| Wed 29 Oct 2003, 15:00 | | Audited Results for the year ended 30 September 2 |
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Afrox Healthcare Limited - Audited Results for the year ended 30 September 2003
AFROX HEALTHCARE
Afrox Healthcare Limited
Incorporated in South Africa
Company registration: 1985/001313/06
ISIN code: ZAE0000022059
Share code: AHH
Another outstanding performance
- Revenue up 15%
- Operating profit up 19%
- Headline earnings per share up 22%
- Cash generated from operations up 35%
Message to our shareholders
Dear shareholders
Performance
Afrox Healthcare again produced good results for the year ended 30 September
2003. Operating profit increased by 19 percent to R571 million (2002: R478
million), with revenue up 15 percent to R4,47 billion (2002: R3,88 billion).
The results reflect strong organic growth and increased activity levels in the
business. Since 1999 Afrox Healthcare has met and exceeded its financial
targets.
The financial strength of the company, represented by strong cash flow and
earnings capability, enabled the board of directors to declare a final dividend
of 40 cents per share (2002: 39 cents per share). This brings the total dividend
for the year to 67 cents per share (2002: 57 cents per share). The dividend is
covered two times by earnings.
Cash generated was up 35 percent on last year and over the past
four years the compound annual growth rate of this ratio was
27,0 percent.
Afrox Healthcare and its parent company are currently trading under a joint
cautionary announcement, which states that African Oxygen Limited is in the
process of considering its strategic options with regard to its shareholding in
Afrox Healthcare Limited. This may or may not lead to a change in control. As
soon as the process is finalised, stakeholders will be informed accordingly.
Business review
In a challenging environment, characterised by increased regulatory control and
stiff competition, we had another year of increased organic growth and
performance excellence. As affordability of quality healthcare for all South
Africans remains a pressing issue, we have been proactive in establishing
various risk-sharing reimbursement tariff models with individual funders.
Afrox Healthcare is recognised by funders as being one of the lowest cost
private healthcare providers. Our geographical spread, doctor networks and cost
management initiatives give us a competitive advantage in this price-sensitive
market. We have developed a low cost, high quality healthcare model, which will
be offered to a significant number of medically insured patients in 2004. Other
affordable healthcare models, aimed at the medically uninsured population, are
well advanced.
Shareholdings were increased in the Little Company of Mary Hospital in Pretoria
to 60 percent, and in Joint Medical Holdings in Durban where Afrox Healthcare
now holds 49 percent of the shares. Joint Medical Holdings incorporates City
Hospital, Isipingo Hospital, Durdoc Hospital, Maxwell Clinic and Citi-med
Ambulance and Emergency Services.
Synergy benefits derived from last year"s acquisition of the Amahosp hospitals
in KwaZulu-Natal, are now generating strong revenues.
Our investment in building and equipment upgrades during the financial year
amounted to R270 million, and is part of a continuous programme to meet and
exceed the expectations of doctors and patients, as well as to expand capacity.
Construction and relocation of the new 124-bed Roseacres Clinic in Germiston,
was completed, replacing the old clinic and providing a secure environment for
the hospital. In Rustenburg, in a joint venture with Anglo Platinum to cater for
increased admissions, expansion of the Peglerae Hospital is in progress, as well
as conversion of the Forona Clinic to a women"s wellness centre.
The healthcare services businesses, Afrohc, Direct Medicines and Lifecare
Special Health Services, performed consistently well. Afrohc supplies on-site
occupational and basic primary healthcare services contracted to commerce,
industry and the mining sector.
We have successfully re-engineered Direct Medicines, which is a chronic benefit
management company. Lifecare has 9000 beds, which we operate under contract to
provincial governments for long-stay patients.
Afrox Healthcare"s College of Learning, affiliated to the University of Port
Elizabeth, is structured to accommodate all levels of nurse training in most
disciplines, and 700 students enrolled this year. To ensure that patients
receive the best care, competency based training within the hospitals is now
part of the induction programme for all new nursing staff.
Accounting policies
These results have been prepared in accordance with South African Statements of
Generally Accepted Accounting Practice. The accounting policies for the year
ended 30 September 2003 are consistent with those applied at 30 September 2002,
except for a change with regard to AC 133 Financial Instruments: Recognition and
Measurement. In accordance with the transitional provisions of AC 133,
comparative figures have not been restated. The company also adopted circular
7/2002 on the calculation of headline earnings.
Audit report
The auditors, PricewaterhouseCoopers Inc, have issued their opinion on the
group"s financial statements for the year ended 30 September 2003. A copy of
their unqualified report is available for inspection at the company"s registered
office.
Prospects and developments
We concluded a public/private partnership between a group of Afrox Healthcare
hospitals and an empowerment company, Season Star Trading, as the two members of
a private consortium, and the Eastern Cape Department of Health. The consortium
will manage the Humansdorp Hospital and will fund a R13,5 million private wing
to be built on to the hospital.
In an equal partnership with Care UK plc, Afrox Healthcare has been accorded
preferred bidder status for three United Kingdom National Health Service (NHS)
contracts valued at R2,7 billion over a five-year period. The contracts are for
the management and operation of three diagnostic treatment centres in Maidstone,
Plymouth and Nottingham, and will assist the NHS to alleviate the backlog of
patients awaiting surgical procedures.
Technology is important in providing optimum levels of quality and
professionalism in the business. Exciting developments have included the
company"s introduction of point of care technology spanning wards, theatres and
applications for doctors.
The 2004 budget for expansion into new markets, organic growth projects and
maintenance is R321 million. Major building projects are planned at Rosepark and
Glynnwood Hospitals.
Afrox Healthcare will continue to expand its core competencies and network in
strategic geographic areas around key technologies, such as oncology,
rehabilitation, and renal dialysis.
Thanks
We thank our doctors, nurses and other healthcare professionals, and the
employees of Afrox Healthcare for their support, and for the crucial role they
have played in this year"s excellent performance.
Greg Sedgwick Michael Flemming
(Chairman) (Managing Director)
Johannesburg 29 October 2003
Notice of final dividend declaration and salient features
Notice is hereby given that a final cash dividend of 40 cents (2002: 39 cents)
per ordinary share, being the final dividend for the year ended 30 September
2003, has been declared payable to all shareholders of Afrox Healthcare recorded
in the register on Friday, 23 January 2004.
The salient dates for the declaration and payment of the final dividend are as
follows:
2004
Last day to trade ordinary shares
`cum" dividend Friday, 16 January
Ordinary shares trade `ex"
the dividend Monday, 19 January
Record date Friday, 23 January
Payment date Monday, 26 January
Share certificates may not be dematerialised/rematerialised between Monday, 19
January 2004 and Friday, 23 January 2004, both days inclusive.
By order of the Board
Johannesburg 29 October 2003
AUDITED results for the YEAR ended 30 SEPTEMBER 2003
Summarised Balance Sheet
R"000 2003 2002
ASSETS
Non-current assets 1 774 187 1 578 612
Property, plant and equipment 1 422 159 1 304 742
Other non-current assets 352 028 273 870
Current assets 958 882 845 012
Inventories 144 335 146 591
Trade and other receivables 799 609 685 258
Cash and cash equivalents 14 938 13 163
TOTAL ASSETS 2 733 069 2 423 624
EQUITY AND LIABILITIES
Capital and reserves 1 335 721 1 162 936
Minority interests 205 712 197 696
Non-current liabilities 402 490 290 807
Current liabilities 789 146 772 185
Current portion of borrowings 46 298 139 808
Provisions for liabilities and charges 139 696 95 109
Other current liabilities 603 152 537 268
TOTAL EQUITY AND LIABILITIES 2 733 069 2 423 624
Summarised Statement of Changes in Equity
R"000 2003 2002
Opening capital and reserves 1 162 936 997 881
Effect of implementing AC 133 15 579 -
Adjustment for AC 135 adopted by
associated companies (1 961) -
Shares issued less expenses 3 063 3 354
Currency translation differences 806 2 363
Net profit 302 771 253 812
Dividends declared and paid (147 473) (94 474)
Closing capital and reserves 1 335 721 1 162 936
Summarised Income Statement
R"000 2003 % Change 2002
Revenue 4 474 829 15 3 886 036
Operating profit before finance
cost 571 196 19 478 261
Finance cost (net) (88 699) (69 635)
Share of profits of associates 42 841 27 139
Profit before tax 525 338 21 435 765
Tax (162 370) (138 084)
Profit from ordinary activities 362 968 22 297 681
Minority interest (60 197) (43 869)
Net profit for the year 302 771 19 253 812
Adjustments for headline earnings
Goodwill written off 7 669 5 283
Profit on sale of fixed property
and investments (1 615) (5 774)
Headline earnings 308 825 22 253 321
Headline earnings per
share (cents) 138,2 22 113,7
Earnings per share (cents) 135,5 19 113,9
Summarised Cash Flow Statement
R"000 2003 2002
Cash generated from operations 733 483 544 626
Net finance cost and tax paid (302 207) (202 409)
Cash flow from operating activities 431 276 342 217
Acquisition of subsidiaries (33 640) (231 249)
Other investing activities (net) (6 478) (3 771)
Purchase of property, plant and
equipment (net) (224 194) (133 976)
Cash flow from investing activities (264 312) (368 996)
Proceeds from share issue 3 063 3 354
Dividends paid (147 473) (94 474)
Other movement in financing activities (20 779) 127 165
Cash flow from financing activities (165 189) 36 045
Net increase in cash and cash equivalents 1 775 9 266
Opening balance at beginning of the year 13 163 3 897
Closing balance at end of the year 14 938 13 163
Statistics and Ratios
2003 2002
Statistics
Weighted number of shares in issue ("000) 223 448 222 817
Total dividend per share (cents) 67,0 57,0
Ratios
Interest cover (times) 6,4 6,9
Gearing (%) 22,5 24,0
Return on capital employed (%) 30,9 28,2
Current ratio (:1) 1,2 1,1
Operating margin 12,8 12,3
This is a summarised commentary and results announcement. A full annual report
will be published on the company"s website and a hard copy will be mailed to
shareholders on or about 20 November 2003.
The annual general meeting will be held on 26 February 2004 and notice thereof
will be given in the annual report.
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 Limited.
PO Box 61051, Marshalltown 2107.
Telephone (+27 11) 370-5000.
Sponsor: Nedbank Corporate
Directors: GLSedgwick* (Chairman), CMDFlemming (Managing Director), RGCottrell,
RK Lourey*, RLHogben, R Medori**,
CJPG van Zyl. *Australian ** French
Company secretary: MGRowell
Date: 29/10/2003 02:44:48 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
