Wrap Text
Results for the half year ended 31 December 2013
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 2013
- Half-year earnings more than doubled
- Higher iron ore prices
- Weaker rand boosts revenues
- Interim dividend increased to R4,50 per share
- Change in basis of consolidation
Des Sacco, Chairman of Assore, said:
“Earnings for the half year were at record levels and the Group is well-positioned to take advantage of the growth in
world steel production, which is continuing.”
Commentary
RESULTS
Headline earnings for the six months to 31 December 2013 increased by 119,4% to R2,4 billion, compared to the same
period in the previous financial year. This is due mainly to increased headline earnings of Assmang Limited (“Assmang”) for
the period, which increased by 104,4% to R4,3 billion compared to the same period in the previous financial year (“the
previous period”).
Selling prices in US dollars for iron ore exports were on average 13% higher compared to the previous period. Prices
for manganese and chrome ores remained consistent during the period, with increases in certain grades of both ore types
offsetting decreases in other grades, while prices for manganese alloys were generally lower. Market conditions for all
the Group’s commodities firmed during the period, with continued demand from Asia and improving demand from Europe and
the United States contributing to relatively stable markets. The weaker rand/US dollar exchange rate contributed
significantly to Assmang’s turnover, which increased by 33,5% over the previous period, resulting in higher commissions earned by
the Group.
Assore holds a 50% interest in Assmang, which it controls jointly and which, until the previous accounting period, has
been proportionately consolidated. In terms of new International Financial Reporting Standards (“IFRS”) effective for
the Group from the beginning of the financial year, joint ventures are required to be accounted for on the equity
accounting basis and Assore has therefore disclosed its share of Assmang’s profit after taxation in its income statement as its
“Share of profit from joint venture after taxation” (refer “Accounting policies and basis of preparation” below).
SALES VOLUMES
Sales volumes of iron ore were higher for the current period, due to increased sales into the local market from
Assmang’s Beeshoek Mine on the back of increased local demand. However, export sales volumes from Assmang’s Khumani Iron Ore
Mine are being restricted due to a lack of plant availability and unreliable water supply by the regional water board,
which are being addressed. Steady production from Assmang’s Manganese and Chrome divisions enabled the Group to record
budgeted export sales volumes for the period, however local sales volumes of manganese ore were lower.
The table below sets out Assmang’s sales volumes for the current period:
Half year ended Increase/
31 December 31 December (decrease)
Metric tons ’000 2013 2012 %
Iron ore 7 738 7 433 4
Manganese ore* 1 411 1 513 (7)
Manganese alloys* 117 107 9
Charge chrome 17 48 (65)
Chrome ore* 477 483 (1)
* Excluding intra-group sales to alloy plants.
CAPITAL EXPENDITURE
Capital expenditure in Assmang amounted to R1,5 billion (2013: R2,3 billion) for the period. The majority of the
capital was spent on replacement and maintenance capital. Major project capital expenditure was undertaken at the Khumani
Iron Ore Mine, on the completion of the Wet High Intensity Magnetic Separation (“WHIMS”) plant (R131 million) and R199 million
on the continuation of the debottlenecking activities (Khumani Optimisation Project). R297 million was spent in Assmang’s
Manganese Division on infrastructure and feasibility studies for the expansion of the Black Rock Mines’ capacity
to at least 4 million tons per annum.
The site has been established for Assmang¹s joint venture ferromanganese smelting project in Malaysia and groundwork
has commenced. The project, valued at US dollar 328 million, is being undertaken by Sakura Ferralloys SDN.BHD, in which
Assmang holds a 54,36% interest. The plant is scheduled to achieve full design production output of approximately
170 000 tons per annum towards the middle of 2016.
OUTLOOK
Robust steel production in China and the rest of the world during this reporting period supported the demand for the
Group’s products and prices were stronger than anticipated. However, the short-term outlook for the Chinese steel
industry is clouded by environmental concerns and the gradual transition from an economy based on high fixed domestic
investment to a more consumer oriented economy. Nevertheless, the Group expects that world steel production will continue to grow
from the record levels of 2013 and thus demand for the Group’s products should increase.
However, some concern exists regarding supply side developments in all of the Group’s markets. Australian miners
exported over 90 million tons of additional iron ore in the 2013 calendar year and a similar increment is expected during
this calendar year. Manganese ore producers, particularly in South Africa, continue to ramp up production, while South
African chrome ore exports are at record levels and are increasing.
The Group’s markets are thus finely balanced and its results remain exposed to fluctuations in the rand/US dollar
exchange rate, which has already weakened significantly since the start of the new calendar year.
DIVIDENDS
The results in the announcement include the final dividend relating to the previous financial year of 350 cents (2012:
300 cents) per share, which was declared on 27 August 2013 and paid to shareholders on 23 September 2013. Based on the
increased level of earnings for the period, the Board has declared an interim dividend of 450 cents (2012: 250 cents)
per share, which will be paid to shareholders on or about 10 March 2014.
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 and comply with International Financial Reporting Standards
(“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.
In terms of IFRS 11 - Joint Arrangements, joint ventures are required to be accounted for using the equity accounting
method. As determined by IFRS 11, Assmang is a joint venture, which up until the end of the previous financial year was
proportionately consolidated. It has therefore been necessary to change the basis on which Assmang is accounted for to
the equity accounting method from the beginning of the current period. While there was no impact on the Group results
following the change, it did however, have a significant effect on disclosures made in both the consolidated income
statement and statement of financial position. The results for the six months ended 31 December 2012 as previously reported
have been included in order to illustrate the impact of the adoption of this standard.
In addition to the adoption of IFRS 11, the Group has adopted several new IFRSs and amendments to IFRSs which have not
had any significant impact on the results or disclosures of the Group for the period under review.
DECLARATION OF INTERIM DIVIDEND
Shareholders are advised that on 11 February 2014, the board of directors (“the Board”) declared Interim Dividend
Number 114 (“the Dividend”), of 450 cents (2013: 250) per share (gross) for the period ended 31 December 2013.
In terms of paragraph 11.17 of the Listings Requirements of JSE Limited, 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 382,5 cents per share for shareholders liable to pay the Dividend 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. Assore’s 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, 28 February 2014
- Trading “ex dividend” commences Monday, 3 March 2014
- Record date Friday, 7 March 2014
- Dividend payment date Monday, 10 March 2014
- Dates (inclusive) between which share certificates may not be Monday, 3 March 2014
dematerialised or rematerialised to Friday, 7 March 2014
On behalf of the Board
Desmond Sacco CJ Cory Johannesburg
Chairman Chief Executive Officer 12 February 2014
Consolidated income statement
Half year ended Year ended
31 December 31 December 31 December 30 June
2013 2012 2012 2013
Unaudited Unaudited Unaudited Audited
restated reported restated
R’000 R’000 R’000 R’000
Revenue 1 320 539 988 148 5 980 025 1 964 409
Turnover 736 069 465 151 5 736 898 999 280
Cost of sales (686 908) (429 796) (3 832 783) (934 228)
Gross profit 49 161 35 355 1 904 115 65 052
Profit on disposal of available-for-sale investments - - - 27 850
Other income 584 469 347 985 461 891 954 318
Other expenses (214 947) (205 824) (716 083) (447 530)
Finance costs (29 469) (52 124) (60 981) (91 237)
Profit before taxation and joint venture 389 214 125 392 1 588 942 508 453
Taxation (108 142) (67 617) (482 607) (171 227)
Profit after taxation, before joint venture 281 072 57 775 1 106 335 337 226
Share of profit from joint venture, after taxation 2 151 322 1 048 560 - 3 092 476
Profit for the period 2 432 394 1 106 335 1 106 335 3 429 702
Attributable to:
Shareholders of the holding company 2 427 312 1 106 240 1 106 240 3 426 978
Non-controlling shareholders 5 082 95 95 2 724
As above 2 432 394 1 106 335 1 106 335 3 429 702
Earnings as above 2 427 312 1 106 240 1 106 240 3 426 978
Profit on disposal (net of tax) on available-for-sale investments - - - (22 657)
Impairment of non-financial assets - - - 112 262
Loss on disposal of fixed assets 19 109 109 17 240
Headline earnings 2 427 331 1 106 349 1 106 349 3 533 823
Earnings per share (basic and diluted - cents) 2 352 1 072 1 072 3 320
Headline earnings per share (basic and diluted - cents) 2 352 1 072 1 072 3 424
Dividends per share declared in respect of the profit for the
period (cents) 450 250 250 600
- Interim 450 250 250 250
- Final 350
Weighted average number of ordinary shares (million)
Shares in issue 139,61 139,61 139,61 139,61
Impact of treasury shares held in trust (36,40) (36,40) (36,40) (36,40)
103,21 103,21 103,21 103,21
Consolidated statement of comprehensive income
Half year ended Year ended
31 December 31 December 31 December 30 June
2013 2012 2012 2013
Unaudited Unaudited Unaudited Audited
restated reported restated
R’000 R’000 R’000 R’000
Profit for the period (above) 2 432 394 1 106 335 1 106 335 3 429 702
Items that may be reclassified into the income statement dependent
on the outcome of a future event: 42 040 24 687 24 687 (11 730)
Reclassification of fair value gain on disposal of available-for-sale
investments after taxation - - - (22 657)
Gain/(loss) on revaluation to market value of available-for-sale
investments after taxation 29 845 24 779 24 779 (19 465)
Gain/(loss) on revaluation to market value of available-for-sale
investments 39 483 30 640 30 640 (23 928)
Deferred capital gains tax thereon (9 638) (5 861) (5 861) 4 463
Actuarial gains on pension plan after taxation - - - 18 185
Exchange differences on translation of foreign operations 12 195 (92) (92) 12 207
Total comprehensive income for the period, net of tax 2 474 434 1 131 022 1 131 022 3 417 972
Attributable to:
Shareholders of the holding company 2 469 358 1 130 972 1 130 972 3 409 266
Non-controlling shareholders 5 076 50 50 8 706
As above 2 474 434 1 131 022 1 131 022 3 417 972
Consolidated statement of cash flow
Half year ended Year ended
31 December 31 December 30 June
2013 2012 2013
Unaudited Unaudited Audited
restated restated
R’000 R’000 R’000
Cash generated from operations 663 821 623 850 1 269 939
Cash utilised in investing activities (198 789) (21 656) (24 927)
Long term liabilities repaid - - (750 000)
Other financing activities (81 281) (65 337) 157 405
Increase in cash for the period 383 751 536 857 652 417
Cash resources at beginning of the period 1 703 746 1 095 192 1 051 329
Cash resources per statement of financial position 2 087 497 1 632 049 1 703 746
Consolidated statement of changes in equity
Half year ended Year ended
31 December 31 December 31 December 30 June
2013 2012 2012 2013
Unaudited Unaudited Unaudited Audited
restated reported restated
R’000 R’000 R’000 R’000
Share capital, share premium and other reserves
Balance at beginning of year 326 837 344 548 344 548 344 548
Other comprehensive income/(loss) for the period 43 189 24 732 24 732 (17 711)
Surplus on disposal of available-for-sale investments recognised
in profit for the year - - (22 657)
Net increase/(decrease) in the market value of available-for-sale
investments 29 845 24 779 24 779 (19 465)
Transfer to share-based payment reserve 1 149 - - -
Actuarial gains/(losses) on pension plan after taxation - - - 18 185
Foreign currency translation reserve arising on consolidation 12 195 (47) (47) 6 226
Balance at end of the period 370 026 369 280 369 280 326 837
Treasury shares
Balance at end of the period (5 051 583) (5 051 583) (5 051 583) (5 051 583)
Retained earnings
Balance at beginning of the period - as reported 18 756 125 15 907 437 15 907 436 15 907 437
Change in accounting policy (refer "Accounting policies and basis
of preparation") - (10 651) - (10 651)
Balance at beginning of the period - restated 18 756 125 15 896 786 15 907 436 15 896 786
Profit for the period attributable to shareholders 2 427 312 1 106 240 1 106 240 3 426 978
Ordinary dividends declared (net of dividends on treasury shares)
Number 113 at R3,50 per share (2012: R3,00 per share) (361 225) (309 623) (309 622) (567 640)
Balance at end of the period 20 822 212 16 693 403 16 704 054 18 756 124
Ordinary shareholders’ interest 16 140 655 12 011 100 12 021 751 14 031 378
Non-controlling shareholders’ interests
Balance at beginning of period 128 910 126 858 126 858 126 858
Share of total comprehensive income 1 929 (6 349) (6 349) 2 052
- profit for the period 5 082 95 95 2 724
- other comprehensive income (6) (45) (45) 5 982
Dividends paid to non-controlling shareholders (3 147) (6 399) (6 399) (6 654)
Balance at end of the period 130 839 120 509 120 509 128 910
Total equity 16 271 494 12 131 609 12 142 260 14 160 288
Consolidated statement of financial position
At At At At
31 December 31 December 31 December 30 June
2013 2012 2012 2013
Unaudited Unaudited Unaudited Audited
restated reported restated
R’000 R’000 R’000 R’000
Assets
Non-current assets
Property, plant and equipment and intangible assets 544 136 503 224 10 239 751 510 577
Investments
- joint venture 14 352 389 11 653 359 - 12 946 015
- available-for-sale investments 392 040 269 974 269 974 178 430
- other 46 766 34 942 34 942 41 963
Other non-current financial assets 12 315 - 163 155 12 315
Total non-current assets 15 347 646 12 461 499 10 707 822 13 689 300
Current assets
Inventories 484 496 271 760 2 361 289 426 292
Trade and other receivables 223 966 196 938 2 211 782 250 711
Cash resources 2 087 497 1 632 049 3 134 581 1 703 746
Total current assets 2 795 959 2 100 747 7 707 652 2 380 749
Total assets 18 143 605 14 562 246 18 415 474 16 070 049
Equity and liabilities
Share capital and reserves
Ordinary shareholders’ interest 16 140 655 12 011 100 12 021 751 14 031 378
Non-controlling shareholders’ interests 130 839 120 509 120 509 128 910
Total equity 16 271 494 12 131 609 12 142 260 14 160 288
Non-current liabilities
Net deferred taxation liabilities 54 905 53 257 2 523 669 43 622
Long-term liabilities
- interest-bearing 846 100 1 596 100 1 596 100 846 100
- non-interest-bearing 30 275 36 089 361 744 24 682
Total non-current liabilities 931 280 1 685 446 4 481 513 914 404
Current liabilities
Interest-bearing 430 705 183 175 183 175 349 424
Non-interest-bearing 510 126 562 016 1 608 526 645 933
Total current liabilities 940 831 745 191 1 791 701 995 357
Total equity and liabilities 18 143 605 14 562 246 18 415 474 16 070 049
Segmental information
Joint venture mining and beneficiation
R’000 Iron ore Manganese Chrome Sub-total
Half year ended 31 December 2013 - unaudited
Revenues
- third party 9 424 567 4 029 343 781 782 14 235 692
- intra-group - - - -
Total revenues 9 424 567 4 029 343 781 782 14 235 692
Contribution to profit 3 644 079 656 731 36 884 4 337 694
Half year ended 31 December 2012 - unaudited restated
Revenues
- third party 6 179 220 3 510 458 969 972 10 659 650
- intra-group - - - -
Total revenues 6 179 220 3 510 458 969 972 10 659 650
Contribution to profit 1 731 304 412 271 (21 503) 2 122 072
*Eliminations and adjustments comprise mainly of the adjustments required to give effect to the requirement of IFRS
to equity account the Group’s investment in Assmang.
Segmental information (continued)
Other Corporate Eliminations
Marketing mining and and and
R’000 and shipping beneficiation treasury adjustments* Consolidated
Half year ended 31 December 2013 - unaudited
Revenues
- third party 1 160 891 155 958 3 690 (14 235 692) 1 320 539
- intra-group 1 254 231 181 185 - (1 435 416) -
Total revenues 2 415 122 337 143 3 690 (15 671 108) 1 320 539
Contribution to profit 275 702 67 071 (27 411) (2 220 662) 2 432 394
Half year ended 31 December 2012 - unaudited restated
Revenues
- third party 703 280 281 656 3 212 (10 659 650) 988 148
- intra-group 1 074 566 157 300 - (1 231 866) -
Total revenues 1 777 846 438 956 3 212 (11 891 516) 988 148
Contribution to profit 93 250 (10 827) (37 123) (1 061 037) 1 106 335
*Eliminations and adjustments comprise mainly of the adjustments required to give effect to the requirement of IFRS to equity account
the Group’s investment in Assmang.
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:
Magna Carta
Jacques de Bie Tel: 011 784 2598 Cell: 082 691 5384
Date: 12/02/2014 03:16:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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