CANCELLATION OF S375368 Unaudited Interim financial results for the six months ended 30 June 2016 Howden Africa Holdings Limited (Incorporated in the Republic of South Africa) (Registration number 1996/002982/06) Share code: HWN ISIN: ZAE000010583 (“Howden” or “the Company” or “the Group”) Unaudited interim financial results for the six months ended 30 June 2016 Howden Africa is a market-driven, customer-orientated company. Its main business activities are the design, manufacture and marketing of specialised air and gas-handling solutions for a wide range of industries. The Group’s major industries supplied include power generation, petrochemical, mining, construction, refrigeration, water treatment and general industry. Howden Africa is also a distributor of ESAB welding and cutting equipment and consumables (reported under our new Fabrication Technology division). Howden Africa is committed to environmental awareness. Accordingly, all product designs and manufacturing are scrutinised for environmental friendliness. Design and drawing activities are computerised and manufacturing is concentrated on producing key components. Manufacturing facilities are located in Booysens (Johannesburg) and Struandale (Port Elizabeth). HIGHLIGHTS - Revenue of R702.8 million increased by 3.7% - Earnings per share of 140.85 cents increased by 1.2% - Operating profit of R102.4 million decreased by 7.1% COMMENTARY OVERVIEW Howden Africa experienced challenging trading conditions due to a slow-down in expenditure for environmental and mining capital equipment projects within the first six months of 2016 which resulted in the Group’s operating profits declining 7.1% when compared to the corresponding period in 2015. RESULTS Orders received of R673.9 million for the first half of 2016 is 19.0% behind the corresponding period in 2015. There has been reduced order intake within the Environmental Control division with orders reducing to R42.8 million. The Fans and Heat Exchangers division is 0.8% ahead of the corresponding period in 2015 due to improved aftermarket (spares and service supply). The new Fabrication Technology division commenced trading in the first quarter and received orders of R38.7 million. Revenue was R702.8 million for the first half of 2016 and is 3.7% ahead of the equivalent period in 2015 of R677.5 million. The Fans and Heat Exchangers division increased revenue 11.5% to R588.2 million due to improved aftermarket. The Environmental Control division revenue decreased 46.7% due to customers delaying decisions on environmental control projects due to economic conditions. The new Fabrication Technology division had revenue of R34.7 million. Operating profit of R102.4 million is a reduction of 7.1% over the R110.2 million to June 2015; the performance in the Fans and Heat Exchangers division was robust with the reduction resulting from a decline within the Environmental Control division. The Fabrication Technology division made a loss of R1.8 million in its first few months of trading. Central operation costs are in line with the prior year. Earnings per share of 140.85 cents is 1.2% up on the corresponding period last year due primarily to improved investment income. Cash generated from operations was R61.8 million - an improvement over the corresponding period (2015: R8.2 million). Net asset value per share has increased by 23.4% to 1 718.98 cents (June 2015: 1 392.98 cents) mainly due to the increase in cash and cash equivalents to R764.2 million. ACCOUNTING POLICIES The condensed consolidated interim financial statements for the period ended 30 June 2016 are prepared in accordance with the requirements of the JSE Limited Listings Requirements for interim reports and the requirements of the Companies Act of South Africa. The Listings Requirements require interim reports to be prepared in accordance with the framework concepts and the measurement and recognition requirements of International Financial Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee and Financial Pronouncements as issued by Financial Reporting Standards Council and to also, as a minimum, contain the information required by IAS 34 Interim Financial Reporting. The accounting policies applied in the preparation of the condensed consolidated financial statements are in terms of IFRS and are consistent with those applied in the previous consolidated annual financial statements. OUTLOOK Capital project spend within power generation, mining and general industry is expected to remain subdued. The Fans and Heat Exchangers division will continue to focus its strategy on the supply of services and spares to key industries. Market conditions within the Environmental Control division are expected to remain challenging. The Fabrication Technology division is expected to grow. EVENTS AFTER REPORTING DATE Mrs C Koopman resigned on 29 July and Mr C Masson was appointed as Company Secretary. DIVIDENDS The directors have resolved not to declare a dividend (2015: nil). DIRECTORATE Mr W Thomson joined the board on 1 February 2016 and became CEO on 1 June 2016 with Mr T Bärwald resigning as a director. UNAUDITED INTERIM FINANCIAL RESULTS The Company’s auditors Ernst & Young Inc., have not reviewed or audited the interim financial results for the six months ended 30 June 2016. The Group financial results were prepared by Mr Kulani Mlambo CA(SA) under the supervision of the Chief Financial Officer, Mr K Johnson FCPA (Aust.). For and on behalf of the board of directors IH Brander W Thomson Chairman Chief Executive Officer 25 August 2016 Condensed consolidated statement of comprehensive income for the period ended 30 June 2016 Six months Six months Twelve months ended ended ended 30 June 30 June 31 December 2016 2015 2015 (Unaudited) (Unaudited) Change (Audited) R’000 R’000 % R’000 Revenue 702 823 677 469 3.7 1 483 276 Cost of sales (511 284) (485 562) 5.3 (1 071 717) Gross profit 191 539 191 907 (0.2) 411 559 Distribution costs (24 088) (19 246) (37 583) Administrative expenses (65 769) (64 017) (117 460) Other income 737 1 567 5 481 Operating profit 102 419 110 211 (7.1) 261 997 Investment income 25 861 17 152 40 510 Finance costs (61) (617) (27) Net finance income 25 800 16 535 56.0 40 483 Profit before income tax 128 219 126 746 302 480 Income tax expense (35 639) (35 283) (86 927) Profit for the period 92 580 91 463 1.2 215 553 Other comprehensive income for the period: Cash flow hedge (loss)/gain (1 921) 1 505 1 009 Pension fund plan gain - 882 901 Other comprehensive (loss)/income for the period, net of tax (1 921) 2 387 1 910 Total comprehensive income for the period 90 659 93 850 (3.4) 217 463 Earnings per share - basic and diluted (cents) 140.85 139.15 1.2 327.94 Condensed consolidated statement of financial position as at 30 June 2016 Six months Six months Twelve months ended ended ended 30 June 30 June 31 December 2016 2015 2015 (Unaudited) (Unaudited) (Audited) R’000 R’000 R’000 ASSETS Non-current assets 196 635 191 854 196 763 Property, plant and equipment and intangible assets 137 179 146 890 142 290 Pension fund plan surplus 19 675 - 17 712 Deferred tax assets 25 200 28 564 24 452 Trade and other receivables and construction contracts 11 581 16 400 12 309 Current assets 1 510 254 1 288 625 1 387 607 Inventories 357 838 223 225 235 163 Trade and other receivables and construction contracts 335 704 427 509 384 800 Loans issued 7 500 - 7 500 Current income tax asset 45 028 33 342 29 954 Cash and cash equivalents 764 184 604 550 730 190 TOTAL ASSETS 1 706 889 1 480 480 1 584 370 EQUITY Share capital and reserves Share capital and reserves 1 129 866 915 594 1 039 207 Total equity 1 129 866 915 594 1 039 207 LIABILITIES Non-current liabilities 96 887 152 257 108 933 Pension fund plan deficit - 5 815 - Deferred tax liabilities 9 272 1 034 9 272 Other payables and construction contracts 75 434 121 194 87 626 Provisions 12 181 24 214 12 035 Current liabilities 480 136 412 629 436 230 Trade and other payables and construction contracts 457 692 403 191 417 564 Current income tax liabilities - 277 - Provisions 22 444 9 161 18 666 Total liabilities 577 023 564 886 545 163 TOTAL EQUITY AND LIABILITIES 1 706 889 1 480 480 1 584 370 Condensed consolidated statement of changes in equity for the period ended 30 June 2016 Six months Six months Twelve months ended ended ended 30 June 30 June 31 December 2016 2015 2015 (Unaudited) (Unaudited) (Audited) R’000 R’000 R’000 Share capital and reserves at the beginning of the period 1 039 207 821 744 821 744 Total comprehensive income for the period 90 659 93 850 217 463 Profit for the period 92 580 91 463 215 553 Cash flow hedge (1 921) 1 505 1 009 Pension fund plan loss - 882 901 Share capital and reserves at the end of the period 1 129 866 915 594 1 039 207 Condensed consolidated statement of cash flows for the period ended 30 June 2016 Six months Six months Twelve months ended ended ended 30 June 30 June 31 December 2016 2015 2015 (Unaudited) (Unaudited) (Audited) R’000 R’000 R’000 Cash flow from operating activities Cash generated from operations 61 755 8 220 156 760 Interest paid (61) (617) (27) Income tax paid (50 713) (45 542) (81 536) Net cash generated from/(utilised in) operating activities 10 981 (37 939) 75 197 Cash flow from investing activities Interest received 25 861 17 334 37 521 Loans issued - - (7 500) Purchases of property, plant and equipment (2 814) (2 537) (7 192) Government grant received - - 4 209 Purchases of intangible assets (48) (72) (17) Proceeds from disposal of property, plant and equipment 14 76 284 Net cash generated from investing activities 23 013 14 801 27 305 Net increase/(decrease) in cash and cash equivalents 33 994 (23 138) 102 502 Cash and cash equivalents at the beginning of the period 730 190 627 688 627 688 Cash and cash equivalents at the end of the period 764 184 604 550 730 190 Other Group salient features for the period ended 30 June 2016 Six months Six months Twelve months ended ended ended 30 June 30 June 31 December 2016 2015 2015 (Unaudited) (Unaudited) Change (Audited) R’000 R’000 % R’000 Net asset value per share (cents) 1 718.98 1 392.98 23.4 1 581.00 Depreciation 6 962 6 952 - 14 035 Amortisation 1 009 999 1.0 1 886 Capital expenditure 2 862 2 609 9.7 7 209 Capital commitments - Authorised and contracted 335 512 (34.6) 598 Operating profit to revenue (%) 14.57 16.27 (10.4) 17.66 Number of shares in issue (000’s) 65 729 65 729 65 729 Earnings per share - basic and diluted (cents) 140.85 139.15 1.2 327.94 Headline earnings per share (cents) 140.83 139.29 1.1 329.62 Reconciliation of headline earnings Profit for the period 92 580 91 463 215 553 (Profit)/loss on disposal of property, plant and equipment (12) 88 59 Impairment of property, plant and equipment - - 1 044 Headline earnings 92 568 91 551 1.1 216 656 Segmental analysis by operating division for the period ended 30 June 2016 Six months Six months Twelve months ended ended ended 30 June 30 June 31 December 2016 2015 2015 (Unaudited) (Unaudited) Change (Audited) R’000 R’000 % R’000 Orders received Fans and Heat Exchangers 592 339 587 595 0.8 1 106 500 Environmental Control 42 804 243 895 (82.4) 311 200 Fabrication Technology 38 719 - - - 673 862 831 490 (19.0) 1 417 700 Revenue Fans and Heat Exchangers 588 213 527 488 11.5 1 117 302 Environmental Control 79 952 149 981 (46.7) 365 974 Fabrication Technology 34 658 - - - 702 823 677 469 3.7 1 483 276 Inter-segmental sales Fans and Heat Exchangers 11 412 6 087 87.5 18 242 Environmental Control 16 276 14 764 10.2 22 249 Fabrication Technology 560 - - - 28 248 20 851 35.5 40 491 Operating profit/(loss) Fans and Heat Exchangers 118 403 97 740 21.1 213 642 Environmental Control (3 941) 22 987 (117.1) 51 377 Fabrication Technology (1 781) - - - 112 681 120 727 (6.7) 265 019 Central operations (10 262) (10 516) (2.4) (3 022) Total operating profit 102 419 110 211 (7.1) 261 997 Investment income 25 861 17 152 50.8 40 510 Finance costs (61) (617) (90.1) (27) Profit before tax 128 219 126 746 1.2 302 480 Corporate information Directors IH Brander (Chairman)#**, W Thomson (Chief Executive Officer)#, J Brown#**, M Malebye**, K Johnson# (Chief Financial Officer), H Mathe**, M Patel** (#British **Non-executive) Company secretary C Masson Transfer secretaries Computershare Investor Services Proprietary Limited 70 Marshall Street Johannesburg, 2001 Sponsor PricewaterhouseCoopers Corporate Finance Proprietary Limited www.howden.co.za Date: 26/08/2016 12:04:59 Produced by the JSE SENS Department. 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