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RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2012
ASSORE LIMITED
Company Registration Number: 1950/037394/06
Share code: ASR
ISIN: ZAE000146932
(Assore or Group or Company)
RESULTS FOR THE HALF-YEAR ENDED 31 DECEMBER 2012
- Headline earnings down 46,5%
- Average iron ore prices down 36%
- Interim dividend R2,50 per share
Des Sacco, Chairman of Assore, said:
Earnings were lower because of decreased iron ore prices which did recover towards the end of 2012. Sales volumes
for iron and chrome ores increased and prices for some of our grades of manganese ore were higher. Margins for all
of our products benefited from the weaker Rand."
COMMENTARY
RESULTS
Headline earnings for the six months to 31 December 2012 decreased by 46,5%, to R1 106 million, compared to the same
period in the previous financial year. This is due mainly to decreased earnings of Assmang Limited (Assmang) for the
period, together with reduced commissions earned on lower turnover within the Group.
Assore holds a 50% interest in Assmang, which is proportionately consolidated in accordance with International
Financial Reporting Standards (IFRS). Assmangs headline earnings declined by 46,3% to R2 122 million compared to the same
period in the previous financial year. Average US Dollar selling prices for iron ore were 35,9% lower than the previous
period. In addition, labour issues and production difficulties resulted in higher unit production costs in Assmangs
Manganese Division, which negatively impacted its contribution to headline earnings. The impact of the lower selling
prices of iron ore was partly offset by a weaker Rand/US Dollar exchange rate, increased export volumes of iron and chrome
ore and firmer prices for manganese ore.
Market conditions for all of the Groups commodities were more volatile, compared to the previous corresponding
period. These conditions, which were characterised by weaker Asian demand and continuing sovereign debt issues in Europe,
continued to hamper a recovery in global economic growth. This was evidenced in the lower iron ore prices, and continued
downward pricing pressure on the Groups alloy products. Global shortages in certain grades of manganese ore and the
weaker Rand/US Dollar exchange rate resulted in some pricing traction for these grades.
SALES VOLUMES
Sales volumes of iron and chrome ores were higher for the current period. Iron ore volumes were higher due to the
availability of increased railage capacity over the period and following the reduction of charge chrome production at
Assmangs Machadodorp Works, additional volumes of chrome ore were available for export. Sales volumes of manganese products
were similar to those of the previous period.
The table below sets out Assmangs sales volumes for the current period:
Half-year ended Increase/
31 December 31 December (decrease)
Metric tons 000 2012 2011 %
Iron ore 7 433 6 781 10
Manganese ore* 1 513 1 590 (5)
Manganese alloys* 107 104 3
Charge chrome 48 86 (44)
Chrome ore* 483 211 129
* Excluding intra-group sales to alloy plants.
CAPITAL EXPENDITURE
The bulk of the Groups capital expenditure occurs in Assmang, where more than R2,3 billion was spent on capital items
in the current period (2012: R2,1 billion). R1,4 billion was spent in the iron ore division, with R446 million on
waste stripping, R351 million on the Wet High Intensity Magnetic Separation (WHIMS) project and R181 million on the
Khumani Expansion Project (KEP). The expansion of the manganese ore mines continues, and R144 million was spent at the
Black Rock mines, while R83 million was spent on facilities to optimise existing logistical infrastructure. A further R219
million was spent on the conversion of ferrochrome capacity to ferromanganese capacity at the Machadodorp Works.
Replacement capital makes up the remainder of the capital spent within Assmang.
OUTLOOK
Subsequent to the leadership change in China, increased economic activity in China has become apparent and has
resulted in increased demand for the Groups commodities. However, the resultant recovery in economic growth is fragile. In
addition, the steel industry in Europe continues to be in a state of decline, albeit at a slower rate than in the
previous calendar year. Whilst there are signs of a recovery in the United States economy, it is unclear as to the strength of
this recovery. Recent increases in iron ore prices have been maintained and it is anticipated that prices for the
remainder of the financial year will stabilise at levels higher than those for the first half of the financial year.
Shortages of certain grades of manganese ore continue to support higher prices for some of the Groups manganese products.
The Groups results remain exposed to fluctuations in the Rand/US Dollar exchange rate.
DIVIDENDS
The results in this announcement include the final dividend relating to the previous financial year of 300 cents
(2011: 250 cents) per share, which was declared on 31 August 2012 and paid to shareholders on 1 October 2012. Based on the
level of earnings for the period, the board has declared an interim dividend of 250 cents (2012: 250 cents) per share,
which will be paid to shareholders on or about 11 March 2013.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial results for the period under review have been prepared under the supervision of Mr CJ Cory,
CA(SA) and in accordance with IAS 34 Interim Financial Reporting. The accounting policies applied are consistent with
those adopted in the financial year ended 30 June 2012. Amendments to IFRS effective in the period have not had any
impact on the results or disclosures of the Group.
DIRECTORS
Since 1 July 2012, the following changes to the board of directors have taken place:
- 31 August 2012 - Mr PC (Phil) Crous resigned as Group Technical and Operations Director, following his decision to
take early retirement;
- 1 September 2012 - Messrs AD (Alastair) Stalker and BH (Tiaan) van Aswegen, were appointed as Group Marketing
Director and Group Technical and Operations Director respectively; and
- 15 October 2012 - Mr S (Sydney) Mhlarhi was appointed as an independent non-executive director and as a member of
the Audit and Risk Committee.
DECLARATION OF INTERIM DIVIDEND
Shareholders are advised that the board of directors has declared Interim Dividend Number 112 (the Dividend), of
250 cents (2012: 250 cents) per share (gross) for the period ended 31 December 2012 on 12 February 2013.
In terms of paragraph 11.17 of the Listings Requirements of the JSE Limited, shareholders are advised of the following
with regard to the declaration:
1. the Dividend has been declared from accumulated revenue;
2. the local Dividend Tax rate is 15%;
3. the Company does not have any Secondary Companies Tax (STC) credit available to reduce the impact of the
Dividend Tax;
4. the net local dividend amount is 212,5 cents per share for shareholders liable to pay the Dividends Tax;
5. the issued ordinary share capital of Assore is 139 607 000 shares, of which 36 400 000 shares are accounted for as
treasury shares in terms of IFRS and are therefore excluded from earnings per share calculations; and
6. Assores income tax reference number is 9045/018/84/4.
The salient dates are as follows:
- Last day for trading to qualify and participate in the final dividend Friday, 1 March 2013
- Trading ex dividend commences Monday, 4 March 2013
- Record date Friday, 8 March 2013
- Dividend payment date Monday, 11 March 2013
- Dates (inclusive) between which share certificates may not be Monday, 4 March 2013
dematerialised or rematerialised to Friday, 8 March 2013
On behalf of the board
Desmond Sacco CJ Cory Johannesburg
Chairman Chief Executive Officer 13 February 2013
CONSOLIDATED INCOME STATEMENT
Half-year ended Year ended
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
R000 R000 R000
Revenue 5 980 025 6 843 807 13 612 731
Turnover 5 736 898 6 386 024 12 947 766
Cost of sales (3 832 783) (3 337 372) (7 337 643)
Gross profit 1 904 115 3 048 652 5 610 123
Other income 461 891 626 209 1 984 313
Other expenses (716 083) (476 455) (1 792 466)
Finance costs (60 981) (126 199) (217 244)
Profit before taxation 1 588 942 3 072 207 5 584 726
Taxation (482 607) (934 057) (1 537 692)
Profit for the period 1 106 335 2 138 150 4 047 034
Attributable to:
Shareholders of the holding company 1 106 240 2 129 171 4 033 013
Non-controlling shareholders 95 8 979 14 021
As above 1 106 335 2 138 150 4 047 034
Earnings as above 1 106 240 2 129 171 4 033 013
Profit on disposal of available-for-sale investments, net of tax - (61 057) (406 092)
Impairment of non-financial assets - - 82 705
Loss/(profit) on disposal of fixed assets 109 (646) (1 863)
Headline earnings 1 106 349 2 067 468 3 707 763
Earnings per share (basic and diluted - cents) 1 072 1 978 3 827
Headline earnings per share (basic and diluted - cents) 1 072 1 921 3 519
Dividends per share declared in respect of the profit
for the period (cents) 250 250 550
- Interim 250 250 250
- Final 300
Weighted average number of ordinary shares (million)
Ordinary shares in issue 139,61 139,61 139,61
Weighted impact of treasury shares held in trust (36,40) (31,97) (34,24)
103,21 107,64 105,37
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half-year ended Year ended
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
R000 R000 R000
Profit for the period (as above) 1 106 335 2 138 150 4 047 034
Reclassification of fair value gain on disposal of available-for-sale
investments included in income statement, previously recognised in
comprehensive income - (61 057) (406 092)
Profit on disposal of available-for-sale investments (as above) - (71 139) (472 200)
Deferred capital gains tax thereon - 10 082 66 108
Gain/(loss) on revaluation to market value of
available-for-sale investments after taxation 24 779 (522) 9 952
Gain/(loss) on revaluation of available-for-sale
investments to market value 30 640 (607) 15 734
Deferred capital gains tax thereon (5 861) 85 (5 782)
Exchange differences on translation of foreign operations (92) 6 165 13 192
Total comprehensive income for the period,
net of tax 1 131 022 2 082 736 3 664 086
Attributable to:
Shareholders of the holding company 1 130 972 2 067 592 3 643 469
Non-controlling shareholders 50 15 144 20 617
As above 1 131 022 2 082 736 3 664 086
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half-year ended Year ended
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
R000 R000 R000
Share capital, share premium and other reserves
Balance at beginning of the period 344 548 734 092 734 092
Other comprehensive income/(loss) 24 732 (55 414) (389 544)
Net increase/(decrease) in the market value of
available-for-sale investments, net of tax 24 779 (522) 9 952
Profit on disposal of available-for-sale investments
recognised in profit for the year, net of tax - (61 057) (406 092)
Foreign currency translation reserve arising on consolidation (47) 6 165 6 596
Balance at end of the period 369 280 678 678 344 548
Treasury shares
Balance at beginning of the period (5 051 583) (2 359 028) (2 359 028)
Treasury shares purchased during the period - (2 692 555) (2 692 555)
Balance at end of the period (5 051 583) (5 051 583) (5 051 583)
Retained earnings
Balance at beginning of the period 15 907 436 12 390 460 12 390 460
Profit for the period, attributable to shareholders 1 106 240 2 129 171 4 033 013
Ordinary dividends declared (net of dividends on treasury shares)
Number 111 at R3,00 per share (2011: R2,50 per share) (309 622) (258 018) (516 036)
Balance at end of the period 16 704 054 14 261 613 15 907 437
Ordinary shareholders interest 12 021 751 9 888 708 11 200 402
Non-controlling interests
Balance at beginning of the period 126 858 114 287 114 287
Attributable profit for the period 95 8 979 14 021
Dividends paid to non-controlling shareholders (6 399) (5 901) (8 046)
Foreign currency translation reserve arising on consolidation (45) 6 165 6 596
Balance at end of the period 120 509 123 530 126 858
Total equity 12 142 260 10 012 238 11 327 260
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At At At
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
R000 R000 R000
Assets
Non-current assets
Mining and other fixed assets 10 239 751 8 826 922 9 529 499
Investments
- available-for-sale 269 974 695 870 239 333
- other 34 942 65 905 34 725
Other non-current financial assets 163 155 73 583 106 665
Total non-current assets 10 707 822 9 662 280 9 910 222
Current assets
Inventories 2 361 289 2 377 587 2 177 066
Trade and other receivables 2 211 782 2 123 947 2 049 782
Cash resources 3 134 581 3 146 930 3 324 437
Total current assets 7 707 652 7 648 464 7 551 285
Total assets 18 415 474 17 310 744 17 461 507
Equity and liabilities
Share capital and reserves
Ordinary shareholders interest 12 021 751 9 888 708 11 200 402
Non-controlling interests 120 509 123 530 126 858
Total equity 12 142 260 10 012 238 11 327 260
Non-current liabilities
Deferred taxation liabilities 2 523 669 2 345 564 2 357 001
Long-term liabilities
- interest-bearing 1 596 100 - 1 596 100
- non-interest-bearing 361 744 242 801 342 744
Total non-current liabilities 4 481 513 2 588 365 4 295 845
Current liabilities
Interest-bearing 183 175 2 918 145 192 019
Non-interest-bearing 1 608 526 1 791 996 1 646 383
Total current liabilities 1 791 701 4 710 141 1 838 402
Total equity and liabilities 18 415 474 17 310 744 17 461 507
Capital expenditure (R million) 1 123,5 1 048,7 2 312,5
Capital commitments (R million) 2 661,8 3 240,1 3 357,4
CONSOLIDATED STATEMENT OF CASH FLOW
Half-year ended Year ended
31 December 31 December 30 June
2012 2011 2012
Unaudited Unaudited Audited
R000 R000 R000
Cash generated from operations 1 178 473 1 720 406 3 757 227
Cash utilised in investing activities
- to maintain operations (618 469) (408 003) (788 331)
- to expand operations (684 523) (590 224) (1 495 715)
Treasury shares purchased - (2 692 555) (2 692 555)
Proceeds on disposal of available-for-sale investments - - 663 650
Long-term finance raised, net of repayments - - 1 601 300
Cash (utilised)/generated by financing activities (65 337) 2 782 572 (55 873)
(Decrease)/increase in cash for the period (189 856) 812 196 989 703
Cash resources at beginning of the period 3 324 437 2 334 734 2 334 734
Cash resources per statement of financial position 3 134 581 3 146 930 3 324 437
SEGMENTAL INFORMATION
Other Corporate Eliminations
Joint venture mining and beneficiation Marketing mining and and and
R000 Iron ore Manganese Chrome Sub-total and shipping beneficiation treasury adjustments Consolidated
Half-year ended 31 December 2012 - unaudited
Revenues
- third party 6 179 220 3 510 458 969 972 10 659 650 502 008 144 980 3 212 (5 329 825) 5 980 025
- inter-segment - - - - 162 283 157 300 - (319 583) -
Total revenues 6 179 220 3 510 458 969 972 10 659 650 664 291 302 280 3 212 (5 649 408) 5 980 025
Contribution to profit 1 731 304 412 271 (21 503) 2 122 072 93 250 (10 827) (37 123) (1 061 037) 1 106 335
Half-year ended 31 December 2011 - unaudited
Revenues
- third party 7 518 677 3 457 439 962 441 11 938 557 603 162 248 877 22 490 (5 969 279) 6 843 807
- inter-segment - - - - 387 818 129 410 - (517 228) -
Total revenues 7 518 677 3 457 439 962 441 11 938 557 990 980 378 287 22 490 (6 486 507) 6 843 807
Contribution to profit 3 125 669 834 030 (9 706) 3 949 993 202 303 (1 759) (31 080) (1 981 307) 2 138 150
Directors:
Executive: Desmond Sacco (Chairman), CJ Cory (Chief Executive Officer), AD Stalker (Marketing), BH van Aswegen (Technical and Operations)
Non-executive: EM Southey* (Deputy Chairman and Lead Independent Director), RJ Carpenter, S Mhlarhi*, WF Urmson* *Independent
Alternate: PE Sacco
Registered office: Assore House, 15 Fricker Road, IIlovo Boulevard, Johannesburg, 2196
Transfer office: Computershare Investor Services Proprietary Limited, 70 Marshall Street, Johannesburg, 2001
Company secretaries: African Mining and Trust Company Limited
Sponsor: The Standard Bank of South Africa Limited
www.assore.com
Note to editors:
Assore holds a 50% interest in Assmang Limited (Assmang), which it controls jointly with African Rainbow Minerals Limited (ARM).
Further enquiries:
College Hill
Jacques de Bie Tel: 011 447 3030
Cell: 082 691 5384
Date: 13/02/2013 11:43:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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