Wrap Text
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 1998
HOWDEN AFRICA HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 96/02982/06)
("HOWDEN AFRICA")
DIRECTORS
JW HERBERT (NON-EXECUTIVE CHAIRMAN)* **
JP VAN DEN BERGH (CHIEF EXECUTIVE OFFICER)
AG MACLACHLAN* **
TV MAPHAI**
S MEYER
R MOKATE**
JC MOODIE**
NWR SMITH* **
* BRITISH
** NON-EXECUTIVE
COMPANY SECRETARY: MJM LAKE
REGISTERED OFFICE
1A BOOYSENS ROAD, BOOYSENS, 2091
POSTAL ADDRESS
PO BOX 2239, JOHANNESBURG, 2000
TRANSFER SECRETARIES
RAND REGISTRARS LIMITED,
BLOCK C, CROWNWOOD,
100 NORTHERN PARKWAY,
ORMONDE, JOHANNESBURG 2001
COMMENTS
DESPITE REDUCED TURNOVER AND THE DETERIORATING ECONOMIC CLIMATE, GOOD PROGRESS
HAS BEEN MADE IN THE HALF YEAR TO JUNE 1998. IT HAS BEEN A PERIOD OF
CONSOLIDATION FOR THE GROUP WITH EMPHASIS ON IMPROVING BOTH PROFITABILITY
RATIOS AND OPERATING EFFICIENCIES.
HIGHLIGHTS FOR THE PERIOD UNDER REVIEW
* OPERATING PROFIT INCREASED BY 20.8% TO R18.4 MILLION
* PROFIT BEFORE TAX INCREASED BY 10.6% TO R19.5 MILLION
* EARNINGS PER SHARE UP 17.7% TO 19.12 CENTS
RESULTS
IN THE SIX MONTHS TO 30 JUNE 1998 GROUP OPERATING PROFIT OF R18.4 MILLION IS
REPORTED AGAINST R15.3 MILLION FOR THE SIX MONTHS TO 31 OCTOBER 1997. PROFIT
BEFORE TAX INCREASED BY 10.6% TO R19.5 MILLION.
CONTRIBUTION TO PROFIT FROM THE FAN AND HEAT EXCHANGER BUSINESS IMPROVED 24%
AGAINST THE AMOUNT REPORTED LAST YEAR. A USEFUL CONTRIBUTION WAS MADE BY THE
LOCKED TORQUE-AFRICA BUSINESS ACQUIRED ON 31 DECEMBER 1997.
AN ENCOURAGING PROFIT CONTRIBUTION IS REPORTED FROM THE PUMP BUSINESS WHERE
PAST RATIONALISATION EFFORTS ARE NOW STARTING TO BEAR FRUIT.
A DISAPPOINTING PERFORMANCE HAS BEEN RECORDED IN THE AIR AND GAS CLEANING
BUSINESS DUE TO A MIX OF THE POSTPONEMENT OR CANCELLATION OF CONTRACTS AND THE
RESCHEDULING OF PROGRESS INVOICING ON EXISTING CONTRACTS.
DESPITE THE HIGHER TAX CHARGE, EARNINGS PER SHARE INCREASED BY 17.7% OVER THAT
REPORTED LAST YEAR.
REVIEW OF OPERATIONS
FANS AND HEAT EXCHANGERS
THE GROUP HAS STRATEGICALLY RESTRUCTURED THE FAN BUSINESSES IN ORDER TO ENHANCE
MARKET AND CUSTOMER FOCUS. POST THE ACQUISITION OF DONKIN MANUFACTURING AND
ASSOCIATED AIR INDUSTRIES IN 1994, FIVE FAN COMPANIES EXISTED TO SERVICE THE
FAN MARKET. IN AN EFFORT TO IMPROVE CUSTOMER SERVICE EXCELLENCE, THESE HAVE
BEEN RESTRUCTURED INTO THREE DIVISIONS FOCUSING ON THE FAN MARKET, NAMELY;
HOWDEN POWER, TAKING CARE OF THE POWER AND BOILER MARKET; HOWDEN SAFANCO,
SERVICING THE MINING MARKET AND HOWDEN DONKIN SERVICING THE INDUSTRIAL AND HVAC
MARKETS.
PROSPECTS FOR THE BALANCE OF THE YEAR ARE IN LINE WITH THE FIRST HALF.
CONTINUED FOCUS ON THE AFTER-MARKET SHOULD START REAPING RESULTS IN THE CURRENT
FINANCIAL YEAR.
AIR AND GAS CLEANING
THIS SECTOR IS MOST AFFECTED BY THE DOWNTURN IN THE ECONOMY AND THE HIGH
INTEREST RATES. THIS HAS RESULTED IN THE POSTPONEMENT AND CANCELLATION OF A
NUMBER OF POTENTIAL PROJECTS. ORDERS RECEIVED INCLUDED A ONE-YEAR MAINTENANCE
CONTRACT ON ONE OF THE POWER STATIONS INDICATING A BREAKTHROUGH IN THE SERVICE
MARKET IN THIS SECTOR.
PUMPS AND REFRIGERATION
THE RATIONALISATION OF PRODUCT LINES CONTRIBUTED TO A DROP IN BUSINESS, LEAVING
INTACT PRODUCT LINES MORE SUITED TO THE PRESENT PUMP BUSINESS STRUCTURES. THE
REFRIGERATION BUSINESS HAS HAD MIXED RESULTS WITH THE POSTPONEMENT OF SOME
POTENTIAL PROJECTS. THESE ARE EXPECTED TO MATERIALISE IN THE SECOND HALF OF THE
YEAR.
SOME OF THE MARKET SECTORS SERVED BY THIS DIVISION ARE EXPECTED TO REMAIN
DEPRESSED IN THE SECOND HALF.
EXPORTS
EXPORTS FOR THE FIRST SIX MONTHS OF THE YEAR ARE AHEAD OF BUDGET AND AIDED BY
THE RAND EXCHANGE RATE LOOKS SET TO CONTINUE IN THE SECOND HALF. WHILST THE
PRODUCTS INVOLVED ARE MAINLY FANS AND PUMPS THERE IS POTENTIAL FOR GAS CLEANING
APPLICATIONS. THE GROUP REMAINS COMMITTED TO BUILDING EXPORTS TO SOME 20% OF
TOTAL SALES OVER THE MEDIUM TERM.
OUTLOOK
THE RECENT VOLATILITY IN THE LOCAL ECONOMY AND NEGATIVE GROWTH IN THE
MANUFACTURING SECTOR IS EXPECTED TO CONTINUE IN THE SECOND HALF OF THE YEAR,
TOGETHER WITH THE CONTINUED ABSENCE OF LARGE INFRASTRUCTURE PROJECT INVESTMENTS
THE REVISED GROUP STRUCTURE, HOWEVER, HAS LED TO COST EFFECTIVE OPERATIONS AND
THE ABILITY TO COMPETE MORE EFFECTIVELY IN EXPORT MARKETS WHICH WILL ASSIST IN
COPING WITH THE UNCERTAIN PERIOD AHEAD.
BOARD OF DIRECTORS
JOHAN VAN DEN BERGH WILL BE LEAVING THE COMPANY TO TAKE UP AN APPOINTMENT IN A
DIFFERENT INDUSTRY SECTOR. HIS SUCCESSOR WILL BE ANNOUNCED SHORTLY.
DIVIDEND
AN INTERIM DIVIDEND OF 5 CENTS PER SHARE HAS BEEN DECLARED TO ALL SHAREHOLDERS
REGISTERED IN THE BOOKS OF THE COMPANY AT CLOSE OF BUSINESS ON 9 OCTOBER 1998.
PAYMENT IS EXPECTED TO BE MADE ON OR ABOUT 30 OCTOBER 1998.
YEAR 2000 COMPLIANCE
SITE SPECIFIC PROJECT TEAMS ARE IN PLACE TO ADDRESS THE POTENTIAL IMPLICATIONS
OF THE YEAR 2000 UPON GROUP COMPUTER SYSTEMS AND BUSINESS PROCESSES. INTERNAL
YEAR 2000 READINESS REVIEWS HAVE TAKEN PLACE WHICH HIGHLIGHT THE TESTING, AND
UPGRADING WHERE NECESSARY, OF BOTH COMPUTER HARDWARE AND SOFTWARE SYSTEMS AND
LIAISON WITH THIRD PARTIES MATERIAL TO
THE GROUP'S BUSINESSES. THE BOARD AND AUDIT COMMITTEE ARE KEPT REGULARLY
INFORMED OF DEVELOPMENTS IN THIS REGARD. BASED ON ASSESSMENTS TO DATE AND
SUBJECT TO COMPLIANCE BY MATERIAL ENTITIES WITH WHOM THE GROUP TRANSACTS, IT IS
NOT EXPECTED THAT THE YEAR 2000 WILL HAVE A MATERIALLY ADVERSE EFFECT ON
OPERATIONS OR FINANCIAL RESULTS. COST INCURRED TO DATE TOTAL R230000 WITH
R350000 BUDGETED FOR FUTURE EXPENDITURE. IT IS THE INTENTION TO ACHIEVE YEAR
2000 COMPLIANCE THROUGHOUT ALL BUSINESS OPERATIONS BY JANUARY 1999.
FOR AND ON BEHALF OF THE BOARD
J W HERBERT 7 SEPTEMBER 1998
THE SUMMARISED UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 1998 ARE
AS FOLLOWS: -
CONSOLIDATED INCOME STATEMENT
ACTUAL ACTUAL ACTUAL ACTUAL
6 MONTHS 6 MONTHS % 8 MONTHS
ENDED ENDED CHANGE ENDED
30 JUNE 1998 31 OCTOBER 1997 31 DEC 1997
(UNAUDITED) (UNAUDITED) (AUDITED)
R'000 R'000 R'000
TURNOVER 207 192 219 025 -5,4% 298 894
OPERATING PROFIT 18 448 15 276 20,8% 21 822
NET FINANCIAL
REVENUE 1 003 2 318 2 671
PROFIT BEFORE
TAXATION 19 451 17 594 10,6% 24 493
TAXATION (6 808) (5 138) (12 113)
PROFIT AFTER TAXATION 12 643 12 456 1,5% 12 380
ATTRIBUTABLE TO
OUTSIDE SHAREHOLDERS (422) (2 072) (3 340)
NET PROFIT ATTRIBUTABLE
TO ORDINARY
SHAREHOLDERS 12 221 10 384 17,7% 9 040
ORDINARY DIVIDENDS (3 196) (2 556) (5 752)
RETAINED PROFIT
FOR THE YEAR 9 025 7 828 15,3% 3 288
NUMBER OF SHARES: (000'S)
IN ISSUE 63 910 63 910 63 910
WEIGHTED AVERAGE 63 910 63 910 63 910
EARNINGS PER SHARE:
(CENTS) 19,12 16,25 17,7% 14,14
DIVIDEND PER SHARE:
(CENTS) 5,00 4,00 25,0% 9,00
INTERIM 5,00 4,00 4,00
FINAL 5,00
ABRIDGED CONSOLIDATED BALANCE SHEET
ACTUAL ACTUAL ACTUAL
6 MONTHS ENDED 6 MONTHS ENDED 8 MONTHS ENDED
30 JUNE 1998 31 OCTOBER 1997 31 DEC 1997
(UNAUDITED) (UNAUDITED) (AUDITED)
R'000 R'000 R'000
CAPITAL EMPLOYED
SHAREHOLDERS' FUNDS 118 175 120 680 109 150
OUTSIDE SHAREHOLDERS'
INTEREST 7 637 10 947 12 215
LOAN FROM HOLDING
COMPANY 323 571 571
DEFERRED TAX 5 571 4 813 5 646
131 706 137 011 127 582
EMPLOYMENT OF CAPITAL
FIXED AND NON-CURRENT
ASSETS 35 982 37 064 38 987
CURRENT ASSETS
STOCK AND WORK IN
PROGRESS 66 031 68 988 65 173
ACCOUNTS RECEIVABLE 97 943 96 422 87 851
AMOUNTS OWING BY FELLOW
SUBSIDIARIES 611 0 1 661
BANK AND CASH
BALANCES 29 769 41 230 41 378
194 354 206 640 196 063
CURRENT LIABILITIES
ACCOUNTS PAYABLE 91 876 87 910 93 351
TAXATION 3 558 15 410 7 630
AMOUNTS OWING TO FELLOW
SUBSIDIARIES 0 817 735
SHAREHOLDERS FOR
DIVIDEND 3 196 2 556 5 752
98 630 106 693 107 468
NET CURRENT ASSETS 95 724 99 947 88 595
131 706 137 011 127 582
ABRIDGED CONSOLIDATED CASH FLOW
CASH FLOW FROM OPERATING ACTIVITIES
CASH GENERATED BY
OPERATIONS 20 305 17 542 24 890
UTILISED TO INCREASE
WORKING CAPITAL (12 110) (8 906) 178
CASH GENERATED BY
OPERATING ACTIVITIES 8 195 8 636 25 068
FINANCIAL COSTS 1 003 2 318 2 671
DIVIDENDS PAID (10 752) (5 113) (5 113)
TAXATION PAID (10 955) (897) (14 819)
(12 509) 4 944 7 807
CASH UTILISED IN
INVESTING ACTIVITIES 1 148 (828) (3 543)
CASH EFFECTS FROM
FINANCING ACTIVITIES (248) 0 0
(DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (11 609) 4 116 4 264
OTHER GROUP SALIENT FEATURES
NET ASSET VALUE PER
SHARE (CENTS) 184,91 188,83 170,79
DEPRECIATION 2 419 2 708 3 225
CAPITAL EXPENDITURE 1 415 1 569 4 120
CAPITAL COMMITMENTS
AUTHORISED AND
CONTRACTED 200 150 190
AUTHORISED NOT
CONTRACTED 200
Sharenet Sites 
