| Thu 25 Apr 2002, 0:00 | | Ahealth Shows Good Growth |
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AFROX HEALTHCARE LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1985/001313/06)
ISIN : ZAE000022059 Share code : AHH
AHEALTH SHOWS GOOD GROWTH
Revenue up 24,2%
Operating profit up 28,4%
Earnings per share up 21,6% to 45,0c
Dear shareholders
Performance
Afrox Healthcare's (AHealth's) increased operating efficiencies resulted in
half year operating profit growth of 28,4 percent, outstripping the increase
in revenue growth of 24,2 percent.
This strong performance was achieved in the traditionally slower first half
when revenues are affected by lower hospital occupancies in December,
January and over Easter. At the same time, the annual tariff increase, this
year an acceptable 7,5 percent, only became effective from the second
quarter onwards.
The strong results and balance sheet have enabled the board of directors to
declare an interim dividend of 18 cents (2001: 11,0 cents), up 63 percent.
This percentage increase is much in line with last year's total dividend,
which was 65 percent higher at 35,4 cents. The dividend is covered 2,5
times by earnings of 45,0 cents.
The growth in earnings was attributable to a combination of a solid
improvement in the current activity levels as well as the positive effect of
the recent acquisitions on earnings levels.
These acquisitions have a total enterprise value, including debt, of nearly
R500 million. Gearing is 47,7 percent, acceptable for an expanding company
and comparable with the restated 19,8 percent for the same period last year.
Gearing should improve as a result of continued working capital management
and strong second half cash generation.
For the industry as a whole, paid patient days remained relatively flat.
AHealth facilities nevertheless realised marginal increases in both
admissions and theatre cases.
The decline in the rand against the US dollar has placed further pressure on
the pricing of both pharmaceuticals and medical equipment. AHealth, as well
as funders, are exploring several potential alternative healthcare delivery
models. These new risk-sharing lower-cost models will be tailored to cater
for lower acuity cases and, at the same time, are also expected to increase
the affordability of private healthcare to a far wider section of the
population than at present.
Accounting policies
The accounting policies in respect of the financial year ended 30 September
2001 have been consistently applied to the results for the period ended 31
March 2002, except for the new statement on investment properties. The
policies conform with South African statements of Generally Accepted
Accounting Practices.
The new accounting statement on investment properties (AC 135) was adopted
with effect from 1 October 2001. The effect is that all buildings owned by
the Group are now depreciated over their expected remaining useful life.
Comparative figures have been restated to reflect the effect of the
depreciation on buildings.
Financial
AHealth has maintained a sound financial base since the reverse listing in
October 1999 and the balance sheet remains strong despite its focus on
growth. Cash generated from operations was a healthy R121 million and this
is expected to increase in the stronger second half. As a result of this
good cash generation and detailed attention to working capital management,
the interest-bearing debt of R622 million should be reduced by year end,
with gearing expected to be lower than the present level.
Business Review
Both hospitals and healthcare services divisions performed well.
Hospitals
During the period, AHealth bought the remaining 80 percent in the 700-bed,
four-hospital, Amahosp group in KwaZulu-Natal and increased its stake in the
341-bed Wilgers Hospital in Pretoria to 96 percent. The 30-bed Queenstown
Hospital was acquired in October 2001. This regional hospital will become
an important referral point for the company's high technology acute care
hospitals in East London.
All three acquisitions were concluded to achieve strategic geographic
network coverage. It is anticipated that the improved networks will
facilitate growth through inter-hospital referrals. As they are fully
incorporated into AHealth's management matrix, the new hospitals will also
give further critical mass and improve operating efficiencies, which will
lead to cost savings and other benefits.
In addition, the acquisitions concluded are in line with the company's
strategy of seeking to obtain majority shareholdings in hospitals where
AHealth holds minority stakes and, of making selective acquisitions.
Work has commenced on state-of-the-art cardiac and neurosurgical facilities
in Pretoria. The enlarged 140-bed Bedford Gardens Hospital is now complete,
and the upgrading of several other hospitals with extended facilities and
the installation of the latest medical equipment continues. New
rehabilitation facilities are planned to complement AHealth's three existing
ones in Johannesburg and Bloemfontein and two new fertility (IVF) units will
be opened shortly.
Healthcare services
The performance of the companies in the healthcare services division was
satisfactory considering the financial pressures experienced in these
markets. Good progress has been made in the re-positioning of Direct
Medicines and Afrox Occupational Health to meet future market demands.
Dividend
The directors have declared an increased interim dividend of 18,0 cents
(2001: 11,0 cents). The dividend is covered 2,5 times by earnings.
Prospects
Traditionally, the second half of the year is stronger than the first in
both revenue and profits, and will include a full six months' contribution
from the Amahosp hospitals. Further firm growth is also expected from
revenue-enhancing organic projects and, together with a strong balance sheet
and keen focus on working capital management, the company is in a fine
position for further continued growth.
Greg Sedgwick Michael Flemming
Chairman Managing Director
Johannesburg / 25 April 2002
Notice of interim dividend declaration and salient features
Notice is hereby given that an interim cash dividend of 18,0 cents (2001:
11,0 cents) per ordinary share, being the interim dividend for the half year
ended 31 March 2002, has been declared payable to all shareholders of
AHealth recorded as such on Friday, 26 July 2002.
The salient dates for the declaration and payment of the final dividend are
as follows:
2002
Last date to trade ordinary shares "CUM" dividend Friday,19 July
Ordinary shares trade "EX" the dividend Monday,22 July
Record date Friday,26 July
Payment date Monday,29 July
Share certificates may not be dematerialised/rematerialised between Monday,
15 July 2002 and Friday,26 July 2002, both days inclusive.
By order of the Board
Ivor Matthee
BALANCE SHEET
Unaudited Unaudited Audited
31 March 31 March 30 September
2002 2001 2001
R'000 (Restated (Restated)
)
ASSETS
Non - current assets 1,507,871 1,116,119 1,146,378
Property, plant and 1,285,021 924,031 929,697
equipment
Other non-current assets 222,850 192,088 216,681
Current assets 901,391 806,779 627,409
Inventories 153,511 119,791 133,877
Trade and other 710,871 566,893 489,635
receivables
Cash and cash 37,009 120,095 3,897
equivalents
Total Assets 2,409,262 1,922,898 1,773,787
EQUITY AND LIABILITIES
Capital and reserves 1,043,966 912,986 997,881
Share capital and 623,876 620,374 621,450
premium
Retained earnings and 420,090 292,612 376,431
reserves
Minority interests 182,276 190,835 189,671
Non - current liabilities 455,152 317,392 60,773
Current liabilities 727,868 501,685 525,462
Current portion of 167,342 21,615 15,765
borrowings
Provisions for 64,271 39,807 75,502
liabilities and charges
Other current 496,255 440,263 434,195
liabilities
Total equity and 2,409,262 1,922,898 1,773,787
liabilities
INCOME STATEMENT
Unaudited Unaudited Audited
Six months % Six months Year
ended Change ended ended
31 March 31 March 30
2002 2001 September
2001
R'000 (Restated) (Restated)
Revenue 1,819,721 24.2 1,465,736 3,087,485
Operating profit 196,924 28.4 153,404 348,901
before finance costs
Finance costs (net) (29,820) (14,066) (31,629)
Share of profits of 13,395 12,651 30,464
associates
Profit before 180,499 18.8 151,989 347,736
taxation
Tax 60,614 45,061 105,556
Profit from ordinary 119,885 12.1 106,928 242,180
activities
Minority interest 19,573 24,877 52,270
Net profit for the 100,312 22.3 82,051 189,910
period
Adjustments for
Headline earnings
Goodwill written off 2,569 587 1,734
Profit on sale of (5,290) - (2,985)
fixed property
Headline earnings 97,591 82,638 188,659
18.1
Headline earnings 43,8 37,2 84,9
per share (cents) 17,7
Earnings per share 45,0 37,0 85,4
(cents) 21,6
CASH FLOW STATEMENT
Unaudited Unaudited Audited
Six Six Year
months months
ended ended Ended
31 March 31 March 30
2002 2001 September
2001
R'000 (Restated (Restated
) )
Cash generated from 121,128 170,980 433,904
operations
Net finance costs and (111,573) (102,489) (168,756)
taxation paid
Dividends paid (54,367) (26,118) (52,097)
Cash flow from operating (44,812) 42,373 213,051
activities
Acquisition of (198,658) (52,225) (84,414)
subsidiaries
Other investing activities 6,088 (16,736) 8,732
(net)
Purchase of property & (51,978) (53,688) (104,016)
equipment
Cash flow from investing (244,548) (122,649) (179,698)
activities
Proceeds from share issue 2,426 3,281 745
Other movement in 320,046 121,461 (105,830)
financing activities
Cash flow from financing 322,472 124,742 (105,085)
activities
Net increase/(decrease) in 33,112 44,466 (71,732)
cash
and cash equivalents
Opening balance at 3,897 75,629 75,629
beginning of period
Closing balance at end of 37,009 120,095 3,897
period
STATEMENT OF CHANGES IN EQUITY
Share Retained Total
capital earnings
R'000 and and
premium reserves
Restated balance at 1 621,450 376,431 997,881
October 2001
Shares issued less 2,426 - 2,426
expenses
Currency translation - (2,286) (2,286)
differences
Net profit - 100,312 100,312
Dividend declared and paid - (54,367) (54,367)
Balance at 31 March 2002 623,876 420,090 1,043,966
Balance at 1 October 2000 620,705 263,148 883,853
Adjustment for - (52,762) (52,762)
depreciation on buildings
Shares issued less (331) - (331)
expenses
Currency translation - 175 175
differences
Net profit - 82,051 82,051
Balance at 31 March 2001 620,374 292,612 912,986
STATISTICS AND RATIOS
31 March 31 March 30
September
2002 2001 2001
(Restated (Restated
) )
Statistics
Weighted number of shares 222,817 222,024 222,283
in issue ('000)
Dividend per share (cents) 18.1 11.0 35.4
Ratios
Effective tax rate 28.4 29.6 29.1
(excluding STC effect) (%)
Gearing (%) 47.7 19.8 6.1
Interest cover (times) 6.6 10.9 11.0
The interim financial report to shareholders that complies with AC127 will
be mailed in early May 2002. These results can also be viewed on the
website:
www.afroxhealthcare.co.za
