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Afrox - Results For The Six Months Ended 31 March 2004

Release Date: 29/04/2004 14:22:24      Code(s): AFX
AFROX - RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004                          
AFRICAN OXYGEN LIMITED                                                          
African Oxygen Limited                                                          
(Incorporated in the Republic of South Africa).                                 
Registration number: 1927/000089/06.                                            
ISIN: ZAE000030920.  South African share code: AFX.  Namibian share code: AOX.  
("Afrox" or "the Company").                                                     
AFROX                                                                           
RESULTS FOR THE SIX MONTHS ENDED 31 MARCH 2004                                  
NET PROFIT UP 21%                                                               
HEADLINE EARNINGS PER SHARE UP 15%                                              
GEARINGAT 17%                                                                   
DEAR SHAREHOLDERS                                                               
PERFORMANCE SUMMARY                                                             
Despite a difficult economy, during the six months to                           
31 March 2004, the group achieved a growth in net profit of                     
21% to R305 million (2003: R253 million), headline earnings increased by 15%, to
89,9 cents (2003: 78,4 cents), and revenue                                      
by 4%. Cash generated from operations increased by 10% to reach R589,5 million  
(2003: R537,0 million) and gearing decreased and                                
now stands at 17%.                                                              
The results reflect Afrox Healthcare as a fully consolidated subsidiary, but the
income statement has been segmented into `continuing" - Afrox"s industrial      
interests - and `discontinuing" - Afrox"s Healthcare interest, due to the       
potential sale of Afrox Healthcare which is accounted for in terms of AC117.    
Continuing operations                                                           
Afrox produced pleasing growth in operating profit which grew by 13%, net profit
increased by 19%, and profit before tax was 22% higher. Revenue was lower at    
R1,39 billion (2003: R1,43 billion), due to the difficult trading conditions    
that prevailed during the six months under review. The strength of the rand     
impacted on manufacturing output to the mining sector and also on export        
revenue.                                                                        
Discontinuing operations                                                        
Afrox Healthcare performed well in the first six months, with a 9% growth in    
revenue, 14% increase in operating profit, and 26% increase in net profit to    
reach R98 million (2003: R78 million).                                          
BUSINESS REVIEW                                                                 
Continuing operations                                                           
Industrial & Special Products (ISP) and Process Gas Solutions (PGS) constitute  
the industrial businesses. ISP involves cylinder and liquid fabrication gases,  
special and medical gases, Handigas, welding products and two welding product   
factories, as well as safety products and other consumer focused products       
supplied through our national retail centre network. PGS tailors solutions to   
meet the needs of large consumers of product in key market sectors by supplying 
dedicated on-site production units, either by pipeline, or in liquid form by    
tanker.                                                                         
Revenue for the six-month period decreased by 3% when compared with the same    
period last year. The key factor impacting on performance was a decrease in the 
selling price of Handigas due to the lower rand price of oil and consequent     
reduction in the selling price of petroleum products.                           
Despite this the 19% increase in net profit demonstrates the company"s inherent 
ability to manage costs, increase efficiencies, and produce acceptable results  
in challenging times. Operating profits improved in all sectors and finance     
costs reduced owing to a focus on working capital management, as well as a      
reduction in interest rates and tax.                                            
Although the manufacturing and mining industries were depressed, Afrox          
manufactures and supplies products and services to many other sectors, including
hospitality, medical gases and, retail sales through our national network of    
retail sales centres. We were able to improve our market position in most       
sectors in which we operate, with positive growth in sales to the smaller       
customers who were unaffected by the manufacturing downturn. The company also   
benefits from long-term bulk gas contracts and annuity rental of cylinders.     
Process Gas Solutions maintained its market share and posted strong results     
considering the economic climate.                                               
Discontinuing operations                                                        
Afrox Healthcare again performed well with increases in revenues and profits.   
New opportunities and initiatives contributed to improved activity levels. An   
affordable, quality healthcare model offered to patients, providing a           
comprehensive set of primary healthcare services, has expanded the market. The  
acquisition of control of the Wilgeheuwel Hospital also enhanced growth.        
Sale of Afrox Healthcare                                                        
For 20 years Afrox has derived substantial growth from its healthcare business, 
which has attained the requisite scale and level of sophistication to enable it 
to pursue its own growth initiatives. Afrox and Afrox Healthcare have divergent 
needs and the time has come for both companies to focus on their own individual 
growth areas without being constrained by core interests that are not           
comfortably aligned.                                                            
On 17 November 2003, we announced that we would dispose of Afrox"s 69%          
shareholding in Afrox Healthcare to Bidco. A BEE consortium, led by Brimstone   
Investments Corporation Limited and Mvelaphanda Strategic Investments (Pty)     
Limited, will acquire 75% of Bidco.                                             
The approval by the Competition Tribunal is the only outstanding condition      
precedent for the acquisition by Bidco of all the shares in Afrox Healthcare    
including Afrox"s 69% shareholding in Afrox Healthcare. Once this approval has  
been obtained, the Board will consider the distribution of the proceeds. In     
terms of the transaction no interim dividend is payable arising out of the      
earnings from discontinuing operations.                                         
ACCOUNTING POLICIES                                                             
These results have been prepared in accordance with South African Statements of 
Generally Accepted Accounting Practice. The accounting policies for the six     
months are consistent with those applied at 30 September 2003.                  
OUTLOOK                                                                         
After the sale of Afrox Healthcare, Afrox will be a more keenly focused company 
comprising, in addition to our core gases and welding businesses, a number of   
interrelated industrial businesses that supply products and services to a wide  
spectrum of the economy. Afrox is a customer-centric company with high service  
levels and excellent world benchmark products. Our attention is focused on      
bottom line profits, efficiencies, cash flow and return on equity, and the      
safety of our employees and customers.                                          
Despite difficult trading conditions during the first half of the financial     
year, Afrox has sustained good profit growth. However, the uncertain domestic   
and international economic climate makes it unwise to predict performance,      
beyond that we expect cash flow to remain strong and profits for the full year  
to exceed those of last year on a like-for-like basis.                          
John Walsh     Rick Hogben           Johannesburg                               
Chairman       Managing Director     29 April 2004                              
NOTICE OF INTERIM DIVIDEND DECLARATION AND SALIENT FEATURES                     
Notice is hereby given that, from the continuing operations, an interim cash    
dividend of 33,0 cents (2003: 33,0 cents) per ordinary share, being the interim 
dividend for the half year ended 31 March 2004, has been declared payable to all
shareholders of African Oxygen Limited recorded in the register on Friday, 23   
July 2004.                                                                      
The salient dates for the declaration and payment of the interim dividend are as
follows:                                                                        
                                                    2004                        
Last date to trade ordinary shares "cum" dividend   Friday, 16 July             
Ordinary shares trade "ex" the dividend             Monday, 19 July             
Record date                                         Friday, 23 July             
Payment date                                        Monday, 26 July             
Share certificates may not be dematerialised or rematerialised between Monday,  
19 July 2004 and Friday, 23 July 2004, both days inclusive.                     
By order of the Board                                                           
Ria Sanz                  Johannesburg                                          
Company Secretary          29 April 2004                                        
Summarised Balance Sheet                                                        
                            Unaudited     Unaudited     Audited                 
                            as at         as at         as at                   
R"000                       31 March 2004 31 March 2003 30 Sept 2003            
ASSETS                                                                          
Non-current assets          3 443 223     3 127 790     3 269 797               
Property, plant and                                                             
equipment                   2 972 894     2 800 236     2 857 588               
Other non-current assets    470 329       327 554       412 209                 
Current assets              1 864 693     1 870 304     1 942 527               
Inventories                 425 434       415 047       416 647                 
Receivables and prepayments 1 401 051     1 386 521     1 265 328               
Cash and cash equivalents   38 208        68 736        260 552                 
Total assets                5 307 916     4 998 094     5 212 324               
EQUITY AND LIABILITIES                                                          
Capital and reserves        2 497 968     2 109 610     2 377 131               
Issued capital              17 143        16 834        17 143                  
Share premium               537 314       450 292       537 314                 
Accumulated profits and                                                         
reserves                    1 943 511     1 642 484     1 822 674               
Minority interest           665 955       565 227       626 165                 
Non-current liabilities     787 160       810 014       783 873                 
Borrowings                  621 440       559 493       623 735                 
Other non-current                                                               
liabilities                 165 720       250 521       160 138                 
Current liabilities         1 356 833     1 513 243     1 425 155               
Current portion of                                                              
borrowings                  91 571        338 821       87 278                  
Provisions for liabilities                                                      
and charges                 175 553       109 428       178 616                 
Other current liabilities   1 083 801     1 063 938     1 157 884               
Bank overdraft              5 908         1 056         1 377                   
Total equity and                                                                
liabilities                 5 307 916     4 998 094     5 212 324               
Statistics and Ratios                                                           
Six months to Six months to 12 months to            
                            March 2004    March 2003    Sept 2003               
Statistics                                                                      
Total number of shares in                                                       
issue ("000)                342 853       336 675       342 853                 
Number of ordinary shares                                                       
on which earnings per share                                                     
are based ("000)            342 853       330 715       335 767                 
Dividends and capitalisation                                                    
share award,                                                                    
per share (cents)           33,0           33,0          83,0                   
Ratios                                                                          
Interest cover (times)      11,3          7,3           8,9                     
Effective tax rate (%)      33,0          33,0          29,5                    
Gearing (%)                 17,0          22,1          12,5                    
Dividend cover                                                                  
- headline earnings (times) 1,9           2,3           2,0                     
Summarised Income Statement                                                     
                     Unaudited            Unaudited     Audited                 
                     Six months to %      Six months to 12 months to            
R"000                March 2004    Change March 2003    Sept 2003               
Continuing                                                                      
operations                                                                      
Revenue              1 391 439     (3)    1 430 271     2 851 066               
Operating profit                                                                
before finance                                                                  
costs                312 541       13     276 879       518 640                 
Finance costs        (13 985)             (32 571)      (33 245)                
Profit before                                                                   
taxation             298 556       22     244 308       485 395                 
Income tax expense   (89 567)             (67 170)      (135 954)               
Profit after                                                                    
taxation             208 989       18     177 138       349 441                 
Minorities           (1 631)              (2 546)       (4 349)                 
Net profit for the                                                              
period               207 358       19     174 592       345 092                 
Discontinuing                                                                   
operations                                                                      
Revenue              2 343 426     9      2 151 909     4 474 829               
Operating profit                                                                
before finance                                                                  
costs                285 757       14     250 033       571 196                 
Finance costs        (38 957)             (39 802)      (88 699)                
Income from                                                                     
associates           26 046               17 999        42 841                  
Profit before                                                                   
taxation             272 846       20     228 230       525 338                 
Income tax expense   (98 920)             (89 000)      (162 370)               
Profit after                                                                    
taxation             173 926       25     139 230       362 968                 
Minority interest    (75 984)             (61 228)      (153 622)               
Net profit for the                                                              
period               97 942        26     78 002        209 346                 
Total net profit for                                                            
the period           305 300       21     252 594       554 438                 
Adjustments for headline earnings                                               
- Exceptional items  -                    703           -                       
- Goodwill amortised 5 725                4 832         8 689                   
- (Profit)/loss on                                                              
disposal of property,                                                           
plant and equipment  (2 693)              1 197         (4 029)                 
Headline earnings    308 332       19     259 326       559 098                 
Basic earnings per                                                              
ordinary share                                                                  
- Group (cents)      89,0          17     76,4          165,1                   
- Continuing                                                                    
operations (cents)   60,4          15     52,8          102,8                   
- Discontinued                                                                  
operations (cents)   28,6          21     23,6          62,3                    
Headline earnings                                                               
per ordinary share                                                              
- Group (cents)      89,9          15     78,4          166,5                   
- Continuing                                                                    
operations (cents)   61,7          15     53,6          102,4                   
- Discontinuing                                                                 
operations (cents)   28,2          14     24,8          64,1                    
Segmental Information                                                           
Geographical segments                                                           
for continuing operations                                                       
R"000                      South Africa   Rest of Africa   Total                
Six months ended 31 March 2004                                                  
Revenue                    1 216 786      174 653          1 391 439            
Operating profit before                                                         
finance costs              267 309        45 232           312 541              
Six months ended 31 March 2003                                                  
Revenue                    1 254 118      176 153          1 430 271            
Operating profit before                                                         
finance costs              230 899        45 980           276 879              
Year ended 30 September 2003                                                    
Revenue                    2 502 516      348 550          2 851 066            
Operating profit before                                                         
finance costs              454 840        63 800           518 640              
Summarised Cash Flow Statement                                                  
                        Unaudited       Unaudited       Audited                 
                        Six months to   Six months to   12 months to            
R"000                   March 2004      March 2003      Sept 2003               
Cash generated from                                                             
operations              589 494         537 009         1 444 615               
Finance costs and                                                               
taxation paid           (273 501)       (288 548)       (489 570)               
Net dividends paid      (171 427)       (32 078)        (54 953)                
Net cash inflow from                                                            
operating activities    144 566         216 383         900 092                 
Acquisition of business (45 269)        (42 756)        (66 624)                
Disposal of shares      -               2 000           -                       
Purchase of property,                                                           
plant and equipment     (230 868)       (255 968)       (485 261)               
Other investing cash                                                            
flows, net              14 904          6 800           48 027                  
Net cash outflow from                                                           
investing activities    (261 233)       (289 924)       (503 858)               
Minorities              (58 895)        (48 294)        (75 711)                
(Decrease)/increase in                                                          
borrowings              (51 313)        138 313         (49 946)                
Movement on retirement                                                          
benefit obligation      -               -               (62 604)                
Net cash (outflow)/                                                             
inflow from financing                                                           
activities              (110 208)       90 019          (188 261)               
Net (decrease)/increase                                                         
in cash and cash                                                                
equivalents             (226 875)       16 478          207 973                 
Cash and cash equivalents                                                       
at start of period      259 175         51 202          51 202                  
Cash and cash equivalents                                                       
at end of period        32 300          67 680          259 175                 
Summarised Statement of Changes in Equity                                       
                                               Reval-      AC133                
Issued      Share     uation      hedging              
R"000                    capital     premium   reserve     reserve              
Balance at                                                                      
1 October 2003           17 143      537 314   102 745     (332)                
Surplus on revaluation                                                          
of properties            -           -         648         -                    
Other movements          -           -         (1 063)     332                  
Net profit for the                                                              
period                   -           -         -           -                    
Dividend declared        -           -         -           -                    
Balance at                                                                      
31 March 2004            17 143      537 314   102 330     -                    
Balance at                                                                      
1 October 2002           16 515      360 478   104 371     -                    
Change in accounting                                                            
policy                   -           -         -           -                    
Restated balance         16 515      360 478   104 371     -                    
Surplus on revaluation                                                          
of properties            -           -         1 259       -                    
Other movements          -           -         (2 269)     -                    
Net profit for the                                                              
period                   -           -         -           -                    
Dividend declared        -           -         -           -                    
Issue of share capital   319         89 814    -           -                    
Balance at 31 March 2003            16 834      450 292   103 361     -         
Summarised Statement of Changes in Equity                                       
(continuied)                                                                    
                                           Accumul-                             
ated                                 
R"000                                      profits         Total                
Balance at 1 October 2003                  1 720 261       2 377 131            
Surplus on revaluation of properties       -               648                  
Other movements                            (12 953)        (13 684)             
Net profit for the period                  305 300         305 300              
Dividend declared                          (171 427)       (171 427)            
Balance at 31 March 2004                   1 841 181       2 497 968            
Balance at 1 October 2002                  1 411 164       1 892 528            
Change in accounting policy                13 563          13 563               
Restated balance                           1 424 727       1 906 091            
Surplus on revaluation of properties       -               1 259                
Other movements                            (15 987)        (18 256)             
Net profit for the period                  252 594         252 594              
Dividend declared                          (122 211)       (122 211)            
Issue of share capital                     -               90 133               
Balance at 31 March 2003                   1 539 123       2 109 610            
This is a summarised commentary and results announcement. The interim report,   
which complies with AC127, will be mailed to shareholders during May 2004.      
Stakeholder enquiries may be addressed per e-mail to: rick.hogben@afrox.boc.com 
AFRICANOXYGENLIMITED                                                            
African Oxygen Limited (Incorporated in the Republic of South Africa).          
Registration number: 1927/000089/06.                                            
ISIN: 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 and Namibia: Nedbank      
Capital.                                                                        
Directors:  JLWalsh**** (Chairman), RLHogben (Managing Director), RGCottrell, N 
Deeming*, CMDFlemming, AE Isaac*, LAMacNair,                                    
R Medori**, GL Sedgwick***, GS Sibiya, CB Strauss, CJPG van Zyl.                
Alternate director: RK Lourey***                                                
* British, ** French, *** Australian, **** American.                            
Company Secretary: ME Sanz                                                      
www.afrox.com                                                                   
Date: 29/04/2004 02:22:43 PM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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