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ASR
ASR
ASR - Assore Limited - Final results for the year ended 30 June 2010
Assore Limited
Company Registration Number: 1950/037394/06
Share code: ASR
ISIN: ZAE000017117
("Assore" or "Group" or "Company")
FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2010
Headline earnings decrease by 54% to R1,49 billion
Recovery of Group`s commodity markets in second half
Higher sales volumes for all products
Increased final dividend
26% empowered shareholding
COMMENTARY
Headline earnings for the financial year to 30 June 2010 have declined by 54,2%
to R1,494 billion due to the decline in the earnings of Assmang Limited
(Assmang), and the reduced commissions earned on the significantly lower sales
of Group products, compared to the previous financial year. The remaining
effects of the global recession that set in during the last calendar quarter of
2008, impacted negatively on earnings in the first half of the financial year,
which amounted to R338 million. Earnings for the second half of R1,142 billion
were significantly higher than those of the first half due to increased sales
prices of the Group`s products, and in particular, of iron ore. The demand for
all Group commodities was also much improved, due to the continued strong demand
from the East. The strength of the Rand, which prevailed across most of the
financial year, further impacted earnings negatively.
As a result of the trading conditions described above, Assmang`s headline
earnings declined by 56,7% to R2,729 billion compared to the previous year.
Assore holds a 50% interest in Assmang, which is proportionately consolidated in
accordance with International Financial Reporting Standards (IFRS).
On 2 December 2009 shareholders were advised of the Company`s intention to enter
into its second empowerment transaction, which was approved by shareholders in a
meeting convened for this purpose on 19 January 2010. As a result, 26,07% of
Assore`s shares will be controlled by Historically Disadvantaged South Africans,
as required by the Mining Charter.
On 20 August 2010, shareholders were advised of a proposed sub-division of
ordinary shares, on a 5 for 1 basis. A general meeting has been scheduled for 10
September 2010 in order to approve the transaction (refer Event After the
Reporting Period).
SALES VOLUMES
Sales volumes for all products were higher in the current year, however, the
prices realised in 2010 were lower due mainly to the strong Rand, which
prevailed over most of the year. This resulted in Assmang`s turnover for the
year under review declining to R12,9 billion (2009: R15,3 billion). The
following table sets out the sales volumes of Assmang`s commodities for the year
under review:
2010 2009 %
M tons `000 M tons `000 increase
Iron ore 9 799 7 409 32
Manganese ore* 3 095 2 152 44
Manganese alloys* 238 117 103
Charge chrome 189 144 31
Chrome ore* 272 256 6
* Excluding intra-group sales
CAPITAL EXPENDITURE
The bulk of the Group`s capital expenditure occurs in Assmang, and amounted to
R3,3 billion (2009: R2,8 billion). The major capital expenditure for the year
occurred in the iron ore and manganese divisions of Assmang. A total of R2,085
billion was spent on the ongoing infrastructural development at the Khumani Iron
Ore Mine, which will result in the mine capacity increasing to 16 million sales
tons per annum from 1 July 2012. R258 million was spent on rebuilding manganese
and chrome furnaces, with a further R46 million spent on the conversion of a
chrome furnace to a manganese furnace at the Machadodorp Works. Apart from the
expenditure in Assmang, R42 million has been spent on further developing two
underground shafts at the Rustenburg Chrome Ore Mine, which is 44% held by a
black economic empowerment partner for the benefit of historically disadvantaged
groups in the area surrounding the mining operations. One of these shafts has
recently been commissioned, and full production is expected towards the end of
the 2011 calendar year.
OUTLOOK
Markets have recovered from the lows experienced towards the end of 2008 and
into 2009. The extent of this recovery has been muted, however, due mainly to
the recent pullback in Chinese economic growth and the European debt crisis,
placing a degree of pressure on commodity prices in general. Ore and alloy
prices for manganese and chrome have recently come under pressure, but iron ore
prices remain robust. The pricing convention in the iron ore industry has
undergone a structural change with effect from 1 April 2010, where prices are
negotiated on a quarterly or spot basis, superseding the previous negotiations,
which occurred annually between miners and customers. The new basis is now in
line with the pricing convention operating in the manganese ore market. These
circumstances, in combination with the Group`s exposure to fluctuations in
exchange rates, make it difficult to estimate developments on Group earnings
with reasonable assurance or accuracy.
DIVIDENDS
The results in this announcement include the interim dividend of 500 cents
(2009: 1 000 cents) per share which was declared on 16 February 2010 and paid to
shareholders on 29 March 2010.
In line with the results for the year the Board has declared a final dividend of
1 200 cents per share making a total dividend for the year of 1 700 cents (2009:
2 000 cents) per share. The final dividend will be paid to shareholders on or
about 27 September 2010 and in accordance with IFRS, is not included in the
results as it was declared after year-end.
REVIEW BY AUDITORS
Ernst & Young Inc, the Group`s auditors, has reviewed the financial results
included in this announcement in accordance with ISRE 2410 - Review of Interim
Financial Information Performed by the Independent Auditor of the Entity. Their
unmodified 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 on the
historical cost basis, except for financial instruments that are fairly valued
and in accordance with IAS 34 - Interim Reporting, issued by the International
Accounting Standards Board (IASB). The accounting policies applied are
consistent with those adopted in the financial year ended 30 June 2009, with the
exception of the adoption of the following policies in response to changes in
IFRS:
- IAS 1 (Amendment) - Presentation of Financial Statements; and
- IFRS 8 - Operating Segments.
The adoption of these changes to IFRS has had no effect on the financial
statements of the Group except for the disclosure of additional information. In
addition, further minor amendments to IFRS and interpretations as issued by the
IASB, have also been considered and adopted by the Group. These amendments and
interpretations have not had any effect on the financial results for the year or
any requirement for additional disclosure.
EVENT AFTER THE REPORTING PERIOD
On 20 August 2010, shareholders were advised of a proposed sub-division of
ordinary shares, on a 5 for 1 basis, for which a general meeting has been
scheduled for 10 September 2010 in order to approve the transaction. Should the
sub-division be approved, the comparative figures for future financial results
of all earnings per share information will be divided by a factor of 5. The
results for the financial year presented were not affected by the proposed sub-
division.
DECLARATION OF FINAL DIVIDEND
Final dividend No. 107 of 1 200 cents per share was declared on 1 September
2010, in the currency of the Republic of South Africa.
In accordance with Strate, the following dates apply to the dividend declared:
The last date to trade to qualify for the dividend (and for changes of address
or dividend instructions) will be Thursday, 16 September 2010.
The Company`s ordinary shares will commence trading "ex dividend" from the
commencement of business on Friday, 17 September 2010.
The record date will be Thursday, 23 September 2010.
Dividend cheques in payment of this dividend to holders of certificated shares
will be posted on or about Monday, 27 September 2010. 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 Monday, 27 September
2010.
Share certificates may not be dematerialised or rematerialised between Friday,
17 September 2010 and Thursday, 23 September 2010, both days inclusive.
On behalf of the Board
Desmond Sacco CJ Cory
Chairman Chief Executive Officer
Johannesburg
2 September 2010
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
30 June 30 June
2010 2009
Reviewed Audited
R`000 R`000
Revenue 7 565 582 9 527 669
Turnover 7 085 669 8 818 655
Cost of sales (4 787 703) (3 983 720)
Gross profit 2 297 966 4 834 935
Profit on disposal of - 19 086
available-for-sale
investments
Other income 623 818 1 410 828
Other expenses (463 691) (717 821)
Finance costs (123 633) (298 148)
Profit before taxation and 2 334 460 5 248 880
State`s share of profits
Taxation and State`s share (822 963) (1 981 493)
of profits
Profit for the year 1 511 497 3 267 387
Attributable to:
Shareholders of the holding 1 479 524 3 241 452
company
Non-controlling interests 31 973 25 935
As above 1 511 497 3 267 387
Earnings as above 1 479 524 3 241 452
Profit on disposal (net of
tax) of :
- Available-for-sale - (16 414)
investments
- Property, plant and (1 983) (18 359)
equipment
Impairment of non-financial 16 664 59 114
assets
Headline earnings 1 494 205 3 265 793
Earnings per share (basic 6 181 13 669
and diluted - cents)
Headline earnings per share 6 241 13 772
(basic and diluted - cents)
Dividends per share declared 1 700 2 000
in respect of the profit for
the year (cents)
- Interim 500 1 000
- Final 1 200 1 000
Weighted average number of
ordinary shares (million)
Ordinary shares in issue 27,69 27,66
Weighted impact of treasury
shares
- Held by Group companies (2,45) (3,03)
- Held by Bokamoso Trust (1,30) (0,91)
23,94 23,74
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Year ended Year ended
30 June 30 June
2010 2009
Reviewed Audited
R`000 R`000
Profit for the year (as 1 511 497 3 267 387
above)
Other comprehensive 143 705 (237 400)
income/(loss) for the year,
net of tax
Net gain/(loss) on 167 095 (270 143)
revaluation of available-for-
sale investments to market
value
Profit on disposal of - (19 086)
available-for-sale
investments recognised in
profit for the year
Deferred capital gains (23 393) 40 492
taxation
143 702 (248 737)
Exchange differences on 3 11 337
translation of foreign
operations
Total comprehensive income 1 655 202 3 029 987
for the year, net of tax
Attributable to:
Shareholders of the holding 1 623 229 3 004 052
company
Non-controlling interests 31 973 25 935
As above 1 655 202 3 029 987
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At At
30 June 30 June
2010 2009
Reviewed Audited
R`000 R`000
ASSETS
Non-current assets
Property, plant and
equipment, investment
properties and intangible 6 409 473 5 183 450
assets
Investments - available-for- 602 851 415 066
sale investments
- other 73 266 42 259
Other non-current financial 31 906 -
assets
Total non-current assets 7 117 496 5 640 775
Current assets
Inventories 1 771 977 1 804 010
Trade and other receivables 1 481 046 593 087
Cash resources 1 907 909 3 049 067
Total current assets 5 160 932 5 446 164
TOTAL ASSETS 12 278 428 11 086 939
EQUITY AND LIABILITIES
Share capital and reserves
Ordinary shareholders` 7 867 444 6 603 229
interest
Non-controlling interests 102 035 71 819
Total equity 7 969 479 6 675 048
Non-current liabilities
Net deferred taxation 1 713 730 1 341 836
liabilities
Long-term liabilities 219 067 257 513
Total non-current 1 932 797 1 599 349
liabilities
Current liabilities
Interest-bearing 1 031 644 1 623 843
Non-interest-bearing 1 344 508 1 188 699
Total current liabilities 2 376 152 2 812 542
TOTAL EQUITY AND LIABILITIES 12 278 428 11 086 939
Net asset value per share 333,0 278,9
(Rand)
Capital expenditure (R 1 749,3 1 476,0
million)
Capital commitments (R 3 013,5 3 656,9
million)
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
30 June 30 June
2010 2009
Reviewed Audited
R`000 R`000
Cash generated from 1 329 208 3 670 885
operations
Cash utilised in investing (1 797 439) (1 620 690)
activities
Cash utilised by financing (672 927) (990 085)
activities
(Decrease)/increase in cash (1 141 158) 1 060 110
for the year
Cash resources at beginning 3 049 067 1 988 957
of year
CASH RESOURCES PER STATEMENT 1 907 909 3 049 067
OF FINANCIAL POSITION
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
30 June 30 June
2010 2009
Reviewed Audited
R`000 R`000
Share capital, share premium
and other reserves
Balance at beginning of year 151 762 389 173
Shares issued 233 743 -
Par value of shares - (11)
repurchased and cancelled
Other comprehensive 143 705 (237 400)
income/(loss)
Balance at end of year 529 210 151 762
Treasury shares
Balance at beginning of year (2 125 285) (2 341 725)
Treasury shares (233 743) (26 465)
issued/repurchased during
the year
Warehouse transaction costs - (5 038)
Cancellation of treasury
shares repurchased during
the year
- Value of shares cancelled, - 248 718
excluding par value
- Costs of shares cancelled - (775)
Balance at end of year (2 359 028) (2 125 285)
Retained earnings
Balance at beginning of year 8 576 752 6 063 424
Comprehensive income - 1 479 524 3 241 452
profit
Treasury shares repurchased - (248 718)
and cancelled during the
year
Ordinary dividends declared
Numbers 105 and 106 (359 014) (479 406)
aggregating R15,00 per share
(2009: R20,00 per share)
Balance at end of year 9 697 262 8 576 752
Ordinary shareholders` 7 867 444 6 603 229
equity
Non-controlling interests
Balance at beginning of year 71 819 111 528
Total comprehensive income 31 973 25 935
Dividends paid to minorities (1 760) (75 843)
Foreign currency translation 3 10 199
reserve arising on
consolidation
Balance at end of year 102 035 71 819
Total equity 7 969 479 6 675 048
SEGMENTAL INFORMATION
Joint venture mining and beneficiation
R`000 Iron ore Manganese Chrome Sub-total
Year ended 30
June 2010 -
Reviewed
Revenues
Third party 5 002 654 6 253 174 1 789 643 13 045 471
Inter-segment - - - -
Total 5 002 654 6 253 174 1 789 643 13 045 471
revenues
Contribution 1 436 649 1 480 222 (184 650) 2 732 221
to profit
Contribution 1 435 759 1 477 505 (184 649) 2 728 615
to headline
earnings
Segment 8 729 631 8 921 510 1 920 523 19 571 664
assets
Capital 2 304 067 743 498 288 751 3 336 316
expenditure
Year ended 30
June 2009 -
Audited
Revenues
Third party 5 026 714 8 897 515 1 812 333 15 736 562
Inter-segment - - - -
Total 5 026 714 8 897 515 1 812 333 15 736 562
revenues
Contribution 2 170 428 3 955 584 193 146 6 319 158
to profit
Contribution 2 159 878 3 926 926 213 344 6 300 148
to headline
earnings
Segment 6 504 050 8 348 952 2 038 210 16 891 212
assets
Capital 1 529 176 853 983 396 616 2 779 775
expenditure
Other
Marketing mining and Eliminations
R`000 and Benefi- and Consolidated
shipping cation adjustments*
Year ended 30
June 2010 -
Reviewed
Revenues
Third party 642 336 189 986 (6 312 211) 7 565 582
Inter-segment 422 223 2 240 (424 463) -
Total 1 064 559 192 226 (6 736 674) 7 565 582
revenues
Contribution 163 318 (37 431) (1 378 584) 1 479 524
to profit
Contribution 162 596 (20 225) (1 376 781) 1 494 205
to headline
earnings
Segment 5 623 226 5 245 084 (18 161 546) 12 278 428
assets
Capital 31 405 49 700 (1 668 159) 1 749 262
expenditure
Year ended 30
June 2009 -
Audited
Revenues
Third party 1 120 715 305 623 (7 635 231) 9 527 669
Inter-segment 513 336 4 592 (517 928) -
Total 1 634 051 310 215 (8 153 159) 9 527 669
revenues
Contribution 193 942 (73 660) (3 172 053) 3 267 387
to profit
Contribution 183 645 (55 452) (3 162 548) 3 265 793
to headline
earnings
Segment 4 660 165 2 184 242 (12 468 680) 11 086 939
assets
Capital 2 491 83 590 (1 389 888) 1 475 968
expenditure
* Eliminations and adjustments mainly give effect to the
elimination of the 50% share attributable to the other joint
venture party in Assmang.
Directors
Executive
D Sacco (Chairman), RJ Carpenter (Deputy Chairman),
CJ Cory (Chief Executive Officer),
PC Crous (Technical and Operations)
Non-executive
BM Hawksworth, MC Ramaphosa, EM Southey, Dr JC van der Horst
Alternate
NG Sacco, PE Sacco, R Smith
Assore Limited
Company registration number: 1950/037394/06
Share code: ASR ISIN: ZAE000017117
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
www.assore.com
Date: 02/09/2010 12:12:01 Produced by the JSE SENS Department.
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