| Tue 22 Jul 2008, 7:05 | | HLM - Hulamin Limited - Unaudited interim results for the half-year ended 30 |
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HLM
HLM
HLM - Hulamin Limited - Unaudited interim results for the half-year ended 30
June 2008 and cash dividend declaration
HULAMIN LIMITED
(Incorporated in the Republic of South Africa)
Registration number: 1940/013924/06
JSE share code: HLM
ISIN number: ZAE000096210
("Hulamin" or "the company")
UNAUDITED INTERIM RESULTS for the half-year ended 30 June 2008
AND CASH DIVIDEND DECLARATION
- Headline earnings increased to R181 million (2007: R70 million loss)
- Headline earnings per share, excluding corporate structuring costs, up 110%
to 84 cents per share (2007: 40 cents per share)
- Operating profit (before corporate structuring costs) up 58% to R270
million
- Improved mix and margins in Rolled Products
- Increased operating profit from Hulamin Extrusions
- Interim dividend of 28 cents per share (2007: 18 cents per share)
Alan Fourie CEO commented:
"We are pleased to report a strong increase in earnings with continued
improvement in our sales mix and operating margin, and stronger sales in the
local market. This has been achieved despite supply disruptions that caused
volume growth to slow in the first quarter.
The softening local economic climate is likely to have an impact on the level
of local sales in the second half of the year, while export sales are expected
to remain healthy. Inflationary pressures are expected to continue in the
second half of 2008.
Our Rolled Products expansion project continues to progress well. Upgrades to
hot and cold rolling equipment will impact on capacity in the second half.
Nevertheless, we expect to increase our sales volumes and further improve our
sales mix supporting continued improvement in profitability and capital
efficiency."
Enquiries
Hulamin 033 395 6911
Alan Fourie, CEO 083 626 9444
Charles Hughes, CFO 082 745 6173
Richard Jacob 082 806 4068
College Hill 011 447 3030
Johannes van Niekerk 082 921 9110
Frederic Cornet 083 307 8286
Commentary
Hulamin increased its sales revenue in the first half of 2008 by 8% to
R3,6 billion, from R3,3 billion in the corresponding period in 2007.
Operating profit for the reporting period increased by 58% to R270 million from
R171 million in the corresponding period (excluding the corporate structuring
costs of R160 million incurred in 2007 associated with the introduction of BEE
equity investors and the unbundling and listing of the company).
Attributable earnings include a benefit of R30,5 million (14 cents per share)
which arose as a consequence of the reduction in the deferred tax liability
following the reduction of 1% in the corporate tax rate.
Headline earnings per share (excluding the 2007 corporate structuring costs)
improved by 44 cents to 84 cents per share, an increase of 110% over the same
period in 2007.
The Rand price of aluminium increased from R16 814 per ton in the fourth
quarter of 2007 to R23 060 per ton in the second quarter of 2008. This had a
significant impact on working capital, which increased by R549 million.
Inventory levels were also impacted by the effect of a planned maintenance
shutdown in June. These factors fully absorbed the cash flow from operating
activities resulting in a negative cash flow of R376 million before dividends
and expenditure on the expansion project which amounted to R66 million and R236
million respectively. Borrowings amounted to R1,6 billion at 30 June 2008.
Rolled Products
Rolled Products sales volumes were unchanged from the first half of 2007.
Production was adversely affected by several disruptions in the first four
months of the reporting period, including electricity load shedding, an
equipment failure in the cold rolling operation and disruptions to the supply
of nitrogen. Continued growth in the volumes of high value products, which
generally have slower throughput rates, also limited the growth in total sales
volumes. Annualised production improved from 179 000 tons in the first quarter
to 206 000 tons in the second quarter of the reporting period.
Local sales volumes resumed their growth trend with an increase of 17%, arising
mainly in the automotive and general distribution sectors. International sales
were constrained by available capacity as demand remains strong across the full
product range.
Costs increased by 16% and were again influenced by an increase of 58% in
energy costs while alloying costs increased sharply as a consequence of an
increase in the magnesium price from $2 000 per ton to $4 500 per ton, as well
as increases in other metals. Excluding these two items, costs increased by 6%.
The R950 million expansion project continues to progress well and is expected
to be completed on schedule and within budget. More than 80% of the project
costs have been committed. It is particularly pleasing that there has not been
a single lost time injury during the 1,3 million man hours worked thus far,
while there have been more than 700 contractors on site.
Extrusions
Hulamin Extrusions increased its sales volumes by 20% which gave rise to a
significant improvement in operating earnings. The business continues to
implement several initiatives to strengthen its market position.
Hulamin has reached agreement with Hydro AS to acquire its 30% shareholding in
Hulamin Extrusions, which will then become a wholly-owned operation. The
transaction is subject to approval by the Competition Commission.
Outlook
Underlying operating profit is showing strong growth over 2007. The company
expects to increase its sales volumes and further improve its sales mix in the
second half of the year which will support continued improvement in
profitability and capital efficiency. Equipment commissioning in the expansion
project has commenced and is expected to continue until mid 2009. The benefits
of the project are expected to flow through from 2009 to 2012.
Trading statement for 2008 financial year
Hulamin`s results for 2007 were heavily impacted by the non-recurring charges
of R168 million arising from the introduction of BEE equity investors and the
unbundling and listing of the company (corporate structuring costs). The group
thus reported earnings of R41 million (19 cps) and headline earnings of R40
million (18 cps). The group`s results for the year to December are expected to
show an improvement of at least 20% from those reported for the year to
December 2007, due to the non-recurrence of the abovementioned corporate
structuring costs and thus in terms of section 3.4(b) of the JSE Limited
Listing Requirements the group is required to issue a trading statement.
However, in view of volatility in exchange rates and as it is quite early in
the reporting period, Hulamin cannot with reasonable certainty, quantify the
extent of its results for the year to December 2008 within the 20% range
required by the JSE Limited Listing Requirements. It is expected that a trading
statement for the year to December 2008 will be issued later in the reporting
period, which should be in November or December of 2008.
DIVIDEND DECLARATION
Notice is hereby given that the board has declared an interim dividend
(number 3) of 28 cents per share for the half-year ended 30 June 2008 to
shareholders recorded in the register at the close of business on
Friday, 22 August 2008.
The salient dates of the declaration and payment of this interim dividend are
as follows:
Last date to trade ordinary shares "cum" dividend Friday, 15 August 2008
Ordinary shares commence trading "ex" dividend Monday, 18 August 2008
Record date Friday, 22 August 2008
Payment of dividend Monday, 25 August 2008
Share certificates may not be dematerialised or rematerialised between Monday,
18 August 2008 and Friday, 22 August 2008, both days inclusive.
On Monday, 25 August 2008, 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, 20
August 2008.
For and on behalf of the board.
Willem Fitchat
Company secretary
Moses Mabhida Road, Pietermaritzburg, KwaZulu-Natal
21 July 2008
Income Statement
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2008 2007 2007
Note R`000 R`000 R`000
Revenue 3 571 627 3 296 674 6 568 371
Cost of sales (3 112 208) (2 951 616) (5 837 665)
Gross profit 459 419 345 058 730 706
Other operating income 14 055 9 366 7 630
Selling and marketing
expenses (162 358) (135 998) (271 571)
Administrative expenses (70 920) (56 513) (108 848)
Underlying operating
profit 240 196 161 913 357 917
Metal price lag 30 202 8 970 22 119
Operating profit
before corporate
structuring costs 270 398 170 883 380 036
Corporate structuring
costs 5 - (159 927) (168 389)
Operating profit 270 398 10 956 211 647
Share of joint
venture`s and
associate
company`s profit/(loss) 117 (424) 216
Finance costs (43 674) (46 634) (85 262)
Profit/(loss) before tax 226 841 (36 102) 126 601
Tax 3 (41 191) (34 227) (89 131)
Net profit/(loss) 185 650 (70 329) 37 470
Attributable to:
Shareholders 181 442 (70 271) 40 761
Minority interest 4 208 (58) (3 291)
185 650 (70 329) 37 470
Headline
earnings/(loss)
Profit/(loss)
attributable to
shareholders 181 442 (70 271) 40 761
Less taxed profit on
sale of fixed assets - - (886)
Headline
earnings/(loss)
attributable to
shareholders 181 442 (70 271) 39 875
Earnings/(loss) per
share (cents) 6
Basic 84 (33) 19
Diluted 83 (33) 19
Headline
earnings/(loss) per
share (cents)
Basic 84 (33) 18
Diluted 83 (33) 18
Dividend per share
(cents) 28 18 48
Currency conversion
Rand/US dollar average 7,65 7,16 7,05
Rand/US dollar closing 7,83 7,05 6,84
Cash Flow Statement
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2008 2007 2007
R`000 R`000 R`000
Cash flows from operating activities
Operating profit 270 398 10 956 211 647
Interest paid (69 501) (46 634) (100 373)
Profit on disposal of property,
plant and equipment - - (886)
Non-cash items:
Depreciation and amortisation 94 792 90 605 182 025
Other non-cash items 21 505 140 669 203 230
Tax payments (96 019) - (13 359)
Change in working capital (549 430) (134 998) (142 388)
(328 255) 60 598 339 896
Cash flows from investing activities
Expenditure on property, plant and
equipment (280 669) (176 528) (392 529)
Expenditure on intangible assets (2 327) (1 452) (5 067)
Proceeds on disposal of property,
plant and
equipment - - 886
Investments (836) (1 280) (6 336)
(283 832) (179 260) (403 046)
Cash flows from financing activities
Borrowings raised/repaid) 689 107 67 441 (362 529)
Capital contribution 503 40 000 436 605
Settlement of share options net of
reversals - - (12 316)
Dividends paid (65 790) - (39 498)
623 820 107 441 22 262
Net increase/decrease) in cash,
cash
equivalents and bank overdrafts 11 733 (11 221) (40 888)
Balance at beginning of period 671 41 559 41 559
Cash, cash equivalents and bank
overdrafts
at end of period 12 404 30 338 671
Balance Sheet
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2008 2007 2007
Note R`000 R`000 R`000
ASSETS
Non-current assets
Property, plant and
equipment 4 380 558 4 026 206 4 166 987
Intangible assets 26 623 23 636 26 162
Investments in associates
and joint ventures 4 620 2 621 3 784
Deferred tax asset 15 976 - 16 373
4 427 777 4 052 463 4 213 306
Current assets
Inventories 1 374 570 930 899 964 145
Trade and other receivables 1 364 940 1 142 009 1 013 603
Cash and cash equivalents 92 058 78 176 92 146
Derivative financial assets 65 258 33 660 47 005
2 896 826 2 184 744 2 116 899
Total assets 7 324 603 6 237 207 6 330 205
EQUITY
Share capital and share
premium 989 995 989 207 989 492
BEE reserve 174 686 174 686 174 686
Employee share-based
payment reserve 34 378 - 21 085
Hedging reserve 35 124 (8 313) 988
Retained income 2 423 552 2 241 411 2 307 900
Equity holders` interest 3 657 735 3 396 991 3 494 151
Minority interest 39 350 38 375 35 142
Total equity 3 697 085 3 435 366 3 529 293
LIABILITIES
Non-current liabilities
Borrowings 7 898 285 668 828 663 611
Deferred income tax
liabilities 883 026 886 654 894 203
Retirement benefit
obligations 115 716 104 615 107 505
1 897 027 1 660 097 1 665 319
Current liabilities
Trade and other payables 914 114 838 524 734 665
Borrowings 7 699 654 241 838 257 042
Derivative financial
liabilities 50 035 8 624 47 626
Income tax liability 66 688 52 758 96 260
1 730 491 1 141 744 1 135 593
Total liabilities 3 627 518 2 801 841 2 800 912
TOTAL EQUITY AND
LIABILITIES 7 324 603 6 237 207 6 330 205
Net debt to equity (%) 40,7 24,2 23,5
Statement of Changes in Equity
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2008 2007 2007
R`000 R`000 R`000
Balance at beginning of period 3 494 151 2 912 318 2 912 318
Net profit/(loss) 181 442 (70 271) 40 761
Share premium 498 385 862 474 292
Share capital issued 5 10 458 14 096
Consolidated "A" and "B" class
shares - - (91 783)
Share-based payment reserve:
- BEE investors` share capital
contribution - 40 000 40 000
- IFRS 2 charge on introduction of
BEE investors - 134 686 134 686
- value of employee services 13 293 11 575 21 087
- share-based payment settled net
of reversals - (11 575) (12 319)
Cash flow hedges transferred to
income statement (988) (7 749) (7 749)
Cash flow hedges 35 124 (8 313) 988
Tax on share options - - 7 272
Dividends paid (65 790) - (39 498)
Deferred tax on prior year common
control
transaction reversed - - (11 960)
Normal tax on prior year common
control
transaction - - 11 960
Shareholders` interest 3 657 735 3 396 991 3 494 151
Minority interest in subsidiary 39 350 38 375 35 142
Balance at beginning of period 35 142 38 433 38 433
Share of profit/(loss) 4 208 (58) (3 291)
Equity 3 697 085 3 435 366 3 529 293
Notes
1. Basis of preparation
The consolidated unaudited interim financial statements of the group for the
half-year ended 30 June 2008 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 are consistent with those used in the preparation of the group`s
2007 annual financial statements.
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2008 2007 2007
R`000 R`000 R`000
2. Segmental analysis
REVENUE
Hulamin Rolled Products 3 124 421 2 922 391 5 791 457
Hulamin Extrusions 447 206 374 283 776 914
Group total 3 571 627 3 296 674 6 568 371
Inter-segmental revenue in Hulamin Rolled Products amounted to
R32 240 000 (Half-year 30 June 2007: R17 834 000; Full year
31 December 2007: R46 489 000).
Inter-segmental revenue in Hulamin Extrusions amounted to
R15 109 000 (Half-year 30 June 2007: R9 759 000; Full year
31 December 2007: R21 490 000).
OPERATING PROFIT
Hulamin Rolled Products 240 733 5 119 207 042
Hulamin Extrusions 29 665 5 837 4 605
Group total 270 398 10 956 211 647
3. Tax
The tax (charge)/relief included
within these interim financial
statements is:
Normal (60 032) (47 388) (111 103)
Deferred (5 252) 13 161 27 078
Deferred - rate change adjustment 30 507 - -
STC (6 414) - ( 5 106)
(41 191) (34 227) (89 131)
Normal rate of taxation (%) 28,0 29,0 29,0
Adjusted for:
BEE and IFRS 2 costs (%) - (108,1) 31,3
Other non-allowable items (%) 0,8 (15,2) 6,1
Deferred - rate change adjustment (%) (13,5) - -
STC (%) 2,8 - 4,1
(%) 18,1 (94,3) 70,5
Unaudited Unaudited Audited
Half-year Half-year Year ended
30 June 30 June 31 December
2008 2007 2007
R`000 R`000 R`000
4. Commitments and contingent
liabilities
Capital expenditure commitments
Contracted 452 615 452 527 486 568
Approved but not contracted 350 925 518 180 395 843
803 540 970 707 882 411
Operating lease commitments 40 516 19 695 22 610
Guarantees and contingent
liabilities 22 348 22 103 22 348
5. Corporate structuring costs
The group completed a number of transactions in 2007 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 were as
follows:
The legal, tax, accounting and
other costs related to
the unbundling, listing and
renaming of the group - 16 309 19 026
Costs in respect of partial early
vesting of share incentives - 8 932 8 932
Share-based payment costs related
to the introduction
of broad-based BEE investors - 134 686 134 686
Share-based payment costs related
to the MSOP and
ESOP schemes - - 5 745
- 159 927 168 389
6. Earnings/(loss) per share
Basic earnings per share is calculated using the weighted average number of
ordinary shares in issue during the year. For purposes of diluted earnings per
share, the weighted average number of shares in issue is adjusted for the
dilutive effect of employee share options.
Number Number Number
of shares of shares of shares
June June December
2008 2007 2007
Weighted average number of
shares used for basic EPS 215 634 092 215 578 344 215 589 370
Options 2 238 976 - 2 763 896
Weighted average number of
shares used for diluted EPS 217 873 068 215 578 344 218 353 266
7. Funding
The company is funded by secured long and short-term facilities from a number
of financial institutions.
Corporate Information
Registration number: 1940/013924/06
JSE share code: HLM
ISIN number: ZAE000096210
Company secretary: W Fitchat
Business and postal address
Moses Mabhida Road, Pietermaritzburg, 3201
PO Box 74, Pietermaritzburg, 3200
Telephone: +27 33 395 6911
Facsimile: +27 33 394 6335
Website: www.hulamin.co.za
E-mail: Hulamin@hulamin.co.za
Transfer secretaries
Computershare Investor Services
(Proprietary) Limited
70 Marshall Street, Johannesburg, 2001
PO Box 61051, Marshalltown, 2107
Securities exchange listings
South Africa (Primary), JSE Limited
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
The Hulamin board comprises of the following
directors:
Non-executive directors
P M Baum, L C Cele, V N Khumalo
T P Leeuw, J B Magwaza, M E Mkwanazi
(Chairman) P H Staude, J G Williams
Alternate: S P Ngwenya
Executive directors
A Fourie (Chief executive officer)
C D Hughes, M Z Mkhize
Date: 22/07/2008 07:05:06 Produced by the JSE SENS Department.
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