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AFRICAN OXYGEN LIMITED - Summarised group results and dividend declaration for the six months ended 30 June 2019

Release Date: 16/09/2019 07:05
Code(s): AFX     PDF:  
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Summarised group results and dividend declaration
for the six months ended 30 June 2019

African Oxygen Limited
(Incorporated in the Republic of South Africa)
Registration number: 1927/000089/06
ISIN: ZAE000067120     JSE code: AFX
NSX code: AOX

Summarised Group results and dividend declaration
for the six months ended 30 June 2019

During the six months ended 30 June 2019:

Revenue R3 000 million 
Increase of 3.3% from R2 904 million at 30 June 2018

EBITDA R659 million
Increase of 6.3% from R620 million at 30 June 2018

EBIT R457 million
Increase of 4.8% from R436 million at 30 June 2018

Cash generated from operations R485 million
Increase of R253 million from R232 million at 30 June 2018

Earnings per share 112.0 cents
Increase of 6.7% from 105 cents at 30 June 2018

Headline earnings per share 111.3 cents
Increase of 7% from 104 cents at 30 June 2018

Dividend 55.0 cents
Increase of 5.8% from 52 cents at 30 June 2018

Summarised consolidated interim statement of financial position
as at 30 June 2019

R'million                                        30 June 2019  30 June 2018
                                                     Reviewed      Reviewed
Non-current assets                                      3 769         3 519
Current assets                                          3 967         3 398
Total assets                                            7 736         6 917
Total equity                                            4 221         4 160
Non-current liabilities                                 1 495         1 634
Current liabilities                                     2 020         1 123
Equity and liabilities                                  7 736         6 917

Summarised consolidated interim statement of profit or loss

R'million                                        30 June 2019  30 June 2018
                                                     Reviewed      Reviewed
Revenue                                                 3 000         2 904
EBITDA                                                    659           620
Depreciation and amortisation                              (202)         (184)
Earnings before interest and taxation                     457           436
Headline earnings                                         343           321

Summarised consolidated interim statement of cash flows

R'million                                        30 June 2019  30 June 2018
                                                     Reviewed      Reviewed
Cash generated from operations                            485           232
Interest, taxation and dividends paid                    (194)         (285)
Cash inflow/(outflow) from operating activities           291           (53)
Investment and financing activities                      (222)         (160)
Free cash flow                                             69          (213)
Cash and cash equivalents                               1 222         1 131

Performance Highlights
Revenue increased by 3.3% to R3 000 million (2018: R2 904 million) from a combination of improved volumes in the
Atmospheric Gases segment, mainly as a result of the increased Healthcare business, growth in cylinder volumes within our
Liquefied Petroleum Gas (LPG) segment and the successful recovery of cost inflation across all three segments.

The continued contraction in South Africa's manufacturing sector led to a reduction in volumes in welding consumables within the
Hard Goods segment. Revenue adjusted for change in LPG market price increased by 3.2% and earnings before interest and
taxes (EBIT) at R457 million (2018: R436 million), increased by 4.8%. This increase in EBIT was mainly as a result of
additional Healthcare business with South African public hospitals and further cost savings from restructuring activities.

The operating profit or EBIT of our operating segments increased by R48 million or 9.2% to R571 million (2018: R523 million). 
Our EBIT in Atmospheric Gases and LPG increased by 18.9% and 1.6% respectively. However, Hard Goods' EBIT declined
by 5.5% for the six-month period. Margin improved overall by 103 bps from efficiencies generated in both the Atmospheric
Gases and LPG segments. Hard Goods reported a reduction in margin compared to previous year levels due to lower production
volumes in our local South African factories. Corporate costs increased by R27 million, impacted by R29 million in foreign currency
differences compared to June 2018.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) of R659 million (2018: R620 million) improved by 6.3%.

Headline earnings per share increased by 7% to 111.3 cents (2018: 104.0 cents) and basic earnings per share increased by
6.7% to 112.0 cents (2018: 105.0 cents). Adjusted for IFRS 16, headline earnings per share would have been at 112.8 cents
or 8.5% up compared to 2018. Diluted earnings per share increased by 7.2% to 111.3 cents (2018: 103.8 cents).

Operating cash flow of R485 million (2018: R232 million) increased by R253 million compared to June 2018, mainly from
better trade working capital management.

Capital expenditure of R180 million (2018: R140 million) increased compared to June 2018 as a result of investments into
the new Healthcare business, cylinders for LPG and Industrial Gases and investments in strategic plant spares for our air
separation plants in order to strengthen the reliability of our main production assets. This, together with additional
cash utilised on acquiring shares in respect of the share incentive scheme of R22 million (2018: R37 million) and certain
other investments resulted in a net cash position of R1 222 million (June 2018: R1 131 million).

Return on capital employed (ROCE) reduced by 130 bps to 21.4% (2018: 22.7%). ROCE before adjusting for the impact of IFRS
16 remained at the 2018 level of 22.7%.

Dividend
It is the Company's policy to declare dividends twice annually. The Board of directors has declared a cash dividend of 
55 cents per share (2018: 52 cents), declared out of the after-tax income for the six months ended 30 June 2019. Based on
Afrox's policy the dividend is covered two times by HEPS.

Notice of interim dividend declaration number 185 and salient features
Notice is hereby given that a gross cash dividend of 55 cents per ordinary share, being the interim dividend for the six
months ended 30 June 2019, has been declared payable to all shareholders of Afrox recorded in the register on Friday,
4 October 2019.

The salient dates for the declaration and payment of the interim dividend are as follows:

Last day to trade ordinary shares cum dividend        Tuesday, 1 October 2019
Ordinary shares trade ex the dividend                 Wednesday, 2 October 2019
Record date                                           Friday, 4 October 2019
Payment date                                          Monday, 7 October 2019

Shares may not be dematerialised or rematerialised between Wednesday,  2 October 2019 and Friday, 4 October 2019, both
days inclusive.

The local net dividend amount is 44 cents (2018: 41.6 cents) per share for shareholders liable to pay dividends tax and 
55 cents (2018: 52 cents) per share for shareholders exempt from dividends tax.

In terms of the dividends tax, the following additional information is disclosed:
- The dividend has been declared out of income reserves.
- The local dividends tax rate is 20%, subject to double tax agreement.
- Afrox currently has 308 567 602 ordinary shares (excluding treasury shares of 34 285 308) in issue.
- Afrox's income tax reference number is 9350042710.

Outlook
The low growth in the South African economy is likely to persist for the balance of 2019. However, given this environment,
Afrox will continue to focus on specific growth opportunities, strict cost management and effective price cost recoveries.

About this short form
This short-form announcement is the responsibility of the Company's directors, it is a summary of the information in the
Group's full results announcement for the half year to 30 June 2019 and does not contain full or complete details. The full
results announcement is accessible via the JSE link at https://senspdf.jse.co.za/documents/2019/jse/isse/AFX/HY2019SENS.pdf 
and the Company's website at www.afrox.co.za. Copies of the full results announcement may be requested at the Company's 
registered office or the offices of One Capital, at no charge, during normal office hours.

Investment decisions in relation to the Company's shares should be based on consideration of the full results
announcement.

By order of the Board

Cheryl Singh
Company Secretary

16 September 2019
Johannesburg

Sponsor in South Africa: One Capital

Sponsor in Namibia: Namibia Equity Brokers Proprietary Limited

Executive directors: S Venter (Managing Director), M Vogt* (Group Financial Director)
Non executive directors: JM Panikar** (Chairman), M von Plotho*
Independent non-executive directors: CF Wells***, NVL Qangule, GJ Strauss, NV Fakude
*German **American ***British


Date: 16/09/2019 07:05:00
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