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Introduction

Message from the Chief Executive

At Hulamin we remain committed to our core purpose of being accountable to our stakeholders for the impact we have on our community, environment and industry.

Despite operating in a tough business environment in 2010, Hulamin continued to improve its performance in the broader areas of sustainability. For the first time, in line with the requirements of South Africa's King Code of Governance Principles (King III), Hulamin has engaged in a sustainability assurance programme. We continue using Global Reporting Initiative (GRI) G3 guidelines, supported by Hulamin's internal guidelines to standardise our reporting process and to afford stakeholders the opportunity to compare Hulamin with other organisations.

The aim of our sustainability report is to provide those Hulamin stakeholders a more in-depth level of detail about our sustainability performance. For this reporting period, selected KPIs were identified and subjected to external independent limited assurance. This same report is communicated to employees through various internal communication channels.

We recognise that growing our business is ultimately dependent on attracting and retaining the best and most skilled employees, those who are proud of Hulamin's performance in all spheres of activity. This growth is also achieved by maintaining positive relationships with other principal stakeholders; including funders, shareholders, suppliers and customers, and the communities we operate in. We are committed to continue conducting our business in an informed, responsive and socially responsible manner.

Economic development, climate change, energy and water scarcity are challenges that are becoming important and have a bearing on our business activities. We do, however, recognise that we are part of a collective society in responding to these challenges.

I am particularly proud of the work of my colleagues who have contributed to this report and would like to acknowledge these efforts in reporting the positive contributions to society by the entire Hulamin team.

Report Profile

This report is an overview of Hulamin's sustainability performance during the 2010 financial year, with references to, and comparison with, data from previous years where appropriate.

The foundation for Hulamin's strategic agenda and vision of being a recognised global enterprise is based on the principle that organisation health and growth cannot be separated and consequently, sustainability must underpin all our actions.

We have been conscious of making positive socio-economic contributions in the region where we operate, by stimulating job creation, contributingto skills development, investing in the community, and promoting broad-based black economic empowerment (BBBEE). We have also actively pursued a culture of safety in the workplace. As a responsible corporate citizen we have sought to reduce our environmental footprint, especially in reducing our greenhouse gas emission and water usage impacts.

This report does not cover the entire list of GRI G3 indicators; rather it follows the format of the 2009 report with the added dimension of limited assurance on selected KPIs.

Where available, targets are covered in this report. Where targets are absent, notably in the Environmental section, this is due to the complexity in understanding what is possible in our unique circumstances. In these cases, the philosophy of continuous improvement is adopted until such time as targets have been set.

Stakeholder Engagement

We interact with our stakeholders on a regular basis. Our most important stakeholder group remains our employees with whom we conduct structured and regular communication.

Our key stakeholder categories are as follows:

Employees

Employees are the foundation upon which all our activities depend. Effective communication with employees is essential to the ongoing functioning of the business. We use many different channels to communicate with employees, including:

Weekly shopfloor walkabouts by all members of the Executive Committee;
Regular letters from the Chief Executive Officer;
Internal newsletters;
Communication boards;
Employee relations meetings;
Shop-floor briefings; and
Interim and full-year financial performance updates.We continuously seek ways for further engagement with our employees.

Government

We continually work to establish and maintain constructive relations with government through a range of agencies at national, provincial and local levels. We constantly seek to integrate and align with government policy and growth objectives in our growth planning.

Investors

Our funders and the broader investment community are constantly updated of our financial results and other topical issues through regular presentations and discussions with bankers, investment analysts, fund managers and journalists. The broader investment public receives information about Hulamin in key daily newspapers, radio and television.

Suppliers and customers

We work closely with our contractors, service providers and our customers to understand and address their concerns and requirements on material issues.

Other stakeholders

We continue to engage cooperatively with our peers through industry associations, which also provide a conduit for communication with government.

Local communities and non-governmental organisations

We engage with the communities where we operate to better understand their concerns and interests, giving us an opportunity to participate appropriately. We contribute widely in corporate social investment activities within the immediate communities.

The media

We remain engaged with the media in sharing information that seeks to promote Hulamin, its activities and products.

Scope and boundaries

Apart from sales offices in Europe and North America, Hulamin is located entirely in South Africa. All reporting takes place within the South African regulatory and socio-economic context, with consideration for international standards.

Participating in sustainability indices

In 2010, Hulamin was admitted into the Socially Responsible Index (SRI) by the Johannesburg Securities Exchange (JSE) for notable corporate governance, and environmental and social responsibility practices. The JSE's SRI encourages companies to embrace the triple bottom line (social, economic and environmental performance) as a method of doing business, while balancing this with the need to demonstrate a return for the shareholders. We are proud to be only one of five small cap companies to be inducted in 2010.

Statement of Verification

All content and qualitative data included in this report has been reviewed and approved by Hulamin senior management. KPMG has provided limited assurance over selected KPIs. Particular emphasis has been placed on ensuring that the report reflects a complete and fair picture of sustainability issues impacting the company.

Independant Assurance Report on selected Sustainability information

To the directors of Hulamin Limited

We have undertaken an assurance engagement on selected sustainability information, as described below and presented in the Sustainability Report included in the 2010 Annual Report of Hulamin Limited for the year ended 31 December 2010.

We have complied with the International Federation of Accountants' Code of Ethics for Professional Accountants, which includes comprehensive independence and other requirements founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour. Our engagement was conducted by a multidisciplinary team of health, safety, social, environmental and assurance specialists with extensive experience in sustainability reporting.

Selected sustainability information and level of assurance

We are required to provide limited assurance on the indicators below:

Employment equity indicators (expressed as the total number of people for each category) - black representation at senior management; black representation at middle management; black representation at skilled and supervisory level; women at senior management; women at middle management; women at skilled and supervisory level; people with disabilities.

Social performance indicators (expressed in Rand) - socio-economic development (SED) (CSI component) spend; total BBBEE spend; total skills development spend for disabled and black employees; total enterprise development spend.
Environmental indicators - direct energy consumption; indirect energy consumption; carbon footprint; total water consumption; total weight of waste disposed (by category) or recycled; number of environmental incidents.
Health and safety indicators - HIV/AIDS spend (expressed in Rand); noise induced hearing loss (NIHL) cases for year; employee and contractor lost time injury frequency rate (LTIFR).

Directors' responsibilities

The directors are responsible for the selection, preparation and presentation of the sustainability information, the identification of stakeholders and stakeholder requirements, material issues, for commitments with respect to sustainability performance, and establishing and maintaining appropriate performance management and internal control systems from which the reported information is derived, and for such internal control as the directors determine is necessary to enable the preparation of the Sustainability Report that is free from material misstatement, whether due to fraud or error.

The directors are also responsible for the selection and application of the criteria, which are the Global Reporting Initiative (GRI) G3 Guidelines, to the selected sustainability information.

Our responsibility

Our responsibility is to express a limited assurance conclusion on the selected sustainability information based on our work performed. We conducted our engagement in accordance with International Standard on Assurance Engagements (ISAE) 3000, Assurance Engagements other than the Audits or Reviews of Historical Financial Information, issued by the International Auditing and Assurance Standards Board. That Standard requires that we plan and perform our engagement to obtain limited assurance about whether the selected information is free from material misstatement.

Our procedures and the extent of our procedures depend on our judgement, including the risks of material misstatement of the selected sustainability information. In making our risk assessments, we considered internal control relevant to Hulamin's preparation of the Report. In a limited assurance engagement, the evidence gathering procedures are less than where reasonable assurance is expressed. We believe the evidence we have obtained is sufficient and appropriate to provide a basis for our limited assurance conclusion.

Summary of work performed

Our work included the following evidence gathering procedures:

Interviewing management to obtain an understanding of the internal control environment, risk assessment process and information systems relevant to the sustainability reporting process;
Testing the controls which generate, collate, aggregate and monitor the selected sustainability information;
Inspecting supporting documentation and performing analytical procedures; and
Evaluating whether the information presented in the Report is consistent with our overall knowledge and experience of sustainability management and performance at Hulamin.

Conclusion

Based on our work performed, nothing has come to our attention that causes us to believe that the selected sustainability information set out above, for the year ended 31 December 2010, is not fairly stated in all material respects in accordance with the Global Reporting Initiative (GRI) G3 Guidelines.

Limitation of liability

Our work has been undertaken to enable us to express a limited assurance conclusion on the selected sustainability information to the Directors of Hulamin in accordance with the terms of our engagement, and for no other purpose. We do not accept or assume liability to any party other than Hulamin, for our work, for this Report, or for the conclusion we have reached.

KPMG Services (Pty) Limited