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AFRICAN OXYGEN LIMITED - AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003
AFRICAN OXYGEN LIMITED
Incorporated in the Republic of South Africa
Registration number: 1927/000089/06
Share Code: AFX
ISIN Code: ZAE 000030920
("Afrox")
AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2003
South Africa"s Best Governed Company
Afrox received the Deloitte & Touche and Moneyweb Good Governance Award for the
best governed company in the country. It was placed first in two of the four
categories, namely Board Effectiveness and Corporate Integrity and Ethics.
Net profit up 42%
Industrial business grows by 61%
Earnings per share up 38%
With dividends up 38%
Cash generated from operations increases by 24% to R1,4 billion
DEAR SHAREHOLDERS
Performance Summary
African Oxygen Limited (Afrox) posted excellent results for the year ended
30 September 2003. The results reflect the company"s ability to grow all its
businesses profitably while focusing on improved efficiencies and asset
management. Headline earnings per share have increased by 33 percent, and this
enabled the company to increase its total dividend for the year by 38 percent to
83 cents per share.
Industrial & Special Products (ISP) and Process Gas Solutions (PGS), which
constitute the industrial businesses, showed marked increases in revenue,
earnings and cash flow, as did Healthcare.
Afrox increased its net profit attributable to shareholders by 42 percent. On a
segmental basis the industrial business now represents 62 percent of net profit,
and Healthcare 38 percent.
Financial Results
Revenue increased by 13 percent to R7,3 billion (2002: R6,5 billion) with
operating profits increasing by 22 percent to R1,1 billion, exceeding R1 billion
for the first time (2002: R896 million).
ISP, PGS and Healthcare, all benefited from improved operating profit margins.
Within ISP, the AfroxPac safety product, in its first full year of trading,
contributed to the overall operating profits" improvement. PGS benefited from a
lower cost base owing to its focus on operating efficiencies, while Healthcare"s
improved operating profits were directly the result of increased activity levels
and overhead efficiencies.
Net interest paid reduced by 22 percent to R122 million (2002: R157 million).
This was mainly due to excellent working capital management, but was aided by
the lower interest rates experienced in the latter part of the financial year.
The improved tax rate of 30 percent (2002: 33 percent) resulted from the
utilisation of assessed losses in both the industrial and healthcare businesses.
At a segmental reporting level, the industrial business increased its share of
group net profit by 61 percent to R345,1 million (2002: R214,7 million), while
the healthcare business increased its share of net profit by 19 percent to
R209,3 million (2002: R175,5 million).
Funding requirements decreased by R258 million (2002: R141 million) in spite of
robust growth, capital expenditure, and acquisitions worth R552 million. Once
again sound asset management resulted in a reduction of working capital of R115
million. This contributed to the record low gearing level of 13 percent (2002:
21 percent).
Accounting Policies
These results have been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice including AC133, which became applicable
for the first time this year. The accounting policies for the year ended
30 September 2003 are consistent with those applied at 30 September 2002, except
for a change with regard to Financial Instruments: Recognition and Measurement -
AC133. Comparative figures have not been restated.
Audit Report
The auditors, PricewaterhouseCoopers Inc, have issued their opinion on the
group"s financial statements for the year ended 30 September 2003. A copy of
their unqualified report is available for inspection at the company"s registered
office.
Business Review
The industrial businesses of ISP and PGS performed well in spite of a downturn
in the manufacturing sector over the past six months. New initiatives to improve
marketing focus and customer relationships contributed to the excellent results
in ISP. During the past two years, the ISP business has achieved strong market
penetration by developing new markets, extending its global customer base, and
adding to its product offering to existing and new customers. This strategy has
translated into sound and sustainable growth, accompanied by excellent working
capital management.
PGS"s strong performance was enhanced by its application of advanced technology
to produce and improve new and existing processes. Firm pricing trends and a
focus on operating efficiencies, added to revenues to ensure that PGS exceeded
its targets for the year.
Healthcare had another year of good organic growth, with increased activity
levels and performance excellence. The company acquired increased shareholdings
in the Little Company of Mary Hospital in Pretoria and Joint Medical Holdings in
Durban. Construction of the new 124-bed Roseacres Clinic in Germiston was
completed in September 2003. The total investment in building initiatives and
equipment upgrades during the financial year amounted to R270 million, and is
part of a continuous programme to meet and exceed the expectations of doctors
and patients, as well as to expand capacity.
Outlook
Over many years Afrox has developed a solid business base, providing essential
products and services to key markets. The industrial business is now offering
new products to a broader market sector. The company has optimised its human
capital, technology and facilities to increase its productivity and global
competitiveness. This gives Afrox the resilience to perform well in all economic
cycles, as evidenced in these excellent results.
Afrox has a strong balance sheet and is well positioned for future growth.
John Walsh Rick Hogben Johannesburg
Chairman Managing Director 30 October 2003
Notice Of Final Dividend Declaration And Salient Features
Notice is hereby given that a final cash dividend of 50 cents (2002: 37 cents)
per ordinary share, being the final dividend for the year ended 30 September
2003, has been declared payable to all shareholders of Afrox recorded in the
register on Friday, 23 January 2004.
The salient dates for the declaration and payment of the final dividend are as
follows:
2004
Last day to trade ordinary shares
`cum" dividend Friday, 16 January
Ordinary shares trade `ex" the dividend Monday, 19 January
Record date Friday, 23 January
Payment date Monday, 26 January
Share certificates may not be dematerialised/rematerialised between Monday,
19 January 2004 and Friday, 23 January 2004, both days inclusive.
By order of the Board
Johannesburg
30 October 2003
CAUTIONARY
Afrox and Afrox Healthcare are currently trading under a joint cautionary
announcement, which states that Afrox is in the process of considering its
strategic options with regard to its shareholding in Afrox Healthcare Limited.
This may or may not lead to a change in Afrox"s shareholding. As soon as this
process is finalised, there will be a full communications exercise to inform
stakeholders.
AFROX
Afrox is one of South Africa"s best known industrial brands. It is a leader in
all its businesses - gases, welding products and healthcare.
AFROXMEDICAL
Afrox medical gases are used in most state and private hospitals, emergency
units, ambulances, and for home therapy.
HANDIGAS
The majority of restaurants and fast-food outlets cook with Handigas, and almost
all hotels, pubs and casinos use Handigas.
AFROXHEALTHCARE
Afrox Healthcare is the country"s leading Healthcare provider with
88 acute care and long-stay chronic hospitals.
VITEMAX
Most metals in South Africa are joined using Afrox electrodes or welding wires.
SA"s top selling electrode is Vitemax, with 293 million sold annually.
FOODGRADECO2
Afrox"s FoodGrade CO2 puts the fizz in nearly every single softdrink made in
South Africa.
SUREMIX
Suremix puts the head on most draught beers poured in South Africa.
SUMMARISED BALANCE SHEET
30 September 30 September
R"000 2003 2002
ASSETS
Non-current assets 3 269 920 2 988 843
Property, plant and equipment 2 857 588 2 687 938
Other non-current assets 412 332 300 905
Current assets 1 942 527 1 691 211
Inventories 416 647 404 319
Trade and other receivables 1 265 328 1 206 905
Cash and cash equivalents 260 552 79 987
Total assets 5 212 447 4 680 054
EQUITY AND LIABILITIES
Capital and reserves 2 377 131 1 892 528
Share capital 17 143 16 515
Share premium 537 314 360 478
Accumulated profits and reserves 1 822 674 1 515 535
Minority interest 626 165 560 342
Non-current liabilities 783 873 794 673
Borrowings 623 735 550 365
Other non-current liabilities 160 138 244 308
Current liabilities 1 425 278 1 432 511
Current portion of borrowings 87 278 201 067
Provisions 178 616 113 347
Other current liabilities 1 158 007 1 089 312
Bank overdraft 1 377 28 785
Total equity and liabilities 5 212 447 4 680 054
STATISTICS AND RATIOS
30 September 30 September
2003 2002
Statistics
Total number of shares in issue ("000) 342 853 330 301
Number of ordinary shares on which
earnings per share are based ("000) 335 767 326 363
Dividends and capitalisation share
award, per share (cents) 83,0 62,5
- Final 50,0 37,0
- Interim 33,0 25,5
Ratios
Interest cover (times) 8,9 5,6
Effective tax rate (%) 29,5 32,5
Gearing (%) 13 21
Dividend cover - net profit (times) 2,0 2,0
SUMMARISED INCOME STATEMENT
30 September % 30 September
R"000 2003 Change 2002
Revenue 7 325 895 13 6 511 510
Cost of sales (5 266 760) (4 732 843)
Gross profit 2 059 135 16 1 778 667
Other operating income 897 --
Administration and other
expenses (970 196) (882 191)
Operating profit 1 089 836 22 896 476
Exceptional items -- (15 034)
Profit from operations 1 089 836 24 881 442
Finance costs (121 944) (157 275)
Income from associates 42 841 27 139
Profit before taxation 1 010 733 35 751 306
Income tax expense (298 324) (244 018)
Profit after taxation 712 409 40 507 288
Minority interest (157 971) (117 040)
Net profit for the year 554 438 42 390 248
Adjustments for headline
earnings
- Exceptional items -- 15 034
- Taxation effect -- (1 370)
- Goodwill amortised 8 689 5 916
- Profit on disposal of
property, plant and equipment (4 029) (2 622)
Headline earnings 559 098 37 407 206
Basic earnings per ordinary
share (cents) 165 38 120
Headline earnings per ordinary
share (cents) 167 33 125
Segmental Information
Corporate
R"000 PGS ISP Healthcare costs Group
Year ended
30 September 2003
Revenue 408 067 2 442 999 4 474 829 -- 7 325 895
Operating profit 90 630 454 680 550 521 (5 995) 1 089 836
Year ended
30 September 2002
Revenue 369 314 2 256 160 3 886 036 -- 6 511 510
Operating profit 79 638 391 511 429 266 (3 939) 896 476
SUMMARISED CASH FLOW STATEMENT
30 September 30 September
R"000 2003 2002
Cash generated from operations 1 444 738 1 168 010
Finance costs and taxation paid (489 570) (374 370)
Dividends received 897 --
Cash available from operations 956 065 793 640
Dividends paid (55 850) (123 221)
Net cash inflow from operating activities 900 215 670 419
Acquisition of business (68 624) (227 653)
Disposal of shares 2 000 111 097
Purchase of property, plant and equipment (485 261) (380 804)
Other investing cash flows, net 48 027 6 334
Net cash used in investing activities (503 858) (491 026)
Minorities (75 711) (38 375)
Decrease in borrowings (49 946) (136 422)
Movement on retirement benefit obligation (62 727) (387)
Net cash utilised in financing activities (188 384) (175 184)
Net increase in cash and cash equivalents 207 973 4 209
Cash and cash equivalents at beginning
of period 51 202 46 993
Cash and cash equivalents at end
of period 259 175 51 202
SUMMARISED STATEMENT OF CHANGES IN EQUITY
Issued Share Other Accumulated
R"000 capital premium reserves profits Total
Balance at
1 October 2002 16 515 360 478 104 371 1 411 163 1 892 527
Change in
accounting
policy -- -- 1 061 15 911 16 972
Restated
balance 16 515 360 478 105 432 1 427 074 1 909 499
Surplus on
revaluation of
properties -- -- 2 016 -- 2 016
Other
movements -- -- (611) (8 018) (8 629)
Currency
translation
difference -- -- (4 424) (19 919) (24 343)
Net profit for
the period -- -- -- 554 438 554 438
Dividends -- -- -- (233 314) (233 314)
Issue of share
capital 628 176 836 -- -- 177 464
Balance at 30 September
2003 17 143 537 314 102 413 1 720 261 2 377 131
Balance at
1 October 2001 16 277 298 756 87 807 1 182 407 1 585 247
Surplus on
revaluation of
properties -- -- 15 940 -- 15 940
Other
movements -- -- 624 10 104 10 728
Currency
translation
difference -- -- -- 13 585 13 585
Net profit for
the period -- -- -- 390 248 390 248
Dividends -- -- -- (185 181) (185 181)
Issue of share
capital 238 61 722 -- -- 61 960
Balance at
30 September
2002 16 515 360 478 104 371 1 411 163 1 892 527
This is a summarised commentary and results announcement. A full annual report
will be published on the Internet and a hard copy will be mailed to shareholders
in the first week of December 2003. The annual general meeting will be held on
27 February 2004 and notice thereof will be given in the annual report. The
results can be viewed on the website www.afrox.com.
AFRICANOXYGENLIMITED
African Oxygen Limited (Incorporated in the Republic of South Africa).
Registration number: 1927/000089/06.
ISINCode: ZAE000030920.
South African share code: AFX.
Namibian share code: AOX.
("Afrox" or "the Company").
Registered office:
Afrox House, 23 Webber Street,
Selby, Johannesburg 2001.
PO Box 5404, Johannesburg 2000.
Telephone (+27 11) 490-0400.
Transfer secretaries:
Computershare Limited,
70 Marshall Street,
Johannesburg 2001.
PO Box 61051,
Marshalltown 2107.
Telephone (+27 11) 370-5000.
Sponsor in South Africa:
Nedbank Corporate.
Sponsor in Namibia:
Namibia Equity Brokers (Pty)Limited.
Directors:
JLWalsh**** (Chairman), RLHogben (Managing Director), RGCottrell, N Deeming*,
CMDFlemming, AE Isaac*, LAMacNair, R Medori**, GL Sedgwick***, GS Sibiya,
CB Strauss.
Alternate director:
RK Lourey***
* British, ** French, *** Australian, **** American.
Company Secretary:
MGRowell
www.afrox.com
Date: 30/10/2003 03:05:13 PM Supplied by www.sharenet.co.za
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