| Wed 31 Oct 2001, 0:00 | | Afrox Healthcare - Audited Results For The Year |
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AUDITED RESULTS FOR THE YEAR ENDED 30 SEPTEMBER 2001
Share Code : AHH
ISIN Code: ZAE000022059
- Revenue exceeds R3 billion
- Operating profit up 36% at R332 million
- Headline earnings per share up 32% at 91,5 cents
- Dividend up 65% at 35,4 cents
- Cash generated from operations up 21% at R434 million
- Gearing reduced from 21,9% to 6,1%
Performance highlights
Afrox Healthcare Limited had an excellent year with revenue up 26 percent,
profit before tax up 39 percent and attributable profit to shareholders up
36 percent. Headline earnings per share were up 32 percent at 91,5 cents.
The pleasing results reflect the successful implementation of the ongoing
strategies developed over the past three years. Management focus was
directed at improving efficiencies, realising operating synergies and
detailed attention to asset management. The R150 million capital expenditure
programme for growth projects in the 2001 financial year is already starting
to deliver, with most of the projects up and running, or well advanced. At
the same time, solid plans were laid for growing the business in 2002.
Negotiations are taking place to acquire a majority shareholding in the
KwaZulu-Natal based Amahosp group. Cautionaries regarding the negotiations
have been published.
During the year, Afrox Healthcare acquired Lifecare Group Holdings Limited
(Lifecare) from parent, African Oxygen Limited (Afrox). Lifecare operates 24
hospitals with 10000 beds and specialises in chronic long-stay care. Afrox
Healthcare has managed Lifecare since Afrox's acquisition in April 1999.
Lifecares' contribution to the current year's attributable profit is six
percent. This business is included in the Healthcare services operations as
it is largely service oriented in nature, and cares for patients through
contracts with Provincial government.
Financial
Following the efficient merger between Afrox Healthcare and PresMed, 2001
was a year of improving efficiencies, in both operating cost management and
management of working capital. Real overhead cost reductions were achieved
with operating margins increasing to 11,8 percent compared with 11,4 percent
last year.
Excellent working capital management resulted in working capital declining
by R74 million. Improvements were made in both debtor and creditor
management, with debt collections continuing to improve. Cash generated from
operations was 21 percent higher at R434 million.
Focus on asset management and cash flow during the year produced an equally
impressive and strong balance sheet.
Gearing improved from 22 percent to 6 percent, with debtors days the lowest
ever. Net interest bearing debt was well controlled and shows a reduction of
R144 million to R77 million. Return on net assets improved from 25,2 percent
to 30,9 percent; and return on capital employed was 27,6 percent compared to
23,3 percent.
Business review
Despite lower occupancy rates in the South African private hospitals market,
Afrox Healthcare hospitals improved admissions by one percent. The hospitals
performed well but, performance in specific ones was impacted by Transmed's
decision to deny pension fund members access to private hospitals.
It is pleasing to report that most short and medium-term growth initiatives
announced this time last year are operational or nearing completion. Their
full impact, however, will only be fully realised in the 2002 financial
year.
The projects include a new cardiac unit in East London, and the upgrading
and renovating of Johannesburg, Pretoria and Port Elizabeth hospitals. Acute
rehabilitation clinics are operational at two facilities in Gauteng and a
third is to be opened shortly in Bloemfontein. A state-of-the-art
reproductive medical clinic (IVF) was opened in Gauteng and a further two
will be opened in Cape Town and Gauteng. ER24 is fully operational. The 65
emergency and trauma facilities are located in Afrox Healthcare and
MediClinic hospitals.
Healthcare services companies are all market leaders in their respective
areas of expertise. In particular, Direct Medicines, Lifecare and Hospital
Medical Systems, Afrox Healthcare's pathology management company, performed
well.
Plans to expand Direct Medicines' product range and to start various eHealth
initiatives are advanced, and will be launched within the next few months.
Dividend
The directors have declared a final dividend of 24,4 cents, making a total
of 35,4 cents (2000: 21,5 cents), up 65 percent. This increase is to more
closely align Afrox Healthcare's dividend policy with that of its parent,
Afrox. The dividend is covered 2,6 times by earnings of 92,1 cents.
Accounting policies
The accounting policies are consistently applied as set out in the 2000
financial statements except for the new statement on Post-Balance Sheet
Events (AC 107) and the statement on Provisions, Contingent Liabilities and
Contingent Assets (AC 130) that were adopted from 1 October 2000.
Future prospects
Afrox Healthcare has a very strong balance sheet, which will allow the
company to pursue both organic and acquisition growth. The company has
numerous plans to commission high-technology equipment, to further upgrade
facilities in hospitals, and to launch new products and businesses. To this
end, R300 million in capital expenditure has been set aside for the 2002
growth projects. This organic growth should be boosted by acquisitions.
Continued strong growth is forecast for the coming financial year.
Greg Sedgwick Rick Hogben
Chairman Managing Director
Johannesburg
31 October 2001
Notice of final dividend declaration and salient features
Notice is hereby given that on 31 October 2001, the board of directors
resolved to declare a final cash dividend of 24,4 cents (2000: 11,9 cents)
per ordinary share, being the final dividend for the financial year ended 30
September 2001, to shareholders registered as such at the close of business
on Friday, 25 January 2002 (both days inclusive).
The salient dates for the declaration and payment of the final dividend are
as follows:
Last date to trade ("LDT") Friday,
ordinary shares "CUM" dividend 18 January 2002
Ordinary shares trade "EX" Monday,
the dividend 21 January 2002
Friday,
Record Date ("RD") 25 January 2002
Monday,
Payment Date 28 January 2002
Share certificates may not be dematerialised/rematerialised between 14
January 2002 and 25 January 2002.
By order of the Board
Ivor Matthee
Company Secretary
Johannesburg
31 October 2001
AFROX HEALTHCARE LIMITED
Registration number 1985/001313/06
Registered office:
Afrox House, 23 Webber Street
Selby, Johannesburg, 2001
PO Box 5404, Johannesburg, 2000
Telephone +27(11) 490-0400
Directors:
GL Sedgwick* (Chairman), RL Hogben (Managing Director), RG Cottrell,
RKLourey*, JM Marriott, R M dori**, DMJ Ncube, CJPG van Zyl
*Australian **French
Company Secretary:
IMMatthee
Transfer Secretaries:
Mercantile Registrars Limited
8th Floor, Anglo Building, 11 Diagonal Street
Johannesburg, 2001
P O Box 1053, Johannesburg, 2000
Telephone +27(11) 370-5000
These results can also be viewed on the website
www.afroxhealthcare.co.za
The directors report that the condensed audited group results for the year
ended 30 September 2001 are as follows:
2001 2000
R'000 % change R'000
BALANCE SHEET
Assets
Non-current assets 1 213 926 1 043 405
Current assets 627 409 654 288
Total assets 1 841 335 1 697 693
Equity and liabilities
Capital and reserves 1 065 429 883 853
Minority interests 189 671 123 852
Non-current liabilities 60 773 211 594
Current liabilities 525 462 478 394
Total equity and liabilities 1 841 335 1 697 693
INCOME STATEMENT
Revenue 3 087 485 26 2 446 162
Operating profit before
finance costs 363 687 31 278 288
Finance costs (31 629) (33 344)
Operating profit 332 058 36 244 944
Share of profits of associates 30 464 15 409
Profit before tax 362 522 39 260 353
Tax 105 556 80 403
Profit after tax 256 966 179 950
Minority interest 50 734 27 702
Preference dividend paid by
subsidiary 1 536 1 579
Attributable profit 204 696 36 150 669
Goodwill written off 1 734 534
(Profit)/loss on sale of
fixed property (2 985) 1 440
Headline earnings 203 445 33 152 643
CHANGES IN EQUITY
Balance at beginning of year 883 853 822 588
Issue of ordinary shares 745 (872)
Other movement in reserves 578 (41 344)
Net profit 204 696 150 669
Dividends (24 443) (47 188)
Balance at end of year 1 065 429 883 853
CASH FLOW STATEMENT
Cash generated from operations 433 904 358 034
Net finance costs (31 629) (33 344)
Tax paid (137 127) (49 494)
Cash inflow from operating
activities 265 148 275 196
Investing activities (76 545) (11 864)
Dividends received 863 655
Net acquisition of property,
plant and equipment (104 016) (158 440)
Cash outflow from investing
activities (179 698) (169 649)
Proceeds from share issue 745 4
Other movement in financing
activities (107 366) (33 982)
Dividends paid (50 561) (40 208)
Cash outflow from financing
activities (157 182) (74 186)
Net (decrease)/increase in cash
and cash equivalents (71 732) 31 361
STATISTICS AND RATIOS
Statistics
Weighted average number of
shares in issue ('000) 222 283 219 480
Headline earnings per share
(cents) 91,5 32 69,5
Earnings per share (cents) 92,1 34 68,6
Dividend per share (cents) 35,4 65 21,5
Ratios
Dividend cover (times) 2,6 3,2
Interest cover (times) 11,5 8,4
Net asset value (cents) 479,3 398,1
Gearing (%) 6,1 21,9
Return on capital employed (%) 27,6 23,3
Return on net assets (%) 30,9 25,2
REVENUE GRAPH
EBITDAGRAPH
CASH GENERATED FROM OPERATIONS GRAPH
Afrox Healthcare Limited - Press Release
Share Code : AHH
ISIN Code: ZAE000022059
October 31, 2001
Strong growth from AHealth, and more to come
Afrox Healthcare Limited (AHealth) continued to show strong growth for the
year ended 30 September 2001, with headline earnings per share up 32 percent
at 91,5 cents, and net profit attributable to shareholders 36 percent higher
at R204,7 million.
Revenue was 26 percent higher at R3,1 billion (2000: R2,4 billion), with
operating profit at R332 million (2000: R245 million), up 36 percent.
Profit before tax was up 39 percent at R363 million (2000: R260 million),
and headline earnings were R203 million, (2000: R153 million), some 33
percent higher. Efficiency projects and focus on operating cost and working
capital management resulted in real overhead cost reductions, with operating
margins increasing to 11,8, compared with 11,4 last year.
Managing director of AHealth, Rick Hogben, says "It was, however, a year of
consolidation where we concentrated on asset management, organic growth, and
laying very sound plans for expanding the business in the 2002 financial
year.
"We have a number of exciting growth projects on the table. These include
launching various eHealth initiatives. We are also looking at buying out
minority shareholdings in certain of our hospitals, and negotiations are
going well for the acquisition of the KwaZulu-Natal based, four hospital,
seven hundred bed, Amahosp Group.
"We have earmarked R300 million for capital expenditure, nearly R150 million
more than the 2001 financial year. This will be used for investing in
various growth projects, including high technology revenue enhancing medical
equipment, further upgrading many of our hospitals, investment in a cardiac
unit at the Eugene Marais, and a neurosurgical unit at the Little Company of
Mary, both in Pretoria. Additionally, we will continue to grow new
businesses, such as further expanding our medical reproductive and
rehabilitation facilities", says Hogben
"Gearing reduced from 22 percent to 6 percent, net interest bearing debt has
reduced from R221 million to R77 million, and debtors days continue to
improve. As a result of this strong asset management focus, cash generated
from operations was R434 million, 21 percent higher than this time last
year.
The strong performance and excellent balance sheet has lead to an increased
total dividend for the year, 65 percent higher at 35,4 cents (2000: 21,5
cents). The dividend is covered 2,6 times by earnings of 92,1 cents.
Hogben says that with gearing at 6 percent, a strong cash flow, and interest
rates the lowest in over two decades, growth opportunities can be financed
by borrowings.
Segmental results show hospital revenue increased from R1,9 billion to R2,1
billion and Healthcare services companies, which now include Lifecare,
increased from R541 million to nearly a billion at R951 million.
Hospital operating profits were R25 million higher at R260 million, with
Healthcare services companies more than doubling to R104 million from R43
million. Hospitals are understated as all corporate costs are allocated to
this business area.
Turning to the one acquisition AHealth made this year, Hogben says
"Lifecare, the 24 hospital, 10 000 bed operation, which specialises in
chronic long-stay care with contracts with Provincial government, performed
well and now forms part of our Healthcare services operation. AHealth
acquired African Oxygen Limited's (Afrox) 55 percent stake during the year.
The other 45 percent is held by Don Ncube's Real Africa Holdings (Real
Africa)
Effective October 1 this year, Rick Hogben took over as managing director of
African Oxygen Limited (Afrox). Afrox, the R5 billion plus a year gases,
welding products and healthcare group, holds 82 percent of Afrox Healthcare
Limited. Rick Hogben replaces Jimmy Marriott who will reach retirement age,
and retire later this year.
Rick Hogben joined Afrox Healthcare seven years ago and was charged with
developing a Healthcare services businesses portfolio. This business now
contributes some R1 billion in revenue. In 1999 he was named AHealth's
managing director. In the past three years, Rick has led the successful
acquisition of Lifecare, the merger with PresMed, and reverse listed AHealth
on the JSE Securities Exchange.
Rick Hogben's successor in AHealth, Michael Flemming, was named at the board
meeting today.
Business review
The occupancy rate in all South African private hospitals is lower this
year, while Afrox Healthcare hospitals improved admissions by one percent.
The hospitals performed well but, performance in specific ones were impacted
by Transmed's decision to deny pension fund members access to private
hospitals.
It is pleasing to report that most short and medium-term growth initiatives
announced this time last year are operational or nearing completion. Their
full impact, however, will only be fully realised in the 2002 financial
year.
The projects include a new cardiac unit in East London, and the upgrading
and renovating of Johannesburg, Pretoria and Port Elizabeth hospitals.
Acute rehabilitation clinics are operational at two facilities in Gauteng
and a third is to be opened shortly in Bloemfontein. A state-of-the-art
reproductive medical clinic (IVF) was opened in Gauteng and a further two
will be opened in Cape Town and Gauteng. ER24 is fully operational. The 65
emergency and trauma facilities are located in Afrox Healthcare and
MediClinic hospitals.
Healthcare services companies are all market leaders in their respective
areas of expertise. In particular, Direct Medicines, Lifecare and Hospital
Medical Systems, Afrox Healthcare's pathology management company, performed
well. Plans to expand Direct Medicines' product range and to start an
eHealth business are advanced, and will be launched within the next few
months.
New MD for AHealth
Michael Flemming has been named the new managing director of Afrox
Healthcare Limited (AHealth).
Flemming succeeds Rick Hogben who was appointed managing director of African
Oxygen Limited, AHealth's parent company, effective October 1, 2001.
Mike Flemming (44) joined African Oxygen Limited in 1985 and transferred to
its healthcare division in 1994. He has held several senior finance and
line management positions with both Afrox and Afrox Healthcare. Flemming
holds BComm, Bachelor of Law and BProc degrees. He also attended the
Harvard Business School advanced management programme.
Ends
Issued by Afrox Healthcare Limited (AHealth)
For further information contact:
Chris Fieldgate (Investor relations) (011) 490-0430 or Cell: 082-495-1481
