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HWN - Howden Africa Holdings Limited - Reviewed annual financial results for the
year ended 31 December 2011
Howden Africa Holdings Limited ("HAHL")
(Incorporated in the Republic of South Africa)
(Registration number 1996/002982/06)
Share code: HWN ISIN: ZAE 000010583
("Howden" or "the Company" or "the Group")
Reviewed annual financial results for the year ended 31 December 2011
Operating profit - R169,9 million
Increased by 65,5% from R102,6 million in 2010
Net cash generated from operating activities - R175,3 million
Increased by 97,6% from R88,7 million in 2010
Headline earnings per share - 194,00 cents
Increased by 83,3% from 105,85 cents in 2010
COMMENTARY
OVERVIEW
The Group has performed well in 2011, with both of its divisions showing an
improvement in performance when compared to 2010. Activity levels within our
core markets of mining, power generation and environmental control have all
increased during the year. However, customers for medium industrial
applications, and the building industry, continue to face difficult trading
conditions.
RESULTS
In 2011, Howden achieved an 83,8% improvement in earnings, following on from the
good interim results posted in August 2011. Revenue growth stems from the 49,3%
improvement in order intake, favourably impacting on the 65,5% operating profit
growth as planned efficiencies take effect.
Group revenue increased by 13,8% to R988,4 million (2010: R868,8 million),
driven by the improving market conditions.
Operating profit showed a healthy increase of 65,5% to R169,9 million (2010:
R102,6 million), reflecting sales, efficiency gains and more project activity.
Net finance income of R12,1 million (2010: R6,4 million), reflected better
working capital management and the final repayment of a term loan facility.
Howden`s continuing focus on working capital and advance payments received from
customers, both made a major contribution to improved cash flows. Net cash
generated from operations increased by 97,6% to R175,3 million (2010: R88,7
million), with cash and equivalents higher at R243,1 million (2010: R126,5
million).
ACCOUNTING POLICIES
The condensed consolidated annual financial statements for the year ended 31
December 2011 have been prepared in accordance with International Financial
Reporting Standards (IFRS), IAS 34 Interim Financial Reporting, the AC 500
series of Accounting Standards, JSE Listings Requirements and the Companies Act
of South Africa, 2008. The accounting policies are consistent with those applied
in the prior year annual financial statements.
REVIEW OF OPERATIONS
Fans and Heat Exchangers Division
Orders received increased by a significant 29,8% to R915,0 million (2010: R704,7
million). Revenue was up by 17,4% to R859,2 million (2010: R731,8 million). This
resulted in a 26,0% increase in operating profit to R169,1 million (2010: R134,2
million).
The division has continued to support the key market sectors of power generation
and petrochemical during 2011, particularly in provision of long-term
maintenance support.
Environmental Control Division
There was a marked recovery of 156,8% in order intake to R326,9 million (2010:
R127,3 million). Although revenue declined slightly to R129,2 million (2010:
R137,0 million), the division returned to profitability, posting a profit of
R8,8 million against last year`s loss of R23,0 million.
The business has been proactively identifying and working on opportunities
throughout Africa, leveraging on significant experience and customer reference
lists. During 2011, a number of these opportunities have turned into orders,
which has boosted its order book going into 2012.
Large scale environmental control legislation and general environmental pressure
and awareness in Africa, should further improve opportunities for the
Environmental Control Division over the next few years.
OUTLOOK
Markets are generally showing an improvement, aftermarket volumes remain buoyant
and there is an improved market appetite for environmental projects.
SUBSEQUENT EVENTS
Charter International plc, the company`s ultimate holding company, was acquired
by Colfax Corporation in January 2012.
DIVIDENDS
The Board of HAHL has resolved not to declare a dividend until the new tax
legislation and its impact on shareholders has been considered.
DIRECTORATE
There were a number of changes in the directorate and officers during the year.
The Group Financial Director, S Meyer, left the Group on 8 March 2011 and was
replaced by an Interim Group Financial Director, TW Rensen, on 1 May 2011. K
Johnson took over from TW Rensen from 1 March 2012 as Chief Financial Officer.
The Company Secretary, M Luthuli, resigned on 30 April 2011 and was replaced by
C Miller on 1 May 2011.
On 27 July 2011, IH Brander was appointed as a non-executive director. RJ
Cleland retired as the non-executive Chairman of the Board on 25 August 2011,
and IH Brander was appointed in his place.
S Badat joined the Board as an independent non-executive director on 21 November
2011.
A Mashiatshidi passed away on 18 February 2012, and will be sadly missed by the
Company.
REVIEWED RESULTS
PricewaterhouseCoopers Inc., the Group`s independent auditors, have reviewed the
condensed consolidated annual financial information for the year ended 31
December 2011, that comprises the condensed consolidated statement of financial
position as at 31 December 2011, and the condensed consolidated statements of
comprehensive income, changes in equity, and cash flows for the year then ended,
and have expressed an unqualified opinion on this reviewed condensed
consolidated annual financial information. The review report is available for
inspection at the Company`s registered office.
The Group financial results were prepared under the supervision of the Group
Financial Director, TW Rensen FCA.
For and on behalf of the Board of Directors.
IH Brander T Barwald
Chairman Chief Executive Officer
2 March 2012
CONDENSED CONSOLIDATED STATEMENT OF FINANCIAL POSITION
AS AT 31 DECEMBER 2011
31 December 31 December
2011 2010
(Reviewed) (Audited)
R`000 R`000
ASSETS
Non-current assets 211 669 208 264
Property, plant and equipment and intangible 123 255 121 767
assets
Pension fund plan asset 30 424 30 390
Cash and cash equivalents 20 012 19 229
Other non-current assets 37 978 36 878
Current assets 764 739 466 552
Inventories 263 538 119 947
Trade and other receivables 278 129 239 370
Cash and cash equivalents 223 072 107 235
Total assets 976 408 674 816
EQUITY
Share capital and reserves 275 316 172 606
LIABILITIES
Non-current liabilities 120 161 172 114
Current liabilities 580 931 330 096
Total liabilities 701 092 502 210
Total equity and liabilities 976 408 674 816
CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2011
31 December Change 31 December
2011 % 2010
(Reviewed) (Audited)
R`000 R`000
Revenue 988 400 13,8 868 841
Gross profit 316 677 39,6 226 808
Distribution costs (42 046) 34,5 (31 265)
Administrative expenses (104 778) 12,8 (92 906)
Operating profit 169 853 65,5 102 637
Finance income 14 791 12 184
Finance costs (2 734) (5 761)
Profit before income tax 181 910 66,8 109 060
Income tax expense (54 414) (39 705)
Profit for the year 127 496 83,8 69 355
Other comprehensive income
(Loss)/gains recognised directly in
equity
Pension fund plan (loss)/surplus (2 473) 4 732
Income tax relating to components 692 (1 325)
of other comprehensive income
Other comprehensive (loss)/income (1 781) 3 407
for the year, net of tax
Total comprehensive income for the 125 715 72 762
year
Cents Cents
Earnings per share
- basic and diluted 193,97 83,8 105,52
OTHER GROUP SALIENT FEATURES
FOR THE YEAR ENDED 31 DECEMBER 2011
31 December Change 31 December
2011 % 2010
(Reviewed) (Audited)
R`000 R`000
Net asset value per share (cents) 418,87 59,5 262,60
Depreciation 6 541 5 928
Amortisation 2 308 2 162
Capital expenditure 10 698 9 059
Capital commitments
- Authorised and contracted 1 562 2 263
Number of shares in issue (`000) 65 729 65 729
BASIC AND DILUTED
Earnings per share (cents) 193,97 83,8 105,52
Headline earnings per share (cents) 194,00 83,3 105,85
Dividends per share
- dividend paid (cents) 15,00 20,00
- special dividend paid (cents) - 75,00
- interim dividend paid (cents) 20,00 12,00
Reconciliation of headline earnings
attributable to the equity holders
of the Company
Net profit attributable to equity 127 496 69 355
holders
Loss on disposal of property, plant 17 217
and equipment
Headline earnings attributable to 127 513 83,3 69 572
equity holders
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED 31 DECEMBER 2011
Share Retained Pension Total
capital earnings fund R`000
R`000 R`000 plan
surplus
R`000
Audited
Balance at 1 January 2010 657 152 270 17 247 170 174
Total comprehensive income for - 69 355 3 407 72 762
the year
Dividends paid - (70 330) - (70 330)
Balance at 31 December 2010 657 151 295 20 654 172 606
Reviewed
Balance at 1 January 2011 657 151 295 20 654 172 606
Total comprehensive - 127 496 (1 781) 125 715
income/(loss) for the year
Dividends paid - (23 005) - (23 005)
Balance at 31 December 2011 657 255 786 18 873 275 316
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED 31 DECEMBER 2011
31 December 31 December
2011 2010
(Reviewed) (Audited)
R`000 R`000
Cash flow from operating activities
Cash generated from operations 220 912 135 023
Interest paid (2 551) (5 761)
Income tax paid (43 085) (40 525)
Net cash generated from operating activities 175 276 88 737
Cash flow from investing activities
Interest received 9 710 12 184
Purchases of property, plant and equipment (10 338) (8 608)
Purchases of intangible assets (360) (451)
Proceeds from disposal of property, plant and 337 204
equipment, and intangibles
Net cash (used in)/generated from investing (651) 3 329
activities
Cash flow from financing activities
Repayment of borrowings (35 000) (15 000)
Dividends paid (23 005) (70 330)
Net cash used in financing activities (58 005) (85 330)
Net increase in cash and cash equivalents 116 620 6 736
Cash and cash equivalents at the beginning of 126 464 119 728
the year
Cash and cash equivalents at the end of the 243 084 126 464
year
CONDENSED CONSOLIDATED SEGMENTAL ANALYSIS BY OPERATING DIVISION FOR THE YEAR
ENDED 31 DECEMBER 2011
31 December Change 31 December
2011 % 2010
(Reviewed) (Audited)
R`000 R`000
Revenue
Fans and Heat Exchangers 859 246 731 827
Environmental Control 129 154 137 014
988 400 13,8 868 841
Orders received
Fans and Heat Exchangers 914 972 704 669
Environmental Control 326 877 127 328
1 241 849 49,3 831 997
Operating profit
Fans and Heat Exchangers 169 108 134 174
Environmental Control 8 763 (22 982)
177 871 111 192
Central operations (8 018) (8 555)
Total operating profit 169 853 65,5 102 637
Inter-segmental sales
Fans and Heat Exchangers 17 300 32 669
Environmental Control 47 660 12 867
64 960 42,7 45 536
Directors:
IH Brander (Chairman)#**, T Barwald (Chief Executive Officer)+,
TW Rensen*, J Brown#**, M Malebye**, S Badat**,
K Johnson# (#British +German *Irish **Non-executive)
Company secretary:
C Miller
Registered office:
1a Booysens Road, Booysens, 2091
Postal address: PO Box 2239, Johannesburg, 2000
Transfer secretaries:
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
Sponsor:
PricewaterhouseCoopers Corporate Finance (Pty) Limited
www.howden.com
Date: 02/03/2012 17:30:02 Supplied by www.sharenet.co.za
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