Sharenet Sites 
Sharenet Sites
PRELIMINARY RESULTS FOR THE EIGHT MONTHS ENDED 31 DECEMBER 1997 PRELIMINARY RESULTS COMMENTS
THIS IS THE THIRD PRELIMINARY STATEMENT OF HOWDEN AFRICA HOLDINGS LIMITED FOLLOWING THE LISTING ON THE JOHANNESBURG STOCK EXCHANGE ON 3 MAY 1996. HOWDEN AFRICA IS PART OF AN INTERNATIONAL GROUP OF BUSINESSES WITH LEADING MARKET POSITIONS SERVING INDUSTRIAL CUSTOMERS. THE GROUP'S CORE BUSINESS DIVISIONS ARE FANS AND HEAT EXCHANGERS, AIR AND GAS CLEANING AND PUMPS AND REFRIGERATION COMMENTARY
THE FINANCIAL YEAR END HAS CHANGED FROM APRIL TO DECEMBER AND THIS ANNOUNCEMENT REFLECTS THE EIGHT MONTH PERIOD TO DECEMBER 1997. OPERATING RESULTS FOR THE PERIOD ENDED 31 DECEMBER 1997 WERE SATISFACTORY, DESPITE THE DIFFICULT ECONOMIC ENVIRONMENT AND EVER INCREASING COMPETITIVE PRESSURES. THE CONTRACTING COMPANIES REPORTED GOOD OPERATING RESULTS, WHICH WERE OFFSET BY LESS THAN SATISFACTORY RESULTS IN THE TRADING COMPANIES. THE COMPARISONS BELOW REFER TO THE CORRESPONDING EIGHT MONTH PERIOD TO DECEMBER 1996 (UNAUDITED):
- ORDER INTAKE AMOUNTED TO R 206 COMPARED TO R 395 IN THE CORRESPONDING PERIOD, WHICH INCLUDED CONTRACTS WORTH R 189 MILLION FOR THE FABRIC FILTER PLANT AND MAIN BOILER FEED PUMP CONTRACTS AT MAJUBA POWER STATION WHICH ARE NOT TO BE REPEATED
- TURNOVER WAS UP 20% TO R 299 MILLION COMPARED TO R 250 MILLION - OPERATING PROFIT UP 13.8% TO R 22 MILLION COMPARED TO R 19 MILLION - PROFIT BEFORE TAX AMOUNTED TO R 24.5 MILLION, 22% AHEAD OF THE CORRESPONDING R 20 MILLION
- AT 31 DECEMBER 1997 THE GROUP HAD A NET POSITIVE CASH POSITION OF R 41 MILLION
- DIVIDENDS TOTALLING 9 CENTS PER SHARE HAVE BEEN DECLARED FOR THE PERIOD TAXATION
TAX CHARGES FOR THE YEARS TO 30 APRIL 1996 AND 30 APRIL 1997 WERE BASED ON THE ASSUMPTION THAT CERTAIN INTELLECTUAL PROPERTY RIGHTS ACQUIRED BY THE COMPANY WOULD BE AMORTISED FOR TAX PURPOSES.
AN INITIAL RULING HAS NOW BEEN RECEIVED TO THE EFFECT THAT THE ALLOWANCE WOULD NOT BEEN PERMITTED. THIS RULING IS BEING CHALLENGED BUT IN LINE WITH THE CONCEPT OF ACCOUNTING PRUDENCE, THE ALLOWANCES CLAIMED IN PREVIOUS YEARS HAVE NOW BEEN REVERSED GIVING RISE TO AN ADDITIONAL TAX CHARGE IN THE PERIOD UNDER REVIEW OF R 1 923 334. BOARD OF DIRECTORS
DURING THE YEAR UNDER REVIEW JAN MOODIE WAS PROMOTED TO CHIEF EXECUTIVE OFFICER OF HOWDEN ASIA PACIFIC, BASED IN SINGAPORE. HE WILL REMAIN AS A NON-EXECUTIVE DIRECTOR ON THE BOARD. JOHAN VAN DEN BERGH WAS PROMOTED TO CHIEF EXECUTIVE OFFICER OF HOWDEN AFRICA HOLDINGS LIMITED. THERE WERE NO OTHER CHANGES TO THE BOARD. DIVIDENDS
AN INTERIM DIVIDEND OF 4 CENTS PER SHARE WAS PAID OUT ON 27 FEBRUARY 1998 (APRIL 1997: 4 CENTS). THE DIRECTORS HAVE RECOMMENDED A FINAL DIVIDEND OF 5 CENTS PER SHARE PAYABLE ON 28 MAY 1998 TO MEMBERS REGISTERED AS SUCH ON 8 MAY 1998.
THIS WILL RESULT IN A TOTAL DIVIDEND FOR THE EIGHT MONTH PERIOD OF 9 CENTS PER SHARE. (APRIL 1997: 12 CENTS) OUTLOOK
THE GROUP ENTERS THE YEAR WITH A HEALTHY ORDER BOOK AND WILL CONTINUE ITS FOCUS ON MAINTAINING LEADING MARKET POSITIONS IN ITS CORE BUSINESS AREAS. PROSPECTS LOOK GOOD FOR ALL MARKETS SERVED BY THE GROUP INCLUDING POWER GENERATION, MINING, AGRICULTURE, CONSTRUCTION AND STEEL AND PROCESS.
THE REFRIGERATION BUSINESS STARTS THE YEAR WITH A BETTER ORDER BOOK THAN WHAT THEY HAVE HAD IN A LONG TIME AND PROSPECTS FOR FURTHER ORDERS FOR SURFACE WATER CHILLERS TO THE MINING INDUSTRY LOOK GOOD.
A GOOD RATE OF ORDER INTAKE IN THE PUMP BUSINESS COUPLED WITH THE REDUCED COST STRUCTURES, FOCUS ON ACHIEVING PRODUCTION TARGETS AND TARGETING OF NEW INDUSTRIAL MARKETS ARE LIKELY TO RESULT IN A POSITIVE CONTRIBUTION FROM THE PUMP BUSINESS.
WITH A NUMBER OF MAINTENANCE, EXPANSION, RECOMMISSIONING AND CONSTRUCTION PROJECTS IN PROGRESS IN THE POWER GENERATION MARKET, PROSPECTS ARE GOOD FOR THE FANS AND HEAT EXCHANGER BUSINESS WHILST THE PURCHASE OF THE DUST HANDLING BUSINESS OF LOCKED TORQUE-AFRICA AT THE END OF 1997 SHOULD ADD A POSITIVE TREND TO THE MEDIUM FAN BUSINESS.
THE GROUP IS WELL PLACED TO RECEIVE ORDERS FOR THE SUPPLY OF MAIN SURFACE FANS AND ASSOCIATED EQUIPMENT FOR A NUMBER OF PROJECTS IN SOUTH AFRICA AND ACROSS THE BORDERS.
PROBLEMS AT THE SMALL FANS DIVISION HAVE BEEN RESOLVED AND THE RESTRUCTURING ASSOCIATED THEREWITH IS ALREADY SHOWING POSITIVE SIGNS.
AS A RESULT OF CONTINUOUS WORLD FOCUS ON ENVIRONMENTAL ISSUES AND THE
COMMITMENT BY INDUSTRY TO INSTALL ENVIRONMENTALLY FRIENDLY SYSTEMS, THE GROUP IS IDEALLY POSITIONED TO BENEFIT FROM THE PROSPECTS IN THE AIR AND GAS CLEANING BUSINESS. A NUMBER OF CONTRACTS ARE IN THE PIPELINE FOR THE SUPPLY OF FABRIC FILTER PLANT TO THE STEEL AND PROCESS INDUSTRY. THERE ARE GOOD PROSPECTS FOR FURTHER EXPORT ORDERS FOR FABRIC FILTER PLANTS.
THERE ARE TWO POSSIBLE PROJECTS FOR THE SUPPLY OF FABRIC FILTER PLANT INTO THE POWER GENERATION INDUSTRY AND THE GROUP IS WELL PLACED TO BENEFIT FROM THESE PROJECTS, SHOULD THEY MATERIALISE.
THE GROUP WILL CONTINUE TO EXPAND ITS EXPORT PROGRAMME WITH AN ADDED EMPHASIS ON BECOMING WORLD CLASS TO COMPETE EFFECTIVELY AGAINST FOREIGN COMPETITION BOTH LOCALLY AND OUTSIDE OUR BORDERS. THE UNITED ARAB EMIRATES, THE REST OF AFRICA, SOUTH AMERICA AND THE PACIFIC BASIN ARE TARGETED AS SPECIFIC FOCUS AREAS. STRATEGIES ARE IN PLACE AND THERE IS ENTHUSIASM TO TAKE A FRESH APPROACH IN MEETING THE CHALLENGES OF A CHANGING ENVIRONMENT. HOWDEN AFRICA REMAINS FOCUSED ON BUILDING STRONG CUSTOMER RELATIONS THROUGH MUTUAL TRUST AND ONGOING DEVELOPMENT OF QUALITY PRODUCTS THAT MEET THE NEEDS OF OUR CUSTOMERS.
MANAGEMENT CONTINUES ITS EFFORTS TO ENHANCE EARNINGS BY IMPROVING MARGINS AND BUILDING ON THE SOUND PLATFORM OF THE GROUP'S ESTABLISHED ENGINEERING
STRENGTHS, MARKET POSITIONS AND WELL-KNOWN RANGE OF PRODUCTS. HOWDEN AFRICA RECOGNISES THAT PEOPLE ARE ITS MOST IMPORTANT RESOURCE AND STRONG EMPHASIS IS PLACED ON THE DEVELOPMENT AND MOTIVATION OF ITS HUMAN RESOURCES TO THE MAXIMUM LEVELS OF SKILLS IN A NON-DISCRIMINATORY ENVIRONMENT OF MERIT RECOGNITION AND EQUAL OPPORTUNITY. STAFF MORALE IS HIGH AND THERE IS GENERAL OPTIMISM ABOUT FUTURE PROSPECTS. THE MANAGEMENT TEAM AND OTHER EMPLOYEES HAVE DEMONSTRATED RESILIENCE AND LOYALTY IN COPING WITH THE CHANGES AND RESTRUCTURING.
PARTICIPATION AT ALL LEVELS WILL CONTINUE TO BE ENCOURAGED THROUGHOUT THE GROUP FOR AND ON BEHALF OF THE BOARD J W HERBERT NON-EXECUTIVE CHAIRMAN 17 MARCH 1998
THE SUMMARISED AUDITED RESULTS FOR THE EIGHT MONTHS ENDED 31 DECEMBER 1997 ARE AS FOLLOWS: - CONSOLIDATED INCOME STATEMENT
ACTUAL ACTUAL
8 MONTHS ENDED YEAR ENDED
31 DECEMBER 1997 30 APRIL 1997
(AUDITED) (AUDITED)
R'000 R'000
TURNOVER 298 894 404 839
OPERATING PROFIT 21 822 39 014
NET FINANCIAL REVENUE 2 671 1 878
PROFIT BEFORE TAXATION 24 493 40 892
TAXATION (12 113 ) (13 347)
PROFIT AFTER TAXATION 12 380 27 545 ATTRIBUTABLE TO
OUTSIDE SHAREHOLDERS (3 340 ) (3 288) NET PROFIT ATTRIBUTABLE TO ORDINARY
SHAREHOLDERS 9 040 24 257
ORDINARY DIVIDENDS (5 752 ) (5 254) RETAINED PROFIT
FOR THE YEAR 3 288 19 003 NUMBER OF SHARES: (000'S)
IN ISSUE 63 910 63 910
WEIGHTED AVERAGE 63 910 60 639 EARNINGS PER SHARE:
(CENTS) 14,14 40,00 DIVIDEND PER SHARE:
(CENTS) 9,00 12,00
INTERIM 4,00 4,00
FINAL 5,00 8,00 OTHER GROUP SALIENT FEATURES NET ASSET VALUE PER
SHARE (CENTS) 170,79 176,6
DEPRECIATION 3 225 4 458
CAPITAL EXPENDITURE 4 120 5 891 ACQUISITION OF
NEW BUSINESSES 7 408 49 374 CAPITAL COMMITMENTS AUTHORISED AND
CONTRACTED 190 1 200 AUTHORISED NOT
CONTRACTED 200 206 ABRIDGED CONSOLIDATED BALANCE SHEET
ACTUAL ACTUAL
8 MONTHS ENDED YEAR ENDED
31 DECEMBER 1997 30 APRIL 1997
(AUDITED) (AUDITED)
R'000 R'000 CAPITAL EMPLOYED
SHAREHOLDERS' FUNDS 109 150 112 850 OUTSIDE SHAREHOLDERS'
INTEREST 12 215 8 875 LOAN FROM HOLDING
COMPANY 571 571
DEFERRED TAX 5 646 4 813
127 582 127 109 EMPLOYMENT OF CAPITAL FIXED AND NON-CURRENT
ASSETS 38 987 38 500 CURRENT ASSETS STOCK AND WORK IN
PROGRESS 65 173 81 390
ACCOUNTS RECEIVABLE 87 851 101 791 AMOUNTS OWING BY FELLOW
SUBSIDIARIES 1 661 986
BANK AND CASH BALANCES 41 378 37 114
196 063 221 281 CURRENT LIABILITIES
ACCOUNTS PAYABLE 93 351 112 918
TAXATION 7 630 11 169 AMOUNTS OWING TO FELLOW
SUBSIDIARIES 735 3 472 SHAREHOLDERS FOR
DIVIDEND 5 752 5 113
107 468 132 672
NET CURRENT ASSETS 88 595 88 609
127 582 127 109 ABRIDGED CONSOLIDATED CASH FLOW CASH FLOW FROM OPERATING ACTIVITIES CASH GENERATED BY
OPERATIONS 24 890 43 410 UTILISED TO INCREASE
WORKING CAPITAL 178 (12 621 ) CASH GENERATED BY OPERATING
ACTIVITIES 25 068 30 789
FINANCIAL COSTS 2 671 1 878
DIVIDENDS PAID (5 113) (135)
TAXATION PAID (14 819 ) (6 891)
7 807 25 641 CASH UTILISED IN INVESTING ACTIVITIES
FIXED ASSETS ACQUIRED (4 120 ) (5 891) PUMP BUSINESSES
ACQUIRED 0 (49 374) PROCEEDS ON DISPOSAL
OF FIXED ASSETS 577 206
(3 543) (55 059) CASH EFFECTS FROM FINANCING ACTIVITIES SHARE CAPITAL AND SHARE PREMIUM
RAISED 0 57 457 DECREASE IN LOANS
FROM MINORITIES 0 (12) INCREASE IN LONG
TERM LOAN 0 (5 872)
0 51 573 INCREASE IN CASH AND CASH
EQUIVALENTS 4 264 22 155 DIRECTORS JW HERBERT (NON-EXECUTIVE CHAIRMAN)* ** JP VAN DEN BERGH (CHIEF EXECUTIVE OFFICER) S MEYER AG MACLACHLAN* ** TV MAPHAI** R MOKATE** JC MOODIE** NWR SMITH* ** * BRITISH ** NON-EXECUTIVE 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
