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Audited Group Results For The Year Ended 31 December 2012
HULAMIN LIMITED
("Hulamin" or "the group")
Registration number: 1940/013924/06
Share code: HLM
ISIN: ZAE000096210
AUDITED GROUP RESULTS FOR THE YEAR ENDED 31 DECEMBER 2012
- Attributable earnings up 66%, to R133 million
- Headline EPS up 128%, which includes employer
allocation of R118 million from pension fund conversion
- Cash flow before financing activities positive at R72 million
Richard Jacob (Chief Executive Officer) Commented:
"Hulamin overcame a difficult first half to record an improvement in earnings for the year under review.
We look forward to improve our operating performance further in 2013, underpinned by continued delivery
from our manufacturing excellence programme. Market conditions however remain challenging. A gradual
improvement in demand is anticipated as the world economic outlook improves."
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
Turnover decreased to R6,54 billion in 2012 (2011: R6,91 billion) on lower sales from Hulamin Rolled
Products, which totalled 194 000 tons (208 000 tons in 2011). In April 2012, a fault developed in
the Camps Drift Hot Finishing Mill motor and the resulting stoppage caused a loss of approximately
25 000 tons, or 11% of annual sales, equating to an estimated operating loss of R154 million. An
accrual of R93 million (before tax) has been made in respect of the resulting insurance claim.
Operating profit increased by 44% to R245 million, which includes the employer allocation of
R164 million (R118 million after tax) arising out of the successful conversion and outsourcing of the
Hulamin Pension Fund, offset by the R84 million impairment of mothballed and underperforming
assets. With Rand aluminium prices being fairly stable, the metal price revaluation declined from
a loss of R34 million in 2011 to a loss of R2 million in 2012, after recording a profit of R15 million
in the first six months of 2012. The weakening of the Rand towards the end of the year has
contributed to the improved financial results.
Interest paid increased marginally to R63 million, and borrowings decreased to R742 million
(2011: R809 million). Earnings improved by 66% to R133 million and headline earnings per share
increased by 128% to 57 cents per share.
Headline earnings excluding the employer allocation from the pension fund of R118 million,
amounted to R64 million. This was 19% more than the 2011 headline earnings, excluding the
R26 million prior year insurance receipt, of R54 million. The board has decided not to declare a
final dividend.
The continuing application of Hulamin's manufacturing excellence programme delivered further
operational benefits, particularly in improved throughput from the remelt and twin roll caster
operations, cold rolling speeds and in foil performance.
International market performance remained uncertain throughout 2012 as growth moderated in
China and weaker manufacturing in Europe specifically, impacted on both international demand
and margins.
Domestic demand for both rolled and extruded products remained under pressure as the
competitiveness of South African manufacturing continued to be eroded by rising costs and
competition from aggressively priced imports.
Aluminium beverage cans in South Africa
As announced in November 2012, Hulamin has concluded an agreement with Nampak for the
supply of aluminium can body stock from 2013 to 2015. This agreement follows two years of
product development and discussions with role players in the South African beverage industry and
the decision to move from steel-bodied to all-aluminium cans. Hulamin looks forward to further
growth from this sector as the benefits of the aluminium can are established in the market.
Solar projects
In December 2012, Hulamin Extrusions concluded an agreement for the supply of extruded
aluminium sections to be used in the construction of solar photo-voltaic installations. This will
provide an encouraging growth opportunity for Hulamin Extrusions in an otherwise depressed local
architectural market that is experiencing a flood of imports.
Rolling slab and extrusion billet supply
Hulamin produces the majority of its rolling slab requirements in its own facilities in Pietermaritzburg,
and sources the balance from BHP Billiton's Bayside smelter. Hulamin has continued to engage
BHP Billiton on the future of slab supply from Bayside and agreement has been reached to extend
rolling slab supply to the end of June 2013. Discussions continue in search of a long-term solution
to the local supply of rolling slab. Hulamin continued to import the majority of its extrusion billet
requirements in 2012.
Prospects
In 2013, Hulamin will commence supply of aluminium can body stock in the local market. Although
the volumes will only become meaningful from 2014, growth in local beverage can demand
indicates an opportunity for local sales growth in excess of 50% by 2016.
Improved operating performance remains a key priority and opportunities to improve cost
competitiveness further are being identified. Hulamin will continue its drive to advance
manufacturing capacity utilisation and efficiency through better equipment reliability and product
quality performance.
Market conditions continued to be subdued in 2013, placing pressure on margin and mix
optimisation. A gradual improvement in demand is anticipated.
Retirement of Chief Financial Officer
Charles Hughes will be retiring on 31 May 2013 after 33 years with the company, during which time
he served Hulamin with dedication, strong leadership and incisive judgement. David Austin, former
CFO of Macsteel International Trading, has been appointed as Chief Financial Officer of Hulamin
with effect from 1 March 2013.
ME Mkwanazi RG Jacob
Chairman Chief Executive Officer
21 February 2013
CONDENSED CONSOLIDATED INCOME STATEMENT
2012 2011
Note R'000 R'000
Revenue 6 541 997 6 905 444*
Cost of sales (5 895 049) (6 398 110)
Gross profit 646 948 507 334
Other gains and losses 3 41 938 85 246*
Selling, marketing and distribution expenses (361 621) (355 282)
Administrative and other expenses (82 713) (67 353)
Operating profit 244 552 169 945
Net finance costs (62 909) (61 910)
Share of profits of joint ventures 181 1 187
Profit before tax 181 824 109 222
Taxation 4 (49 276) (29 546)
Net profit for the year 132 548 79 676
Headline earnings
Net profit for the year 132 548 79 676
(Profit)/loss on disposal of property, plant and equipment (15 419) 2 985
Impairment of property, plant and equipment 84 057 3 690
Reversal of impairment of investment in joint venture (4 361)
Loss on sale of investment in joint venture 3 793
Tax effects of adjustments (22 763) (1 869)
Headline earnings attributable to shareholders 182 216 80 121
Earnings per share 5
Basic (cents) 42 25
Diluted (cents) 41 25
Headline earnings per share
Basic (cents) 57 25
Diluted (cents) 57 25
Currency conversion
Rand/US dollar average 8,22 7,27
Rand/US dollar closing 8,47 8,11
*Prior year information has been reclassified. Refer to note 3.
CONDENSED CONSOLIDATED
STATEMENT OF COMPREHENSIVE INCOME
2012 2011
R'000 R'000
Net profit for the year 132 548 79 676
Cash flow hedges, net of tax (17 220) (30 518)
Total comprehensive income for the year 115 328 49 158
CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
2012 2011
R'000 R'000
Balance at beginning of year 4 669 625 4 609 534
Total comprehensive income for the year 115 328 49 158
Shares issued 25 1 831
Redemption of B ordinary shares (129)
Consolidated "A" and "B" class shares (3 018)
Value of employee services (1 878) 17 125
Settlement of employee share incentives (6 017) (4 127)
Tax on employee share incentives (209) (878)
Total equity 4 776 745 4 669 625
CONDENSED CONSOLIDATED BALANCE SHEET
2012 2011
R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 4 673 697 4 915 087
Intangible assets 63 437 47 499
Investments in associates and joint ventures 40 581
Retirement benefit asset 177 179 37 615
Deferred tax asset 29 560 21 225
4 943 873 5 062 007
Current assets
Inventories 1 515 612 1 306 702
Trade and other receivables 945 223 1 069 739
Derivative financial assets 46 990 60 747
Cash and cash equivalents 29 596 19 900
2 537 421 2 457 088
Total assets 7 481 294 7 519 095
EQUITY
Share capital and share premium 1 817 434 1 727 643
BEE reserve 174 686 174 686
Employee share-based payment reserve 101 099 105 750
Hedging reserve (8 898) 8 322
Retained earnings 2 692 424 2 653 224
Total equity 4 776 745 4 669 625
LIABILITIES
Non-current liabilities
Non-current borrowings 556 948 628 284
Deferred tax liability 969 782 940 205
Retirement benefit obligations 192 758 169 740
1 719 488 1 738 229
Current liabilities
Trade and other payables 718 974 816 251
Current borrowings 215 131 200 325
Derivative financial liabilities 49 443 94 360
Income tax liability 1 513 305
985 061 1 111 241
Total liabilities 2 704 549 2 849 470
Total equity and liabilities 7 481 294 7 519 095
Net debt to equity (%) 15,5 17,3
CONDENSED CONSOLIDATED CASH FLOW STATEMENT
2012 2011
R'000 R'000
Cash flows from operating activities
Operating profit 244 552 169 945
Net interest paid (65 510) (65 933)
(Profit)/loss on disposal of property, plant and equipment (15 419) 2 985
Non-cash items:
Depreciation, amortisation and impairment of property,
plant and equipment 306 486 213 388
Other non-cash items (169 708) 175 302
Income tax payment (20 338) (19 774)
Changes in working capital (181 671) (188 839)
98 392 287 074
Cash flows from investing activities
Additions to property, plant and equipment (82 319) (134 449)
Additions to intangible assets (15 621) (17 495)
Proceeds on disposal of property, plant and equipment 34 926
Decrease in investment in joint ventures 36 969 16 854
(26 045) (135 090)
Cash flows before financing activities 72 347 151 984
Cash flows from financing activities
Borrowings repaid (56 530) (154 227)
Shares issued 25 1 831
Redemption of B ordinary shares (129)
Settlement of share options (6 017) (4 127)
(62 651) (156 523)
Net increase/(decrease) in cash and cash equivalents 9 696 (4 539)
Cash and cash equivalents at beginning of year 19 900 24 439
Cash and cash equivalents at end of year 29 596 19 900
NOTES
1. Basis of preparation
The audited group financial statements for the year ended 31 December 2012, from which
these condensed consolidated financial statements are derived, have been prepared in
accordance with International Financial Reporting Standards, under the supervision of the Chief
Financial Officer, Mr C D Hughes CA(SA). These condensed consolidated financial statements
have been prepared in terms of IAS 34 Interim Financial Reporting. The accounting policies
and methods of computation adopted are consistent with those used in the preparation of the
previous annual financial statements. Hulamin has not adopted any new or revised accounting
standards in the current year which have impacted the reported results.
2012 2011
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 5 852 892 6 166 100
Hulamin Extrusions 689 105 739 344
Group total 6 541 997 6 905 444
OPERATING PROFIT
Hulamin Rolled Products 253 531 161 334
Hulamin Extrusions (8 979) 8 611
Group total 244 552 169 945
TOTAL ASSETS
Hulamin Rolled Products 7 230 731 7 255 454
Hulamin Extrusions 250 563 263 641
Group total 7 481 294 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. Cash flow hedge gains and losses relating to the hedging of sales transactions
are recorded in revenue. The loss of R51.6 million previously recorded in other gains and losses
in the prior year has been reallocated to revenue.
2012 2011
R'000 R'000
4. Taxation
The tax charge included within these condensed financial
statements is:
Normal 21 547 18 735
Deferred 27 729 10 811
49 276 29 546
Normal rate of taxation % 28,0 28,0
Adjusted for:
Exempt income, non-allowable and other items % (0,9) (0,9)
Effective rate of taxation % 27,1 27,1
Number of Number of
shares shares
2012 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 317 510 700 316 933 746
Share options 4 521 585 3 679 234
Weighted average number of shares used for diluted EPS 322 032 285 320 612 980
2012 2011
R'000 R'000
6. Commitments and contingent liabilities
Capital expenditure contracted for but not yet incurred 37 852 26 116
Operating lease commitments 3 246 8 548
Guarantees and contingent liabilities 300 23 209
AUDIT OPINION
The auditors, PricewaterhouseCoopers Inc., have issued their opinion on the group's financial
statements for the year ended 31 December 2012. The audit was conducted in accordance with
International Standards on Auditing. They have issued an unmodified audit opinion. A copy of their
audit report is available for inspection at the company's registered office. These condensed financial
statements have been derived from the group financial statements and are consistent, in all material
respects, with the group financial statements.
CORPORATE INFORMATION
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 (Pty) Ltd; 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, PH Staude, GHM Watson
Executive directors:
RG Jacob (Chief Executive Officer), CD Hughes, MZ Mkhize
Company Secretary
W Fitchat
Date of SENS release: 25 February 2013
Date: 25/02/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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