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HOWDEN AFRICA HOLDINGS - UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30
JUNE 2003
HOWDEN AFRICA HOLDINGS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1996/002982/06)
Share code: HWN ISIN: ZAE000010583
UNAUDITED FINANCIAL RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2003
ABRIDGED CONSOLIDATED INCOME STATEMENT
Actual Actual Actual
6 months ended 6 months ended 12 months ended
30 June 30 June 31 December
2003 2002 Actual 2002
(Unaudited) (Unaudited) % (Audited)
R"000 R"000 change R"000
Turnover 281 284 235 710 19,3 522 598
Operating profit 14 646 8 799 66,5 23 872
Net financial revenue/(cost) 2 739 (224) 734
Foreign exchange losses (2 920) (2 053) (7 196)
Exceptional item - loan
written down - - (112)
Diminution in value of
investment in a subsidiary - - (152)
Amortisation of goodwill
on acquisition - (1 821) (827)
Share of results of associate - (1 397) (1 397)
Profit before taxation 14 465 3 304 337,8 14 922
Taxation (5 308) (1 587) (10 286)
Profit after taxation 9 157 1 717 433,3 4 636
Minority interest (2 146) (1 255) (2 393)
Net profit for the period 7 011 462 2 243
Number of shares in issue(000"s) 65 729 65 729 65 729
Earnings per share: (cents) 10,67 0,70 3,41
Headline earnings per
share: (cents) 15,49 3,18 7,87
Dividends per share: (cents) - - -
Reconciliation of
headline earnings
Net profit for the period 7 011 462 2 243
Amortisation of goodwill 147 166 248
Loss on sale of subsidiary 3 080 - 2 110
Profit on sale of property,
plant and equipment (57) (357) (518)
Exceptional item - loan
written down - - 112
Diminution in value of investment
in a subsidiary - - 152
Amortisation of goodwill on
acquisition - 1 821 827
Headline earnings 10 181 2 092 5 174
OTHER GROUP SALIENT FEATURES
Actual 6 months Actual 6 months Actual 12 months
ended 30 June ended 30 June ended 31 December
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
R"000 R"000 R"000
Net asset value per share
(cents) 166,11 147,78 153,99
Depreciation 3 446 3 260 6 557
Capital expenditure 2 735 3 198 6 984
Capital commitments
Authorised and contracted 896 - 811
Authorised not contracted 80 - -
abridged consolidated
statement of changes in equity
Opening balance 101 215 95 669 95 669
Currency translation differences 959 1 005 2 393
Net profit 7 011 462 2 243
Subsidiary reserves disposed of - - 910
Closing balance 109 185 97 136 101 215
ABRIDGED CONSOLIDATED BALANCE SHEET
Actual 6 months Actual 6 months Actual 12 months
ended 30 June ended 30 June ended 31 December
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
R"000 R"000 R"000
ASSETS
Non - current assets 34 274 39 712 35 957
Property, plant and equipment 33 063 34 400 34 601
Intangible assets 724 1 163 871
Investment in associate - - -
Non-current loans - 4 149 -
Deferred tax 487 - 485
Current assets 248 112 178 577 209 353
Inventories 65 263 65 381 54 663
Receivables and pre-payments 134 362 103 769 123 105
Amounts owing by fellow
subsidiaries 128 66 28
Cash and cash equivalents 48 359 9 361 31 557
Total assets 282 386 218 289 245 310
EQUITIES AND LIABILITIES
Capital and reserves 109 185 97 136 101 215
Minority interest 4 188 5 482 6 556
Non-current liabilities 3 164 5 152 3 164
Post retirement medical benefit
obligations 3 164 3 164 3 164
Deferred tax - 1 988 -
Current liabilities 165 849 110 519 134 375
Trade and other payables 157 629 109 687 123 124
Taxation 4 770 (1 565) 7 550
Amounts owing to fellow
subsidiaries 3 450 2 397 3 701
Total liabilities 169 013 115 671 137 539
Total equity and liabilities 282 386 218 289 245 310
ABRIDGED CONSOLIDATED CASH FLOW STATEMENT
Actual 6 months Actual 6 months Actual 12 months
ended 30 June ended 30 June ended 31 December
2003 2002 2002
(Unaudited) (Unaudited) (Audited)
Cash flow from operating activities
Cash generated by operations 18 195 7 380 24 825
Utilised to decrease working
capital 13 501 7 036 13 632
Cash generated from operating
activities 31 696 14 416 38 457
Financial revenue/(cost) 2 739 (224) 734
Taxation paid (8 072) (8 164) (10 170)
26 363 6 028 29 021
Cash utilised in investing
activities (5 061) (1 045) (5 879)
Cash effects of financing
activities (4 500) - 4 037
Increase in cash and cash
equivalents 16 802 4 983 27 179
SEGMENTAL ANALYSIS BY OPERATING DIVISION
Actual 6 months Actual 6 months Actual 12 months
ended 30 June ended 30 June ended 31 December
2003 2002 2002
Turnover
Fans and heat exchangers 110 866 93 178 188 068
Environmental control 91 569 58 524 141 412
Pumps 66 237 53 461 114 798
Hertz Technologies 1 499 4 102 10 571
Overseas operations 11 113 26 445 67 749
281 284 235 710 522 598
COMMENTS
A continued improvement in performance is reported for the half year to June
2003 despite a noticeable deterioration in economic conditions reported in the
local economy. The second quarter of the year in particular provided a challenge
with orders received in the period down 30% on the position achieved in the
first quarter. An order book of R214 million, however,gives encouragement that
Group companies should trade through to the improvement forecast towards the
last quarter of the year.
RESULTS
In the six months ended June 2003, orders receivable of R295,4 million were up
12% compared with the corresponding period in 2002.
Turnover of R281,3 million was 19% up on last year, due largely to the
completion of contracts into the mining and power markets. The strong opening
order book in particular assisted in generating a useful start to the year.
In the period to 30 June 2003 Group operating profits of R14,6 million are
reported, against R8,8 million for the same period last year.
Reorganisation efforts associated with the offshore operations, together with
the sale of Hertz Technologies (Pty) Ltd in May 2003, have resulted in profit
improvements of R3,4 million being reported for the period, offset by a R3,1
million loss on sale of the subsidiary.
A net cash position of R48,4 million compares with the R31,6 million net cash
reported at the end of December 2002. Improvement in profitability, and a lower
net working capital position, more than compensated for payments associated with
capital expenditure and corporate taxation.
Earnings per share of 10,67 cents compare with 0,7 cents last year, after
absorbing foreign exchange losses of R2,9 million (2002: R2,1 million)
associated with the continued strengthening of the Rand.
REVIEW OF OPERATIONS
Fans and heat exchangers
Order intake for fans and heat exchangers totalled R131,4 million compared to
R120,4 million in the corresponding period last year. Business in this division
benefited from the strong opening order book and healthy market share in the
mining industry. The industry continues to be serviced by too many competitors
operating at marginal levels, given the available market, and consolidation
could be considered in order to establish businesses with the required critical
mass. Shareholders will be kept informed of any developments in this regard.
Indications are that orders receivable over the balance of the year will be
at a lower level than achieved in the first half.
Environmental control
The environmental control business received orders totalling R95,8 million
compared to R89,0 million last year. This achievement included an order worth
R44 million received by Bateman Howden for the supply of fabric filters to
Kelvin Power Station. Outside of this achievement, order intake has come off
measurably and intense effort will be required over the balance of the year to
convert outstanding prospects into orders.
Business in the second half of the year, is expected to reflect an
improvement on that achieved in the first half, excluding the aforementioned
fabric filter order.
Pumps
Order intake for the pumps business totalled R68,2 million against the R54,2
million achieved last year, dry weather patterns over large parts of the country
contributing to an improved demand for pump products in the agricultural sector.
Good results have also been achieved in other market sectors and the pump
company continues to reflect improvement in earning satisfactory shareholder
returns.
OFFSHORE OPERATIONS
As noted in the 2002 Annual Report, operations offshore have largely been
sold off or closed. The offshore businesses that remain active are Howden 3Ts
International and Engart Incorporated (USA). Continued Rand strength has
impacted negatively on each of these entities competitiveness as a large portion
of their work tends to be produced locally. Moving forward, a view will need to
be taken as to how both businesses could more effectively serve their respective
markets without negatively impacting Group results.
OUTLOOK
There is concern at present that order prospects could be delayed over the
second half of the year with implications for the order book carried forward to
2004. An improvement in economic conditions is, however, forecast towards year
end and Group companies would generally be well placed to compete should this
materialise.
DIVIDEND
At the Annual General Meeting held in June 2001 it was announced that future
dividend policy would be set in the light of earnings and cash flow, also taking
into account forward orders and the need to invest in the Group"s future. Given
the improvement in earnings and the stronger cash position, it is proposed that
a dividend of 3 cents be declared payable to shareholders. The last date to
trade cum-div is Friday, 3 October 2003. Shares start trading ex dividend on
Monday, 6 October 2003. The record date is Friday, 10 October 2003. Payment will
be made on Monday, 13 October 2003. No share certificates are to be
dematerialised or rematerialised between Monday, 6 October 2003 and Friday, 10
October 2003, both days inclusive.
DIRECTORATE
Mr Colin Ferreira resigned as an Executive Director of the company at the
conclusion of the Annual General Meeting on 12 June 2003. We thank him for his
valued contribution and wish him well into his retirement. Mr. Arthur
Mashiatshidi has been appointed as an independent non-executive director as from
31 July 2003. He is the CEO and founder of Decorum Capital Partners, the Fund
Manager of the New Africa Mining Fund, a private equity fund that focusses on
financing exploration projects in South Africa and around the continent. He is
an independent director of Thebe Investment Corporation and also serves on the
Financial Markets Advisory Board as well as the Advisory Board of the Graduate
School of Business at the University of Cape Town.
BASIS OF PREPARATION
These financial statements have been prepared in accordance with Generally
Accepted Accounting Practice in South Africa. There has been no change in
accounting policies since the annual report of 31 December 2002.
For and on behalf of the Board of Directors.
J S Feek
(Chairman)
29 August 2003
Directors: J S Feek (Chairman) , R J Cleland # **,
S Meyer, Dr R Mokate **, A B Mashiatshidi **
(# British) (** Non-executive)
Company secretary: M J M Lake
Registered office: 1a Booysens Road
Booysens, 2091
Postal address: PO Box 2239
Johannesburg, 2000
Transfer secretaries: Computershare Limited,
70 Marshall Street
Johannesburg, 2001
Sponsor: PricewaterhouseCoopers
Corporate Finance (Pty) Limited
Date: 29/08/2003 04:30:09 PM Supplied by www.sharenet.co.za
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