| Mon 29 Aug 2005, 10:33 | | RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005 |
|
Howden - Summarised unaudited results for the six months ended 30 June 2005
HOWDEN AFRICA HOLDINGS LIMITED
Share code: HWN
ISIN: ZAE000010583
SUMMARISED UNAUDITED RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2005
ABRIDGED CONSOLIDATED INCOME STATEMENT
Actual Restated Restated
six months six months 12 months
ended ended ended
30 June 30 June 31 December
2005 2004 Actual 2004
(Unaudited) (Unaudited) change (Audited)
R`000 R`000 % R`000
Revenue 228 479 217 643 5,0 422 033
Operating profit 16 204 15 768 2,8 34 348
Net financial revenue 2 578 2 379 4 512
Foreign exchange
profit/(loss) 202 (1 070) (401)
Share of results of
associate (233) 773 5 562
Profit before
taxation 18 751 17 850 5,0 44 021
Taxation (6 017) (9 501) (13 900)
Profit for the period 12 734 8 349 52,5 30 121
Attributable to:
Equity holders of
the Company 10 610 5 952 78,3 26 007
Minority interest 2 124 2 397 (11,4) 4 114
12 734 8 349 52,5 30 121
Number of shares in
issue (`000) 65 729 65 729 65 729
Earnings per share
(cents) 16,14 9,06 78,3 39,57
Headline earnings
per share (cents) 16,65 9,40 77,0 40,46
Dividends per share
(cents) 6,00 52,00 56,00
Reconciliation of
headline earnings
attributable
to equity holders of
the Company
Net profit for the
period attributable
to holders 10 610 5 952 26 007
Impairment of assets - 229 229
Loss on sale of
subsidiary - - 301
(Profit)/Loss on
sale of property
plant and
equipment (36) - 56
Loss on disposal of
part of associate 368 - -
Headline earnings
attributable to
equity holders 10 942 6 181 77,0 26 593
RECONCILIATION OF RESTATED INCOME ATTRIBUTABLE
TO EQUITY HOLDERS AS REPORTED UNDER IFRS
30 June 31 December
Notes 2004 2004
R`000 R`000
As previously reported under SA GAAP 5 312 24 498
Adjustment for:
Depreciation 1 671 1 342
Impairment of assets 1 (229) (229)
Share of associate company`s IFRS
adjustments 53 106
Goodwill 2 145 290
As restated under IFRS 5 952 26 007
OTHER GROUP SALIENT FEATURES
Actual Restated Restated
six months six months 12 months
ended ended ended
30 June 30 June 31 December
2005 2004 2004
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
Net asset value per share
(cents) 182,26 148,00 172,78
Depreciation 1 493 1 386 2 081
Capital expenditure 1 335 870 3 379
Capital commitments
Authorised and contracted 50 - 1 288
Authorised not contracted - - 19
ABRIDGED CONSOLIDATED BALANCE SHEET
Actual Restated Restated
As at As at As at
30 June 30 June 31 December
2005 2004 2004
(Unaudited) (Unaudited) (Audited)
R`000 R`000 R`000
ASSETS
Non-current assets 76 509 68 365 83 685
Property, plant and equipment 30 581 29 221 30 716
Intangible assets 120 120 120
Investment in associate 30 023 37 192 37 164
Deferred tax 15 785 1 832 15 685
Current assets 209 295 156 481 195 170
Inventories 49 483 35 876 48 804
Receivables and pre-payments 77 055 73 747 59 886
Cash and cash equivalents 82 757 46 858 86 480
Total assets 285 804 224 846 278 855
EQUITIES AND LIABILITIES
Capital and reserves
attributable to
equity holders 119 799 97 280 113 565
Minority interest 8 895 5 054 6 771
Total equity 128 694 102 334 120 336
Current liabilities 157 110 122 512 158 519
Trade and other payables 153 321 116 434 137 109
Provisions 2 413 1 499 2 509
Taxation 1 376 4 579 18 901
Total liabilities 157 110 122 512 158 519
Total equity and liabilities 285 804 224 846 278 855
ABRIDGED CONSOLIDATED CASH
FLOW STATEMENT
Cash flow from operating activities
Cash generated by operations 17 863 16 865 36 614
Utilised to (increase)/decrease
working capital (1 732) 8 611 29 657
Cash generated from operating
activities 16 131 25 476 66 271
Financial revenue 2 578 2 379 4 512
Dividends paid (3 944) (34 179) (36 808)
Taxation paid (23 347) (17 480) (20 070)
(8 582) (23 804) 13 905
Cash flow from investing activities 4 859 (4 183) (2 270)
Cash flow from financing activities - (530) (530)
Net (decrease)/increase in cash and cash
equivalents (3 723) (28 517) 11 105
SEGMENTAL ANALYSIS BY OPERATING DIVISION
Revenue
Fans and heat exchangers 150 799 120 330 240 518
Environmental control 77 680 97 313 181 515
228 479 217 643 422 033
Orders receivable
Fans and heat exchangers 164 623 136 639 241 298
Environmental control 122 666 113 683 195 735
287 289 250 322 437 033
ABRIDGED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Attributable to
equity holders of Minority Total
the Company interest equity
R`000 R`000 R`000
Balance at 1 January 2004 119 483 5 289 124 772
IFRS transitional adjustments 6 289 - 6 289
Currency translation differences (265) - (265)
Profit for the period 5 952 2 397 8 349
Minority interest acquired - (2 102) (2 102)
Dividends paid (34 179) (530) (34 709)
Balance at 30 June 2004 97 280 5 054 102 334
Balance at 1 July 2004 97 280 5 054 102 334
Currency translation differences (744) - (744)
Profit for the period 20 055 1 717 21 772
Movements on reserves of
subsidiaries (397) - (397)
Dividends paid (2 629) - (2 629)
Balance at 31 December 2004 113 565 6 771 120 336
Balance at 1 January 2005 113 565 6 771 120 336
Currency translation differences (432) - (432)
Profit for the period 10 610 2 124 12 734
Dividends paid (3 944) - (3 944)
Balance at 30 June 2005 119 799 8 895 128 694
RECONCILIATION OF RESTATED STATEMENT OF CHANGES
IN SHAREHOLDERS` EQUITY AS REPORTED UNDER IFRS
30 June 31 December
Notes 2004 2004
R`000 R`000
As previously reported under SA GAAP 90 351 105 767
Adjustment for:
Property, plant and equipment 1 4 515 4 515
Deferred tax provision on capital gains 1 (29) (29)
Goodwill 2 (581) (581)
Release of negative goodwill in
associated company 2 2 384 2 384
IFRS income statement adjustments 640 1 509
As restated under IFRS 97 280 113 565
Material adjustments for IFRS restatements
The basis of the material adjustments, net of the associated tax impact, as
shown in the tables of reconciliation of restated income attributable to
ordinary shareholders and reconciliation of restated statement of changes in
shareholders` equity are noted below: Depreciation has been adjusted as
disclosed in the reconciliation of IFRS above.
Note 1: Property, plant and equipment
Previously property, plant and equipment were measured at cost less accumulated
depreciation and impairment losses. Under IFRS, equipment (principally
computers, machinery, fixtures and furniture) is still stated at cost less
accumulated depreciation and impaired losses. Residual values and useful lives
for all plant and equipment have been reassessed.
The accounting policy for owner-occupied property has been changed from the
revaluation method to the cost method. The fair value as deemed cost exemption
in IFRS 1 has been applied. These properties will be stated at cost less
accumulated depreciation and impaired losses. The deemed cost will be
depreciated over the remaining useful life of the property.
Land is not depreciated.
Note 2: Goodwill
Previously the group recognised acquired goodwill at cost and amortised it on a
straight-line basis over its expected useful life. Goodwill was subject to
review for indications of impairment and any impairment losses were recognised
in the income statement as it arises. IFRS requires that goodwill is not
amortised, but is subject to impairment reviews, both annually and when there
are indications that the carrying value may not be recoverable. Negative
goodwill is no longer recognised on the balance sheet, but in the income
statement as it arises. Negative goodwill in the associate company was released
and recognised at 1 January 2004.
In line with the impairment reviews, the 2004 goodwill amortisation previously
recognised in the income statement has been reversed. All goodwill has been
tested for impairment at 1 January 2004, 30 June 2004 and 31 December 2004 in
accordance with IFRS, which resulted in the goodwill being fully impaired on
transition. The impairment has been recognised in the income statement at 1
January 2004.
Innovative Engineering
COMMENTARY
OVERVIEW
With the exception of the mining market, where orders received have remained
static compared to the same period last year, local economic conditions have
become more favourable for suppliers into the capital equipment market. Order
book levels have improved over the year but could come under pressure through
to year end given depressed conditions in the mining sector and the competitive
nature of the markets the Group operates in.
RESULTS
In the six months ended 30 June 2005 orders received of R287,2 million were up
15% compared with the corresponding period in 2004. Prospects associated with
environ- mental gas cleaning have improved over the period with success having
been achieved in converting a good share of tenders processed. Turnover of
R228,5 million was 5% up on last year, the absence of larger value mining
projects subduing growth over the period.
Group operating profit of R16,2 million is reported for the period to 30 June
2005, against R15,8 million (restated IFRS) reported for the six months to 30
June 2004. As reported in the trading statement released on 9 June 2005, the
operating profit has been negatively affected by the R5,3 million write-off of
costs associated with the supply of a rotary drier plant to Libya. All
practical steps continue to be taken to effect recovery of these monies and to
mitigate the charge and any significant change in this position will be
communicated accordingly.
Earnings per share of 16,14 cents compare with 9,06 cents (restated IFRS) last
year, an increase of 78,3%. In March 2004 the company paid a special dividend
of 47 cents per share, which carried an STC charge of 5,9 cents per share.
Excluding the effect of STC, the earnings per share increase over last year
reduces to 7,9%.
A net cash position of R82,8 million compares with the R86,5 million reported
at the end of December 2004, cash generated from operating activities largely
neutralising the impact of large corporate taxation payments.
IFRS ADOPTION
The results to June 2005 have been reported in accordance with International
Financial Reporting Standards (IFRS), which were adopted with effect from 1
January 2004.
Certain accounting policies are therefore not consistent with those applied in
the annual financial statements for the year ended 31 December 2004. The
comparative results for the six months ended 30 June 2004 and the year ended 31
December 2004 have been restated in terms of the adoption of IFRS in these
interim financial reporting statements.
CORPORATE ACTIVITIES
The Court application for the winding-up of Bateman Howden, details of which
were reported in the 2004 Annual Report, was heard on 24 August 2005. Judgement
has been reserved and shareholders will be kept informed of progress.
REVIEW OF OPERATIONS
Fans and heat exchangers
Order intake for fans and heat exchangers totalled R164.6 million compared to
R136,6 million in the corresponding period last year. This division has
performed strongly in all markets, the first quarter in particular generating
business above expectations. A levelling off of orders has been experienced in
the second quarter but a healthy order book exists at end June. Products and
services associated with site extension and refurbishment programmes have
assisted in boosting order levels in the reporting period.
Prospects associated with both public and private capital expenditure
initiatives continue to be rolled out and this should result in the division
recording orders receivable over the full year ahead of the position last year.
Environmental control
The environmental control business received orders totalling R122,7 million
compared to R113,7 million last year. The return to service programme at Camden
Power Station coincided with the completion of contracts elsewhere thereby
supporting the sustainability of the order book. Gas cleaning business outside
the energy sector has turned markedly from the poor position reported last
year and together with the conversion of furnace prospects in the motor
assembly and components industry assisted in achieving the improvement
recorded. On a negative note the relative lack of prospects in the gold mining
industry and the downturn in the incineration market has put pressure on
certain segments of the division and this could lead to some restructuring over
the second half of the year.
Pumps
The pumps business, now reported as an associate company, has experienced
difficult trading conditions due mainly to uncertainty in local agricultural
markets affected by land reform programmes in certain parts of the country. A
small loss has been reported for the period and results have been
disappointing, but prospects in the export market should assist in returning
the business to profitability, albeit at levels below initial expectations.
OUTLOOK
The softening of the Rand seen in the first half of the year should provide
some assistance to larger mining and industrial exporters and this in turn
should have positive over- tones for the order book in the medium term. Given a
fair measure of success in converting prospects associated with the array of
capital expenditure and maintenance programmes, satisfactory results through
to year-end should be achievable.
DIVIDENDS
The directors have approved an unchanged interim dividend of 4 cents (2004:
interim dividend 4 cents) per share to be declared payable to shareholders. The
last date to trade cum dividend is Friday, 16 September 2005. Shares start
trading ex-dividend on Monday, 19 September 2005. The record date is Friday, 23
September 2005. Payment will be Monday, 26 September 2005. No share
certificates are to be dematerialised or rematerialised between Monday, 19
September 2005 and Friday, 23 September 2005, both days inclusive.
DIRECTORATE
Mr John Feek resigned as Chairman and Executive Director of the company at the
conclusion of the Annual General Meeting on 9 June 2005. We thank him for his
valued contribution and wish him well into his retirement. Mr Michael Foster,
Commercial Director of Charter plc, was appointed as a non-executive director
on 3 March 2005 and was appointed non-executive Chairman effective from the
conclusion of the Annual General Meeting. Mr James Brown, Financial Director of
Howden Group Limited, was appointed as a non-executive director on 3 March
2005. Dr Renosi Mokate, a non-executive director, who was appointed as a deputy
governor of the Reserve Bank, has resigned from the board effective 1 August
2005.
AUDITORS` OPINION
The results for the six months ended 30 June 2005 and the 30 June 2004
restatements have not been reviewed or audited.
The restatements of financial information for the opening IFRS balance sheet as
at 1 January 2004, the IFRS balance sheet and income statement as at and for
the year ended 31 December 2004 and the opening IFRS balance sheet at 1 January
2005 have been audited by the company`s auditors, PricewaterhouseCoopers Inc
and their audit opinion is available for inspection at the group`s registered
office. Their report includes an emphasis of matter, that amendments to the
interpretive guidance issued by the IASB, between the date of this announcement
and the finalisation of the financial statements for the year ending 31
December 2005, may result in changes to the restatements published.
They further note that the scope of the audit engagement did not include the
presentation and disclosure of the IFRS financial information in a set of
consolidated annual financial statements and was limited to the recognition
and measurement requirements of IFRS and the disclosures of the conversion
information as required by IFRS 1.
For and on behalf of the Board
M G Foster S Meyer
(Chairman) (Chief Operating Officer, acting)
26 August 2005
Directors: M G Foster (Chairman)#**,
S Meyer (Chief Operating Officer, acting),
R J Cleland#**, A B Mashiatshidi**, J Brown#**
(# 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: 29/08/2005 07:05:19 AM
Produced by the JSE SENS Department
