Wrap Text
HOWDEN AFRICA HOLDINGS LIMITED
(INCORPORATED IN THE REPUBLIC OF SOUTH AFRICA)
(REGISTRATION NUMBER 96/02982/06)
("HOWDEN AFRICA")
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 1999
COMMENTS
THE ECONOMIC SLOWDOWN THAT STARTED DURING THE SECOND HALF OF 1998 CARRIED
THROUGH TO THE FIRST HALF OF THIS YEAR, RESULTING IN THE GROUP REPORTING A
DECLINE IN EARNINGS ACROSS ALL DIVISIONS WHEN COMPARED TO THE SAME PERIOD LAST
YEAR. ALTHOUGH A NUMBER OF INDICATORS SUGGEST THE ECONOMY IS BEGINNING TO
BOTTOM OUT, THERE REMAINS CONCERN THAT THE IMPROVEMENT ANTICIPATED TOWARDS YEAR
END WILL NOT BE SUFFICIENT ENOUGH TO HAVE ANY MATERIAL IMPACT ON THE FULL
YEAR'S RESULTS.
RESULTS
IN THE SIX MONTHS TO 30 JUNE 1999 GROUP OPERATING PROFITS OF R5.7 MILLION ARE
REPORTED, AGAINST R18.4 MILLION FOR THE SAME PERIOD LAST YEAR.
TURNOVER OF R176.6 MILLION IS 14.7% DOWN ON LAST YEAR, THE LOWER VOLUMES
CONTRIBUTING IN LARGE PORTION TO THE FALL IN PROFITABILITY. CONTRIBUTIONS FROM
THE CORE BUSINESSES OF FANS AND PUMPS WERE DISAPPOINTING.
NET CASH AND BANK BALANCES OF R30.3 MILLION COMPARE WITH THE R29.8 MILLION
REPORTED LAST YEAR. MANAGEMENT FOCUS ON BOTH OPERATING COSTS AND WORKING
CAPITAL HAS RESULTED IN THE CASH RESERVES REMAINING FAIRLY CONSISTENT.
DESPITE THE LOWER TAX CHARGE, EARNINGS PER SHARE REDUCE BY 62.4% AGAINST THAT
REPORTED LAST YEAR.
REVIEW OF OPERATIONS
FANS AND HEAT EXCHANGERS
ORDER INTAKE FOR FANS AND HEAT EXCHANGERS TOTALLED R83.2 MILLION COMPARED TO
R89.1 MILLION IN THE CORRESPONDING PERIOD LAST YEAR. THE LOW LEVEL OF BUSINESS
IN THE MINING SECTOR IN PARTICULAR IMPACTED NEGATIVELY ON PERFORMANCE IN THIS
DIVISION AND MARGINS RECEIVED ON LARGER CONTRACTS WERE LESS THAN SATISFACTORY.
PROSPECTS FOR THE BALANCE OF THE YEAR ARE IN LINE WITH THAT ACHIEVED IN THE
FIRST HALF.
ENVIRONMENTAL CONTROL
THIS DIVISION, PREVIOUSLY KNOWN AS THE AIR AND GAS CLEANING DIVISION, HAS BEEN
RENAMED TO MORE ACCURATELY REFLECT THE NATURE OF IT'S BUSINESS AND THE
STRATEGIC INTENT. THE ENVIRONMENTAL CONTROL BUSINESS RECEIVED ORDERS TOTALLING
R29.0 MILLION COMPARED TO R20.1 MILLION LAST YEAR. THIS OUTCOME IS FAIRLY
ENCOURAGING GIVEN THE MIX OF ORDERS RECEIVED BUT CONCERN MUST BE EXPRESSED
REGARDING THE EXTREMELY LOW LEVEL OF ENGINEERED GAS CLEANING BUSINESS AVAILABLE
BUSINESS IN THE SECOND HALF OF THE YEAR IS EXPECTED TO BE SLIGHTLY UP ON THAT
ACHIEVED IN THE FIRST HALF FOR THIS DIVISION.
PUMPS
ORDER INTAKE FOR THE PUMPS BUSINESS TOTALLED R56.0 MILLION AGAINST THE R53.0
MILLION ACHIEVED LAST YEAR, WHICH IS DISAPPOINTING CONSIDERING IT INCLUDED THE
BUSINESS OF PUMPMAKER (ACQUIRED 1 SEPTEMBER 1998). MANAGEMENT CHANGES
IMPLEMENTED LATE LAST YEAR ARE STILL TO BEAR FRUIT BUT LOW LEVELS OF RETURN
CONTINUING TO BE REPORTED FROM THIS DIVISION REMAIN OF CONCERN. FORECAST ORDERS
RECEIVABLE OVER THE BALANCE OF THE YEAR SHOULD BE AHEAD OF THAT REPORTED FOR
THE FIRST HALF.
OUTLOOK
THE DECLINE IN LONG-TERM ORDERS ON HAND, DROPPING THE ORDER BOOK TO SOME 38% OF
LEVELS EXISTING AS RECENTLY AS APRIL 1997, HAS RESULTED IN THE GROUP BECOMING
FAR MORE SENSITIVE TO MOVEMENTS IN THE LOCAL ECONOMY. IN THIS REGARD DEPRESSED
GROWTH IN THE AGRICULTURE, MINING, MANUFACTURING, ELECTRICITY AND CONSTRUCTION
SECTORS OF THE ECONOMY HAVE A DIRECT BEARING ON FINANCIAL RESULTS. NEGATIVE
GROWTH IS BEING FORECAST FOR EACH OF THESE SECTORS FOR THE FULL 1999 YEAR.
UNDER THESE CIRCUMSTANCES YOUR DIRECTORS REMAIN EXTREMELY CAUTIOUS REGARDING
THE OUTLOOK OVER THE BALANCE OF THE YEAR.
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 8 OCTOBER 1999.
PAYMENT IS EXPECTED TO BE MADE ON OR ABOUT 29 OCTOBER 1999.
YEAR 2000 COMPLIANCE
THE GROUP'S OBJECTIVES FOR ITS YEAR 2000 PROGRAMME HAVE BEEN LARGELY ACHIEVED
WITH FULL COMPLIANCE SET FOR COMPLETION BY THE YEAR END. MISSION CRITICAL
SYSTEMS HAVE BEEN UPGRADED OR REPLACED AND ARE YEAR 2000 COMPLIANT. TESTING
WILL CONTINUE AND ALL EXPENDITURE HAS BEEN WRITTEN OFF AS INCURRED, WITH R190
000 ALLOWED FOR FUTURE EXPENDITURE.
FOR AND ON BEHALF OF THE BOARD
J W HERBERT
7 SEPTEMBER 1999
THE SUMMARISED UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 1999 ARE
AS FOLLOWS: -
CONSOLIDATED INCOME STATEMENT
ACTUAL ACTUAL ACTUAL
6 MONTHS ENDED 6 MONTHS ENDED YEAR ENDED
30 JUNE 1999 30 JUNE 1998 31 DEC 1998
(UNAUDITED) (UNAUDITED) (AUDITED)
R'000 R'000 R'000
TURNOVER 176 634 207 192 409 168
OPERATING PROFIT 5 740 18 448 26 655
NET FINANCIAL REVENUE 2 239 1 003 3 768
PROFIT BEFORE TAXATION 7 979 19 451 30 423
TAXATION (2 394) (6 808) (9 331)
PROFIT AFTER TAXATION 5 585 12 643 21 092
ATTRIBUTABLE TO
OUTSIDE SHAREHOLDERS (993) (422) (1 634)
NET PROFIT ATTRIBUTABLE
TO ORDINARY SHAREHOLDERS 4 592 12 221 19 458
ORDINARY DIVIDENDS (3 210) (3 196) (8 990)
RETAINED PROFIT
FOR THE YEAR 1 382 9 025 10 468
NUMBER OF SHARES: (000'S)
IN ISSUE 64 215 63 910 64 215
WEIGHTED AVERAGE 64 215 63 910 64 063
EARNINGS PER SHARE: (CENTS) 7,15 19,12 30,37
DIVIDEND PER SHARE: (CENTS) 5,00 5,00 14,00
INTERIM 5,00 5,00 5,00
FINAL 9,00
ABRIDGED CONSOLIDATED BALANCE SHEET
ACTUAL ACTUAL ACTUAL
6 MONTHS ENDED 6 MONTHS ENDED YEAR ENDED
30 JUNE 1999 30 JUNE 1998 31 DEC 1998
(UNAUDITED) (UNAUDITED) (AUDITED)
R'000 R'000 R'000
CAPITAL EMPLOYED
SHAREHOLDERS' FUNDS 114 053 118 175 112 671
OUTSIDE SHAREHOLDERS' INTEREST 10 076 7 637 8 158
LOAN FROM HOLDING COMPANY 323 323 323
DEFERRED TAX 2 346 5 571 2 346
126 798 131 706 123 498
EMPLOYMENT OF CAPITAL
FIXED AND NON-CURRENT ASSETS 37 146 35 982 38 572
CURRENT ASSETS
STOCK AND WORK IN PROGRESS 64 993 66 031 66 951
ACCOUNTS RECEIVABLE 102 985 97 943 90 887
AMOUNTS OWING BY FELLOW
SUBSIDIARIES 508 611 1 334
BANK AND CASH BALANCES 30 313 29 769 34 739
198 799 194 354 193 911
CURRENT LIABILITIES
ACCOUNTS PAYABLE 103 951 91 876 92 229
TAXATION 1 740 3 558 8 185
AMOUNTS OWING TO FELLOW
SUBSIDIARIES 246 0 2 792
SHAREHOLDERS FOR DIVIDEND 3 210 3 196 5 779
109 147 98 630 108 985
NET CURRENT ASSETS 89 652 95 724 84 926
126 798 131 706 123 498
ABRIDGED CONSOLIDATED CASH FLOW
CASH FLOW FROM OPERATING ACTIVITIES
CASH GENERATED BY OPERATIONS 8 059 20 305 30 579
INVESTMENT INCOME - - -
UTILISED TO INCREASE WORKING
CAPITAL 68 (12 110) 1 910
CASH GENERATED BY OPERATING
ACTIVITIES 8 127 8 195 32 489
FINANCIAL COSTS 2 239 1 003 3 768
DIVIDENDS PAID (5 779) (10 752) (8 963)
TAXATION PAID (8 839) (10 955) (12 166)
(4 252) (12 509) 15 128
CASH UTILISED IN INVESTING
ACTIVITIES (174) 1 148 (16 519)
CASH EFFECTS FROM FINANCING
ACTIVITIES 0 (248) (5 248)
(DECREASE)/INCREASE IN CASH AND
CASH EQUIVALENTS (4 426) (11 609) (6 639)
OTHER GROUP SALIENT FEATURES
NET ASSET VALUE PER SHARE (CENTS) 177,61 184,91 175,46
DEPRECIATION 2 319 2 419 4 737
CAPITAL EXPENDITURE 1 162 1 415 4 029
CAPITAL COMMITMENTS
AUTHORISED AND CONTRACTED 200 200 426
AUTHORISED NOT CONTRACTED 60 60
DIRECTORS
JW HERBERT (NON-EXECUTIVE CHAIRMAN)* **
CJ FERREIRA (MANAGING DIRECTOR)
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
MERCANTILE REGISTRARS LIMITED
11 DIAGONAL STREET, JOHANNESBURG 2000
HOWDEN AFRICA EXPERIENCES TOUGH TRADING CONDITIONS IN A DEPRESSED CAPITAL
EQUIPMENT MARKET
(7 SEPTEMBER 1999)
EPS IN HOWDEN AFRICA HOLDINGS LIMITED, THE LISTED SPECIALIST AIR, GAS AND
LIQUID HANDLING EQUIPMENT GROUP, DROPPED 63% TO 7,15 CENTS FOR THE SIX MONTHS
TO JUNE 1999 (JUNE 1998 -: 19,12 CENTS), A DIRECT RESULT OF THE DEPRESSED
CONDITIONS IN THE CAPITAL EQUIPMENT MARKET.
COLIN FERREIRA, MANAGING DIRECTOR, STATED THAT THE OPERATING RESULTS FOR THE
SIX MONTHS WERE DISAPPOINTING WITH TURNOVER DOWN BY 14,7% TO R176,6M. ORDER
INTAKE WAS HOWEVER SLIGHTLY UP BY 3.7% TO R168,3M (1998 - : R162,3M) AND
OPERATING PROFIT WAS R5,6M (1998 - : R12,6M). THE GROUP HAD A NET POSITIVE CASH
POSITION OF R30,3M AT END OF JUNE (1998 - : R29,8M).
AN INTERIM DIVIDEND OF 5 CENTS A SHARE HAS BEEN DECLARED, WHICH IS IN LINE WITH
THAT PAID IN 1998 .
ACCORDING TO MR FERREIRA, ALTHOUGH THERE APPEARS TO BE A POSITIVE CLIMATE
EMERGING DUE TO LOWER INTEREST AND INFLATION, IT DOES NOT APPEAR THAT THE GROUP
WILL BENEFIT FROM THIS DURING THE CURRENT YEAR AND THE RESULTS FOR THE
REMAINING SIX MONTHS OF 1999 SHOULD NOT BE MUCH DIFFERENT FROM THOSE ACHIEVED
IN THE FIRST SIX MONTHS.
"IN THE STANDARD FAN BUSINESS THERE ARE PROSPECTS FOR THE SUPPLY AND
INSTALLATION OF VENTILATION AND AIR-CONDITIONING FANS FOR THE SELECTIVE
BUILDING PROJECTS BUT CONDITIONS IN THE CONSTRUCTION SECTOR REMAIN DIFFICULT.
"THE GROUP WILL CONTINUE TO FOCUS ON AFTER-MARKET SERVICE ASSOCIATED WITH IT'S
LARGE BASE OF INSTALLED ENGINEERED FANS THROUGHOUT THE COUNTRY, BUT THESE
EFFORTS AT BEST, WILL BEAR FRUIT ONLY IN THE MEDIUM TO LONG TERM.
"THE REFRIGERATION BUSINESS HAS HAD A GOOD FIRST HALF TO END JUNE AND GOOD
PROSPECTS ARE AVAILABLE TO SEE THROUGH A SATISFACTORY YEAR.
"THE OUTLOOK FOR THE PUMP DIVISION IS UNCERTAIN. ALTHOUGH THE INTEGRATION OF
THE RECENTLY ACQUIRED PUMPMAKER INTO THE PUMP DIVISION HAS BEEN ACHIEVED
RELATIVELY SUCCESSFULLY, A COMBINATION OF FLAT MARKET CONDITIONS AND AGGRESSIVE
COMPETITION MAKES FOR DIFFICULT TIMES. A CONTINUED FOCUS ON INTERNAL
EFFICIENCIES REMAINS THE ORDER OF THE DAY.
"HOWDEN AFRICA CONTINUES TO FOCUS ON DEVELOPING EXPORT MARKETS, PARTLY WITH A
VIEW TO LESSENING DEPENDENCE ON STATIC LOCAL MARKETS. IT IS CONSIDERED THAT
GOOD POTENTIAL EXISTS FOR EXPORTS OF STANDARD FANS, PUMPS, AND GAS-CLEANING
PRODUCT LINES.
"FINALLY, IN RECOGNITION OF THE DIFFICULT TIMES BEING EXPERIENCED IN THOSE
SECTORS OF THE ECONOMY THE GROUP ESSENTIALLY SERVES, RATIONALISATION AND
REORGANISATION EFFORTS WILL CONTINUE SO AS TO CORRECTLY ALIGN OURSELVES WITH
THE REALITY OF THE SITUATION," CONCLUDED MR FERREIRA.
ENDS
CONTACT DETAILS
COLIN FERREIRA - MANAGING DIRECTOR
CELL : 083 675 6000
TEL : (011) 240 4075
SHANE MEYER - FINANCIAL DIRECTOR
TEL : (011) 240 4081
MIKE LAKE - GROUP COMPANY SECRETARY
TEL : (011) 240 4072
CELL : 082 902 0473
Sharenet Sites 
