Wrap Text
Unaudited Interim Financial Results for the six months ended 30 June 2012
Howden Africa Holdings Limited (HAHL)
(Incorporated in the Republic of South Africa)
(Registration number 1996/002982/06)
Share code: HWN
ISIN code: ZAE 000010583
("Howden" or "the Company" or "the Group")
UNAUDITED INTERIM FINANCIAL RESULTS: for the six months ended 30 June 2012
Operating profit
R110,9 million
Increased by 93,3% from
R57,4 million in 2011
Revenue
R647,1 million
Increased by 48,9% from
R434,5 million in 2011
Headline earnings per share
130,60 cents
Increased by 97,9% from
65,99 cents in 2011
COMMENTARY
Overview
Howden Africa has benefited from a continuation of improved market conditions and improvements in efficiencies
to generate significant improvements in operating profit and cash flows for the first half of 2012. Earnings per
share of 130,60 cents is 97,9% up on the corresponding period last year.
Results
Revenue of R647,1 million for the first half of 2012 is 48,9% ahead of the equivalent period in 2011 of R434,5 million,
as both the Fans and Heat Exchangers and Environmental Control business divisions performed strongly. The performance of
the Environmental Control division was particularly strong with a 145,3% increase in revenue compared to the first half
of 2011 as it successfully executed major projects won in 2011.
Orders received of R594,5 million for the first half of 2012 is 9,5% ahead of the corresponding period last year. There
has been good order intake experienced, especially for mine main ventilation and de-dusting supplies in South Africa and
the rest of Africa and for power generation and petrochemical service and spares work in South Africa.
Operating profit (EBIT) of R110,9 million is a significant improvement over the R57,4 million to June 2011, as a result of
improvements in project execution and initiatives to optimise the utilisation of resources and materials.
Headline earnings per share of 130,6 cents is 97,9% up on the corresponding period last year reflecting better sales and
efficiency gains.
Howden's continuing focus on sustainable working capital management has resulted in a solid cash flow performance in the
first half of 2012. Cash generated from operations was R84,8 million.
Accounting policies
The interim financial results to June 2012 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 period.
Review of operations
Fans and Heat Exchangers division
The Fans and Heat Exchangers division had a successful first six months in 2012, increasing both revenue and operating profit
compared to the corresponding period in 2011. Revenue was up by 32,6% to R492,7 million. This increase in revenue, combined
with enhanced project management, improved cost efficiencies and an exceptional increase in profit related to projects within
the oil and gas industry have resulted in a 61,8% increase in operating profit to R103,1 million.
Orders received during the first half of 2012 is R468,2 million. There has been good order intake experienced, especially for
mine main ventilation fan supplies in South Africa and the rest of Africa, and for spares and service within power generation.
Environmental Control division
The Environmental Control division secured a number of major orders in 2011, particularly for mineral process plant upgrades,
which resulted in a better performance in the first half of 2012 compared to the corresponding period. Revenue increased to
R154,3 million, a 145,3% increase on the first half of 2011. Operating profit increased from a loss of R2,1 million in the
previous period to a profit of R13,1 million.
There was an increase in order intake to R126,4 million for the first six months ended June 2012, compared to R53,1 million
in the corresponding period in 2011. Large-scale environmental control legislation and general environmental pressure and
awareness in Africa continue and should further improve opportunities for this division over the next few years.
Outlook
The trading outlook is generally cautiously optimistic in the heavy engineering sector of mining, mineral process plants and
aftermarket, but less so in the medium industrial and building industry where trading conditions remained subdued.
Subsequent events
There are no known material events under this category.
Dividends
The directors have resolved to declare an interim gross dividend of 25,00 cents per share for the six month period ending 30 June 2012.
The last date to trade cum dividend is Friday, 5 October 2012. Shares start trading ex dividend on Monday, 8 October 2012. The record date
is Friday, 12 October 2012,and payment will be on Monday, 15 October 2012. No share certificates are to be dematerialised or rematerialised
between Monday, 8 October 2012 and Friday, 12 October 2012, both days inclusive.
In terms of the dividend tax amendments effective 1 April 2012, the following additional information is disclosed:
(a) Local dividend tax rate is 15%.
(b) No STC credits available for utilisation.
(c) In respect of the interim dividend the net local dividend amount is:
(i) 21,25 cents per share for shareholders liable to pay the new dividends tax; and
(ii) 25,00 cents per share for shareholders exempt from paying the new dividends tax.
(d) The issued share capital of Howden is 65 729 109 ordinary shares.
(e) The Howden tax reference number is 9624/001/71/6.
Directorate
Mr Kevin Johnson was appointed to the board of directors as an executive director with effect from 1 March 2012. Mr Humphrey
Mathe was appointed to the board of directors as an independent non-executive director with effect from 1 July 2012.
Unaudited interim financial results
The Company's auditors, Ernst & Young, have not reviewed or audited the interim financial results for the six months ended
30 June 2012. The Group financial results were prepared under the supervision of the Chief Financial Officer, Mr K Johnson.
For and on behalf of the board of directors.
IH Brander T Barwald
Chairman Chief Executive Officer
30 August 2012
Condensed consolidated statement of comprehensive income
for the period ended 30 June 2012
Six months Six months Twelve months
ended ended ended
30 June 2012 30 June 2011 Change 31 December 2011
(Unaudited) (Unaudited) % (Audited)
R'000 R'000 R'000
Revenue 647 124 434 471 48,9 988 400
Gross profit 182 818 125 281 45,9 316 677
Operating profit 110 963 57 414 93,3 169 853
Finance income 8 030 5 863 14 791
Finance costs (290) (1 669) (2 734)
Profit before income tax 118 703 61 608 92,7 181 910
Income tax expense (32 859) (18 230) (54 414)
Profit for the period 85 844 43 378 97,9 127 496
Other comprehensive income
Currency translation differences 177 - -
Pension fund plan surplus/(loss)* - 1 608 (2 473)
Income tax relating to components - (450) 692
of other comprehensive income
Other comprehensive income 177 1 158 (1 781)
for the period, net of tax
Total comprehensive income for the period 86 021 44 536 93,1 125 715
Cents Cents Cents
Earnings per share
- basic and diluted 130,60 65,99 97,9 193,97
* The pension fund valuation was not obtained for the 2012 interim reporting period.
Condensed consolidated statement of financial position
as at 30 June 2012
Six months Six months Twelve months
ended ended ended
30 June 2012 30 June 2011 31 December 2011
(Unaudited) (Unaudited) (Audited)
R'000 R'000 R'000
ASSETS
Non-current assets 191 103 200 268 211 669
Property, plant and equipment and intangible assets 125 760 122 427 123 255
Pension fund plan asset 32 216 32 970 30 424
Cash and cash equivalents - 5 306 20 012
Other non-current assets 33 127 39 565 37 978
Current assets 977 363 713 067 764 739
Inventories 325 878 215 072 263 538
Trade and other receivables 339 600 299 336 278 129
Cash and cash equivalents 311 885 198 659 223 072
TOTAL ASSETS 1 168 466 913 335 976 408
EQUITY
Share capital and reserves
Share capital and reserves 246 312 207 283 275 316
Total equity 246 312 207 283 275 316
LIABILITIES
Non-current liabilities 165 396 443 240 120 161
Current liabilities 756 758 262 812 580 931
Total liabilities 922 154 706 052 701 092
TOTAL EQUITY AND LIABILITIES
OTHER GROUP FEATURES
for the period ended 30 June 2012
Six months Six months Twelve months
ended ended ended
30 June 2012 30 June 2011 31 December 2011
(Unaudited) (Unaudited) Change (Audited)
R'000 R'000 % R'000
Net asset value per share (cents) 374,74 315,36 18,8 418,87
Depreciation 3 002 2 737 6 541
Amortisation 1 227 1 054 2 308
Capital expenditure 6 745 4 541 10 698
Capital commitments
- Authorised and contracted - 2 617 1 562
Number of shares in issue (000's) 65 729 65 729 65 729
Earnings per share (cents) 130,60 65,99 97,9 193,97
Headline earnings per share (cents) 130,60 65,94 98,0 194,00
Dividends per share
- dividend paid (cents) - 15,00 15,00
- special dividend paid (cents) - - -
- interim dividend paid (cents) - - 20,00
Reconciliation of headline earnings
Profit for the period 85 844 43 378 127 496
(Profit)/loss on disposal of property, - (33) 17
plant and equipment
Headline earnings 85 844 43 345 98,0 127 513
Condensed consolidated statement of changes in equity
for the period ended 30 June 2012
Six months Six months Twelve months
ended ended ended
30 June 2012 30 June 2011 31 December 2011
(Unaudited) (Unaudited) (Audited)
R'000 R'000 R'000
Share capital and reserves at the beginning of the period 275 316 275 606 172 606
Total comprehensive income for the period 86 021 44 536 125 715
Dividends declared (115 026)
Dividends paid (9 859) (23 005)
Share capital and reserves at the end of the period 246 312 207 283 275 316
Condensed consolidated statement of cash flows
for the period ended 30 June 2012
Six months Six months Twelve months
ended ended ended
30 June 2012 30 June 2011 31 December 2011
(Unaudited) (Unaudited) (Audited)
R'000 R'000 R'000
Cash flow from operating activities
Cash generated from operations 84 807 100 472 220 912
Interest paid - (1 669) (2 551)
Income tax paid (17 302) (12 888) (43 085)
Net cash generated from operating activities 67 505 85 915 175 276
Cash flow from investing activities
Interest received 8 030 5 863 9 710
Purchases of property, plant and equipment (6 745) (4 233) (10 338)
Purchases of intangible assets - (308) (360)
Proceeds from disposal of property, plant and equipment 11 123 337
Net cash generated/(utilised) from investing activities 1 296 1 445 (651)
Cash flow from financing activities
Repayment of borrowings - - (35 000)
Dividends paid - (9 859) (23 005)
Net cash used in financing activities - (9 859) (58 005)
Net increase in cash and cash equivalents 68 801 77 501 116 620
Cash and cash equivalents at the beginning of the period 243 084 126 464 126 464
Cash and cash equivalents at the end of the period 311 885 203 965 243 084
Segmental analysis by operating division
for the period ended 30 June 2012
Six months Six months Twelve months
ended ended ended
30 June 2012 30 June 2011 31 December 2011
(Unaudited) (Unaudited) Change (Audited)
R'000 R'000 % R'000
Revenue
Fans and Heat Exchangers 492 774 371 542 859 246
Environmental Control 154 350 62 929 129 154
647 124 434 471 48,9 988 400
Orders received
Fans and Heat Exchangers 468 179 490 054 914 972
Environmental Control 126 366 53 113 326 877
594 545 543 167 9,5 1 241 849
Operating profit
Fans and Heat Exchangers 103 141 63 749 169 108
Environmental Control 13 079 (2 112) 8 763
116 220 61 637 177 871
Central operations (5 257) (4 223) (8 018)
Total operating profit 110 963 57 414 93,3 169 853
Intersegmental sales
Fans and Heat Exchangers 20 827 5 812 17 300
Environmental Control 6 718 24 415 47 660
27 545 30 227 (8,9) 64 960
Directors:
IH Brander (Chairman)#**,
T Barwald (Chief Executive Officer)*,
J Brown#**, M Malebye**,
S Badat**, K Johnson#, Humphrey Mathe**
(#British *German **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.co.za
Date: 31/08/2012 03:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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