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INTERIM REPORT FOR THE SIX MONTHS ENDED 31 OCTOBER 1997
HOWDEN AFRICA HOLDINGS LIMITED
COMMENTS
THE YEAR-END FOR HOWDEN AFRICA HOLDINGS LTD WILL CHANGE TO DECEMBER, AS
PREVIOUSLY REPORTED, IN ORDER TO CONFORM WITH THE YEAR-END OF THE MAJORITY
SHAREHOLDER, CHARTER PLC. THE JOHANNESBURG STOCK EXCHANGE RULES REQUIRE,
HOWEVER, THAT AN INTERIM REPORT FOR THE SIX MONTHS TO OCTOBER 1997 BE REPORTED
DESPITE THE FINAL REPORT DUE EARLY IN 1998.
ECONOMIC CONDITIONS IN THE COUNTRY HAVE PROVEN TO BE TOUGHER THAN ANTICIPATED,
RESULTING IN A SLOW START TO THE FINANCIAL PERIOD IN ALL THE TRADING COMPANIES
WITHIN THE GROUP. AGAINST A BACKGROUND OF DIFFICULT TRADING CONDITIONS, THE
UNDERLYING PERFORMANCE ACHIEVED FOR THE SIX MONTHS TO OCTOBER 1997 WAS
SATISFACTORY. THE RESULTS INCLUDE THE COST OF RESTRUCTURING AND CONSOLIDATING
THE PUMP COMPANIES.
RESULTS
IN THE SIX MONTHS TO 31 OCTOBER 1997 GROUP OPERATING PROFITS OF R 15.3 MILLION
ARE REPORTED, AGAINST THE R 17 MILLION FOR THE SAME PERIOD LAST YEAR.
CONTRIBUTION TO PROFIT FROM THE FAN AND HEAT EXCHANGER BUSINESS WAS IN LINE
WITH LAST YEAR. THE AIR AND GAS CLEANING SECTOR INCREASED ITS CONTRIBUTION TO
PROFIT. RATIONALISATION AT THE PUMP BUSINESS IS NOW COMPLETE AND THE GROUP
LOOKS FORWARD TO SEEING BENEFITS FROM THE RESTRUCTURING DURING THE 1998
FINANCIAL YEAR.
THE REDUCTION IN EARNINGS PER SHARE IS ATTRIBUTABLE TO A RISE IN OUTSIDE
SHAREHOLDERS INTEREST AND NUMBER OF SHARES IN ISSUE.
BOARD OF DIRECTORS
AT THE ANNUAL GENERAL MEETING HELD ON 8 OCTOBER 1997, IT WAS ANNOUNCED THAT JAN
MOODIE HAD BEEN APPOINTED CHIEF EXECUTIVE OFFICER OF HOWDEN ASIA PACIFIC, BASED
IN SINGAPORE, WITH EFFECT FROM 1 JANUARY 1998. JOHAN VAN DEN BERGH WAS PROMOTED
TO CHIEF EXECUTIVE OFFICER OF HOWDEN AFRICA HOLDINGS LIMITED WITH EFFECT FROM
FRIDAY 10 OCTOBER 1997. JAN MOODIE WILL REMAIN AS A NON-EXECUTIVE DIRECTOR ON
THE HOWDEN AFRICA BOARD AND IT IS ENVISAGED THAT HIS PRESENCE IN THE PACIFIC
BASIN WILL PROVE USEFUL IN SUPPORTING THE GROUP'S EXPORT DRIVE INTO THE REGION.
NIGEL SMITH WHO IS CHIEF OPERATING OFFICER OF CHARTER PLC WAS APPOINTED A
NON-EXECUTIVE DIRECTOR OF THE HOWDEN AFRICA BOARD ON 6 JUNE 1997.
PROSPECTS
EVEN THOUGH THE POOR ECONOMIC CONDITIONS ARE NOT EXPECTED TO IMPROVE IN THE
SHORT TERM, THE GROUP WILL CONTINUE TO BUILD ON ITS SOUND PLATFORM OF
ESTABLISHED ENGINEERING STRENGTHS, WELL KNOWN RANGE OF PRODUCTS AND LEADING
MARKET POSITIONS IN ITS THREE CORE BUSINESS AREAS.
PROSPECTS FOR THE FANS AND HEAT EXCHANGER BUSINESS ARE PROMISING, WITH MORE
ORDERS EXPECTED FROM THE COAL MINING INDUSTRY FOR DUST EXTRACTION SYSTEMS, AS
WELL AS MAIN SURFACE FANS FOR THE COPPER MINES. SPECIFIC EMPHASIS IS BEING
PLACED ON EXPORTS TO THE EMERGING MINING MARKET IN SUB-SAHARAN AFRICA. SPARES,
SERVICE AND ENHANCEMENT WORK FOR THE POWER GENERATION INDUSTRY REMAINS
PROMISING WITH A BUOYANT ORDER BOOK. THE OUTLOOK IS POSITIVE FOR THE AIR AND
GAS CLEANING BUSINESS, WITH GOOD PROSPECTS FOR FABRIC FILTER PLANT AND MELTING
FURNACES FOR THE IRON AND STEEL INDUSTRY, BOTH LOCALLY AND FOR EXPORT. A NUMBER
OF PROJECTS ARE IN THE OFFING AND, IF SUCCESSFUL, COULD BOLSTER THE ORDER BOOK
SUBSTANTIALLY.
PROSPECTS LOOK GOOD FOR THE PUMPS AND REFRIGERATION BUSINESS, WITH MAJOR
CONTRACTS ON THE HORIZON IN THE GOLD MINING INDUSTRY FOR SURFACE WATER
CHILLERS. WITH CONTINUOUS FOCUS ON THE PUMP BUSINESS, TOGETHER WITH THE REDUCED
COST STRUCTURES, NEW MARKETS ARE BEING DEVELOPED AND PENETRATED AND THIS SHOULD
RESULT IN A POSITIVE GROWTH IN BOTH TURNOVER AND PROFITABILITY. EXPORTS ARE
EXPECTED TO GROW, DESPITE DIFFICULT ECONOMIC CONDITIONS, WITH THE UNITED ARAB
EMIRATES, AFRICA, SOUTH AMERICA AND THE PACIFIC BASIN TARGETED AS SPECIFIC
FOCUS AREAS.
MANAGEMENT CONTINUES TO GIVE ATTENTION TO INCREASING EARNINGS BY FOCUSING ON
TIGHT CONTROL OVER COSTS AND DEVELOPING EXPORT MARKETS. YOUR DIRECTORS REMAIN
CONFIDENT ABOUT THE GROUP'S PROSPECTS.
DIVIDEND
THE DIRECTORS HAVE DECLARED AN INTERIM DIVIDEND OF 4 CENTS PER SHARE TO
SHAREHOLDERS REGISTERED IN THE BOOKS OF THE COMPANY AT CLOSE OF BUSINESS ON 6
FEBRUARY 1998. PAYMENT IS EXPECTED TO BE MADE ON OR ABOUT 27 FEBRUARY 1998.
FOR AND ON BEHALF OF THE BOARD
JW HERBERT
22 JANUARY 1998
THE SUMMARISED UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 31 OCTOBER 1997
ARE AS FOLLOWS: -
CONSOLIDATED INCOME STATEMENT
ACTUAL ACTUAL ACTUAL ACTUAL
6 MONTHS 6 MONTHS PRO FORMA YEAR
ENDED ENDED % ENDED
31 OCTOBER 31 OCTOBER CHANGE 30 APRIL
1997 1996 1997
(UNAUDITED) (UNAUDITED) (AUDITED)
R'000 R'000 R'000
TURNOVER 219 025 208 683 5,0% 404 839
OPERATING PROFIT 15 276 17 034 -10,3% 39 014
NET FINANCIAL
REVENUE 2 318 837 1 878
PROFIT BEFORE
TAXATION 17 594 17 871 -1,5% 40 892
TAXATION (5 138) (5 022) (13 347)
PROFIT AFTER
TAXATION 12 456 12 849 -3,1% 27 545
ATTRIBUTABLE TO
OUTSIDE SHAREHOLDERS (2 072) (1 220) (3 288)
NET PROFIT
ATTRIBUTABLE TO
ORDINARY SHAREHOLDERS 10 384 11 629 -10,7% 24 257
ORDINARY DIVIDENDS (2 556) - (5 254)
RETAINED PROFIT
FOR THE YEAR 7 828 11 629 19 003
NUMBER OF SHARES:
(000'S)
IN ISSUE 63 910 62 000 63 910
WEIGHTED AVERAGE 63 910 58 000 60 639
EARNINGS PER SHARE:
(CENTS) 16,25 20,05 40,00
DIVIDEND PER SHARE:
(CENTS) 4,00 4,00 12,00
INTERIM 4,00 4,00 4,00
FINAL 8,00
OTHER GROUP SALIENT FEATURES
NET ASSET VALUE
PER SHARE (CENTS) 188,83 163,96 176.6
DEPRECIATION 2 708 2 100 4 458
CAPITAL EXPENDITURE 1 569 1 489 5 891
CAPITAL COMMITMENTS
AUTHORISED AND
CONTRACTED 150 873 200
AUTHORISED NOT
CONTRACTED 206
ABRIDGED CONSOLIDATED BALANCE SHEET
ACTUAL ACTUAL ACTUAL
6 MONTHS ENDED 6 MONTHS ENDED YEAR ENDED
31 OCTOBER 1997 31 OCTOBER 1996 30 APRIL 1997
(UNAUDITED) (UNAUDITED) (AUDITED)
R'000 R'000 R'000
CAPITAL EMPLOYED
SHAREHOLDERS' FUNDS 120 680 101 658 112 850
OUTSIDE SHAREHOLDERS'
INTEREST 10 947 6 819 8 875
LOAN FROM HOLDING
COMPANY 571 571 571
DEFERRED TAX 4 813 4 680 4 813
137 011 113 728 127 109
EMPLOYMENT OF CAPITAL
FIXED AND NON-CURRENT
ASSETS 37 064 33 049 38 500
CURRENT ASSETS
STOCK AND WORK
IN PROGRESS 68 988 73 117 81 390
ACCOUNTS RECEIVABLE 96 422 103 679 101 791
AMOUNTS OWING BY
FELLOW SUBSIDIARIES - - 986
BANK AND CASH BALANCES 41 230 22 745 37 114
206 640 199 541 221 281
CURRENT LIABILITIES
ACCOUNTS PAYABLE 87 910 113 629 112 918
TAXATION 15 410 4 153 11 169
AMOUNTS OWING TO
FELLOW SUBSIDIARIES 817 1 080 3 472
SHAREHOLDERS FOR
DIVIDEND 2 556 - 5 113
106 693 118 862 132 672
NET CURRENT ASSETS 99 947 80 679 88 609
137 011 113 728 127 109
ABRIDGED CONSOLIDATED
CASH FLOW
CASH FLOW FROM
OPERATING ACTIVITIES
CASH GENERATED
BY OPERATIONS 17 542 19 118 43 410
UTILISED TO INCREASE
WORKING CAPITAL (8 906) (6 803) (12 621)
CASH GENERATED BY
OPERATING ACTIVITIES 8 636 12 315 30 789
FINANCIAL COSTS 2 318 837 1 878
DIVIDENDS PAID (5 113) - (135)
TAXATION PAID (897) (5 715) (6 891)
4 944 7 437 25 641
CASH UTILISED IN
INVESTING ACTIVITIES
FIXED ASSETS ACQUIRED (1 569) (1 955) (5 891)
PUMP BUSINESSES
ACQUIRED - (49 363 ) (49 374)
PROCEEDS ON DISPOSAL
OF FIXED ASSETS 741 67 206
(828) (51 251) (55 059)
CASH EFFECTS FROM
FINANCING ACTIVITIES
SHARE CAPITAL AND
SHARE PREMIUM RAISED - 51 600 57 457
DECREASE IN LOANS
FROM MINORITIES - - (12)
INCREASE IN
LONG TERM LOAN - - (5 872)
0 51 600 51 573
INCREASE IN CASH
AND CASH EQUIVALENTS 4 116 7 786 22 155
DIRECTORS
JW HERBERT (CHAIRMAN)*
JP VAN DEN BERGH (CHIEF EXECUTIVE)
AG MACLACHLAN*
TV MAPHAI
S MEYER
R MOKATE
JC MOODIE
NWR SMITH*
* BRITISH
COMPANY SECRETARY: MJM LAKE
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 96/02982/06)
("HOWDEN AFRICA")
REGISTERED OFFICE
1A BOOYSENS ROAD, BOOYSENS, 2091
POSTAL ADDRESS
PO BOX 2239, JOHANNESBURG, 2000
TRANSFER SECRETARIES
SOUTHERN REGISTRARS (PTY) LIMITED,
1ST FLOOR - BLOCK D, CROWNWOOD, 100 NORTHERN PARKWAY,
ORMONDE, JOHANNESBURG 2001
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