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Afx / Aox - African Oxygen Limited - Interim Financial Results And Dividend

Release Date: 21/08/2008 15:00:02      Code(s): AFX
AFX / AOX - African Oxygen Limited - Interim Financial Results And Dividend     
                   Announcement For The Six Months Ended 30 June 2008           
AFRICAN OXYGEN LIMITED                                                          
(Incorporated in the Republic of South Africa)                                  
Registration number: 1927/000089/06                                             
ISIN: ZAE000067120                                                              
JSE code: AFX                                                                   
NSX code: AOX                                                                   
INTERIM FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 
JUNE 2008                                                                       
- Revenue R2,6 billion                                                          
- Operating profit R450 million                                                 
- EPS at 89,8 cents                                                             
- CAPEX R315 million                                                            
PERFORMANCE SUMMARY                                                             
African Oxygen Limited (Afrox) results for the six months to 30 June 2008 show  
revenue at R2,680 billion with operating profits at R450 million. Net profit for
the period was R282 million and earnings per share 89,8 cents. The balance sheet
remains strong with gearing at 29,9%. Operating cash flow for the period was    
R582 million.                                                                   
The change of the financial year-end, during the previous year, has complicated 
the comparison of results. The comparatives are for a nine-month period,        
therefore a reconciliation of equal period results has been produced. In        
comparing the two six-month periods, revenue increased by 18%, with operating   
profit up 13%. Net profit increased 19%, with basic earnings per share up 18%.  
CAPITAL PROJECTS                                                                
Capital expenditure for the six months was R315 million, with the main          
investments being in cylinder stocks, CO2 plant and the implementation of SAP.  
SAP is now the de-facto system for Afrox and all users have been trained.       
OPERATIONAL REVIEW                                                              
Electricity load scheduling by ESKOM impacted on production in the first        
quarter, inhibiting our ability to exploit strong market demand. Added to this, 
the sharp increases in the price of steel, oil and fuel had a negative impact on
the cost base during the first six months.                                      
The reliability of our Air Separation Units (ASUs) reached new highs, which     
should result in better bulk service delivery and increased product for the     
merchant market. The argon situation improved significantly due to good plant   
performance at Pretoria and Highveld. In addition, we started production at our 
Wadeville and Pietermaritzburg plants.                                          
Constraints on CO2 production in the second quarter have now stabilised and     
supply prospects have improved as we undertake the commissioning of the new     
plant in Sasolburg.                                                             
We have added two Gas & Gear centres to our country-wide network and plan to    
open six more by year-end, bringing our total network to 29 centres.            
The organisation has been restructured during the past 12 months, and the new   
management structures have responded positively to the challenges of improving  
operational performance and capturing the benefits of the current positive      
market conditions.                                                              
DIVIDEND                                                                        
It is currently group policy to declare both interim and year-end dividends. The
board of directors have declared an interim cash dividend of 42,0 cents per     
share for the six months ended 30 June 2008 (2007: 54,0 cents for the nine      
months period). The dividend is covered 2,14 times by earnings per share.       
OUTLOOK                                                                         
The outlook is expected to improve in the second half of 2008, as the full      
benefits of the previously announced capex programme and organisation           
restructure are realised. This is already reflected in the improved production  
volumes at our Germiston cylinder-filling hub. Our Brits plant has also         
increased production of MIG-wire over the last few months with record production
levels of Low Hydrogen welding electrodes achieved during June 2008.            
Despite the general slowdown in the South African economy, we expect demand for 
our products to remain strong for the remainder of the financial year based on  
the level of infrastructure development.                                        
Kent Masters            Tjaart Kruger            21 August 2008                 
Chairman                Managing director        Johannesburg                   
NOTICE OF INTERIM DIVIDEND DECLARATION NUMBER 164 AND SALIENT FEATURES          
Notice is hereby given that an interim cash dividend of 42,0 cents per ordinary 
share, being the interim dividend for the six-month period ended 30 June 2008,  
has been declared payable to all shareholders of African Oxygen Limited recorded
in the register on Friday, 24 October 2008.                                     
The salient dates for the declaration and payment of the interim dividend are as
follows:                                                                        
                                                2008                            
Last day to trade ordinary shares                                               
"cum" dividend                                   Friday, 17 October             
Ordinary shares trade "ex" the dividend          Monday, 20 October             
Record date                                      Friday, 24 October             
Payment date                                     Monday, 27 October             
Share certificates may not be dematerialised or rematerialised between Monday,  
20 October 2008 and Friday, 24 October 2008, both days inclusive.               
By order of the board                                                           
Mlawuli Manjingolo                        21 August 2008                        
Company secretary                         Johannesburg                          
CONDENSED CONSOLIDATED BALANCE SHEET                                            
                                       Unaudited   Unaudited   Audited          
                                       30 June     30 June     31 Dec           
Rm                               Note   2008        2007        2007            
ASSETS                                                                          
Property, plant and equipment    3      2 667       2 471       2 459           
Investment in associates                13          11          12              
Other non-current assets                875         381         833             
Non-current assets                      3 555       2 863       3 304           
Inventories                             807         596         684             
Trade and other receivables             1 141       858         934             
Cash and cash equivalents               155         126         96              
Current assets                          2 103       1 580       1 714           
Total assets                            5 658       4 443       5 018           
EQUITY AND LIABILITIES                                                          
Shareholder`s equity                    2 706       2 300       2 533           
Minority interests                      37          27          27              
Total equity                            2 743       2 327       2 560           
Interest-bearing borrowings             690         500         490             
Deferred tax liability                  422         264         379             
Non-current liabilities                 1 112       764         869             
Current portion of long-term            500         423         300             
loans                                                                           
Trade and other payables                900         838         852             
Taxation                                87          62          106             
Bank overdraft                          316         29          331             
Current liabilities                     1 803       1 352       1 589           
Total equity and liabilities            5 658       4 443       5 018           
CONDENSED CONSOLIDATED INCOME STATEMENT                                         
                                       Unaudited   Unaudited   Audited          
                                       30 June     30 June     31 Dec           
                                       2008        2007        2007             
Rm                               Note   6 months    9 months    15 months       
Revenue                                 2 680       3 288       5 849           
Operating expenses                      (2 230)     (2 683)     (4 798)         
Operating profit                        450         605         1 051           
Net finance costs                       (42)        (47)        (89)            
Income from associates                  2           -           1               
Profit before taxation                  4           410         558             
Taxation                                (128)       (196)       (350)           
Profit for the period                   282         362         613             
Attributable to:                                                                
Equity holders of the company           277         358         603             
Minority interest                       5           4           10              
Net profit for the period               282         362         613             
Basic earnings per share                89,8        116,3       195,5           
(cents)                                                                         
Dividend per share (cents)                                                      
Interim*                                42,0        54,0        54,0            
Final                                                           46,0            
*The interim dividend was declared subsequent to 30 June 2008 and is presented  
for information purposes.                                                       
EQUAL PERIOD COMPARISON OF CONSOLIDATED INCOME STATEMENT                        
                               Unaudited       Unaudited     Unaudited          
                               30 June         30 June       31 Dec             
                               2008            2007          2007               
Rm                              6 months        6 months      12 months         
Revenue                         2 680           2 272         4 785             
Operating expenses              (2 230)         (1 875)       (3 931)           
Operating profit                450             397           854               
Net finance costs               (42)            (29)          (41)              
Income from associates          2               -             -                 
Profit before taxation          410             368           813               
Taxation                        (128)           (131)         (258)             
Profit for the period           282             237           555               
Attributable to:                                                                
Equity holders of the company   277             235           547               
Minority interest               5               2             8                 
Net profit for the period       282             237           555               
Basic earnings per share        89,8            76,2          177,3             
(cents)                                                                         
GEOGRAPHICAL SEGMENTS                                                           
South       Rest of                      
Rm                                      Africa      Africa      Total           
Fifteen months ended 31 December 2007                                           
- revenue                               5 183       666          5 849          
- operating profit                      888          163         1 051          
Nine months ended 30 June 2007                                                  
- revenue                               2 879        409         3 288          
- operating profit                      510         95           605            
Six months ended 30 June 2008                                                   
- revenue                               2 312       368          2 680          
- operating profit                      372         78           450            
CONDENSED CONSOLIDATED CASH FLOW STATEMENT                                      
Unaudited   Unaudited   Audited          
                                       30 June     30 June     31 Dec           
                                       2008        2007        2007             
Rm                                      6 months    9 months    15 months       
Operating profit                        450         605         1 051           
Adjustments for:                                                                
Depreciation                            116         159         251             
Other                                   16          (18)        42              
Operating cash flow before working      582         746         1 344           
capital changes                                                                 
Working capital changes                 (307)       (186)       (350)           
Cash generated from operations          275         560         994             
Finance costs and taxation paid         (150)       (281)       (315)           
Other                                   -           -           (54)            
Cash available from operations          125         279         625             
Dividends paid                          (142)       (309)       (475)           
Net cash (outflow)/inflow from          (17)        (30)        150             
operating activities                                                            
Acquisition of business                 -           (114)       (132)           
Purchase of property, plant and         (315)       (607)       (987)           
equipment and intangibles                                                       
Other investing cash flows - net        7           9           33              
Net cash outflow from investing         (308)       (712)       (1 086)         
activities                                                                      
Minorities                              (1)         (2)         (6)             
Increase in borrowings                  400         408         274             
Net cash inflow from financing          399         406         268             
activities                                                                      
Net increase/(decrease) in cash                                                 
and cash equivalents                    74          (336)       (668)           
Cash and cash equivalents at beginning  (235)       433         433             
of period                                                                       
Cash and cash equivalents at                                                    
end of period                           (161)       97          (235)           
STATISTICS AND RATIOS                                                           
                                       Unaudited   Unaudited   Audited          
30 June     30 June     31 Dec           
                                       2008        2007        2007             
                                       6 months    9 months    15 months        
Basic earnings per ordinary share -     89,8        116,3       195,5           
group (cents)                                                                   
Headline earnings per ordinary                                                  
share - group (cents)                   89,8        117,0       196,5           
Average number of shares in issue       308 568     308 568     308 568         
during the period (`000)                                                        
Shares in issue (`000)                  308 568     308 568     308 568         
Dividends per share (cents)             42,0        54,0        100,0           
Net asset value per share (cents)       877         745         821             
Ratios                                                                          
Operating margin (%)                    16,8        18,4        18,0            
Interest cover (times)                  10,7        12,9        11,8            
Effective tax rate (%)                  31,2        35,1        36,3            
Gearing (%)                             29,9        24,5        25,9            
Dividend cover - (times)                2,14        2,15        1,96            
NOTES TO THE FINANCIAL STATEMENTS                                               
1.   FINANCIAL PERIOD                                                           
In the prior year, Afrox changed its year-end to December to align itself with  
the financial year-end of its holding company, Linde AG. The comparative        
financial period therefore ended on 31 December 2007 and covered 15 months. The 
interim results hereby presented are for six months ended 30 June 2008 and the  
comparative period covers nine months ended 30 June 2007.                       
2.   Basis of preparation and accounting policies                               
These condensed interim group financial statements have been prepared using     
accounting policies that comply with International Financial Reporting Standards
(IFRS), and complies with IAS 34 - Interim Financial Reporting, Schedule 4 of   
the Companies Act, 1973 and the disclosure requirements of the Listing          
Requirements of the JSE Limited.                                                
The accounting policies applied are consistent with those followed in the       
preparation of the consolidated financial statements for the 15-month period    
ended 31 December 2007, except where the group has adopted new or revised IFRS  
statements.                                                                     
The group has adopted the following new or revised accounting pronouncement in  
the current period, which did not have a material impact on the reported        
results:                                                                        
IFRS 7: Financial Instruments: Disclosure                                       
These condensed interim financial statements have not been reviewed or audited  
by the group`s auditors.                                                        
                                      Unaudited Unaudited   Audited             
                                      30 June   30 June     31 Dec              
                                      2008      2007        2007                
Rm                                 6 months  9 months    15 months           
3.  Capital expenditure and                                                     
   commitments                                                                  
   Property, plant and equipment                                                
Opening carrying value             2 459     2 029       1 928               
   Additions                          301       607         781                 
   Disposals                          (2)       (10)        (17)                
   Depreciation                       (116)     (159)       (251)               
Acquisition of business            -         -           24                  
   Exchange loss and other            25        4           (6)                 
   movements                                                                    
   Closing carrying value             2 667     2 471       2 459               
Capital commitments                                                          
   - authorised but not committed     27        295         1                   
   - authorised and committed         145       104         494                 
   Total capital commitments          172       399         495                 
4.  Profit before taxation                                                      
   Included in profit before                                                    
   taxation are:                                                                
   Amortisation of intangible         7         1           3                   
assets                                                                       
   Depreciation                       116       159         251                 
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                           
                  Share                                                         
capital and                                                   
Rm                 share        Other       Retained   Minority   Total         
                  premium      reserves    earnings   interest                  
Balance at 30      552          158         1 572      23          2 305        
September 2006                                                                  
Other movements     -            47          76        -           123          
Net profit for     -            -            603       10          613          
the period                                                                      
Dividend paid      -            -            (475)      (6)        (481)        
Balance at 31      552          205         1 776      27          2 560        
December 2007                                                                   
Balance at 1       552          205         1 776      27          2 560        
January 2008                                                                    
Other movements    -            38          -           6          44           
Net profit for     -            -            277        5          282          
the period                                                                      
Dividend paid      -            -            (142)      (1)        (143)        
Balance at 30      552          243         1 911      37          2 743        
June 2008                                                                       
AFRICAN OXYGEN LIMITED                                                          
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 (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), TN Kruger (Managing director),              
DM Lawrence, M Malebye, DK Mokhele, J Nowicki**, K Oliver, SM Pityana,          
LL van Niekerk, CJPG van Zyl (Financial director), AM Watkins***                
*American    **German     ***British                                            
Company secretary:  M Manjingolo                                                
www.afrox.com                                                                   
Afrox is a member of The Linde Group                                            
Date: 21/08/2008 15:00:01 Supplied by www.sharenet.co.za                     
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information disseminated through SENS.                                          



                                        
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