Go Back Email this Link to a friend


African Oxygen Limited - Audited Results For The Year Ended 30 September 2005

Release Date: 03/11/2005 15:19:11      Code(s): AFX
African Oxygen Limited - Audited results for the year ended 30 September 2005   
African Oxygen Limited                                                          
(Incorporated in the Republic of South Africa)                                  
Registration number: 1927/000089/06                                             
JSE code: AFX                                                                   
NSX code: AOX                                                                   
ISIN: ZAE000067120                                                              
("Afrox" or "the company" or "the Group")                                       
Audited results for the year ended 30 September 2005                            
Basic earnings per share +128%                                                  
Final dividend + 29%                                                            
Cash generated from industrial operations +30%                                  
Gearing at 16%                                                                  
Summarised Balance Sheet                                                        
                                       As at            As at                   
30 September     30 September            
R"000                                  2005             2004                    
ASSETS                                                                          
Non-current assets                     2 180 244        3 530 712               
Property, plant and equipment          1 664 795        3 048 255               
Investment in associates               378 790          120 925                 
Other non-current assets               136 659          361 532                 
Current assets                         1 065 360        2 100 642               
Inventories                            325 706          406 544                 
Trade and other receivables            572 235          1 213 149               
Cash and cash equivalents              167 419          480 949                 
Total assets                           3 245 604        5 631 354               
EQUITY AND LIABILITIES                                                          
Capital and reserves                   1 719 622        2 663 079               
Share capital                          15 428           17 143                  
Share premium                          537 314          537 314                 
Accumulated profits and reserves       1 166 880        2 108 622               
Minority interest                      12 083           752 594                 
Non-current liabilities                612 771          538 910                 
Borrowings                             466 856          415 103                 
Other non-current liabilities          145 915          123 807                 
Current liabilities                    901 128          1 676 771               
Current portion of borrowings          56 923           237 056                 
Provisions for liabilities and                                                  
charges                                105 685          220 912                 
Trade payables and other                                                        
current liabilities                    733 330          1 215 739               
Bank overdraft                         5 190            3 064                   
Total equity and liabilities           3 245 604        5 631 354               
Summarised Income Statement                                                     
                                  30 September  %       30 September            
R"000                             2005          Change  2004                    
Group                                                                           
Revenue                           5 852 639     (25)    7 835 144               
Operating profit                  987 061       (21)    1 256 001               
Profit on sale of investment      1 050 726             (16 167)                
Profit from operations            2 037 787             1 239 834               
Finance income/(costs)            980                   (97 854)                
Income from associates            76 163                51 770                  
Profit before taxation            2 114 930     77      1 193 750               
Income tax expense                (651 155)             (395 715)               
Profit after taxation             1 463 775     83      798 035                 
Minority interest                 (98 106)              (183 713)               
Net profit for the year           1 365 669     122     614 322                 
Adjustments for headline earnings                                               
- Profit on sale of investment    (1 050 726)           16 167                  
- Capital gains tax on sale                                                     
of investment                     143 937               -                       
- Transaction costs within                                                      
associate investment               9 268                -                       
- Impairment of trade and                                                       
subsidiary investments            3 344                 -                       
- Goodwill impaired               8 416                 10 075                  
- Profit on disposal of property,                                               
plant and equipment               (2 755)               (6 222)                 
Headline earnings                 477 153               634 342                 
- Secondary tax on companies(STC)                                               
on special dividend paid from the                                               
profit on sale of investment      177 858               -                       
Headline earnings before STC                                                    
related to the special dividend   655 011        3      634 342                 
Basic earnings per ordinary share                                               
- Group (cents)                   408,2          128    179,2                   
Headline earnings per ordinary                                                  
share before STC relating to                                                    
special dividend - Group (cents)  195,8          6      185,0                   
Headline earnings per ordinary                                                  
share - Group (cents)             142,6          (23)   185,0                   
Segmental Information                                                           
R"000                       Industrial  Healthcare        Total                 
Year ended 30 September 2005                                                    
Revenue                     3 344 465    2 508 174          5 852 639           
Operating profit              684 788      302 273            987 061           
Year ended 30 September 2004                                                    
Revenue                     2 921 362    4 913 782          7 835 144           
Operating profit              612 711      643 290          1 256 001           
Summarised Cash Flow Statement                                                  
                                       30 September     30 September            
R"000                                  2005             2004                    
Cash generated from operations         954 487          1 611 376               
Finance costs and taxation paid        (539 975)        (472 040)               
Dividends received                     11 020           1 096                   
Cash available from operations         425 532          1 140 432               
Dividends paid                         (1 652 551)      (284 568)               
Net cash (outflow)/inflow from                                                  
operating activities                   (1 227 019)      855 864                 
Acquisition of business                (93 547)         (49 329)                
Disposal of business                   2 214 243          2 921                 
Purchase of property, plant and                                                 
equipment                              (492 187)        (493 713)               
Other investing cash flows, net        (254 567)        64 449                  
Net cash inflow/(outflow) from                                                  
investing activities                   1 373 942        (475 672)               
Dividends and loans paid to                                                     
minorities                             (29 774)         (48 889)                
Increase/(decrease) in borrowings      232 166          (112 593)               
Buy-back of shares by a subsidiary                                              
company                                (664 971)        -                       
Net cash outflow from financing                                                 
activities                             (462 579)        (161 482)               
Net (decrease)/increase in cash and                                             
cash equivalents                       (315 656)        218 710                 
Cash and cash equivalents at                                                    
beginning of year                      477 885          259 175                 
Cash and cash equivalents at                                                    
end of year                            162 229          477 885                 
Consolidated Statement of Changes in Equity                                     
                   Issued    Share    Other     Accumulated                     
R"000              capital   premium  reserves  profits    Total                
Balance at                                                                      
1 October 2004     17 143    537 314  101 758   2 006 864  2 663 079            
Surplus on                                                                      
revaluation of                                                                  
properties         -         -       8 660    -          8 660                  
Other movements    -         -       (2 873)  3 873      1 000                  
Currency                                                                        
translation                                                                     
difference         -         -       (230)    (1 034)    (1 264)                
Net profit for                                                                  
the year           -         -       -        1 365 669  1 365 669              
Dividends declared -         -       -        (1 652 551)(1 652 551)            
Purchase of shares                                                              
by wholly-owned                                                                 
subsidiary                                                                      
(treasury shares)  (1 715)   -       -        (663 256)  (664 971)              
Balance at                                                                      
30 September 2005  15 428    537 314 107 315  1 059 565  1 719 622              
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)    (35 901)   (36 219)               
Currency                                                                        
translation                                                                     
difference         -         -       (384)    (7 250)    (7 634)                
Net profit for                                                                  
the year           -         -       -        614 322    614 322                
Dividends declared -         -       -        (284 568)  (284 568)              
Balance at                                                                      
30 September 2004  17 143    537 314 101 758  2 006 864  2 663 079              
Statistics and Ratios                                                           
                                     30 September     30 September              
                                     2005             2004                      
Statistics                                                                      
Total number of shares in issue                                                 
excluding treasury shares ("000)     308 568          342 853                   
Number of ordinary shares on which                                              
earnings per share are based ("000)  334 587          342 853                   
Dividends per share (cents) - Group  495,0            64,0                      
- Final                              40,0             31,0                      
- Special dividend                   415,0            -                         
- Interim                            40,0             33,0                      
Ratios                                                                          
Interest cover (times)               >(100)           12,8                      
Effective tax rate (%)               30,8             33,1                      
Gearing (%)                          16,1             4,7                       
Dividend cover - (from                                                          
remaining industrial                                                            
operations)                          2,0             1,83                       
Accounting policies                                                             
These results have been prepared in accordance with South African Statements of 
Generally Accepted Accounting Practice. The accounting policies are consistent  
with those of the previous financial year, with the exception of the            
implementation of South African Statements of Generally Accepted Accounting     
Practice, AC140 (IFRS 3): Business combinations, AC128 (IAS 36) Impairment of   
assets and AC129 (IAS 38): Intangible assets. All companies in the group have   
followed these policies in all material respects.                               
The change in accounting policies described above has been made in accordance   
with the transition provisions of the respective standards. AC140 (IFRS 3):     
Business combinations have been applied prospectively from 1 October 2004, while
AC128 (IAS 36) Impairment of assets and AC129 (IAS 38): Intangible assets have  
been applied retrospectively. There has been no impact on the opening retained  
earnings at 1 October 2004 as a result of the adoption of these standards. In   
addition we have adopted the guidance to straight line rental payments made     
under operating leases with escalation clauses over the period of the lease, and
have restated the prior year comparatives.                                      
African Oxygen Limited will adopt all further mandatory International Financial 
Reporting Statements in its 2006 financial year.                                
Due to the changed circumstances whereby African Oxygen Limited became a 20.1   
percent investor in Life Healthcare Group (Pty) Limited, the 2004 income        
statement, which was previously split into continuing and discontinuing         
operations, has been restated to reflect a diminution in holding.               
Performance summary                                                             
For the year ended 30 September 2005, African Oxygen Limited posted strong      
results in mixed trading conditions.                                            
The year was also an eventful one for the group.  The sale of Afrox Healthcare  
Limited was concluded at the end of March 2005 with a black owned consortium    
comprising Brimstone Investment Corporation Ltd and Mvelaphanda Strategic       
Investments (Pty) Ltd, and the company is continuing to operate very            
successfully under the name of Life Healthcare Group (Pty) Limited. Afrox       
retained a 20,1 percent share in the business. These financial results include  
this interest in Life Healthcare.                                               
We continued to produce results well above inflation in an economy where certain
manufacturing sectors remain difficult.                                         
Shareholders received an excellent cash distribution of 687 cents a share due to
increased dividends, a special dividend as a result of the healthcare sale and  
the compulsory buy back of shares.                                              
The interpretation of the results is complicated as a result of the Healthcare  
sale and the compulsory share buy back.  The results for financial year 2004    
include fully consolidated results of Afrox Healthcare Limited.  Financial year 
2005 has the fully consolidated results of Afrox Healthcare Limited for six     
months, the exceptional profit on the sale of Afrox Healthcare Limited and the  
Life Healthcare Group associate profits for six months.  Any comparisons should 
be made with care.                                                              
The business presently includes gases, welding and related products, and a 20,1 
percent shareholding in Life Healthcare. On this basis, revenue increased 14    
percent to R3,3 billion, operating profit was higher by 12 percent at R685      
million.  The cash generated from these operations increased by 30 percent to   
R829 million.                                                                   
Overheads were well controlled, growing 7 percent against a sales increase of 14
percent resulting in margin growth of 10 percent.  Rising fuel prices increased 
distribution costs, despite improved efficiencies in costs per cylinder         
delivered, and per kilometre travelled.                                         
High oil prices influenced the pricing of liquefied petroleum gas (LPG).        
Nevertheless we were successful in countering increasing input costs and        
sustaining margins by increasing LPG prices. Our manufacturing operations had to
contend with rising steel prices - a key raw material in our manufacturing      
processes. In addition, the demand for MIG wire exceeded our supply capacity and
necessitated more expensive imports.                                            
Afrox"s balance sheet is a hallmark of our results and this year our strong     
asset management continued.  Debtors and stocks were managed well, net current  
assets showed a decline against the previous year and the return on capital     
employed (operating profit to net assets) was 32,7 percent.  Gearing remained   
low at 16,1 percent and will allow Afrox the opportunity for expansion.         
Audit report                                                                    
The auditors, PricewaterhouseCoopers Inc, have issued their opinion on the      
group"s financial statements for the year ended 30 September 2005. A copy of    
their unqualified report is available for inspection at the company"s registered
office.                                                                         
Business review                                                                 
Afrox supplies gas, welding and related products and services which includes    
medical gases, hospitality, LPG in its various forms, scientific gases,         
refrigerants and packaged chemicals. Considerable progress has been made in     
capturing the opportunities that have evolved from these sectors.               
Handigas performed well and is now the largest contributor to revenue. We had to
increase prices to mitigate the upward trend in the oil price and fluctuations  
in the rand/dollar exchange rate.                                               
Afrox Safety was formed as an extension of our portfolio and will specialise in 
the provision of safety products and services. It includes the Afrox miners"    
RescuPak business and the newly acquired Twinco. Excluding the Twinco           
acquisition, the Safety operation grew sales by 98 percent.                     
Greater activity in the merchant market and good tonnage growth led to a strong 
increase in turnover for Process Gas Solutions, while the food and beverage     
industries boosted demand for nitrogen and carbon dioxide. New gases contracts  
were negotiated which requires the expansion of capacity at Pietermaritzburg,   
and at Roodekop.                                                                
A world-class calibration and filling facility, commissioned in Germiston, has  
improved our scientific offering, particularly to the petroleum industry. All   
South African refineries now use Afrox calibration mixtures and pure instrument 
grade gases.                                                                    
Eleven new Afrox Gas & Gear retail outlets opened and we plan to have 40        
operating by the end of 2007. The outlets are stocked with a wide range of      
specially merchandised equipment aimed at smaller collect customers.            
We have improved the quality of our medical product offerings and were pleased  
to win the State contract for gases - the major portion of which was for medical
gases - as well as the State home care contract for respiratory therapies, home 
medical equipment and medical gases.                                            
Exports are an increasing part of our business and we expanded into the European
market with our range of medical and scientific regulators, welding equipment   
and accessories, and other industrial products.                                 
Among our African Operations, Malawi and Zambia performed exceptionally well. We
have expertise in developing new markets and view cross border expansion as a   
strong growth area for Afrox.                                                   
Several new projects made 2005 a significant year for Afrox. Construction       
started on the R100 million expansion of Afrox"s gases operations centre in     
Germiston. This project will enlarge what is already the biggest gas production,
cylinder filling and distribution centre in the southern hemisphere, improving  
our levels of customer service. A new nitrous oxide facility will address       
environmental issues. At our Brits welding consumable factory capacity is to be 
expanded to satisfy growing demand.                                             
Dividend                                                                        
The results for the financial year under review have enabled the board of       
directors to declare a final cash dividend of 40 cents per share (2004: 31 cents
per share), an increase of 29 percent on last year. The dividend is covered     
twice by earnings from remaining industrial operations.                         
Outlook                                                                         
Afrox has the resilience to perform well across economic cycles. We will do this
by optimising our human capital, design, manufacturing and marketing            
capabilities to increase productivity and global competitiveness. Long-term     
contracts, established branch and distribution networks, strong branding and    
steady revenues from cylinder rentals underpin our businesses. We have a strong 
balance sheet and are well positioned for future growth.                        
Kent Masters              Rick Hogben                                           
Chairman                  Managing director                                     
Dividend declaration                                                            
From the remaining industrial operations, the board of directors has declared a 
final cash dividend of 40 cents per share (2004: 31 cents) for the year ended 30
September 2005.                                                                 
The dividend is payable on Monday, 30 January 2006 to shareholders recorded in  
the books of the company at the close of business on Friday, 27 January 2006.   
The last day to trade "cum" dividend will be Friday, 20 January 2006 and the    
shares will trade "ex" dividend from the commencement of business on Monday 23  
January 2006.                                                                   
Share certificates may not be dematerialised or rematerialised between Monday,  
23 January 2006 and Friday, 27 January 2006, both days inclusive.               
By order of the board                                                           
Johannesburg                                                                    
3 November 2005                                                                 
The photo in the masthead shows Afrox"s medical integrated valve regulator. This
forms part of a lightweight cylinder designed to supply medical gases at pre-   
determined controlled flow rates for use in hospitals, home care or by emergency
services. This product won an award for design excellence.                      
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 2005. The annual general meeting will be held on  
28 February 2006, and notice thereof will be given in the annual report.        
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:  JK Masters* (Chairman), RL Hogben (Managing Director), RG Cottrell, 
AJ Cullens**, A Ferguson**, JA Ford**, LA MacNair,                              
CB Strauss, LL van Niekerk, CJPG van Zyl.                                       
Alternate director:  D Shook*                                                   
Company secretary:  ME Sanz                                                     
* American                                                                      
** British                                                                      
www.afrox.com                                                                   
Date: 03/11/2005 03:19:34 PM Supplied by www.sharenet.co.za                     
Produced by the JSE SENS Department                                             
                                                                                
                                                                                
                                                                                



                                        
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.