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Assore Limited - Final results for the year ended 30 June 2006
Assore Limited
Company registration number: 1950/037394/06
Share code: ASR
ISIN: ZAE000017117
Final results for the year ended 30 June 2006
* Lower profit from Assmang"s manganese division
* Attributable earnings decrease by 10,2%
* Headline earnings decrease by 37,4%
* Iron ore prices increase by 19%
* Assmang commences construction of new Khumani Iron Ore Mine
Consolidated income statement
Year ended Year ended
30 June 30 June
2006 2005
Reviewed Audited
R"000 R"000
Turnover 3 382 587 3 093 944
Cost of sales (2 783 365) (2 317 628)
Gross profit 599 222 776 316
Profit on disposal of investments 145 777 -
Discount on BEE transaction (35 752) -
Other income 217 999 196 514
Other expenses (204 571) (157 501)
Finance costs (15 284) (21 721)
Profit before taxation 707 391 793 608
Income tax expense (227 569) (252 546)
Profit for the year 479 822 541 062
Earnings attributable to:
Equity holders of the parent 457 384 509 445
Minority interests 22 438 31 617
Profit for the year 479 822 541 062
Earnings per share (cents) 1 651,5 1 819,4
Headline earnings per share (cents) * 1 160,8 1 833,7
Dividends per share (cents)
- Interim dividend paid in April
2006/2005 80 50
- Final dividend paid in October
2005/2004 150 45
* Determination of headline earnings
Attributable earnings per income
statement as above 457 384 509 445
Profit on disposal of listed
investments (net of tax) (129 085) -
(Profit)/loss on disposal of property,
plant and equipment (net of tax) (6 801) 4 000
Headline earnings 321 498 513 445
Weighted average number of ordinary
shares (million)
Ordinary shares in issue 28,00 28,00
Treasury shares (0,30) -
Shares outstanding 27,70 28,00
Net asset value per share (Rand) 96,2 76,1
Capital expenditure (R million) 389,9 337,9
Capital commitments (R million) 2 116,9 218,2
Consolidated balance sheet
At 30 June At 30 June
2006 2005
Reviewed Audited
R"000 R"000
ASSETS
Non-current assets
Property, plant, equipment and
intangible assets 2 023 210 1 391 931
Investments 169 750 232 093
Total non-current assets 2 192 960 1 624 024
Current assets
Inventories 896 152 695 600
Trade and other receivables 648 001 624 169
Cash resources 171 854 293 059
Total current assets 1 716 007 1 612 828
TOTAL ASSETS 3 908 967 3 236 852
EQUITY AND LIABILITIES
Share capital and reserves
Ordinary shareholders" interest 2 553 841 2 092 721
Outside shareholders" interest 51 114 39 363
2 604 955 2 132 084
Treasury shares (78 526) -
Total equity 2 526 429 2 132 084
Non-current liabilities
Deferred taxation 544 844 345 181
Long-term liabilities 122 312 65 333
Total non-current liabilities 667 156 410 514
Current liabilities
Interest bearing 253 454 226 740
Non-interest bearing 461 928 467 514
Total current liabilities 715 382 694 254
TOTAL EQUITY AND LIABILITIES 3 908 967 3 236 852
Consolidated cash flow statement
Year ended Year ended
30 June 30 June
2006 2005
Reviewed Audited
R"000 R"000
Cash generated from operations 469 992 638 730
Cash utilised in investing activities (678 158) (319 042)
Cash generated by/(utilised in)
financing activities 86 961 (192 892)
(Decrease)/increase in cash for the
year (121 205) 126 796
Cash resources at beginning of year 293 059 166 263
CASH RESOURCES PER BALANCE SHEET 171 854 293 059
Consolidated statement of changes of equity
Year ended Year ended
30 June 30 June
2006 2005
Reviewed Audited
R"000 R"000
SHARE CAPITAL AND RESERVES
Balance at beginning of year 99 579 39 012
Shares issued during the year 55 -
Shares repurchased during the year (55) -
Share premium on shares issued during
the year 30 358 -
Net increase in the market value of
listed investments 6 509 66 500
Deferred taxation on changes in market
value of listed investments (5 389) (9 410)
Foreign currency translation reserve 906 3 477
Balance at end of year 131 963 99 579
RETAINED EARNINGS
Balance at the beginning of the period 1 993 142 1 510 297
Attributable earnings for the year 457 384 509 445
BEE transaction - shares issued at a
discount 35 752 -
Ordinary dividends paid
No 97 and No 98 aggregating R2,30 per
share (2005: 95 cents per share) (64 400) (26 600)
Balance at end of year 2 421 878 1 993 142
PER BALANCE SHEET 2 553 841 2 092 721
COMMENTARY
Despite an increase in turnover of 9,3% to R3,4 billion (2005: R3,1 billion),
attributable profit for the year decreased by 10,2% to R457,4 million (2005:
R509,4 million). However, after adjusting for the non-recurring profit on
disposal of investments and the discount on the sale of Assore shares referred
to below, the profit for the year on normal operations would have been R364,1
million, a decrease of 28,5%. This was mainly due to a lower profit contribution
from Assmang Limited ("Assmang"), in which company the group holds a 50%
interest.
As a result of an offer made to minorities earlier in the year, Assmang was
delisted on 28 February 2006 and, as a joint venture, is partially consolidated.
Assmang"s after tax profit for the year decreased to R666,6 million (2005:
R949,0 million) largely attributable to lower prices for manganese ore and
alloys as well as for charge chrome. The tonnages sold are set out in the table
below and the higher profit generated by iron ore, due to significantly higher
prices and the additional tonnage, was unable to offset the effects of lower
manganese ore and alloy prices. These were largely brought about by the over
supply situation which developed in the market during the year.
Net commissions received on sales of group commodities, which are included in
other income, were marginally lower for the year at R67,7 million (2005: R75,0
million). Profit for the year was increased by the disposal of listed
investments of R129,1 million (after tax) and is disclosed separately in the
income statement. These investments had been accumulated over a number of years
at a cost of R68,9 million and realised R214,6 million on disposal. The proceeds
were used to repay the short-term borrowings raised to finance the buyout of
Assmang minorities referred to above. A discount of R35,8 million, which arose
from the sale of Assore shares, in terms of the empowerment transaction approved
by shareholders earlier in the year, is disclosed separately. The discount,
which has been measured against Assore"s 180-day volume weighted average share
price, is required to be included in the determination of earnings per share but
is equity neutral, in that the entry is charged to the income statement and the
corresponding credit is raised against equity in accordance with International
Financial Reporting Standards ("IFRS").
Sales Volumes
Sales volumes for the year were as follows:
Metric tons `000 Volume %
Increase/
2006 2005 (decrease)
Iron ore 5 926 5 776 2,6
Manganese ore 1 678 1 811 (7,3)
Manganese alloys 260 197 32,0
Charge chrome 210 262 (19,8)
Chrome ore 178 35 408,6
Iron ore tonnage increased marginally but is constrained by capacity on the
Sishen/Saldahna railway line and port facilities.
Manganese volumes and prices fell during the year as a result of the world
markets being oversupplied.
Tonnages of manganese alloys increased in line with robust demand from carbon
steel producers and prices recovered during the year from the effects of the
oversupplied position which developed in the previous year.
Charge chrome sales were lower, in line with a temporary limitation on
production to counter negative market conditions resulting from an oversupply in
world markets.
CAPITAL EXPENDITURE
The bulk of the group"s capital expenditure occurs in Assmang, which in the year
under review, totalled R705,0 million (2005: R699,1 million). Included in this
expenditure were the following specific items, the balance relating largely to
replacement items:
R"000
Iron ore - waste stripping at Beeshoek 143 658
- new Khumani iron ore mine 64 312
Manganese ore - Nchwaning III Project shaft development 83 755
Chrome ore - completion of underground mine project 57 188
During the year, the Assmang Board approved the development of a new opencast
iron ore mine (Khumani Mine) in the Kathu area of the Northern Cape adjacent to
the Sishen iron ore mine. Estimated cost is R3,2 billion and initial production
from the new mine is expected in the first half of 2008. The mine will replace
the existing opencast operations at Beeshoek and initial first phase export
capacity is expected to be 8,4 million tons per annum. A second phase expansion
is planned to increase export capacity to 16,8 million tons per annum at a
further estimated capital cost (including contingencies) of R1,8 billion.
DIRECTORS
On 12 July 2006, it was announced that Mr Cyril Ramaphosa had agreed to join the
Assore Board as a non-executive director with Mr Rowan Smith as his alternate.
Mr Ramaphosa is Chairman and a significant shareholder of the Shanduka Group,
which acquired a 11,76% interest in Assore as part of the empowerment
transaction which was concluded in February this year.
OUTLOOK
World carbon steel production remains robust, driven by China, and this has
resulted in a 19% increase in iron ore prices with effect from April 2006 and a
steady demand for manganese ore and manganese alloys.
This situation is expected to continue but would be threatened if the Chinese
carbon steel industry moves into a large supply surplus, resulting in a
substantial increase of steel exports from China.
The stainless steel industry has recovered from the downturn it experienced
during the second half of 2005 and ferrochrome prices have shown significant
gains. However, the supply of ferrochrome is expected to increase in response to
the commissioning of a number of new projects which is likely to put pressure on
prices, going forward.
As always group results remain significantly exposed to fluctuation in exchange
rates as the bulk of sales are for export.
DIVIDENDS
The results in this announcement include the interim dividend of 80 cents (2005:
50 cents) per share which was declared on 15 March 2006 and paid to shareholders
on 10 April 2006.
The Board has declared an unchanged final dividend of 150 cents per share,
making an increased total dividend for the year of 230 cents (2005: 200 cents)
per share. This dividend will be paid to shareholders on or about Tuesday, 26
September 2006 and is not included in the results as it was declared after year-
end.
ACCOUNTING POLICIES
The financial information included in this announcement has been prepared in
accordance with IFRS. This is consistent with the basis used in the previous
reporting period, except for IAS16 regarding Property, Plant and Equipment,
IAS21 regarding The Effects of Changes in Foreign Exchange Rates, IFRIC5
regarding Rights to Interests arising from Decommissioning, Restoration and
Environmental Rehabilitation Funds, and IFRIC8 regarding the Scope of IFRS2,
which were adopted with effect from
1 July 2005.
AUDIT REVIEW
The year-end results have been reviewed in terms of Rule 3.22 of the Listing
Requirements of the JSE Limited by the group"s auditors Ernst & Young and their
unqualified review opinion is available for inspection at the registered office
of the company.
DECLARATION OF FINAL DIVIDEND
Final dividend No 99 of 150 cents per share was declared on 30 August 2006. The
dividend has been declared in the currency of the Republic of South Africa. In
accordance with STRATE, the following dates apply to the final dividend:
The last date to trade to qualify for the dividend (and for changes of address
or dividend instructions) will be Friday, 15 September 2006.
The company"s ordinary shares will commence trading "ex" the dividend from the
commencement of business on Monday, 18 September 2006.
The record date will be Friday, 22 September 2006.
Dividend cheques in payment of this dividend to holders of certificated shares
will be posted on or about Tuesday, 26 September 2006. Electronic payment to
holders of certificated shares will be undertaken simultaneously.
Holders of dematerialised shares will have their accounts at their Central
Securities Depository Participant or broker credited on Tuesday, 26 September
2006.
Share certificates may not be dematerialised or rematerialised between Monday,
18 September 2006 and Friday, 22 September 2006, both days inclusive.
On behalf of the board
Desmond Sacco C J Cory
Chairman Chief Executive Officer
Johannesburg
1 September 2006
Registered office Transfer office Directors
Assore House Computershare Investor Executive
15 Fricker Road Services 2004 (Pty) Ltd Desmond Sacco
(Chairman)
IIlovo Boulevard 70 Marshall Street R J Carpenter (Deputy
Chairman)
Johannesburg 2196 Johannesburg 2001 C J Cory (Chief
Executive Officer)
P C Crous (Technical
and Operations)
Company secretaries Non-executive
African Mining and P N Boynton
Trust Company Limited B M Hawksworth
M C Ramaphosa
Dr J C van der Horst
Assore Limited Alternate
Company registration number: 1950/037394/06 J W Lewis (British)
Share code: ASR ISIN: ZAE000017117 R Smith
Date: 31/08/2006 05:17:11 PM Supplied by www.sharenet.co.za
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