Wrap Text
Unaudited results for the half-year ended 30 June 2013
HULAMIN LIMITED
("Hulamin" or "the group")
Registration number: 1940/013924/06
Share code: HLM
ISIN: ZAE000096210
UNAUDITED RESULTS FOR THE HALF-YEAR ENDED 30 JUNE 2013
- Normalised earnings increased to R91 million
(June 2012: R11 million loss)
- HEPS 17% up on corresponding period as previously reported,
32% down after 2012 restatement required by IAS 19R
- Rolled Products sales up 3% to 195 000 tons annualised
- Flexible working capital finance facility concluded
Richard Jacob (Chief Executive Officer) commented:
"Hulamin produced a substantial improvement in normalised earnings
during the six months to June, drawing from ongoing cost management
and production efficiency drives, the weaker Rand that benefitted
exports and the fundamental turnaround at Hulamin Extrusions.
After completing the organisation rightsizing and with a more
balanced order book in place, we expect improved sales volumes and
better yields in the second half."
Enquiries
Hulamin 033 395 6911
Richard Jacob, CEO 082 806 4068
David Austin, CFO 082 718 6151
Hector Molale 083 639 1021
CapitalVoice
Johannes van Niekerk 082 921 9110
COMMENTARY
Turnover increased by 13,1% to R3,6 billion (June
2012: R3,1 billion) on higher sales volumes and a
weaker Rand, moderated by a lower aluminium price.
Hulamin Rolled Products sales grew a disappointing
3% to 97 000 tons off the low base recorded in the first
half of 2012. Poor market conditions in the first quarter
of 2013 lead to an imbalance in the plant product mix
load which corrected in the second quarter.
Preventative maintenance and plant upgrade work was
completed during a planned nine day outage in May,
resulting in the loss of some 5 000 tons of production.
This concluded the upgrade to the Camps Drift Hot
Mill which formed part of the original insurance claim
in respect of the downtime that occurred in 2012, and
consequently insurance proceeds of R23 million (pre-
tax), which offset the loss of production incurred this
year, are included in these results.
The London Metals Exchange price of aluminium fell
by approximately $200 per ton during the period,
which resulted in a negative metal price lag adjustment
of R29 million (June 2012: R15 million positive).
In March, consultation commenced with employees
on possible rightsizing of the workforce. This process,
which is now largely complete, will see a headcount
reduction of approximately 140 people. Once-off
severance costs of R35 million (pre-tax) have been
provided for in these results.
Operating profit before exceptional items and
metal price lag increased to R187 million in 2013
(June 2012: R1 million loss), which is the highest level
since 2006.
Interest paid and net borrowings remained largely in
line with the comparative period at R31 million and
R799 million respectively.
Revised accounting standard, IAS 19R, became
effective in the current period and Hulamin has thus
applied it for the first time. Although the revised
standard had little impact in the current period, it has
had a substantial effect on the restatement of the
corresponding prior period. This material difference
arose from the conversion of the Hulamin pension
fund from defined benefit to defined contribution in
2012. Full details of the impact are provided in the
accompanying notes.
Headline earnings per share decreased by 32%
to 21 cents (increased 17% before restatement of
the prior period), while earnings declined by 42%
(10% before restatement) to R66 million (June 2012:
R114 million). The board has decided not to declare an
interim dividend.
Markets
International and local markets started the year soft,
following the slowdown late in 2012. Although local
demand has remained subdued, we have secured a
full and balanced order book, ensuring that the plant is
well loaded for the second half of 2013.
Aluminium beverage cans in South Africa
As announced in November 2012, Hulamin concluded
an agreement with Nampak for the supply of
28 000 tons of aluminium can body stock from 2013 to
2015. Hulamin has made good progress in developing
the product to international quality specifications and
has concluded successful commercial trials in Europe.
Local commercial qualification is due to start in the
third quarter of 2013.
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 and BHP Billiton continue to discuss
the future of supply from the Bayside casthouse.
Agreement has been reached to extend the supply
of rolling slab to the end of March 2014. Hulamin
continues to import extrusion billet.
Metal Inventory and Receivables Facility (MIRF)
The new three-year R1,45 billion MIRF, agreed
at the end of June 2013, will replace the
current R1,14 billion debt facilities and provides the
required flexibility to absorb movements in the value
of working capital, to which Hulamin is exposed in the
course of normal operations.
Equipment reliability risk assessment
A comprehensive review of Hulamin's equipment risk
was completed in the first half of 2013, using internal
resources and experienced global expert consultants.
The study identified key asset upgrade and critical
component strategic spares requirements. Hulamin
has commenced the process of allocating capital
expenditure accordingly.
Outlook
In line with improvements to the order book, we have
firm prospects for improved sales volumes in the
second half. We look forward to commencing local
supply of aluminium can body stock and the ongoing
positive momentum from our manufacturing excellence
initiatives leading to improved plant performance.
ME Mkwanazi RG Jacob
Chairman Chief Executive Officer
25 July 2013
CONDENSED GROUP INCOME STATEMENT
Unaudited Restated Restated
Half-year Half-year Year ended
30 June 30 June 31 December
2013 2012 2012
Note R'000 R'000 R'000
Revenue 3 554 146 3 142 955* 6 541 997
Cost of sales (3 200 876) (2 761 630)* (6 038 514)
Gross profit 353 270 381 325 503 483
Other gains and losses 5 2 198 23 408 41 938
Selling and marketing expenses (191 968) (179 442) (361 621)
Administrative and other expenses (40 750) (41 363) (82 713)
Operating profit 122 750 183 928 101 087
Net finance costs (30 884) (32 022) (62 909)
Share of profits of joint ventures 183 181
Profit before tax 91 866 152 089 38 359
Taxation 3 (25 473) (38 282) (9 106)
Net profit for the period 66 393 113 807 29 253
Headline earnings
Net profit for the period 66 393 113 807 29 253
Loss/(profit) on disposal of property,
plant and equipment 15 (17 779) (15 419)
Net impairments 84 057
Loss on sale of investment in joint venture 3 793
Tax effects of adjustments (4) 2 203 (22 763)
Headline earnings attributable to shareholders 66 404 98 231 78 921
Severance costs 24 860
Effect of pension fund conversion (113 121) (21 584)
Revaluation of assets to be disposed 3 557
Normalised earnings 91 264 (11 333) 57 337
Earnings per share (cents) 6
Basic 21 36 9
Diluted 21 35 9
Headline earnings per share (cents)
Basic 21 31 25
Diluted 21 31 25
Normalised earnings per share (cents)
Basic 29 (4) 18
Dividend per share (cents)
Currency conversion
Rand/US dollar average 9,23 7,94 8,22
Rand/US dollar closing 9,99 8,19 8,47
* Prior period information has been reclassified (refer note 5).
CONDENSED GROUP STATEMENT OF COMPREHENSIVE INCOME
Unaudited Restated Restated
Half-year Half-year Year ended
30 June 30 June 31 December
2013 2012 2012
R'000 R'000 R'000
Net profit for the period 66 393 113 807 29 253
Other comprehensive income
Items that will not be reclassified to profit or loss
Remeasurements of post-employment benefit
assets and obligations, net of tax (170 046) (12 517)
Items that may be reclassified subsequently
to profit or loss
Cash flow hedges, net of tax (30 174) (3 025) (17 220)
Other comprehensive loss for the period,
net of tax (30 174) (173 071) (29 737)
Total comprehensive income/(loss)
for the period 36 219 (59 264) (484)
CONDENSED GROUP BALANCE SHEET
Unaudited Restated Restated
Half-year Half-year Year ended
30 June 30 June 31 December
2013 2012 2012
R'000 R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 4 632 402 4 836 034 4 673 697
Intangible assets 60 387 51 106 63 437
Investments in joint ventures 40 405
Retirement benefit asset 160 425 100 000 177 179
Deferred tax asset 28 538 26 175 33 632
4 881 752 5 053 720 4 947 945
Current assets
Inventories 1 798 252 1 463 790 1 515 612
Trade and other receivables 1 024 293 784 043 945 223
Derivative financial assets 34 287 45 681 46 990
Cash and cash equivalents 11 837 8 119 29 596
Income tax asset 384
Disposal group held for sale 30 192
2 869 053 2 331 825 2 537 421
Total assets 7 750 805 7 385 545 7 485 366
EQUITY
Share capital and share premium 1 817 539 1 727 648 1 817 434
BEE reserve 174 686 174 686 174 686
Employee share-based payment reserve 105 285 105 262 101 099
Hedging reserve (39 072) 5 297 (8 898)
Retained earnings 2 729 388 2 684 130 2 663 276
Total equity 4 787 826 4 697 023 4 747 597
LIABILITIES
Non-current liabilities
Non-current borrowings 520 867 628 595 556 948
Deferred income tax liabilities 963 224 937 921 962 518
Retirement benefit obligations 239 965 221 146 233 242
1 724 056 1 787 662 1 752 708
Current liabilities
Trade and other payables 801 105 676 649 718 974
Current borrowings 290 195 179 656 215 131
Derivative financial liabilities 147 623 43 239 49 443
Income tax liability 1 316 1 513
1 238 923 900 860 985 061
Total liabilities 2 962 979 2 688 522 2 737 769
Total equity and liabilities 7 750 805 7 385 545 7 485 366
Net debt to equity (%) 16,7 17,0 15,6
CONDENSED GROUP STATEMENT OF CHANGES IN EQUITY
Unaudited Restated Restated
Half-year Half-year Year ended
30 June 30 June 31 December
2013 2012 2012
R'000 R'000 R'000
Total equity
Balance at beginning of period 4 747 597 4 756 289 4 756 289
Total comprehensive income/(loss) for the period 36 219 (59 264) (484)
Shares issued 105 5 25
Redemption of B ordinary shares (129)
Value of employee services 4 186 (488) (1 878)
Settlement of employee share incentives (6 017)
Tax on employee share incentives (281) 481 (209)
Balance at end of period 4 787 826 4 697 023 4 747 597
CONDENSED GROUP CASH FLOW
Unaudited Restated Restated
Half-year Half-year Year ended
30 June 30 June 31 December
2013 2012 2012
R'000 R'000 R'000
Cash flows from operating activities
Operating profit 122 750 183 928 101 087
Net interest paid (31 145) (33 534) (65 510)
Loss/(profit) on disposal of property,
plant and equipment 15 (17 779) (15 419)
Depreciation, amortisation and impairment
of property, plant and equipment 110 202 105 077 306 486
Other non-cash items 96 642 (167 531) (26 243)
Income tax payment (10 121) (10 422) (20 338)
Changes in working capital (279 579) (26 375) (181 671)
8 764 33 364 98 392
Cash flows from investing activities
Additions to property, plant and equipment (60 342) (42 506) (82 319)
Additions to intangible assets (5 269) (5 317) (15 621)
Proceeds on disposal of property,
plant and equipment 22 672 34 926
Decrease in investment in joint ventures 359 36 969
(65 611) (24 792) (26 045)
Cash flows from financing activities
Increase/(decrease) in borrowings 38 983 (20 358) (56 530)
Shares issued 105 5 25
Redemption of B ordinary shares (129)
Settlement of share options (6 017)
39 088 (20 353) (62 651)
Net (decrease)/increase in cash and
cash equivalents (17 759) (11 781) 9 696
Balance at beginning of period 29 596 19 900 19 900
Cash and cash equivalents at end of period 11 837 8 119 29 596
NOTES
1. Basis of preparation
The unaudited condensed consolidated interim financial information of the group for the half-year ended
30 June 2013 has been prepared in accordance with IAS 34 Interim Financial Reporting and the Companies
Act No 71 of 2008, under the supervision of the Chief Financial Officer, Mr DA Austin CA(SA), and should
be read in conjunction with the group's 2012 annual financial statements, which have been prepared in
accordance with International Financial Reporting Standards.
Hulamin believes normalised earnings to more accurately reflect operational performance. Headline earnings
are adjusted to take into account non-operational and abnormal gains and losses.
The accounting policies and methods of computation adopted are consistent with those used in the
preparation of the group's 2012 annual financial statements, except as described below:
Certain amendments to IAS 1 arising from the Annual Improvements programme (2009 to 2011). The
amendments to IAS 1 introduce a grouping of items in other comprehensive income. Items that could
be reclassified to profit or loss at a future point in time now have to be presented separately from items
that will never be reclassified. The amendment affected presentation only and has had no impact on the
group's financial position or performance.
IAS 19 (Revised 2011) Employee Benefits (IAS 19R). IAS 19R amends the accounting for employment
benefits. The most significant impact on the group has been that IAS 19R eliminates the option to defer
the recognition of actuarial gains and losses. These remeasurements are required to be presented in
other comprehensive income in full.
IAS 19R has been applied retrospectively in accordance with its transitional provisions. Consequently, the
group has restated its reported results throughout the comparative periods presented and reported the
cumulative effect as at 1 January 2012 as an adjustment to opening equity.
The effects of the application of IAS 19R on the reported results for the year ended 31 December 2012 and
the six months ended 30 June 2012 are as follows:
Half-year Year ended
30 June 31 December
2012 2012
R'000 R'000
Impact on profit/(loss) for the period
Decrease/(increase) in cost of sales 56 873 (143 465)
(Increase)/decrease in taxation expense (15 924) 40 170
Increase/(decrease) in net profit for the period 40 949 (103 295)
Impact on comprehensive income/(loss) for the period
Decrease in remeasurement of retirement benefit asset (236 175) (13 072)
Decrease in remeasurement of retirement benefit obligations (4 314)
Increase in taxation relating to items of other comprehensive income 66 129 4 868
Decrease in other comprehensive income for the period (170 046) (12 518)
Decrease in total comprehensive income for the period (129 097) (115 813)
Impact on balance sheet
Decrease in retirement benefit asset (19 199)
Increase in retirement benefit obligations (39 736) (40 484)
Increase in deferred income tax asset 4 273 4 072
Decrease in deferred income tax liability 12 229 7 264
Net decrease in net assets (42 433) (29 148)
Decrease in retained earnings 42 433 29 148
Hulamin has not adopted any other new or revised accounting standards in the current period which have
impacted the reported results.
Unaudited Restated Restated
Half-year Half-year Year ended
30 June 30 June 31 December
2013 2012 2012
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 3 172 139 2 795 242 5 852 892
Hulamin Extrusions 382 007 347 713 689 105
Group total 3 554 146 3 142 955 6 541 997
Operating profit
Hulamin Rolled Products 105 813 167 582 109 454
Hulamin Extrusions 16 937 16 346 (8 367)
Group total 122 750 183 928 101 087
Total assets
Hulamin Rolled Products 7 457 428 7 113 470 7 234 691
Hulamin Extrusions 293 377 272 075 250 675
Group total 7 750 805 7 385 545 7 485 366
3. Taxation
The taxation charge included within these condensed
interim financial statements is:
Normal 8 224 11 433 21 547
Deferred 17 249 26 849 (12 441)
25 473 38 282 9 106
Normal rate of taxation (%) 28,0 28,0 28,0
Adjusted for:
Non-allowable items/(exempt income) (%) (0,3) (3,9) (8,5)
Capital gains tax (%) 1,1 4,2
(%) 27,7 25,2 23,7
4. Commitments and contingent liabilities
Capital expenditure contracted for but not yet incurred 32 311 39 180 37 852
Operating lease commitments 1 761 6 098 3 246
Guarantees and contingent liabilities 300 5 532 300
5. 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
R7,1 million previously recorded in cost of sales in the six-month period ending 30 June 2012 has been
reclassified to revenue.
Number Number Number
of shares of shares of shares
June June December
2013 2012 2012
6. Earnings per share (EPS)
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 318 776 685 317 129 553 317 510 700
Share options 3 623 362 3 824 756 4 521 585
Weighted average number of shares used for diluted EPS 322 400 047 320 954 309 322 032 285
CORPORATE INFORMATION
HULAMIN LIMITED
("Hulamin" or "the group") Sponsor
Registration number: 1940/013924/06 Rand Merchant Bank
Share code: HLM (A division of FirstRand Bank Limited)
ISIN: ZAE000096210 1 Merchant Place, corner Fredman Drive and
Business and postal address Rivonia Road, Sandton, 2196
Moses Mabhida Road, Pietermaritzburg, 3201 PO Box 786273, Sandton, 2146
PO Box 74, Pietermaritzburg, 3200
Directorate
Contact details Non-executive directors:
Telephone: +27 33 395 6911 ME Mkwanazi (Chairman), LC Cele, SMG Jennings
Facsimile: +27 33 394 6335 (appointed with effect effect from 1 July 2013)
Website: www.hulamin.co.za VN Khumalo, TP Leeuw, JB Magwaza,
E-mail: hulamin@hulamin.co.za NNA Matyumza, SP Ngwenya, PH Staude,
Securities exchange listing GHM Watson
South Africa (Primary), JSE Limited Executive directors:
Transfer Secretaries RG Jacob (Chief Executive Officer), DA Austin
Computershare Investor Services (Pty) Ltd (appointed with effect from 1 March 2013),
70 Marshall Street, Johannesburg, 2001 CD Hughes (retired with effect from
PO Box 61051, Marshalltown, 2107 28 February 2013), MZ Mkhize
Date of SENS release: 29 July 2013 Company Secretary: W Fitchat
Date: 29/07/2013 07:05:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on,
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