Wrap Text
AFX - African Oxygen Limited - Unaudited financial results
and dividend announcement for the six months ended 30 June
2010
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 2010
* Revenue R2,3 billion
* Headline earnings 38,8 cent
PERFORMANCE SUMMARY
Revenue for the six months to 30 June 2010 was R2,3 billion,
down 3%, with R354 million in earnings before interest, tax,
depreciation and amortisation (EBITDA), down 13%, compared
to the same period last year. EBITDA margin was 15,3%, down
1,8%. Net profit was R125 million (2009: R127m) and headline
earnings per share 38,8 cents (2009: 38,7 cents). Capital
expenditure was R93 million (2009: R115m)for the period. Net
borrowings were R941 million (2009: R1,24 billion). The
Group`s gearing was 21,5% compared to 27,1% for the same
period last year.
Business review
Afrox continued to experience difficult trading conditions,
with volumes lower than last year, as industrial sector
spending remained under pressure, with recovery only
experienced in the automotive and basic iron and steel
industries.
The Group`s results were negatively affected by several non-
repetitive events. Operations were adversely affected by
plant outages and a drivers` strike, which impacted on poor
customer service and costs. The strength of the Rand and
high steel prices affected the competitiveness of Afrox`s
own-manufactured welding products and cutting equipment.
Finally, the Eskom and municipal tariff increases impacted
the bottom line.
LPG volumes were up 3%, driven by the automotive sector,
while the LPG cylinder business was down amid increased
competitor activity. The regulation of retail prices of LPG
cylinders sold to residential customers commenced on July
14, 2010, and Afrox has factored the impact of these changes
into its business strategy.
Healthcare performed well with an increase in volumes during
this reporting period.
Operations in other African countries contributed 29% (2009:
28%) to the Group`s half-year EBITDA following a challenging
first-half. Afrox will continue to aggressively grow its
business in rapidly expanding sub-Saharan economies,
aligning with existing customer strategies and investments
in order to take advantage of increasing consumer demand in
the region.
The Group`s underlying business remains strong and, as the
leading gases and welding company in Africa, Afrox remains
the supplier of choice in key markets. Our Level 4 Broad-
Based Black Economic Empowerment rating continues to have a
positive effect while solid progress is being made in
respect of Afrox`s BEE transformation programme and drive
for High Performance Organisation status.
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 2010 (2009: 19,0 cents). The dividend is covered
2,0 times by earnings per share.
Board of directors
Frederick Kotzee was appointed financial director from 1
April 2010 and Dynes Woodrow was appointed as non-executive
director effective 20 May 2010.
Outlook
No significant improvement is expected in the South African
economy in the second-half of 2010 with only moderate
recovery expected in the rest of Africa. Focus will remain
on cost management and customer service. As such Afrox
maintains a cautious outlook.
Kent Masters Tjaart Kruger 26 August 2010
Chairman Managing Director Johannesburg
NOTICE OF INTERIM DIVIDEND DECLARATION NUMBER 168 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 2010, has been declared payable
to all shareholders of Afrox recorded in the register on
Friday, 22 October 2010.
The salient dates for the declaration and payment of the
interim dividend are as follows:
2010
Last day to trade ordinary shares Friday, 15 October
"cum" dividend
Ordinary shares trade "ex" the Monday, 18 October
dividend
Record date Friday, 22 October
Payment date Monday, 25 October
Share certificates may not be dematerialised or
rematerialised between Monday, 18 October 2010 and Friday,
22 October 2010, both days inclusive.
By order of the board
A Meer-Seedat 26 August 2010
Acting Company Secretary Johannesburg
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
30 June 30 June 31 Dec
Rm Note 2010 2009 2009
ASSETS
Property, plant and 4 2 688 2 766 2 729
equipment
Other non-current assets 974 999 1 020
Non-current assets 3 662 3 765 3 749
Inventories 654 711 573
Trade and other 902 1 081 865
receivables
Cash and cash 494 187 609
equivalents
Current assets 2 050 1 979 2 047
Total assets 5 712 5 744 5 796
EQUITY AND LIABILITIES
Shareholders` equity 2 839 2 749 2 827
Non-controlling interest 36 33 32
Total equity 2 875 2 782 2 859
Long-term borrowings 1 127 790 1 127
Deferred tax liabilities 573 538 562
Non-current liabilities 1 700 1 328 1 689
Current portion of long- 263 600 363
term borrowings
Trade, other payables 812 964 843
and provision
Taxation payable 17 37 9
Bank overdrafts 45 33 33
Current liabilities 1 137 1 634 1 248
Total equity and 5 712 5 744 5 796
liabilities
CONDENSED CONSOLIDATED INCOME STATEMENT
30 June 30 June 31 Dec
2010 2009 2009
Restated Restated
Rm Note 6 months 6 months 12 months
Revenue 2 312 2 374 4 795
Operating cost (1 958) (1 969) (4 012)
EBITDA 354 405 783
Depreciation and (137) (151) (301)
amortisation
Operating profit 217 254 482
Net finance expense (31) (68) (116)
Income from associate 3 2 2
Profit before taxation 189 188 368
Income tax expense (64) (61) (125)
Profit for the period 125 127 243
Attributable to:
Equity holders of the 118 120 232
Company
Non-controlling 7 7 11
interest
Net profit for the 125 127 243
period
Basic and diluted 5 38,3 39,0 75,2
earnings per share
(cents)
Headline earnings per 5 38,8 38,7 74,6
share (cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
30 June 30 June 31 Dec
2010 2009 2009
Restated Restated
Rm 6 months 6 months 12 months
Profit for the period 125 127 243
Exchange differences (5) (31) (27)
for foreign operations
Exchange differences (1) (8) (4)
relating to non-
controlling interest
Changes in fair value - (4) (2)
of cash flow hedges
Actuarial (60) - 26
gains/(losses) on
defined-benefit funds
Deferred tax relating 17 - (7)
to actuarial
gains/losses
Other comprehensive (49) (43) (14)
income after tax:
Total comprehensive 76 84 229
income for the period
Attributable to:
Equity holders of the 71 85 222
Company
Non-controlling 5 (1) 7
interest
Total comprehensive 76 84 229
income for the period
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
30 June 30 June 31 Dec
2010 2009 2009
Restated Restated
Rm 6 months 6 months 12 months
Operating profit 217 254 482
Adjustments for:
Depreciation and amortisation 137 151 301
Other 11 (44) 28
Operating cash flow before working 365 361 811
capital changes
Working capital changes (155) 247 422
Cash generated from operations 210 608 1 233
Finance costs and taxation paid (88) (140) (288)
Other - - (3)
Cash available from operating 122 468 942
activities
Dividends paid (59) (77) (136)
Net cash inflow from operating 63 391 806
activities
Purchase of property, plant and (93) (115) (307)
equipment and intangibles
Net other investing cash flows 4 25 133
Net cash outflow from investing (89) (90) (174)
activities
Dividends to non-controlling interest (1) (5) (14)
(Decrease)/increase in borrowings (100) - 100
Net cash (outflow)/inflow from (101) (5) 86
financing activities
Net (decrease)/increase in cash and
cash
equivalents (127) 296 718
Cash and cash equivalents at beginning 576 (142) (142)
of period
Cash and cash equivalents at
end of period 449 154 576
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share Non-
capital
and
Rm share Other Retained controlling Total
premium reserves earnings interest
Balance at 1 552 300 1 975 32 2
January 2010 859
Total - (47) 118 5 76
comprehensive
income
Dividends - - (59) (1) (60)
paid
Balance at 30 552 253 2 034 36 2 875
June 2010
Balance at 1 552 310 1 879 39 2 780
January 2009
Total - (35) 120 (1) 84
comprehensive
income
Dividends (77) (5) (82)
paid
Balance at 30 552 275 1 922 33 2 782
June 2009
Balance at 1 552 310 1 879 39 2
January 2009 780
Total - (10) 232 7 229
comprehensive
income
Dividends - - (136) (14)
paid (150)
Balance at 31 552 300 1 975 32 2
December 2009 859
COMPARATIVE ANALYSIS
30 June 31 Dec
2010 2009
6 months 12
months
Rm Reported Adjustment Restated Reported Adjustment Restated
Revenue 2 374 - 2 374 4 795 - 4 795
Operating (1 941) (28) (1 969) (3 957) (55) (4 012)
cost
EBITDA 433 (28) 405 838 (55) 783
Depreciation (151) - (151) (301) - (301)
and
amortisation
Operating 282 (28) 254 537 (55) 482
profit
Net finance (96) 28 (68) (171) 55 (116)
expense
Income from 2 - 2 2 - 2
associate
Profit before 188 - 188 368 - 368
taxation
Income tax (61) - (61) (125) - (125)
expense
Profit for 127 - 127 243 - 243
the period
Attributable
to:
Equity 120 - 120 232 - 232
holders of
the Company
Non- 7 - 7 11 - 11
controlling
interest
Net profit 127 - 127 243 - 243
for the
period
Basic and 39,0 - 39,0 75,2 - 75,2
diluted
earnings per
share (cents)
Headline 38,7 - 38,7 74,6 - 74,6
earnings per
share (cents)
The adjustment relates to:
Net financing cost for pensions is shown as finance expense and
investment income and not within operating profit.
GEOGRAPHICAL SEGMENTS
30 June 30 June 31 Dec
2010 2009 2009
Rm Restated Restated
Revenue 2 312 2 374 4 795
- South Africa 1 955 1 998 4 070
- Rest of Africa 357 376 725
EBITDA 354 405 783
- South Africa 252 290 577
- Rest of Africa 102 115 206
Total assets 5 712 5 744 5 796
- South Africa 5 390 5 263 5 273
- Rest of Africa 322 481 523
NOTES TO THE FINANCIAL STATEMENTS
African Oxygen Limited ("Afrox" or the "Company") is a South
African registered company. The condensed consolidated
interim financial statements of the Company comprise the
Company and its subsidiaries (together referred to as the
"Group") and the Group`s interest in an associate.
1 Statement of compliance
These condensed consolidated interim financial statements
have been prepared in accordance with the recognition and
measurement criteria of International Financial Reporting
Standards ("IFRS"), the presentation as well as disclosure
requirements of IAS34 Interim Financial Reporting, the
Listing Requirements of the JSE Limited and the Companies
Act of South Africa, as amended.
2. Basis of preparation and accounting policies
The financial statements are prepared in millions of South
African Rands (Rm) on the historical cost basis.
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 2009.
The accounting policies are those presented in the annual
financial statements for the year ended 31 December 2009 and
have been applied consistently to the periods presented in
these condensed consolidated interim financial statements
and by all Group entities, except where the Group has
adopted new or revised accounting statements and
interpretations of these standards. The Group has changed
the disclosure option per IAS 19.
3 Audit report
These consolidated interim financial statements have not
been reviewed or audited by the Group`s auditors.
30 June 30 June 31 Dec
2010 2009 2009
Rm 6 months 6 months 12 months
4. Capital expenditure
Property, plant and equipment
Opening carrying value 2 729 2 817 2 817
Additions 93 115 293
Disposals (6) (3) (83)
Depreciation (121) (136) (271)
Foreign exchange differences (7) (27) (27)
Closing carrying value 2 688 2 766 2 729
5. Earnings and headline earnings per share
* Earnings per share are calculated on earnings of R118 million
(2009: R120 million).
* Headline earnings per share are calculated on headline earnings
of R119 million (2009: R119 million).
All of the above are based on weighted average number of ordinary
shares of 308 567 602 (2009: 308 567 602) in issue during the
period.
Reconciliation between earnings
and headline earnings
Profit for the period 118 120 232
Loss/(profit) on disposal of 1 (1) (9)
property, plant and equipment
Net impairment of intangibles - - 8
Headline earnings 119 119 231
6. Subsequent events
The directors are not aware of any material matter or
circumstance arising since the end of the period and up to
the date of this report, not otherwise dealt with in this
report. The Group declared an interim cash dividend of 19,0
cents per share on 26 August 2010.
STATISTICS AND RATIOS
30 June 30 June 31 Dec
2010 2009 2009
6 months 6 months 12
months
Average number of shares in 308 568 308 568 308 568
issue during the period
(`000)
Shares in issue (`000) 308 568 308 568 308 568
Net asset value excluding 822 785 804
actuarial gain/loss per
share (cents)
Dividends per share (cents) 19,0 19,0 38,0
Final - - 19,0
Interim 19,0 19,0 19,0
Ratios
EBITDA margin (%) 15,3 17,1 16,3
Interest paid cover on 7,0 3,7 4,2
operating profit (times)
Effective tax rate (%) 33,8 32,6 34,0
Gearing (%) 21,5 27,1 21,1
Dividend cover - (times) 2.0 2,1 2,0
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),
FT Kotzee (Financial Director), J Narayadoo(Director MPG
Operations),
DM Lawrence, M Malebye, Dr KDK Mokhele, J Nowicki**,
KJ Oliver, SM Pityana, LL van Niekerk, DM Woodrow***
*American **German ***British
Acting Company Secretary: A Meer-Seedat
Auditors: KPMG Inc.
26 August 2010
www.afrox.com
Afrox is a member of The Linde Group
Date: 26/08/2010 15:07:01 Supplied by www.sharenet.co.za
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