unaudited interim financial results for the six months ... · continuous improvement (kaizen) is...

uNAudITEd INTERIM FINANCIAL RESuLTS for the six months ended 30 June 2013

De-dusting plant

Main surface vent fan

Centrifugal fan

Transportation fan

Cement plant

TransportationPower generation

Wind tunnel

Deep mining

Water treatment

Mineral refi nery Oil and gas

Co-generator sugar

OuR VisiONTo be Africa’s leading application engineer, providing lifetime solutions in air and gas handling.

OuR VAluEs It takes focus, dedication and living our values to achieve success for our customers. We all play a crucial role in driving our company forward.

Customers talk, we listenThis voice of the customer will always drive the development of our strategic plans and actions.

The best team wins Team-oriented, involved associates are our most valuable resources, and we are passionate about attracting, developing and remaining the best talent.

Continuous improvement (Kaizen) is our way of lifeSet breakthrough objective, experiment and learn every day, eliminate waste in our business processes, and benchmark the best, then better them.

Innovation defi nes our futureIndividual and organisational creativity will drive breakthrough ideas for technology, products solutions and processes.

We compete for shareholders based on our performanceTo consistently attract and retain loyal shareholders, we must deliver best-in-class results for profi ts, working capital and cash fl ow.

Operating profi t

R145,8 millionIncreased by 31,4% from R111,0 million in 2012

Cash generated from operations

R214,0 millionIncreased by 152,4% from R84,8 million in 2012

Earnings per share

162,44 centsIncreased by 24,4% from 130,60 cents in 2012

1

COMMENTARY

OVERVIEWHowden 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 RESuLTSRevenue 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.

Howden’s 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 pOLICIESThese 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 OpERATIONSFans and Heat Exchangers divisionThe 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.

HOWDEN Unaudited interim financial results for the six months ended 30 June 2013 2

COMMENTARY continued

Environmental Control divisionRevenue 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.

OuTLOOKThe 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 dATEThere are no known material events under this category.

dIVIdENdSThe 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.

dIRECTORATEThere have been no directorate changes for the six months ended 30 June 2013.

uNAudITEd INTERIM FINANCIAL RESuLTSThe Company’s 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 BärwaldChairman Chief Executive Officer

30 August 2013

3

Six monthsended

30 June2013

(unaudited)R’000

Six monthsended

30 June 2012

(Unaudited)R’000

Change%

Twelve monthsended

31 December 2012

(Audited)R’000

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, net of tax 56 177 (3 018)

Total comprehensive income for the period 106 824 86 021 24,18 157 394

Cents Cents CentsEarnings per share

– basic and diluted 162,44 130,60 24,4 244,05

CONdENsEd CONsOlidATEd sTATEMENT Of COMPREHENsiVE iNCOMEfor the period ended 30 June 2013


CONdENsEd CONsOlidATEd sTATEMENT Of fiNANCiAl POsiTiONas at 30 June 2013

Six monthsended

30 June2013

(unaudited)R’000

Six monthsended

30 June 2012

(Unaudited)R’000

Twelve monthsended

31 December 2012

(Audited)R’000

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.

5

OTHER gROuP sAliENT fEATuREsfor the period ended 30 June 2013

Six monthsended

30 June2013

(unaudited)R’000

Six monthsended

30 June 2012

(Unaudited)R’000

Change%

Twelve monthsended

31 December 2012

(Audited)R’000

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 EquiTYfor the period ended 30 June 2013

Six monthsended

30 June2013

(unaudited)R’000

Six monthsended

30 June 2012

(Unaudited)R’000

Twelve monthsended

31 December 2012

(Audited)R’000

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

7

CONdENsEd CONsOlidATEd sTATEMENT Of CAsH flOwsfor the period ended 30 June 2013

Six monthsended

30 June2013

(unaudited)R’000

Six monthsended

30 June 2012

(Unaudited)R’000

Twelve monthsended

31 December 2012

(Audited)R’000

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 diVisiONfor the period ended 30 June 2013

Six monthsended

30 June2013

(unaudited)R’000

Six monthsended

30 June 2012

(Unaudited)R’000

Change%

Twelve monthsended

31 December 2012

(Audited)R’000

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


708 095 594 545 19,1 1 208 183

Operating profit



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



14 224 27 545 (48,4) 61 822

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”)

directorsIH Brander (Chairman)#*, T Bärwald (Chief Executive

Officer)†, J Brown#*, M Malebye*, S Badat*, K Johnson#,

H Mathe* (#British †German *Non-executive)

Company SecretaryC Miller

Registered office1a Booysens Road, Booysens, 2091Postal address: PO Box 2239, Johannesburg, 2000

Transfer secretariesComputershare Investor Services (Pty) Limited70 Marshall Street, Johannesburg, 2001

SponsorPricewaterhouseCoopers Corporate Finance (Pty) Limited

www.howden.co.za BA

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www.howden.co.za

unaudited interim financial results for the six months ... · continuous improvement (kaizen) is...

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