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AFX - African Oxygen Limited - Unaudited financial results and dividend
announcement for the six months ended 30 June 2009
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")
UNAUDITED FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE SIX MONTHS ENDED
30 JUNE 2009
* Revenue R2,4 billion
* EBITDA R433 million
* Cash generated R608 million
PERFORMANCE SUMMARY
BUSINESS REVIEW
Trading conditions in the six months to 30 June 2009 were extremely tough as
the substantial collapse in demand experienced in the last quarter of 2008
continued into the first half of 2009. The first quarter of 2009 saw
manufacturing output in South Africa declined by 22,1% year-on-year, the
largest decline on record. Afrox`s exposure to this sector is substantial. The
second quarter of 2009 saw only marginal improvement in sales volumes.
To offset extreme trading conditions, Afrox has implemented a rigorous regime
of cost containment. Restructuring and retrenchment measures previously
announced will be completed in the second-half of this financial year. These
fundamental and structural changes to the cost base are considered essential
to Afrox`s long-term viability.
The Company has curbed expenditure in line with the prevailing economic
conditions, while focus on working capital in day-to-day operations prevail
under tight management.
FINANCIAL OVERVIEW
Revenue for the period is down by 11%, EBITDA by 25%, operating profit by
37%, with net profits down by 57%, compared to the same period in 2008. Cash
flow performance was good ensuring that the balance sheet remains strong with
gearing at 27,1%.
Comparing the first half of 2009 with the second half of 2008, revenue for the
period is down by 20%, EBITDA by 1%, operating profit by 7% and net profits by
11%.
Other African operations continued to achieve good results, contributing 27%
to the Group`s half-year EBITDA.
Net borrowings decreased by R297 million to R1 236 million as a result of
increased focus on cash management. Capex was curtailed to R115 million in
the reporting period.
PERFORMANCE
The capex programme embarked on a few years ago is coming to fruition.
The capacity enhancements as a result of this programme have positioned the
Company for future growth.
The decision to accelerate our High Performance Organisation programme,
announced in the Chairman`s statement of the 2008 Annual Report, has proved
timely and positive progress is being made in this respect. Change management
requirements have been challenging, but the organisation is responding
positively. Afrox maintains high market-place visibility in order to defend
market share in the short-term and position the Group for growth when economic
conditions improve.
DIVIDEND
It is the Group`s policy to consider dividends twice annually. The board of
directors have declared an interim cash dividend of 19,0 cents per share for
the six months ended June 2009 (2008: 42,0 cents). The dividend is covered
2,05 times by earnings per share.
OUTLOOK
Infrastructure spending in South Africa continues to remain an opportunity.
Afrox is competitive in this area amid increasing competition. Our Level 4
Black Economic Empowerment rating is having a positive impact on business
retention and new tenders.
Key drivers remain working capital reduction, reduction in the cost of doing
business and liquidity. Operational and structural changes are on course to
strip-out R200 million in underlying costs. This programme will be completed
by year-end. Identification of savings is now part of the business process
and from this, Afrox expects to achieve ongoing efficiencies.
In the present climate Afrox maintains a cautious outlook amid indications
that these results to 30 June 2009 are likely to reflect business trends
through to fiscal year-end. The Company will remain profitable and cash
flow positive for the full year.
ACKNOWLEDGEMENTS
The Group would like to thank all employees and customers for their commitment
and steadfast dedication to the business in the face of harsh trading
conditions, restructuring and realignment activities.
Kent Masters Tjaart Kruger 27 August 2009
Chairman Managing director Johannesburg
NOTICE OF FINAL DIVIDEND DECLARATION NUMBER 166 AND SALIENT FEATURES
Notice is hereby given that a cash dividend of 19,0 cents per ordinary share,
being the interim dividend for the six-month period ended 30 June 2009, has
been declared payable to all shareholders of Afrox recorded in the register
on Friday, 23 October 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, 16 October
Ordinary shares trade "ex" the dividend Monday, 19 October
Record date Friday, 23 October
Payment date Monday, 26 October
Share certificates may not be dematerialised or rematerialised between Monday,
19 October 2009 and Friday, 23 October 2009, both days inclusive.
By order of the board
Mlawuli Manjingolo 27 August 2009
Company Secretary Johannesburg
CONDENSED CONSOLIDATED BALANCE SHEET
Unaudited Unaudited Audited
30 June 30 June 31 Dec
Rm Note 2009 2008 2008
ASSETS
Property, plant and equipment 2 2 766 2 667 2 817
Other non-current assets 999 888 1 014
Non-current assets 3 765 3 555 3 831
Inventories 711 807 845
Trade and other receivables 1 081 1 141 1 178
Cash and cash equivalents 187 155 143
Current assets 1 979 2 103 2 166
Total assets 5 744 5 658 5 997
EQUITY AND LIABILITIES
Shareholders` equity 2 749 2 706 2 741
Minority interests 33 37 39
Total equity 2 782 2 743 2 780
Long-term borrowings 790 690 890
Deferred tax 538 422 519
Non-current liabilities 1 328 1 112 1 409
Current portion of long-term 600 500 500
borrowings
Trade, other payables and 964 900 975
provision
Income tax payable 37 87 48
Bank overdrafts 33 316 285
Current liabilities 1 634 1 803 1 808
Total equity and liabilities 5 744 5 658 5 997
CONDENSED CONSOLIDATED INCOME STATEMENT
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2009 2008 2008
Rm Note 6 months 6 months 12 months
Revenue 2 374 2 680 5 666
Operating cost (1 941) (2 107) (4 656)
EBITDA 433 573 1 010
Depreciation and amortisation (151) (123) (257)
Operating profit 282 450 753
Net finance expense (96) (42) (121)
Income from associate 2 2 2
Profit before taxation 188 410 634
Income tax expense (61) (128) (207)
Profit for the period 127 282 427
Attributable to:
Equity holders of the company 120 277 412
Minority interest 7 5 15
Net profit for the period 127 282 427
Reconciliation between
earnings and headline earnings
Profit for the period 120 277 412
Profit on disposal of (1) - (1)
property, plant and equipment
Headline earnings 119 277 411
Reconciliation between
headline earnings and core
headline earnings
Headline earnings 119 277 411
Restructuring cost 23 4 16
Tax effect (6) (1) (4)
Core headline earnings 136 280 423
Basic and diluted earnings per 4 39,0 89,8 133,7
share (cents)
Headline earnings per share 4 38,7 89,8 133,5
(cents)
Core headline earnings per 4 44,0 90,7 137,1
share (cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2009 2008 2008
Rm 6 months 6 months 12 months
Profit for the period 127 282 427
Exchange differences on (31) 38 17
translating foreign
operations
Exchange differences relating (8) 6 3
to minority interest
Cash flow hedges (4) - -
Actuarial loss on defined - - (226)
benefit plans
Deferred tax relating to - - 69
actuarial loss
Other comprehensive income (43) 44 (137)
after tax:
Total comprehensive income 84 326 290
for the period
Attributable to:
Equity holders of the company 85 315 272
Minority interest (1) 11 18
Net profit for the period 84 326 290
GEOGRAPHICAL SEGMENTS
South Rest of
Rm Africa Africa Total
Twelve months ended 31 December 2008
- revenue 4 869 797 5 666
- ebitda 817 193 1 010
- total assets 5 480 517 5 997
Six months ended 30 June 2008
- revenue 2 312 368 2 680
- ebitda 487 86 573
- total assets 5 198 460 5 658
Six months ended 30 June 2009
- revenue 1 998 376 2 374
- ebitda 318 115 433
- total assets 5 263 481 5 744
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2009 2008 2008
Rm 6 months 6 months 12 months
Operating profit 282 450 753
Adjustments for:
Depreciation and amortisation 151 123 257
Other (72) 9 (8)
Operating cash flow before working 361 582 1 002
capital changes
Working capital changes 247 (307) (337)
Cash generated from operations 608 275 665
Finance costs and taxation paid (140) (150) (309)
Other - - (1)
Cash available from operations 468 125 355
Dividends paid (77) (142) (272)
Net cash inflow/(outflow) from 391 (17) 83
operating activities
Purchase of property, plant and (115) (315) (603)
equipment and intangibles
Other investing cash flows - net 25 7 19
Net cash outflow from investing (90) (308) (584)
activities
Minorities (5) (1) (6)
Increase in borrowings - 400 600
Net cash inflow from financing (5) 399 594
activities
Net increase in cash and cash
equivalents 296 74 93
Cash and cash equivalents at (142) (235) (235)
beginning of period
Cash and cash equivalents at
end of period 154 (161) (142)
STATISTICS AND RATIOS
Unaudited Unaudited Unaudited
30 June 30 June 31 Dec
2009 2008 2008
6 months 6 months 12 months
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
Net asset value per share (cents) 891 877 782
Dividends per share (cents) 19,0 42,0 67,0
Final - - 25,0
Interim 19,0 42,0 42,0
Ratios
EBITDA margin (%) 18,2 21,4 17,8
Interest paid cover on EBITDA 3,9 7,2 6,5
(times)
Effective tax rate (%) 32,6 31,1 32,6
Gearing (%) 27,1 29,9 31,7
Dividend cover - (times) 2,1 2,1 2,0
NOTES TO THE FINANCIAL STATEMENTS
1. Basis of preparation and accounting policies
These condensed interim Group financial statements have been prepared in
accordance with the recognition and measurement criteria 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 interim condensed consolidated financial statements do not include all
the information and disclosures required in the annual financial statements,
and should be read in conjunction with the Group`s annual financial statements
as at 31 December 2008.
The accounting policies applied are consistent with those followed in the
preparation of the consolidated financial statements for the year ended 31
December 2008, except where the Group has adopted new or revised IFRS
statements.
The Group has adopted the following revised accounting standards, amendments
and interpretations in the current period, which did not have a material
impact on the reported results:
IAS 1: Revised Presentation of Financial Statements
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
2009 2008 2008
Rm 6 months 6 months 12 months
2. Capital expenditure
Property, plant and equipment
Opening carrying value 2 817 2 459 2 459
Additions 115 301 540
Disposals (3) (2) (2)
Depreciation (136) (116) (231)
Addition on EFL termination - - 29
Foreign exchange differences (27) 25 22
Closing carrying value 2 766 2 667 2 817
3. Comparing first half of 2009 to 1st half 2nd half
second half of 2008 2009 2008
6 months 6 months
Revenue 2 374 2 985
Operating cost (1 941) (2 548)
EBITDA 433 437
Depreciation and amortisation (151) (135)
Operating profit 282 302
Net finance expense (96) (79)
Income from associate 2 1
Profit before taxation 188 224
Income tax expense (61) (79)
Profit for the period 127 145
Minority interest (7 ) (10)
Net profit for the period 120 135
Basic and diluted earnings per 39,0 43,8
share (cents)
Headline earnings per share 38,7 43,6
(cents)
Core headline earnings per share 44,0 46,4
(cents)
4. Earnings, headline earnings and core headline earnings per share
* Earnings per share are calculated on earnings of R120 million
(2008: R277 million).
* Headline earnings per share are calculated on headline earnings
of R119 million (2008: R277 million).
* Core headline earnings per share is calculated on core headline
earnings of R136 million (2008: R280 million).
All of the above are based on weighted average number of ordinary
shares of 308 567 602 (2008: 308 567 602) in issue during the
period.
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital
and
Rm share Other Retained Minority Total
premium reserves earnings interest
Balance at 1 552 450 1 739 27 2 768
January 2008
Total - (140) 412 18 290
comprehensive
income
Dividends paid - - (272) (6) (278)
Balance at 31 552 310 1 879 39 2 780
December 2008
Balance at 1 552 310 1 879 39 2 780
January 2009
Total - (35) 120 (1) 84
comprehensive
income
Dividends paid - - (77) (5) (82)
Balance at 30 552 275 1 922 33 2 782
June 2009
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,
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),
CJPG van Zyl (Financial director), DM Lawrence, M Malebye, DK Mokhele,
J Nowicki**, K Oliver, SM Pityana, LL van Niekerk, AM Watkins***
*American **German ***British
Company secretary: M Manjingolo
www.afrox.com
Afrox is a member of The Linde Group
Date: 27/08/2009 15:04:02 Supplied by www.sharenet.co.za
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