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Unaudited Interim Results for the half-year ended 30 June 2012
HULAMIN LIMITED
("Hulamin" or "the group")
Registration number: 1940/013924/06
Share code: HLM
ISIN: ZAE000096210
Unaudited Interim Results
for the half-year ended 30 June 2012
- Earnings per share in line with corresponding period in 2011
- Headline Earnings per share exclude sale of property and decline by 18%
- Improved operating performance has returned after interruption by hot mill failure
- Camps Drift Hot Mill running normally after component failure in May and June 2012
Richard Jacob (Chief Executive Officer) commented:
Were disappointed that after achieving all-time record production volumes of
219 000 tons annualised in the first four months, the downtime during the repair
of the Camps Drift Hot Mill caused lost production of some 25 000 tons. We have
recommissioned the mill and efforts to recover the backlog are progressing apace.
Further operational improvements and production efficiencies have made a positive
contribution to our margin and are expected to support earnings growth as we ramp-up
to full production capacity through 2014. Despite weakening global demand in general,
Hulamins order book remains healthy for the remainder of the year.
Enquiries
Hulamin 033 395 6911
Richard Jacob, CEO 082 806 4068
Charles Hughes, CFO 082 745 6173
Hector Molale 083 639 1021
CapitalVoice
Johannes van Niekerk 082 921 9110
Commentary
Rolled Products
Performance in the Rolled Products operation continued to improve in the first four months
of the period, as the operation ramps up production to its target of 250 000 tons per
annum. These improvements resulted in production of 219 000 tons annualised in this
four-month period, which is the highest sustained level of production yet achieved.
The failure of a motor in the Camps Drift hot finishing mill at the end of April resulted in the
mill being down for 46 days and the loss of 25 000 tons of production and sales. Sales of
rolled products therefore declined by 9% to an annualised 189 000 tons in the first half of
2012 compared to the 208 000 tons annualised sold in the corresponding period in 2011,
and revenues declined by 7%. Agreement on the insurance claim arising from this incident
has not been finalised and it is therefore not reflected in this set of results.
Demand for rolled products in the domestic market remains subdued, and imports
of competing products continue to negatively impact prices, with general engineering
products most affected. Demand for Hulamin products in the USA and Asian markets
remained stable during the six months under review, while the European market weakened
towards the end of the first quarter but has held steady since then.
Extrusions
Sales volumes of extruded products have been maintained at the same level as in the
corresponding period in 2011, however, competition from imported product has resulted in
margins coming under pressure. The consolidation of Hulamin Extrusions' operations and
the closure of the plant in Cape Town have been completed successfully and R16 million
in respect of the sale of the property has been included in operating profit for the current
period.
Hulamin
Hulamin's operating profit of R127 million in the current period includes the recognition of
a R95 million (R69 million after tax) allocation resulting from the conversion of the Hulamin
Pension Fund to a Defined Contribution plan.
After tax earnings for the six months ended June 2012 amounted to R73 million, which
is similar to earnings in the corresponding period of 2011. Headline earnings exclude the
after tax profit on the sale of the above mentioned property.
Normalised headline earnings, a non-IFRS measure of underlying earnings from
operations, was a loss of R8 million for the six months under review, which is lower than
the R45 million profit in the corresponding period in 2011. Normalised headline earnings
for the current period exclude the profit on sale of the property in Cape Town, the pension
fund allocation of R69 million and any proceeds from the pending insurance claim.
The company's manufacturing excellence programme continues to deliver cost and
efficiency improvements. The programme lost momentum during the period of disruption
caused by the hot mill breakdown, and this momentum is being regained as operations
normalise.
Hulamin remains engaged with BHP Billiton on the future supply of rolling slab beyond
December 2012, when the current supply contract comes up for renewal.
The general weakening in global demand has resulted in the outlook for margins being
uncertain. Hulamin's order book remains healthy for the remainder of the year. Hulamin
expects to extract further operational improvements and production efficiencies by
increasing volumes, improving yields and managing costs.
The board of directors has decided not to declare an interim dividend.
The above results have not been reviewed and reported on by the company auditors.
ME Mkwanazi RG Jacob
Chairman Chief Executive Officer
26 July 2012
Condensed Group Income Statement
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2012 2011 2011
Note R'000 R'000 R'000
Revenue 3 150 023 3 354 006 6 957 080
Cost of sales (2 825 571) (3 114 182) (6 398 110)
Gross profit 324 452 239 824 558 970
Other gains and losses 3 23 408 90 768 33 610
Selling and marketing expenses (179 442) (162 091) (355 282)
Administrative and other expenses (41 363) (36 785) (67 353)
Operating profit 127 055 131 716 169 945
Net finance costs (32 022) (29 318) (61 910)
Share of profits of joint ventures 183 191 1 187
Profit before tax 95 216 102 589 109 222
Taxation 4 (22 358) (29 978) (29 546)
Net profit for the period 72 858 72 611 79 676
Headline earnings
Net profit for the period 72 858 72 611 79 676
(Profit)/loss on disposal of property,
plant and equipment (17 779) 2 985
Net impairments (709) (671)
Tax effects of adjustments 2 203 (1 023) (1 869)
Headline earnings attributable
to shareholders 57 282 70 879 80 121
Earnings per share (cents) 5
Basic 23 23 25
Diluted 23 23 25
Headline earnings per share (cents)
Basic 18 22 25
Diluted 18 22 25
Dividend per share (cents)
Currency conversion
Rand/US dollar average 7,94 6,91 7,26
Rand/US dollar closing 8,19 6,82 8,11
Condensed Group Statement of Comprehensive Income
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
Net profit for the period 72 858 72 611 79 676
Cash flow hedges, net of tax (3 025) (33 515) (30 518)
Total comprehensive income for the period 69 833 39 096 49 158
Condensed Group Statement of Changes in Equity
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
Balance at beginning of period 4 669 625 4 609 534 4 609 534
Share of total comprehensive income for the period 69 833 39 096 49 158
Shares issued 5 2 139 1 831
Consolidated "A" and "B" class shares (3 018)
Value of employee services (488) 17 119 17 125
Settlement of employee share incentives (4 127)
Tax on employee share incentives 481 (940) (878)
Total equity 4 739 456 4 666 948 4 669 625
Condensed Group Balance Sheet
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2012 2011 2011
Note R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 4 836 034 4 986 125 4 915 087
Intangible assets 51 106 34 775 47 499
Investments in joint ventures 40 405 45 573 40 581
Retirement benefit asset 119 199 56 018 37 615
Deferred tax asset 21 902 21 609 21 225
5 068 646 5 144 100 5 062 007
Current assets
Inventories 1 463 790 1 275 664 1 306 702
Trade and other receivables 784 043 1 043 244 1 069 739
Derivative financial assets 45 681 58 451 60 747
Income tax asset 925
Cash and cash equivalents 8 119 8 843 19 900
Disposal group held for sale 6 30 192
2 331 825 2 387 127 2 457 088
Total assets 7 400 471 7 531 227 7 519 095
EQUITY
Share capital and share premium 1 727 648 1 730 969 1 727 643
BEE reserve 174 686 174 686 174 686
Employee share-based payment reserve 105 262 108 338 105 750
Hedging reserve 5 297 5 325 8 322
Retained earnings 2 726 563 2 647 630 2 653 224
Total equity 4 739 456 4 666 948 4 669 625
LIABILITIES
Non-current liabilities
Non-current borrowings 628 595 628 082 628 284
Deferred income tax liabilities 950 150 949 655 940 205
Retirement benefit obligations 181 410 158 724 169 740
1 760 155 1 736 461 1 738 229
Current liabilities
Trade and other payables 676 649 760 366 816 251
Current borrowings 179 656 326 789 200 325
Derivative financial liabilities 43 239 40 663 94 360
Income tax liability 1 316 305
900 860 1 127 818 1 111 241
Total liabilities 2 661 015 2 864 279 2 849 470
Total equity and liabilities 7 400 471 7 531 227 7 519 095
Net debt to equity (%) 16,9 20,3 17,3
Condensed Group Cash Flow Statement
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
Cash flows from operating activities
Operating profit 127 055 131 716 169 945
Net interest paid (33 534) (34 141) (65 933)
(Profit)/loss on disposal of property,
plant and equipment (17 779) 2 985
Non-cash items:
Depreciation and amortisation 105 077 106 075 209 698
Other non-cash items (110 658) 94 676 178 992
Income tax payment (10 422) (11 267) (19 774)
Changes in working capital (26 375) (184 173) (188 839)
33 364 102 886 287 074
Cash flows from investing activities
Additions to property, plant and equipment (42 506) (96 206) (134 449)
Additions to intangible assets (5 317) (2 955) (17 495)
Proceeds on disposal of property,
plant and equipment 22 672
Decrease in investment in joint ventures 359 6 505 16 854
(24 792) (92 656) (135 090)
Cash flows from financing activities
Borrowings repaid (20 358) (27 965) (154 227)
Shares issued 5 2 139 1 831
Settlement of share options, net of reversals (4 127)
(20 353) (25 826) (156 523)
Net decrease in cash and cash equivalents (11 781) (15 596) (4 539)
Balance at beginning of period 19 900 24 439 24 439
Cash and cash equivalents at end of period 8 119 8 843 19 900
Notes
1. Basis of preparation
The condensed consolidated interim financial information of the group for the half-year ended 30 June 2012
has been prepared in accordance with IAS 34 Interim Financial Reporting and the Companies Act 71 of
2008, under the supervision of the Chief Financial Officer, Mr C D Hughes CA(SA), and should be read in
conjunction with the group's 2011 annual financial statements, which have been prepared in accordance
with International Financial Reporting Standards. The accounting policies and methods of computation
adopted are consistent with those used in the preparation of the group's 2011 annual financial statements.
Hulamin has not adopted any new or revised accounting standards in the current period which have
impacted the reported results.
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
2. Operating segment analysis
The group is organised into two major operating segments
namely Hulamin Rolled Products and Hulamin Extrusions.
REVENUE
Hulamin Rolled Products 2 802 310 3 007 058 6 217 736
Hulamin Extrusions 347 713 346 948 739 344
Group total 3 150 023 3 354 006 6 957 080
OPERATING PROFIT
Hulamin Rolled Products 110 981 124 807 161 334
Hulamin Extrusions 16 074 6 909 8 611
Group total 127 055 131 716 169 945
TOTAL ASSETS
Hulamin Rolled Products 7 128 593 7 203 220 7 255 454
Hulamin Extrusions 271 878 328 007 263 641
Group total 7 400 471 7 531 227 7 519 095
3. Other gains and losses
The group is exposed to fluctuations in aluminium prices, interest rates and exchange rates, and hedges
these risks with derivative financial instruments. Other gains and losses reflect the fair value adjustments
arising from these derivative financial instruments and non-derivative financial instruments classified as fair
value through profit and loss in terms of IAS 39.
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2012 2011 2011
R'000 R'000 R'000
4. Taxation
The tax charge included within these condensed interim
financial statements is:
Normal 9 813 8 998 18 735
Deferred 10 925 20 980 10 811
Capital gains tax 1 620
22 358 29 978 29 546
Normal rate of taxation (%) 28,0 28,0 28,0
Adjusted for:
(Exempt income)/non-allowable items (%) (6,2) 1,2 (0,9)
Capital gains tax (%) 1,7
(%) 23,5 29,2 27,1
Number of Number of Number of
shares shares shares
June 2012 June 2011 Dec 2011
5. Earnings per share
The weighted average number of shares used in the calculation
of basic and diluted earnings per share are as follows:
Weighted average number of shares used for basic EPS 317 129 553 316 842 024 316 933 746
Share options 3 824 756 3 866 149 3 679 234
Weighted average number of shares used for diluted EPS 320 954 309 320 708 173 320 612 980
6. Disposal group held for sale
The assets of Hulamin Roofing Solutions, a division disclosed
as part of the Hulamin Rolled Products segment, have been
presented as held for sale following a decision to divest from the
business.
7. Commitments and contingent liabilities
Capital expenditure contracted for but not yet incurred 39 180 61 825 26 116
Operating lease commitments 6 098 7 307 8 548
Guarantees and contingent liabilities 5 532 23 086 23 209
Corporate Information
HULAMIN LIMITED
("Hulamin" or "the group")
Registration number: 1940/013924/06
Share code: HLM
ISIN: ZAE000096210
Business and postal address
Moses Mabhida Road, Pietermaritzburg, 3201
PO Box 74, Pietermaritzburg, 3200
Contact details
Telephone: +27 33 395 6911
Facsimile: +27 33 394 6335
Website: www.hulamin.co.za
E-mail: hulamin@hulamin.co.za
Securities exchange listing
South Africa (Primary), JSE Limited
Transfer secretaries
Computershare Investor Services (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Sponsor
Rand Merchant Bank
(A division of FirstRand Bank Limited)
1 Merchant Place, corner Fredman Drive and Rivonia Road, Sandton, 2196
PO Box 786273, Sandton, 2146
Directorate
Non-executive directors:
ME Mkwanazi (Chairman), LC Cele, VN Khumalo, TP Leeuw, JB Magwaza,
NNA Matyumza, SP Ngwenya, G Pretorius, PH Staude, GHM Watson
Executive directors:
RG Jacob (Chief Executive Officer), CD Hughes, MZ Mkhize
Company Secretary
W Fitchat
www.hulamin.co.za
Date: 30/07/2012 08:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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