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AFX - African Oxygen Limited - Audited Group Financial Results And Dividend

Release Date: 18/02/2010 15:00
Code(s): AFX
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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 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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