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HWN
HWN
HWN - Howden Africa Holdings Limited - Unaudited interim financial results for
the six months ended 30 June 2011
Howden Africa Holdings Limited
(Incorporated in the Republic of South Africa)
(Registration number 1996/002982/06)
Share code: HWN ISIN: ZAE000010583
("Howden" or "the Company" or "the Group")
UNAUDITED INTERIM FINANCIAL RESULTS
for the six months ended 30 June 2011
Condensed consolidated statement of comprehensive income
for the period ended 30 June 2011
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(Unaudited) (Unaudited) Change (Audited)
R`000 R`000 % R`000
Revenue 434 471 423 806 2,5 868 841
Gross profit 125 281 102 291 22,5 226 808
Operating profit 57 414 46 820 22,6 102 637
Finance income 5 863 5 419 12 184
Finance costs (1 669) (2 782) (5 761)
Profit before income 61 608 49 457 24,6 109 060
tax
Income tax expense (18 230) (21 371) (39 705)
Profit for the period 43 378 28 086 54,4 69 355
Other comprehensive
income
Pension fund plan 1 608 (397) 4 732
surplus/(loss)
Income tax relating to (450) 111 (1 325)
components of other
comprehensive income
Other comprehensive 1 158 (286) 3 407
income for the period,
net of tax
Total comprehensive 44 536 27 800 72 762
income for the period
Cents Cents Cents
Earnings per share
- basic and diluted 65,99 42,73 54,4 105,52
Condensed consolidated statement of financial position
as at 30 June 2011
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
ASSETS
Non-current assets 200 268 202 682 208 264
Property, plant and 122 427 120 901 121 767
equipment and
intangible assets
Pension fund plan asset 32 970 23 000 30 390
Cash and cash 5 306 18 713 19 229
equivalents
Other non-current 39 565 40 068 36 878
assets
Current assets 713 067 628 624 466 552
Inventories 215 072 200 217 119 947
Trade and other 299 336 300 587 239 370
receivables
Cash and cash 198 659 127 820 107 235
equivalents
Total assets 913 335 831 306 674 816
EQUITY
Share capital and 207 283 135 531 172 606
reserves
LIABILITIES
Non-current liabilities 443 240 297 481 172 114
Current liabilities 262 812 398 294 330 096
Total liabilities 706 052 695 775 502 210
TOTAL EQUITY AND 913 335 831 306 674 816
LIABILITIES
Condensed consolidated statement of changes in equity
for the period ended 30 June 2011
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
Share capital and 172 606 170 174 170 174
reserves at the
beginning of the period
Total comprehensive 44 536 27 800 72 762
income for the period
Dividends paid (9 859) (62 443) (70 330)
Share capital and 207 283 135 531 172 606
reserves at the end of
the period
Other Group salient features
for the period ended 30 June 2011
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(Unaudited) (Unaudited) Change (Audited)
R`000 R`000 % R`000
Net asset value per 315,36 206,20 52,9 262,60
share (cents)
Depreciation 2 737 2 596 5 928
Amortisation 1 054 1 005 2 162
Capital expenditure 4 541 3 337 9 059
Capital commitments
- Authorised and 2 617 2 087 2 263
contracted
Number of shares in 65 729 65 729 65 729
issue (`000)
Earnings per share 65,99 42,73 54,4 105,52
(cents)
Headline earnings per 65,94 42,70 54,4 105,85
share (cents)
Dividends per share
- dividend paid (cents) 15,00 20,00 20,00
- special dividend paid - 75,00 75,00
(cents)
- interim dividend paid - - 12,00
(cents)
Reconciliation of
headline earnings
Profit for the period 43 378 28 086 69 355
(Profit)/Loss on (33) (21) 217
disposal of property,
plant and equipment
Headline earnings 43 345 28 065 54,4 69 572
Condensed consolidated statement of cash flows
for the period ended 30 June 2011
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
Cash flow from
operating activities
Cash generated from 100 472 71 930 135 023
operations
Interest paid (1 669) (2 782) (5 761)
Income tax paid (12 888) (16 354) (40 525)
Net cash generated from 85 915 52 794 88 737
operating activities
Cash flow from
investing activities
Interest received 5 863 5 419 12 184
Purchases of property, (4 233) (3 167) (8 608)
plant and equipment
Purchases of intangible (308) (170) (451)
assets
Proceeds from disposal 123 75 204
of property, plant and
equipment
Net cash generated from 1 445 2 157 3 329
investing activities
Cash flow from
financing activities
Repayment of borrowings - (15 000) (15 000)
Dividends paid (9 859) (13 146) (70 330)
Net cash used in (9 859) (28 146) (85 330)
financing activities
Net increase in cash 77 501 26 805 6 736
and cash equivalents
Cash and cash 126 464 119 728 119 728
equivalents at the
beginning of the period
Cash and cash 203 965 146 533 126 464
equivalents at the end
of the period
Segmental analysis by operating division
for the period ended 30 June 2011
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2011 2010 2010
(Unaudited) (Unaudited) Change (Audited)
R`000 R`000 % R`000
Revenue
Fans and Heat 371 542 346 093 731 827
Exchangers
Environmental Control 62 929 77 713 137 014
434 471 423 806 2,5 868 841
Orders received
Fans and Heat 490 054 376 970 704 669
Exchangers
Environmental Control 53 113 101 205 127 328
543 167 478 175 13,6 831 997
Operating profit
Fans and Heat 63 749 51 939 134 174
Exchangers
Environmental Control (2 112) (2 126) (22 982)
61 637 49 813 111 192
Central operations (4 223) (2 993) (8 555)
Total operating profit 57 414 46 820 22,6 102 637
Inter-segmental sales
Fans and Heat 5 812 17 285 32 669
Exchangers
Environmental Control 24 415 5 255 12 867
30 227 22 540 34,1 45 536
COMMENTARY
OVERVIEW
The Group remains committed to creating sustainable stakeholder value, as levels
of fixed investment recover from the impact of the world economic crisis.
Order intake for the six months to 30 June 2011 was R543,2 million, compared to
R478,2 million for the corresponding period last year; a 13,6% improvement from
the reduced levels of demand experienced during 2010.
RESULTS
Revenue of R434,5 million for the first half of 2011 is 2,5% ahead of the
equivalent R423,8 million achieved last year, signifying an improvement in
market conditions. The Fan and Heat Exchangers division performed well in terms
of additional order intake, which will translate into increased sales in the
future.
The Environmental Control division is subject to the timing of major projects
coming on-stream, but is optimistic about future prospects, based on the
potential order pipeline from work currently under development or adjudication.
In this context, the South African Air Quality Act, effective from 1 April 2010,
provides major opportunities over the next ten to fifteen years.
Operating profit of R57,4 million is a significant improvement over the R46,8
million to June 2010, as strengthening project management and cost efficiencies
were achieved in most areas of the Group`s activities.
Earnings per share of 65,99 cents is 54,4% up on last year`s 42,73 cents, and is
closer to the level of earnings reported for 2009, mainly due to efficiencies
and the better margins available in improved market conditions.
The net cash position of R168,3 million is well ahead of the R110,8 million
reported at June last year, with cash of R100,5 million generated from
operations. This is well up on the R71,9 million generated in the first half of
2010, and largely reflects contract receipts which are subsequently used for
project execution.
ACCOUNTING POLICIES
The interim financial results to June 2011 have been prepared in accordance with
International Financial Reporting Standards (IFRS), IAS 34: Interim Financial
Reporting, JSE Limited Listings Requirements and the Companies Act of South
Africa, incorporating the AC 500 series of Accounting Standards. The accounting
policies are consistent with those applied in the prior year.
REVIEW OF OPERATIONS
Fans and Heat Exchangers
The Fan and Heat Exchangers division received orders of R490,1 million for the
six months ended 30 June 2011, compared to R377,0 million for the first half of
last year. Significant export orders into Africa were secured to supply
ventilation fans to the mining industry. Local market activity included Eskom
new build, and spares aftermarket orders under the Eskom National Spares
Contract, where Howden is contracted to maintain the existing fleet of power
stations under stringent service standards.
The business remains committed to delivery on the new Medupi and Kusile power
stations, and is ahead of schedule on these projects. Orders secured in the
aftermarket have further improved the division`s order book at the end of the
reporting period, and will compensate for the completed Eskom retrofit and
return to service programmes.
Environmental Control
The reduced order intake of R53.1 million is considered a timing issue, as
bidding activity to date is very promising. The new clean air legislation should
generate considerable additional work for the Environmental Control division.
There are a number of large scale environmental projects awaiting adjudication,
which should be awarded by the end of 2011. In July, the division won a wet
scrubber turnkey installation for a major industrial client.
OUTLOOK
In total, orders are ahead of the position at December 2010. There is a positive
outlook due to the increased bidding activity in the Environmental Control
division.
POST BALANCE SHEET EVENT
There are no known material events under this category.
DIVIDENDS
The directors have resolved to declare an interim dividend of 20 cents per
share. The last date to trade cum dividend is Friday, 9 September 2011. Shares
start trading ex dividend on Monday, 12 September 2011. The record date is
Friday, 16 September 2011, and payment will be on Monday, 19 September 2011. No
share certificates are to be dematerialised or rematerialised between Monday, 12
September 2011 and Friday, 16 September 2011, both days inclusive.
DIRECTORATE
S Meyer, the Group Financial Director, left the Group on 8 March 2011 and was
replaced by an Interim Group Financial Director, TW Rensen on 1 May 2011. 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 after the 25 August 2011 board meeting, and stepped down as
both a non-executive director and Chairman of the Board. He will be replaced as
chairman by IH Brander. The board wishes to thank Mr. Cleland for his valuable
contribution to Howden over the past 11 years.
UNAUDITED INTERIM FINANCIAL RESULTS
The Company`s auditors, PricewaterhouseCoopers Inc, have not reviewed or audited
the interim financial results for the six months ended 30 June 2011.
The Group financial results were prepared under the supervision of the Group
Financial Director, Mr. TW Rensen FCA.
For and on behalf of the Board of Directors
RJ Cleland T Barwald
(Chairman) (Chief Executive Officer)
26 August 2011
Directors:
RJ Cleland (Chairman)#**
T Barwald (Chief Executive Officer)+
TW Rensen*
AB Mashiatshidi**
J Brown#**
M Malebye**
IH Brander#**
(#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
Date: 26/08/2011 17:00:02 Produced by the JSE SENS Department.
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