Afrox - Sound Results With Good Growth Opportunities Release Date: 26/10/2006 15:49:38 Code(s): AFX
Afrox - Sound Results With Good Growth Opportunities
AFRICAN OXYGEN LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1927/000089/06)
JSE Share code: AFX
NSX Share code: AOX
("Afrox" or "the company" or "the Group"
Thursday 26 October 2006
AFROX: SOUND RESULTS WITH GOOD GROWTH OPPORTUNITIES
African Oxygen Limited (Afrox) once again produced sound results, growing well
ahead of inflation for the year ended 30 September 2006.
A pleasing performance was recorded with industrial operating profit up 15
percent at R684 million, net profit up 12 percent at R437 million and revenue
higher by 19 percent at R4 billion.
On a like for like basis, industrial headline earnings per share were 19 percent
higher at 141,6 cents per share. This is the base off which Afrox will measure
itself in the future.
Managing director, Rick Hogben said, "Significant value has been released for
shareholders in disposing of our final 20 percent in Life Healthcare. For an
investment of R375 million made this time last year, we realised cash of R850
million and a net profit of R362 million.
Afrox"s balance sheet remains strong and return on capital employed is at a very
acceptable 30 percent. Gearing is at the negligible level of 3,3 percent, and
provides substantial scope to leverage the company"s growth opportunities.
The sound results enabled the board to declare a final cash dividend of 40 cents
per share (2005: 40 cents).
This is covered 2,18 times by earnings. In addition the board declared a special
cash dividend of 60 cents per share from the sale of company"s remaining
shareholdings in the Life Healthcare Group.
Including the interim of 46 cents, the total distribution for the year is 148
cents a share.
Through the year economic conditions remained favourable and demand for all
gases and products reached high levels, resulting in considerable pressure in
supply, mainly for atmospheric gases, carbon dioxide, Handigas, mig welding wire
and certain welding products.
Afrox is well positioned to grow further and has a number of key projects, which
are scheduled for commissioning within the next financial year. These include
six gas producing facilities, a new MIG welding wire plant and the entire
upgrading of Afrox"s Gases Operation Centre.
Hogben said that many more growth projects were being investigated.
"Perhaps the most important is the possibility of acquiring major storage
facilities at the coast to allow for future imports of liquefied petroleum gas,
where refineries are unable to meet demand. It will also increase our strategic
stock holding for this key energy product".
Turning to the shortage of liquefied petroleum gas (LPG) that hit South Africa,
Hogben says, "Under extremely difficult circumstances our Handigas business
worked hard to minimise the disruptive effects of supply shortage of LPG from
domestic refineries. We reverted to importing some product but the entire
shortage resulted in considerably increased operating costs and reduced margins
in our endeavour to keep customers supplied".
Afrox is an integrated, full spectrum gases business. Each of its
value-adding segments is inter-dependant. This synergy, from bulk gas production
through to retail, is key to sustainability of performance. Afrox"s brand,
reliability of supply and high quality of products represents substantial
intangible asset value.
Hogben said "All businesses produced sound results, ahead of inflation. Our
growth strategy is focussed on increasing capacity, upgrading manufacturing
facilities and modernising infrastructure to improve efficiencies. We continue
our efforts to improve customer service levels and product offerings".
The bulk merchant business, a mainstay of Afrox, for which the industrial and
special products business units are a vital internal customer, produced
acceptable results at high levels of capacity utilisation.
Other highlights for the year include a new parent company for Afrox. The BOC
Group was acquired on 6 September 2006 by Linde AG of Germany. The two companies
are highly complimentary with minimum geographic overlap. The Linde Group is now
the world"s leading industrial gases business with global sales of Euro 12
billion and R&D spend of Euro 1,4 billion. The Group employs 55 000 people in 70
countries on all continents.
In conclusion Rick Hogben says, "We welcome The Linde Group as our new parent
company. We look forward to continue future growth, driven by sound investment
in the business and growing demand from an economy, which we expect to remain
buoyant over the coming years. Consequently we are well positioned to continue
to deliver real growth and earnings well in excess of inflation.
Issued by African Oxygen Limited
For further information
Rick Hogben - Managing Director (011) 490-0606 or 082-452-4037
Chris Fieldgate - Investor Relations (011) 490-0430 or 082-495-1481
Date: 26/10/2006 03:49:41 PM Supplied by www.sharenet.co.za
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