Wrap Text
Reviewed Financial Results for the Year Ended 31 December 2013
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 financial results for the year ended 31 December 2013
Operating profit
R448,9 million
Increased by 103,7% from R220,4 million in 2012
Earnings per share
474,67 cents
Increased by 94,5% from 244,05 cents in 2012
Net cash generated from operations
R268,4 million
Increased by 1 197,1% from R20,7 million in 2012
COMMENTARY
OVERVIEW
In 2013, Howden achieved a 94,5% improvement in earnings per share, following on from good interim results posted in
August 2013. Despite weakening demand for new build mining equipment, the Group has diversified into other market
segments and aftermarket (spares and services) to achieve an outstanding financial performance for the year ended
31 December 2013.
The business has benefited from an improvement in performance within the Fans and Heat Exchangers division
where we have generated outstanding revenue growth and operating profit. The Environmental Control division increased
orders received by 151,2% and remained profitable despite a drop in revenue in 2013.
Highlights for 2013 when compared to the corresponding period in 2012 are:
- Earnings per share increased by 94,5% to 474,67 cents
- Group revenue increased 27,8% to R1,68 billion
- Net cash generated from operations increased by 1 197,1% to R268,4 million
- Group operating profit increased 103,7% to R448,9 million
- Operating profit margins have increased by 10,0% to 26,7%
- Orders received of R1,76 billion have increased by 45,5%.
RESULTS
Revenue of R1,68 billion for 2013 is 27,8% ahead of the corresponding period last year of R1,3 billion. The performance
of the Fans and Heat Exchangers division was particularly strong with a 51,3% increase in revenue compared to 2012.
The Environmental Control division saw a 43,6% drop in revenue to R184,5 million as it experienced a decline in orders
during 2012 which has impacted revenue during 2013.
Orders received of R1,76 billion for 2013 are 45,5% ahead of the corresponding period last year. There has been good
order intake experienced by the Group, especially for new build environmental control products and aftermarket (spares
and services) for main mine ventilation, power generation and petrochemical work in South Africa.
Operating profit of R448,9 million is an improvement over the R220,4 million in 2012. This is a result of increased sales
volume, improvements in project execution and our focus on continuously improving operating efficiency.
The results include a management service fee payable to Howden Group Limited in terms of a management service agreement
entered into by Howden Africa Holdings Limited in 2013. The management service fee is payable upon receiving Reserve
Bank approval of the management service agreement.
Earnings per share of 474,67 cents is 94,5% up on the corresponding period last year, reflecting better revenue and
efficiency gains.
Howden’s continuing focus on sustainable working capital management has resulted in an excellent cash flow performance
in 2013. Net cash generated from operations was R268,4 million, a 1 197,1% improvement on the corresponding period in
2012.
ACCOUNTING POLICIES
The condensed consolidated annual financial statements for the year ended 31 December 2013 have been prepared in
accordance with International Financial Reporting Standards (IFRS), IAS 34 Interim Financial Statements, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee and Financial Reporting Pronouncements as issued by
the Financial Reporting Standards Council, JSE Listings Requirements and the Companies Act of South Africa, 2008. The
accounting policies have been updated to take into account the change in the following standards:
- IFRS 10 Consolidated Financial Statements
- IFRS 12 Disclosure of Interests in Other Entities
- IFRS 13 Fair Value Measurement
- IAS 19 Employee Benefits (amended)
The adoption of new and amended standards and interpretations has not had a significant impact on the financial
position and results, and will mainly have an impact on disclosures presented in the integrated annual report.
REVIEW OF OPERATIONS
Fans and Heat Exchangers division
The Fans and Heat Exchangers division had a very successful 2013, increasing both revenue and operating profit
compared to the corresponding period in 2012. Revenue was up by 51,3% to R1,50 billion and operating profit was 128,4% higher
at R447,5 million. The division’s operating profit included once-off project gains of R109,5 million.
Orders received during 2013 have increased by R311,2 million, an increase of 29,6% compared to the corresponding
period in 2012. There has been good order intake experienced, especially for spares and services within mining and power
generation.
Environmental Control division
Revenue decreased to R184,5 million, a 43,6% decrease on 2012. The division, however, remains profitable with
operating profit of R23,4 million.
Orders received increased by 151,2% to R396,3 million. This increase resulted from the award of some large environmental
orders in the second half of 2013 and in particular one large order for the design and manufacture of a dedusting
fabric filter plant for the steel industry.
Large-scale environmental control legislation and general environmental pressure and awareness in Africa continue and
should improve opportunities in the future.
OUTLOOK
Excluding once-off projects in the Fans and Heat Exchangers division in 2013, the trading outlook remains cautiously
optimistic for the Group. The Group expects good opportunities for the supply of our custom-designed equipment for
mineral process plants, locomotive fans, aftermarket services and maintenance and environmental control.
EVENTS AFTER THE REPORTING PERIOD
There are no known material events under this category.
DIVIDENDS
The directors have resolved not to declare a dividend until such time they have fully considered the implications of
the recently published B-BBEE Codes of Good Practice.
DIRECTORATE
There have been no directorate changes for the year ended 31 December 2013.
REVIEWED RESULTS
Ernst & Young Inc., the Group’s independent auditors, have reviewed the condensed consolidated annual financial
information for the year ended 31 December 2013, that comprises the condensed consolidated statement of financial position as
at 31 December 2013, and the condensed consolidated statement 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. Ernst & Young Inc. have followed the guidance provided in the International Standard on Review Engagements,
(ISRE) 2410 (Review Financial Statement of Interim Financial Information Performed by Independent Auditor of the Entity), to perform
their review.The unqualified review report is available for inspection at the Company’s registered office.
The Group financial results were prepared under the supervision of the Chief Financial Officer, Mr K Johnson FCPA
(Aust.).
For and on behalf of the board of directors
IH Brander T Bärwald
Chairman Chief Executive Officer
5 March 2014
Condensed consolidated statement of financial position
as at 31 December 2013
31 December 2013 31 December 2012
(Reviewed) (Audited)
R’000 R’000
ASSETS
Non-current assets 207 432 214 055
Property, plant and equipment and intangible assets 147 364 132 617
Pension fund plan asset 7 911 27 698
Other non-current assets 52 157 53 740
Current assets 1 098 945 907 381
Inventories 330 335 369 209
Trade and other receivables 422 566 389 797
Cash and cash equivalents 346 044 148 375
Total assets 1 306 377 1 121 436
EQUITY
Share capital and reserves
Share capital and reserves 560 076 301 252
Total equity 560 076 301 252
LIABILITIES
Non-current liabilities 110 244 110 677
Current liabilities 633 084 688 280
Bank overdraft 2 973 21 227
Total liabilities 746 301 820 184
Total equity and liabilities 1 306 377 1 121 436
Condensed consolidated statement of comprehensive income
for the year ended 31 December 2013
31 December 2013 31 December 2012
(Reviewed) Change (Audited)
R’000 % R’000
Revenue 1 682 832 27,8 1 317 200
Cost of sales (1 037 761) (927 152)
Gross profit 645 071 65,4 390 048
Operating profit 448 885 103,7 220 386
Investment income 14 623 15 659
Finance costs (1 700) (6 676)
Profit before income tax 461 808 101,3 229 369
Income tax expense (149 811) (68 957)
Profit for the year 311 997 94,5 160 412
Other comprehensive income
Pension fund plan loss (19 078) (4 192)
Income tax relating to components of
other comprehensive income 5 342 1 174
Other comprehensive income for the year,
net of tax (13 736) (3 018)
Total comprehensive income for the year 298 261 89,5 157 394
Cents Cents
Earnings per share
- basic and diluted 474,67 94,5 244,05
Headline earnings per share 475,27 94,7 244,15
Other group salient features
for the year ended 31 December 2013
12 months 12 months
ended ended
31 December 31 December
2013 2012
(Reviewed) Change (Audited)
R’000 % R’000
Net asset value per share (cents) 852,1 85,9 458,32
Depreciation 10 573 9 385
Amortisation 1 914 1 986
Capital expenditure 27 792 21 040
Capital commitments
- authorised and contracted 5 197 17 489
Number of shares in issue (000's) 65 729 65 729
Earnings per share (cents) 474,67 94,5 244,05
Headline earnings per share (cents) 475,27 94,7 244,15
Dividends per share
- dividend paid (cents) 30,00 29,00
- special dividend paid (cents) - 146,00
- interim dividend paid (cents) 30,00 25,00
Reconciliation of headline earnings
Profit for the period 311 997 160 412
Loss on disposal of property, plant and equipment 395 93
Headline earnings 312 392 94,7 160 505
Condensed consolidated statement of changes in equity
for the year ended 31 December 2013
31 December 2013 31 December 2012
(Reviewed) (Audited)
R’000 R’000
Share capital and reserves at beginning of year 301 252 275 316
Total comprehensive income for the year 298 261 157 394
Dividends (39 437) (131 458)
Share capital and reserves at end of year 560 076 301 252
Condensed consolidated statement of cash flows
for the year ended 31 December 2013
31 December 2013 31 December 2012
(Reviewed) Change (Audited)
R’000 % R’000
Cash flow from operating activities
Cash generated from operations 388 889 280,4 102 234
Interest paid (1 700) (6 676)
Income tax paid (118 823) (75 403)
Share-based payment - 534
Net cash generated from operating activities 268 366 1 197,1 20 689
Cash flow from investing activities
Interest received 14 623 15 659
Purchases of property, plant and equipment (27 409) (20 998)
Purchases of intangible assets (383) (42)
Proceeds from disposal of property, plant and equipment 163 214
Net cash used in investing activities (13 006) 151,7 (5 167)
Cash flow from financing activities
Dividends paid (39 437) (131 458)
Net cash used in financing activities (39 437) (131 458)
Net increase/(decrease) in cash and cash equivalents 215 923 (115 936)
Cash and cash equivalents at beginning of period 127 148 243 084
Cash and cash equivalents at end of period 343 071 169,8 127 148
Segmental analysis by operating division
for the year ended 31 December 2013
31 December 31 December
2013 2012
(Reviewed) Change (Audited)
R’000 % R’000
Revenue
Fans and Heat Exchangers 1 498 348 990 151
Environmental Control 184 484 327 049
1 682 832 27,8 1 317 200
Orders received
Fans and Heat Exchangers 1 361 598 1 050 421
Environmental Control 396 296 157 762
1 757 894 45,5 1 208 183
Operating profit
Fans and Heat Exchangers 447 526 195 981
Environmental Control 23 385 39 563
470 911 235 544
Central operations (22 026) (15 158)
Total operating profit 448 885 103,7 220 386
Intersegmental sales
Fans and Heat Exchangers 52 104 42 148
Environmental Control 2 854 19 674
54 958 (11,1) 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 Koopman
Transfer secretaries
Computershare Investor Services Proprietary Limited
70 Marshall Street, Johannesburg, 2001
Sponsor
PricewaterhouseCoopers Corporate Finance Proprietary Limited
www.howden.co.za
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