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02/03/2012 : 17:30:02
HWN - Howden Africa Holdings Limited - Reviewed annual financial results for the
HWN
Posted Fri, 02 Mar 2012

HWN HWN 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 Produced by the JSE SENS Department. 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