Hulamin : Integrated Annual Report 2021

Introducon

About this report 2

Chairman's review 4

Introducing Hulamin

Hulamin at a glance 6

Group overview 8

Integrated thinking 10

Hulamin's Circle of Synergy 12

Our commitment to

sustainability development 13

The business in context

milestones 15

About aluminium 16

Trends in the

aluminium sector 17

The aluminium value chain 18

The role of Hulamin and South Africa in the

aluminium value chain 20

Business model 22

Stakeholder engagement 24

The operang environment 26

Strategic leadership

Board of Directors 29

Execuve Commiee 32

Our long-term business goal 33

Our strategy 34

Chief Execuve Officer's

review 36

Chief Financial Officer's

report 38

Risk management 46

Performance outcomes

Manufactured capital 55

Capital outcomes scorecard 58

Corporate governance

Remuneraon report

Annual financial Statements

61

07

Shareholder informaon

Analysis of shareholders 163

Statutory approvals and

reports 73

Group financial statements 83

Company financial

statements 150

Hulamin share price 164

Shareholders' diary 164

Noce of annual general

meeng 165

Form of proxy 173

Applicaon form for electronic parcipaon at the annual

general meeng 175

Corporate informaon 177

Introducon

• 2 About this report

• 4 Chairman's review

About this report

This integrated annual report provides a concise

review of how Hulamin creates sustainable value.

It provides insight into Hulamin's business model, changes in the external environment and the risks and opportunies that arise therefrom.

Scope

The scope of this report includes Hulamin Limited, its subsidiaries and operang divisions, listed on page 8. The report covers the period 1 January 2021 to 31 December 2021.

Our audience

Hulamin's long-term providers of capital are the primary audience of Hulamin's integrated report. However, Hulamin's value creaon acvies benefit and impact a wide range of stakeholders whose interests are specifically covered in this report in line with our shared value creaon principle.

The report provides all stakeholders with a greater understanding of the reliance of Hulamin's business model on the relevant capitals. It also sets out the financial and non-financial performance of Hulamin and the impact of Hulamin's operaons on the relevant capitals and provides insight into the prospects of the group.

Reporng frameworks

In compiling this integrated annual report, the following frameworks have been considered:

• • Internaonal Integrated Reporng Framework, December 2013

• • King Report on Corporate Governance (King IV)

• • JSE Limited Lisngs Requirements

• • Companies Act, No 71 of 2008, as amended, and the Companies Regulaons

• • Internaonal Financial Reporng Standards

Assurance

The Audit Commiee provides an oversight role to this integrated annual report. The commiee has reviewed the completeness and accuracy of this report and is sasfied that the report is an accurate reflecon of the group's integrated performance.

Certain elements of this report have been independently assured. This assurance forms part of a combined assurance approach adopted by Hulamin.

Materiality and comparability

Materiality has been applied to qualitave and quantave disclosures and content of this report. An item is considered material if it could influence the decisions of the group and its stakeholders.

There have been no significant changes to the content and scope of this report from prior years. In aempts to enhance the comparability of informaon, certain comparave figures may have been restated and these have been noted as such.

Forward-looking informaon

The report contains some forward-looking informaon regarding the financial and non-financial performance and posion of Hulamin. Hulamin believes this forward-looking informaon to be realisc at the me of the issue of the report. These statements include uncertaines, assumpons and risks about future events and circumstances, which may result in actual results differing from those ancipated. Forward-looking informaon has not been reviewed or reported on by the external auditors.

Board approval

The Board acknowledges its responsibility for ensuring the integrity of the integrated annual report and to the best of its knowledge and belief the integrated annual report addresses all material issues and presents fairly the integrated performance of Hulamin and its impacts. The report has been prepared in line with best pracce and the Board confirms that it has approved the release of the 2021 integrated annual report.

Feedback from stakeholders

Hulamin is commied to building stronger stakeholder relaonships, which are enhanced through various communicaons. Stakeholders are encouraged to provide feedback on this integrated annual report and the type of informaon you would like to see in future reports toAyanda.Mngadi@hulamin.co.za, which will enable the group to gauge the accuracy and standard of its integrated reporng.

Our 2021 reportsContent and assurance providers

Annual financial statements: Ernst & Young Inc.

Review of internal controls: PricewaterhouseCoopers Advisory Services Proprietary Limited and Ngubane & Co.

BEE contributor level: Empowerdex

Sustainability report (selected informaon): BDO Advisory Services (Pty) Ltdwww.hulamin.com/sites/default/files/downloads/2021%20Hulamin_Sustainability_Report.pdf

Chairman's Review

The first, second and third Covid-19 waves of 2020 and 2021 had serious negave impacts on the Company. These disrupons were most visible in Group sales volumes, where both soſt market condions and challenges in maintaining manufacturing momentum resulted in measurably lower sales.

Late in December 2020, the Internaonal Trade Administraon Commission (ITAC) of South Africa announced that the 2018 Hulamin applicaon for duty protecon on aluminium flat-rolled products was successful. A 15% import duty on aluminium rolled products into South Africa was therefore gazeed for implementaon from January 2021. This resulted in a significant increase in local demand, which has been parcularly noceable in the beverage can sector. As a result, demand for all products, especially from the beverage can market, experienced a sharp increase during 2021.

Although performance in 2021 showed a pleasing improvement, the year remained punctuated by several disrupons and upheavals. Hulamin is located in a fragile social and polical context. The scourges of poverty, inequality and unemployment are commonplace in and around Pietermaritzburg. This results in a volale polical environment where levels of infrastructure and public sector services are parcularly variable. In 2021, Hulamin faced power and logiscs challenges due to unreliable local government infrastructure and services. Furthermore, in 2021 we faced social unrest and loong in our communies, cyber-aacks in the Durban port, and ongoing road logiscs delays in and around our operaons, and instances where our employees faced violent crime were commonplace. As a result stable and reliable operaons in this context posed parcular challenging.

Transformaon

The Board places great value on the role that Hulamin plays in invesng in, normalising and sustaining our KwaZulu-Natal and South African communies. Despite the challenging economic environment and resulng financial performance, we are proud to have maintained acvies geared towards transformaon throughout these difficult periods in 2019 and 2020.

In the 2021 assessment, in spite of the ght financial condions, the Company qualified for a Level 7 scoring in the revised B-BBEE codes, as published by the Department of Trade and Industry in 2015. The main reasons for the decline in ownership scoring curtailed expenditure on Enterprise and Social Development (ESD) and the lower share price.

In terms of the revised B-BBEE codes, failing to reach the sub-minimum on ownership, procurement or ESD, results in being penalised a level. As a consequence, the Hulamin B-BBEE scorecard for 2021 resulted in a net score of Level 7.

Plans are in place to improve the posion for the 2022 year and to revert to historic performance.

Aluminium supply

Hulamin connues to play its crucial role in the Southern African aluminium economy. Hulamin is the key link between the large primary industry and the manufacturers who require aluminium raw materials for their fabricaon processes. Our key supplier is Hillside Aluminium, one of the largest and most globally compeve smelters, located in Richards Bay. Like all aluminium smelters, it plays a crucial role in stabilising the electricity supply grid by changing its electricity demand at short noce to counter changes in electricity supply availability. The smelter is wholly dependent on electricity supply for both operaonal connuity and economic sustainability. Consequently, security of primary aluminium supply is one of Hulamin's major risks.

During 2021, the Naonal Energy Regulator of South Africa (NERSA) approved a supply contract between Eskom and Hillside for a new five-year electricity supply contract. We are thankful for this progress and for the certainty that it brings to the sustainability of Hulamin and the aluminium industry in South Africa. Furthermore, the availability of compeve primary aluminium unlocks opportunies for investment by Hulamin and the broader industry.

The Board and I report another safe year for Hulamin. Although the tragic effects of Covid-19 have subsided somewhat, we are sad to report a total of 12 Covid-19-related deaths in the Hulamin family since the start of the pandemic in 2020. A total of 968 posive cases were reported, of which we are grateful to report that 950 people have fully recovered and, at me of reporng, six are sll recovering.

In 2021, Hulamin once again provided a safe and healthy work environment for employees. The year was parcularly challenging for employees' wellbeing, following the effects of Covid-19, the economic downturn, and its resulng impacts on employment and financial stability. Early in 2021, the Company idenfied the need to support employees' mental health in these most challenging mes. We are proud to have been in a posion to assist our most valuable assets, our people, both directly through protecve health intervenons, such as safer transport, as well as through the successful implementaon of a mental health support/coping programme for employees. We are once again proud of our safety record as safety incident frequency target rates were achieved in 2021. (The Total Recordable Case Frequency Rate was 0.6).

Rerement and succession

The Board places great value on the governance responsibilies placed on the Hulamin Board of Directors as the primary accountability body for the Company. Reflecng the values and priories of stakeholders is the foundaon upon which we hold management accountable. The Board is sasfied with the competence and experience of the Board and management team. We are cognisant of the trade-offs between size, diversity and cost to run the business opmally over the coming years.

We thank Laren Farquharson for stepping into the gap, following Anton Krull's resignaon in 2020 while we awaited the appointment of Mark Gounder in April 2021. Laren's experience and cool demeanour provided the connuity the Board and I needed during this challenging period.

Mark Gounder joined the Board on 1 April 2021, following a long and disnguished career in the sugar industry. We are delighted to welcome him to the Board and have been pleased with his energy, experience, judgement and leadership in his short tenure thus far. We welcome him to the Hulamin family and look forward to his upliſting of the Hulamin Finance team, his support to Richard and the Board, and to his long tenure with the Company.

Sharon Ramoetlo joined Hulamin on 1 May 2021 in the role of Company Secretary, following the rerement of Willem Fitchat. Sharon has filled this role seamlessly, bringing her unique skills, experience and personality to the funcon. The Board and I have been delighted with the efficient diligence with which she has taken on her responsibilies, allowing the board and its commiees to seamlessly perform their funcons.

Conclusion and outlook

The Board is pleased that Hulamin has recovered from the ongoing challenges of 2019 through to 2021, returning strongly to profitability in 2021. I am pleased that we have migated the challenging period, successfully aconing the turnaround improvements iniated in 2019.

Although the challenges and constraints of Covid-19 are ongoing, we are pleased to present a successful 2021 year. We returned a meaningful improvement in volumes, kept costs under control, and managed our liquidity under oſten difficult condions. We look forward to further improvements in the year ahead.

Thabo Leeuw

Chairman

Introducing Hulamin

• 6 Hulamin at a glance

• 8 Group overview

• 10 Integrated thinking

• 12 Hulamin's Circle of Synergy

• 13 Our commitment to sustainability development

Hulamin at a glance

Hulamin is a leading, mid-stream aluminium semi-fabricator and fabricator of aluminium products located in Pietermaritzburg, KwaZulu-Natal.

We purchase primary aluminium and supply a range of high value, niche rolled products and complex extrusions to manufacturers of finished products in South Africa and over 50 countries around the world.

01

Hulamin's largest acvity is aluminium rolling which contributes around 90% of our revenue, with the balance comprising extruded products and other downstream products. Although the South African market is an important and growing element of our business, a significant poron of rolled products are exported to regions such as Europe, North America, the Middle East and Asia.

Our Philosophy

Our Promises

• • Earn a reputaon for excellent customer service

• • Assist all employees to upliſt their skill levels

• • Generate respectable profits in our operaons

• • Set the benchmark in our industry for safe and responsible manufacturing

Our Core Purpose

Our core purpose is to create value through the manufacture of high-value aluminium semi-fabricated products. In doing so, we aim to contribute to the upliſtment of the standard of living in the region. We achieve this by smulang business acvies associated with adding value to the large quanes of primary aluminium produced in the region and through pursuing related business opportunies within which we can further apply our capabilies.