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Audited results for the year ended 31 December 2016 and cash dividend declaration
HULAMIN LIMITED
("Hulamin" or "the group")
Registration number: 1940/013924/06
Share code: HLM
ISIN: ZAE000096210
AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2016 AND CASH DIVIDEND DECLARATION
- Headline Earnings per share up 222% to 119 cps
- Record sales of 232 000 tons
- Strong cash flow of R415 million
- Best ever safety performance (LTIFR: 0.09 and TRCFR: 0.27)
Richard Jacob, CEO, commented:
"This record set of results is based on a much improved and more consistent manufacturing
performance, tighter capital discipline and a weaker Rand against the US Dollar. In spite of a
stronger currency environment in the second half, Hulamin performed particularly well in
this period, improving HEPS from 48 cps in the first half of 2016 to 71 cps in the second, and
improving cash flow from R33 million to R382 million over the same period."
ENQUIRIES
Hulamin 033 395 6911
Richard Jacob, CEO 082 806 4068
Anton Krull, CFO 071 361 0622
CapitalVoice
Johannes van Niekerk 082 921 9110
COMMENTARY
Group sales volumes for 2016 increased 17% to 232 000 tons. Hulamin Rolled Products was the
major contributor to this performance, improving sales volumes by 19% to 214 000 tons.
Manufacturing output was consistent throughout the period, while improved product yields,
lower unit costs and a higher level of value added products made significant contributions to
the improved profitability.
Market conditions in which Hulamin trades, both in South Africa and around the globe,
remained tentative throughout 2016. Selling prices (rolling margins) in US Dollars in the second
half improved on levels achieved in the first half. For the full year, however, margins were softer
than in 2015. The London Metal Exchange aluminium price continued to rise through the
second half of 2016 to close at $1 713 per ton. This resulted in a metal price lag profit of R50
million for the full year (2015: loss of R161 million).
Turnover increased to R10.1 billion (2015 R8.4 billion) driven by the higher sales volume, an
average Rand LME price that increased by 24% during the year under review and the weakening
of the Rand against the US Dollar.
Local demand for beverage can stock products started the year under pressure and recovered
somewhat in the second half to end the year at a similar level to 2015. The increased demand
for can stock in the second half allowed us to source additional volumes of scrap. Now that the
recycling facility is fully commissioned and contributing to overall business performance, albeit
ramping up to full capacity in conjunction with the growth in sales of can body stock, we are
increasing our activities in sourcing all forms of scrap.
Rolled Products manufacturing conversion costs per ton declined in real terms by 10.7% (4.3%
nominally). Total manufacturing costs (excluding metal price lag) rose by 14% to R3.1 billion.
Aside from the increased variable costs such as packaging, material costs, alloying elements
and certain components of energy cost, which are also sensitive to currency and commodity
prices, we maintained tight controls over employment, maintenance and energy costs.
Earnings before interest and taxation (EBIT) rose by 110% to R622 million. Comparative
operating profit (before metal price lag) was 20% higher at R567 million. Net interest charges
increased by 30% to R87 million, as a result of higher average levels of debt. Attributable
earnings were consequently 135% higher at R385 million for the year (Headline Earnings per
Share (HEPS) was 119 cents compared to 37 cents in 2015). Normalised HEPS improved by
116% to 119 cents.
Cash flow before financing activities improved sharply to R415 million (2015: R420 million
outflow), after R328 million capital expenditure and interest payments of R102 million
(including capitalised interest of R15 million).
Operational performance at the Isizinda cast house continued to improve. This asset
contributes to improved energy efficiency (receiving molten metal from Hillside Aluminium),
lower overall cost of rolling slab and more efficient use of working capital through increased flexibility.
Hulamin Extrusions performance also improved compared to the prior period. During 2016, we
approved a capital investment plan for Hulamin Extrusions and the repositioning of the
business in the very dynamic local market.
Dividend
The board has declared a final dividend of 15 cents per share for 2016 (before withholding tax).
Transformation
We contribute to a new sustainable economic order in South Africa through our conduct in
business, one that broadens economic participation and addresses social injustice, racism,
poverty and inequality among other development objectives. Following the conclusion of the
Black Economic Empowerment ownership transaction in 2015, Hulamin has made further
progress in 2016 in the areas of management control and employment equity. As a result, 81%
of line management are now black (62% of whom are African and 23% are African women). We
continue to build a world-class management team that is well placed to lead Hulamin into the future.
Prospects
Hulamin expects to maintain the improved sales and manufacturing performance achieved in
2016, into 2017. Should the Rand continue to firm against the US Dollar, however, this is likely
to put pressure on financial performance. We expect healthy demand for our products
throughout 2017 in market conditions that we expect to remain uncertain.
M E Mkwanazi R G Jacob
Chairman Chief Executive Officer
Pietermaritzburg
23 February 2017
Condensed Consolidated Balance Sheet
as at 31 December 2016
2016 2015
R'000 R'000
ASSETS
Non-current assets
Property, plant and equipment 3 263 500 3 166 800
Intangible assets 69 086 66 917
Retirement benefit asset 117 397 142 292
Deferred tax asset 25 463 20 260
3 475 446 3 396 269
Current assets
Inventories 1 825 221 1 784 805
Trade and other receivables 1 513 096 1 384 390
Derivative financial assets 64 445 8 457
Cash and cash equivalents 75 627 70 158
Income tax asset 2 603 12 461
3 480 992 3 260 271
Total assets 6 956 438 6 656 540
EQUITY
Share capital and share premium 1 817 580 1 817 580
BEE reserve 51 776 51 224
Employee share-based payment reserve 55 852 45 707
Hedging reserve 15 506 ( 92 122)
Retained earnings 2 405 974 2 032 128
Total equity 4 346 688 3 854 517
LIABILITIES
Non-current liabilities
Non-current borrowings 162 000 216 000
Deferred tax liability 516 533 486 765
Retirement benefit obligations 258 879 227 997
937 412 930 762
Current liabilities
Trade and other payables 1 141 011 806 210
Current borrowings 490 444 829 401
Derivative financial liabilities 15 168 235 650
Income tax liability 25 715 -
1 672 338 1 871 261
Total liabilities 2 609 750 2 802 023
Total equity and liabilities 6 956 438 6 656 540
Net debt to equity % 13.3 25.3
Condensed Consolidated Income Statement
2016 2015
Note R'000 R'000
Revenue 10 099 349 8 394 986
Cost of sales (8 957 621) (7 855 025)
Gross profit 1 141 728 539 961
Selling, marketing and distribution expenses (443 881) (382 204)
Administrative and other expenses (144 892) (111 050)
Other gains and losses 68 559 248 773
Operating profit 621 514 295 480
Interest income 1 309 2 085
Interest expense (88 005) (68 577)
Profit before tax 534 818 228 988
Taxation 3 (149 885) (65 274)
Net profit for the year attributable to equity holders of the company 384 933 163 714
Headline earnings
Net profit for the year attributable to equity holders of the company 384 933 163 714
(Profit)/loss on disposal of property, plant and equipment (6 093) 10 538
Bargain purchase gain - (51 868)
Tax effects of adjustments 897 (3 123)
Headline earnings attributable to equity holders of the company 379 737 119 261
Normalised Earnings
Headline earnings attributable to equity holders of the company 379 737 119 261
BEE share-based costs - 20 000
Transaction costs - 5 455
Post retirement medical aid past service costs adjustments - 4 857
Equity-settled share-based payment: Isizinda 552 27 224
Normalised earnings 380 289 176 797
Earnings per share (cents) 4
Basic 120 51
Diluted 117 50
Headline earnings per share (cents) 4
Basic 119 37
Diluted 116 36
Normalised earnings per share (cents) 4
Basic 119 55
Diluted 116 54
Dividends per share (cents)
Interim - 8
Final 15 -
Currency conversion
Rand / US dollar average 14.73 12.76
Rand / US dollar closing 13.61 15.56
Condensed Consolidated Statement of Comprehensive Income
for the year ended 31 December 2016
2016 2015
R'000 R'000
Net profit for the year attributable to equity holders of the
company 384 933 163 714
Other comprehensive (loss)/income for the year 93 851 (78 063)
Items that may be reclassified subsequently to profit or loss 107 628 (98 736)
Cash flow hedges transferred to income statement 127 948 (9 186)
Cash flow hedges created 21 535 (127 947)
Income tax effect (41 855) 38 397
Items that will not be reclassified to profit or loss (13 777) 20 673
Remeasurement of retirement benefit obligation (14 032) 25 134
Remeasurement of retirement benefit asset (5 103) 3 578
Income tax effect 5 358 ( 8 039)
Total comprehensive income for the year attributable to equity holders of the company 478 784 85 651
Condensed Consolidated Statement of Changes in Equity
for the year ended 31 December 2016
2016 2015
R'000 R'000
Balance at beginning of year 3 854 517 3 833 817
Total comprehensive income for the year 478 784 85 651
Value of employee services 26 998 16 777
Settlement of employee share incentives (12 436) (24 397)
Tax on employee share incentives (1 727) (3 096)
Share-based payment costs on 2015 BEE transaction - 20 000
Equity-settled share-based payment: Isizinda 552 31 224
Dividends paid - (105 459)
Total equity 4 346 688 3 854 517
Condensed Consolidated Cash Flow Statement
for the year ended 31 December 2016
2016 2015
R'000 R'000
Cash flows from operating activities
Operating profit 621 514 295 480
Net interest paid (101 792) (86 943)
(Profit)/loss on disposal of property, plant and equipment (6 093) 10 538
Non-cash items:
Depreciation, amortisation and impairment of property,
plant and equipment and intangible assets 186 000 148 661
Other non-cash items (58 308) 85 545
Income tax payment (127 972) (49 735)
Changes in working capital 165 679 (279 771)
679 028 123 775
Cash flows from investing activities
Additions to property, plant and equipment (314 856) (472 358)
Government grant 57 047 -
Acquisition of business in business combination - (100 170)
Additions to intangible assets (13 551) (15 480)
Proceeds on disposal of property, plant and equipment 7 681 44 679
(263 679) (543 329)
Cash flows before financing activities 415 349 (419 554)
Cash flows from financing activities
(Repayment of) / Proceeds from non-current borrowings (54 000) 270 000
(Repayment of) / Proceeds from current borrowings (338 957) 89 257
Settlement of employee share incentives (12 436) (24 397)
Proceeds to settle equity option - 4 000
Dividends paid - (105 459)
(405 393) 233 401
Net increase / (decrease) in cash and cash equivalents 9 956 (186 153)
Cash and cash equivalents at beginning of year 70 158 249 106
Effects of exchange rate changes on cash and cash equivalents (4 487) 7 205
Cash and cash equivalents at end of year 75 627 70 158
Notes
1. Basis of preparation
The audited group financial statements for the year ended 31 December 2016, from which these
condensed consolidated financial statements are derived, have been prepared in accordance with
International Financial Reporting Standards, the Companies Act 71 of 2008 and the JSE listing
requirements, under the supervision of the Chief Financial Officer, Mr AP Krull 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 group's 2015 financial statements.
Hulamin believes normalised earnings to more accurately reflect operational performance and is
arrived at by adjusting headline earnings to take into account non-operational and abnormal gains
and losses.
2016 2015
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 9 237 127 7 554 622
Hulamin Extrusions 862 222 840 364
Group total 10 099 349 8 394 986
OPERATING PROFIT
Hulamin Rolled Products 587 318 282 908
Hulamin Extrusions 34 196 12 572
Group total 621 514 295 480
TOTAL ASSETS
Hulamin Rolled Products 6 663 575 6 335 986
Hulamin Extrusions 292 863 320 554
Group total 6 956 438 6 656 540
3. Taxation
The tax charge included within these condensed consolidated financial statements is:
Normal 163 518 40 082
Deferred (13 633) 25 192
149 885 65 274
Normal rate of taxation 28.0% 28.0%
Adjusted for:
Exempt income, non-allowable and other items 0.0% 0.5%
Effective rate of taxation 28.0% 28.5%
4. Earnings per share
The weighted average number of shares used in the calculation of basic and diluted earnings per share, headline
earnings per share and normalised earnings per share is as follows:
Number of Number of
shares shares
2016 2015
Weighted average number of shares used for basic EPS 319 596 836 319 596 836
Share options 9 064 508 7 666 904
Weighted average number of shares used for diluted EPS 328 661 344 327 263 740
R'000 R'000
5. Dividends per share
Dividends per share declared
Interim dividend: nil (2015: 8 cents on 319 596 836 ordinary shares) - 25 568
Final dividend: 15 cents on 319 596 836 ordinary shares (2015: nil) 47 940 -
Final dividend: 15 cents on 4 721 600 A1 ordinary shares (2015: nil) 708 -
Total 48 648 25 568
The final dividend was declared subsequent to year end and therefore has not been provided for in the group
financial statements.
6. Commitments and contingent liabilities
Capital expenditure contracted for but not yet incurred 109 734 202 632
Operating lease commitments 30 782 41 034
AUDIT OPINION
The auditors, PricewaterhouseCoopers Inc., have issued their opinion on the group's financial statements for the
year ended 31 December 2016. The audit was conducted in accordance with International Standards on Auditing.
They have issued an unmodified audit opinion. The auditor's report does not necessarily report on all the
information contained in this announcement. Shareholders are therefore advised that, in order to obtain a full
understanding of the nature of the auditor's engagement, they should obtain a copy of the auditor's report
together with the accompanying financial information from the company's registered office. These condensed
consolidated financial statements, although not audited, have been derived from the group's audited financial
statements and are consistent, in all material respects, with the group's audited financial statements. The directors
take full responsibility for the preparation of this announcement, including ensuring that the condensed
consolidated financial statements are correctly extracted from the underlying audited financial statements.
CASH DIVIDEND DECLARATION
Notice is hereby given that the directors have declared a final gross cash dividend of 15.0 cents
(12.0000 cents net of dividend withholding tax) per ordinary share for the year ended 31 December 2016.
The dividend has been declared from income reserves. A dividend withholding tax of 20% will
be applicable to all shareholders who are not exempt.
The issued share capital at the declaration date is 319 596 836 ordinary shares and 4 721 600
A1 ordinary shares. The income tax number of the company is 9522-526-71-5.
The salient dates for the dividend will be as follows:
Last day of trade to receive a dividend Monday, 20 March 2017
Shares commence trading ex-dividend Wednesday, 22 March 2017
Record date Friday, 24 March 2017
Payment date Monday, 27 March 2017
Share certificates may not be de-materialised or rematerialised between Wednesday,
22 March 2017 and Friday, 24 March 2017.
CORPORATE INFORMATION
HULAMIN LIMITED
("Hulamin", "the company" 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 (Pty) Ltd
Rosebank Towers, 15 Biermann Avenue, Rosebank, 2196; 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), CA Boles*(1), LC Cele*, VN Khumalo, TP Leeuw*, N Maharajh*(2),
NNA Matyumza*, Dr B Mehlomakulu*(3), SP Ngwenya, PH Staude*, GHM Watson*, GC Zondi(#)(4)
Executive directors:
RG Jacob (Chief Executive Officer), AK Krull (Chief Financial Officer)(4), MZ Mkhize
*Independent non-executive director
# Alternate non-executive director
Note 1:Appointed on 1 October 2016
Note 2:Appointed on 1 September 2016
Note 3:Appointed on 1 November 2016
Note 4: Appointed on 1 May 2016
J B Magwaza and D A Austin resigned as directors effective 30 April 2016.
Company Secretary
W Fitchat
Date of SENS release: 27 February 2017
Date: 27/02/2017 07:30:00 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,
information disseminated through SENS.
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