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African Oxygen Limited - Audited Results For The Year Ended 30 September 2004

Release Date: 28/10/2004 15:27:38      Code(s): AFX
AFRICAN OXYGEN LIMITED - Audited results for the year ended 30 September 2004   
African Oxygen Limited                                                          
(Incorporated in the Republic of South Africa).                                 
Registration number: 1927/000089/06.                                            
ISIN: ZAE000030920.                                                             
JSE share code: AFX.                                                            
NSX share code: AOX.                                                            
("Afrox").                                                                      
Audited results for the year ended 30 September 2004                            
Net profit from continuing operations grows by 16%                              
Strong cash flow reduces gearing to 4,6%                                        
Dividend out of continuing operations up 24%                                    
Performance summary                                                             
African Oxygen Limited (Afrox) posted sound results for the year ended 30       
September 2004, in difficult trading conditions. The strong rand impacted on    
Afrox"s customers, particularly in the mining and manufacturing sectors, causing
a decline in demand for core products. The rand"s strength also affected Afrox"s
own export revenues and foreign currency receipts from earnings from the        
company"s operations in Africa. Nevertheless, efficiency-enhancing measures were
successful. The healthcare business performed well, continuing its good growth  
performance of previous years.                                                  
The group achieved a growth in net profit of 12 percent to R623 million (2003:  
R554 million), headline earnings per share increased by 13 percent to 187,5     
cents (2003: 166,5 cents), and revenue by 7 percent. Gearing decreased and now  
stands at 4,6 percent.                                                          
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       
proposed sale of Afrox Healthcare which is accounted for in terms of AC117.     
Continuing operations                                                           
Afrox"s industrial business produced pleasing results in operating profit, which
grew by 18 percent to R613 million (2003: R519 million), profit before tax was  
21 percent higher and net profit increased by 16 percent. Revenue at R2,9       
billion (2003: R2,8 billion) was only marginally higher due to the difficult    
trading conditions that prevailed during the year. The tax rate grew from 28,0  
percent to 31,2 percent, reflecting a higher STC charge of R13 million.         
Discontinuing operations                                                        
Afrox Healthcare performed well with a 10 percent increase in revenue to R4,9   
billion (2003: R4,5 billion), 16 percent increase in operating profit, and 6    
percent growth in net profit.                                                   
ACCOUNTING POLICIES                                                             
These results have been prepared in accordance with South African Statements of 
Generally Accepted Accounting Practice. The accounting policies for the year    
ended 30 September 2004 are consistent with those applied at 30 September 2003. 
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 2004. A copy of    
their unqualified report is available for inspection at the company"s registered
office.                                                                         
BUSINESS REVIEW                                                                 
Continuing operations                                                           
Industrial & Special Products (ISP) and Process Gas Solutions (PGS) constitute  
the industrial businesses.                                                      
ISP weathered difficult trading conditions through focused growth efforts and,  
as a consequence, grew market share in most areas. Sales increased through      
improved customer focus and by developing commercial offers tailor-made for     
different customer segments. In the African operations restructuring and major  
investments in new plant and equipment have laid a foundation for further       
growth. New business gains, particularly in the beverage industry, the renewal  
of existing contracts, and buoyant demand for carbon dioxide contributed to     
PGS"s robust performance.                                                       
Discontinuing operations                                                        
Healthcare had an excellent year in spite of stiff competition and increased    
government legislation. The shareholding in the Wilgeheuwel Hospital in         
Roodepoort was increased from 28 percent to 74 percent. The Jan S Marais        
Hospital in the Western Cape was sold. Construction began on a R174 million 194-
bed hospital in Fourways with completion due by March 2006. In the United       
Kingdom a venture was successfully launched providing orthopaedic services to   
the National Health Services (NHS).                                             
DIVIDEND                                                                        
The sound results enabled the board of directors to declare a final dividend,   
from the continuing operations, of 31,0 cents per share. The total dividend is  
covered 1,8 times by earnings of R401 million.                                  
SALE OF AFROX HEALTHCARE                                                        
On 17 November 2003, we announced that we would dispose of Afrox"s 68 percent   
shareholding in Afrox Healthcare to Bidco, a BEE consortium, led by Brimstone   
Investment Corporation Limited and Mvelaphanda Strategic Investments (Pty)      
Limited. The approval by the Competition Tribunal is the only outstanding       
condition precedent for the acquisition by Bidco of all the shares in Afrox     
Healthcare. The Competition Tribunal will reconvene on 24 January 2005 to       
deliberate the sale.                                                            
Once this approval has been obtained the board will consider the distribution of
proceeds to shareholders. In terms of the transaction no dividend is payable    
arising out of the earnings from the discontinuing operations.                  
Outlook                                                                         
Afrox provides essential products and services to key markets. We will continue 
to package innovative product service offerings for our customers.  Afrox has a 
strong balance sheet and cash flow, and low gearing, placing the company in a   
sound position for future expansion, although the strong rand and volatility in 
oil prices make performance forecasts difficult for 2005.                       
John Walsh                                                                      
Chairman                                                                        
Rick Hogben                                                                     
Managing Director                                                               
Johannesburg                                                                    
28 October 2004                                                                 
Dividend declaration                                                            
From the continuing operations, the board of directors has declared a final cash
dividend of 31 cents per share for the year ended 30 September 2004. The        
dividend is payable on Monday, 31 January 2005 to shareholders recorded in the  
books of the company at the close of business on Friday, 28 January 2005.  The  
last day to trade `cum" dividend will be Friday, 21 January 2005 and the shares 
will trade `ex" dividend from the commencement on business on Monday, 24 January
2005.                                                                           
Share certificates may not be dematerialised or rematerialised between Monday,  
24 January 2005 and Friday, 28 January 2005, both days inclusive.               
By order of the board                                                           
Johannesburg                                                                    
28 October 2004                                                                 
Summarised Balance Sheet                                                        
As at          As at                    
                                        30 September   30 September             
R"000                                   2004           2003                     
ASSETS                                                                          
Non-current assets                      3 530 712      3 269 797                
Property, plant and equipment           3 051 133      2 857 588                
Other non-current assets                479 579        412 209                  
Current assets                          2 100 642      1 942 527                
Inventories                             406 544        416 647                  
Trade and other receivables             1 213 149      1 265 328                
Cash and cash equivalents               480 949        260 552                  
Total assets                            5 631 354      5 212 324                
EQUITY AND LIABILITIES                                                          
Capital and reserves                    2 705 924      2 377 131                
Share capital                           17 143         17 143                   
Share premium                           537 314        537 314                  
Accumulated profits and reserves        2 151 467      1 822 674                
Minority interest                       786 791        626 165                  
Non-current liabilities                 570 378        783 873                  
Borrowings                              415 103        623 735                  
Other non-current liabilities           155 275        160 138                  
Current liabilities                     1 568 261      1 425 155                
Current portion of borrowings           237 056        87 278                   
Provisions for liabilities                                                      
and charges                             220 912        178 616                  
Other current liabilities               1 107 229      1 157 884                
Bank overdraft                          3 064          1 377                    
Total equity and liabilities            5 631 354      5 212 324                
Summarised Income Statement                                                     
                                  30 September  %       30 September            
R"000                             2004          Change  2003                    
Continuing operations                                                           
Revenue                           2 921 362     2       2 851 066               
Operating profit before                                                         
finance costs                     612 711       18      518 640                 
Finance costs                    (25 473)              (33 245)                 
Profit before taxation            587 238       21      485 395                 
Income tax expense               (183 279)             (135 954)                
Profit after taxation             403 959       16      349 441                 
Minorities                       (2 973)               (4 349)                  
Net profit for the year           400 986       16      345 092                 
Discontinuing operations                                                        
Revenue                           4 913 782     10      4 474 829               
Operating profit before                                                         
Healthcare disposal costs         664 790       16      571 196                 
Costs of Healthcare disposal     (16 167)       -                               
Finance costs                    (72 381)              (88 699)                 
Income from associates            51 770                42 841                  
Profit before taxation            628 012       20      525 338                 
Income tax expense               (218 886)             (162 370)                
Profit after taxation             409 126       13      362 968                 
Minority interest                (187 420)             (153 622)                
Net profit for the year           221 706       6       209 346                 
Total net profit for the year     622 692       12      554 438                 
Adjustments for headline earnings                                               
- Costs of Healthcare disposal    16 167                -                       
- Goodwill amortised              10 075                8 689                   
- Profit on disposal of property,                                               
plant and equipment              (6 222)               (4 029)                  
Headline earnings                 642 712       15      559 098                 
Basic earnings per ordinary share                                               
- Group (cents)                   181,6         10      165,1                   
- Continuing operations (cents)   117,0         14      103,0                   
- Discontinuing                                                                 
operations (cents)                64,6          4       62,1                    
Headline earnings per                                                           
ordinary share                                                                  
- Group (cents)                   187,5         13      166,5                   
- Continuing operations (cents)   117,1         15      102,1                   
- Discontinuing operations                                                      
(cents)                           70,4          9       64,4                    
Summarised Cash Flow Statement                                                  
30 September   30 September             
R"000                                   2004           2003                     
Cash generated from operations          1 611 376      1 444 615                
Finance costs and taxation paid        (472 040)      (489 570)                 
Dividends received                      1 096          897                      
Cash available from operations          1 140 432      955 942                  
Dividends paid                         (284 568)      (55 850)                  
Net cash inflow from operating                                                  
activities                              855 864        900 092                  
Acquisition of business                (46 408)       (68 624)                  
Disposal of shares                      -              2 000                    
Purchase of property, plant                                                     
and equipment                          (493 713)      (485 261)                 
Other investing cash flows, net         64 449         48 027                   
Net cash outflow from investing                                                 
activities                             (475 672)      (503 858)                 
Minorities                             (48 889)       (75 711)                  
(Decrease)/increase in borrowings      (112 593)      (49 946)                  
Movement on retirement benefit                                                  
obligation                              -             (62 604)                  
Net cash (outflow)/inflow from                                                  
financing activities                   (161 482)      (188 261)                 
Net (decrease)/increase in cash and                                             
cash equivalents                        218 710        207 973                  
Cash and cash equivalents at                                                    
beginning of year                       259 175        51 202                   
Cash and cash equivalents at                                                    
end of year                             477 885        259 175                  
Statistics and Ratios                                                           
                                        30 September   30 September             
                                        2004           2003                     
Statistics                                                                      
Total number of shares in                                                       
issue ("000)                            342 853        342 853                  
Number of ordinary shares on which                                              
earnings per share are based ("000)     342 853        335 767                  
Dividends and capitalisation share                                              
award, per share (cents)                                                        
- from continuing operations            64,0           51,8                     
- Final                                 31,0           29,0                     
- Interim                               33,0           22,8                     
Ratios                                                                          
Interest cover (times)                  13,1           8,9                      
Effective tax rate (%)                  33,1           29,5                     
Gearing (%)                             4,6            12,5                     
Dividend cover for continuing                                                   
operations (interim and final                                                   
dividend for current year)              1,8            2,0                      
Segmental Information                                                           
Geographical segments for continuing operations                                 
R"000                        South Africa  Rest of Africa  Total                
Year ended 30 September 2004                                                    
Revenue                      2 558 524     362 838         2 921 362            
Operating profit before                                                         
finance costs                530 514       82 197          612 711              
Year ended 30 September 2003                                                    
Revenue                      2 502 516     348 550         2 851 066            
Operating profit before                                                         
finance costs                440 742       77 898          518 640              
Summarised Statement of Changes in Equity                                       
Issued   Share    Other     Accumulated                      
R"000              capital  premium  reserves  profits     Total                
Balance at                                                                      
1 October 2003     17 143   537 314  102 413   1 720 261   2 377 131            
Surplus on                                                                      
revaluation of                                                                  
properties         -        -        47        -           47                   
Other movements    -        -       (318)     (1 426)     (1 744)               
Currency                                                                        
translation                                                                     
difference         -        -       (384)     (7 250)     (7 634)               
Net profit for                                                                  
the year           -        -        -         622 692     622 692              
Dividends                                                                       
declared           -        -        -        (284 568)   (284 568)             
Balance at                                                                      
30 September 2004  17 143   537 314  101 758   2 049 709   2 705 924            
Balance at                                                                      
1 October 2002     16 515   360 478  104 371   1 411 164   1 892 528            
Change in                                                                       
accounting policy  -        -        1 061     15 911      16 972               
Restated balance   16 515   360 478  105 432   1 427 075   1 909 500            
Surplus on                                                                      
revaluation of                                                                  
properties         -        -        2 016     -           2 016                
Other movements    -        -       (611)     (8 019)     (8 630)               
Currency                                                                        
translation                                                                     
difference         -        -       (4 424)   (19 919)    (24 343)              
Net profit for                                                                  
the year           -        -        -         554 438     554 438              
Dividends                                                                       
declared           -        -        -        (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            
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 2004. The annual general meeting will be held on  
24 February 2005 and notice thereof will be given in the annual report. The     
results can be viewed on the website www.afrox.com.                             
AFRICAN OXYGEN LIMITED                                                          
African Oxygen Limited                                                          
(Incorporated in the Republic of South Africa).                                 
Registration number: 1927/000089/06.                                            
ISIN: ZAE000030920.                                                             
JSE share code: AFX.                                                            
NSX share code: AOX.                                                            
("Afrox").                                                                      
Registered office: Afrox House, 23 Webber Street, Selby, Johannesburg 2001. PO  
Box 5404, Johannesburg 2000. Telephone (+27 11) 490-0400.                       
Transfer secretaries: Computershare Investor Services 2004 (Pty) Limited, 70    
Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107. Telephone  
(+27 11) 370-5000.                                                              
Sponsor in South Africa: Barnard Jacobs Mellet Corporate Finance (Pty) Limited  
Sponsor in Namibia: Namibia Equity Brokers (Pty) Limited.                       
Directors:  JL Walsh**** (Chairman), RL Hogben (Managing Director), RG Cottrell,
N Deeming*, CMD Flemming, AE Isaac*, LA MacNair, R Medori**, GS Sibiya, CB      
Strauss, CJPG van Zyl.                                                          
Alternate director: RK Lourey***                                                
* British, ** French, *** Australian, **** American.                            
Company Secretary: ME Sanz                                                      
www.afrox.com                                                                   
Date: 28/10/2004 03:28:29 PM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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