Howden Africa Half Year Results Presentation 29 September 2017

Transcription

1 Howden Africa 2017 Half Year Results Presentation 29 September 2017 Howden Group 2014

2 Safety & Housekeeping Safety Pause In case of an emergency - Do not run - Proceed to the nearest exit - Wait for instructions at assembly points We expect the presentation to last for approximately 30mins. Please hold your questions for the end of the presentation. We ask that you please turn off your mobile telephones. Howden Group

3 Forward-Looking Statements The material in this presentation is general background information about Howden s activities as at the date of this presentation. This information is given in summary form and does not purport to be complete and has been prepared solely for informational purposes. Information in this presentation should not be considered as advice or a recommendation to investors or potential investors in relation to holding, purchasing or selling securities. This presentation or statements made during the presentation may contain forward looking information including statements regarding our intent, belief or current expectations with respect to Howden s businesses and operations, market conditions, results of operation and financial condition, capital adequacy, specific provisions and risk management practices. Investors/shareholders are cautioned not to place undue reliance on these forward looking statements. Forward-looking statements are based on Howden's current expectations and involve risks and uncertainties that could cause actual results to differ materially from those expressed or implied in such forward-looking statements. These statements are based on a number of assumptions that are subject to change. The slides speak only as of this date. Howden disclaims any duty to update the information herein. The term Howden" in reference to the activities described in these slides may mean one or more of Howden's South African operating subsidiaries and/or their internal business divisions. Howden Group

4 Howden Vision & Values Howden Group

5 Howden Global - Acquisition Ventsim 3D Mine Ventilation Simulation Software Howden adds Ventsim 3D Mine Ventilation Simulation Software to its mining portfolio with the acquisition of Chasm Consulting. As part of Howden s strategy to become the world s leading provider of mine ventilation solutions, we are pleased to announce the acquisition of Chasm Consulting and its world leading product Ventsim. Providing industry-leading 3D design and simulation capability, the Ventsim software is widely used among the global mine ventilation community. Howden will now offer a full suite of solutions for mine ventilation, from modelling and design software to full turnkey projects including main and auxiliary fans, instrumentation, automation and Ventilation on Demand via the Simsmart product line SimSmart SmartExec Howden Group

6 Howden Africa Strategies The Company focus is on our key strategies of : Maintaining an high level of customer service across industries Expanding export sales into the Rest of Africa Diversification from the traditional Power market Investing in our people and supporting the community Develop and maintaining flexibility of technical skills across the business Identifying opportunities to grow our aftermarket both organically and through acquisition Howden Group

7 Howden Africa Corporate Social Investment Corporate Social Investment (CSI) is recognised as an inherent part of our business At Howden Africa we take part in various CSI activities throughout the year....both traditional events and also activities in the localities where we perform our main business Mandela Day, was celebrated at Turfontein Primary School. The CSI Committee helped with the following activities: - Painting of Madiba silhouttes and messages on posters - Painting of rusted palisade fence on school grounds - Handing over non perishable food and blankets - Donation of books for the school library - Feeding 1200 pupils for the day Howden Group

8 2017 Half Year Results Highlights William Thomson - CEO Howden Group

9 Howden Africa 2016 Financial Performance Revenue Revenue (Aftermarket vs. New Build) R R R R % Aftermarket R R % New Build R R R R 0 H H Revenue by Industry Revenue of R million for 2017 is 20.7% up on Aftermarket to New Build ratio has not changed significantly (2016 was approximately 70% Aftermarket). Our customers appetite across all industries for major new build or upgrades requiring new capital investment remained subdued but our strategy of supporting clients during feasibility studies improves our position when customer funding is available for hardware. The orders on hand within our aftermarket increased by approx R30m from end of H to end H Howden Group

10 Fan and Heat Exchanger Division Howden Group

11 Fan and Heat Exchanger Division ORDERS ORDERS RECEIVED R R R R R R R R 0 H H FY 2016 H Fans and Heat Exchangers division orders received during the first half of 2017 increased by 20.4%% to R713.3 million compared to the corresponding period (2016 H1: R592.3 million). Increase in order intake relates to Mining & Minerals Projects awarded in the period. Howden Group

12 Fan and Heat Exchanger Division SALES SALES R R R R R R R R R 0 H H FY 2016 H The Fans and Heat Exchangers division saw a increase in revenue of 12.2% to R660.1 million (2016: R588.2 million). The increase relates to execution of Rest of Africa mining projects awarded in the prior year. Howden Group

13 Environmental Control Division Howden Group

14 Environmental Control Division ORDERS ORDERS R R R R R R R 0 H H FY 2016 H Environmental Control division order intake was R97.3 million compared to R42.8 million in Several orders awarded in the second half of 2016 are being executed in This division continues to have a large opportunity list, but with limited release of funding. Howden Group

15 Environmental Control Division SALES SALES R R R R R R R R R R R 0 H H FY 2016 H The Environmental Control Division revenue increased to R128.9m resulting from the execution of projects awarded in H This division still faces headwinds with no strong legislative drive for wider environmental control measures. Howden Group

16 Fabrication Technology Division (ESAB) Howden Group

17 Fabrication Division / ESAB PEFORMANCE ORDERS SALES R R R R R R R R R R R H H FY 2016 H R R R R R R R R R R R H H FY 2016 H The new Fabrication Technology Division commenced trading during H This Division presents a new revenue stream with growth opportunities for the business which has a relatively low market share in the region. The division is facing tough challenges in the market, but continues to target market share growth. Howden Group

18 Financial Overview Marinella Vigouroux - CFO Howden Group

19 Financial Overview Financial Performance 2016 Segment analysis by operating division Operating profit of R133.1 million for the 6 month is 29.9% up on the prior period with the Environmental control and Fabrication Division returning profits from previous period losses. The Fans and Heat Exchangers division saw operating profit increase by 14.1% due to the execution of large mining projects. The Environmental Control division s returned to profit was the first year of trade for The Fabrication Technology division Central operations costs have decreased compared to H as the management team transitions to a local team. Howden Group

20 Financial Overview Financial Position 2016 Assets increased to R2 033 million. The major changes during 2017 have been a further increase in the business s cash and cash equivalents balance which has increased to R1.125 million. Liabilities increased to R656.3 million. The major change relating to payables on the execution of turnkey construction contracts. Howden Group

21 Financial Overview Conclusion The first half of 2017 has returned a solid set of results for the Howden Africa business especially in the Environmental Control division with the improved execution on turnkey projects. The Company remains focused on its strategies of expanding export sales into the Rest of Africa investing in our people identifying opportunities to grow our aftermarket both organically and through acquisition maintaining flexibility Growing the new Division The Company remains well placed to take advantage of any opportunities that present themselves in the future. Howden Group

22 Trading Outlook Howden Group

23 Trading Outlook Capital project spend within power generation, mining and general industry within South Africa is expected to remain subdued but with some positive movement within the Rest of Africa mining industry. Fans and Heat Exchangers division continues to focus on the supply of spares and service to key industries. Market conditions within the Environmental Control division are expected to remain challenging although the positive signs from H2 are indicating more activity in this market. Fabrication Technology Division is expected to grow. Howden Group

24 Questions? Howden Group

25 Shareholder Q&A s Q1. What are the plans for the cash, assuming R1 billon is sufficient for any single acquisition? Although R1 billion would support any single acquisition. The business is not limiting itself to one acquisition. Q2. Is there plans for the resumption of a normal dividend on cash in excess of R1 billion? At this stage the company maintains its policy on dividends and there are no plans for the resumption of normal dividends. The board continues to have robust discussions around dividends and the use of the cash. Q3. Is there scope for the application of the cash for an acquisition outside of South Africa? The company expects use of cash for acquisitions would be within South Africa. Q4. Would diversification of product offerings include clean energy technology? We currently own several products for environmental control which contributes to cleaner energy. We continue to consider adjacencies to our current product offerings for this purpose. Howden Group

26 Shareholder Q&A s Q5. How are we promoting our brand across Africa? Howden leverages off its existing installed base in the territory and will continue to invest in resources to promote brand awareness. Q6. In terms of growth what is the potential within the rest of Africa? The possibility exists to double or even triple our current rest of Africa turnover. Q7. In rest of Africa are we looking refocus away from aftermarket business towards new build? The business is still looking to grow its aftermarket business across Africa alongside the new build business. Q8. What is the market share of the new fabrication technology business? Less than 10%. The business is focused on growing its market share to double digits Howden Group

27 Thank You Howden Group 2014