| Wed 27 Oct 2004, 17:24 | | Audited results for the Year ended 30 September 04 |
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Afrox Healthcare - Audited results for the Year ended 30 September 2004
Afrox Healthcare Limited
(Incorporated in the Republic of South Africa)
Company registration: 1985/001313/06
ISIN: ZAE000022059
Share code: AHH
AUDITED results for the YEAR ended 30 SEPTEMBER 2004
- Overall winner of Sustainable Growth Award
- Revenue UP 10%
- Operating Profit UP 16%
- Cash generated from operations UP 33%
Summarised Balance Sheet
R`000 2004 2003
ASSETS
Non-current assets 1 952 169 1 774 187
Property, plant and equipment 1 533 323 1 422 159
Other non-current assets 418 846 352 028
Current assets 1 297 703 1 053 427
Inventories 132 409 144 335
Trade and other receivables 726 449 799 609
Cash and cash equivalents 38 991 14 938
Holding company loan 399 854 94 545
TOTAL ASSETS 3 249 872 2 827 614
EQUITY AND LIABILITIES
Capital and reserves 1 607 302 1 335 721
Minority interest 263 934 205 712
Non-current liabilities 391 551 497 035
Current liabilities 987 085 789 146
Current portion of borrowings 162 545 46 298
Provisions for liabilities and charges 178 349 139 696
Other current liabilities 646 191 603 152
TOTAL EQUITY AND LIABILITIES 3 249 872 2 827 614
Summarised Statement of Changes in Equity
R`000 2004 2003
Opening capital and reserves 1 335 721 1 162 936
Effect of implementing AC 133 332 15 579
Adjustment for AC 135 adopted by
associated companies - (1 961)
Shares issued less expenses 11 846 3 063
Currency translation differences 169 806
Net profit 350 162 302 771
Dividends declared and paid (90 928) (147 473)
Closing capital and reserves 1 607 302 1 335 721
Summarised Income Statement
R`000 2004 % Change 2003
Revenue 4 913 782 10 4 474 829
Operating profit before
finance cost 664 790 16 571 196
Finance cost (net) (72 381) (88 699)
Share of profits of associates 51 770 42 841
Profit before tax 644 179 23 525 338
Tax (218 886) (162 370)
Profit after tax 425 293 17 362 968
Minority interest (75 131) (60 197)
Net profit for the year 350 162 16 302 771
Adjustments for headline earnings
Net profit for the year 350 162 302 771
Amortisation of goodwill and
impairment of property and
trade investments 10 880 7 669
Profit on sale of fixed property
and investments (5 464) (1 615)
Headline earnings 355 578 15 308 825
Headline earnings per
share (cents) 156,4 13 138,2
Earnings per share (cents) 154,1 14 135,5
Summarised Cash Flow Statement
R`000 2004 2003
Cash generated from operations 974 405 733 484
Net finance cost and tax paid (264 976) (302 208)
Cash flow from operating activities 709 429 431 276
Acquisition of subsidiaries (49 325) (33 640)
Other investing activities (net) 2 939 (6 799)
Purchase of property, plant and
equipment (net) (192 509) (223 873)
Cash flow from investing activities (238 895) (264 312)
Proceeds from share issues 11 846 3 063
Dividends paid (90 928) (147 473)
Other movement in financing activities (367 399) (20 779)
Cash flow from financing activities (446 481) (165 189)
Net increase in cash and cash equivalents 24 053 1 775
Opening balance at beginning of the year 14 938 13 163
Closing balance at end of the year 38 991 14 938
Statistics and Ratios
2004 2003
Statistics
Weighted number of shares in issue (`000) 227 294 223 448
Dividend per share (cents) 0,0 67,0
Ratios
Interest cover (times) 9,2 6,4
Gearing (%) 5,8 22,0
Return on capital employed (%) 36,1 31,1
Current ratio (:1) 1,3 1,3
Operating margin 13,5 12,8
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 19 November 2004.
The annual general meeting will be held on 24 February 2005 and notice thereof
will be given in the annual report.
Message to our shareholders
Dear shareholders
Performance
Afrox Healthcare`s pleasing results were achieved in a year of uncertainty
surrounding the potential sale of the company as well as legislative changes.
The group performed well with a 10 percent increase in revenue to R4,9 billion
(2003: R4,5 billion), 16 percent increase in operating profit to R665 million
(2003: R571 million), and 33 percent increase in cash generated from operations
to R974 million (2003: R733 million). Our sound performance can be attributed to
our focus on quality, operating efficiencies, organic growth and the acquisition
of the Wilgeheuwel Hospital in Gauteng. Early in the year, we increased our
shareholding in this hospital from 28 percent to 74 percent.
Business review
A comprehensive quality programme was launched during the year to entrench
quality standards in every employee. The group has invested in excess of 100 000
man hours training employees for this initiative.
The net investment in acquisitions, additional facilities and equipment amounted
to R242 million. Construction began on a new 194-bed hospital at Fourways. Other
initiatives include extensive building additions to the Glynnwood Hospital in
Benoni and new cardiac facilities at Pretoria`s Eugene Marais Hospital and the
Vincent Pallotti in Cape Town. Admissions have exceeded expectations at the new
Roseacres Hospital in Germiston, which was opened during the year. A new
rehabilitation centre was commissioned at Entabeni Hospital in Durban.
The hospitals saw little improvement in patient volumes, and focused on cost-
effective management. The tariffs with individual medical funders reflect an
increase in risks shared by the hospitals. Legislation affecting the pricing of
medicines was introduced during the year and required a further review of
tariffs. These negotiations were successfully concluded on the basis of
remaining cost neutral to funders, and a portion of the input cost increase has
been absorbed.
The Jan S Marais hospital was sold and the Cape Anaesthetic Clinic and
Brackenfell Sameday Surgical Centre closed during the last quarter.
The healthcare services businesses, Afrohc (occupational healthcare) and
Lifecare Special Health Services performed well. Afrohc supplies on-site
occupational and basic primary healthcare services on contract to commerce,
industry and the mining sector. Lifecare`s 8 800 beds are operated under
contract to provincial governments for long-stay patients.
A R13,5 million private wing, funded by Afrox Healthcare and empowerment
partner, Star Season Trading, opened at the Humansdorp Hospital. Together we
manage the Humansdorp Hospital for the Eastern Cape Department of Health in a
public/private partnership.
International expansion progressed through a venture with Care UK plc in the
United Kingdom, providing orthopaedic services to the National Health Services
(NHS). Currently we operate from existing NHS hospitals in the Nottingham area
while two large units, due for commissioning in 2005, are under construction.
Feedback received from both patients and the NHS has been encouraging.
Affordability of healthcare remains a pressing issue. A venture was established
with general practitioners offering low-income earners access to private medical
services through our product, Access Card.
Awards
Our ability to deliver value to shareholders has been acknowledged in the 2004
Sustainable Growth Awards where we attained first place overall and first in the
five year category. We were also placed eleventh in the Financial Mail Top 100
companies award.
Prospects and developments
Afrox Healthcare is in a sound financial position and we have plans to grow the
business. We have established a national footprint in southern Africa and aim to
grow organically, through partnerships, and by expanding our products and
services to make them accessible to lower income groups, as well as by making
limited acquisitions in key strategic locations.
In December 2004, the company`s head office will move to premises in Illovo and
will operate as a stand alone company.
Sale of Afrox Healthcare and dividends
In November 2003, Bidco, comprising a black economic empowerment consortium led
by Brimstone Investment Corporation and Mvelaphanda Strategic Investments,
announced an offer to acquire the entire issued share capital of Afrox
Healthcare Limited. The Scheme of Arrangement in terms of Section 311 of the
Companies Act 1973 as amended was approved by shareholders and made an order of
court subject to the approval by the competition authorities. The Competition
Tribunal commenced hearings in July 2004 and will reconvene in January 2005 with
the final ruling expected in March 2005. The Board resolved to oppose the
application brought by certain minority shareholders to declare that the Section
311 Scheme of Arrangement has lapsed and is void as a result of the non-
fulfillment, by 30 September 2004, of the condition precedent, being the
approval by the competition authorities. In terms of the Scheme of Arrangement,
no dividends are payable.
Accounting policies
These results have been prepared according to South African Statements of
Generally Accepted Accounting Practice. The accounting policies for the year
ended 30 September 2004 are consistent with those applied at 30 September 2003.
Audit report
The auditors, PricewaterhouseCoopers Inc, have issued their opinion on the
group`s financial statements for the year ended 30 September 2004. A copy of
their unqualified report is available for inspection at the company`s registered
office.
Appreciation
We thank our doctors, nurses and employees who have built the company into what
it is today. We are especially grateful that under the current difficult
circumstances they continue to give their best to the company, their patients
and customers, and for the crucial role they have played in this year`s
excellent performance.
Greg Sedgwick Michael Flemming
(Chairman) (Managing Director)
27 October 2004
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 2004 (Pty) Limited, PO Box
61051, Marshalltown 2107. Telephone (+27 11) 370-5000.
Sponsor: Nedbank Capital
Directors: GL Sedgwick* (Chairman), CMD Flemming (Managing Director), RG
Cottrell, RK Lourey*, RL Hogben, R Medori**, CJPG van Zyl. *Australian **
French
Company secretary: ME Sanz
The results can be viewed on the website: www.afroxhealthcare.co.za
Stakeholder enquiries may be addressed per e-mail to:
mike.flemming@newname.co.za
