| Tue 24 Jul 2007, 7:15 | | HLM - Hulamin Limited - Interim results for the ha |
|
HLM
HLM
HLM - Hulamin Limited - Interim results for the half-year ended 30 June 2007
and dividend declaration
Hulamin Limited
Registration number: 1940/013924/06
Share code: HLM
ISIN: ZAE000096210
Interim results for the half-year ended 30 June 2007
- Continuing volume growth
- Sustained improvement in underlying performance by Rolled Products
- Operating profit of R171 million before once off corporate structuring
costs
- Once off corporate structuring costs of R160 million
led to headline loss of R70 million
- Interim dividend of 18 cents per share
Alan Fourie CEO commented: "Rolled Products has delivered a particularly
strong operational performance in the half-year to June 2007 with support from
volume, mix and exchange rate gains to maintain operating profit at R160
million, notwithstanding the benefit from the non-recurring R128 million metal
price lag included in the corresponding profit figure last year.
Volume growth in niche, high value sectors continued and is expected to
continue at similar or accelerated levels in the second half of the year.
Consequently we expect operating earnings in the second half of the year to
exceed those achieved in the first half."
Enquiries
Hulamin 033 395 6911
Alan Fourie 083 626 9444
Charles Hughes 082 745 6173
Richard Jacob 082 806 4068
College Hill 011 447 3030
Johannes van Niekerk 082 921 9110
Fred Cornet 083 307 8286
Commentary
Hulamin increased its revenue by 37% to R3,3 billion in the first half of 2007
compared to the first half of 2006. Rolled Products maintained operating
profits of R160 million notwithstanding the benefit from the R128m
non-recurring metal price lag in the first half of 2006. However Hulamin`s
operating profit before corporate structuring costs was 10% lower at R171
million following the reduced earnings contribution from Hulamin Extrusions.
Operating profit amounted to R11 million after accounting for corporate
structuring costs of R160 million, which are primarily the IFRS 2 costs
related to the introduction of BEE equity ownership, and this was also the
underlying cause of the headline loss of R70 million.
Operating cash flow improved to positive R61m on the back of tighter inventory
control. Capital expenditure amounted to R178 million and included R98 million
in respect of the Rolled Products expansion project. Net debt at 30 June
amounted to R832 million giving rise to a net debt to equity ratio of 24%.
The implementation of employee share ownership plans in the second half of the
year will result in the introduction of a further 5% BEE equity investment in
the group at an estimated cost of R10 million in respect of the current year.
Rolled Products
Rolled Products` sales volumes grew by 7% to 190 000 tons annualised, due
largely to an 8% growth in export sales. Having shown strong growth for the
last three years, growth in local sales volumes slowed sharply to 2%. This
slowdown was partly prompted by de-stocking in some sectors and second half
sales are expected to improve.
International demand remains firm and the sales mix improved with sustained
high growth in the high value sectors.
Although energy and packaging costs increased by 23%, the overall increase in
conversion costs was limited to 8%, resulting in an increase of 2% in unit
costs in nominal terms.
The price of primary aluminium on the LME was reasonably stable when compared
to the first half of 2006 during which the sharp price increase gave rise to a
non-recurring positive metal price lag effect of R128 million. This has been
partially compensated in 2007 by the movement in the average exchange rate
from R6,31 to R7,16. This exchange rate benefit, together with the effects of
the improved sales volumes and product mix, has contributed to achieving an
operating profit similar to that achieved in the first half of 2006.
Extrusions and Commercial Products
Hulamin Extrusions` earnings reduced sharply due to reduced margins and
increased costs. Sales volumes reduced slightly as a consequence of a flat
local market and increased imports. Margins in the architectural segment came
under pressure from imports but this is expected to ease following the
withdrawal of Chinese export rebates on aluminium extrusions with effect from
1 July. Hulamin Extrusions has also incurred considerable costs in product
development and the establishment of an improved distribution infrastructure.
Benefits from these actions are expected to flow through in the second half of
the year.
The Commercial Products operations have also been affected by reorganisation
and reflected a slight reduction in earnings.
Expansion Project
The company began work on the R950 million expansion of its Rolled Products
production facilities in 2006. With over 50% of the costs having been
committed and the schedule well established, it is expected that the project
will be completed on time and within budget, and will begin contributing to
increased sales volumes in early 2009.
Outlook
Operating profit before corporate restructuring costs in the second half of
the year is expected to exceed that achieved in the first half.
Dividend declaration
Notice is hereby given that the Board has declared an interim dividend (number
1) of 18 cents per share for the half-year ending 30 June 2007 to
shareholders recorded in the register at the close of business on Friday,
24 August 2007.
The salient dates of the declaration and payment of this interim dividend are
as follows:
Last date to trade ordinary shares "cum" dividend Friday, 17 August 2007
Ordinary shares commence trading "ex" dividend Monday, 20 August 2007
Record date Friday, 24 August 2007
Payment of dividend Monday, 27 August 2007
Share certificates may not be dematerialised or rematerialised between Monday,
20 August and Friday, 24 August 2007, both days inclusive.
On Monday, 27 August 2007, dividends due to holders of share certificates will
either be transferred electronically to shareholders` bank accounts or, in the
absence of suitable mandates, dividend cheques will be posted to such
shareholders. Shareholders who have not yet mandated electronic payments are
encouraged to do so for all future dividends.
Dividends in respect of dematerialised shareholders will be credited to the
shareholders` relevant CSDP or broker account.
The dividend is declared in the currency of the Republic of South Africa.
Dividends paid by the United Kingdom paying agent will be paid in British
currency at the ruling exchange rate at the close of business on Wednesday,
22 August 2007.
For and on behalf of the Board.
Willem Fitchat
Company Secretary
Moses Mabhida Road, Pietermaritzburg, KwaZulu-Natal
23 July 2007
Income Statement
Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
2007 2006 2006
Note R`000 R`000 R`000
Revenue 3 296 674 2 405 773 5 476 140
Cost of sales (2 950 153) (2 036 935) (4 684 789)
Gross profit 346 521 368 838 791 351
Other operating income - - 341
Selling and marketing
expenses (122 275) (119 722) (260 891)
Administrative expenses (53 363) (59 073) (98 374)
Operating profit before
corporate structuring costs 170 883 190 043 432 427
Corporate structuring costs 5 (159 927) - (10 000)
Operating profit 10 956 190 043 422 427
Share of associate
company`s loss (424) - (310)
Finance costs (46 634) (66 547) (222 119)
(Loss)/profit before tax (36 102) 123 496 199 998
Tax 3 (34 227) 7 936 11 379
Net (loss)/profit (70 329) 131 432 211 377
Attributable to:
Shareholders (70 271) 127 540 204 072
Minority interest (58) 3 892 7 305
(70 329) 131 432 211 377
Headline (loss)/earnings
(Loss)/profit attributable
to shareholders (70 271) 127 540 204 072
Add taxed loss on sale of
fixed assets - - 70
Headline (loss)/earnings
attributable to
shareholders (70 271) 127 540 204 142
(Loss)/earnings per share
(cents)
Basic (33) 62 100
Diluted (33) 61 99
Headline (loss)/earnings
per share (cents)
Basic (33) 62 100
Diluted (33) 61 99
Dividend per share (cents) 18 - -
Currency conversion
Rand/US dollar average 7,16 6,31 6,77
Rand/US dollar closing 7,05 7,15 7,00
Cash Flow Statement
Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
2007 2006 2006
R`000 R`000 R`000
Cash flows from operating activities
Operating profit 10 956 190 043 422 427
Interest paid (46 634) (66 547) (224 117)
Loss on disposal of property,
plant and equipment - - 70
Non-cash items:
Depreciation 90 605 90 305 172 501
Other non-cash items 140 669 7 468 1 521
Tax payments - - (1 448)
Change in working capital (134 998) (227 800) (260 389)
60 598 (6 531) 110 565
Cash flows from investing activities
Expenditure on property, plant
and equipment (176 528) (110 319) (231 323)
Expenditure on intangible assets (1 452) (2 981) (3 881)
Proceeds on disposal of property,
plant and equipment - - 46
Investments (1 280) - (2 074)
(179 260) (113 300) (237 232)
Cash flows from financing activities
Borrowings raised/(repaid) 67 441 79 394 (422 371)
Capital contribution 40 000 - 580 000
107 441 79 394 157 629
Net (decrease)/increase in cash,
cash equivalents and bank
overdrafts (11 221) (40 437) 30 962
Balance at beginning of period 41 559 10 597 10 597
Cash, cash equivalents and
bank overdrafts
at end of period 30 338 (29 840) 41 559
Balance Sheet
Unaudited Unaudited Audited
as at as at as at
30 June 30 June 31 December
2007 2006 2006
Note R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and equipment 4 026 206 3 898 565 3 939 255
Intangible assets 23 636 23 348 23 212
Investments in associates 2 621 - 1 765
4 052 463 3 921 913 3 964 232
Current assets
Inventories 930 899 906 203 988 978
Trade and other receivables 1 142 009 979 652 1 050 353
Cash and cash equivalents 78 176 93 287 63 526
Derivative financial assets 33 660 52 518 67 980
2 184 744 2 031 660 2 170 837
Total assets 6 237 207 5 953 573 6 135 069
EQUITY
Share capital 21 558 10 000 11 100
Share premium 967 649 2 887 581 787
Share-based payment reserve 174 686 - -
Hedging reserve (8 313) 16 318 7 749
Partners` capital accounts - 257 312 -
Retained income 2 241 118 2 361 904 2 311 389
Realised capital surpluses 293 293 293
Equity holders` interest 3 396 991 2 648 714 2 912 318
Minority interest 38 375 35 020 38 433
Total equity 3 435 366 2 683 734 2 950 751
LIABILITIES
Non-current liabilities
Borrowings 7 668 828 765 807 2 829
Deferred income tax liabilities 886 654 922 039 899 815
Retirement benefit obligations 104 615 97 526 98 632
1 660 097 1 785 372 1 001 276
Current liabilities
Trade and other payables 838 524 784 328 932 278
Borrowings 7 241 838 645 127 814 525
Hulamin Joint Venture 7 - - 396 320
Derivative financial liabilities 8 624 55 015 34 549
Income tax liability 52 758 (3) 5 370
1 141 744 1 484 467 2 183 042
Total liabilities 2 801 841 3 269 839 3 184 318
TOTAL EQUITY AND LIABILITIES 6 237 207 5 953 573 6 135 069
Debt to equity 26,5% 52,6% 41,1%
Net debt to equity 24,2% 49,1% 39,0%
Statement of Changes in Equity
Unaudited Unaudited Audited
half-year half-year year ended
30 June 30 June 31 December
2007 2006 2006
R`000 R`000 R`000
Balance at beginning of period 2 912 318 2 518 877 2 518 877
Net (loss)/profit (70 271) 127 540 204 072
Share premium 385 862 - 578 900
Share capital issued 10 458 - 1 100
Share-based payment reserve:
- BEE investor`s share
capital contribution 40 000 - -
- IFRS 2 charge on introduction of
BEE investors 134 686 - -
- value of employee services 11 575 2 121 4 830
- share-based payment settled (11 575) (2 121) (4 830)
Cash flow hedges transferred to
income
statement (7 749) (14 020) (14 020)
Cash flow hedges (8 313) 16 317 7 749
Partners` capital account
eliminated on
common control transaction - - (355 075)
Consideration in excess of
predecessor
values on sale of business - - (29 285)
Shareholders` interest 3 396 991 2 648 714 2 912 318
Minority interest in subsidiary 38 375 35 020 38 433
Balance at beginning of period 38 433 31 128 31 128
Share of (loss)/profit (58) 3 892 7 305
Equity 3 435 366 2 683 734 2 950 751
Notes
1. Basis of preparation
The consolidated unaudited interim financial statements of the group for the
half-year ended 30 June 2007 have been prepared in accordance with
International Accounting Standard (IAS) 34 - Interim Financial Reporting. The
accounting policies comply with International Financial Reporting Standards
(IFRS) and have been applied consistently with those used in the preparation
of the group`s 2006 annual financial statements except for the adoption of AC
503
- Accounting for Black Empowerment Transactions (an interpretation of IFRIC 8)
the impact of which is set out in note 5.
2. Segmental analysis
Revenue
Hulamin Rolled Products 2 828 365 2 011 154 4 592 018
Hulamin Extrusions 364 825 310 479 671 935
Commercial Products 103 484 84 140 212 187
Group total 3 296 674 2 405 773 5 476 140
Operating profit
Hulamin Rolled Products 160 463 160 513 374 079
Hulamin Extrusions 6 230 23 624 44 352
Commercial Products 4 190 5 906 13 996
Corporate structuring costs (159 927) - (10 000)
Group total 10 956 190 043 422 427
3. Tax
The 2006 financial statements do not reflect any charge or liability for
taxation on the results of The Hulamin Joint Venture, as this income tax was
borne by the partners in the joint venture.
Normal (47 388) (1 113) (6 821)
Deferred 13 161 9 049 18 200
(34 227) 7 936 11 379
Normal rate of taxation 29,0% 29,0% 29,0%
Adjusted for:
*Non-allowable items (123,3%) 0,7% 1,7%
Joint venture income not taxed - (36,1%) (36,4%)
(94,3%) (6,4%) (5,7%)
* Note that the majority of corporate structuring costs are not deductible for
income tax purposes.
4. Commitments and contingent liabilities
Capital expenditure commitments
Contracted 452 527 72 868 95 152
Approved but not contracted 518 180 101 434 984 668
970 707 174 302 1 079 820
Operating lease commitments 19 695 18 851 16 464
Guarantees and contingent liabilities 22 103 4 057 21 980
5. Corporate structuring costs
The group has completed a number of transactions to facilitate the unbundling
and listing of Hulamin Limited, and the introduction of broad-based BEE
investors. The once off costs relating to these transactions are as follows:
The legal, tax, accounting and other
costs related to the unbundling, listing
and renaming of the group 16 309 - 10 000
Costs in respect of partial early vesting
of share incentives 8 932 - -
Share-based payment costs related to
the introduction of broad-based BEE
investors 134 686 - -
159 927 - 10 000
6. (Loss)/earnings per share
The weighted average number of shares in issue at 30 June and 31 December 2006
have been adjusted to account for the following transactions which occurred
during the period ending 30 June 2007:
- The issued share capital of 11,1 million shares of R1,00 each was divided
into 111 million shares of 10 cents each and,
- 104 577 344 shares were issued as a capitalisation issue out of share
premium, in anticipation of the public listing of the company during
June 2007.
The adjusted weighted average number of shares used is as follows:
June June December
2007 2006 2006
Number Number Number
of shares of shares of shares
Weighted average number of
shares used for basic EPS 215 578 344 204 577 344 204 637 618
Options - 3 760 849 2 141 526
Weighted average number of
shares used for diluted EPS 215 578 344 208 338 193 206 779 144
7. Funding
The amount owed to The Hulamin Joint Venture partners of R396 320 006 was
repaid on 30 March 2007. The partners subsequently subscribed for 100 R1 par
value shares in Hulamin Limited for R396 320 006.
As part of the process of unbundling and listing of Hulamin Limited, the loan
from the Tongaat Hulett Group and HypoVereinsbank were repaid and replaced
with secured long and short-term facilities from a number of financial
institutions.
Corporate information
Registration number: 1940/013924/06
Share code: HLM
ISIN: ZAE000096210
Company Secretary: W Fitchat
Business and postal address
Moses Mabhida Road, Pietermaritzburg, 3201
PO Box 74, Pietermaritzburg, 3200
Contact numbers
Telephone: +27 33 395 6911
Facsimile: +27 33 394 6335
Website: www.hulamin.co.za
Email: Hulamin@hulamin.co.za
Securities exchange listings
South Africa (Primary), JSE Limited
Transfer secretaries
Computershare Investor Services 2004 (Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Sponsor
Rand Merchant Bank
1 Merchant Place, Corner Fredman Drive and Rivonia Road, Sandton, 2196
PO Box 786273, Sandton, 2146
Directorate
Following the unbundling of the company from the Tongaat Hulett Group, the
Hulamin Board comprises of the following directors:
Non-executive directors:
PM Baum, I Botha, LC Cele, VN Khumalo, TP Leeuw, JB Magwaza, ME Mkwanazi
(Chairman), PH Staude
Alternate:
SP Ngwenya
Executive directors:
A Fourie (Chief Executive Officer), CD Hughes, MZ Mkhize
The following Hulamin board members resigned with effect from the unbundling
record date (29 June 2007):
Non-executive directors:
LWJ Matlhape, MH Munro, CML Savage, SJ Saunders (alt), MP Zambane
Executive directors (alternates):
FB Bradford, RG Jacob, CJ Little, TK Mshengu, DF Timmerman
Date: 24/07/2007 07:15:01 Produced by the JSE SENS Department.
