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AFRICAN OXYGEN LIMITED - Audited results for the year ended 30 September 2004
African Oxygen Limited
(Incorporated in the Republic of South Africa).
Registration number: 1927/000089/06.
ISIN: ZAE000030920.
JSE share code: AFX.
NSX share code: AOX.
("Afrox").
Audited results for the year ended 30 September 2004
Net profit from continuing operations grows by 16%
Strong cash flow reduces gearing to 4,6%
Dividend out of continuing operations up 24%
Performance summary
African Oxygen Limited (Afrox) posted sound results for the year ended 30
September 2004, in difficult trading conditions. The strong rand impacted on
Afrox"s customers, particularly in the mining and manufacturing sectors, causing
a decline in demand for core products. The rand"s strength also affected Afrox"s
own export revenues and foreign currency receipts from earnings from the
company"s operations in Africa. Nevertheless, efficiency-enhancing measures were
successful. The healthcare business performed well, continuing its good growth
performance of previous years.
The group achieved a growth in net profit of 12 percent to R623 million (2003:
R554 million), headline earnings per share increased by 13 percent to 187,5
cents (2003: 166,5 cents), and revenue by 7 percent. Gearing decreased and now
stands at 4,6 percent.
The results reflect Afrox Healthcare as a fully consolidated subsidiary, but the
income statement has been segmented into `continuing" - Afrox"s industrial
interests - and `discontinuing" - Afrox"s healthcare interest, due to the
proposed sale of Afrox Healthcare which is accounted for in terms of AC117.
Continuing operations
Afrox"s industrial business produced pleasing results in operating profit, which
grew by 18 percent to R613 million (2003: R519 million), profit before tax was
21 percent higher and net profit increased by 16 percent. Revenue at R2,9
billion (2003: R2,8 billion) was only marginally higher due to the difficult
trading conditions that prevailed during the year. The tax rate grew from 28,0
percent to 31,2 percent, reflecting a higher STC charge of R13 million.
Discontinuing operations
Afrox Healthcare performed well with a 10 percent increase in revenue to R4,9
billion (2003: R4,5 billion), 16 percent increase in operating profit, and 6
percent growth in net profit.
ACCOUNTING POLICIES
These results have been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice. The accounting policies for the year
ended 30 September 2004 are consistent with those applied at 30 September 2003.
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 2004. A copy of
their unqualified report is available for inspection at the company"s registered
office.
BUSINESS REVIEW
Continuing operations
Industrial & Special Products (ISP) and Process Gas Solutions (PGS) constitute
the industrial businesses.
ISP weathered difficult trading conditions through focused growth efforts and,
as a consequence, grew market share in most areas. Sales increased through
improved customer focus and by developing commercial offers tailor-made for
different customer segments. In the African operations restructuring and major
investments in new plant and equipment have laid a foundation for further
growth. New business gains, particularly in the beverage industry, the renewal
of existing contracts, and buoyant demand for carbon dioxide contributed to
PGS"s robust performance.
Discontinuing operations
Healthcare had an excellent year in spite of stiff competition and increased
government legislation. The shareholding in the Wilgeheuwel Hospital in
Roodepoort was increased from 28 percent to 74 percent. The Jan S Marais
Hospital in the Western Cape was sold. Construction began on a R174 million 194-
bed hospital in Fourways with completion due by March 2006. In the United
Kingdom a venture was successfully launched providing orthopaedic services to
the National Health Services (NHS).
DIVIDEND
The sound results enabled the board of directors to declare a final dividend,
from the continuing operations, of 31,0 cents per share. The total dividend is
covered 1,8 times by earnings of R401 million.
SALE OF AFROX HEALTHCARE
On 17 November 2003, we announced that we would dispose of Afrox"s 68 percent
shareholding in Afrox Healthcare to Bidco, a BEE consortium, led by Brimstone
Investment Corporation Limited and Mvelaphanda Strategic Investments (Pty)
Limited. The approval by the Competition Tribunal is the only outstanding
condition precedent for the acquisition by Bidco of all the shares in Afrox
Healthcare. The Competition Tribunal will reconvene on 24 January 2005 to
deliberate the sale.
Once this approval has been obtained the board will consider the distribution of
proceeds to shareholders. In terms of the transaction no dividend is payable
arising out of the earnings from the discontinuing operations.
Outlook
Afrox provides essential products and services to key markets. We will continue
to package innovative product service offerings for our customers. Afrox has a
strong balance sheet and cash flow, and low gearing, placing the company in a
sound position for future expansion, although the strong rand and volatility in
oil prices make performance forecasts difficult for 2005.
John Walsh
Chairman
Rick Hogben
Managing Director
Johannesburg
28 October 2004
Dividend declaration
From the continuing operations, the board of directors has declared a final cash
dividend of 31 cents per share for the year ended 30 September 2004. The
dividend is payable on Monday, 31 January 2005 to shareholders recorded in the
books of the company at the close of business on Friday, 28 January 2005. The
last day to trade `cum" dividend will be Friday, 21 January 2005 and the shares
will trade `ex" dividend from the commencement on business on Monday, 24 January
2005.
Share certificates may not be dematerialised or rematerialised between Monday,
24 January 2005 and Friday, 28 January 2005, both days inclusive.
By order of the board
Johannesburg
28 October 2004
Summarised Balance Sheet
As at As at
30 September 30 September
R"000 2004 2003
ASSETS
Non-current assets 3 530 712 3 269 797
Property, plant and equipment 3 051 133 2 857 588
Other non-current assets 479 579 412 209
Current assets 2 100 642 1 942 527
Inventories 406 544 416 647
Trade and other receivables 1 213 149 1 265 328
Cash and cash equivalents 480 949 260 552
Total assets 5 631 354 5 212 324
EQUITY AND LIABILITIES
Capital and reserves 2 705 924 2 377 131
Share capital 17 143 17 143
Share premium 537 314 537 314
Accumulated profits and reserves 2 151 467 1 822 674
Minority interest 786 791 626 165
Non-current liabilities 570 378 783 873
Borrowings 415 103 623 735
Other non-current liabilities 155 275 160 138
Current liabilities 1 568 261 1 425 155
Current portion of borrowings 237 056 87 278
Provisions for liabilities
and charges 220 912 178 616
Other current liabilities 1 107 229 1 157 884
Bank overdraft 3 064 1 377
Total equity and liabilities 5 631 354 5 212 324
Summarised Income Statement
30 September % 30 September
R"000 2004 Change 2003
Continuing operations
Revenue 2 921 362 2 2 851 066
Operating profit before
finance costs 612 711 18 518 640
Finance costs (25 473) (33 245)
Profit before taxation 587 238 21 485 395
Income tax expense (183 279) (135 954)
Profit after taxation 403 959 16 349 441
Minorities (2 973) (4 349)
Net profit for the year 400 986 16 345 092
Discontinuing operations
Revenue 4 913 782 10 4 474 829
Operating profit before
Healthcare disposal costs 664 790 16 571 196
Costs of Healthcare disposal (16 167) -
Finance costs (72 381) (88 699)
Income from associates 51 770 42 841
Profit before taxation 628 012 20 525 338
Income tax expense (218 886) (162 370)
Profit after taxation 409 126 13 362 968
Minority interest (187 420) (153 622)
Net profit for the year 221 706 6 209 346
Total net profit for the year 622 692 12 554 438
Adjustments for headline earnings
- Costs of Healthcare disposal 16 167 -
- Goodwill amortised 10 075 8 689
- Profit on disposal of property,
plant and equipment (6 222) (4 029)
Headline earnings 642 712 15 559 098
Basic earnings per ordinary share
- Group (cents) 181,6 10 165,1
- Continuing operations (cents) 117,0 14 103,0
- Discontinuing
operations (cents) 64,6 4 62,1
Headline earnings per
ordinary share
- Group (cents) 187,5 13 166,5
- Continuing operations (cents) 117,1 15 102,1
- Discontinuing operations
(cents) 70,4 9 64,4
Summarised Cash Flow Statement
30 September 30 September
R"000 2004 2003
Cash generated from operations 1 611 376 1 444 615
Finance costs and taxation paid (472 040) (489 570)
Dividends received 1 096 897
Cash available from operations 1 140 432 955 942
Dividends paid (284 568) (55 850)
Net cash inflow from operating
activities 855 864 900 092
Acquisition of business (46 408) (68 624)
Disposal of shares - 2 000
Purchase of property, plant
and equipment (493 713) (485 261)
Other investing cash flows, net 64 449 48 027
Net cash outflow from investing
activities (475 672) (503 858)
Minorities (48 889) (75 711)
(Decrease)/increase in borrowings (112 593) (49 946)
Movement on retirement benefit
obligation - (62 604)
Net cash (outflow)/inflow from
financing activities (161 482) (188 261)
Net (decrease)/increase in cash and
cash equivalents 218 710 207 973
Cash and cash equivalents at
beginning of year 259 175 51 202
Cash and cash equivalents at
end of year 477 885 259 175
Statistics and Ratios
30 September 30 September
2004 2003
Statistics
Total number of shares in
issue ("000) 342 853 342 853
Number of ordinary shares on which
earnings per share are based ("000) 342 853 335 767
Dividends and capitalisation share
award, per share (cents)
- from continuing operations 64,0 51,8
- Final 31,0 29,0
- Interim 33,0 22,8
Ratios
Interest cover (times) 13,1 8,9
Effective tax rate (%) 33,1 29,5
Gearing (%) 4,6 12,5
Dividend cover for continuing
operations (interim and final
dividend for current year) 1,8 2,0
Segmental Information
Geographical segments for continuing operations
R"000 South Africa Rest of Africa Total
Year ended 30 September 2004
Revenue 2 558 524 362 838 2 921 362
Operating profit before
finance costs 530 514 82 197 612 711
Year ended 30 September 2003
Revenue 2 502 516 348 550 2 851 066
Operating profit before
finance costs 440 742 77 898 518 640
Summarised Statement of Changes in Equity
Issued Share Other Accumulated
R"000 capital premium reserves profits Total
Balance at
1 October 2003 17 143 537 314 102 413 1 720 261 2 377 131
Surplus on
revaluation of
properties - - 47 - 47
Other movements - - (318) (1 426) (1 744)
Currency
translation
difference - - (384) (7 250) (7 634)
Net profit for
the year - - - 622 692 622 692
Dividends
declared - - - (284 568) (284 568)
Balance at
30 September 2004 17 143 537 314 101 758 2 049 709 2 705 924
Balance at
1 October 2002 16 515 360 478 104 371 1 411 164 1 892 528
Change in
accounting policy - - 1 061 15 911 16 972
Restated balance 16 515 360 478 105 432 1 427 075 1 909 500
Surplus on
revaluation of
properties - - 2 016 - 2 016
Other movements - - (611) (8 019) (8 630)
Currency
translation
difference - - (4 424) (19 919) (24 343)
Net profit for
the year - - - 554 438 554 438
Dividends
declared - - - (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
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 2004. The annual general meeting will be held on
24 February 2005 and notice thereof will be given in the annual report. The
results can be viewed on the website www.afrox.com.
AFRICAN OXYGEN LIMITED
African Oxygen Limited
(Incorporated in the Republic of South Africa).
Registration number: 1927/000089/06.
ISIN: ZAE000030920.
JSE share code: AFX.
NSX share code: AOX.
("Afrox").
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 2004 (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: JL Walsh**** (Chairman), RL Hogben (Managing Director), RG Cottrell,
N Deeming*, CMD Flemming, AE Isaac*, LA MacNair, R Medori**, GS Sibiya, CB
Strauss, CJPG van Zyl.
Alternate director: RK Lourey***
* British, ** French, *** Australian, **** American.
Company Secretary: ME Sanz
www.afrox.com
Date: 28/10/2004 03:28:29 PM Supplied by www.sharenet.co.za
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