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AFX - Afrox - Audited Financial Results And Dividend Announcement For The Year
Ended 31 December 2008
AFRICAN OXYGEN LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1927/000089/06
ISIN: ZAE000067120
JSE code: AFX
NSX code: AOX
("Afrox" or "the Company" or "the Group")
AUDITED FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE YEAR ENDED
31 DECEMBER 2008
Comparable 12 month revenue up 18% to R5.7 billion
Comparable 12 month operating profit down 10% to R753 million
Comparable 12 month EPS down 11% to 133.7 cents per share
Final dividend of 25 cents per share declared, 67 cents per share for the year
PERFORMANCE SUMMARY
For the year ended 31 December 2008 revenue increased by 18% to R5,7 billion and
operating profit declined by 10% to R753 million compared to the restated
results for the twelve month period ended December 2007. Operating profit margin
dropped to 13% from 17% as a result of the difficult economic environment
particularly in the fourth quarter. Accordingly net attributable profit of R412
million, and earnings per share of 133,7 cents, were 11% lower.
Operating cash flow of R1 billion met expectations but the increase in net
working capital was higher than planned, mainly as a result of higher inventory
and trade receivable levels. Group gearing of 32% is acceptable at the peak of
an investment cycle and EBITDA interest cover of 8 times is well above our
minimum threshold.
BUSINESS REVIEW
The year was one of consolidating actions initiated as a result of the strategic
review process and introducing a discipline of "today`s work today". Much work
remains to be done on the journey to a High Performance Organisation but
progress to-date has been satisfactory.
This has undoubtedly been one of the most challenging years for Afrox. The
global economic crisis, and the ensuing retreat in consumer-spending, is in
chilling contrast to the effusiveness of recent times. World markets remain
rudderless and no improvements are expected in the short to medium-term. The
impact on South Africa has been rapid and overall economic activities have
declined sharply. Afrox faced steadily deteriorating trading conditions during
the second half, with the final quarter particularly depressed.
Afrox is the first chemicals JSE-listed company to achieve a Level 4 value
adding status for its commitment to Broad Based Black Economic Empowerment. In
line with the Department of Trade and Industry`s generic scorecard, this allows
customers to claim 125% in BBBEE recognition on all goods and services purchased
from Afrox.
Afrox secured a number of new customer wins. The carbon dioxide plant in
Sasolburg and the Kuilsriver air separation as well as nitrogen liquefaction
plants have now been commissioned. In addition to the capital expenditure,
significant effort went into improving the reliability of the Company`s plants.
Our African Operations achieved excellent results at good margin for the year,
contributing a record 23% of group profits.
DIVIDEND
The Board has resolved to declare a final cash dividend of 25 cents per share
(2007: 54 cents). Together with the interim cash dividend of 42 cents per share
(2007: 46 cents), a total of 67 cents per share (2007: 100 cents) is paid for
the year and is covered 2.0 times in earnings per share (2007: 1.9 times), which
is consistent with our guiding principals.
OUTLOOK
Our major capital investment programme has now been completed with the result
that significantly reduced expenditure is anticipated for the immediate future.
Focal points for 2009 include tighter working capital management, reducing
overhead cost, minimising the cost and complexity of doing business, and
preserving liquidity at a time when credit is tight. Our African operations are
performing well but we expect deteriorating conditions towards the middle of the
year due to the impact of the lower commodity prices.
No improvement in trading conditions are expected before 2010, when the
infrastructure build-up, lower inflation and the easing of interest rates will,
hopefully, have stemmed job losses and steadied volumes. Until such time as
general confidence returns, however, Afrox`s traditional customer base will
remain under extreme pressure.
Kent Masters Tjaart Kruger 26 February 2009
Chairman Managing director Johannesburg
NOTICE OF FINAL DIVIDEND DECLARATION NUMBER 165 AND SALIENT FEATURES
Notice is hereby given that a cash dividend of 25 cents per ordinary share,
being the final dividend for the year ended 31 December 2008, has been declared
payable to all shareholders of African Oxygen Limited recorded in the register
on Friday, 24 April 2009.
The salient dates for the declaration and payment of the final dividend are as
follows:
2009
Last day to trade ordinary shares "cum" dividend
Friday, 17 April
Ordinary shares trade "ex" the dividend Monday, 20 April
Record date Friday, 24 April
Payment date Tuesday, 28 April
Share certificates may not be dematerialised or rematerialised between Monday,
20 April 2009 and Friday, 24 April 2009, both days inclusive.
Note:
In the event that the South African National Elections are confirmed for 22
April 2009, a Public Holiday may be declared and the dividend timetable above
would be impacted. In such instance, Afrox would likely bring the Afrox branch
register dividend dates forward by one day to Thursday, 16 April 2009 with
respective ex dividend dates being changed to Friday, 17 April 2009. The record
and payment dates would remain as stated above.
By order of the board
Mlawuli Manjingolo 26 February 2009
Company Secretary Johannesburg
CONDENSED CONSOLIDATED BALANCE SHEET
Audited Audited
Restated
31 December 31 December
Rm Note 2008 2007
ASSETS
Property, plant and equipment 4 2 817 2 459
Investment in associate 14 12
Other non-current assets 1 000 1 170
Non-current assets 3 831 3 641
Inventories 845 684
Trade and other receivables 1 178 942
Cash and cash equivalents 143 96
Current assets 2 166 1 722
Total assets 5 997 5 363
EQUITY AND LIABILITIES
Shareholders` equity 2 741 2 741
Minority interest 39 27
Total equity 2 780 2 768
Long-term borrowings 890 490
Deferred tax liability 519 465
Non-current liabilities 1 409 955
Current portion of long-term loans 500 300
Trade and other payables 975 903
Taxation payable 48 106
Bank overdraft 285 331
Current liabilities 1 808 1 640
Total equity and liabilities 5 997 5 363
CONDENSED CONSOLIDATED INCOME STATEMENT
Audited Audited
Restated
31 December 31 December
2008 2007
Rm Note 12 months 15 months
Revenue 5 666 5 849
Operating expenses (4 913) (4 832)
Operating profit 753 1 017
Net finance costs (121) (89)
Income from associates 2 1
Profit before taxation 5 634 929
Taxation (207) (341)
Profit for the period 427 588
Attributable to:
Equity holders of the company 412 578
Minority interest 15 10
Profit for the period 427 588
Basic and diluted earnings per share 133,7 187,5
(cents)
Dividend per share (cents)
Interim 42,0 54,0
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Audited Audited
Restated
31 December 31 December
2008 2007
Rm 12 months 15 months
Operating profit 753 1 017
Adjustments for:
Depreciation and amortisation 257 254
Other (8) 73
Operating cash flow before working capital 1 002 1 344
changes
Working capital changes (337) (350)
Cash generated from operations 665 994
Finance costs and taxation paid (309) (315)
Other (1) (32)
Cash available from operations 355 647
Dividends paid (272) (475)
Net cash inflow from operating activities 83 172
Acquisition of operations - (132)
Purchase of property, plant and equipment and (603) (987)
intangibles
Other net investing cash flows 19 11
Net cash outflow from investing activities (584) (1 108)
Payments to minorities (6) (6)
Increase in borrowings 600 274
Net cash inflow from financing activities 594 268
Net increase/(decrease) in cash and cash 93 (668)
equivalents
Cash and cash equivalents at start of period (235) 433
Cash and cash equivalents at end of period (142) (235)
EQUAL PERIOD COMPARISON OF CONSOLIDATED INCOME STATEMENT
Audited Unaudited
Restated
31 December 31 December
2008 2007
Rm 12 months 12 months
Revenue 5 666 4 785
Operating expenses (4 913) (3 952)
Operating profit 753 833
Net finance costs (121) (83)
Income from associates 2 -
Profit before taxation 634 750
Taxation (207) (279)
Profit for the period 427 471
Attributable to:
Equity holders of the company 412 463
Minority interest 15 8
Profit for the period 427 471
Basic earnings per share (cents) 133,7 150,2
RECONCILIATION OF PRIOR PERIODS` RESULTS DUE TO CHANGES IN
ACCOUNTING POLICIES
Changes in accounting policies
As a result of the change in accounting policies the published accounts for the
Group and Company for the fifteen months ended 31 December 2007 had to be
restated. These restated income statements and balance sheets show the original
reported numbers and the effect of the changes.
Adoption of IFRIC 14 - The Limit on a Defined Benefit Asset, Minimum Funding
Requirements and their interaction
IFRIC 14 - "IAS 19 - The Limit on a Defined Benefit Asset. Minimum Funding
Requirements and their Interaction" provides guidance regarding when refunds or
reductions in future contributions should be regarded as available, how a
minimum funding requirement might affect the availability of reductions in
future contributions and when a minimum funding requirement might give rise to a
liability. The guidance provided by IFRIC 14 is effective for annual periods
beginning on or after 1 January 2008 and therefore Afrox have applied the
interpretations guidance in determining the extent to which the pension fund
surplus could be recognised at 31 December 2008. In accordance with the
requirements this change in policy has been applied on a retrospective basis
with comparative numbers being restated.
IAS 39 - Financial Instruments: Recognition & Measurement change in accounting
for LPG cylinder deposits
Historically the accounting treatment adopted by Afrox has been to recognise the
liability for LPG cylinder deposits on the balance sheet as a provision.
Consequently the total liability has been historically recognised based on
historical trends and data supporting the fact that only 25% of LPG cylinders
are returned by customers for refund. During the current financial year the
International Financial Reporting Interpretations Committee ("IFRIC") raised the
issue regarding whether deposits on returnable containers were in fact financial
liabilities and provided clarity regarding the accounting treatment thereof.
Based on the clarity provided by the IFRIC, Afrox concluded that the
classification of this obligation as a financial liability on the balance sheet
better reflected the underlying nature of the liability. This change has been
accounted for as a change in accounting policy and has been applied on a
retrospective basis.
BALANCE SHEET
Restated
Audited unaudited
as at 31 as at 31
Rm December IFRIC 14 IAS 39 December
2007 effect change 2007
Assets
Non-current assets 3 296 345 - 3 641
Current assets 1 722 - - 1 722
5 018 345 - 5 363
Equity and liabilities
Capital and reserves 2 561 245 (38) 2 768
Non-current liabilities 869 100 (14) 955
Current liabilities 1 588 - 52 1 640
Total equity and 5 018 345 - 5 363
liabilities
INCOME STATEMENT
Restated
Audited unaudited
for the 15 for the 15
months months
ended ended
Rm December IFRIC 14 IAS 39 December
2007 effect change 2007
Revenue 5 849 - - 5 849
Operating profit 1 052 - (35) 1 017
Net finance expense (89) - - (89)
Income from associate 1 - - 1
Profit before taxation 964 - (35) 929
Income tax expense (350) - 9 (341)
Profit for the period 614 - (26) 588
Attributable to:
Equity holders of the 604 - (26) 578
company
Minority Interest 10 - - 10
Profit for the period 614 - (26) 588
Basic and diluted 195.5 - (8.0) 187.5
earnings per ordinary
share - (cents)
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital
Rm and Other Retained Minority Total
share reserves earnings interest
premium
Balance at 552 158 1 572 23 2 305
1 October 2006
Change in accounting - 242 (12) - 230
policy
Restated opening 552 400 1 560 23 2 535
balances
Other movements - 50 76 - 126
Profit for the - - 578 10 588
period
Dividends paid - - (475) (6) (481)
Balance at 31 552 450 1 739 27 2 768
December 2007
Balance at 1 January 552 450 1 739 27 2 768
2008
Other movements - (140) 3 (137)
Profit for the - - 412 15 427
period
Dividends paid - - (272) (6) (278)
Balance at 552 310 1 879 39 2 780
31 December 2008
GEOGRAPHIC SEGMENTS
South Rest of
Rm Africa Africa Total
Twelve months ended 31 December 2008
- revenue 4 869 797 5 666
- profit before income tax 577 176 753
Fifteen months ended 31 December 2007
- revenue 5 111 738 5 849
- profit before income tax 855 162 1 017
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 year ended on 31 December 2007 and covered fifteen months, therefore
no percentage variances are reported. The year end results hereby presented are
for twelve months ended 31 December 2008.
2. STATEMENT OF COMPLIANCE AND ACCOUNTING POLICIES
These condensed year end group financial statements have been prepared in
accordance with the recognition and measurement of International Financial
Reporting Standards (IFRS), and are in compliance with IAS 34: presentation and
disclosure Interim Financial Reporting, the JSE Limited`s Listing Requirements
and in the manner required by the South African Companies Act.
The accounting policies applied are consistent with those followed in the
preparation of the consolidated annual financial statements for the year 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 and IFRIC Interpretation 14: The Limit
on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction.
3. AUDIT OPINION
The independent auditors, KPMG Inc., have issued their opinion on the Group`s
financial statements for the year ended 31 December 2008. A copy of their
unqualified audit report is available for inspection at the Company`s registered
office.
Audited Audited
Restated
31 December 31 December
2008 2007
Rm 12 months 15 months
4. Capital expenditure and commitments
Property, plant and equipment
Opening carrying value 2 459 1 928
Additions 540 781
Disposals (2) (17)
Depreciation (231) (251)
Acquisition of business - 24
Exchange loss and other movements 51 (6)
Closing carrying value 2 817 2 459
Capital commitments
- authorised but not committed - 1
- authorised and committed 47 494
Total capital commitments 47 495
5. Profit before taxation
Included in profit before taxation are:
Amortisation of intangible assets 26 3
Depreciation 231 251
STATISTICS AND RATIOS
Audited Audited
Restated
31 December 31 December
2008 2007
Rm 12 months 15 months
Basic and diluted earnings per ordinary 133,7 187,5
share - Group (cents)
Headline earnings per ordinary share - 133,5 188,9
Group (cents)
Average number of shares in issue during 308 568 308 568
the period (`000)
Shares in issue at end of period (`000) 308 568 308 568
Dividends per share (cents) (excl special) 67,0 100,0
Net asset value per share (cents) 782 730
RATIOS
Operating margin (%) 13,3 17,4
Interest cover (times) 6,2 11,4
Effective tax rate (%) 32,6 36,7
Gearing (%) 31,7 24,1
Dividend cover (times) 2,0 1,9
Registered office: Afrox House, 23 Webber Street, Selby, Johannesburg 2001. PO
Box 5404, Johannesburg 2000. Telephone +27 (0) 11 490-0400.
Transfer secretaries: Computershare Investor Services (Pty) Limited,
70 Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107.
Telephone: +27 (0) 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: 26/02/2009 15:22:02 Supplied by www.sharenet.co.za
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