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Unaudited interim financial results for the six months ended 30 June 2013 and cash dividend
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)
Unaudited interim financial results for the six months ended 30 June 2013
- Earnings per share 162,44 cents. Increased by 24,4% from 130,60 cents in 2012
- Operating profit R145,8 million. Increased by 31,4% from R111,0 million in 2012
- Cash generated from operations R214,0 million. Increased by 152,4% from R84,8 million in 2012
COMMENTARY
OVERVIEW
Howden Africa has benefited from significant improvements in performance within the Fans and Heat Exchangers division
where we have generated strong sales and operating profit in power generation and mining. The Environmental Control
division is experiencing record tender activity and has remained profitable.
Highlights for the period ending June 2013 when compared to the corresponding period in 2012 are:
- Earnings per share of 162,4 cents has increased by 24,4%.
- Gross profit margins have increased by 3,3% to 31,5%.
- Cash generated from operations of R214,0 million has increased by 152,4%.
- Orders received of R708,1 million have increased by 19,1%.
GROUP RESULTS
Revenue of R691,3 million for the first half of 2013 is 6.8% ahead of the equivalent period in 2012 of R647,1 million.
The performance of the Fans and Heat Exchangers division was particularly strong with a 24,3% increase in revenue
compared to the first half of 2012. The Environmental Control division saw a 48,8% drop in revenue to R79,0 million as it
experienced a decline in orders during 2012 which impacted revenue during the first half of 2013.
Orders received of R708,1 million for the first half of 2013 are 19,1% ahead of the corresponding period last year.
There has been good order intake experienced by the Group, especially for mine ventilation, power generation and
petrochemical service and spares work in South Africa.
Operating profit (EBIT) of R145,8 million is a significant improvement over the R111,0 million to June 2012. This is a
result of increased sales volume, improvements in project execution and our focus on continuous improvement.
Earnings per share of 162,4 cents is 24,4% up on the corresponding period last year reflecting better revenue and
efficiency gains.
Howdens continuing focus on sustainable working capital management has resulted in an excellent cash flow performance
in the first half of 2013. Cash generated from operations was R214,0 million, a 152,4% improvement on the corresponding
period in 2012.
ACCOUNTING POLICIES
These interim financial results have been prepared in accordance with International Financial Reporting Standards
(IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, presentation and disclosure as
required by IAS 34 Interim Financial Reporting, the JSE Listing Requirements and the requirements of the Companies Act
of South Africa. The accounting policies are consistent in all material respects with that of the previous financial
period, as the adoption of new and amended standards and interpretations did not have a significant impact on the financial
position and results, and will mainly have an impact on disclosures presented in the annual report.
REVIEW OF OPERATIONS
Fans and Heat Exchangers division
The Fans and Heat Exchangers division had a very successful first six months of 2013, increasing both revenue and
operating profit compared to the corresponding period in 2012. Revenue was up by 24,3% to R612,3 million. This increase in
revenue combined with enhanced project management and improved cost efficiencies have resulted in a 39,8% increase in
operating profit (EBIT) to R144,2 million compared to the corresponding period in 2012.
Orders received during the first half of 2013 have increased to R637,5 million, an increase of 36,2% compared to the
corresponding period in 2012. There has been good order intake experienced, especially for spares and service within
power generation and mining.
Environmental Control division
Revenue decreased to R79,0 million, a 48,8% decrease on the first half of 2012. The division however, remains
profitable with operating profit (EBIT) of R9,1 million. Operating profit margins have improved from 8,5% in June 2012 to 11,6%
despite the fall in revenue. This is due to headcount being redistributed to the Fans and Heat Exchangers division and
margin improvements made during the execution of the major projects won in 2011 and the first half of 2012.
Order intake was R70,6 million compared to R126,4 million in the first half of 2012. Large scale environmental control
legislation and general environmental pressure and awareness in Africa continue to develop and should improve
opportunities in the future.
OUTLOOK
The trading outlook is cautiously optimistic for the Group in the heavy engineering sector of mining, mineral process
plants, locomotive fans, aftermarket service, maintenance and in future, the environmental control market.
EVENTS AFTER REPORTING DATE
There are no known material events under this category.
DIVIDENDS
The directors have resolved to declare an interim dividend of 30 cents per share. The last date to trade cum dividend
is Friday, 4 October 2013. Shares start trading ex dividend on Monday, 7 October 2013. The record date is Friday, 11
October 2013, and payment will be on Monday, 14 October 2013. No share certificates are to be dematerialised or
rematerialised between Monday, 7 October 2013 and Friday, 11 October 2013, 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) 25,5 cents per share for shareholders liable to pay the new dividends tax; and
ii) 30 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.
The dividend declared is derived from income reserves.
DIRECTORATE
There have been no directorate changes for the six months ended 30 June 2013.
UNAUDITED INTERIM FINANCIAL RESULTS
The Companys auditors, Ernst & Young Inc, have not reviewed or audited the interim financial results for the six
months ended 30 June 2013.
The Group financial results were prepared under the supervision of the Chief Financial Officer, Mr K Johnson CPA
(Australia).
For and on behalf of the board of directors
IH Brander T Bärwald
Chairman Chief Executive Officer
30 August 2013
Condensed consolidated statement of financial position
as at 30 June 2013
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2013 2012 2012
(Unaudited) (Unaudited) (Audited)
R000 R000 R000
Assets
Non-current assets 219 304 191 103 214 055
Property, plant and equipment and intangible assets 149 184 125 760 132 617
Pension fund plan asset 27 972 32 216 27 698
Other non-current assets 42 148 33 127 53 740
Current assets 956 572 977 363 907 381
Inventories 372 432 325 878 369 209
Trade and other receivables 306 096 339 600 389 797
Cash and cash equivalents 278 044 311 885 148 375
Total assets 1 175 876 1 168 466 1 121 436
Equity
Share capital and reserves
Share capital and reserves 388 357 246 312 301 252
Total equity 388 357 246 312 301 252
Liabilities
Non-current liabilities 128 415 165 396 110 677
Current liabilities 655 696 756 738 688 280
Bank overdraft 3 408 - 21 227
Total liabilities 787 519 922 134 820 184
Total equity and liabilities 1 175 876 1 168 446 1 121 436
Financial instruments held at fair value consist of FEC assets of R165 000 and FEC liabilities of R106 000.
These are fair valued using market observable inputs, and are therefore considered to be level 2 instruments.
The fair values of all other financial instruments approximate their carrying values due to the short term
nature of these instruments, or the fact that they are priced at variable interest rates.
Condensed consolidated statement of comprehensive income
for the period ended 30 June 2013
Six months Six months Change Twelve months
ended ended % ended
30 June 30 June 31 December
2013 2012 2012
(Unaudited) (Unaudited) (Audited)
R000 R000 R000
Revenue 691 251 647 124 6,8 1 317 200
Cost of sales (473 606) (464 306) (927 152)
Gross profit 217 645 182 818 19,1 390 048
Operating profit 145 800 110 963 31,4 220 386
Finance income 6 041 8 030 15 659
Finance costs (2 458) (290) (6 676)
Profit before income tax 149 383 118 703 25,8 229 369
Income tax expense (42 615) (32 859) (68 957)
Profit for the period 106 768 85 844 24,4 160 412
Other comprehensive income
Currency translation differences 56 177 -
Pension fund plan loss - - (4 192)
Income tax relating to components of other comprehensive income - - 1 174
Other comprehensive income for the period, 56 177 (3 018)
net of tax
Total comprehensive income for the period 106 824 86 021 24,18 157 394
Cents Cents Cents
Earnings per share
- basic and diluted 162,44 130,60 24,4 244,05
Other group salient features
for the period ended 30 June 2013
Six months Six months Change Twelve months
ended ended % ended
30 June 30 June 31 December
2013 2012 2012
(Unaudited) (Unaudited) (Audited)
R000 R000 R000
Net asset value per share (cents) 590,85 374,74 57,7 458,32
Depreciation 4 505 3 002 9 385
Amortisation 937 1 227 1 986
Capital expenditure 17 578 6 745 21 040
Capital commitments
- Authorised and contracted - - 17 489
Number of shares in issue (000's) 65 729 65 729 65 729
Basic and diluted earnings per share (cents) 162,44 130,60 24,4 244,05
Basic and diluted headline earnings per share (cents) 162,46 130,60 24,4 244,15
Dividends per share
- dividend paid (cents) 30,00 - 29,00
- special dividend paid (cents) - 146,00
- interim dividend paid (cents) - - 25,00
Reconciliation of headline earnings - -
Profit for the period 106 768 85 844 160 412
Loss on disposal of property, plant and equipment 16 - 67
Headline earnings 106 784 85 844 24,4 160 479
Condensed consolidated statement of changes in equity
for the period ended 30 June 2013
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2013 2012 2012
(Unaudited) (Unaudited) (Audited)
R000 R000 R000
Share capital and reserves at the beginning of the period 301 252 275 316 275 316
Total comprehensive income for the period 106 824 86 022 157 394
Dividends declared - (115 026) -
Dividends paid (19 719) - (131 458)
Share capital and reserves at the end of the period 388 357 246 312 301 252
Condensed consolidated statement of cash flows
for the period ended 30 June 2013
Six months Six months Twelve months
ended ended ended
30 June 30 June 31 December
2013 2012 2012
(Unaudited) (Unaudited) (Audited)
R000 R000 R000
Cash flow from operating activities
Cash generated from operations 214 012 84 807 102 234
Interest paid (1 050) - (6 676)
Income tax paid (34 218) (17 302) (75 403)
Share-based payment - - 534
Net cash generated from operating activities 178 744 67 505 20 689
Cash flow from investing activities
Interest received 6 041 8 030 15 659
Purchases of property, plant and equipment (17 530) (6 745) (20 998)
Purchases of intangible assets (48) - (42)
Proceeds from disposal of property, plant and equipment - 11 214
Net cash generated from investing activities (11 537) 1 296 (5 167)
Cash flow from financing activities
Dividends paid (19 719) - (131 458)
Net cash used in financing activities (19 719) - (131 458)
Net increase in cash and cash equivalents 147 488 68 801 (115 936)
Cash and cash equivalents at the beginning of the period 127 148 243 084 243 084
Cash and cash equivalents at the end of the period 274 636 311 885 127 148
Segmental analysis by operating division
for the period ended 30 June 2013
Six months Six months Change Twelve months
ended ended % ended
30 June 30 June 31 December
2013 2012 2012
(Unaudited) (Unaudited) (Audited)
R000 R000 R000
Revenue
Fans and Heat Exchangers 612 290 492 774 990 151
Environmental Control 78 961 154 350 327 049
691 251 647 124 6,8 1 317 200
Orders received
Fans and Heat Exchangers 637 533 468 179 1 050 421
Environmental Control 70 562 126 366 157 762
708 095 594 545 19,1 1 208 183
Operating profit
Fans and Heat Exchangers 144 160 103 141 195 981
Environmental Control 9 131 13 079 39 563
153 291 116 220 235 544
Central operations (7 491) (5 257) (15 158)
Total operating profit 145 800 110 963 31,4 220 386
Intersegmental sales
Fans and Heat Exchangers 8 225 20 827 42 148
Environmental Control 5 999 6 718 19 674
14 224 27 545 (48,4) 61 822
Registered office
1a Booysens Road, Booysens, 2091
Postal address: PO Box 2239, Johannesburg, 2000
Directors
IH Brander (Chairman)#*, T Bärwald (Chief Executive Officer),
J Brown#*, M Malebye*, S Badat*, K Johnson#, H Mathe*
(#British German *Non-executive)
Company Secretary
C Miller
Transfer secretaries
Computershare Investor Services (Pty) Limited
70 Marshall Street, Johannesburg, 2001
Sponsor
PricewaterhouseCoopers Corporate Finance (Pty) Limited
www.howden.co.za
Date: 30/08/2013 12:41:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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