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Afx - African Oxygen Limited - Unaudited Financial Results And Dividend

Release Date: 27/08/2009 15:04:02      Code(s): AFX
AFX - African Oxygen Limited - Unaudited financial results and dividend         
announcement for the six months ended 30 June 2009                              
AFRICAN OXYGEN LIMITED                                                          
(Incorporated in the Republic of South Africa)                                  
Registration number: 1927/000089/06                                             
ISIN: ZAE000067120                                                              
JSE code: AFX                                                                   
NSX code: AOX                                                                   
("Afrox" or "the Company" or "the Group")                                       
UNAUDITED FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE SIX MONTHS ENDED  
30 JUNE 2009                                                                    
*    Revenue R2,4 billion                                                       
*    EBITDA R433 million                                                        
*    Cash generated R608 million                                                
PERFORMANCE SUMMARY                                                             
BUSINESS REVIEW                                                                 
Trading conditions in the six months to 30 June 2009 were extremely tough as    
the substantial collapse in demand experienced in the last quarter of 2008      
continued into the first half of 2009. The first quarter of 2009 saw            
manufacturing output in South Africa declined by 22,1% year-on-year, the        
largest decline on record. Afrox`s exposure to this sector is substantial. The  
second quarter of 2009 saw only marginal improvement in sales volumes.          
To offset extreme trading conditions, Afrox has implemented a rigorous regime   
of cost containment. Restructuring and retrenchment measures previously         
announced will be completed in the second-half of this financial year. These    
fundamental and structural changes to the cost base are considered essential    
to Afrox`s long-term viability.                                                 
The Company has curbed expenditure in line with the prevailing economic         
conditions, while focus on working capital in day-to-day operations prevail     
under tight management.                                                         
FINANCIAL OVERVIEW                                                              
Revenue for the period is down by 11%, EBITDA by 25%, operating profit by       
37%, with net profits down by 57%, compared to the same period in 2008. Cash    
flow performance was good ensuring that the balance sheet remains strong with   
gearing at 27,1%.                                                               
Comparing the first half of 2009 with the second half of 2008, revenue for the  
period is down by 20%, EBITDA by 1%, operating profit by 7% and net profits by  
11%.                                                                            
Other African operations continued to achieve good results, contributing 27%    
to the Group`s half-year EBITDA.                                                
Net borrowings decreased by R297 million to R1 236 million as a result of       
increased focus on cash management. Capex was curtailed to R115 million in      
the reporting period.                                                           
PERFORMANCE                                                                     
The capex programme embarked on a few years ago is coming to fruition.          
The capacity enhancements as a result of this programme have positioned the     
Company for future growth.                                                      
The decision to accelerate our High Performance Organisation programme,         
announced in the Chairman`s statement of the 2008 Annual Report, has proved     
timely and positive progress is being made in this respect. Change management   
requirements have been challenging, but the organisation is responding          
positively. Afrox maintains high market-place visibility in order to defend     
market share in the short-term and position the Group for growth when economic  
conditions improve.                                                             
DIVIDEND                                                                        
It is the Group`s policy to consider dividends twice annually. The board of     
directors have declared an interim cash dividend of 19,0 cents per share for    
the six months ended June 2009 (2008: 42,0 cents). The dividend is covered      
2,05 times by earnings per share.                                               
OUTLOOK                                                                         
Infrastructure spending in South Africa continues to remain an opportunity.     
Afrox is competitive in this area amid increasing competition. Our Level 4      
Black Economic Empowerment rating is having a positive impact on business       
retention and new tenders.                                                      
Key drivers remain working capital reduction, reduction in the cost of doing    
business and liquidity. Operational and structural changes are on course to     
strip-out R200 million in underlying costs. This programme will be completed    
by year-end. Identification of savings is now part of the business process      
and from this, Afrox expects to achieve ongoing efficiencies.                   
In the present climate Afrox maintains a cautious outlook amid indications      
that these results to 30 June 2009 are likely to reflect business trends        
through to fiscal year-end. The Company will remain profitable and cash         
flow positive for the full year.                                                
ACKNOWLEDGEMENTS                                                                
The Group would like to thank all employees and customers for their commitment  
and steadfast dedication to the business in the face of harsh trading           
conditions, restructuring and realignment activities.                           
Kent Masters            Tjaart Kruger            27 August 2009                 
Chairman                Managing director        Johannesburg                   
NOTICE OF FINAL DIVIDEND DECLARATION NUMBER 166 AND SALIENT FEATURES            
Notice is hereby given that a cash dividend of 19,0 cents per ordinary share,   
being the interim dividend for the six-month period ended 30 June 2009, has     
been declared payable to all shareholders of Afrox recorded in the register     
on Friday, 23 October 2009.                                                     
The salient dates for the declaration and payment of the final dividend are as  
follows:                                                                        
                                                 2009                           
Last day to trade ordinary shares "cum" dividend  Friday, 16 October            
Ordinary shares trade "ex" the dividend           Monday, 19 October            
Record date                                       Friday, 23 October            
Payment date                                      Monday, 26 October            
Share certificates may not be dematerialised or rematerialised between Monday,  
19 October 2009 and Friday, 23 October 2009, both days inclusive.               
By order of the board                                                           
Mlawuli Manjingolo                                  27 August 2009              
Company Secretary                                   Johannesburg                
                                                                                
CONDENSED CONSOLIDATED BALANCE SHEET                                            
                                     Unaudited   Unaudited   Audited            
30 June     30 June     31 Dec             
Rm                             Note   2009        2008        2008              
ASSETS                                                                          
Property, plant and equipment  2      2 766       2 667       2 817             
Other non-current assets              999         888         1 014             
Non-current assets                    3 765       3 555       3 831             
Inventories                           711         807         845               
Trade and other receivables           1 081       1 141       1 178             
Cash and cash equivalents             187         155         143               
Current assets                        1 979       2 103       2 166             
Total assets                          5 744       5 658       5 997             
EQUITY AND LIABILITIES                                                          
Shareholders` equity                  2 749       2 706       2 741             
Minority interests                    33          37          39                
Total equity                          2 782       2 743       2 780             
Long-term borrowings                  790         690         890               
Deferred tax                          538         422         519               
Non-current liabilities               1 328       1 112       1 409             
Current portion of long-term          600         500         500               
borrowings                                                                      
Trade, other payables and             964         900         975               
provision                                                                       
Income tax payable                    37          87          48                
Bank overdrafts                       33          316         285               
Current liabilities                   1 634       1 803       1 808             
Total equity and liabilities          5 744       5 658       5 997             
CONDENSED CONSOLIDATED INCOME STATEMENT                                         
                                     Unaudited   Unaudited   Audited            
30 June     30 June     31 Dec             
                                     2009        2008        2008               
Rm                             Note   6 months    6 months    12 months         
Revenue                               2 374       2 680       5 666             
Operating cost                        (1 941)     (2 107)     (4 656)           
EBITDA                                433         573         1 010             
Depreciation and amortisation         (151)       (123)       (257)             
Operating profit                      282         450         753               
Net finance expense                   (96)        (42)        (121)             
Income from associate                 2           2           2                 
Profit before taxation                188         410         634               
Income tax expense                    (61)        (128)       (207)             
Profit for the period                 127         282         427               
                                                                                
Attributable to:                                                                
Equity holders of the company         120         277         412               
Minority interest                     7           5           15                
Net profit for the period             127         282         427               
                                                                                
Reconciliation between                                                          
earnings and headline earnings                                                  
Profit for the period                 120         277         412               
Profit on disposal of                 (1)         -           (1)               
property, plant and equipment                                                   
Headline earnings                     119         277         411               
                                                                                
Reconciliation between                                                          
headline earnings and core                                                      
headline earnings                                                               
Headline earnings                     119         277         411               
Restructuring cost                    23          4           16                
Tax effect                            (6)         (1)         (4)               
Core headline earnings                136         280         423               
                                                                                
                                                                                
Basic and diluted earnings per 4      39,0        89,8        133,7             
share (cents)                                                                   
Headline earnings per share    4      38,7        89,8        133,5             
(cents)                                                                         
Core headline earnings per     4      44,0        90,7        137,1             
share (cents)                                                                   
                                                                                
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                        
                             Unaudited       Unaudited     Audited              
30 June         30 June       31 Dec               
                             2009            2008          2008                 
Rm                            6 months        6 months      12 months           
Profit for the period         127             282           427                 
Exchange differences on       (31)            38            17                  
translating foreign                                                             
operations                                                                      
Exchange differences relating (8)             6             3                   
to minority interest                                                            
Cash flow hedges              (4)             -             -                   
Actuarial loss on defined     -               -             (226)               
benefit plans                                                                   
Deferred tax relating to      -               -             69                  
actuarial loss                                                                  
Other comprehensive income    (43)            44            (137)               
after tax:                                                                      
Total comprehensive income    84              326           290                 
for the period                                                                  
                                                                                
Attributable to:                                                                
Equity holders of the company 85              315           272                 
Minority interest             (1)             11            18                  
Net profit for the period     84              326           290                 
GEOGRAPHICAL SEGMENTS                                                           
South        Rest of                       
Rm                                    Africa       Africa     Total             
Twelve months ended 31 December 2008                                            
- revenue                             4 869        797         5 666            
- ebitda                              817           193        1 010            
- total assets                        5 480        517        5 997             
Six months ended 30 June 2008                                                   
- revenue                             2 312         368        2 680            
- ebitda                              487          86          573              
- total assets                        5 198        460        5 658             
Six months ended 30 June 2009                                                   
- revenue                             1 998        376         2 374            
- ebitda                              318          115         433              
- total assets                        5 263        481        5 744             
CONDENSED CONSOLIDATED CASH FLOW STATEMENT                                      
                                     Unaudited    Unaudited  Audited            
30 June      30 June    31 Dec             
                                     2009         2008       2008               
Rm                                    6 months     6 months   12 months         
Operating profit                      282          450        753               
Adjustments for:                                                                
Depreciation and amortisation         151          123        257               
Other                                 (72)         9          (8)               
Operating cash flow before working    361          582        1 002             
capital changes                                                                 
Working capital changes               247          (307)      (337)             
Cash generated from operations        608          275        665               
Finance costs and taxation paid       (140)        (150)      (309)             
Other                                 -            -          (1)               
Cash available from operations        468          125        355               
Dividends paid                        (77)         (142)      (272)             
Net cash inflow/(outflow) from        391          (17)       83                
operating activities                                                            
Purchase of property, plant and       (115)        (315)      (603)             
equipment and intangibles                                                       
Other investing cash flows - net      25           7          19                
Net cash outflow from investing       (90)         (308)      (584)             
activities                                                                      
Minorities                            (5)          (1)        (6)               
Increase in borrowings                -            400        600               
Net cash inflow from financing        (5)          399        594               
activities                                                                      
Net increase in cash and cash                                                   
equivalents                           296          74         93                
Cash and cash equivalents at          (142)        (235)      (235)             
beginning of period                                                             
Cash and cash equivalents at                                                    
end of period                         154          (161)      (142)             
STATISTICS AND RATIOS                                                           
                                     Unaudited   Unaudited   Unaudited          
                                     30 June     30 June     31 Dec             
                                     2009        2008        2008               
6 months    6 months    12 months          
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           
Net asset value per share (cents)     891         877         782               
Dividends per share (cents)           19,0        42,0        67,0              
  Final                              -           -           25,0               
  Interim                            19,0        42,0        42,0               

Ratios                                                                          
EBITDA margin (%)                     18,2        21,4        17,8              
Interest paid cover on EBITDA         3,9         7,2         6,5               
(times)                                                                         
Effective tax rate (%)                32,6        31,1        32,6              
Gearing (%)                           27,1        29,9        31,7              
Dividend cover - (times)              2,1         2,1         2,0               
NOTES TO THE FINANCIAL STATEMENTS                                               
1.   Basis of preparation and accounting policies                               
These condensed interim Group financial statements have been prepared in        
accordance with the recognition and measurement criteria of International       
Financial Reporting Standards (IFRS), and are in compliance with IAS 34:        
presentation and disclosure Interim Financial Reporting, the JSE Limited`s      
Listing Requirements and in the manner required by the South African            
Companies Act.                                                                  
The interim condensed consolidated financial statements do not include all      
the information and disclosures required in the annual financial statements,    
and should be read in conjunction with the Group`s annual financial statements  
as at 31 December 2008.                                                         
The accounting policies applied are consistent with those followed in the       
preparation of the consolidated financial statements for the year ended 31      
December 2008, except where the Group has adopted new or revised IFRS           
statements.                                                                     
The Group has adopted the following revised accounting standards, amendments    
and interpretations in the current period, which did not have a material        
impact on the reported results:                                                 
IAS 1: Revised Presentation of Financial Statements                             
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              
2009      2008        2008                
   Rm                                 6 months  6 months    12 months           
2.  Capital expenditure                                                         
   Property, plant and equipment                                                
Opening carrying value             2 817     2 459       2 459               
   Additions                          115       301         540                 
   Disposals                          (3)       (2)         (2)                 
   Depreciation                       (136)     (116)       (231)               
Addition on EFL termination        -         -           29                  
   Foreign exchange differences       (27)      25          22                  
   Closing carrying value             2 766     2 667       2 817               
                                                                                
3.  Comparing first half of 2009 to              1st half    2nd half           
   second half of 2008                          2009        2008                
                                                6 months    6 months            
                                                                                
Revenue                                      2 374       2 985               
   Operating cost                               (1 941)     (2 548)             
   EBITDA                                       433         437                 
   Depreciation and amortisation                (151)       (135)               
Operating profit                             282         302                 
   Net finance expense                          (96)        (79)                
   Income from associate                        2           1                   
   Profit before taxation                       188         224                 
Income tax expense                           (61)        (79)                
   Profit for the period                        127         145                 
   Minority interest                            (7 )        (10)                
   Net profit for the period                    120         135                 

   Basic and diluted earnings per               39,0        43,8                
   share (cents)                                                                
   Headline earnings per share                  38,7        43,6                
(cents)                                                                      
   Core headline earnings per share             44,0        46,4                
   (cents)                                                                      
                                                                                
4.  Earnings, headline earnings and core headline earnings per share            
   * Earnings per share are calculated on earnings of R120 million              
   (2008: R277 million).                                                        
   * Headline earnings per share are calculated on headline earnings            
of R119 million (2008: R277 million).                                        
   * Core headline earnings per share is calculated on core headline            
   earnings of R136 million (2008: R280 million).                               
   All of the above are based on weighted average number of ordinary            
shares of 308 567 602 (2008: 308 567 602) in issue during the                
   period.                                                                      
                                                                                
                                                                                
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                           
                 Share                                                          
                 capital                                                        
                 and                                                            
Rm                share       Other       Retained   Minority   Total           
                 premium     reserves    earnings   interest                    
Balance at 1      552         450         1 739      27          2 768          
January 2008                                                                    
Total             -           (140)       412        18          290            
comprehensive                                                                   
income                                                                          
Dividends paid    -           -            (272)      (6)        (278)          
Balance at 31     552         310         1 879      39          2 780          
December 2008                                                                   
Balance at 1      552         310         1 879      39          2 780          
January 2009                                                                    
Total             -           (35)        120         (1)        84             
comprehensive                                                                   
income                                                                          
Dividends paid    -           -            (77)       (5)        (82)           
Balance at 30     552         275         1 922      33          2 782          
June 2009                                                                       
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,            
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),              
CJPG van Zyl (Financial director), DM Lawrence, M Malebye, DK Mokhele,          
J Nowicki**, K Oliver, SM Pityana, LL van Niekerk, AM Watkins***                
*American    **German     ***British                                            
Company secretary:  M Manjingolo                                                
www.afrox.com                                                                   
Afrox is a member of The Linde Group                                            
Date: 27/08/2009 15:04:02 Supplied by www.sharenet.co.za                     
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information disseminated through SENS.                                          



                                        
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