Wrap Text
Results for the half-year ended 31 December 2014
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 2014
- Headline earnings decline by 59,2%
- Significantly lower iron ore prices
- Interim dividend declared of R3,00 per share
Des Sacco, Chairman of Assore said:
“Prices for the group’s products have come down due to oversupply and world-wide economic uncertainty. Headline earnings for
the six months have decreased by 59%, however, the group has benefitted from increased premiums for lumpy iron ore, lower crude
oil prices and a weaker Rand.”
Commentary
Results
Headline earnings for the six months to 31 December 2014 declined by 59,2% to R990 million, compared to the same
period in the previous financial year (the previous period). This was mostly due to substantially lower headline earnings
recorded for the period by Assmang Proprietary Limited (Assmang), which decreased by 60,5% to R1,7 billion.
Subdued demand for iron ore, particularly in China, coupled with significant additional volumes being brought to
market from Australia and Brazil resulted in the index selling prices in US dollars for 62% iron ore fines delivered in China
falling to US dollar 82 per ton, being 38,3% lower on average. The premium for “lumpy” grade ores, although lower on
average for the six months, had a positive impact on the prices achieved by the group for sales of iron ore towards the
end of the half year. During the period, prices for manganese and chrome ores remained relatively constant, with some
minor fluctuations, while prices for manganese alloys declined slightly. Market conditions for all the group’s commodities
deteriorated during the period, due to weakening world demand for steel and steel-related products. The group, however,
has benefited from a weaker rand/US dollar exchange rate, which was 8,0% lower. Commissions and technical fees earned by the
group declined in line with selling prices achieved on Assmang’s products.
Assore holds a 50% interest in Assmang, which it controls jointly with African Rainbow Minerals Limited (ARM) and
which, in terms of International Financial Reporting Standards (IFRS) is accounted for on the equity accounting basis.
Assore has disclosed its share of Assmang’s profit after taxation in its income statement as its “Share of profit from joint
venture after taxation”.
Sales volumes
Despite sales volumes of iron ore into the South African market improving significantly for the current period, export
sales volumes were lower, due to delays experienced in loading iron ore vessels at the Saldanha port. Sales volumes for
the remainder of the group’s products were similar to the previous period. The table below sets out Assmang’s sales
volumes for the current period:
Half-year Half-year
ended ended Increase/
31 December 31 December (decrease)
Metric tons ’000 2014 2013 %
Iron ore 7 496 7 738 (3)
Manganese ore* 1 422 1 411 1
Manganese alloys* 112 117 (4)
Chrome ore 478 477 -
* Excluding intra-group sales to alloy plants.
Capital expenditure
Capital expenditure in Assmang amounted to R1,7 billion (2014: R1,5 billion) for the period. The majority of the
capital was spent in Assmang’s Manganese division on the expansion of the Black Rock mines’ capacity to 4 million tons per
annum by 2017. Assmang’s Iron Ore division spent R710 million, of which R404 million was spent on waste-stripping at its
Khumani and Beeshoek mines. R140 million was spent across the group’s chrome assets, with R40 million allocated to the
development of underground shafts at Rustenburg Minerals.
Construction work at Assmang’s joint venture ferromanganese smelting project in Malaysia (“Sakura”), in which it has a
54,36% stake, continues, and all major milestones to date have been met. The project remains on schedule to achieve
full design production output of approximately 170 000 tons per annum towards the middle of 2016 at an estimated cost to
completion of US dollar 328 million, of which US dollar 155 million has been spent to date.
On 2 December 2014, the group announced that it intended to subscribe for an equity stake of approximately 30% in IronRidge
Resources Limited (IronRidge) at a cost of R121 million. IronRidge has planned an initial two-year programme to conduct
prospecting for high-grade iron ore in three separate locations in Gabon, West Africa.
Outlook
A high level of unpredictability continues to undermine the state of the global economy in a number of different
countries around the world. Chinese economic growth for 2015 is expected to be at its lowest level in more than 20 years,
while uncertainty is apparent in Europe, specifically in the Eurozone where quantitative easing will commence shortly and
the euro weakened by political tensions in Greece and the Ukraine. The Japanese economy is in recession, however, the
outlook for India is promising, on the back of recent political changes. These conditions should result in prices of the
group’s products remaining under pressure, with the index price for iron ore expected to trade in a range of between US
dollar 55 and 75 for the short to medium term. Prices for manganese ores and alloys have declined recently and are
expected to remain at depressed levels in the short term.
Some respite on margins is being experienced, however, due to reduced freight rates, on the back of the recent
collapse in crude oil prices. Further benefit is being realised by the group on the sale of “lumpy” iron ore grades, with spot
premiums in this market currently exceeding US dollar 20 per ton. The prevailing level of the Rand/US dollar exchange
also enhances the group’s results, relative to previously reported results.
Dividends
The results in this announcement include the final dividend relating to the previous financial year of 550 cents
(2013: 350 cents) per share, which was declared on 27 August 2014 and paid to shareholders on 2 September 2014. Based on the
decreased level of earnings for the period, the board has declared an interim dividend of 300 cents
(2013: 450 cents) per share, which will be paid to shareholders on or about 9 March 2015.
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, as amended. The accounting policies applied are consistent with
those adopted in the financial year ended 30 June 2014 and amendments and improvements to IFRS effective in the period
have not had any significant impact on the results or disclosures of the group for the period under review.
Directors
Subsequent to the date of the previous integrated annual report, the following non-executive appointments have been
made to the board of directors, with effect from 2 February 2015:
- Ms Thandeka Mgoduso, who also serves as an independent non-executive director on the boards of the South African
Reserve Bank, Tongaat Hulett and Air Traffic Navigation Services.
- Mrs Ipeleng Nonkululeko Mkhari, who is founder and CEO of Motseng Investment Holdings, and serves as an independent
non-executive director on the boards of KAP Industrial Holdings, Nampak and South African Property Owners Association
(SAPOA).
Declaration of interim dividend
Shareholders are advised that on 10 February 2015, the board of directors (the board) approved interim dividend number
116 (the dividend) of 300 cents per share (gross) for the half-year ended 31 December 2014.
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 tax on companies (STC) credits available to reduce the impact of the dividend tax.
4. The net local dividend amount is 255,0 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.
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 interim dividend Friday, 27 February 2015
- Trading “ex dividend” commences Monday, 2 March 2015
- Record date Friday, 6 March 2015
- Dividend payment date Monday, 9 March 2015
- Dates (inclusive) between which share certificates may not be dematerialised or Monday, 2 March 2015
rematerialised to Friday, 6 March 2015
On behalf of the board
Desmond Sacco CJ Cory Johannesburg
Chairman Chief Executive Officer 11 February 2015
Consolidated income statement
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
R’000 R’000 R’000
Revenue 1 677 172 1 320 539 2 894 596
Turnover 1 295 758 736 069 1 768 561
Cost of sales (1 216 392) (686 908) (1 649 450)
Gross profit 79 366 49 161 119 111
Commissions on sales and technical fees 278 218 494 480 926 060
Other income 104 399 89 989 200 384
Other expenses (299 338) (214 947) (486 350)
Finance costs (14 531) (29 469) (61 152)
Profit before taxation and joint venture 148 114 389 214 698 053
Taxation (46 367) (108 142) (240 486)
Profit after taxation, before joint venture 101 747 281 072 457 567
Share of profit from joint venture, after taxation 845 379 2 151 322 3 572 155
Profit for the period 947 126 2 432 394 4 029 722
Attributable to:
Shareholders of the holding company 935 434 2 427 312 4 005 123
Non-controlling shareholders 11 692 5 082 24 599
As above 947 126 2 432 394 4 029 722
Earnings attributable to shareholders of the holding company 935 434 2 427 312 4 005 123
Impairment of financial assets 63 308 - 26 327
Impairment of non-financial assets - - 276 922
Loss on disposal of fixed assets 4 367 19 542
Taxation effect of above items (13 039) - (79 024)
Headline earnings 990 070 2 427 331 4 229 890
Earnings per share (basic and diluted - cents) 906 2 352 3 881
Headline earnings per share (basic and diluted - cents) 959 2 352 4 098
Dividends per share declared in respect of the profit for
the period (cents) 300 450 1 000
- interim 300 450 450
- final 550
Ordinary shares in issue for the year (million), net of
treasury shares
Ordinary shares in issue 139,61 139,61 139,61
Less: Treasury shares held in BEE trusts (36,40) (36,40) (36,40)
103,21 103,21 103,21
Consolidated statement of comprehensive income
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
R’000 R’000 R’000
Profit for the period (as above) 947 126 2 432 394 4 029 722
Items that may be reclassified into the income statement
dependent on the outcome of a future event (9 130) 42 040 57 407
(Loss)/gain after taxation, on revaluation to market value
of available-for-sale investments (27 282) 29 845 52 434
(Loss)/gain on revaluation to market value of
available-for-sale investments (33 545) 39 483 59 452
Deferred capital gains tax thereon 6 263 (9 638) (7 018)
Exchange differences on translation of foreign operations 18 152 12 195 4 973
Actuarial gains in pension fund after taxation - - 36 776
Total comprehensive income for the period, net of tax 937 996 2 474 434 4 123 905
Attributable to:
Shareholders of the holding company 917 409 2 469 358 4 096 869
Non-controlling shareholders 20 587 5 076 27 036
As above 937 996 2 474 434 4 123 905
Consolidated statement of financial position
At At At
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
R’000 R’000 R’000
ASSETS
Non-current assets
Property, plant and equipment and intangible assets 591 348 544 136 552 191
Investments
- joint venture 14 863 549 14 352 389 14 768 170
- available-for-sale 287 454 392 040 377 988
- other 43 372 46 766 46 613
Pension fund surplus 56 973 12 315 56 973
Total non-current assets 15 842 696 15 347 646 15 801 935
Current assets
Inventories 770 028 484 496 627 190
Trade and other receivables 420 819 223 966 383 923
Cash resources 2 137 134 2 087 497 2 144 598
Total current assets 3 327 981 2 795 959 3 155 711
TOTAL ASSETS 19 170 677 18 143 605 18 957 646
EQUITY AND LIABILITIES
Share capital and reserves
Ordinary shareholders’ interests 17 652 363 16 140 655 17 302 592
Non-controlling interests in subsidiary companies 161 278 130 839 150 271
Total equity 17 813 641 16 271 494 17 452 863
Non-current liabilities
Net deferred taxation liabilities 47 907 54 905 63 426
Long-term liabilities
- interest-bearing 346 100 846 100 346 100
- non-interest-bearing 26 562 30 275 27 134
Total non-current liabilities 420 569 931 280 436 660
Current liabilities
Interest-bearing 752 310 430 705 538 588
Non-interest-bearing 184 157 510 126 529 535
Total current liabilities 936 467 940 831 1 068 123
TOTAL EQUITY AND LIABILITIES 19 170 677 18 143 605 18 957 646
Consolidated statement of cash flow
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
R’000 R’000 R’000
Cash (utilised)/generated by operations (346 561) 275 046 100 494
Dividends paid net of dividends on treasury shares (567 639) (361 225) (825 656)
Cash utilised by investing activities (56 986) (198 789) (111 224)
Dividends received from joint venture 750 000 750 000 1 750 000
Acquisition of available-for-sale investment - - (161 926)
Long-term liabilities repaid - - (500 000)
Other financing activities 213 722 (81 281) 189 164
(Decrease)/increase in cash for the period (7 464) 383 751 440 852
Cash resources at beginning of period 2 144 598 1 703 746 1 703 746
Cash resources per statement of financial position 2 137 134 2 087 497 2 144 598
Segmental information
Other mining Eliminations
Associate mining and beneficiation Marketing and and
Iron ore Manganese Chrome Sub-total and shipping beneficiation adjustments* Consolidated
R’000 R’000 R’000 R’000 R’000 R’000 R’000 R’000
Half-year ended 31 December 2014
Revenues 5 970 123 3 872 371 708 455 10 550 949 1 498 974 180 693 (10 553 444) 1 677 172
Contribution to profit 1 173 669 473 488 56 074 1 703 231 107 463 (11 952 (851 616) 947 126
Half-year ended 31 December 2013
Revenues 9 424 567 4 029 343 781 782 14 235 692 1 163 711 159 648 (14 238 512) 1 320 539
Contribution to profit 3 644 079 656 731 36 884 4 337 694 275 702 39 660 (2 220 662) 2 432 394
*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.
Consolidated statement of changes in equity
Half-year Half-year Year
ended ended ended
31 December 31 December 30 June
2014 2013 2014
Unaudited Unaudited Audited
R’000 R’000 R’000
Share capital, share premium and other reserves
Balance at beginning of period 418 583 326 837 326 837
Other comprehensive (loss)/income for the period (18 024) 43 189 91 746
(Loss)/gain after taxation, on revaluation to market value
of available-for-sale investments (27 282) 29 845 52 434
Transfer to share-based payment reserve - 1 149 -
Actuarial gains in pension fund after taxation - - 36 776
Exchange differences on translation of foreign operations 9 258 12 195 2 536
Balance at end of period 400 559 370 026 418 583
Treasury shares
Balance at beginning and end of period (5 051 583) (5 051 583) (5 051 583)
Retained earnings
Balance at beginning of period 21 935 592 18 756 125 18 756 125
Profit for the period attributable to shareholders 935 434 2 427 312 4 005 123
Ordinary dividends declared during the period (567 639) (361 225) (825 656)
- total dividends declared (767 839) (488 625) (1 116 856)
- dividends on treasury shares held in BEE trusts 200 200 127 400 291 200
Balance at end of period 22 303 387 20 822 212 21 935 592
Ordinary shareholders’ interest 17 652 363 16 140 655 17 302 592
Non-controlling interests
Balance at beginning of period 150 271 128 910 128 910
Share of total comprehensive income 11 007 1 929 21 361
- profit for the period 11 692 5 082 24 599
- other comprehensive income 8 895 (6) 2 437
- dividends paid to non-controlling shareholders (9 580) (3 147) (5 675)
Balance at end of period 161 278 130 839 150 271
Total equity 17 813 641 16 271 494 17 452 863
Fair value of financial instruments
The group uses the following hierarchy for determining and disclosing the fair value inputs of financial instruments:
Level 1: quoted prices in an active market that are unadjusted for identical assets or liabilities.
Level 2: valuation techniques using inputs, which are directly or indirectly observable.
Level 3: valuations based on data that is not observable (not applicable to the group).
The values of all other financial instruments recognised, but not subsequently measured at fair value, approximate fair value.
Half-year ended 31 December 2014 - Unaudited
Level 1 Level 2 Total
R’000 R’000 R’000
Assets measured at fair value
Available-for-sale investments 287 454 - 287 454
Other investments 43 372 - 43 372
330 826 - 330 826
Liabilities measured at fair value
Forward exchange contracts# - 9 229 9 229
Year ended 30 June 2014 - Audited
Level 1 Level 2 Total
R’000 R’000 R’000
Assets measured at fair value
Available-for-sale investments 377 988 - 377 988
Other investments* 46 613 - 46 613
424 601 - 424 601
Liabilities measured at fair value
Forward exchange contracts# - - -
* During the prior year, “Other investments” were transferred from Level 2 to Level 1,
since these are traded in what has been reassessed as an active market.
# Forward exchange contracts, which are included in trade and other payables, are measured
based on bankers’ qouted exchange rates.
Executive Directors:
Desmond Sacco (Chairman), CJ Cory (Chief Executive Officer), AD Stalker (Marketing), BH van Aswegen (Technical and Operations)
Non-executive Directors:
EM Southey* (Deputy Chairman and Lead Independent Director), RJ Carpenter, TN Mgoduso*, S Mhlarhi*, IN Mkhari*, WF Urmson*
*Independent
Alternate Director: 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
Date: 11/02/2015 11:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
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