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African Oxygen Limited - Results For The Six Months Ended 31 March 2005
AFRICAN OXYGEN LIMITED
African Oxygen Limited
(Incorporated in the Republic of South Africa).
Registration number: 1927/000089/06.
ISIN Code: ZAE000030920.
South African share code: AFX. Namibian share code: AOX.
("Afrox" or "the Company").
AFRICAN OXYGEN LIMITED
Results for the six months ended 31 March 2005
- Sale of Afrox Healthcare Limited concluded for R3,4 billion
- Afrox returns R2,1 billion to shareholders
- Interim dividend increased by 21 percent
Summarised Income Statement
Unaudited Unaudited Audited
6 months 6 months 12 months
to March % to March to Sept.
R"000 2005 Change 2004 2004
Revenue 4 071 347 9 3 734 865 7 835 144
Operating profit 641 163 7 598 298 1 277 501
Net profit on sale
of shares in Afrox
Healthcare Limited 1 003 591 - (16 167)
Profit from
operations 1 644 754 598 298 1 261 334
Finance costs (20 854) (52 942) (97 854)
Income from
associates 27 805 26 046 51 770
Profit before
taxation 1 651 705 189 571 402 1 215 250
Income tax expense (352 230) (188 487) (402 165)
Profit after
taxation 1 299 475 239 382 915 813 085
Minorities (99 359) (77 615) (190 393)
Total net profit
for the period 1 200 116 293 305 300 622 692
Reconciliation of
headline earnings
Total net profit
for the period 1 200 116 293 305 300 622 692
- Net profit on sale
of shares in Afrox
Healthcare Limited (1 003 591) - 16 167
- Taxation effect on
net profit on sale
of shares in Afrox
Healthcare Limited 143 937 - -
- Goodwill impaired 6 449 5 725 10 075
- Profit on disposal
of property, plant
and equipment (1 379) (2 693) (6 222)
Headline earnings 345 532 12 308 332 642 712
Basic earnings per
ordinary share
- Group (cents) 350,0 293 89,0 181,6
Headline earnings
per ordinary share
- Group (cents) 100,8 12 89,9 187,5
Summarised Balance Sheet
Unaudited Unaudited Audited
As at As at As at
31 March 31 March 30 Sept.
R"000 2005 2004 2004
ASSETS
Non-current assets 2 035 204 3 443 223 3 530 712
Property, plant and equipment 1 582 312 2 969 614 3 048 255
Associate investment 375 000 - -
Other non-current assets 77 892 473 609 482 457
Current assets 2 861 337 1 864 693 2 100 642
Inventories 303 652 425 434 406 544
Receivables and prepayments 552 357 1 401 051 1 213 149
Cash and cash equivalents 2 005 328 38 208 480 949
Total assets 4 896 541 5 307 916 5 631 354
EQUITY AND LIABILITIES
Capital and reserves 3 798 902 2 497 968 2 705 924
Issued capital 17 143 17 143 17 143
Share premium 537 314 537 314 537 314
Accumulated profits and
reserves 3 244 445 1 943 511 2 151 467
Minority interest 10 687 665 955 786 791
Non-current liabilities 160 488 787 160 570 378
Borrowings 11 303 621 440 415 103
Other non-current liabilities 149 185 165 720 155 275
Current liabilities 926 464 1 356 833 1 568 261
Current portion of borrowings 68 002 91 571 237 056
Provisions for liabilities
and charges 91 255 175 553 220 912
Other current liabilities 762 656 1 083 801 1 107 229
Bank overdraft 4 551 5 908 3 064
Total equity and liabilities 4 896 541 5 307 916 5 631 354
Statistics and Ratios
6 months 6 months 12 months
to March to March to Sept.
2005 2004 2004
Statistics and Ratios
Total number of shares in
issue ("000) 342 853 342 853 342 853
Number of ordinary shares on
which earnings per share are
based ("000) 342 853 342 853 342 853
Dividends per share (cents) 40,0 33,0 64,0
Special dividend per share(cents)415,0 - -
Ratios
Interest cover (times) 78,9 11,3 12,9
Effective tax rate (%)
- excluding the sale of shares
in Afrox Healthcare 32,1 33,0 33,1
- including the sale of shares
in Afrox Healthcare 21,3 33,0 33,1
Gearing (%) - 17,0 4,6
Dividend cover - Headline
earnings (times) 1,62 1,87 1,83
Performance summary
For the six months ended 31 March 2005, the consolidated results of both Afrox
industrial and healthcare, have shown a 9 percent increase in revenue to R4,1
billion (2004: R3,7 billion), with operating profit up 7 percent at R641,2
million (2004: R598,3 million) and headline earnings per share 10,9 cents higher
than the comparable period last year.
The first quarter, in particular, was characterised by a rapid escalation in
costs of liquefied petroleum gas (LPG) and steel. After an initial lag in the
recovery of these costs, they had been fully recovered by the end of the second
quarter, which saw a general improvement with a pleasing growth in profits.
Overall the results were according to expectations.
The Process Gas Solutions" (PGS) business was affected by reduced plant
efficiencies, which have now been rectified through planned maintenance.
Sale of Afrox Healthcare
The sale of Afrox Healthcare was granted final approval by the Competition
Tribunal and became effective on 22 March 2005. Business Venture (Bidco), a BEE
consortium, led by Brimstone Investment Corporation Limited and Mvelaphanda
Strategic Investments (Pty) Limited, became the registered holder of all of the
issued shares of Afrox Healthcare Limited. On 23 March 2005, Afrox Healthcare
Limited"s listing on the JSE Securities Exchange was terminated. All
shareholders have been paid in full.
Afrox Healthcare Limited performed well and should continue this trend as a
stand-alone BEE company. In this regard the directors, management and employees
of Afrox wish Afrox Healthcare a successful future.
To comply with accounting standards, the healthcare income statement is
consolidated with the industrial results but is also shown separately in the
table below. In future, Afrox"s remaining 20,1 percent interest in Bidco, will
be equity accounted and shown as income from associates.
As Afrox remains an investor in Healthcare through Bidco, Healthcare is no
longer disclosed as a discontinuing operation.
Business review
Afrox is a strong, robust business that has proved its ability to grow through
all economic cycles. Since inception in 1927, the company has clearly
demonstrated this by producing a compound annual growth rate in profit of 14,6
percent over the 78-year period.
Afrox is a broad based company operating in a wide range of business segments.
Our strategy is to sustain our core business while utilising our strong branding
and distribution network to grow into new markets and new geographies.
On a comparative basis for the six months under review, the Afrox industrial
business stripped of healthcare results, showed a pleasing 12 percent increase
in revenue at R1,6 billion (2004: R1,4 billion) with net profit 7 percent higher
at R222,8 million (2004: R207,4 million). Cash flow improved considerably from
R235 million in March 2004 to R320 million.
Several growth projects are in place, many of which are at an advanced stage and
are already producing good returns. In 2004, for example, we entered the global
export market with our Vitemax general-purpose electrodes by selling to BOC
companies in Australia and New Zealand. The product was well received and has
proved a growth area.
Following success with exports of our world benchmark Afrox designed and
manufactured gas and welding equipment to Australia, New Zealand and SE Asia,
the company won the contract to supply BOC in the United Kingdom with our
redesigned range of gas equipment and accessories.
We are converting, re-locating or upgrading our existing chain of retail
outlets, aimed at smaller collect customers, to a new concept in industrial
retailing known as Afrox Gas & Gear. The centres are stocked with a wide range
of specially merchandised equipment. We plan to have 16 Gas & Gear centres
countrywide operational by the year-end and should introduce 24 more within the
next two years.
In April 2005, we acquired Twinco, a leading safety products company that will
position us to compete successfully in the safety products market. In addition,
sales of the AfroxPac 35 self-contained self-rescuer, launched in 2003, are on
track to achieve stringent stretch targets by year-end. Growth in the safety
business has led to the consolidation of our safety products under a single
business unit called Afrox Safety, which already has an annualised turnover in
excess of R180 million.
During the half-year we also focused on cost control and efficiency enhancing
projects. An example is the R100 million re-engineering and expansion of our
Gases Operations Centre in Germiston. This three-year project will enlarge and
increase efficiencies in what is already the biggest gas production, cylinder
filling and distribution centre in the southern hemisphere, manufacturing,
producing and distributing the entire range of our industrial, medical and
scientific gases.
Process Gas Solutions" sales were affected by a shortage of carbon dioxide for
the carbonated beverage industry over the high volume summer season. A planned
shutdown for maintenance of our largest gas producing plant in Mpumalanga
resulted in rationing product to keep all customers supplied.
During the half-year, BOC Edwards appointed PGS as the sole distributor for its
world benchmark range of vacuum products. PGS is currently developing several
revenue-enhancing projects, which should increase revenues over the next six
months.
Accounting policies
These results have been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice. The accounting policies for the six
months are consistent with those applied at 30 September 2004.
Special dividend and share buy back
The board of directors has resolved to distribute the net proceeds from the
disposal of the company"s 68 percent shareholding in Afrox Healthcare Limited by
way of a share buy back and a special dividend of 415 cents per ordinary share.
The attention of shareholders is drawn to a parallel announcement regarding the
distribution of the remainder of the net proceeds by way of a 10 percent
compulsory share buy back.
This will result in a total distribution of 608 cents per share.
Interim dividend
The results for the six months under review have enabled the board of directors
to declare an interim cash dividend from the industrial business of 40 cents per
share (2004: 33 cents per share), an increase of 21 percent on last year. The
dividend is covered 1,62 times by earnings from the industrial operations.
Outlook
Afrox is known as a strong performer through all economic cycles. The past six
months have, however, been difficult. We have actions to address the challenges
for the second half of the year. As a result we expect increased revenues and
profits from our new product and service offerings. We look forward to the next
six months with confidence and expect earnings growth to be higher for the full
year.
Kent Masters Rick Hogben Johannesburg
Chairman Managing Director 29 April 2005
Summarised Cash Flow Statement
Unaudited Unaudited Audited
6 months 6 months 12 months
to March to March to Sept.
R"000 2005 2004 2004
Cash generated from operations 577 291 589 494 1 611 376
Finance costs and taxation paid (250 238) (273 501) (472 040)
Net dividends paid (106 295) (171 427) (283 472)
Net cash inflow from operating
activities 220 758 144 566 855 864
Disposal/(acquisition) of
subsidiaries 2 171 338 (45 269) (46 408)
Purchase of property, plant
and equipment (308 291) (230 868) (493 713)
Other investing cash flows, net (317 792) 14 904 64 449
Net cash inflow/(outflow)
from investing activities 1 545 255 (261 233) (475 672)
Minorities (29 788) (58 895) (48 889)
Decrease in borrowings (213 333) (51 313) (112 593)
Net cash outflow from
financing activities (243 121) (110 208) (161 482)
Net increase/(decrease) in
cash and cash equivalents 1 522 892 (226 875) 218 710
Cash and cash equivalents at
start of period 477 885 259 175 259 175
Cash and cash equivalents at
end of period 2 000 777 32 300 477 885
Summarised Statement of Changes of Equity
Revalu-
Issued Share ation
R"000 capital premium reserves
Balance at 1 October 2004 17 143 537 314 101 758
Surplus on revaluation
of properties - - 200
Other movements - - (495)
Net profit for the period - - -
Dividend declared - - -
Balance at 31 March 2005 17 143 537 314 101 463
Balance at 1 October 2003 17 143 537 314 102 745
Surplus on revaluation
of properties - - 648
Other movements - - (1 063)
Net profit for the period - - -
Dividend declared - - -
Balance at 31 March 2004 17 143 537 314 102 330
Summarised Statement of Changes of Equity
AC133 Accu-
hedging mulated
R"000 reserve Profits Total
Balance at 1 October 2004 - 2 049 709 2 705 924
Surplus on revaluation
of properties - - 200
Other movements - (548) (1 043)
Net profit for the period - 1 200 116 1 200 116
Dividend declared - (106 295) (106 295)
Balance at 31 March 2005 - 3 142 982 3 798 902
Balance at 1 October 2003 (332) 1 720 261 2 377 131
Surplus on revaluation
of properties - - 648
Other movements 332 (12 953) (13 684)
Net profit for the period - 305 300 305 300
Dividend declared - (171 427) (171 427)
Balance at 31 March 2004 - 1 841 181 2 497 968
Geographical Segments
South Rest of
R"000 Africa Africa Total
Six months ended 31 March 2005
Revenue 3 827 737 243 610 4 071 347
Operating profit 590 514 50 649 641 163
Six months ended 31 March 2004
Revenue 3 505 192 229 673 3 734 865
Operating profit 554 704 43 594 598 298
12 months ended 30 September 2004
Revenue 7 363 834 471 310 7 835 144
Operating profit 1 186 521 90 980 1 277 501
Notice of special dividend declaration and salient features
Notice is hereby given that a special cash dividend of 415,0 cents per ordinary
share has been declared payable to all shareholders of African Oxygen Limited
recorded in the register on Friday, 24 June 2005.
The salient dates for the declaration and
payment of the special dividend are as follows: 2005
Last day to trade ordinary shares `cum" dividend Friday, 17 June
Ordinary shares trade `ex" the dividend Monday, 20 June
Record date Friday, 24 June
Payment date Monday, 27 June
Share certificates may not be dematerialised or rematerialised between Monday 20
June 2005 and Friday 24 June 2005, both days inclusive.
Notice of interim dividend declaration and salient features
Notice is hereby given that, from the industrial operations, an interim cash
dividend of 40.0 cents (2004: 33.0 cents) per ordinary share, being the interim
dividend for the half year ended 31 March 2005, has been declared payable to all
shareholders of African Oxygen Limited recorded in the register on Friday, 22
July 2005.
The salient dates for the declaration and
payment of the interim dividend are as follows: 2005
Last day to trade ordinary shares `cum" dividend Friday, 15 July
Ordinary shares trade `ex" the dividend Monday, 18 July
Record date Friday, 22 July
Payment date Monday, 25 July
Share certificates may not be dematerialised or rematerialised between Monday 18
July 2005 and Friday 22 July 2005, both days inclusive.
By order of the Board
Ria Sanz Johannesburg
Company Secretary 29 April 2005
Business Segments
6 months ended 6 months ended
31 March 2005 ended 31 March 2004
Industrial Industrial
R"000 Operations Healthcare Total Operations Healthcare
Revenue 1 563 173 2 508 174 4 071 347 1 391 439 2 343 426
Operating
profit 327 869 313 294 641 163 312 541 285 757
Total net
profit for
the period
before sale
of Afrox
Healthcare 222 833 117 629 340 462 207 358 97 942
Net profit on
sale of shares
in Afrox
Healthcare
Limited after
CGT - - 859 654 - -
Net profit for
the period 222 833 117 629 1 200 116 207 358 97 942
Business Segments
12 months ended
30 September 2004
Industrial
R"000 Total Operations Healthcare Total
Revenue 3 734 865 2 921 362 4 913 782 7 835 144
Operating profit 598 298 612 711 664 790 1 277 501
Total net
profit for
the period
before sale
of Afrox
Healthcare 305 300 400 986 237 873 638 859
Net profit on
sale of shares
in Afrox
Healthcare
Limited after
CGT - - - (16 167)
Net profit for the period 305 300 400 986 237 873 622 692
AFRICAN OXYGEN LIMITED
African Oxygen Limited (Incorporated in the Republic of South Africa).
Registration number: 1927/000089/06. ISIN Code: 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.
Directors: JK Masters** (Chairman), RL Hogben (Managing Director), RG Cottrell,
AJ Cullens*, JA Ford*, AE Isaac*, LA MacNair, R Medori***, CB Strauss, LL van
Niekerk, CJPG van Zyl. Alternate director: RK Lourey**** Company Secretary:
ME Sanz * British ** American *** French **** Australian
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.
This is a summarised commentary and results announcement. The interim report,
which complies with AC127, will be mailed to shareholders during May 2005.
Stakeholder enquiries may be addressed to: rick.hogben@afrox.boc.com
www.afrox.co.za
Date: 29/04/2005 02:59:39 PM Supplied by www.sharenet.co.za
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