- Related news: Investor Relations
Trading statement for the year ended 31 December 2018 and restatement of prior period results
In terms of para 3.4 (b) of the JSE Listings Requirements, listed companies are required to publish a trading statement as soon as the board of directors is satisfied that a reasonable degree of certainty exists that the financial results for the period to be reported on next will vary by at least 20% when compared to those of the prior corresponding reporting period. Hulamin achieved a record sales volume of 245 000 tons in 2018. Hulamin Rolled Products performed particularly well in the second half achieving annualised sales of 240 000 tons. This improved performance resulted in record headline earnings for the half-year and strong underlying cashflows for the year under review. Despite results being impacted by the strong currency in the first half, normalised¹ earnings for the full year is expected to be up by between 23% to 32% over the prior year.
We have reviewed the application of hedge accounting in terms of the IAS 39 standard. This has resulted in the restatement of the 2017 Annual Financial Statements following a timing adjustment between the 2017 and 2018 results. There is no cumulative impact on earnings and also no impact on cash resulting from this restatement. Hulamin´s commodity risk management programme is highly effective. Hulamin plans to adopt the new financial instruments standard IFRS 9 in 2019, which will overcome the limitations of IAS 39.
The change to earnings per share (EPS), headline EPS (HEPS) and normalised¹
EPS is therefore as follows:
31/12/2017 31/12/2017
Reported(cents) Restated(cents)
EPS 104 95
HEPS 104 95
Normalised¹ EPS 64 64
We have focused strongly in recent years on improving underlying performance and free cash flow generation. In parallel, we have also adopted a more prudent capital allocation process by means of raising investment hurdle rates. Mounting uncertainty in the macro environment and the associated rise of risk indicators, has also supported increasing the Company´s weighted average cost of capital (WACC) to more accurately value the Company´s internal forecasts of future cash flows.
This WACC increase results in material changes to the valuation of assets and, as a consequence, impairment charges have been applied to both Hulamin Rolled Products and Hulamin Extrusions.
After making these impairment adjustments, Hulamin expects EPS, HEPS and normalised¹ EPS for the year ended 31 December 2018 to be within the ranges shown below:
31/12/2018 31/12/2017
Expectation(cents) Restated(cents)
EPS -248(-361%) to -242(-354%) 95
HEPS 93(-2%) to 99(+4%) 95
Normalised¹ EPS 79(+23%) to 85(+32%) 64
¹ Normalised earnings are defined as earnings excluding non-recurring items and once-off adjustments. The impact of metal price lag has been removed from normalised earnings in order to enhance the visibility of underlying earnings.
The financial information in this trading statement has not been reviewed or reported on by the Company´s external auditors.
Hulamin´s results for the year ended 31 December 2018 are expected to be released on the Stock Exchange News Service on or about 04 March 2019. Pietermaritzburg
28 February 2019