| Tue 29 Apr 2003, 17:20 | | Afrox Healthcare Limited-Unaudited Interim Results |
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Afrox Healthcare Limited
Company registration: 1985/001313/06
ISIN code: ZAE0000022059 Share code: AHH
("Afrox Healthcare")
Quality reaps rewards for Afrox Healthcare
Revenue 18%
Operating profit 27%
Headline earnings per share 29%
Cash generated from operations 74%
Summarised Balance Sheet
Unaudited Unaudited Audited
31 March 31 March 30 September
R"000 2003 2002 2002
ASSETS
Non-current assets 1 697 939 1 507 871 1 578 612
Property, plant and equipment 1 402 845 1 285 021 1 304 742
Other non-current assets 295 094 222 850 273 870
Current assets 1 021 143 901 391 845 012
Inventories 148 397 153 511 146 591
Trade and other receivables 838 132 710 871 685 258
Cash and cash equivalents 34 614 37 009 13 163
Total assets 2 719 082 2 409 262 2 423 624
EQUITY AND LIABILITIES
Capital and reserves 1 211 239 1 043 966 1 162 936
Share capital and premium 625 484 623 876 624 804
Retained earnings and reserves 585 755 420 090 538 132
Minority interest 178 960 182 276 197 696
Non-current liabilities 484 180 455 152 290 807
Current liabilities 844 703 727 868 772 185
Current portion of borrowings 216 860 167 342 139 808
Provisions for liabilities
and charges 80 360 64 271 95 109
Other current liabilities 547 483 496 255 537 268
Total equity and liabilities 2 719 082 2 409 262 2 423 624
Interim results for the six months ended 31 March 2003
Summarised Statement of changes in equity
Unaudited Unaudited Audited
31 March 31 March 30 September
R"000 2003 2002 2002
Opening capital and reserves 1 162 936 997 881 997 881
Adjustment against opening
reserves for AC133 13 562 -- --
Restated opening balances 1 176 498 997 881 997 881
Issue of share capital
less costs 680 -- 3 354
Currency translation
differences (396) (2 286) 2 363
Net profit 121 140 100 312 253 812
Adjustment in current year
for AC133 333 -- --
Dividends declared and paid (87 016) (54 367) (94 474)
1 211 239 1 041 540 1 162 936
Summarised Income Statement
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 March % 31 March 30 September
R"000 2003 Change 2002 2002
Revenue 2 151 909 18 1 819 721 3 886 036
Operating profit
before finance cost 250 033 27 196 924 478 261
Finance cost (net) (39 801) (29 820) (69 635)
Share of profits of
associates 17 999 13 395 27 139
Profit before tax 228 231 26 180 499 435 765
Tax (89 000) (60 614) (138 084)
Profit from ordinary
activities 139 231 16 119 885 297 681
Minority interest (18 091) (19 573) (43 869)
Net profit for the
period 121 140 21 100 312 253 812
Adjustments for
headline earnings
Goodwill written off 4 167 2 118 5 283
Profit on sale of
fixed property -- (5 290) (5 774)
Headline earnings 125 307 29 97 140 253 321
Headline earnings
per share (cents) 56,1 29 43,6 113,3
Earnings per
share (cents) 54,3 21 45,0 113,9
Summarised Cash Flow Statement
Unaudited Unaudited Audited
Six months Six months Year
ended ended ended
31 March 31 March 30 September
R"000 2003 2002 2002
Cash generated from
operations 210 992 121 128 544 626
Net finance cost and
tax paid (166 813) (111 573) (202 409)
Cash flow from operating
activities 44 179 9 555 342 217
Acquisition of subsidiaries (28 050) (198 658) (231 249)
Other investing
activities (net) (1 103) 6 088 (6 442)
Purchase of property, plant
and equipment (net) (145 188) (51 978) (131 305)
Cash flow from investing
activities (174 341) (244 548) (368 996)
Proceeds from share issues 680 2 426 3 354
Dividends paid (87 016) (54 367) (94 474)
Other movement in financing
activities (net) 237 949 320 046 127 165
Cash flow from financing
activities 151 613 268 105 36 045
Net increase/(decrease) in
cash and cash equivalents 21 451 33 112 9 266
Opening balance at
beginning of period 13 163 3 897 3 897
Closing balance at end of
period 34 614 37 009 13 163
Statistics and Ratios
31 March 31 March 30 September
2003 2002 2002
Statistics
Weighted number of shares
in issue ("000) 223 272 222 817 222 817
Dividend per share (cents) 27,0 18,0 57,0
Ratios
Interest cover (times) 6,3 6,6 6,9
Gearing (%) 33,5 33,7 24,0
Current ratio (:1) 1,2 1,2 1,1
Message to shareholders
Dear shareholders
Performance
Afrox Healthcare has produced excellent results for the six months ended 31
March 2003, benefiting from strong organic growth, operating efficiencies, and
synergy benefits realised from last year"s acquisitions. Operating profit
increased by 27 percent to R250 million, with revenue up 18 percent to R2,15
billion compared with the same period a year ago.
Strong cash flow capabilities have enabled the Board to declare an interim
dividend of 27,0 cents (2002: 18,0 cents) at a dividend cover of two times.
Business review
In response to market demand, Afrox Healthcare has negotiated the tariff
increase for 2003 individually with all funders. We have also negotiated a move
from fee-for-service to a per diem basis with some of the major funders. Ninety-
nine percent of all funders have accepted the increase without eliciting a co-
payment from their members.
Innovative products have been developed to provide affordable healthcare for
lower income groups not currently covered by medical aid. These products offer a
limited network of doctors and hospitals that will deliver quality private
healthcare.
In January 2003, the company"s affordable hospital model was launched providing
hospital services to the Transmed and Open Plan medical schemes. The product is
tailored to accommodate the requirements of specific employer groups seeking
healthcare services for their uninsured employees.
In conjunction with Discovery Health and other service providers, a new low cost
model known as Key Health, was implemented. Key Health delivers cost-effective
care using Discovery"s operational infrastructure and including Afrox
Healthcare"s network of hospitals and specialists.
Our excellent results are attributable to acquisitions made in 2002, the focus
on clinical excellence, and improvements in the quality of customer service.
Streamlined admissions, post-operative patient support groups, patient
satisfaction indicators, and recognition of quality staff, are some of the
initiatives that have elevated healthcare delivery. In a quest to ensure optimum
quality, Afrox Healthcare has become NOSA accredited and is at present the only
hospital group in South Africa to have done so.
Global Credit Rating Company re-assessed the company"s credit rating in March
2003 and it is pleasing to report that we maintained our rating of `A1" in the
short term and `A" in the long term.
Nearly R200 million has been budgeted for maintenance and organic growth
projects in the 2003 financial year. Some of these projects currently under way
include:
* at Flora Clinic, an R18 million expansion including doctors" rooms, bone
marrow transplant and renal dialysis units;
* at St Dominic"s, a R14 million upgrade and expansion that will include a new
neonatal ICU, pharmacy and trauma unit;
* at Springs Parkland Hospital, a R10 million general refurbishment and the
construction of additional doctors" suites and a urology unit;
* the building of a 120 bed hospital and relocation to a site in Sunnyridge,
East Rand for the Roseacres Hospital; and
* the acquisition and upgrade of the Peglerae Hospital building in Rustenburg.
Following a quick and successful integration of last year"s hospital
acquisitions, the synergy benefits derived from the acquisitions are now
generating strong revenues. In Durban cardiac work has increased following a
refurbishment to the cardiac unit and the completion of a new coronary intensive
care unit at Entabeni. In Pretoria the Eugene Marais Hospital"s new R30 million
cardiac unit, commissioned during 2002, is attracting many more patients.
In October 2002, the company acquired a further shareholding in the Little
Company of Mary Hospital in Pretoria. We now own 60 percent of the hospital,
strengthening our presence in this geographical area.
A joint venture with Anglo American Platinum Corporation to provide hospital
services to mining employees, has increased activity substantially at the
Peglerae Hospital in Rustenburg. To facilitate this venture the company"s
effective shareholding in the hospital was reduced from 51 to 36 percent.
Technology investment is a key enabling capability. Although only as yet a pilot
project, wireless technology introduced at the patient bedside has improved the
quality of care and billing accuracy, allowing doctors to access patient
information from a central database.
Prospects
We will continue our operational focus on enhancing the delivery of care in our
hospitals and improving the quality of service offered to our customers. Our
emphasis on delivering quality healthcare, supported by appropriate technology
advances, has resulted in an improvement in the first six months" performance
ratios.
A human resources plan has been formalised for the recruitment and retention of
nurses. The training of nurses is addressed by the Afrox College of Nursing, a
registered academic institution. In March 2003, 160 nurses graduated, and
currently 600 students are enrolled at the College"s nine learning centres.
The trend of a traditionally stronger second half performance is expected to
continue.
Real Africa Holdings will unbundle its 17 percent shareholding in Afrox
Healthcare in May 2003 thus improving the free float of shares.
Accounting policies
The accounting policies at 31 March 2003 are consistent with those applied at 30
September 2002, except for a change in accounting policy with regard to AC133:
Financial Instruments - Recognition and Measurement. These results have been
prepared in accordance with South African Statements of Generally Accepted
Accounting Practice (GAAP). Opening reserves have been adjusted according to the
transitional provisions of AC133 and disclosed in the statement of changes in
equity. Comparative figures have not been restated. As a result of applying
AC133 interest received for the current period was increased by R3 million.
Thanks
The contribution of the doctors, nurses and employees of Afrox Healthcare have
greatly enhanced the quality of our performance. For this effort we extend our
thanks.
Greg Sedgwick Mike Flemming
Chairman Managing director
29 April 2003
Notice of interim dividend declaration and salient features
Notice is hereby given that an interim cash dividend of 27,0 cents (2002: 18,0
cents) per ordinary share, being the interim dividend for the half year ended 31
March 2003, has been declared payable to all shareholders of Afrox Healthcare
recorded as such on Friday, 25 July 2003.
The salient dates for the declaration and payment of the interim dividend are as
follows:
2003
Last date to trade ordinary shares
"cum" dividend Friday, 18 July
Ordinary shares trade "ex" the dividend Monday, 21 July
Record date Friday, 25 July
Payment date Monday, 28 July
Share certificates may not be dematerialised/rematerialised between Monday, 21
July 2003 and Friday, 25 July 2003, both days inclusive.
By order of the Board
Johannesburg
29 April 2003
This is a summarised commentary and results announcement. The interim report
which complies with AC127 is published on the Internet and a hard copy will be
mailed to shareholders on 13 May 2003.
The results can be viewed on the website:
www.afroxhealthcare.co.za
Stakeholder enquiries may be addressed per e-mail to:
mike.flemming@afrox.boc.com
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 Limited
Sponsor: Nedbank Corporate
Directors: GLSedgwick* (Chairman),
CMDFlemming (Managing Director), RGCottrell, RK Lourey*,
RLHogben, R Mdori**, DMJ Ncube, CJPG van Zyl.
*Australian ** French
Company secretary: MG Rowell
