The latest year-end results unpacked by gas provider African Oxygen (Afrox) on Monday showed a significant uptick in financial performance as the company entered the next stage of its expansive turnaround.

The JSE-listed group posted a 284.5% surge in headline earnings per share (HEPS) from 36.2c in 2014 to 139.2c in 2015, while basic earnings per share rose 400.7% to 134.2c for the year ended December 31, compared with the 26.8c posted the year before.

Headline earnings of R429-million were achieved in 2015, an increase on the R111-million recorded in the 12 months to December 2014.

Presenting the company’s results, in Johannesburg, on Monday, MD Schalk Venter said the 22.7% stronger earnings before interest, taxes, depreciation and amortisation (Ebitda) of R1-billion for the year under review reflected the benefits of restructuring efforts that were expected to deliver R277-million in savings in 2016.

“The company is now at the healthiest [level] it has been in a long time,” he told Engineering News Online.

The Ebitda margin before restructuring costs increased from 14% last year to 18.3% in the last 12 months, while profit for the year increased to R425-million, from R96-million in the prior year.

Revenue was down 6.2% to R5.47-billion in 2015, mostly owing to lower liquefied petroleum gas (LPG) prices, with a pass through of R413-million, during the year under review.

However, excluding the market price change of LPG, the total revenue growth for the year would have been a more favourable 0.9%.

During the year under review, Afrox reduced its capital expenditure (capex) to R377-million, from R527-million in 2014, and saved some R205-million after re-evaluating a decision to invest in a production campus in Durban, and instead, disposed of the property and secured suitable rented premises to accommodate the Durban operations on one site.

The Maydon Wharf operations had been successfully relocated to the new Durban filling plant, in Riverhorse Valley, during the last quarter of the year, with temporary filling equipment used. The new filling plant and equipment would be installed by the second quarter of this year.

Afrox sold off its 103 000 m² Cornucobia property piecemeal and, after selling Portion 79 and Portion 78, for R30-million and R24-million respectively, the company was now working on disposing of the remaining Portion 77.

The lower levels of capex, focused trading working capital management, the optimisation of fixed assets and underlying Ebitda growth had resulted in Afrox remaining cash generative during the 2015 financial year.

The company’s net debt reduced by R355-million to R148-million, while its return on capital employed improved to 16.7%.

Afrox said it would continue to be a “profitable, robust and strongly cash-generative” business following the “get healthy” first phase of its turnaround plan.

The now completed reforms introduced a leaner and right-sized operation that better used assets, delivered effective procurement processes and outsourced noncore operations, with best commercial practice pricing compositions.

The cost reduction initiatives were delivered ahead of targets and the full impact was expected to emerge in 2016, with savings of R277-million expected in the next year to add to the R144-million savings already achieved in 2015.

Since the turnaround was launched in 2014, there had been a significant cost-base and full-time equivalent employee reduction and personnel costs had reduced by more than 14%.

A new operating model was implemented and aligned to a revised strategy reflective of the current economic reality after “tweaking” and “incremental changes” failed to deliver anything but surface benefits.

However, “deep cuts” delivering a significant step-change had left the company with the best results it had had in seven years, Venter commented.

The group’s revamped, bold and aggressive go-to-market model saw a leaner, more focused group, closer to the customer and more aligned to their needs, said sales and marketing GM Nazmi Adams.

The group had completely overhauled its sales structure, retail presence, distributor approach and product portfolio and had embarked on an aggressive e-commerce programme.

Under the new e-commerce platform, 17% of all delivered goods were completed, with 256 000 self-service transactions during the year, resulting in 20 000 man-hours saved. Over 11 500 legal entities registered for the e-commerce initiative in 2015.

The restructuring was now completed at R343-million – R47-million lower than expected – with no further costs to be accounted for going forward.

Now the company would move to the “get strong” and “get business” concurrent phases of the plan through the development of a new customer-centric operating model; an increase in the effectiveness and efficiency of traditional channels; the full introduction of the e-commerce platform; portfolio management; and best commercial practice price cost recovery; as well as narrow focus on growth throughout the rest of Africa and sectors such as LPG, healthcare and special gases.

“Our focus in the medium term will be on delivering the turnaround benefits in South Africa and realising any growth opportunities in parts of our portfolio in 2016 and . . . ensuring the go-to-market model is rolled out.”

Afrox declared a total dividend of 69c a share for 2015, representing 50% of HEPS – the highest payment since 2007.