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HULAMIN LIMITED - Summarised provisional consolidated financial results for the year ended 31 December 2019

Release Date: 26/06/2020 07:05
Code(s): HLM     PDF:  
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Summarised provisional consolidated financial results 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” or “the Company”)

SUMMARISED PROVISIONAL CONSOLIDATED FINANCIAL RESULTS FOR THE YEAR ENDED
31 DECEMBER 2019

Results Headlines

•     Group sales volumes decreased by 11% to 219 000 tons
•     Impairment charge of R1.3 billion across both Hulamin Rolled Products and Extrusions
•     Loss per share increased by 57% to 380 cents per share
•     Headline earnings down 182% to a loss of R240 million impacted by restructuring costs, a negative
      metal price lag and Isizinda restructuring
•     EBITDA(1) before impairment down 98% to R18 million and normalised EBITDA(1) down 54% to
      R313 million
•     R222 million free cash flow(2)
•     Balance sheet remains robust, with net debt to equity of 11%
•     Turnaround actions completed


Results Overview

“Hulamin experienced particularly difficult conditions during 2019. Export sales to the United States
were disrupted by blockages in our distribution channel, the global economy slowed measurably
through the year (prompted by a well recorded slowing in China), while local regional demand came
under severe pressure throughout the year. Following the absorption of working capital in the first half
of 2019, we paid specific attention to managing borrowings, to end the year 23% lower than 2018 at
R226 million. This represents a positive cash flow during 2019 of R68 million.

Hulamin Extrusions suffered a first-half loss, which includes a provision for restructuring costs that were
actioned largely in the second half. Sales volumes were measurably lower following a manufacturing
disruption. We have concluded rightsizing programmes (in both Hulamin Extrusions and Hulamin Rolled
Products). This action has resulted in the closure of the Hulamin Extrusions operation in Olifantsfontein
and the consolidation of operations in Pietermaritzburg.

The outbreak of the Covid-19 pandemic in late 2019 and early 2020 has had a serious impact on all
Hulamin’s markets. It is likely to reduce sales volumes considerably and counteract the benefits of cost
saving actioned in 2019 as well as the weaker Rand / Dollar exchange rate.”

Richard Jacob, Hulamin Chief Executive Officer


Financial Headlines
The audited results for the year ended 31 December 2019 (“current period” or “2019 Year”), as
compared to the audited results for the year ended 31 December 2018 (“comparative period” or “2018
Year”), are set out below:

                                                             2019 Year                       2018 Year

                                                     R’000            Percentage               R’000
                                                                       change
 Revenue (R billion)                              10 708 581            -7.2%                11 533 818
 Operating (loss) / profit (R million)            (1 421 404)            49.6%               (949 907)

 Basic (loss) / earnings per share (cents)              (380)            57.0%                  (242)

 Basic headline (loss) / earnings per share              (76)          -183.5%                  91
 (cents)

 Normalised headline (loss) / earnings per                (8)          -110.4%                  77
 share (cents) (note 1)


No dividend was declared in respect of the 2019 year. A dividend of 18 cents per share was declared
in respect of the comparative period.

Note 1: Normalised EBIT, EBITDA, normalised EBITDA and normalised headline earnings (“HEPS”)
The presentation of normalised EBIT, EBITDA, normalised EBITDA and normalised headline earnings
is not an IFRS requirement and these measures may not be directly comparable with the same or
similar measures disclosed by other companies.
These measures are used by the Hulamin Executive Committee in assessing financial performance
and are calculated in a consistent manner as per the latest annual financial statements, by 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 profits and earnings attributable to the ongoing
activities of the Group.
In the current period, these measures include an adjustment for restructuring costs, the settlement of a
share-based payment relating to the Isizinda restructuring and the timing impact of a commodity risk
management programme not qualifying for hedge accounting as at 31 December 2018 due to the
limitations of IAS 39.

Note 2: The cash flow generated from operations and cash flow from investing activities, which equates
to cash flows before financing activities of Hulamin ("free cash flow"), was impacted in the fourth quarter
of 2018 by a customer payment of R208 million that was due to the group and was fully authorised by
the customer and scheduled to be paid on 31 December 2018 but was only concluded in early January
2019. The directors of Hulamin felt that this anomaly misrepresented the group's cash flows for the
2018 financial year and therefore presented an additional measure in the 2018 results, "free cash flow
(adjusted)", which represented free cash flow adjusted for the impact of the inclusion of the customer
payment referred to above. Free cash flow in the current period, excluding this customer payment,
would have amounted to an inflow of R14 million.

Ernst & Young Inc. have issued an unmodified opinion on the consolidated audited results for the year
ended 31 December 2019. That report also includes communication of key audit matters. The audited
annual financial statements and the auditor’s report may be viewed on the Company’s website
http://ir.hulamin.com. 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.

This short form announcement is the responsibility of the Board and does not contain full or complete
details. Any investment decisions by investors and/or shareholders should be based as a whole on
consideration of the summarised provisional consolidated financial results for the year ended
31 December 2019 which may be downloaded from
(https://senspdf.jse.co.za/documents/2020/jse/isse/HLM/2019Prov.pdf)
or Hulamin’s investor website (http://ir.hulamin.com),
or may be requested from the Company by contacting the registered office of the Company during
ordinary business hours, for a period of 30 calendar days following the date of this announcement.

Registered office: Moses Mabhida Road, Pietermaritzburg; Telephone: 033 395 6911

Pietermaritzburg
26 June 2020

Sponsor
Questco Corporate Advisory Proprietary Limited

Date: 26-06-2020 07:05:00
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