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African Oxygen Limited - Audited Results For The Year Ended 30 September 2003

Release Date: 30/10/2003 15:05:01      Code(s): AFX
AFRICAN OXYGEN LIMITED - AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003   
AFRICAN OXYGEN LIMITED                                                          
Incorporated in the Republic of South Africa                                    
Registration number: 1927/000089/06                                             
Share Code: AFX                                                                 
ISIN Code: ZAE 000030920                                                        
("Afrox")                                                                       
AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003                            
South Africa"s Best Governed Company                                            
Afrox received the Deloitte & Touche and Moneyweb Good Governance Award for the 
best governed company in the country. It was placed first in two of the four    
categories, namely Board Effectiveness and Corporate Integrity and Ethics.      
Net profit up 42%                                                               
Industrial business grows by 61%                                                
Earnings per share up 38%                                                       
With dividends up 38%                                                           
Cash generated from operations increases by 24% to R1,4 billion                 
DEAR SHAREHOLDERS                                                               
Performance Summary                                                             
African Oxygen Limited (Afrox) posted excellent results for the year ended      
30 September 2003. The results reflect the company"s ability to grow all its    
businesses profitably while focusing on improved efficiencies and asset         
management. Headline earnings per share have increased by 33 percent, and this  
enabled the company to increase its total dividend for the year by 38 percent to
83 cents per share.                                                             
Industrial & Special Products (ISP) and Process Gas Solutions (PGS), which      
constitute the industrial businesses, showed marked increases in revenue,       
earnings and cash flow, as did Healthcare.                                      
Afrox increased its net profit attributable to shareholders by 42 percent. On a 
segmental basis the industrial business now represents 62 percent of net profit,
and Healthcare 38 percent.                                                      
Financial Results                                                               
Revenue increased by 13 percent to R7,3 billion (2002: R6,5 billion) with       
operating profits increasing by 22 percent to R1,1 billion, exceeding R1 billion
for the first time (2002: R896 million).                                        
ISP, PGS and Healthcare, all benefited from improved operating profit margins.  
Within ISP, the AfroxPac safety product, in its first full year of trading,     
contributed to the overall operating profits" improvement. PGS benefited from a 
lower cost base owing to its focus on operating efficiencies, while Healthcare"s
improved operating profits were directly the result of increased activity levels
and overhead efficiencies.                                                      
Net interest paid reduced by 22 percent to R122 million (2002: R157 million).   
This was mainly due to excellent working capital management, but was aided by   
the lower interest rates experienced in the latter part of the financial year.  
The improved tax rate of 30 percent (2002: 33 percent) resulted from the        
utilisation of assessed losses in both the industrial and healthcare businesses.
At a segmental reporting level, the industrial business increased its share of  
group net profit by 61 percent to R345,1 million (2002: R214,7 million), while  
the healthcare business increased its share of net profit by 19 percent to      
R209,3 million (2002: R175,5 million).                                          
Funding requirements decreased by R258 million (2002: R141 million) in spite of 
robust growth, capital expenditure, and acquisitions worth R552 million. Once   
again sound asset management resulted in a reduction of working capital of R115 
million. This contributed to the record low gearing level of 13 percent (2002:  
21 percent).                                                                    
Accounting Policies                                                             
These results have been prepared in accordance with South African Statements of 
Generally Accepted Accounting Practice including AC133, which became applicable 
for the first time this year. The accounting policies for the year ended        
30 September 2003 are consistent with those applied at 30 September 2002, except
for a change with regard to Financial Instruments: Recognition and Measurement -
AC133. Comparative figures have not been restated.                              
Audit Report                                                                    
The auditors, PricewaterhouseCoopers Inc, have issued their opinion on the      
group"s financial statements for the year ended 30 September 2003. A copy of    
their unqualified report is available for inspection at the company"s registered
office.                                                                         
Business Review                                                                 
The industrial businesses of ISP and PGS performed well in spite of a downturn  
in the manufacturing sector over the past six months. New initiatives to improve
marketing focus and customer relationships contributed to the excellent results 
in ISP. During the past two years, the ISP business has achieved strong market  
penetration by developing new markets, extending its global customer base, and  
adding to its product offering to existing and new customers. This strategy has 
translated into sound and sustainable growth, accompanied by excellent working  
capital management.                                                             
PGS"s strong performance was enhanced by its application of advanced technology 
to produce and improve new and existing processes. Firm pricing trends and a    
focus on operating efficiencies, added to revenues to ensure that PGS exceeded  
its targets for the year.                                                       
Healthcare had another year of good organic growth, with increased activity     
levels and performance excellence. The company acquired increased shareholdings 
in the Little Company of Mary Hospital in Pretoria and Joint Medical Holdings in
Durban. Construction of the new 124-bed Roseacres Clinic in Germiston was       
completed in September 2003. The total investment in building initiatives and   
equipment upgrades during the financial year amounted to R270 million, and is   
part of a continuous programme to meet and exceed the expectations of doctors   
and patients, as well as to expand capacity.                                    
Outlook                                                                         
Over many years Afrox has developed a solid business base, providing essential  
products and services to key markets. The industrial business is now offering   
new products to a broader market sector. The company has optimised its human    
capital, technology and facilities to increase its productivity and global      
competitiveness. This gives Afrox the resilience to perform well in all economic
cycles, as evidenced in these excellent results.                                
Afrox has a strong balance sheet and is well positioned for future growth.      
John Walsh          Rick Hogben         Johannesburg                            
Chairman            Managing Director   30 October 2003                         
Notice Of Final Dividend Declaration And Salient Features                       
Notice is hereby given that a final cash dividend of 50 cents (2002: 37 cents)  
per ordinary share, being the final dividend for the year ended 30 September    
2003, has been declared payable to all shareholders of Afrox recorded in the    
register on Friday, 23 January 2004.                                            
The salient dates for the declaration and payment of the final dividend are as  
follows:                                                                        
                                            2004                                
Last day to trade ordinary shares                                               
`cum" dividend                              Friday, 16 January                  
Ordinary shares trade `ex" the dividend     Monday, 19 January                  
Record date                                 Friday, 23 January                  
Payment date                                Monday, 26 January                  
Share certificates may not be dematerialised/rematerialised between Monday,     
19 January 2004 and Friday, 23 January 2004, both days inclusive.               
By order of the Board                                                           
Johannesburg                                                                    
30 October 2003                                                                 
CAUTIONARY                                                                      
Afrox and Afrox Healthcare are currently trading under a joint cautionary       
announcement, which states that Afrox is in the process of considering its      
strategic options with regard to its shareholding in Afrox Healthcare Limited.  
This may or may not lead to a change in Afrox"s shareholding. As soon as this   
process is finalised, there will be a full communications exercise to inform    
stakeholders.                                                                   
AFROX                                                                           
Afrox is one of South Africa"s best known industrial brands. It is a leader in  
all its businesses - gases, welding products and healthcare.                    
AFROXMEDICAL                                                                    
Afrox medical gases are used in most state and private hospitals, emergency     
units, ambulances, and for home therapy.                                        
HANDIGAS                                                                        
The majority of restaurants and fast-food outlets cook with Handigas, and almost
all hotels, pubs and casinos use Handigas.                                      
AFROXHEALTHCARE                                                                 
Afrox Healthcare is the country"s leading Healthcare provider with              
88 acute care and long-stay chronic hospitals.                                  
VITEMAX                                                                         
Most metals in South Africa are joined using Afrox electrodes or welding wires. 
SA"s top selling electrode is Vitemax, with 293 million sold annually.          
FOODGRADECO2                                                                    
Afrox"s FoodGrade CO2 puts the fizz in nearly every single softdrink made in    
South Africa.                                                                   
SUREMIX                                                                         
Suremix puts the head on most draught beers poured in South Africa.             
SUMMARISED BALANCE SHEET                                                        
                                       30 September   30 September              
R"000                                  2003           2002                      
ASSETS                                                                          
Non-current assets                     3 269 920      2 988 843                 
Property, plant and equipment          2 857 588      2 687 938                 
Other non-current assets                 412 332        300 905                 
Current assets                         1 942 527      1 691 211                 
Inventories                              416 647        404 319                 
Trade and other receivables            1 265 328      1 206 905                 
Cash and cash equivalents                260 552         79 987                 
Total assets                           5 212 447      4 680 054                 
EQUITY AND LIABILITIES                                                          
Capital and reserves                   2 377 131      1 892 528                 
Share capital                             17 143         16 515                 
Share premium                            537 314        360 478                 
Accumulated profits and reserves       1 822 674      1 515 535                 
Minority interest                        626 165        560 342                 
Non-current liabilities                  783 873        794 673                 
Borrowings                               623 735        550 365                 
Other non-current liabilities            160 138        244 308                 
Current liabilities                    1 425 278      1 432 511                 
Current portion of borrowings             87 278        201 067                 
Provisions                               178 616        113 347                 
Other current liabilities              1 158 007      1 089 312                 
Bank overdraft                             1 377         28 785                 
Total equity and liabilities           5 212 447      4 680 054                 
STATISTICS AND RATIOS                                                           
30 September   30 September              
                                       2003           2002                      
Statistics                                                                      
Total number of shares in issue ("000) 342 853        330 301                   
Number of ordinary shares on which                                              
earnings per share are based ("000)    335 767        326 363                   
Dividends and capitalisation share                                              
award, per share (cents)               83,0           62,5                      
- Final                                50,0           37,0                      
- Interim                              33,0           25,5                      
Ratios                                                                          
Interest cover (times)                  8,9            5,6                      
Effective tax rate (%)                 29,5           32,5                      
Gearing (%)                            13             21                        
Dividend cover - net profit (times)     2,0            2,0                      
SUMMARISED INCOME STATEMENT                                                     
30 September  %        30 September              
R"000                          2003          Change   2002                      
Revenue                        7 325 895       13     6 511 510                 
Cost of sales                 (5 266 760)            (4 732 843)                
Gross profit                   2 059 135       16     1 778 667                 
Other operating income               897                    --                  
Administration and other                                                        
expenses                        (970 196)              (882 191)                
Operating profit               1 089 836       22       896 476                 
Exceptional items                     --                (15 034)                
Profit from operations         1 089 836       24       881 442                 
Finance costs                   (121 944)              (157 275)                
Income from associates            42 841                 27 139                 
Profit before taxation         1 010 733       35       751 306                 
Income tax expense              (298 324)              (244 018)                
Profit after taxation            712 409       40       507 288                 
Minority interest               (157 971)              (117 040)                
Net profit for the year          554 438       42       390 248                 
Adjustments for headline                                                        
earnings                                                                        
- Exceptional items                  --                 15 034                  
- Taxation effect                    --                 (1 370)                 
- Goodwill amortised              8 689                  5 916                  
- Profit on disposal of                                                         
property, plant and equipment    (4 029)                (2 622)                 
Headline earnings               559 098       37       407 206                  
Basic earnings per ordinary                                                     
share (cents)                       165       38           120                  
Headline earnings per ordinary                                                  
share (cents)                  167           33       125                       
Segmental Information                                                           
                                               Corporate                        
R"000             PGS      ISP      Healthcare costs      Group                 
Year ended                                                                      
30 September 2003                                                               
Revenue           408 067  2 442 999 4 474 829        --     7 325 895          
Operating profit   90 630    454 680   550 521    (5 995)    1 089 836          
Year ended                                                                      
30 September 2002                                                               
Revenue           369 314  2 256 160 3 886 036        --     6 511 510          
Operating profit   79 638    391 511   429 266    (3 939)      896 476          
SUMMARISED CASH FLOW STATEMENT                                                  
                                          30 September  30 September            
R"000                                     2003          2002                    
Cash generated from operations            1 444 738     1 168 010               
Finance costs and taxation paid            (489 570)     (374 370)              
Dividends received                              897           --                
Cash available from operations              956 065       793 640               
Dividends paid                              (55 850)     (123 221)              
Net cash inflow from operating activities   900 215       670 419               
Acquisition of business                     (68 624)     (227 653)              
Disposal of shares                            2 000       111 097               
Purchase of property, plant and equipment  (485 261)     (380 804)              
Other investing cash flows, net              48 027         6 334               
Net cash used in investing activities     (503 858)     (491 026)               
Minorities                                 (75 711)      (38 375)               
Decrease in borrowings                     (49 946)     (136 422)               
Movement on retirement benefit obligation  (62 727)         (387)               
Net cash utilised in financing activities (188 384)     (175 184)               
Net increase in cash and cash equivalents  207 973         4 209                
Cash and cash equivalents at beginning                                          
of period                                   51 202        46 993                
Cash and cash equivalents at end                                                
of period                                  259 175        51 202                
SUMMARISED STATEMENT OF CHANGES IN EQUITY                                       
               Issued    Share    Other       Accumulated                       
R"000          capital   premium  reserves    profits     Total                 
Balance at                                                                      
1 October 2002 16 515    360 478  104 371     1 411 163   1 892 527             
Change in                                                                       
accounting                                                                      
policy         --        --         1 061        15 911      16 972             
Restated                                                                        
balance        16 515    360 478  105 432     1 427 074   1 909 499             
Surplus on                                                                      
revaluation of                                                                  
properties     --        --         2 016       --            2 016             
Other                                                                           
movements      --        --          (611)       (8 018)     (8 629)            
Currency                                                                        
translation                                                                     
difference     --        --       (4 424)      (19 919)     (24 343)            
Net profit for                                                                  
the period     --        --       --           554 438      554 438             
Dividends      --        --       --          (233 314)    (233 314)            
Issue of share                                                                  
capital        628       176 836  --          --            177 464             
Balance at  30 September                                                        
2003           17 143    537 314  102 413      1 720 261   2 377 131            
Balance at                                                                      
1 October 2001 16 277    298 756   87 807      1 182 407   1 585 247            
Surplus on                                                                      
revaluation of                                                                  
properties     --        --       15 940      --             15 940             
Other                                                                           
movements      --        --       624          10 104        10 728             
Currency                                                                        
translation                                                                     
difference     --        --       --           13 585        13 585             
Net profit for                                                                  
the period     --        --       --          390 248       390 248             
Dividends      --        --       --         (185 181)    (185 181)             
Issue of share                                                                  
capital        238       61 722   --          --             61 960             
Balance at                                                                      
30 September                                                                    
2002           16 515    360 478  104 371     1 411 163   1 892 527             
This is a summarised commentary and results announcement. A full annual report  
will be published on the Internet and a hard copy will be mailed to shareholders
in the first week of December 2003.  The annual general meeting will be held on 
27 February 2004 and notice thereof will be given in the annual report. The     
results can be viewed on the website www.afrox.com.                             
AFRICANOXYGENLIMITED                                                            
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").                                                     
Registered office:                                                              
Afrox House, 23 Webber Street,                                                  
Selby, Johannesburg 2001.                                                       
PO Box 5404, Johannesburg 2000.                                                 
Telephone (+27 11) 490-0400.                                                    
Transfer secretaries:                                                           
Computershare Limited,                                                          
70 Marshall Street,                                                             
Johannesburg 2001.                                                              
PO Box 61051,                                                                   
Marshalltown 2107.                                                              
Telephone (+27 11) 370-5000.                                                    
Sponsor in South Africa:                                                        
Nedbank Corporate.                                                              
Sponsor in Namibia:                                                             
Namibia Equity Brokers (Pty)Limited.                                            
Directors:                                                                      
JLWalsh**** (Chairman), RLHogben (Managing Director), RGCottrell, N Deeming*,   
CMDFlemming, AE Isaac*, LAMacNair, R Medori**, GL Sedgwick***, GS Sibiya,       
CB Strauss.                                                                     
Alternate director:                                                             
RK Lourey***                                                                    
* British, ** French, *** Australian, **** American.                            
Company Secretary:                                                              
MGRowell                                                                        
www.afrox.com                                                                   
Date: 30/10/2003 03:05:13 PM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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