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Howden - Summarised unaudited results for the six months ended 30 June 2006

Release Date: 25/08/2006 17:30
Code(s): HWN
Wrap Text

Howden - Summarised unaudited results for the six months ended 30 June 2006 Howden Africa Holdings Ltd Share code: HWN ISIN: ZAE000010583 (Incorporated in the Republic of South Africa) (Registration number 1996/002982/06) ("the Company" or "the Group") The summarised unaudited results for the six months ended 30 June 2006 Abridged consolidated income statement Actual Actual Actual Actual 6 months 6 months % 12 months
ended ended change ended 30 June 30 June 31 December 2006 2005 2005
(Unaudited) (Unaudited) (Audited) R"000 R"000 R"000 Revenue 227 910 228 479 (0,2) 497 495 Operating profit 17 165 15 377 11,6 35 893 Financial income - 1 674 2 578 5 082 net Foreign exchange 1 731 202 (204) gains/(losses) Loss on disposal of - - (1 182) portion of associate Share of results of 438 (233) 3 322 associate Profit before income 21 008 17 924 17,2 42 911 tax Income tax expenses (21 698) (5 777) (13 753) Net (Loss)/profit for (690) 12 147 29 158 the period Attributable to: Equity holders of the (1 328) 10 023 25 553 Company Minority interest 638 2 124 3 605 (690) 12 147 29 158 Number of shares in (000"s) 65 729 65 729 65 729 issue Earnings per share: (cents) (2,02) 15,25 38,88 Headline earnings per (cents) (1,94) 15,75 40,46 share: Dividends per share: (cents) 6,00 6,00 10,00 Special dividend per 148,12 - - share: Return of share 92,88 - - premium per share: Reconciliation of headline earnings attributable to the equity holders of the Company Net profit for the (1 328) 10 023 25 553 period attributable to equity holders Profit on sale of a - - (95) division of a subsidiary Impairment of assets - (Profit)/loss on sale 53 (36) (49) of property, plant and equipment Loss on disposal of - 368 1 182 portion of associate Headline earnings (1 275) 10 355 (112,3) 26 591 attributable to equity holders Abridged consolidated balance sheet Actual Actual Actual 6 months 6 months 12 months ended ended ended
30 June 30 June 31 December 2006 2005 2005 (Unaudited) (Unaudited) (Audited)
R"000 R"000 R"000 ASSETS Non-current assets 136 495 128 873 137 106 Property, plant and equipment 33 881 30 581 32 971 Intangible assets 37 724 39 004 38 565 Investment in associate 29 975 30 023 31 711 Deferred income tax assets 33 145 29 265 33 276 Retentions due 1 770 - 583 Current assets 251 296 209 289 221 960 Inventories 26 138 14 299 18 656 Trade and other receivables 125 026 112 233 105 770 Derivative financial 40 - 8 instruments Cash and cash equivalents 100 092 82 757 97 526 Total assets 387 791 338 162 359 066 EQUITY Capital and reserves 8 324 158 923 174 015 attributable to equity holders Minority interest 5 864 8 895 10 226 Total equity 14 188 167 818 184 241 LIABILITIES Non-current liabilities Deferred income tax liabilities 15 316 13 240 15 447 Provisions for other 1 737 1 733 1 733 liabilities and charges 17 053 14 973 17 180 Current liabilities 356 550 155 371 157 645 Trade and other payables 178 567 153 315 149 279 Provisions for other 4 574 680 1 390 liabilities and charges Derivative financial 662 - 84 instruments Shareholders for dividend 158 407 - - Current income tax liabilities 14 340 1 376 6 892 Total liabilities 373 603 170 344 174 825 Total equity and liabilities 387 791 338 162 359 066 Abridged consolidated statement of changes in equity Attributable to equity holders
of the Minority Total Company interest equity Balance at 1 January 2005 153 276 6 771 160 047 Currency translation (432) - (432) differences Profit for the period 10 023 2 124 12 147 Dividends paid (3 944) - (3 944) Balance at 30 June 2005 158 923 8 895 167 818 Balance at 1 July 2005 158 923 8 895 167 818 Currency translation 1 182 - 1 182 differences Profit for the period 15 530 1 481 17 011 Minority interest acquired 150 (150) - Movements on reserves of 859 - 859 associate company Dividends paid (2 629) - (2 629) Balance at 31 December 2005 174 015 10 226 184 241 Balance at 1 January 2006 174 015 10 226 184 241 Currency translation (2 012) - (2 012) differences (Loss)/Profit for the period (1 328) 638 (690) Dividends paid (3 944) (5 000) (8 944) Dividend proposed (158 407) - (158 407)
Balance at 30 June 2006 8 324 5 864 14 188 Abridged consolidated cash flow statement Actual Actual Actual 6 months 6 months 12 months
ended ended ended 30 June 30 June 31 December 2006 2005 2005
(Unaudited) (Unaudited) (Audited) R"000 R"000 R"000 Cash flow from operating activities Cash generated by operations 21 192 17 863 39 890 Utilised to decrease/(increase) 5 097 (1 732) (3 492) working capital Cash generated from operating 26 289 16 131 36 398 activities Interest paid (4 067) (11 101) (14 827) Dividends paid (3 944) (3 944) (6 573) Income tax paid (14 250) (23 347) (27 910) 4 028 (22 261) (12 912) Cash flow from investing 3 538 18 538 23 958 activities Cash flow from financing (5 000) - - activities Net increase/(decrease) in cash 2 566 (3 723) 11 046 and cash equivalents Other group salient features Actual Actual Actual 6 months 6 months 12 months ended ended ended 30 June 30 June 31
December 2006 2005 2005 (Unaudited) (Unaudited) (Audited) R"000 R"000 R"000
Net asset value per share 12,66 241,79 264,75 (cents) Depreciation 1 289 1 493 2 625 Amortisation 954 827 1 720 Capital expenditure 2 365 1 335 5 878 Capital commitments Authorised and contracted 163 50 463 Authorised not contracted - - - Segmental analysis by operating division Actual Actual Actual 6 months 6 months 12 months ended ended ended
30 June 30 June 31 December 2006 2005 2005 (Unaudited) (Unaudited) (Audited)
R"000 R"000 R"000 Revenue FANS AND HEAT EXCHANGERS 157 387 150 799 310 223 ENVIRONMENTAL CONTROL 70 523 77 680 187 272 227 910 228 479 497 495 Orders receivable FANS AND HEAT EXCHANGERS 204 037 164 623 316 680 ENVIRONMENTAL CONTROL 49 608 122 666 204 737 253 645 287 289 521 417 Commentary Overview Order book levels have increased over the year primarily due to improved conditions in the mining market and increased activity levels connected to the return to service programme within Eskom. Order intake for the six months to June 2006, however, is 11% lower than the corresponding period last year due to the timing associated with certain large value environmental control orders received over the first half of 2005. Industrial environmental equipment business in general is operating at levels lower than last year but a number of prospects are being worked on and the position should improve over the balance of the year. Results In the six months ended 30 June 2006 Revenue of R227,9 million compares to R228,5 million in the corresponding period last year. Steady growth in Revenue in the fans and heat exchangers division was neutralised by lower revenue reported in the environmental control division. Group operating profit of R17,2 million is reported for the period to 30 June 2006, against R15,4 million reported for the six months to June last year. Reduced margins achieved on two contracts in the environmental control division amounting to R3,6 million detract from an otherwise solid performance. Earnings per share of (2,02) cents compare with 15,25 cents last year, the secondary tax on companies relating to the special dividend of 148,12 cents per share declared on 30 June 2006 negatively affecting earnings per share by 18,52 cents. Excluding the effect of STC, the earnings per share would have reflected a small increase over last year. A net cash position of R100,0 million compares with the R97,5 million reported at the end of December 2005, but this position has altered materially with the financial internal reorganisation approved by shareholders involving the cash payment of 241,0 cents per share in July 2006, financed as to R71 million from existing cash resources and as to R100 million from facilities made available by Standard Bank. ACCOUNTING POLICIES The interim results to June 2006 have been prepared in accordance with International Financial Reporting Standards (IFRS), in a manner consistent with the prior year and in accordance with IAS 34. The results to June 2005 have been adjusted and restated to take account of the value of intangible assets in respect of trademarks. Review of operations Fans and heat exchangers Order intake for fans and heat exchangers totalled R204,0 million compared to R164,6 million in the corresponding period last year. The return to service programme in Eskom has generated increased volumes and strong commodity prices over the period resulted in higher levels of business in the mining market covering coal, gold and platinum. A strong order book exists at the half year and this should remain in effect through to year- end. The nature and timing of the order book suggests that it will be difficult to improve on the results of last year in this division. Environmental Control The environmental control business received orders totalling R49,6 million compared to R122,7 million last year. This division is particularly sensitive to the timing of large value contracts where in 2005 three contracts alone totalled R74 million in the first half of the year and this has not been repeated in 2006. Gas cleaning prospects outside the energy sector have proven to be disappointing over the period but prospects in the furnace and refrigeration market should result in improvement through to year-end. On a positive note, developments in the gold mining sector could lead to an improvement in deep level mine cooling prospects connected to depth extension initiatives. The sale of the rotary incineration equipment associated with the aborted sale to the Middle East last year continues to receive focus. Indications are that success in this regard could be reported over the balance of the year. Pumps The pumps business, reported as an associate company, has had a slow start to the year due to depressed conditions in the agricultural market and competitive imported pump components. A small profit has been reported for the period but export prospects, coming off a relatively high base over the past two years, are expected to diminish in the year mainly due to timing problems. Outlook The strong commodity cycle and growth in fixed investment expenditure has given rise to increasing tender activity which could convert to a stronger order book through the year. The nature of this type of fixed investment expenditure, however, makes it difficult to predict in terms of timing and the Board is therefore of the view that improvements over the balance of the year would be consistent with what was achieved in the first half. Dividends The circular to shareholders dated 31 May 2006 advising of the proposal to make a cash payment of 241 cents per share to shareholders, gave an indication of the reduction in net asset value per share as a result of the distribution. The reduction in net asset value, coupled to the increase in the Group"s gearing ratio, leads the Board to resolve not to declare an interim dividend this year. Directorate Mr Michael Foster resigned as Chairman and non-executive director of the Company on 1 August 2006. We thank him for his valued contribution and wish him well in his new capacity as Chief Executive of Charter plc. Mr Bob Cleland, Chief Executive of Howden Global and a non-executive director since March 2000 has been appointed Non-Executive Chairman in his stead. The company"s auditors, PricewaterhouseCoopers Inc, have not reviewed or audited these results for the six months ended 30 June 2006. For and on behalf of the Board of Directors. RJ Cleland (Chairman) S Meyer (Chief Operating Officer, acting) 25 August 2006 Directors: RJ Cleland (Chairman) #**, S Meyer (Chief Operating Officer, acting), AB Mashiatshidi**, J Brown#** (# British ** Non-executive) Company secretary: MJM 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: 25/08/2006 05:30:09 PM Supplied by www.sharenet.co.za Produced by the JSE SENS Department

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