www.howden.co.za
UNAUDITED INTERIM FINANCIAL
RESULTS: for the six months ended
30 June 2012
Operating profit
Revenue
Headline earnings per share
R110,9 million R647,1 million 130,60 cents
Increased by 93,3% from
R57,4 million in 2011
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 remain 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
Chairman
T Bärwald
Chief Executive Officer
30 August 2012
Condensed consolidated statement of comprehensive income
Condensed consolidated statement of changes in equity
for the period ended 30 June 2012
for the period ended 30 June 2012
Six months
ended
30 June 2012
(Unaudited)
R’000
Six months
ended
30 June 2011
(Unaudited)
R’000
Change
%
Six months
ended
30 June 2012
(Unaudited)
R’000
Twelve months
ended
31 December 2011
(Audited)
R’000
Revenue
647 124
434 471
48,9
988 400
Share capital and reserves at the beginning of the period
Gross profit
182 818
125 281
45,9
316 677
Total comprehensive income for the period
Operating profit
110 963
57 414
93,3
169 853
8 030
Finance income
5 863
(290)
Finance costs
Profit before income tax
118 703
61 608
Income tax expense
(32 859)
(18 230)
85 844
43 378
177
–
Pension fund plan surplus/(loss)*
–
1 608
Income tax relating to components
of other comprehensive income
–
Profit for the period
14 791
(1 669)
(2 734)
Other comprehensive income
for the period, net of tax
Total comprehensive income for
the period
1 158
86 021
44 536
Cents
Cents
130,60
65,99
Share capital and reserves at the end of the period
246 312
(54 414)
Condensed consolidated statement of cash flows
for the period ended 30 June 2012
Six months
ended
30 June 2012
(Unaudited)
R’000
(2 473)
692
(1 781)
93,1
125 715
Cents
97,9
193,97
Six months
ended
30 June 2011
(Unaudited)
R’000
Twelve months
ended
31 December 2011
(Audited)
R’000
Non-current assets
191 103
200 268
211 669
Property, plant and equipment and intangible assets
Pension fund plan asset
Cash and cash equivalents
Other non-current assets
125 760
32 216
–
33 127
122 427
32 970
5 306
39 565
123 255
30 424
20 012
37 978
Current assets
977 363
713 067
764 739
Inventories
Trade and other receivables
Cash and cash equivalents
325 878
339 600
311 885
215 072
299 336
198 659
263 538
278 129
223 072
1 168 466
913 335
976 408
EQUITY
Share capital and reserves
Share capital and reserves
246 312
Total equity
–
Interest paid
Income tax paid
Net cash generated from operating activities
246 312
207 283
207 283
Interest received
Purchases of property, plant and equipment
100 472
220 912
(1 669)
(2 551)
(17 302)
(12 888)
(43 085)
67 505
85 915
175 276
8 030
5 863
9 710
(6 745)
(4 233)
(10 338)
–
(308)
(360)
11
123
337
1 296
1 445
(651)
–
(35 000)
Cash flow from financing activities
Repayment of borrowings
–
Dividends paid
–
(9 859)
Net cash used in financing activities
–
(9 859)
(58 005)
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
Change
%
Twelve months
ended
31 December 2011
(Audited)
R’000
Net increase in cash and cash equivalents
(23 005)
Segmental analysis by operating division
for the period ended 30 June 2012
Six months
ended
30 June 2012
(Unaudited)
R’000
Six months
ended
30 June 2011
(Unaudited)
R’000
Revenue
Fans and Heat Exchangers
492 774
371 542
Environmental Control
154 350
62 929
647 124
434 471
275 316
275 316
Twelve months
ended
31 December 2011
(Audited)
R’000
Cash flow from investing activities
Net cash generated/(utilised) from investing activities
ASSETS
TOTAL ASSETS
84 807
Cash generated from operations
Proceeds from disposal of property, plant and equipment
as at 30 June 2012
Six months
ended
30 June 2011
(Unaudited)
R’000
275 316
Cash flow from operating activities
Purchases of intangible assets
Condensed consolidated statement of financial position
(23 005)
207 283
127 496
–
–
(9 859)
97,9
* The pension fund valuation was not obtained for the 2012 interim reporting period.
Six months
ended
30 June 2012
(Unaudited)
R’000
125 715
–
181 910
Earnings per share
– basic and diluted
172 606
44 536
92,7
(450)
177
275 606
86 021
–
Dividends paid
Twelve months
ended
31 December 2011
(Audited)
R’000
275 316
(115 026)
Dividends declared
Other comprehensive income
Currency translation differences
Six months
ended
30 June 2011
(Unaudited)
R’000
859 246
129 154
48,9
988 400
Orders received
LIABILITIES
Fans and Heat Exchangers
468 179
490 054
914 972
Non-current liabilities
Current liabilities
165 396
756 758
443 240
262 812
120 161
580 931
Environmental Control
126 366
53 113
326 877
594 545
543 167
Total liabilities
922 154
706 052
701 092
Operating profit
1 168 466
913 335
976 408
Fans and Heat Exchangers
103 141
63 749
13 079
(2 112)
116 220
61 637
TOTAL EQUITY AND LIABILITIES
Environmental Control
Other group salient features
for the period ended 30 June 2012
(5 257)
Central operations
Six months
ended
30 June 2012
(Unaudited)
R’000
Six months
ended
30 June 2011
(Unaudited)
R’000
Net asset value per share (cents)
Depreciation
Amortisation
Capital expenditure
Capital commitments
– Authorised and contracted
Number of shares in issue (000's)
Earnings per share (cents)
Headline earnings per share (cents)
Dividends per share
– dividend paid (cents)
– special dividend paid (cents)
– interim dividend paid (cents)
Reconciliation of headline earnings
Profit for the period
(Profit)/loss on disposal of property,
plant and equipment
374,74
3 002
1 227
6 745
315,36
2 737
1 054
4 541
–
65 729
130,60
130,60
2 617
65 729
65,99
65,94
Headline earnings
85 844
Change
%
18,8
97,9
98,0
Twelve months
ended
31 December 2011
(Audited)
R’000
418,87
6 541
2 308
10 698
1 562
65 729
193,97
194,00
–
–
–
15,00
–
–
15,00
–
20,00
85 844
43 378
127 496
–
(33)
43 345
17
98,0
127 513
Total operating profit
110 963
9,5
1 241 849
169 108
8 763
177 871
(4 223)
57 414
(8 018)
93,3
169 853
Intersegmental sales
Fans and Heat Exchangers
Environmental Control
20 827
5 812
6 718
24 415
27 545
30 227
17 300
47 660
(8,9)
64 960
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”)
Directors:
IH Brander (Chairman)#**,
T Bärwald (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
BASTION GRAPHICS
COMMENTARY
Increased by 97,9% from
65,99 cents in 2011
Increased by 48,9% from
R434,5 million in 2011