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AFX / AOX - African Oxygen Limited - Interim Financial Results And Dividend
Announcement For The Six Months Ended 30 June 2008
AFRICAN OXYGEN LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1927/000089/06
ISIN: ZAE000067120
JSE code: AFX
NSX code: AOX
INTERIM FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30
JUNE 2008
- Revenue R2,6 billion
- Operating profit R450 million
- EPS at 89,8 cents
- CAPEX R315 million
PERFORMANCE SUMMARY
African Oxygen Limited (Afrox) results for the six months to 30 June 2008 show
revenue at R2,680 billion with operating profits at R450 million. Net profit for
the period was R282 million and earnings per share 89,8 cents. The balance sheet
remains strong with gearing at 29,9%. Operating cash flow for the period was
R582 million.
The change of the financial year-end, during the previous year, has complicated
the comparison of results. The comparatives are for a nine-month period,
therefore a reconciliation of equal period results has been produced. In
comparing the two six-month periods, revenue increased by 18%, with operating
profit up 13%. Net profit increased 19%, with basic earnings per share up 18%.
CAPITAL PROJECTS
Capital expenditure for the six months was R315 million, with the main
investments being in cylinder stocks, CO2 plant and the implementation of SAP.
SAP is now the de-facto system for Afrox and all users have been trained.
OPERATIONAL REVIEW
Electricity load scheduling by ESKOM impacted on production in the first
quarter, inhibiting our ability to exploit strong market demand. Added to this,
the sharp increases in the price of steel, oil and fuel had a negative impact on
the cost base during the first six months.
The reliability of our Air Separation Units (ASUs) reached new highs, which
should result in better bulk service delivery and increased product for the
merchant market. The argon situation improved significantly due to good plant
performance at Pretoria and Highveld. In addition, we started production at our
Wadeville and Pietermaritzburg plants.
Constraints on CO2 production in the second quarter have now stabilised and
supply prospects have improved as we undertake the commissioning of the new
plant in Sasolburg.
We have added two Gas & Gear centres to our country-wide network and plan to
open six more by year-end, bringing our total network to 29 centres.
The organisation has been restructured during the past 12 months, and the new
management structures have responded positively to the challenges of improving
operational performance and capturing the benefits of the current positive
market conditions.
DIVIDEND
It is currently group policy to declare both interim and year-end dividends. The
board of directors have declared an interim cash dividend of 42,0 cents per
share for the six months ended 30 June 2008 (2007: 54,0 cents for the nine
months period). The dividend is covered 2,14 times by earnings per share.
OUTLOOK
The outlook is expected to improve in the second half of 2008, as the full
benefits of the previously announced capex programme and organisation
restructure are realised. This is already reflected in the improved production
volumes at our Germiston cylinder-filling hub. Our Brits plant has also
increased production of MIG-wire over the last few months with record production
levels of Low Hydrogen welding electrodes achieved during June 2008.
Despite the general slowdown in the South African economy, we expect demand for
our products to remain strong for the remainder of the financial year based on
the level of infrastructure development.
Kent Masters Tjaart Kruger 21 August 2008
Chairman Managing director Johannesburg
NOTICE OF INTERIM DIVIDEND DECLARATION NUMBER 164 AND SALIENT FEATURES
Notice is hereby given that an interim cash dividend of 42,0 cents per ordinary
share, being the interim dividend for the six-month period ended 30 June 2008,
has been declared payable to all shareholders of African Oxygen Limited recorded
in the register on Friday, 24 October 2008.
The salient dates for the declaration and payment of the interim dividend are as
follows:
2008
Last day to trade ordinary shares
"cum" dividend Friday, 17 October
Ordinary shares trade "ex" the dividend Monday, 20 October
Record date Friday, 24 October
Payment date Monday, 27 October
Share certificates may not be dematerialised or rematerialised between Monday,
20 October 2008 and Friday, 24 October 2008, both days inclusive.
By order of the board
Mlawuli Manjingolo 21 August 2008
Company secretary Johannesburg
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
30 June 30 June 31 Dec
Rm Note 2008 2007 2007
ASSETS
Property, plant and equipment 3 2 667 2 471 2 459
Investment in associates 13 11 12
Other non-current assets 875 381 833
Non-current assets 3 555 2 863 3 304
Inventories 807 596 684
Trade and other receivables 1 141 858 934
Cash and cash equivalents 155 126 96
Current assets 2 103 1 580 1 714
Total assets 5 658 4 443 5 018
EQUITY AND LIABILITIES
Shareholder`s equity 2 706 2 300 2 533
Minority interests 37 27 27
Total equity 2 743 2 327 2 560
Interest-bearing borrowings 690 500 490
Deferred tax liability 422 264 379
Non-current liabilities 1 112 764 869
Current portion of long-term 500 423 300
loans
Trade and other payables 900 838 852
Taxation 87 62 106
Bank overdraft 316 29 331
Current liabilities 1 803 1 352 1 589
Total equity and liabilities 5 658 4 443 5 018
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2008 2007 2007
Rm Note 6 months 9 months 15 months
Revenue 2 680 3 288 5 849
Operating expenses (2 230) (2 683) (4 798)
Operating profit 450 605 1 051
Net finance costs (42) (47) (89)
Income from associates 2 - 1
Profit before taxation 4 410 558
Taxation (128) (196) (350)
Profit for the period 282 362 613
Attributable to:
Equity holders of the company 277 358 603
Minority interest 5 4 10
Net profit for the period 282 362 613
Basic earnings per share 89,8 116,3 195,5
(cents)
Dividend per share (cents)
Interim* 42,0 54,0 54,0
Final 46,0
*The interim dividend was declared subsequent to 30 June 2008 and is presented
for information purposes.
EQUAL PERIOD COMPARISON OF CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Unaudited
30 June 30 June 31 Dec
2008 2007 2007
Rm 6 months 6 months 12 months
Revenue 2 680 2 272 4 785
Operating expenses (2 230) (1 875) (3 931)
Operating profit 450 397 854
Net finance costs (42) (29) (41)
Income from associates 2 - -
Profit before taxation 410 368 813
Taxation (128) (131) (258)
Profit for the period 282 237 555
Attributable to:
Equity holders of the company 277 235 547
Minority interest 5 2 8
Net profit for the period 282 237 555
Basic earnings per share 89,8 76,2 177,3
(cents)
GEOGRAPHICAL SEGMENTS
South Rest of
Rm Africa Africa Total
Fifteen months ended 31 December 2007
- revenue 5 183 666 5 849
- operating profit 888 163 1 051
Nine months ended 30 June 2007
- revenue 2 879 409 3 288
- operating profit 510 95 605
Six months ended 30 June 2008
- revenue 2 312 368 2 680
- operating profit 372 78 450
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2008 2007 2007
Rm 6 months 9 months 15 months
Operating profit 450 605 1 051
Adjustments for:
Depreciation 116 159 251
Other 16 (18) 42
Operating cash flow before working 582 746 1 344
capital changes
Working capital changes (307) (186) (350)
Cash generated from operations 275 560 994
Finance costs and taxation paid (150) (281) (315)
Other - - (54)
Cash available from operations 125 279 625
Dividends paid (142) (309) (475)
Net cash (outflow)/inflow from (17) (30) 150
operating activities
Acquisition of business - (114) (132)
Purchase of property, plant and (315) (607) (987)
equipment and intangibles
Other investing cash flows - net 7 9 33
Net cash outflow from investing (308) (712) (1 086)
activities
Minorities (1) (2) (6)
Increase in borrowings 400 408 274
Net cash inflow from financing 399 406 268
activities
Net increase/(decrease) in cash
and cash equivalents 74 (336) (668)
Cash and cash equivalents at beginning (235) 433 433
of period
Cash and cash equivalents at
end of period (161) 97 (235)
STATISTICS AND RATIOS
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2008 2007 2007
6 months 9 months 15 months
Basic earnings per ordinary share - 89,8 116,3 195,5
group (cents)
Headline earnings per ordinary
share - group (cents) 89,8 117,0 196,5
Average number of shares in issue 308 568 308 568 308 568
during the period (`000)
Shares in issue (`000) 308 568 308 568 308 568
Dividends per share (cents) 42,0 54,0 100,0
Net asset value per share (cents) 877 745 821
Ratios
Operating margin (%) 16,8 18,4 18,0
Interest cover (times) 10,7 12,9 11,8
Effective tax rate (%) 31,2 35,1 36,3
Gearing (%) 29,9 24,5 25,9
Dividend cover - (times) 2,14 2,15 1,96
NOTES TO THE FINANCIAL STATEMENTS
1. FINANCIAL PERIOD
In the prior year, Afrox changed its year-end to December to align itself with
the financial year-end of its holding company, Linde AG. The comparative
financial period therefore ended on 31 December 2007 and covered 15 months. The
interim results hereby presented are for six months ended 30 June 2008 and the
comparative period covers nine months ended 30 June 2007.
2. Basis of preparation and accounting policies
These condensed interim group financial statements have been prepared using
accounting policies that comply with International Financial Reporting Standards
(IFRS), and complies with IAS 34 - Interim Financial Reporting, Schedule 4 of
the Companies Act, 1973 and the disclosure requirements of the Listing
Requirements of the JSE Limited.
The accounting policies applied are consistent with those followed in the
preparation of the consolidated financial statements for the 15-month period
ended 31 December 2007, 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:
IFRS 7: Financial Instruments: Disclosure
These condensed interim financial statements have not been reviewed or audited
by the group`s auditors.
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2008 2007 2007
Rm 6 months 9 months 15 months
3. Capital expenditure and
commitments
Property, plant and equipment
Opening carrying value 2 459 2 029 1 928
Additions 301 607 781
Disposals (2) (10) (17)
Depreciation (116) (159) (251)
Acquisition of business - - 24
Exchange loss and other 25 4 (6)
movements
Closing carrying value 2 667 2 471 2 459
Capital commitments
- authorised but not committed 27 295 1
- authorised and committed 145 104 494
Total capital commitments 172 399 495
4. Profit before taxation
Included in profit before
taxation are:
Amortisation of intangible 7 1 3
assets
Depreciation 116 159 251
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital and
Rm share Other Retained Minority Total
premium reserves earnings interest
Balance at 30 552 158 1 572 23 2 305
September 2006
Other movements - 47 76 - 123
Net profit for - - 603 10 613
the period
Dividend paid - - (475) (6) (481)
Balance at 31 552 205 1 776 27 2 560
December 2007
Balance at 1 552 205 1 776 27 2 560
January 2008
Other movements - 38 - 6 44
Net profit for - - 277 5 282
the period
Dividend paid - - (142) (1) (143)
Balance at 30 552 243 1 911 37 2 743
June 2008
AFRICAN OXYGEN LIMITED
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 (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: JK Masters* (Chairman), TN Kruger (Managing director),
DM Lawrence, M Malebye, DK Mokhele, J Nowicki**, K Oliver, SM Pityana,
LL van Niekerk, CJPG van Zyl (Financial director), AM Watkins***
*American **German ***British
Company secretary: M Manjingolo
www.afrox.com
Afrox is a member of The Linde Group
Date: 21/08/2008 15:00:01 Supplied by www.sharenet.co.za
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