Wrap Text
AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2001
Profit before taxation up 26%
Earnings per share up 27%
Net cash inflow of R313m
Focus on asset management
Aggressive marketing initiatives to grow businessPerformance highlights
Dear Shareholders
Once again, we are pleased to announce that Afrox continued its solid
performance record and posted increased revenue, profits and earnings for
the 37th consecutive year since listing in 1963.
The year was characterised by a strong focus on organic growth, further
expansion through niche acquisitions, the launching of new products and,
detailed attention to asset management.
The continuing good performance delivery was achieved in a difficult economy
with the manufacturing sector remaining depressed. Afrox, nevertheless, has
a broad business base and most of its revenue is derived from service sector
related businesses. This enviable position, coupled with a high rental
income component, enables Afrox to produce solid results through all
economic cycles.
Growth was organic for both the Industrial gases and welding business, and
the Healthcare business. New products and services also contributed to the
solid growth.
Several small acquisitions and joint ventures were made during the year. On
the Industrial side, we purchased a major liquefied petroleum gas
distributor in Botswana, the assets of Messer/ Fedgas in Namibia, concluded
a joint venture with the government in Mozambique and another in Madagascar,
and expanded into a further three African countries, which now gives us
operations in 16 sub-Saharan countries. Healthcare bought out certain
minorities in hospitals. The full effect of these acquisitions, however,
will only be realised in the coming financial year.
Financial results
Revenue increased by 11 percent from R4,7 billion to a record R5,2 billion.
Revenue growth was solid with the Industrial business recording an
impressive 13 percent increase to R2,2 billion. This was predominantly due
to good growth in the Handigas bulk business and further growth of welding
export sales, gaseous chemical and medical gases businesses. The Healthcare
business grew revenue by 9 percent during a period of consolidation,
following the Presmed merger.
Profit before interest increased by 18 percent from R672 million to R789
million. Industrial operating profits, inclusive of net gains from the asset
efficiency programme of R24 million (disclosed as an exceptional item) grew
by 13 percent from R381 million to R430 million. There was a good turnaround
in profitability in the Industrial business in the latter six months,
particularly with regard to Handigas margins off the back of a lower oil
price. The asset efficiency programme is expected to deliver ongoing annual
profitability benefits to the Industrial business of R15 million per annum.
"Once again, we are pleased to announce that Afrox continued its solid
performance record and posted increased revenue, profits and earnings for
the 37th consecutive year since listing in 1963."
Healthcare operating profits increased by an impressive 23 percent from R291
million to R359 million. The realisation of operating synergies in the
expanded group resulted in improved drug margins and reduced real overhead
costs.
Net interest paid reduced by 10 percent to R146 million (2000: R162
million). Aside from the benefit of interest rates reducing by an average 1
percent over this year, borrowings were on average R100 million lower than
the previous year's levels. This was due to controlled capital expenditure
and improved working capital management, following the establishment of
world-class service centres.
The tax rate declined from 32 percent to 29 percent during the year. This
arose predominantly from an increase in exempt income following the disposal
of certain assets in the Industrial business and also the utilisation of
assessed losses in both businesses.
Financial position
The group has considerably enhanced its financial structure during the year.
Cash generated from operations increased by a significant 56 percent to R982
million.
Excellent working capital management resulted in this area declining by R7
million during the year. Particularly noteworthy improvements were achieved
in debtor and creditor management.
The greater focus on asset efficiency resulted in an additional cash inflow
of R167 million from certain disposals. The overall impact of the above is
that interest bearing borrowings have declined by R313 million or 33 percent
to R634 million at the financial year-end. Gearing has declined from 50
percent to 27 percent.
During the year the group was awarded an A1 short-term credit rating and an
A+ long-term rating by the Global Credit Rating Company.
Business review
Afrox is structured along three lines of business to mirror the structure of
The BOC Group plc, Afrox's parent company. This structure gives Afrox access
to global best operating practices, the latest technology, and world leading
management practices.
Industrial operations consist of Industrial and Special Products (ISP)
comprising cylinder and liquid fabrication gases, special and medical gases,
Handigas and welding products. Process Gas Solutions (PGS) is made up of
large gas-producing plants, gas pipelines and bulk process gases. The
Healthcare business comprises hospitals and healthcare services businesses.
All three lines of business showed revenue and profit growth, and maintained
market share in a very competitive environment.
Significant ISP marketing initiatives led to a number of new large customers
and increased retail sales through re-imaged sales centres. Handigas
continued to show volume growth and five mega bulk contracts were signed
during the year. Growth was again realised in welding products exports,
gaseous chemicals, and in the PGS line of business, from increased nitrogen
and carbon dioxide volumes, mainly to the food and beverage industry. PGS
also signed several large oxygen contracts and commissioned two hydrogen
plants, which resulted in securing additional major business.
Again, Healthcare had an excellent year. The year was, however, one of
consolidation following the merger with focus on asset management, realising
operating synergies and improving efficiencies.
Although paid patient days remained relatively flat, there was organic
growth with admissions and theatre cases, both up one percent. Revenue and
profits per paid patient day were up as a result of efficiencies and
increased acuity levels. During the year, Afrox sold its interest in
Lifecare Group Holdings Limited (Lifecare) to its subsidiary company, Afrox
Healthcare Limited. This now consolidates Afrox's healthcare interest into
one company in which Afrox has an 82 percent interest.
Healthcare services' operations performed well. The ground work for a number
of innovative and exciting products was completed this financial year and
launches will take place early in 2002.
Dividend
Afrox's consistent growth has meant the directors have declared a final
dividend of 31,5 cents per share, up by 13 percent. The total dividend of 52
cents per share is up 11 percent and is covered 2,2 times by earnings per
share of 113 cents. Since listing in 1963, Afrox has declared increased
dividends each year, with the exception of one, which remained unchanged on
the previous year.
Accounting policies
All accounting policies are consistant with prior years, except for AC107
(post balance sheet events) and AC130 (provisions, contingent liabilties and
contingent assets), which have been applied with effect from 1 October 2000.
During the year the company changed its accounting policy with respect to
the treatment of special purpose entities. Previously the Mpumalanga plant,
held in the ISAS Trust, was not consolidated in the group results. As from 1
October this entity has been consolidated in African Oxygen Limited's group
results in accordance with the new accounting standard, AC132. Comparative
figures have been restated, as referred to on the statement of changes in
equity.
Future prospects
Afrox will continue to show sound organic growth with its many revenue
enhancing initiatives. This, together with new initiatives and acquisitions,
places the company in a good position for future growth.
John Walsh
Chairman
Jimmy Marriott
Managing Director
Johannesburg
1 November 2001
Notice of final dividend declaration and salient features
Notice is hereby given that on 1 November 2001, the board of directors of
Afrox resolved to declare a final cash dividend of 31,5 cents (2000: 28,0
cents) per ordinary share, being the final dividend for the financial year
ended 30 September 2001, to shareholders of Afrox registered as such at the
close of business on Friday, 25 January 2002.
The salient dates for the declaration and payment of the final dividend are
as follows:
Last date to trade ("LDT") ordinary shares "CUM" dividend Friday, 18 January
2002
Ordinary shares trade "EX" the dividend Monday, 21 January 2002
Record Date ("RD") Friday, 25 January 2002
Payment Date Monday, 28 January 2002
Share certificates may not be dematerialised/rematerialised between 14
January 2002 and 25 January 2002.
By order of the Board
Ivor Matthee
Company Secretary
Johannesburg
1 November 2001
The directors report that the audited results for the year ended 30
September 2001 are as follows:
Condensed balance sheet
30 September % 30 September
R'000 2001 change 2000
ASSETS
Non-current assets 2 509 114 2 515 744
Property, plant and
equipment 2 284 988 2 248 827
Other non-current assets 224 126 266 917
Current assets 1 434 511 1 456 302
Inventories 350 323 303 838
Receivables and prepayments 1 029 105 993 264
Group companies 8 089 13 010
Cash and cash equivalents 46 994 146 190
Total assets 3 943 625 3 972 046
EQUITY AND LIABILITIES
Capital and reserves 1 718 805 1 304 931
Share capital 16 277 15 924
Share premium 298 756 221 642
Accumulated profits and
reserves 1 403 772 1 067 365
Minority interest 391 431 402 156
Non-current liabilities 641 407 659 738
Borrowings 470 190 478 816
Other non-current
liabilities 171 217 180 922
Current liabilities 1 191 982 1 605 221
Current portion of
borrowings 210 276 614 331
Provisions for liabilities
and charges 108 209 89 928
Group companies 8 417 7 758
Other current liabilities 865 080 893 204
Total equity and
liabilities 3 943 625 3 972 046
Condensed income statement
Revenue 5 239 374 11 4 722 332
Operating profit 735 227 9 673 850
Exceptional items 23 768 (18 190)
Share of results of
associates 30 465 15 943
Operating profit before
finance costs 789 460 18 671 603
Finance costs (146 233) (10) (161 662)
Profit before taxation 643 227 26 509 941
Taxation (188 990) (164 661)
Profit from ordinary
activities 454 237 32 345 280
Minority interest (90 293) (64 652)
Net profit for the year 363 944 30 280 628
Adjustments for headline
earnings
- Exceptional items (23 768) 18 190
- Tax effect (7 210) (1 263)
Headline earnings 332 966 12 297 555
Condensed cash flow statement
Cash generated from
operations 982 468 56 629 926
Finance costs and taxation
paid (327 067) (258 086)
Dividends received 9 875 7 552
Net cash inflow from
operating activities 665 276 379 392
Purchase of property, plant
and equipment (272 997) (315 942)
Acquisition of businesses - (32 046)
Other investing cash
flows, net (1 299) 16 013
Net cash utilised in
investing activities (274 296) (331 975)
Cash outflow from financing
activities
Dividends paid (77 495) (104 668)
(Decrease)/increase in
borrowings (412 681) 80 394
Net cash flow from financing
activities (490 176) (24 274)
Net (decrease)/increase
in cash and cash
equivalents (99 196) 23 143
Cash and cash equivalents
at beginning of period 146 190 123 047
Cash and cash equivalents
at end of period 46 994 146 190
Condensed statement of
changes in equity
Share Share Revaluation Accumulated
R'000 capital premium reserve profits Total
Restated
balance at
1 October 2000 15 924 221 642 84 801 982 564 1 304 931
Surplus on
revaluation of
properties 1 419 1 419
Other movements 1 587 35 242 36 829
15 924 221 642 87 807 1 017 806 1 343 179
Net profit for
the year 363 944 363 944
Dividend declared (65 785) (65 785)
Issue of share
capital 353 77 114 77 467
Balance at
30 September
2001 16 277 298 756 87 807 1 315 965 1 718 805
Balance at
1 October 1999 15 757 184 966 83 251 913 535 1 197 509
Changes in
accounting policy (52 755) (52 755)
Restated
balance 15 757 184 966 83 251 860 780 1 144 754
Deficit on
revaluation
of properties (2 961) (2 961)
Transfer to
distributable
reserves 4 114 (4 114) 0
Other movements 397 (5 304) (4 907)
15 757 184 966 84 801 851 362 1 136 886
Net profit for
the year 280 628 280 628
Dividends
declared (149 426) (149 426)
Issue of share
capital 167 36 676 36 843
Balance at
30 September
2000 15 924 221 642 84 801 982 564 1 304 931
Statistics and ratios
September % September
2001 change 2000
Statistics
Total number of shares in
issue ('000) 325 542 318 488
Number of ordinary shares on
which earnings per share are
based ('000) 320 828 316 719
Earnings per share (cents) 113 27 89
Headline earnings per
share (cents) 104 11 94
Dividend and capitalisation
share award per share (cents) 52,0 11 47,0
Ratios
Interest cover (times) 5,0 4,2
Effective tax rate (%) 29,4 32,3
Gearing (%) 27,4 49,5
Dividend cover (times) 2,2 1,9
Return on net assets (%) 25,8 22,9
Current assets to sales (%) 27,4 30,8
Registered Office
Afrox House, 23 Webber Street
Selby, Johannesburg, 2001
PO Box 5404, Johannesburg, 2000
Telephone (011) 490-0400
Website: www.afrox.com
AFRICAN OXYGEN LIMITED
Registration number 1927/000089/06
ISIN number: ZAE000030920
Share code: AFX
Transfer Secretary
Mercantile Registrars Limited
Anglo Building
8th Floor
11 Diagonal Street
Johannesburg, 2000
Telephone +27(11) 370-5000
Directors:
JWalshs (Chairman), JMMarriott (Managing Director), RGCottrell, N Deeming*,
RLHogben, AE Isaac*, LA MacNair, RM dori**, GLSedgwick***, GS Sibiya,
CB Strauss.
Alternate director: RK Lourey***
sAmerican *British **French ***Australian
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