Wrap Text
AFX - African Oxygen Limited - Audited Group financial results and dividend
announcement for the year ended 31 December 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")
AUDITED GROUP FINANCIAL RESULTS AND DIVIDEND ANNOUNCEMENT FOR THE YEAR ENDED 31
DECEMBER 2010
* Revenue decreased 2% to R4,7 billion
* EBITDA down 24% to R606 million
* HEPS down 26% to 55,5 cents per share
* Cash generated from operations R606 million
PERFORMANCE SUMMARY
For the year ended 31 December 2010 revenue decreased 2% to R4,7 billion and
earnings before interest, tax, depreciation, amortisation and impairments
(EBITDA) reduced 24% to R606 million. Net profit was R106 million, including
impairments. Headline earnings per share were 55,5 cents for the year, down 26%.
Afrox continued to invest in plant modernisation, additional capacity and
efficiency enhancements to the value of R294 million (2009: R307 million). The
Group ended the year with net borrowings of R842 million and gearing of 20,6%
(2009: 21,1%).
BUSINESS REVIEW
Afrox continued to make sound progress in a number of key performance areas
during 2010. Notwithstanding this, our financial performance was disappointing
as trading conditions remained challenging and were exacerbated by the
disruptive and unforeseeable equipment failures at the air separation unit (ASU)
in Witbank, during March. The impairment of the MIG wire plant in Brits in
November further impacted profitability.
Input cost pressures in 2010, including an increase in electricity (44%), wages
and commodities, were a challenge for the Group from a selling price/cost
recovery point of view. Other factors such as strikes and supply disruptions
presented additional challenges.
A recovery was seen in LPG demand, with bulk volumes ahead of 2009. In packaged
LPG, trading conditions were mixed. Legislated maximum pricing for domestic LPG
came into being in July 2010 and pricing is now adjusted monthly in line with
other petroleum products. Illegal filling continues to be a concern and Afrox is
assisting the authorities to address the issue. Tonnage volumes marginally
increased for the year over 2009.
Merchant bulk volumes were affected in the first half by supply disruptions,
including the Witbank plant failure, and additional costs were incurred for
trunking and sourcing. Claims have been received from two customers due to these
supply disruptions and a contingent liability note will be disclosed in the
annual financial statements. The situation improved during the second half with
volumes ending higher for the year.
Industrial gases volumes remained weak and cylinder rental decreased. Afrox
continues to focus on registering cylinders in advance of the Individual
Cylinder Control Project as a means to ensure better inventory management and
thus protect income. Special products and chemicals volume was ahead of 2009.
Healthcare volumes were down by 5% compared to 2009, not unexpected given that
four provincial tenders for government hospitals were not renewed. Sales and
profits were within expectations. Growth is being achieved in the private
homecare market.
Welding consumables volumes were down on 2009. Aggressive price-based import
competition eroded market share. Sales in gas equipment reduced but gross margin
improved as low margin exports reduced. Afrox launched an industrial welding
machine range with favourable customer response in the latter part of the year.
The implementation of the manufacturing strategy, communicated last year, is on
target. The Germiston equipment factory has received the first components which
have been successfully assembled. With the closure of the MIG wire plant
importation of product plans are in place.
In addition to major maintenance and upgrading of the company`s ASUs, Afrox is
investing R200 million in a new ASU to be erected at the Pretoria site. The ASU
will have Argon capability and will commence production in 2013. The final
commissioning of the CO2 plant in Sasolburg was completed in July.
DIVIDEND
The Board has resolved to declare a final cash dividend of 8 cents per share
(2009: 19 cents). Together with the interim cash dividend of 19 cents per share
(2009: 19 cents), a total of 27 cents per share (2009: 38 cents) is paid for the
year and is covered 2,1 times based on headline earnings per share (2009: 2,0
times).
CHANGES TO THE BOARD
Pursuant to the resignation of Alan Watkins as a director, Dynes Woodrow of the
The Linde Group was appointed to the Board as a non-executive director effective
20 May 2010. Frederick Kotzee was appointed financial director of the company
effective 20 May 2010.
OUTLOOK
Afrox is focusing on protecting its strong position in industrial gases, LPG and
hardgoods with continued investment in plant expansion and modernisation, the
benefits of which are likely to start coming through from 2011 onwards. A number
of sizeable one-off costs should not recur in 2011, and the Group is well geared
to benefit from improved market conditions and growth opportunities.
Kent Masters Tjaart Kruger 16 February 2011
Chairman Managing director Johannesburg
NOTICE OF FINAL DIVIDEND DECLARATION NUMBER 169 AND SALIENT FEATURES
Notice is hereby given that a cash dividend of 8 cents per ordinary share, being
the final dividend for the year ended 31 December 2010, has been declared
payable to all shareholders of African Oxygen Limited recorded in the register
on Thursday, 21 April 2011.
The salient dates for the declaration and payment of the final dividend are as
follows:
2011
Last day to trade ordinary shares "cum" dividend Thursday, 14 April
Ordinary shares trade "ex" the dividend Friday, 15 April
Record date Thursday, 21 April
Payment date Tuesday, 26 April
Share certificates may not be dematerialised or rematerialised between Friday,
15 April 2011 and Thursday, 21 April 2011, both days inclusive.
By order of the board
C Low 16 February 2011
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 2010. The audit was
conducted in accordance with International Standards on Auditing. 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 2010 2009
ASSETS
Property, plant and equipment 3 2 637 2 729
Investment in associate 17 13
Other non-current assets 842 1 007
Non-current assets 3 496 3 749
Inventories 663 573
Trade and other receivables 780 865
Cash and cash equivalents 327 609
Taxation receivable 20 -
Current assets 1 790 2 047
Total assets 5 286 5 796
EQUITY AND LIABILITIES
Attributable to equity holders of 2 695 2 827
the company
Non-controlling interest 32 32
Total equity 2 727 2 859
Long-term borrowings 871 1 127
Deferred tax liabilities 514 562
Non-current liabilities 1 385 1 689
Current portion of long-term 263 363
borrowings
Trade and other payables 848 843
Taxation payable 28 9
Bank overdrafts 35 33
Current liabilities 1 174 1 248
Total equity and liabilities 5 286 5 796
CONDENSED CONSOLIDATED INCOME STATEMENT
Restated
Rm Note 31 December 31 December
2010 2009
Revenue 4 721 4 795
Operating cost (4 115) (3 994)
Earnings before interest, tax, 606 801
depreciation, amortisation and
impairments (EBITDA)
Depreciation and amortisation (283) (301)
Impairments (104) (18)
Earnings before interest and tax 219 482
(EBIT)
Net finance costs (63) (116)
Income from associate 6 2
Profit before taxation 4 162 368
Income tax expense (56) (125)
Profit for the period 106 243
Attributable to:
Equity holders of the Company 94 232
Non-controlling interest 12 11
Profit for the period 106 243
Basic and diluted earnings per 30,5 75,2
ordinary share (cents)
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Rm 31 December 31 December
2010 2009
Profit for the period 106 243
Other comprehensive loss after tax: (117) (14)
Translation differences for foreign (27) (27)
operations
Translation differences relating to (8) (4)
non-controlling interest
Changes in fair value of cash flow (12) (2)
hedges
Actuarial (losses)/gains on defined- (97) 26
benefit plan
Deferred tax relating to actuarial 27 (7)
gains/losses
Total comprehensive (loss)/income (11) 229
for the period
Attributable to:
Equity holders of the Company (15) 222
Non-controlling interest 4 7
Total comprehensive (loss)/income (11) 229
for the period
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Share
capital
Rm and Other Retained Non- Total
share reserves earnings controlling
premium interest
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 31 552 300 1 975 32 2 859
December 2009
Balance at 1 552 300 1 975 32 2 859
January 2010
Other movements - (109) - (8) (117)
Profit for the - - 94 12 106
period
Dividends paid - - (117) (4) (121)
Balance at 31 552 191 1 952 32 2 727
December 2010
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
Rm 31 December 31 December
2010 2009
Earnings before interest and tax (EBIT) 219 482
Adjustments for:
Depreciation and amortisation 283 301
Impairments of tangible and intangible 104 18
assets
Other 36 10
Operating cash flow before working capital 642 811
adjustments
Working capital adjustments (36) 422
Cash generated from operations 606 1 233
Interest paid and taxation paid (197) (288)
Other (3) (3)
Cash available from operating activities 406 942
Dividends paid (117) (136)
Dividends to non-controlling interest (4) (14)
Net cash inflow from operating activities 285 792
Additions to property, plant and equipment (294) (307)
and intangibles
Other net investing cash flows 81 133
Net cash outflow from investing activities (213) (174)
(Decrease)/increase in borrowings (356) 100
Net cash (outflow)/inflow from financing (356) 100
activities
Net (decrease)/increase in cash and cash (284) 718
equivalents
Cash and cash equivalents at beginning of 576 (142)
period
Cash and cash equivalents at end of period 292 576
COMPARATIVE ANALYSIS
31 Dec
2009
12 months
Previously
Rm Reported Adjustment Restated
Revenue 4 795 - 4 795
Operating costs (3 957) (37) (3 994)
EBITDA 838 (37) 801
Depreciation and amortisation (301) - (301)
Impairments - (18) (18)
EBIT 537 (55) 482
Net finance costs (171) 55 (116)
Income from associate 2 - 2
Profit before taxation 368 - 368
Income tax expense (125) - (125)
Profit for the period 243 - 243
Attributable to:
Equity holders of the Company 232 - 232
Non-controlling interest 11 - 11
Net profit for the period 243 - 243
Basic and diluted earnings per share 75,2 - 75,2
(cents)
Headline earnings per share (cents) 74,6 - 74,6
The adjustment relates to:
Net financing costs related to employee benefit funds are shown as
finance costs and investment income and not within earnings before
interest and tax.
GEOGRAPHICAL SEGMENTS
South Rest of
Rm Africa Africa Total
Year ended 31 December 2010
- revenue 3 990 731 4 721
- EBITDA 400 206 606
Year ended 31 December 2009
- revenue 4 070 725 4 795
- EBITDA 595 206 801
NOTES TO THE FINANCIAL STATEMENTS
1. FINANCIAL PERIOD
The year end results hereby presented are for twelve months ended 31 December
2010.
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), AC 500 Standards as issued by the Accounting
Practices Board or its successor, 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 2009, except, for adjustments referred to in the comparative
analysis or, where the group has adopted new or revised IFRS statements.
31 December 31 December
Rm 2010 2009
3. Capital expenditure and commitments
Property, plant and equipment
Opening carrying value 2 729 2 817
Additions 294 293
Disposals (14) (83)
Depreciation (252) (271)
Impairments (96) -
Translation differences (24) (27)
Closing carrying value 2 637 2 729
Capital commitments
- authorised but not contracted 231 62
- authorised and contracted 59 33
Total capital commitments 290 95
4. Profit before taxation
Included in profit before taxation are:
Amortisation of intangible assets 31 30
Depreciation 252 271
STATISTICS AND RATIOS
Rm 31 December 31 December
2010 2009
Reconciliation between earnings and 94 232
headline earnings
Total profit for the period attributable
to equity holders of the company
Profit on disposal of property, plant 2 (9)
and equipment
Net impairment of plant and intangibles 75 8
Headline earnings 171 231
30,5 75,2
Basic and diluted earnings per ordinary
share - Group (cents)
Headline earnings per ordinary share - 55,5 74,6
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) 27,0 38,0
Net asset value per share (cents) 784 804
RATIOS
EBITDA margin (%) 12,8 16,7
Interest cover (times) 3,5 4,2
Effective tax rate (%) 34,6 34,0
Gearing (%) 20,6 21,1
Dividend cover based on headline 2,1 2,0
earnings per share(times)
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),
FT Kotzee (Financial director), DM Lawrence, M Malebye, Dr KDK Mokhele, J
Narayadoo, J Nowicki**, KJ Oliver, SM Pityana, LL van Niekerk,
DM Woodrow***
*American **German ***British
Company secretary: C Low
www.afrox.com
Afrox is a member of The Linde Group
Date: 16/02/2011 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.
Sharenet Sites 
