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HWN
HWN
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 Produced by the JSE SENS Department
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