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Howden - Reviewed Financial Results and Changes to the Board of Directors
HOWDEN AFRICA HOLDINGS LIMITED
Share code: HWN
ISIN: ZAE000010583
(Incorporated in the Republic of South Africa)
(Registration number 1996/0 02982/06)
("the Company" or "the Group")
THE REVIEWED FINANCIAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2004
AND CHANGES TO THE BOARD OF DIRECTORS
Abridged consolidated income statement
2004 2003
R"000 R"000
TURNOVER 422 033 (23,9%) 554 925
Operating profit 32 371 (5,1%) 34 124
Net financial revenue 4 512 5 029
Foreign exchange losses (401) (6 243)
Share of results of associate 5 410 -
Profit before taxation 41 892 27,3% 32 910
Taxation (13 280) (11 138)
Profit after taxation 28 612 21 772
Outside shareholders" interest (4 114) (3 242)
Net profit for year 24 498 32,2% 18 530
Number of shares:
In issue (000"s) 65 729 65 729
Weighted average (000"s) 65 729 65 729
Earnings per share: (cents) 37,27 32,2% 28,19
Headline earnings per share: (cents) 38,26 29,8% 29,47
Dividends per share: (cents) 56,00 3,00
Reconciliation of headline earnings
Net profit for the year 24 498 18 530
Amortisation of goodwill 290 290
Loss on sale of subsidiary 301 3 080
Loss/(Profit) on sale of property,
plant and equipment 56 (3 453)
Loss on conversion of subsidiary to
associate - 925
25 145 29,8% 19 372
Other group salient features
2004 2003
R"000 R"000
Depreciation 3 997 6 370
Capital expenditure 3 379 5 192
Capital commitments:
Authorised and contracted 1 288 78
Authorised not contracted 19 287
Net asset value per share (cents) 160,91 181,78
Abridged consolidated Statement of changes in equity
Opening balance 119 483 101 215
Currency translation differences (1 009) 1 710
Net profit 24 498 18 530
Dividends (36 808) (1 972)
Changes in subsidiary holdings (397) -
Closing balance 105 767 119 483
Abridged consolidated balance sheet
2004 2003
R"000 R"000
ASSETS
Non-current assets 75 887 62 174
Property, plant and equipment 22 755 23 701
Intangible assets 291 581
Investment in associate company 34 674 33 865
Deferred tax 18 167 4 027
Current assets 195 170 190 833
Inventories 48 804 48 447
Receivables and prepayments 59 886 67 011
Cash and cash equivalents 86 480 75 375
Total assets 271 057 253 007
EQUITIES AND LIABILITIES
Capital and reserves 105 767 119 483
Outside shareholders" interest 6 771 5 289
Current liabilities 158 519 128 235
Trade and other payables 139 618 115 157
Taxation 18 901 13 078
Total liabilities 158 519 128 235
Total equity and liabilities 271 057 253 007
Abridged consolidated cash flow statement
2004 2003
R"000 R"000
Cash flows from operating activities
Cash generated by operations 36 614 34 803
Cash generated from decrease in working capital 29 657 8 851
Cash generated from operating activities 66 271 43 654
Financial revenue 4 512 5 029
Dividends paid (36 808) (1 972)
Taxation paid (20 070) (11 626)
13 905 35 085
Cash flows from investing activities (2 270) 13 233
Cash flows from financing activities (530) (4 500)
Net increase in cash and cash equivalents 11 105 43 818
Segmental analysis by operating division
2004 2003
R"000 R"000
Turnover
Fans and heat exchangers 240 518 232 024
Environmental control 181 515 190 044
Pumps - 132 857
422 033 554 925
COMMENTS
A lower than expected opening order book at the beginning of the year, and
decline in both the three and six monthly rolling order intake levels to end
January 2004 gave rise to initial concerns regarding a sustainable improvement
in earnings. This position changed markedly in February with Bateman Howden
receiving the Hendrina Power Station fabric filter order valued at R57 million,
followed by large value incineration and refrigeration contracts received in the
Environmental Control division. The absence of industrial gas cleaning contracts
proved to be the disappointment through the year, no large value contracts
having been converted.
Operating results achieved over the second half of the year represent a healthy
improvement over the first half of 2004. The product based businesses comprising
Donkin and Denorco recorded improved results over the second half of the year
through the completion of local and export contracts in their respective
markets.
RESULTS
Group turnover from continuing operations at R422,0 million compares with a
similar achievement in 2003 (excluding pumps), turnover in the pumps business is
no longer consolidated due to the investment now being equity accounted. With
the exception of the mining market, turnover volumes increased generally in the
fans business but this was largely neutralised by a below average achievement in
the environmental control division.
Profit before taxation of R41,9 million (2003: R32,9 million) is reported,
improved results in the fans and heat exchanger division making good the
shortfall reported by the environmental control division as a result of fewer
large value contracts. Exchange losses of R0,4 million are reported against R6,2
million last year, the reduced offshore exposure making a meaningful
contribution in this regard.
A taxation charge of R13,3 million (2003: R11,1 million) has been accrued,
equivalent to 31,7% of profit before tax. The STC of R3,8 million paid in
respect of the special dividend of R30,9 million contributed an additional 11,0%
to the accrued charge but this has been largely offset by the raising of a
deferred tax asset.
The comparisons below refer to the corresponding twelve-month period to December
2003 (2003 includes pumps):
* Order intake amounted to R437 million compared to R495 million in the
corresponding period
* Turnover was R422 million compared to R555 million
* Operating profit of R32,4 million compared to R34,1 million
* Earnings per share of 37,3 cents compared to 28,2 cents
* At 31 December 2004 the Group had a net positive cash position of R86,5
million compared to R75,4 million
OUTLOOK
The exchange rate direction will continue to exert its influence over a large
part of our customer base. The outlook for fixed investment remains generally
favourable, and the recently announced infrastructure investment programs in
Eskom and Transnet could offer opportunity moving forward. Developments in the
mining, manufacturing and energy sectors of the economy are extremely important
to the Group and results overall should move in line with growth in these
sectors.
DIRECTORATE
There were no changes in the directorate during the period under review.
At the board meeting of 3rd March 2005, Charter plc nominated Mr Michael Foster
as a non-executive director and Deputy Chairman and Mr James Brown as a non-
executive director. Mr Foster is an executive director of Charter plc the
ultimate holding Company of Howden Africa and Mr Brown is an executive director
of Howden Holdings Limited. Both these appointments have been confirmed by the
board.
I, have indicated to the Board that I will no longer remain available for the
position of Acting Executive Chairman and Director from the conclusion of the
Annual General Meeting to be held on 9th June 2005. It is proposed that Mr
Michael Foster will be appointed Chairman of the Board at the conclusion of the
AGM.
DIVIDEND
An interim dividend of 4 cents per share was paid out on 27 September 2004
(2003: 3 cents). Given the improvement in earnings and the stronger cash
position the directors have approved a final dividend of 6 cents (2003: final
dividend 5 cents) to be declared payable to shareholders. The last date to trade
cum dividend is Wednesday, 23 March 2005. Shares start trading ex dividend on
Thursday, 24 March 2005. The record date is Friday, 1 April 2005. Payment will
be Monday, 4 April 2005. No share certificates are to be dematerialised or
rematerialised between Thursday, 24 March 2005 and Friday, 1 April 2005 both
days inclusive.
REVIEW
The results announcement has been reviewed by the Company"s external auditors,
PricewaterhouseCoopers Inc. A copy of their unqualified review opinion is
available at the Company"s registered office.
BASIS OF PREPARATION
These financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. There has been no change
in accounting policies since the annual report of 31 December 2003.
For and on behalf of the Board of Directors
J S Feek
(Executive Chairman, Acting)
4 March 2005
Directors: JS Feek (Executive Chairman, Acting),
S Meyer (Chief Operating Officer, Acting),
RJ Cleland #**, AB Mashiatshidi**, Dr R Mokate**,
(# 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 Investor Services 2004, (Pty) Limited
70 Marshall Street,
Johannesburg, 2001
Sponsor: PricewaterhouseCoopers
Corporate Finance (Pty) Limited
Date: 04/03/2005 05:20:07 PM Supplied by www.sharenet.co.za
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