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Hulamin
Integrated Annual Report 2017
 

Key Resources Hulamin Relies On

      Capital  INPUTS INTO OUR BUSINESS MODEL      TRANSFORMATION OF CAPITALS      LINK TO STRATEGIC OBJECTIVES 

 

FINANCIAL

The pool of funds which support business operations. See here for further information. 
The group requires funding for day-to-day activities incorporated in its business model which allows it to generate value for all stakeholders. Funding is received from:

Investors: The group’s largest investor is the Industrial Development Corporation representing 29,6% of all investors. Investors require returns on investment in the form of a growing share price (through a sustainable profitable business) and dividends.

Finance houses: The group has secured a three-year borrowing facility of R1,65 billion which includes a general 360-day facility of R350 million and a revolving working capital facility of R1,3 billion secured against receivables and inventory. The group secured a term facility (R270 million) to fund the investment in Hulamin’s recycling facility. Finance houses provide this capital in exchange for interest on the amount invested. 

  Equity
Equity provider’s book value R4,7 billion with a current market value of R1,9 billion. This indicator of impairment has been assessed on here of the report.

Retained earnings for the current year
have increased by R291 million.

Dividends declared per share of 15 cents. 
Borrowings
Net debt: R317 million
Net interest cost: R78 million

Cash generation
Net cash inflows from operating activities for the year ended 31 December 2017:
R557 million

Free cash flow generation:
R296 million 
  Lower cost base and operational efficiencies improves returns for shareholders and increases cover ratios for the providers of funding. 
  Achieving higher rolling margins improves return for shareholders and increases ratios for the providers of funding. 
  Short-term trade-offs to invest in the assets of tomorrow to generate sustainable future returns. 

 

MANUFACTURED

Our material goods infrastructure owned, leased or controlled by the group that contributed to our production capabilities.
See here for further information. 
Primary aluminium
The group makes use of primary aluminium as part of its remelt and casting operations which produce rolling slab and extrusion billet required for the manufacture of fabricated and semi-fabricated aluminium products. Through a liquid metal supply agreement the group has secured the supply of liquid metal from South 32’s Hillside Aluminium Smelter until December 2019.

Bayside casting facility
The Bayside cast house owned by Isizinda is operationally controlled by Hulamin and produces one-third of Hulamin’s requirements of rolling slab for the rolling operations.

Remelt and Casting
Hulamin owns three slab production lines, fed by reverberatory melting furnaces, with a slab capacity of around 240 000 tons per year and a recycling furnace.

Rolling
The rolling operations consist of hot, cold and foil rolling mills. Finishing equipment includes coil coating lines, slitting, sheet cut-to-length lines, cleaning and tensioning levelling and foil finishing facilities. The plate plant is equipped with sawing, stretching and plate cut-to-length lines.

Extrusions
Two extrusions plants which include the ability to manufacture dies used in the extrusions press to produce the desired profile. Finishing options include powder coating, anodising and fabrication.
  Our manufactured capital is subjected to wear-and-tear as finished goods are produced for sale to our customers to their quality specifications. The group invests in asset management and maintenance programmes and during the period conducted an integrated plant shut in accordance with these programmes.

Integrated shut (12 days)


During the integrated shut the group’s project engineers and maintenance teams, together with external service providers, performed major maintenance on certain areas of the plant.

Management implemented a trade-off between its manufactured capital and its financial capital.
Key salient features:

Production
Rolled Products: 215 000 tons
Extrusions: 18 000 tons

Additions
Rolled Products: R212 million
Extrusions: R49 million

Repairs and maintenance
Total: R282 million

Depreciation
Rolled Products: R190 million
Extrusions: R26 million
  Improved asset risk management systems and maintenance programmes result in improved manufacturing performance and product quality. 
  Asset enhancements to deliver products to niche markets and provide value to our customers. 
  Investment in new assets and capabilities to support our growth ambitions. 

 

HUMAN

The expertise and skills employed by our people in delivering the group’s vision.
See here for further information. 
The Hulamin Group employs over 2 000 employees across its various business units.

The state-of-the-art technical equipment employed in the group’s business model requires key engineering, metallurgical and manufacturing experience and key competencies and capabilities.  
  Employee’s competencies and capabilities are used in operating manufactured capital to produce finished goods for sale to our customers.

Where required employees are provided with various self-development opportunities through the talent management and development programme, financial assistance for academic studies and an employee wellness programme.

During the current financial year the group has shared R1,1 billion in value with employees through guaranteed and variable remuneration structures.  
  Invest in Human capital through training and development to improve central co-ordination and strategic accountability to drive decision- making. 
  Develop capabilities to grow new markets and consolidate existing market positions into defendable niche positions. 
  Create new skills and competencies to interact with the assets of tomorrow. 
 

NATURAL

The world’s stock of natural resources such as geology, soil, air, water and all living things.
See here for further information.  
Local aluminium smelters
The group relies on the Hillside smelter to produce primary aluminium. The Hillside smelter is highly energy and carbon intensive.

Rolling
As part of the manufacturing operations the group relies on the use of water, gas and electricity.  
  During the manufacturing process Hulamin’s impact on natural resources is as indicated below:  

   Carbon
footprint
(tons CO2e)
Electricity 
consumption 
(KWh)
LPG
consumption
(GJ) 
Water
consumption (Kℓ) 
2015  1,93  1 393  7,52  3,32 
2016  1,76  1 267  6,99  2,66 
2017  1,68  1 228  6,56  2,46 
  Minimise impact on natural capital. 
  Increased benefits from scrap recycling reduce reliance on natural inputs in our business model. 
  New assets and capabilities create efficiencies which reduce reliance on natural capitals. 

 

SOCIAL, RELATIONSHIP and Intellectual

Our relationship with communities, stakeholders and other networks promoting innovative thinking.
See here for further information. 
The group leverages its relationships within the community in which it operates, with its suppliers and its customers to create value for all stakeholders.

Government
Government provides support to the aluminum industry through incentives and assistance with the downstream development of the aluminium value chain.

Suppliers
Strong relationships with suppliers ensures that the group is able to secure the long-term supply of key inputs into the manufacturing process.

Customers and markets
Relationships with customers are key in developing new products and innovation to suit customer needs and expectations. Our customer relationships also provide us with the leverage require to profitably sell our finished products.
  The group interacts with all stakeholders through a formalised stakeholder engagement process. The needs of stakeholders are identified and our strategic response is altered where required to respond to the material needs of our stakeholders. Through this the group continues to enhance the social and relationship capital it has established with stakeholders.    Enhance customer relationship by focussing on quality and on-time delivery. 
  Develop new and leverage off existing networks to establish niche markets. 
  Leverage government relationships to grow the local beneficiation of primary aluminium into a range of value added products. 
                   
      Our strategic objectives are further detailed on here        
  Strengthen the core (of the business) to compete 
  Increase rolling margins 
  Investing in the assets of tomorrow