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Trading statement for the year ended 31 December 2019
HULAMIN LIMITED
(Incorporated in the Republic of South Africa)
Registration number 1940/013924/06
JSE Code: HLM
ISIN: ZAE000096210
(“Hulamin”, “the Group” or “the Company”)
TRADING STATEMENT FOR THE YEAR ENDED 31 DECEMBER 2019
In terms of paragraph 3.4(b) of the JSE Listings Requirements, the board of directors of Hulamin
advises that there is a reasonable degree of certainty that the financial results for the year ended
31 December 2019 (“Current Period”), when compared with the published financial results for the
year ended 31 December 2018 (“Comparative Period”), will differ as follows:
31 Dec 2019 31 Dec 2018
Expected Change Actual
At least 30% (being at
(315) cents per share, or (242) cents per
Loss per share least 73 cents per share)
lower share
lower
At least 119% (being at
Headline (loss) / (17) cents per share, or 91 cents per
least 108 cents per share)
earnings per share lower share
lower
At least 56% (being at
Normalised headline 34 cents per share, or 77 cents per
least 43 cents per share)
earnings per share¹ lower share
lower
Earnings performance
a) Factors impacting the decline in normalised headline earnings per share1 for the Current Period
are:
i) Hulamin Rolled Products operating performance:
Hulamin experienced unusually challenging conditions in 2019, with weak market conditions both
locally and internationally. This resulted in Hulamin Rolled Products sales volumes declining 10%
to 204kt. Due to the high fixed manufacturing cost base of the business, the impact on operating
profit of this sharp reduction in volume has been severe.
As a result of the above, Hulamin implemented a cost reduction programme to reduce operating
costs by R250 million per annum. This plan is well underway, with approximately 250 employees
having left the Group and contractor reductions, as well as other non-manpower savings, having
been recorded.
ii) Hulamin Extrusions operating performance:
A major 11-week disruption to the largest press in Hulamin Extrusions in the first quarter had a
considerable impact on sales volumes, working capital, customer service and profits. The press
has since been restored to full operating capacity.
A restructuring of Hulamin Extrusions during 2019 resulted in the closure of its Olifantsfontein
plant and the consolidation of production at its Pietermaritzburg operation.
b) Factors impacting the decline in headline earnings per share for the Current Period (in addition to
those noted above) include:
• a negative metal price lag of R68 million, resulting from the decline in the aluminium price
during 2019;
• Restructuring costs of R114 million, resulting from the restructuring programmes referred to
above;
• A timing mismatch related to aluminium futures not qualifying for hedge accounting in 2018;
and
• A charge arising from the restructuring of Isizinda Aluminium (“Isizinda”), which arrangement
includes the acquisition by Hulamin of the rolling slab casting business owned by Isizinda.
c) Factors impacting the decline in earnings per share for the Current Period (in addition to those
noted above) largely relate to an impairment charge in Rolled Products of in excess of R1.1 billion
and an impairment charge in Extrusions of in excess of R30 million.
These impairments relate to both a reduction in the 5-year forecast cash flows of the primary
cash-generating units, reflecting the softer outlook in market conditions, as well as an increase in
the Company’s weighted average cost of capital which takes account of increased uncertainty in
the macro environment.
Liquidity and solvency
The Group’s net borrowings were R227 million at 31 December 2019. This represents a debt to equity
ratio of around 10%. Hulamin has borrowing facilities of R1.5 billion. Hulamin remains well within its
bank covenants.
A further trading statement for the year ended 31 December 2019 will be issued once there is greater
certainty on the range of the financial results that will be reported.
Notice of postponement of release of annual results for the year ended 31 December 2019
Shareholders are advised that the Company is in the process of finalising results for the year ended 31
December 2019, which is taking longer than anticipated. Factors contributing to this delay include
finalisation of the following matters:
• The accounting for the restructuring of Isizinda that was negotiated and agreed during 2019;
• The impairment charge; and
• The financial results of one of the Group’s business units, Hulamin Containers (“Hulacon”), still
need to be finalised. Hulacon generated revenue of R252 million in 2018, representing
approximately 2% of Group revenue.
A further announcement regarding the date of release of the Group’s results for the year ended 31
December 2019 will be made once these matters have been resolved. Resolution of these matters
may necessitate an adjustment to the interim 2019 unaudited results.
The financial information contained in this trading statement is the responsibility of the directors and
has not been reviewed or reported on by the Company’s external auditors.
¹ Normalised headline earnings per share is one of the measurement bases which the Hulamin
Executive Committee uses in assessing financial performance and is calculated in a consistent manner
as per the latest annual financial statements, by dividing normalised headline earnings by the
weighted average number of ordinary shares in issue during the year.
Normalised headline earnings is defined as headline earnings excluding (i) metal price lag and (ii)
material non-trading expense or income items which, due to their irregular occurrence, are adjusted
for in order to better present earnings attributable to the ongoing activities of the Group.
The presentation of normalised headline earnings is not an IFRS requirement and may not be directly
comparable with the same or similar measures disclosed by other companies.
Pietermaritzburg
20 March 2020
Sponsor
Questco Corporate Advisory Proprietary Limited
Date: 20-03-2020 05:17:00
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