Wrap Text
Final results for the year ended 30 June 2013
Assore Limited
Company registration number: 1950/037394/06
Share code: ASR ISIN: ZAE000146932
(Assore or Group or Company)
Final Results for the year ended 30 June 2013
- Headline earnings recover significantly in the second half to R3,5 billion for the year
- Record iron and chrome ore sales
- Final dividend increased to R3,50 per share
Desmond Sacco, Chairman of Assore, said:
"Despite difficult market conditions, we produced results that are consistent with last year, mainly
due to record iron ore sales volumes."
Consolidated income statement
Year ended Year ended
30 June 2013 30 June 2012
R000 Unaudited Audited
Revenue 14 175 175 13 612 731
Turnover 13 500 864 12 947 766
Cost of sales (7 803 491) (7 337 643)
Gross profit 5 697 373 5 610 123
Other income 1 273 876 1 984 313
Other expenses (2 014 974) (1 792 466)
Finance costs (116 786) (217 244)
Profit before taxation 4 839 489 5 584 726
Taxation (1 411 121) (1 537 692)
Profit for the year 3 428 368 4 047 034
Attributable to:
Shareholders of the holding company 3 425 644 4 033 013
Non-controlling shareholders 2 724 14 021
As above 3 428 368 4 047 034
Earnings as above 3 425 644 4 033 013
Profit on disposal (net of tax) of available-for-sale investments (22 657) (406 092)
Impairment of non-financial assets 112 262 82 705
Loss/(profit) on disposal of fixed assets 17 240 (1 863)
Headline earnings 3 532 489 3 707 763
Earnings per share (basic and diluted - cents) 3 319 3 827
Headline earnings per share (basic and diluted - cents) 3 423 3 519
Dividends per share declared in respect of the profit for
the year (cents) 600 550
- Interim 250 250
- Final 350 300
Weighted average number of ordinary shares (million)
Ordinary shares in issue 139,61 139,61
Weighted impact of treasury shares held in BEE trusts (36,40) (34,24)
103,21 105,37
Consolidated statement of comprehensive income
Year ended Year ended
30 June 2013 30 June 2012
R000 Unaudited Audited
Profit for the year (as above) 3 428 368 4 047 034
Items that may be reclassified into the income statement
dependent on the outcome of a future event: (29 915) (382 948)
Reclassification of fair value gain on disposal of
available-for-sale investments included in income statement,
previously recognised in comprehensive income (as above) (22 657) (406 092)
Profit on disposal of available-for-sale investments (27 850) (472 200)
Deferred capital gains tax thereon 5 193 66 108
(Loss)/profit on revaluation to market value of
available-for-sale investments after taxation (19 465) 9 952
(Loss)/profit on revaluation to market value of
available-for-sale investments (23 928) 15 734
Deferred capital gains taxation 4 463 (5 782)
Exchange differences on translation of foreign operations 12 207 13 192
Total comprehensive income for the year, net of tax 3 398 453 3 664 086
Attributable to:
Shareholders of the holding company 3 389 747 3 643 469
Non-controlling interests 8 706 20 617
As above 3 398 453 3 664 086
Consolidated statement of financial position
At At
30 June 2013 30 June 2012
R000 Unaudited Audited
Assets
Non-current assets
Property, plant and equipment and intangible assets 10 455 963 9 529 499
Investments
- available-for-sale investments 178 428 239 333
- other 41 964 34 725
Other non-current financial assets 194 725 106 665
Total non-current assets 10 871 080 9 910 222
Current assets
Inventories 2 552 483 2 177 066
Trade and other receivables 2 359 602 2 049 782
Cash resources 4 465 756 3 324 437
Total current assets 9 377 841 7 551 285
Total assets 20 248 921 17 461 507
Equity and Liabilities
Share capital and reserves
Ordinary shareholders interest 14 022 511 11 200 402
Non-controlling interests 128 910 126 858
Total equity 14 151 421 11 327 260
Non-current liabilities
Net deferred taxation liabilities 2 486 435 2 357 001
Long-term liabilities
- interest-bearing 846 100 1 596 100
- non-interest-bearing 421 287 342 744
Total non-current liabilities 3 753 822 4 295 845
Current liabilities
Interest-bearing 349 424 192 019
Non-interest-bearing 1 994 254 1 646 383
Total current liabilities 2 343 678 1 838 402
Total equity and liabilities 20 248 921 17 461 507
Consolidated statement of cash flow
Year ended Year ended
30 June 2013 30 June 2012
R000 Unaudited Audited
Cash generated from operations 3 855 985 3 757 225
Cash utilised in investing activities (2 159 046) (2 372 589)
Treasury shares acquired - (2 692 555)
Proceeds on disposal of available-for-sale investments 36 975 663 650
Long-term finance raised - 2 310 000
Long term liabilities repaid (750 000) (708 700)
Other financing activities 157 405 32 672
Increase in cash for the year 1 141 319 989 703
Cash resources at beginning of year 3 324 437 2 334 734
Cash resources per statement of financial position 4 465 756 3 324 437
Consolidated statement of changes in equity
Year ended Year ended
30 June 2013 30 June 2012
R000 Unaudited Audited
Share capital, share premium and other reserves
Balance at beginning of year 344 548 734 092
Other comprehensive losses (net) (35 896) (389 544)
Other comprehensive losses, including non-controlling
shareholders portion (29 915) (382 948)
Less: Non-controlling shareholders portion thereof (5 981) (6 596)
Balance at end of year 308 652 344 548
Treasury shares
Balance at beginning of year (5 051 583) (2 359 028)
Treasury shares purchased during the year - (2 692 555)
Balance at end of year (5 051 583) (5 051 583)
Retained earnings
Balance at beginning of year 15 907 437 12 390 460
Attributable profit for the year 3 425 644 4 033 013
Ordinary dividends declared during the year (567 639) (516 036)
- total dividends declared (767 839) (698 036)
- dividends on treasury shares held in BEE trusts 200 200 182 000
Balance at end of year 18 765 442 15 907 437
Ordinary shareholders' interest 14 022 511 11 200 402
Non-controlling interests
Balance at beginning of year 126 858 114 287
Attributable profit 2 724 14 021
Dividends paid to non-controlling shareholders (6 653) (8 046)
Foreign currency translation reserve arising on consolidation 5 981 6 596
Balance at end of year 128 910 126 858
Total equity 14 151 421 11 327 260
Segmental information
Other Eliminations
Joint venture mining and beneficiation Marketing mining and and
R000 Iron ore Manganese Chrome Sub-total and shipping beneficiation adjustments* Consolidated
Year ended 30 June 2013 - Unaudited
Revenues
Revenues received 15 962 985 7 450 238 1 876 674 25 289 897 1 234 680 295 546 (12 644 949) 14 175 175
Inter-segmental transfers - - - - 439 560 292 570 (732 130) -
Total revenues 15 962 985 7 450 238 1 876 674 25 289 897 1 674 240 588 116 (13 377 079) 14 175 175
Contribution to attributable profit 5 517 176 827 117 (134 391) 6 209 902 369 761 (49 068) (3 104 951) 3 425 644
Year ended 30 June 2012 - Audited
Revenues
Revenues received 15 323 509 6 669 635 1 983 526 23 976 670 1 327 879 371 327 (12 063 145) 13 612 731
Inter-segmental transfers - - - - 384 610 260 853 (645 463) -
Total revenues 15 323 509 6 669 635 1 983 526 23 976 670 1 712 489 632 180 (12 708 608) 13 612 731
Contribution to attributable profit 5 835 547 1 223 279 (174 837) 6 883 989 819 943 (228 924) (3 441 995) 4 033 013
*Eliminations and adjustments consist of the 50% share attributable to the joint venture party in Assmang and inter-segmental transactions.
COMMENTARY
Results
Headline earnings for the financial year to 30 June 2013 have decreased marginally by 4,7% on the previous year to
R3,5 billion (2012: R3,7 billion). This reduction is mainly due to the decline in the headline earnings of Assmang Limited
(Assmang), which decreased by 7,1% to R6,5 billion (2012: R7,0 billion), compared to the previous financial year.
Increased turnover in Assmang resulted in higher commissions earned by the Group, partly limiting the extent of the decline in
headline earnings and whilst these earnings for the six months ended 31 December 2012 amounted to R1,1 billion, second
half headline earnings amounted to R2,4 billion for the reasons set out in the narrative below.
Assore holds a 50% interest in Assmang, which is proportionately consolidated in accordance with International
Financial Reporting Standards (IFRS). Assmangs headline earnings were negatively impacted by lower US Dollar selling prices
for iron ore, which were mostly offset by a weaker Rand/US Dollar exchange rate and increased sales volumes achieved for
iron and chrome ores. Support for the sale of the Groups products remained mainly from within China, where crude steel
production was at record levels for the second half of the financial year.
Sales volumes
Sales of iron ore increased in Assmangs Iron Ore Division due to the availability of additional railage capacity from
the Khumani Iron Ore Mine. Assmangs Chrome Division achieved record sales volumes of chrome ore, due to the suspension
by Assmang of charge chrome production at Machadodorp because of the depressed global market conditions for ferrochrome
and the increasing cost of electricity in South Africa. Assmang was required to record an impairment charge of R312
million against furnaces and associated equipment in its Manganese, and Chrome Divisions, which had become unprofitable to
operate under current market conditions and cost structures.
Assmangs turnover for the year under review increased by 5,5% to R25,0 billion (2012: R23,7 billion). The following
table sets out the sales volumes of Assmangs products for the year under review:
Increase/
Year ended 30 June (decrease)
Metric tons 000 2013 2012 %
Iron ore 16 070 14 753 9
Manganese ore* 2 856 2 905 (2)
Manganese alloys* 260 270 (4)
Charge chrome 77 174 (56)
Chrome ore* 1 054 521 102
*Excluding intra-group sales to alloy plants
Capital expenditure
The bulk of the Groups capital expenditure occurs in Assmang and amounted to R4,1 billion (2012: R4,5 billion) for
the year under review. R2,2 billion was spent at the Khumani Iron Ore Mine, with R553 million spent on the Wet High
Intensity Magnetic Separation (WHIMS) plant designed to increase yields on low grade ore, R223 million on the Khumani
Optimisation Project (KOP), aimed at plant debottlenecking and R185 million spent on deviating the rail line to enable
expansion of the King Pit. A further R362 million was spent at Beeshoek Iron Ore Mine on waste-stripping. Within Assmangs
Manganese Division, R339 million was spent on sustainable capital together with feasibility studies and early
establishment costs to expand the capacity of the manganese mines to at least 4 million tons per annum. The bulk of the remainder
of the capital expenditure was spent on replacement capital.
On 19 June 2013, the Company announced the conditional approval for the construction by a joint venture comprising
Assmang, Sumitomo Corporation and China Steel of a manganese alloy smelting facility in Sarawak State, Malaysia to be known
as Sakura Ferroalloys SDN.BHD. (Sakura). Sakura is a greenfields project and the facility will be constructed in the
Samalaju Industrial Park, in Sarawak. Sakura will initially consist of two 81MVA furnaces, complete with all related
infrastructure, equipment and services to allow for the production of both high-carbon ferromanganese and silicon-manganese
alloys. Besides being the majority shareholder, Assmang will provide marketing and technical services to Sakura. The
total project value is set at US Dollar 328 million and construction is due to start in early 2014. Assmangs current cash
resources are adequate to meet its share of the project commitment.
Outlook
The level of global crude steel production is expected to decline in the short term, which, together with more iron
ore becoming available from new and established Australian producers, is expected to cause downward pressure on iron ore
prices. Stocks of iron ore in China have stabilised at low levels, which should counteract any significant decline in
selling prices. New entrants from South Africa into the manganese ore market are creating downward pricing pressure on medium
grade manganese ore, which is also negatively impacting on high grade ore. Additional downward pricing pressure is
expected on manganese ores for the foreseeable future due to increased volumes becoming available from producers in
Australia and Gabon. The level and impact of state and regulatory intervention in the significant global economic powers
remains unclear, creating a lack of certainty over the extent of global economic growth in the short, to medium term. Whilst
it is expected that sales volumes are not likely to change significantly, the factors mentioned above could have a
significant impact on the selling prices of the Groups products. The Group remains exposed to fluctuations in exchange
rates.
Dividends
The results in this announcement include the interim dividend of 250 cents (2012: 250 cents) per share which was
declared on 12 February 2013 and paid to shareholders on 11 March 2013. In line with the results for the year, the directors
of Assore (the Board) have declared a final dividend of 350 cents (2012: 300 cents) per share, making a total dividend
in respect of profit for the year of 600 cents (2012: 550 cents) per share. The final dividend will be paid to
shareholders on or about 23 September 2013 and, in accordance with IFRS, is not included in the results contained in this
announcement as it was declared after year end.
Review by auditors
Ernst & Young Inc, the Groups auditors, have reviewed and issued an unmodified report on the condensed financial
results included in this announcement in accordance with ISRE 2410 - Review of Interim Financial Information Performed by
the Independent Auditor of the Entity. A copy of their report is available for inspection at the registered office of the
Company.
Accounting policies and basis of preparation
The financial results for the year under review have been prepared under the supervision of
Mr CJ Cory, CA(SA) in accordance with IAS 34 - Interim Financial Reporting and comply with IFRS, the SAICA Financial
Reporting Guides as issued by the Accounting Practices Committee, the Listings Requirements of the JSE Limited (JSE)
and the Companies Act No 71 of 2008. 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 significant impact on the results or
disclosures of the Group for the year under review.
Declaration of final dividend
Shareholders are advised that the Board has declared final gross dividend number 113 (the Dividend), of 350 cents
(2012: 300) per share (gross) for the year ended 30 June 2013 on 27 August 2013.
In terms of paragraph 11.17 of the Listings Requirements of the JSE, shareholders are advised of the following with
regard to the declaration:
1. the Dividend has been declared from retained earnings;
2. the local Dividend Tax rate is 15%;
3. the Company does not have any Secondary Companies Tax (STC) credits available to reduce the impact of the
Dividend Tax;
4. the net local dividend amount is 297,5 cents per share for shareholders liable to pay the Dividends Tax;
5. the issued ordinary share capital of Assore is 139 607 000 shares; and
6. Assores Income Tax reference number is 9045/018/84/4.
The salient dates for the Dividend are as follows:
Last day for trading to qualify and participate in the final dividend Friday, 13 September 2013
Trading ex dividend commences Monday, 16 September 2013
Record date Friday, 20 September 2013
Dividend payment date Monday, 23 September 2013
Share certificates may not be dematerialised or rematerialised between Monday, 16 September 2013 and Friday, 20
September 2013, both days inclusive.
On behalf of the Board
Desmond Sacco CJ Cory
Chairman Chief Executive Officer
Johannesburg
28 August 2013
Directors
Executive
Desmond Sacco (Chairman), CJ Cory (Chief Executive Officer), AD Stalker (Marketing), BH van Aswegen (Technical and Operations)
Alternate
PE Sacco
Non-executive
EM Southey* (Deputy Chairman and Lead Independent Director), RJ Carpenter, S Mhlarhi*, WF Urmson* *Independent
Registered office
Assore House, 15 Fricker Road, IIlovo Boulevard, Johannesburg, 2196
Company secretaries
African Mining and Trust Company Limited
Transfer office
Computershare Investor Services (Proprietary) Limited, 70 Marshall Street, Johannesburg, 2001
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
Amelia Soares
Tel: 011 447 3030
Cell: 082 610 1156
Date: 28/08/2013 09:56:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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