Your SlideShare is downloading. ×

Hulamin Ltd FY 2013 results

87

Published on

Hulamin Ltd FY 2013 results

Hulamin Ltd FY 2013 results

Published in: Investor Relations
0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total Views
87
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
0
Comments
0
Likes
0
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. THINK HULAMIN THINK ALUMINIUM THINK FUTURE Audited Results and withdrawal of cautionary announcement for the year ended 31 December 2013
  • 2. THINK FUTURE THINK ALUMINIUM THINK HULAMIN HIGHLIGHTS • Normalised earnings up 251% to R201 million • HEPS increased by 128% to 57 cents per share • Positive cash flow before financing activities of R135 million • Non-cash once-off net impairment charge of R1,53 billion • Growing local sales contribution • Improved performance from Hulamin Extrusions AUDIT OPINION The auditors, PricewaterhouseCoopers Inc., have issued their opinion on the group’s financial statements for the year ended 31 December 2013. 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 obtainafullunderstandingofthenatureoftheauditor’sengagement,theyshouldobtain a copy of the auditor’s report together with the accompanying financial information from the company’s registered office. These condensed 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 the condensed financial statements.
  • 3. 2013 | Hulamin Audited Results 1 COMMENTARY We have made further progress in the year under review to position Hulamin appropriately for growth and improved profitability. Continuing cost savings with a 10% reduction in employee numbers and efficiency gains from our manufacturing excellence program and other initiatives netted R96 million in 2013 and over R200 million since inception in 2010. The restructuring of the Rolled Products operations to achieve international best practice benchmarks is underway, having delivered lower annualised production of 192 000 tons in 2013. In September we successfully concluded the replacement of our debt facilities to match our working capital cycle. While certain operations, notably slab production, improved operating performance, and the hot rolling line maintained its high performance levels, cold rolling and the production of can end stock required ongoing supervision. These factors, combined with a first half unfavourable mix and planned replacement maintenance to the Camps Drift Hot Mill, contributed to Rolled Products sales being weaker in 2013 than in 2011 and 2012 and are being addressed in the restructuring referred to earlier. The impact of declining cost competitiveness and margin pressure, exacerbated by rampant input cost increases, supply disruptions, imported rolled and extruded products in the local market without tariff protection and general weak local demand, prompted the revalidation of growth assumptions and a resultant revaluation of plant and equipment in terms of IAS 36, translating to the R1,5 billion after tax, once-off non-cash impairment charge. We remain committed to realising maximum profitability as we optimise the use of installed capacity while unlocking promising regional growth opportunities. The spearhead of this program is the measured introduction of all-aluminium beverage cans, and the metal sourcing and recycling benefits it delivers, without sacrificing high value export opportunities. By implementing new product scheduling technology, with the lighter gauge can body-driven stock mix at its centre, we expect Hulamin Rolled Products to achieve optimal profit realisation at a lower nominal output level of 220 000 tons annually at full capacity. Turnover for the year under review increased to R7,56 billion (2012: R6,54 billion), supported by an improved performance from Hulamin Extrusions and the depreciation of the Rand by 17,5% on average to the US Dollar. Underlying operating profit before metal price lag and impairments increased by 101% to R375 million (2012 restated: R187 million), the highest since 2008. The weakening currency in 2013 is estimated to have contributed approximately R240 million to this number. The LME aluminium price continued to weaken during the year, leading to a R58 million metal price lag loss.
  • 4. 2 THINK FUTURE THINK ALUMINIUM THINK HULAMIN Net interest remained constant at R63 million and, after recognising the impairment charge, earnings declined to a loss of R1,34 billion, from a restated R29 million profit in the prior year. Headline earnings increased by 132% to R183 million (2012 restated: R79 million) or 57 cents per share (2012 restated: 25 cents per share). Normalised earnings, disregarding the impairment charge and once off costs related to the reduction in employee complement, increased to R201 million (2012 restated: R57 million) or 63 cents per share (2012 restated: 18 cents per share). Borrowings decreased to R612 million (2012: R742 million), reflecting a positive cash flow before financing activities of R135 million. Market environment Demand in Western Europe and United States gradually improved through the year. Chinese exports of can end stock, plate and foil continued to grow due to a major expansion of rolling capacity in China in recent years which exceeded the growth in their domestic demand. The growing competition from Chinese exports negatively impacted international rolling margins. Domestic demand for rolled products showed moderate improvement, led by growth in the beverage can market and a return to normal demand patterns in the automotive industry, in spite of being impacted negatively by the three-week strike in August 2013. Demand for extruded products benefited from infrastructure projects, particularly the construction of solar electrical generation plants. All-aluminium beverage cans in Southern Africa In November 2012 Hulamin concluded a commitment with Nampak for the supply of 28 000 tons of aluminium can body stock from 2013 to 2015. Hulamin successfully commenced qualification of its can body stock products in the fourth quarter of 2013. Used beverage cans The conversion of the local and regional beverage can market to the all-aluminium can has created an opportunity for a major step forward in the recycling of packaging materials in South Africa. The recycling of used beverage cans will contribute to job and wealth creation in scrap collection and distribution, and will have environmental benefits from reduced littering and an improved national carbon footprint. Aluminium used beverage cans are particularly well suited to recycling into new can body stock. To this end, Hulamin is investing R300 million in additional scrap separation, processing and recycling equipment, with a planned start up in mid-2015. This investment will allow Hulamin to secure competitively priced aluminium inputs and increase its slab production capacity in Pietermaritzburg. COMMENTARY continued
  • 5. 2013 | Hulamin Audited Results 3 Supply of aluminium from Richards Bay Hulamin sources melting ingot from BHP Billiton’s Hillside smelter in Richards Bay. This metal is combined with process scrap to produce rolling slab and extrusion billet in Pietermaritzburg. Approximately two thirds of Hulamin’s rolling slab and one third of its extrusion billet requirement are produced in this way. The balance of Hulamin’s rolling slab requirement is sourced from the casthouse at BHP Billiton’s Bayside smelter, also in Richards Bay, and the majority of extrusion billet is imported. Withdrawal of cautionary announcement Shareholders are referred to the cautionary announcement issued by Hulamin on 16 January 2014, wherein it was advised that BHP Billiton had commenced an engagement process with its employees over the restructuring of its Bayside operations and that Hulamin had therefore entered into negotiations with BHP Billiton SA Holdings (“BHP Billiton”) over the future of rolling slab supply from the Bayside casthouse. Shareholders are now advised that BHP Billiton has committed to the continued supply of rolling slab to Hulamin to 31 December 2014 and in this regard, caution is no longer required to be exercised by shareholders when dealing in the company’s securities. Hulamin and BHP Billiton have been in discussions for several years over the longer term availability of rolling slab and other value added smelter products from Bayside. These discussions are ongoing and shareholders will be advised as further developments take place. Dividends The board has not declared a dividend for 2013. Prospects The continuing application of efficiency and improvement programmes are expected to benefit manufacturing performance and profitability in 2014 as we progress towards full capacity utilisation. Local sales volumes are expected to grow in 2014 and beyond, as can production is switched to the all-aluminium can, to be completed by 2018 to 2020. Given Hulamin’s current export position, financial performance will continue to be influenced by the value of the Rand in exchange with foreign currencies. ME Mkwanazi RG Jacob Chairman CEO
  • 6. 4 THINK FUTURE THINK ALUMINIUM THINK HULAMIN Restated 2013 2012 Note R’000 R’000 Revenue 7 560 007 6 541 997 Cost of sales (6 914 691) (6 111 363)* Gross profit 645 316 430 634 Selling, marketing and distribution expenses (390 328) (361 621) Administrative expenses (70 830) (82 713) Impairment of property, plant and equipment and intangible assets (2 122 316) (84 057)* Other gains and losses 132 787 198 844* Operating (loss)/profit (1 805 371) 101 087 Interest income 1 358 621 Interest expense (64 715) (63 530) Share of profits of associates and joint ventures – 181 (Loss)/profit before tax (1 868 728) 38 359 Taxation 4 523 769 (9 106) Net (loss)/profit for the year (1 344 959) 29 253 Headline earnings Net (loss)/profit for the year (1 344 959) 29 253 Profit on disposal of property, plant and equipment (143) (15 419) Impairment of property, plant and equipment 2 122 316 84 057 Loss on sale of investment in joint venture – 3 793 Tax effects of adjustments (594 209) (22 763) Headline earnings attributable to shareholders 183 005 78 921 Normalised earnings Headline earnings attributable to shareholders 183 005 78 921 Severance costs (net of tax) 18 438 – Effect of pension fund conversion (net of tax) – (21 584) Normalised earnings 201 443 57 337 Earnings per share 5 Basic (cents) (422) 9 Diluted (cents) (417) 9 Headline earnings per share 5 Basic (cents) 57 25 Diluted (cents) 57 25 Normalised earnings per share 5 Basic (cents) 63 18 Diluted (cents) 62 18 Currency conversion Rand/US dollar average 9,66 8,22 Rand/US dollar closing 10,56 8,47 * Prior period information has been reclassified, refer note 3. CONDENSED CONSOLIDATED INCOME STATEMENT for the year ended 31 December 2013
  • 7. 2013 | Hulamin Audited Results 5 CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2013 Restated 2013 2012 R’000 R’000 Net (loss)/profit for the year attributable to equity holders of the company (1 344 959) 29 253 Other comprehensive loss for the year (4 981) (29 737) Items that may be reclassified subsequently to profit or loss (22 407) (17 220) Cash flow hedges transferred to income statement 12 359 (11 558) Cash flow hedges created (43 480) (12 359) Income tax effect 8 714 6 697 Items that will not be reclassified to profit or loss 17 426 (12 517) Remeasurement of retirement benefit obligation 20 671 (4 313) Remeasurement of retirement benefit asset 3 531 (13 072) Income tax effect (6 776) 4 868 Total comprehensive loss for the year attributable to equity holders of the company (1 349 940) (484)
  • 8. 6 THINK FUTURE THINK ALUMINIUM THINK HULAMIN CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2013 Restated 2013 2012 R’000 R’000 Balance at beginning of year 4 747 597 4 669 625 Impact of change in accounting policy – 86 664 Total comprehensive loss for the year (1 349 940) (484) Shares issued 112 25 Redemption of B ordinary shares – (129) Value of employee services 9 360 (1 878) Settlement of employee share incentives (4 603) (6 017) Tax on employee share incentives 284 (209) Total equity 3 402 810 4 747 597
  • 9. 2013 | Hulamin Audited Results 7 CONDENSED CONSOLIDATED BALANCE SHEET as at 31 December 2013 Restated Restated 2013 2012 2011 R’000 R’000 R’000 ASSETS Non-current assets Property, plant and equipment 2 515 125 4 673 697 4 915 087 Intangible assets 38 093 63 437 47 499 Investments in associates and joint ventures – – 40 581 Retirement benefit asset 161 468 177 179 200 962 Deferred tax asset 27 815 33 632 25 957 2 742 501 4 947 945 5 230 086 Current assets Inventories 1 806 575 1 515 612 1 306 702 Trade and other receivables 972 619 945 223 1 069 739 Derivative financial assets 13 889 46 990 60 747 Cash and cash equivalents 192 800 29 596 19 900 Income tax asset 1 488 – – 2 987 371 2 537 421 2 457 088 Total assets 5 729 872 7 485 366 7 687 174 EQUITY Share capital and share premium 1 817 546 1 817 434 1 727 643 BEE reserve 174 686 174 686 174 686 Employee share-based payment reserve 29 720 101 099 105 750 Hedging reserve (31 305) (8 898) 8 322 Retained earnings 1 412 163 2 663 276 2 739 888 Total equity 3 402 810 4 747 597 4 756 289 LIABILITIES Non-current liabilities Non-current borrowings – 556 948 628 284 Deferred tax liability 405 311 962 518 978 640 Retirement benefit obligations 225 826 233 242 212 720 631 137 1 752 708 1 819 644 Current liabilities Trade and other payables 826 086 718 974 816 251 Current borrowings 804 482 215 131 200 325 Derivative financial liabilities 65 357 49 443 94 360 Income tax liability – 1 513 305 1 695 925 985 061 1 111 241 Total liabilities 2 327 062 2 737 769 2 930 885 Total equity and liabilities 5 729 872 7 485 366 7 687 174 Net debt to equity (%) 18,0 15,6 17,0
  • 10. 8 THINK FUTURE THINK ALUMINIUM THINK HULAMIN Restated 2013 2012 R’000 R’000 Cash flows from operating activities Operating (loss)/profit (1 805 371) 101 087 Net interest paid (64 212) (65 510) Profit on disposal of property, plant and equipment (143) (15 419) Non-cash items: Depreciation, amortisation and impairment of property, plant and equipment 2 332 580 306 486 Other non-cash items 59 751 (26 243) Income tax payment (28 400) (20 338) Changes in working capital (211 247) (181 671) 282 958 98 392 Cash flows from investing activities Additions to property, plant and equipment (131 165) (82 319) Additions to intangible assets (16 659) (15 621) Proceeds on disposal of property, plant and equipment 158 34 926 Decrease in investment in joint ventures – 36 969 (147 666) (26 045) Cash flows before financing activities 135 292 72 347 Cash flows from financing activities Proceeds from borrowings 804 482 – Borrowings repaid (772 079) (56 530) Shares issued 112 25 Redemption of B ordinary shares – (129) Settlement of share options (4 603) (6 017) 27 912 (62 651) Net increase in cash and cash equivalents 163 204 9 696 Cash and cash equivalents at beginning of year 29 596 19 900 Cash and cash equivalents at end of year 192 800 29 596 CONDENSED CONSOLIDATED CASH FLOW STATEMENT for the year ended 31 December 2013
  • 11. 2013 | Hulamin Audited Results 9 1. BASIS OF PREPARATION The audited group financial statements for the year ended 31 December 2013, 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 D A Austin CA(SA). These condensed consolidated financial statements have been prepared in terms of IAS 34 – Interim Financial Reporting. 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. 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 employmentbenefits.ThemostsignificantimpactonthegrouphasbeenthatIAS19Reliminates 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. Hulamin has not adopted any other new or revised accounting standards in the current period which have had a material impact on reported results. NOTES
  • 12. 10 THINK FUTURE THINK ALUMINIUM THINK HULAMIN 1. BASIS OF PREPARATION continued The effects of the application of IAS 19R on the reported results for the years presented are as follows: 2013 2012 2011 R’000 R’000 R’000 Impact on profit/(loss) for the period Decrease/(increase) in cost of sales 6 886 (143 465) (9 053) (Increase)/decrease in taxation expense (1 928) 40 170 2 535 Increase/(decrease) in net profit for the period 4 958 (103 295) (6 518) Impact on comprehensive income/(loss) for the period Increase/(decrease) in remeasurement of retirement benefit asset 3 531 (13 072) 179 082 Decrease/(increase) in remeasurement of retirement benefit obligations 20 672 (4 314) (49 662) (Increase)/decrease in taxation relating to items of other comprehensive income (6 777) 4 868 (36 238) Increase/(decrease) in other comprehensive income for the period 17 426 (12 518) 93 182 Increase/(decrease) in total comprehensive income for the period 22 384 (115 813) 86 664 Impact on balance sheet Increase in retirement benefit asset 3 178 – 163 347 Increase in retirement benefit obligations (12 574) (40 484) (42 980) Increase in deferred income tax asset 2 959 4 072 4 732 (Increase)/decrease in deferred income tax liability (328) 7 264 (38 435) Net (decrease)/increase in net assets (6 764) (29 148) 86 664 Decrease/(increase) in retained earnings 6 764 29 148 (86 664) Impact on earnings per share Increase/(decrease) in basic earnings per share (cents) 2 (33) (2) Increase/(decrease) in diluted earnings per share (cents) 2 (32) (2) Impact on headline earnings per share Increase/(decrease) in basic headline earnings per share (cents) 2 (33) (2) Increase/(decrease) in diluted headline earnings per share (cents) 2 (32) (2) NOTES continued
  • 13. 2013 | Hulamin Audited Results 11 Restated 2013 2012 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 6 783 158 5 852 892 Hulamin Extrusions 776 849 689 105 Group total 7 560 007 6 541 997 Operating (loss)/profit Hulamin Rolled Products (1 846 657) 109 886 Hulamin Extrusions 41 286 (8 799) Group total (1 805 371) 101 087 Total assets Hulamin Rolled Products 5 443 306 7 234 691 Hulamin Extrusions 286 566 250 675 Group total 5 729 872 7 485 366 3. RECLASSIFICATION In the current year, the charge for impairment of property, plant and equipment and intangible assets has, due to its magnitude and nature, been presented as a separate line item of the income statement (previously reflected in cost of sales). Certain other items, previously reflected in cost of sales, have been presented in other gains and losses in the current year. The reclassification of the line items from cost of sales results in more appropriate presentation as those items are not directly associated with generating revenues. In terms of IAS 8 – Accounting Policies, the comparative information has been reclassified and the effect on the financial statements is as follows: 2012 Previously reported R’000 2012 Currently reported R’000 Included in cost of sales: Impairment of property, plant and equipment and intangible assets 84 057 – Profit on disposal of property, plant and equipment (15 419) – Loss on sale of investment in joint venture 3 793 – Net gain on curtailment and settlement of defined benefit plan (52 125) – Insurance proceeds (93 155) – Separate line item of income statement Impairment of property, plant and equipment and intangible assets – 84 057 Included in other gains and losses: Profit on disposal of property, plant and equipment – (15 419) Loss on sale of investment in joint venture – 3 793 Net gain on curtailment and settlement of defined benefit plan – (52 125) Insurance proceeds – (93 155)
  • 14. 12 THINK FUTURE THINK ALUMINIUM THINK HULAMIN Restated 2013 2012 R'000 R'000 4. TAXATION The tax charge included within these condensed financial statements is: Normal 25 399 (18 623) Deferred (549 168) 27 729 (523 769) 9 106 Normal rate of taxation (%) 28,0 28,0 Adjusted for: Exempt income, non-allowable and other items (%) – (4,3) Effective rate of taxation (%) 28,0 23,7 5. EARNINGS PER SHARE (EPS) 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 shares Number of shares 2013 2012 Weighted average number of shares used for basic EPS 319 007 266 317 510 700 Share options 3 337 019 4 521 585 Weighted average number of shares used for diluted EPS 322 344 285 322 032 285 Restated 2013 2012 R'000 R'000 6. COMMITMENTS AND CONTINGENT LIABILITIES Capital expenditure contracted for but not yet incurred 45 425 37 852 Operating lease commitments 41 113 3 246 Guarantees and contingent liabilities 300 300 NOTES continued
  • 15. 2013 | Hulamin Audited Results 13 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 (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* SMG Jennings* (appointed with effect from 1 July 2013) *Independent non-executive director Executive directors: RG Jacob (Chief Executive Officer) DA Austin (appointed with effect from 1 March 2013) CD Hughes (retired with effect from 28 February 2013), MZ Mkhize Company Secretary W Fitchat Date of SENS release: 24 February 2014 CORPORATE INFORMATION
  • 16. 14 THINK FUTURE THINK ALUMINIUM THINK HULAMIN www.hulamin.co.za

×