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AFX - African Oxygen Limited - Audited Group Financial Results And Dividend
Announcement For The Year Ended 31 December 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")
AUDITED GROUP FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE YEAR ENDED 31
DECEMBER 2009
- Revenue decreased by 15% to R4.8 billion
- EBITDA down 17% to R838 million
- EPS down 44% to 75.2 cents per share
- Cash generated from operations increased by R568 million to R1.2 billion
PERFORMANCE SUMMARY
For the year ended 31 December 2009 revenue decreased by 15% to R4.8 billion and
earnings before interest, tax, depreciation and amortisation (EBITDA) reduced
17% to R 838 million. EBITDA margin remained constant at 17,5%. Net profit was R
243 million. Earnings per share were 75,2 cents for the year, down 44%. Afrox
continued to invest in modernisation, capacity and efficiency enhancements but
in line with prevailing economic conditions, spending R 307 million compared to
R603 million in 2008. Cash generated as a percentage of EBITDA was 147% compared
to 66% for 2008. Afrox ended the year with net borrowings of R914 million. The
Group`s gearing improved to 21,1% at year-end compared to 31,7% the year before.
BUSINESS REVIEW
Trading conditions in 2009 were extremely tough. The substantial collapse in
demand experienced in the last quarter of 2008 continued in the first half of
2009, bottoming out marginally in the second half of the year as supply levels
to the key automotive, manufacturing and mining sectors remained subdued. For
the 12 months, volumes, production and labour costs, generally, were subjected
to negative market forces. Sales and volumes across the full product range were
down while commodity prices, continued major customer capex containment and
increased competition exerted extreme pressure on the bottom line. This
reporting period was characterised by decisive change management action in
response to diminished returns and extreme pressure on sales, volumes and
margins. These actions included the consolidation in filling sites from 34 to
11, elimination of slow-moving and minimally profitable product ranges,
optimisation of routes to market and the introduction of a minimum delivery
order value which has enabled distribution to schedule more economically and
improve service levels. A review of all outlets was undertaken and branches that
did not meet minimum return thresholds were closed. Further measures were the
reduction of electricity consumption, procurement pricing initiatives and a 4%
improvement in productivity. Headcount was also reduced by more than 700, which
was 17% of the workforce. Together these have reduced the cost base of the
business in excess of an annualised R200m. These savings are sustainable with
further gains expected in 2010. These measures have streamlined and strengthened
operations and will enable the business to focus on customers and service
delivery into the future. Notable business wins in 2009 were achieved in the
mining and soft drinks sectors, supply contracts with the largest dissolved
acetylene installation in the southern hemisphere, Transnet`s new 520km
pipeline, as well as Eskom`s Kusile and Mendupi power station projects, to name
a few. Our African Operations achieved excellent results at good margin for the
year, contributing 25% to the Group`s EBITDA this year.
DIVIDEND
The Board has resolved to declare a final cash dividend of 19 cents per share
(2008: 25 cents). Together with the interim cash dividend of 19 cents per share
(2008: 42 cents), a total of 38 cents per share (2008: 67 cents) is paid for the
year and is covered 2,0 times in earnings per share (2008: 2.0 times), which is
consistent with our guiding principals.
CHANGES TO THE BOARD
Jonathan Narayadoo has been appointed to the Board as of December 2009. Finance
Director Cor van Zyl retires at the end of February 2010. Alan Watkins has
resigned from the Board effective end February 2010.
OUTLOOK
Focal points for 2010 remain working capital management, productivity
improvement and the minimising the complexity of doing business. There is every
indication that any recovery will be off a low base and slow. Therefore we have
to stay close to our customers and alert to competitive threats. While African
Operations turned in solid performance towards the end of year, we are acutely
aware of increased competitor activity, economic variances and pressures in
local geographic markets, which may indicate certain volatility in returns as we
progress through 2010. The coming year will be challenging and as such we
maintain a cautious outlook but are optimistic that the company`s 2009 cost
reduction and productivity initiatives, coupled with decisive change management
action, will strengthen the Group`s ability to service our customers and
optimise our market position.
Kent Masters Tjaart Kruger 18 February 2010
Chairman Managing director Johannesburg
NOTICE OF FINAL DIVIDEND DECLARATION NUMBER 167 AND SALIENT FEATURES
Notice is hereby given that a cash dividend of 19 cents per ordinary share,
being the final dividend for the year ended 31 December 2009, has been declared
payable to all shareholders of African Oxygen Limited recorded in the register
on Friday, 23 April 2010.
The salient dates for the declaration and payment of the final dividend are as
follows:
2010
Last day to trade ordinary shares "cum" dividend Friday, 16 April
Ordinary shares trade "ex" the dividend Monday, 19 April
Record date Friday, 23 April
Payment date Monday, 26 April
Share certificates may not be dematerialised or rematerialised between Monday,
19 April 2010 and Friday, 23 April 2010, both days inclusive.
By order of the board
A Meer-Seedat 18 February 2010
Acting Company Secretary Johannesburg
AUDIT OPINION
The independent auditors, KPMG Inc., have issued their opinion on the Group`s
financial statements for the year ended 31 December 2009. The audit was
conducted in accordance with International Standards on Accounting. A copy of
their unqualified audit report is available for inspection at the Company`s
registered office. These condensed financial statements have been derived from
the Group financial statements and are consistent, in all material respects,
with the Group financial statements.
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
31 December 31 December
Rm Note 2009 2008
ASSETS
Property, plant and equipment 3 2 729 2 817
Investment in associate 13 14
Other non-current assets 1 007 1 000
Non-current assets 3 749 3 831
Inventories 573 845
Trade and other receivables 865 1 178
Cash and cash equivalents 609 143
Current assets 2 047 2 166
Total assets 5 796 5 997
EQUITY AND LIABILITIES
Attributable to equity holders of 2 827 2 741
the company
Non-controlling interest 32 39
Total equity 2 859 2 780
Long-term borrowings 1 127 890
Deferred tax liabilities 562 519
Non-current liabilities 1 689 1 409
Current portion of long-term 363 500
borrowings
Trade and other payables 843 975
Taxation payable 9 48
Bank overdrafts 33 285
Current liabilities 1 248 1 808
Total equity and liabilities 5 796 5 997
CONDENSED CONSOLIDATED INCOME STATEMENT
Rm Note 31 December 31 December
2009 2008
Revenue 4 795 5 666
Operating cost (3 957) (4 656)
Earnings before interest, tax, 838 1 010
depreciation and amortisation
(EBITDA)
Depreciation and amortisation (301) (257)
Operating profit 537 753
Net finance expense (171) (121)
Income from associate 2 2
Profit before taxation 4 368 634
Income tax expense (125) (207)
Profit for the period 243 427
Attributable to:
Equity holders of the company 232 412
Non-controlling interest 11 15
Profit for the period 243 427
Basic and diluted earnings per 75,2 133,7
ordinary share (cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Rm 31 December 31 December
2009 2008
Profit for the period 243 427
Other comprehensive income after (14) (137)
tax:
Exchange differences for foreign (27) 17
operations
Exchange differences relating to non- (4) 3
controlling interest
Changes in fair value of cash flow (2) -
hedges
Actuarial gains/(losses) on defined- 5 26 (226)
benefit plan
Deferred tax relating to actuarial (7) 69
gains/losses
Total comprehensive income for the 229 290
period
Attributable to:
Equity holders of the company 222 272
Non-controlling interest 7 18
Total comprehensive income for the 229 290
period
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital
Rm and Other Retained Minority Total
share reserves earnings interest
premium
Balance at 552 450 1 739 27 2 768
1 January 2008
Other movements - (140) - 3 (137)
Profit for the - - 412 15 427
period
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
Other movements - (10) - (4) (14)
Profit for the - - 232 11 243
period
Dividends paid - - (136) (14) (150)
Balance at 552 300 1 975 32 2 859
31 December 2009
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Rm 31 December 31 December
2009 2008
Operating profit 537 753
Adjustments for:
Depreciation and amortisation 301 257
Other (27) (8)
Operating cash flow before working capital 811 1 002
adjustments
Working capital adjustments 422 (337)
Cash generated from operations 1 233 665
Interest paid and taxation paid (288) (309)
Other (3) (1)
Cash available from operating activities 942 355
Dividends paid (136) (272)
Net cash inflow from operating activities 806 83
Additions to property, plant and equipment (307) (603)
and intangibles
Other net investing cash flows 133 19
Net cash outflow from investing activities (174) (584)
Dividends to non-controlling interest (14) (6)
Net increase in borrowings 100 600
Net cash inflow from financing activities 86 594
Net increase in cash and cash equivalents 718 93
Cash and cash equivalents at beginning of (142) (235)
period
Cash and cash equivalents at end of period 576 (142)
OPERATING SEGMENTS
South Rest of
Rm Africa Africa Total
Year ended 31 December 2009
- revenue 4 070 725 4 795
- EBITDA 632 206 838
Year ended 31 December 2008
- revenue 4 869 797 5 666
- EBITDA 817 193 1 010
NOTES TO THE FINANCIAL STATEMENTS
1. FINANCIAL PERIOD
The year end results hereby presented are for twelve months ended 31 December
2009.
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 2008, 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:
IAS 1: Presentation of Financial Statements
31 December 31 December
Rm 2009 2008
3. Capital expenditure and commitments
Property, plant and equipment
Opening carrying value 2 817 2 459
Additions 293 540
Disposals (83) (2)
Depreciation (271) (231)
Exchange loss and other movements (27) 51
Closing carrying value 2 729 2 817
Capital commitments
- authorised but not contracted 62 -
- contracted 33 47
Total capital commitments 95 47
4. Profit before taxation
Included in profit before taxation are:
Amortisation of intangible assets 30 26
Depreciation 271 231
STATISTICS AND RATIOS
Rm 31 December 31 December
2009 2008
Reconciliation between earnings and 232 412
headline earnings
Total profit for the period attributable
to equity holders of the company
Profit on disposal of property, plant (9) (1)
and equipment
Net impairment of intangibles 8 -
Headline earnings 231 411
Reconciliation between headline earnings
and core headline earnings
Headline earnings 231 411
Net restructuring cost 16 11
Other 31 (5)
Core headline earnings 278 417
75,2 133,7
Basic and diluted earnings per ordinary
share - Group (cents)
Headline earnings per ordinary share - 74,6 133,5
Group (cents)
Core headline earnings per ordinary 90,2 135,2
share - Group (cents)
Average number of ordinary shares in 308 568 308 568
issue during the period and on which
earnings per share are based (`000)
Dividends per share (cents) 38,0 67,0
Net asset value per share (cents) 804 782
RATIOS
EBITDA margin (%) 17,5 17,8
Interest cover (times) 3,1 6,2
Effective tax rate (%) 34,0 32,6
Gearing (%) 21,1 31,7
Dividend cover (times) 2,0 2,0
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, Dr KDK Mokhele, J Narayadoo, J Nowicki**, KJ Oliver, SM
Pityana, LL van Niekerk, CJPG van Zyl (Financial director),
AM Watkins***
*American **German ***British
Acting company secretary: A Meer-Seedat
www.afrox.com
Afrox is a member of The Linde Group
Date: 18/02/2010 15:00:02 Supplied by www.sharenet.co.za
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