                 
Income tax expense   (156 169)              (112 711)   (244 018)               
Profit after                                                                    
taxation             316 369     32         239 143     507 288                 
Minority interest    (63 775)               (56 830)    (117 040)               
Net profit for the                                                              
period               252 594     39         182 313     390 248                 
Adjustments for                                                                 
headline earnings:                                                              
- Exceptional items  703                    9 782       15 034                  
- Goodwill amortised  4 832                 2 574       5 916                   
- Loss/(Profit) on                                                              
disposal of property,                                                           
plant and equipment  1 197                  (1 544)     (2 622)                 
- Taxation effect    --                     --          (1 370)                 
Headline earnings    259 326     34         193 125     407 206                 
Basic earnings per                                                              
ordinary share                                                                  
(cents)              76          36         56          120                     
Headline earnings                                                               
per ordinary                                                                    
share (cents)        78          32         59          125                     
Segmental Information                                                           
Business segments                                                               
                                              Corporate                         
R"000          PGS      ISP        Healthcare costs      Group                  
Six months ended                                                                
31 March 2003                                                                   
Revenue        197 270  1 233 001  2 151 909  --         3 582 180              
Operating                                                                       
profit         45 741   248 497    236 916    (3 540)    527 614                
Six months ended                                                                
31 March 2002                                                                   
Revenue        175 871  1 069 861  1 807 911  --         3 053 643              
Operating                                                                       
profit         39 999   215 325    174 050    404        429 778                
Year ended                                                                      
30 September 2002                                                               
Revenue        369 314  2 256 160  3 886 036  --         6 511 510              
Operating                                                                       
profit         79 638   391 512    429 266    (3 940)    896 476                
Cash Flow Statement                                                             
Unaudited    Unaudited     Audited                  
                            6 months     6 months      12 months                
                            to March     to March      to Sept                  
R"000                       2003         2002          2002                     
Cash generated from                                                             
operations                  521 883      331 114       1 168 010                
Finance costs and taxation                                                      
paid                        (288 548)    (210 611)     (374 370)                
Dividends paid              (32 078)     (102 168)     (123 221)                
Net cash inflow from                                                            
operating activities        201 257      18 335        670 419                  
Acquisition of business     (42 756)     (244 239)     (116 556)                
Disposal of shares          2 000        95 069        --                       
Purchase of property, plant                                                     
and equipment               (255 968)    (143 272)     (380 803)                
Other investing cash                                                            
flows, net                  6 800        36 916        6 332                    
Net cash outflow from                                                           
investing activities        (289 924)    (255 526)     (491 027)                
Minorities                  (33 168)     (22 004)      (38 375)                 
Increase/(decrease) in                                                          
borrowings                  138 313      330 834       (136 809)                
Net cash inflow/(outflow)                                                       
from financing activities   105 145      308 830       (175 184)                
Net increase in cash and                                                        
cash equivalents            16 478       71 639        4 208                    
Cash and cash equivalents                                                       
at start of period          51 202       46 994        46 994                   
Cash and cash equivalents                                                       
at end of period            67 680       118 633       51 202                   
Statement of Changes in Equity                                                  
              Issued   Share     Revaluation  Accumulated                       
R"000         capital  premium   reserve      profits     Total                 
Balance at                                                                      
1 October                                                                       
2002          16 515   360 478   104 371      1 411 164   1 892 528             
Change in                                                                       
accounting                                                                      
policy        --       --        --            13 563     13 563                
Restated                                                                        
balance       16 515   360 478   104 371      1 424 727   1 906 091             
Surplus on                                                                      
revaluation                                                                     
of properties --       --        1 259         --          1 259                
Other                                                                           
movements     --       --        (2 269)      (15 987)    (18 256)              
Net profit                                                                      
for the                                                                         
period        --       --        --            252 594     252 594              
Dividends                                                                       
declared      --       --        --           (122 211)   (122 211)             
Issue of share                                                                  
capital       319      89 814    --           --          90 133                
Balance at                                                                      
31 March 2003 16 834   450 292   103 361      1 539 123   2 109 610             
Balance at                                                                      
1 October                                                                       
2001          16 277   298 756   87 807       1 315 965   1 718 805             
Change in                                                                       
accounting                                                                      
policy        --       --        --            (133 558)  (133 558)             
Restated                                                                        
balance       16 277   298 756   87 807       1 182 407   1 585 247             
Deficit on                                                                      
revaluation                                                                     
of properties --       --        (640)        --          (640)                 
Other                                                                           
movements     --       --        3 328        19 925      23 253                
Net profit for                                                                  
the peiord    --       --        --           182 313     182 313               
Dividends                                                                       
declared      --       --        --           (102 168)   (102 168)             
Balance at                                                                      
31 March 2002 16 277   298 756   90 495       1 282 477   1 688 005             
The results can be viewed on the website www.afrox.com.                         
Dear shareholders                                                               
PERFORMANCE                                                                     
For the six months to 31 March 2003 Afrox achieved an excellent 34 percent      
increase in headline earnings compared with the same period a year ago. Revenue 
was up 17 percent and operating profit was 23 percent higher, reflecting strong 
market penetration and improved margins as a result of our efficiency enhancing 
initiatives.                                                                    
Focus on management of working capital produced improved cash flow and a        
considerably improved gearing.                                                  
The sound results enabled the Board of directors to declare an interim dividend 
of 33 cents (2002: 25,5 cents) per share an increase of 29 percent. The dividend
is covered 2,27 times by earnings of R252,6 million.                            
Growth                                                                          
The industrial gas business grew organically, assisted by continued growth in   
the manufacturing sector, further development of the value chain within the core
industrial businesses, and initiatives to improve marketing and customer        
relationships. We have also expanded our safety and special products businesses.
Healthcare sustained its excellent growth record. The hospitals acquired during 
2002 are now fully integrated, and the integration was a major contributor to   
the healthcare operating profit increase of 36 percent and the 19 percent       
increase in revenue. A focus on clinical excellence, as well as improvements in 
the quality of service offered to customers in the healthcare services          
businesses, elevated the healthcare delivery.                                   
Financial results                                                               
Revenue increased by 17 percent to R3,6 billion (2002: R3,1 billion). Operating 
profits increased by 23 percent to R528 million (2002: R430 million). Operating 
efficiencies, cost containment, and the realisation of synergistic benefits from
last year"s Healthcare acquisitions contributed to improved margins.            
The strengthening of the Rand has impacted on our business in several areas.    
Foreign currency receipts from export sales and earnings in other African       
countries have been unfavourably affected. Furthermore, the continuing strength 
of the Rand is affecting customers whose main source of revenue is in exports.  
Interest paid reduced by 11 percent to R72,4 million (2002: R81,5 million). At  
31 March 2003 borrowings of R831 million were R254 million lower than the       
previous year"s. The lower borrowings were achieved in spite of a robust capital
expenditure and acquisition programme, that resulted in expenditure of R256     
million, the majority of which was growth related.                              
Gearing has reduced to 22 percent (2002: 31 percent). This improvement, due to  
excellent working capital management, resulted in net current assets declining  
by 9 percent to R701 million (2002: R768 million). Improved profitability and   
stringent asset management significantly increased the return on capital        
employed to 28 percent (2002: 25 percent).                                      
Accounting policies                                                             
The accounting policies at 31 March 2003 are consistent with those applied at 30
September 2002, except for a change with regard to AC133: Financial Instruments 
- Recognition and Measurement. These results have been prepared in accordance   
with South African Statements of Generally Accepted Accounting Practice (GAAP). 
Opening reserves have been adjusted according to the transitional provisions of 
AC133 and disclosed in the statement of changes in equity. Comparative figures  
have not been restated. The impact on the income statement for the current      
financial year is immaterial.                                                   
Business review                                                                 
Industrial and Special Products (ISP), Process Gas Solutions (PGS), and         
Healthcare, all posted strong results.                                          
Industrial and Special Products (ISP)                                           
ISP comprises the core cutting and welding business; Handigas; special gases and
packaged chemicals; hospitality servicing hotels, casinos, and restaurants;     
medical gases; the manufacture of safety products; and the export business.     
Our welding and cutting operations grew with the resurgence in South Africa"s   
mining and manufacturing sectors, and with our efforts to improve product       
quality and marketing. We have developed global best commercial and operating   
practices, and have succeeded in extending customer-centric marketing           
initiatives to segmented customer groupings.                                    
Handigas margins improved, and further business wins in the automotive industry 
increased volumes. Initiatives to market Handigas to low-income households and  
rural communities will optimise opportunities in this sector.                   
Good performances were achieved by the special gases and packaged chemicals     
operations. New applications in these niche businesses are being researched to  
augment future growth adding value and services to our customers" businesses.   
The AfroxPac 35 self-rescuer, contained within the safety services and products 
business, delivered superior returns on the back of substantial local and export
orders. The AfroxPac 35 is a world-class safety unit supplying oxygen to miners 
in the event of an underground emergency. Increased production of these units   
has necessitated the opening of a factory in Benoni.                            
Collectively our African operations performed well, particularly our new        
Mozambican investment and our operations in Namibia, Lesotho and Swaziland.     
Process Gas Solutions (PGS)                                                     
PGS satisfies the process needs of customers with long-term bulk gas contracts. 
Increased volumes in bulk gas supply, and a focus on operating efficiencies,    
boosted performance. Despite interruptions in the supply of carbon dioxide, as a
result of the Petro SA shutdown, detailed forecasting and attention to forward  
planning enabled PGS to offer customers uninterrupted product delivery.         
The acquisition last year of a hydrogen plant at Pelindaba has expanded our     
hydrogen business.                                                              
Healthcare                                                                      
Integration benefits from last year"s hospital acquisitions are now being       
realised. In October 2002, Healthcare increased its shareholding in The Little  
Company of Mary Hospital, strengthening our footprint in Pretoria. Admissions   
have increased at Peglerae Hospital in Rustenburg, following a joint venture to 
provide hospitalisation to mining employees.                                    
Breaking the tradition of negotiating tariffs with umbrella bodies on a fee-for-
service basis, Healthcare engaged individually with funders on a per diem basis.
Almost all funders accepted the increased tariffs for 2003 without eliciting a  
co-payment from their members.                                                  
Major expansion and enhancement projects are in progress at Flora Clinic, St    
Dominic"s, Springs Parkland Clinic, Roseacres, and Peglerae Hospitals.          
Healthcare launched its affordable hospital model to two medical schemes and is 
targeting specific employer groups seeking healthcare services for their        
uninsured employees.                                                            
Outlook                                                                         
We will pursue our industrial growth strategy by optimising our core            
competencies in design techniques, manufacturing, and marketing. Long-term      
contracts, established branch and distribution networks, strong branding and    
steady revenues from cylinder rentals underpin our businesses. We have growth   
opportunities in a variety of new products, and value added services to attract 
a wide range of customers.                                                      
We have developed products to provide affordable healthcare to a broad base of  
low-income earners, while enhancing facilities at the acute care hospitals to   
increase organic growth.                                                        
We believe that we have established a platform for further solid earnings growth
in the next six-month period.                                                   
John Walsh              Rick Hogben                                             
Chairman                Managing Director                                       
Notice of capitalisation award and option to take interim cash dividend         
Notice is hereby given that the Board of directors has approved a capitalisation
award with an option to receive a cash dividend of 33 cents (2002: 25,5 cents)  
per share for the six-month period ended 31 March 2003, payable to all          
shareholders recorded in the register at the close of business on the record    
date being Friday, 25 July 2003.                                                
Terms of the capitalisation award will be forwarded to shareholders by way of   
circular and announced in the press.                                            
The salient dates of the capitalisation award and payment of the interim        
dividend are as follows:                                                        
                                                     2003                       
Last date to trade ordinary shares "cum" dividend    Friday, 18 July            
Ordinary shares trade "ex" the dividend              Monday, 21 July            
Record date                                          Friday, 25 July            
Payment/Issue date                                   Monday, 28 July            
Share certificates may not be dematerialised/rematerialised between Monday, 21  
July 2003 and Friday, 25 July 2003, both days inclusive.                        
By order of the Board                                                           
Michael Rowell             Johannesburg                                         
Company Secretary          30 April 2003                                        
Registered office: Afrox House, 23 Webber Street, Selby, Johannesburg 2001. PO  
Box 5404, Johannesburg 2000. Telephone (+27 11) 490-0400.                       
Transfer secretaries: Computershare Services Limited. PO Box 1053, Johannesburg 
2000. Telephone (+27 11) 370-5000.  Sponsor in South Africa and Namibia: Nedbank
Corporate.                                                                      
Directors:  JLWalsh**** (Chairman), RLHogben (Managing Director), RGCottrell, N 
Deeming*, CMDFlemming, AE Isaac*, LAMacNair, R Mdori**, GL Sedgwick***, GS     
Sibiya, CB Strauss.                                                             
Alternate director: RK Lourey***                                                
* British, ** French, *** Australian, **** American.                            
Company Secretary: MGRowell                                                     



                                        
Email this JSE Sens Item to a Friend.

Send e-mail to
© 2017 SHARENET (PTY) Ltd, Cape Town, South Africa
Home     Terms & conditions    Privacy Policy
    Security Notice    Contact Details
Market Statistics are calculated by Sharenet and are therefore not the official JSE Market Statistics. The calculation/derivation may include underlying JSE data.