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Afx - African Oxygen Limited - Audited Group Financial Results And Dividend

Release Date: 18/02/2010 15:00:03      Code(s): AFX
AFX - African Oxygen Limited - Audited Group Financial Results And Dividend     
Announcement For The Year Ended 31 December 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")                                       
AUDITED GROUP FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE YEAR ENDED 31 
DECEMBER 2009                                                                   
-    Revenue decreased by 15% to R4.8 billion                                   
-    EBITDA down 17% to R838 million                                            
-    EPS down 44% to 75.2 cents per share                                       
-    Cash generated from operations increased by R568 million to R1.2 billion   
PERFORMANCE SUMMARY                                                             
For the year ended 31 December 2009 revenue decreased by 15% to R4.8 billion and
earnings before interest, tax, depreciation and amortisation (EBITDA) reduced   
17% to R 838 million. EBITDA margin remained constant at 17,5%. Net profit was R
243 million. Earnings per share were 75,2 cents for the year, down 44%. Afrox   
continued to invest in modernisation, capacity and efficiency enhancements but  
in line with prevailing economic conditions, spending R 307 million compared to 
R603 million in 2008. Cash generated as a percentage of EBITDA was 147% compared
to 66% for 2008. Afrox ended the year with net borrowings of R914 million. The  
Group`s gearing improved to 21,1% at year-end compared to 31,7% the year before.
BUSINESS REVIEW                                                                 
Trading conditions in 2009 were extremely tough. The substantial collapse in    
demand experienced in the last quarter of 2008 continued in the first half of   
2009, bottoming out marginally in the second half of the year as supply levels  
to the key automotive, manufacturing and mining sectors remained subdued. For   
the 12 months, volumes, production and labour costs, generally, were subjected  
to negative market forces. Sales and volumes across the full product range were 
down while commodity prices, continued major customer capex containment and     
increased competition exerted extreme pressure on the bottom line. This         
reporting period was characterised by decisive change management action in      
response to diminished returns and extreme pressure on sales, volumes and       
margins. These actions included the consolidation in filling sites from 34 to   
11, elimination of slow-moving and minimally profitable product ranges,         
optimisation of routes to market and the introduction of a minimum delivery     
order value which has enabled distribution to schedule more economically and    
improve service levels. A review of all outlets was undertaken and branches that
did not meet minimum return thresholds were closed. Further measures were the   
reduction of electricity consumption, procurement pricing initiatives and a 4%  
improvement in productivity. Headcount was also reduced by more than 700, which 
was 17% of the workforce. Together these have reduced the cost base of the      
business in excess of an annualised R200m.  These savings are sustainable with  
further gains expected in 2010. These measures have streamlined and strengthened
operations and will enable the business to focus on customers and service       
delivery into the future. Notable business wins in 2009 were achieved in the    
mining and soft drinks sectors, supply contracts with the largest dissolved     
acetylene installation in the southern hemisphere, Transnet`s new 520km         
pipeline, as well as Eskom`s Kusile and Mendupi power station projects, to name 
a few. Our African Operations achieved excellent results at good margin for the 
year, contributing 25% to the Group`s EBITDA this year.                         
DIVIDEND                                                                        
The Board has resolved to declare a final cash dividend of 19 cents per share   
(2008: 25 cents). Together with the interim cash dividend of 19 cents per share 
(2008: 42 cents), a total of 38 cents per share (2008: 67 cents) is paid for the
year and is covered 2,0 times in earnings per share (2008: 2.0 times), which is 
consistent with our guiding principals.                                         
CHANGES TO THE BOARD                                                            
Jonathan Narayadoo has been appointed to the Board as of December 2009.  Finance
Director Cor van Zyl retires at the end of February 2010. Alan Watkins has      
resigned from the Board effective end February 2010.                            
OUTLOOK                                                                         
Focal points for 2010 remain working capital management, productivity           
improvement and the minimising the complexity of doing business. There is every 
indication that any recovery will be off a low base and slow. Therefore we have 
to stay close to our customers and alert to competitive threats. While African  
Operations turned in solid performance towards the end of year, we are acutely  
aware of increased competitor activity, economic variances and pressures in     
local geographic markets, which may indicate certain volatility in returns as we
progress through 2010.  The coming year will be challenging and as such we      
maintain a cautious outlook but are optimistic that the company`s 2009 cost     
reduction and productivity initiatives, coupled with decisive change management 
action, will strengthen the Group`s ability to service our customers and        
optimise our market position.                                                   
Kent Masters             Tjaart Kruger             18 February 2010             
Chairman                 Managing director         Johannesburg                 
NOTICE OF FINAL DIVIDEND DECLARATION NUMBER 167 AND SALIENT FEATURES            
Notice is hereby given that a cash dividend of 19 cents per ordinary share,     
being the final dividend for the year ended 31 December 2009, has been declared 
payable to all shareholders of African Oxygen Limited recorded in the register  
on Friday, 23 April 2010.                                                       
The salient dates for the declaration and payment of the final dividend are as  
follows:                                                                        
                                                 2010                           
Last day to trade ordinary shares "cum" dividend  Friday, 16 April              
Ordinary shares trade "ex" the dividend           Monday, 19 April              
Record date                                       Friday, 23 April              
Payment date                                      Monday, 26 April              
Share certificates may not be dematerialised or rematerialised between Monday,  
19 April 2010 and Friday, 23 April 2010, both days inclusive.                   
By order of the board                                                           
A Meer-Seedat                                         18 February 2010          
Acting Company Secretary                              Johannesburg              
AUDIT OPINION                                                                   
The independent auditors, KPMG Inc., have issued their opinion on the Group`s   
financial statements for the year ended 31 December 2009.  The audit was        
conducted in accordance with International Standards on Accounting.  A copy of  
their unqualified audit report is available for inspection at the Company`s     
registered office.  These condensed financial statements have been derived from 
the Group financial statements and are consistent, in all material respects,    
with the Group financial statements.                                            
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION                          
                                                                                
                                             31 December  31 December           
Rm                                  Note      2009         2008                 
ASSETS                                                                          
Property, plant and equipment       3         2 729        2 817                
Investment in associate                       13           14                   
Other non-current assets                      1 007        1 000                
Non-current assets                            3 749        3 831                
Inventories                                   573          845                  
Trade and other receivables                   865          1 178                
Cash and cash equivalents                     609          143                  
Current assets                                2 047        2 166                
Total assets                                  5 796        5 997                
EQUITY AND LIABILITIES                                                          
Attributable to equity holders of             2 827        2 741                
the company                                                                     
Non-controlling interest                      32           39                   
Total equity                                  2 859        2 780                
Long-term borrowings                          1 127        890                  
Deferred tax liabilities                      562          519                  
Non-current liabilities                       1 689        1 409                
Current portion of long-term                  363          500                  
borrowings                                                                      
Trade and other payables                      843          975                  
Taxation payable                              9            48                   
Bank overdrafts                               33           285                  
Current liabilities                           1 248        1 808                
Total equity and liabilities                  5 796        5 997                
CONDENSED CONSOLIDATED INCOME STATEMENT                                         
                                                                                
Rm                                    Note      31 December  31 December        
                                               2009         2008                
Revenue                                         4 795        5 666              
Operating cost                                  (3 957)      (4 656)            
Earnings before interest, tax,                  838          1 010              
depreciation and amortisation                                                   
(EBITDA)                                                                        
Depreciation and amortisation                   (301)        (257)              
Operating profit                                537          753                
Net finance expense                             (171)        (121)              
Income from associate                           2            2                  
Profit before taxation                4         368          634                
Income tax expense                              (125)        (207)              
Profit for the period                           243          427                
Attributable to:                                                                
Equity holders of the company                   232          412                
Non-controlling interest                        11           15                 
Profit for the period                           243          427                
Basic and diluted earnings per                  75,2         133,7              
ordinary share (cents)                                                          
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME                        
                                                                                
Rm                                              31 December  31 December        
                                               2009         2008                
Profit for the period                           243          427                
Other comprehensive income after                (14)         (137)              
tax:                                                                            
Exchange differences for foreign                (27)         17                 
operations                                                                      
Exchange differences relating to non-           (4)          3                  
controlling interest                                                            
Changes in fair value of cash flow              (2)          -                  
hedges                                                                          
Actuarial gains/(losses) on defined-  5         26           (226)              
benefit plan                                                                    
Deferred tax relating to actuarial              (7)          69                 
gains/losses                                                                    
Total comprehensive income for the              229          290                
period                                                                          
Attributable to:                                                                
Equity holders of the company                   222          272                
Non-controlling interest                        7            18                 
Total comprehensive income for the              229          290                
period                                                                          
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY                           
                    Share                                                       
                    capital                                                     
Rm                   and       Other      Retained    Minority  Total           
share     reserves   earnings    interest                   
                    premium                                                     
Balance at           552       450        1 739       27        2 768           
1 January 2008                                                                  
Other movements       -        (140)      -           3         (137)           
Profit for the        -         -         412         15        427             
period                                                                          
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                                                                    
Other movements       -        (10)       -           (4)       (14)            
Profit for the        -         -         232         11        243             
period                                                                          
Dividends paid        -         -         (136)       (14)      (150)           
Balance at           552       300        1 975       32        2 859           
31 December 2009                                                                
CONDENSED CONSOLIDATED CASH FLOW STATEMENT                                      

Rm                                            31 December  31 December          
                                             2009         2008                  
Operating profit                              537          753                  
Adjustments for:                                                                
Depreciation and amortisation                 301          257                  
Other                                         (27)         (8)                  
Operating cash flow before working capital    811          1 002                
adjustments                                                                     
Working capital adjustments                   422          (337)                
Cash generated from operations                1 233        665                  
Interest paid and taxation paid               (288)        (309)                
Other                                         (3)          (1)                  
Cash available from operating activities      942          355                  
Dividends paid                                (136)        (272)                
Net cash inflow from operating activities     806          83                   
Additions to property, plant and equipment    (307)        (603)                
and intangibles                                                                 
Other net investing cash flows                133          19                   
Net cash outflow from investing activities    (174)        (584)                
Dividends to non-controlling interest         (14)         (6)                  
Net increase in borrowings                    100          600                  
Net cash inflow from financing activities     86           594                  
Net increase in cash and cash equivalents     718          93                   
Cash and cash equivalents at beginning of     (142)        (235)                
period                                                                          
Cash and cash equivalents at end of period    576          (142)                
OPERATING SEGMENTS                                                              

                                          South      Rest of                    
Rm                                         Africa     Africa      Total         
Year ended 31 December 2009                                                     
- revenue                                   4 070      725         4 795        
- EBITDA                                   632        206         838           
Year ended 31 December 2008                                                     
- revenue                                   4 869      797         5 666        
- EBITDA                                    817       193         1 010         
NOTES TO THE FINANCIAL STATEMENTS                                               
1. FINANCIAL PERIOD                                                             
The year end results hereby presented are for twelve months ended 31 December   
2009.                                                                           
2. STATEMENT OF COMPLIANCE AND ACCOUNTING POLICIES                              
These condensed year end group financial statements have been prepared in       
accordance with the recognition and measurement 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 accounting policies applied are consistent with those followed in the       
preparation of the consolidated annual 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 new or revised accounting pronouncement in  
the current period, which did not have a material impact on the reported        
results:                                                                        
IAS 1: Presentation of Financial Statements                                     
                                                                                
31 December   31 December          
  Rm                                         2009          2008                 
3. Capital expenditure and commitments                                          
  Property, plant and equipment                                                 
Opening carrying value                     2 817         2 459                
  Additions                                  293           540                  
  Disposals                                  (83)          (2)                  
  Depreciation                               (271)         (231)                
Exchange loss and other movements          (27)          51                   
  Closing carrying value                     2 729         2 817                
  Capital commitments                                                           
   - authorised but not contracted           62             -                   
- contracted                              33            47                   
  Total capital commitments                  95            47                   
4. Profit before taxation                                                       
  Included in profit before taxation are:                                       
Amortisation of intangible assets          30            26                   
  Depreciation                               271           231                  
STATISTICS AND RATIOS                                                           
                                                                                
Rm                                        31 December    31 December            
                                         2009           2008                    
Reconciliation between earnings and       232            412                    
headline earnings                                                               
Total profit for the period attributable                                        
to equity holders of the company                                                
Profit on disposal of property, plant     (9)            (1)                    
and equipment                                                                   
Net impairment of intangibles             8              -                      
Headline earnings                         231            411                    
                                                                                
Reconciliation between headline earnings                                        
and core headline earnings                                                      
Headline earnings                         231            411                    
Net restructuring cost                    16             11                     
Other                                     31             (5)                    
Core headline earnings                    278            417                    
                                         75,2           133,7                   
Basic and diluted earnings per ordinary                                         
share - Group (cents)                                                           
Headline earnings per ordinary share -    74,6           133,5                  
Group (cents)                                                                   
Core headline earnings per ordinary       90,2           135,2                  
share - Group (cents)                                                           
Average number of ordinary shares in      308 568        308 568                
issue during the period and on which                                            
earnings per share are based (`000)                                             
Dividends per share (cents)               38,0           67,0                   
Net asset value per share (cents)         804            782                    
                                                                                
RATIOS                                                                          
EBITDA margin (%)                         17,5           17,8                   
Interest cover (times)                    3,1            6,2                    
Effective tax rate (%)                    34,0           32,6                   
Gearing (%)                               21,1           31,7                   
Dividend cover (times)                    2,0            2,0                    
Registered office: Afrox House, 23 Webber Street, Selby, Johannesburg 2001. PO  
Box 5404, Johannesburg 2000. Telephone +27 (0) 11 490-0400.                     
Transfer secretaries: Computershare Investor Services (Pty) Limited,            
70 Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107.         
Telephone: +27 (0) 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, Dr KDK Mokhele, J Narayadoo, J Nowicki**, KJ Oliver, SM 
Pityana, LL van Niekerk, CJPG van Zyl (Financial director),                     
AM Watkins***                                                                   
*American    **German     ***British                                            
Acting company secretary:  A Meer-Seedat                                        
www.afrox.com                                                                   
Afrox is a member of The Linde Group                                            
Date: 18/02/2010 15:00:02 Supplied by www.sharenet.co.za                     
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