African Oxygen Limited: Audited results for the year ended 30 September 2003 Johannesburg, October 30 /PRNewswire/ -- South Africa's best governed company Afrox received the Deloitte & Touche and Moneyweb Good Governance Award for the best governed company in the country. It was placed first in two of the four categories, namely Board Effectiveness and Corporate Integrity and Ethics. - Net profit up 42% - Industrial business grows by 61% - Earnings per share up 38% - With dividends up 38% - Cash generated from operations increases by 24% to R1,4 billion DEAR SHAREHOLDERS Performance summary African Oxygen Limited (Afrox) posted excellent results for the year ended 30 September 2003. The results reflect the company's ability to grow all its businesses profitably while focusing on improved efficiencies and asset management. Headline earnings per share have increased by 33 per cent, and this enabled the company to increase its total dividend for the year by 38 per cent to 83 cents per share. Industrial & Special Products (ISP) and Process Gas Solutions (PGS), which constitute the industrial businesses, showed marked increases in revenue, earnings and cash flow, as did Healthcare. Afrox increased its net profit attributable to shareholders by 42 percent. On a segmental basis the industrial business now represents 62 per cent of net profit, and Healthcare 38 percent. Financial results Revenue increased by 13 per cent to R7,3 billion (2002: R6,5 billion) with operating profits increasing by 22 per cent to R1,1 billion, exceeding R1 billion for the first time (2002: R896 million). ISP, PGS and Healthcare, all benefited from improved operating profit margins. Within ISP, the AfroxPac safety product, in its first full year of trading, contributed to the overall operating profits' improvement. PGS benefited from a lower cost base owing to its focus on operating efficiencies, while Healthcare's improved operating profits were directly the result of increased activity levels and overhead efficiencies. Net interest paid reduced by 22 per cent to R122 million (2002: R157 million). This was mainly due to excellent working capital management, but was aided by the lower interest rates experienced in the latter part of the financial year. The improved tax rate of 30 per cent (2002: 33 percent) resulted from the utilisation of assessed losses in both the industrial and healthcare businesses. At a segmental reporting level, the industrial business increased its share of group net profit by 61 percent to R345,1 million (2002: R214,7 million), while the healthcare business increased its share of net profit by 19 percent to R209,3 million (2002: R175,5 million). Funding requirements decreased by R258 million (2002: R141 million) in spite of robust growth, capital expenditure, and acquisitions worth R552 million. Once again sound asset management resulted in a reduction of working capital of R115 million. This contributed to the record low gearing level of 13 per cent (2002: 21 percent). Accounting policies These results have been prepared in accordance with South African Statements of Generally Accepted Accounting Practice including AC133, which became applicable for the first time this year. 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 Financial Instruments: Recognition and Measurement - AC133. Comparative figures have not been restated. 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. Business review The industrial businesses of ISP and PGS performed well in spite of a downturn in the manufacturing sector over the past six months. New initiatives to improve marketing focus and customer relationships contributed to the excellent results in ISP. During the past two years, the ISP business has achieved strong market penetration by developing new markets, extending its global customer base, and adding to its product offering to existing and new customers. This strategy has translated into sound and sustainable growth, accompanied by excellent working capital management. PGS's strong performance was enhanced by its application of advanced technology to produce and improve new and existing processes. Firm pricing trends and a focus on operating efficiencies, added to revenues to ensure that PGS exceeded its targets for the year. Healthcare had another year of good organic growth, with increased activity levels and performance excellence. The company acquired increased shareholdings in the Little Company of Mary Hospital in Pretoria and Joint Medical Holdings in Durban. Construction of the new 124-bed Roseacres Clinic in Germiston was completed in September 2003. The total investment in building initiatives 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. Outlook Over many years Afrox has developed a solid business base, providing essential products and services to key markets. The industrial business is now offering new products to a broader market sector. The company has optimised its human capital, technology and facilities to increase its productivity and global competitiveness. This gives Afrox the resilience to perform well in all economic cycles, as evidenced in these excellent results. Afrox has a strong balance sheet and is well positioned for future growth. John Walsh Rick Hogben Johannesburg Chairman Managing Director 30 October 2003 Notice of final dividend declaration and salient features Notice is hereby given that a final cash dividend of 50 cents (2002: 37 cents) per ordinary share, being the final dividend for the year ended 30 September 2003, has been declared payable to all shareholders of Afrox 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 30 October 2003 CAUTIONARY Afrox and Afrox Healthcare are currently trading under a joint cautionary announcement, which states that Afrox 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 Afrox's shareholding. As soon as this process is finalised, there will be a full communications exercise to inform stakeholders. AFROX Afrox is one of South Africa's best known industrial brands. It is a leader in all its businesses - gases, welding products and healthcare. AFROXMEDICAL Afrox medical gases are used in most state and private hospitals, emergency units, ambulances, and for home therapy. HANDIGAS The majority of restaurants and fast-food outlets cook with Handigas, and almost all hotels, pubs and casinos use Handigas. AFROXHEALTHCARE Afrox Healthcare is the country's leading Healthcare provider with 88 acute care and long-stay chronic hospitals. VITEMAX Most metals in South Africa are joined using Afrox electrodes or welding wires. SA's top selling electrode is Vitemax, with 293 million sold annually. FOODGRADECO2 Afrox's FoodGrade CO2 puts the fizz in nearly every single softdrink made in South Africa. SUREMIX Suremix puts the head on most draught beers poured in South Africa. SUMMARISED BALANCE SHEET 30 September 30 September R'000 2003 2002 ASSETS Non-current assets 3 269 920 2 988 843 Property, plant and equipment 2 857 588 2 687 938 Other non-current assets 412 332 300 905 Current assets 1 942 527 1 691 211 Inventories 416 647 404 319 Trade and other receivables 1 265 328 1 206 905 Cash and cash equivalents 260 552 79 987 Total assets 5 212 447 4 680 054 EQUITY AND LIABILITIES Capital and reserves 2 377 131 1 892 528 Share capital 17 143 16 515 Share premium 537 314 360 478 Accumulated profits and reserves 1 822 674 1 515 535 Minority interest 626 165 560 342 Non-current liabilities 783 873 794 673 Borrowings 623 735 550 365 Other non-current liabilities 160 138 244 308 Current liabilities 1 425 278 1 432 511 Current portion of borrowings 87 278 201 067 Provisions 178 616 113 347 Other current liabilities 1 158 007 1 089 312 Bank overdraft 1 377 28 785 Total equity and liabilities 5 212 447 4 680 054 STATISTICS AND RATIOS 30 September 30 September 2003 2002 Statistics Total number of shares in issue ('000) 342 853 330 301 Number of ordinary shares on which earnings per share are based ('000) 335 767 326 363 Dividends and capitalisation share award, per share (cents) 83,0 62,5 - Final 50,0 37,0 - Interim 33,0 25,5 Ratios Interest cover (times) 8,9 5,6 Effective tax rate (%) 29,5 32,5 Gearing (%) 13 21 Dividend cover - net profit (times) 2,0 2,0 SUMMARISED INCOME STATEMENT 30 September % 30 September R'000 2003 Change 2002 Revenue 7 325 895 13 6 511 510 Cost of sales (5 266 760) (4 732 843) Gross profit 2 059 135 16 1 778 667 Other operating income 897 -- Administration and other expenses (970 196) (882 191) Operating profit 1 089 836 22 896 476 Exceptional items -- (15 034) Profit from operations 1 089 836 24 881 442 Finance costs (121 944) (157 275) Income from associates 42 841 27 139 Profit before taxation 1 010 733 35 751 306 Income tax expense (298 324) (244 018) Profit after taxation 712 409 40 507 288 Minority interest (157 971) (117 040) Net profit for the year 554 438 42 390 248 Adjustments for headline earnings - Exceptional items -- 15 034 - Taxation effect -- (1 370) - Goodwill amortised 8 689 5 916 - Profit on disposal of property, plant and equipment (4 029) (2 622) Headline earnings 559 098 37 407 206 Basic earnings per ordinary share (cents) 165 38 120 Headline earnings per ordinary share (cents) 167 33 125 Segmental Information Corporate R'000 PGS ISP Healthcare costs Group Year ended 30 September 2003 Revenue 408 067 2 442 999 4 474 829 -- 7 325 895 Operating profit 90 630 454 680 550 521 (5 995) 1 089 836 Year ended 30 September 2002 Revenue 369 314 2 256 160 3 886 036 -- 6 511 510 Operating profit 79 638 391 511 429 266 (3 939) 896 476 SUMMARISED CASH FLOW STATEMENT 30 September 30 September R'000 2003 2002 Cash generated from operations 1 444 738 1 168 010 Finance costs and taxation paid (489 570) (374 370) Dividends received 897 -- Cash available from operations 956 065 793 640 Dividends paid (55 850) (123 221) Net cash inflow from operating activities 900 215 670 419 Acquisition of business (68 624) (227 653) Disposal of shares 2 000 111 097 Purchase of property, plant and equipment (485 261) (380 804) Other investing cash flows, net 48 027 6 334 Net cash used in investing activities (503 858) (491 026) Minorities (75 711) (38 375) Decrease in borrowings (49 946) (136 422) Movement on retirement benefit obligation (62 727) (387) Net cash utilised in financing activities (188 384) (175 184) Net increase in cash and cash equivalents 207 973 4 209 Cash and cash equivalents at beginning of period 51 202 46 993 Cash and cash equivalents at end of period 259 175 51 202 SUMMARISED STATEMENT OF CHANGES IN EQUITY Issued Share Other Accumulated R'000 capital premium reserves profits Total Balance at 1 October 2002 16 515 360 478 104 371 1 411 163 1 892 527 Change in accounting policy -- -- 1 061 15 911 16 972 Restated balance 16 515 360 478 105 432 1 427 074 1 909 499 Surplus on revaluation of properties -- -- 2 016 -- 2 016 Other movements -- -- (611) (8 018) (8 629) Currency translation difference -- -- (4 424) (19 919) (24 343) Net profit for the period -- -- -- 554 438 554 438 Dividends -- -- -- (233 314) (233 314) Issue of share capital 628 176 836 -- -- 177 464 Balance at 30 September 2003 17 143 537 314 102 413 1 720 261 2 377 131 Balance at 1 October 2001 16 277 298 756 87 807 1 182 407 1 585 247 Surplus on revaluation of properties -- -- 15 940 -- 15 940 Other movements -- -- 624 10 104 10 728 Currency translation difference -- -- -- 13 585 13 585 Net profit for the period -- -- -- 390 248 390 248 Dividends -- -- -- (185 181) (185 181) Issue of share capital 238 61 722 -- -- 61 960 Balance at 30 September 2002 16 515 360 478 104 371 1 411 163 1 892 527 This is a summarised commentary and results announcement. A full annual report will be published on the Internet and a hard copy will be mailed to shareholders in the first week of December 2003. The annual general meeting will be held on 27 February 2004 and notice thereof will be given in the annual report. The results can be viewed on the website http://www.afrox.com/. AFRICANOXYGENLIMITED African Oxygen Limited (Incorporated in the Republic of South Africa). Registration number: 1927/000089/06. ISINCode: ZAE000030920. South African share code: AFX. Namibian share code: AOX. ("Afrox" or "the Company"). Registered office: Afrox House, 23 Webber Street, Selby, Johannesburg 2001. PO Box 5404, Johannesburg 2000. Telephone +27 (11) 490-0400. Transfer secretaries: Computershare Limited, 70 Marshall Street, Johannesburg 2001. PO Box 61051, Marshalltown 2107. Telephone +27 (11) 370-5000. Sponsor in South Africa: Nedbank Corporate. Sponsor in Namibia: Namibia Equity Brokers (Pty)Limited. Directors: JLWalsh(4) (Chairman), RLHogben (Managing Director), RGCottrell, N Deeming (1), CMDFlemming, AE Isaac(1), LAMacNair, R M�dori (2), GL Sedgwick (3), GS Sibiya, CB Strauss. Alternate director: RK Lourey (3) (1) British, (2) French, (3) Australian, (4) American. Company Secretary: MGRowell http://www.afrox.com/ Contact: Mr Chris Fieldgate, Tel No. +27 (11) 490-0430, Cell No. +27 (0) 082 495 1481, e-mail address : DATASOURCE: Afrox Oxygen Limited Mr Chris Fieldgate, Tel No. +27 (11) 490-0430 Cell No. +27 (0) 082 495 1481, e-mail address :

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