| Wed 29 Oct 2003, 15:49 | | PRESS RELEASE |
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AFROX HEALTHCARE LIMITED - PRESS RELEASE
AFROX HEALTHCARE LIMITED
Share code: AHH
ISIN: ZAE000022059
29 OCTOBER 2003
AFROX HEALTHCARE MAINTAINS AN EXCELLENT TRACK RECORD - OPERATING PROFIT UP 19
PERCENT
Afrox Healthcare"s financial results for the year ended 30 September 2002,
demonstrate a track record of continued growth and increased activity levels in
the business. Strong cash flow generation and earnings capability attest to the
financial strength of the company.
Revenue increased 15 percent to R4,47 billion (2002: R3,88 billion) with the
hospitals recording improved activity levels. Operating profit appreciated by
19 percent to R571 million (2002: R478 million), and headline earnings per share
increased by 22 percent to 138,2 cents (2002: 113,7 cents).
Afrox Healthcare has once again created wealth for shareholders with an
increased final dividend of 40 cents per share (2002: 39,0 cents per share)
bringing the total dividend for the year to 67 cents per share (2002: 57,0 cents
per share). The dividend is covered twice by earnings of 135,5 cents per share.
The compounded annual growth rate in the dividend per share for the last four
years is 46,8 percent.
Cash generated from operations was 35 percent higher at R733 million (2002: R544
million). Added to this a continued focus on asset management produced an
impressive and strong balance sheet.
Managing director, Michael Flemming, said, "We have achieved excellent results
in a challenging environment, characterised by increased regulatory control and
stiff competition. The results indicate sound business fundamentals and
strategies, a strong team, and the appropriate facilities. Our drive to achieve
quality in every facet of the business, and our patient and customer-centric
approach in both the hospitals and healthcare services operations, have laid a
solid foundation for continued growth."
In July 2003 Afrox Healthcare was rated `A" in the short term and `A1" in the
long term by Global Credit Rating Company, based on the company"s strong
position in the South African private healthcare industry and its history of
consistent incremental earnings. The company is ranked among the Financial
Mail"s top 100 companies in South Africa, and was rated as the 13th best
performing company on the JSE Securities Exchange in 2002.
"As affordability of quality healthcare remains a pressing issue, we have been
proactive in establishing various risk-sharing reimbursement tariff models with
individual funders," said Flemming. "Our geographic 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.
Flemming said that synergy benefits derived from last year"s acquisition of the
Amahosp hospitals in KwaZulu-Natal are now generating strong revenues.
"We invested R270 million in building projects during the year. This 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, 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 upgrading of the Forona Clinic to a women"s wellness
centre."
A public/private partnership was concluded 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. Flemming says,
"We will manage the Humansdorp hospital, and our consortium will build a private
wing on to the hospital, benefiting both public and private patients in the
Eastern Cape. We hope that this PPP, between our organisation and the state will
be the forerunner of several more."
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. New contracts led to a 20 percent increase in
both the number of lives covered and on-site clinics serviced, which now total
120 000 and 182 respectively.
"We are intent on extending Afrohc"s customer base and growing both Direct
Medicines, our chronic benefit management business, and Lifecare, which operates
special health services facilities under contract to provincial governments.
The services offered by Lifecare, Afrohc and Direct Medicines form an important
component in the affordable healthcare products we are developing," said
Flemming.
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 and will
assist the NHS to alleviate the backlog of patients awaiting surgical
procedures. Flemming said, "We were nominated as preferred bidders for the three
units after a lengthy bidding process placing Afrox Healthcare"s service
excellence among the best in the world."
Referring to the nursing shortage in South Africa, Flemming said that the
company had introduced initiatives to attract, support and retain nurses. "One
initiative is the Afrox Healthcare College of Learning where 700 nurses are
currently enrolled and which accommodates nurse training at all levels. In
addition, we will give our specialised nurses the opportunity to work in the UK
on a one-year renewable contract matched by working back the equivalent time in
South Africa."
Looking to the future Flemming said, "We are establishing a footprint in the
United Kingdom with potential for future growth, and will continue to expand our
core competencies, networking around key technologies such as oncology,
rehabilitation and renal dialysis. We have budgeted R321 million for 2004
capital expenditure, and this will cover expansion into new markets and organic
growth projects. Major building projects and improvements are planned at
Rosepark and Glynnwood hospitals over the next financial year. Approval has
also been granted to develop a new 194-bed, eight-theatre private hospital in
the Fourways area of Gauteng."
Since July, Afrox Healthcare and its parent company have operated under a joint
cautionary stating that, `Afrox is in the process of considering its strategic
options with regard to its shareholding in Afrox Healthcare Limited. These
discussions may or may not lead to a change in Afrox"s shareholding."
Flemming said, "While we review our options we are unable to comment further but
we expect some conclusion in the near future. When this occurs, stakeholders
will be fully informed."
Ends
Issued by Afrox Healthcare Limited
For further information contact:
Michael Flemming
011 490 0501 or 083 702 9327
or
Ros Beart
011 490 0712 or 082 891 5149
Date: 29/10/2003 02:45:21 PM Supplied by www.sharenet.co.za
Produced by the JSE SENS Department
