| Fri 29 Aug 2008, 17:03 | | ASR - Assore Limited - Final results for the year ended 30 June 2008 |
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ASR
ASR
ASR - Assore Limited - Final results for the year ended 30 June 2008
Assore Limited
(Incorporated in the Republic of South Africa)
(Registration number 1950/037394/06)
Share code: ASR ISIN: ZAE000017117
("Assore")
FINAL RESULTS FOR THE YEAR ENDED 30 JUNE 2008
Increased prices for all products and significantly higher sales volumes for
manganese ore
Headline earnings increased by 315,4% to R3,06 billion
Final dividend increased from 200 cents to 1 000 cents per share
Approval for feasibility on 6,0 million ton iron ore expansion at Khumani
CONSOLIDATED INCOME STATEMENT
Year ended Year ended
30 June 30 June
2008 2007
Reviewed Audited
R`000 R`000
Turnover 9 158 937 4 293 036
Cost of sales (4 668 547) (3 174 247)
Gross profit 4 490 390 1 118 789
Profit on disposal of available- 22 350 43 025
for-sale investments
Other income 611 737 233 113
Other expenses (399 005) (195 017)
Finance costs (38 016) (27 471)
Profit before taxation and 4 687 456 1 172 439
State`s share of profits
Taxation and State`s share of (1 509 091) (369 084)
profits
Profit for the year 3 178 365 803 355
Earnings attributable to:
Shareholders of the holding 3 069 522 774 704
company
Minority shareholders 108 843 28 651
Profit for the year (as above) 3 178 365 803 355
Earnings per share (cents) 11 406 2 863
Headline earnings per share 11 362 2 720
(cents)*
Dividends per share declared in
respect of the
abovementioned earnings (cents) 1 250 350
- Interim 250 150
- Final 1 000 200
* Determination of headline
earnings per share
Attributable earnings as above 3 069 522 774 704
(Profit)/loss on disposal (net
of tax) of:
- Available-for-sale (19 221) (36 786)
investments
- Property, plant and equipment 7 407 (1 897)
Headline earnings 3 057 708 736 021
Weighted average number of
ordinary shares (million)
Ordinary shares in issue 28,00 28,00
Treasury shares (1,09) (0,94)
Weighted average ordinary 26,91 27,06
shares
Net asset value per share 171,2 119,5
(Rand)
Capital expenditure (R million) 1 537,0 1 173,2
Capital commitments (R million) 857,3 1 785,9
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Year ended Year ended
30 June 30 June
2008 2007
Reviewed Audited
R`000 R`000
Share capital, share premium
and other reserves
Balance at beginning of year 115 197 53 438
Net increase in the market
value of available-for-sale 209 669 76 791
investments
Deferred capital gains taxation
on changes in market value
of available-for-sale (27 675) (7 566)
investments
Foreign currency translation
reserve arising on 5 720 270
consolidation
Treasury shares (2 255 463) (7 736)
Balance at end of year (1 952 552) 115 197
Retained earnings
Balance at beginning of the 3 115 510 2 421 878
year
Attributable profit for the 3 069 522 774 704
year
Ordinary dividends paid
No. 101 and No. 102 aggregating
R4,50 per share
(2007: R3,00 per share) (121 608) (81 072)
Balance at end of year 6 063 424 3 115 510
Per balance sheet 4 110 872 3 230 707
CONSOLIDATED CASH FLOW STATEMENT
Year ended Year ended
30 June 30 June
2008 2007
Reviewed Audited
R`000 R`000
Cash generated from operations 5 657 688 974 081
Cash utilised in investing (3 823 406) (1 144 954)
activities
Cash (utilised)/generated by (154 782) 308 495
financing activities
Increase in cash resources for 1 679 500 137 622
the year
Cash resources at beginning of 309 457 171 835
year
Cash resources per balance 1 988 957 309 457
sheet
CONSOLIDATED BALANCE SHEET
At 30 June At 30 June
2008 2007
Reviewed Audited
R`000 R`000
Assets
Non-current assets
Property, plant and equipment,
investment properties and
intangible assets 4 196 018 3 003 319
Available-for-sale investments 590 191 236 119
Total non-current assets 4 786 209 3 239 438
Current assets
Inventories 1 287 730 976 047
Trade and other receivables 1 998 542 798 519
Cash resources 1 988 957 309 457
Total current assets 5 275 229 2 084 023
Total assets 10 061 438 5 323 461
Equity and liabilities
Share capital, share premium
and other reserves
Ordinary shareholders` interest 4 110 872 3 230 707
Minority shareholders` interest 111 528 48 673
Total equity 4 222 400 3 279 380
Non-current liabilities
Deferred taxation 899 701 620 597
Long-term liabilities 223 320 156 955
Total non-current liabilities 1 123 021 777 552
Current liabilities
Interest-bearing 2 621 489 544 770
Non-interest-bearing 2 094 528 721 759
Total current liabilities 4 716 017 1 266 529
Total equity and liabilities 10 061 438 5 323 461
COMMENTARY
Headline earnings for the year increased by 315,4% to an all-time record for the
group of R3,06 billion (2007: R0,74 billion) due to substantially higher
earnings for Assmang Limited (Assmang) and increased commissions received on the
higher sales revenue for group products. Assore holds a 50% interest in Assmang
which is proportionally consolidated in accordance with group accounting
policies.
Assmang`s headline earnings for the year increased by 317,0% to R5,55 billion
(2007: R1,33 billion) due to the continuing boom in base mineral markets
worldwide, driven mainly by the sustained demand from China for products used in
the manufacturing of carbon and stainless steels. These market conditions
resulted in substantially higher US Dollar and Euro prices for all products and
significantly higher sales volumes for manganese ore. The higher manganese ore
sales were achieved by utilising the ports of Durban and Richards Bay in
addition to the conventional ore terminal at Port Elizabeth.
SALES VOLUMES AND DIVISIONAL CONTRIBUTION
Assmang`s turnover for the year under review was R14,8 billion (2007: R6,1
billion) and sales volumes for the year are reflected in the table below:
Metric tons `000
2008 2007 %
change
Iron ore 6 581 6 855 (4)
Manganese ore* 3 711 2 327 59
Manganese alloys* 247 251 (2)
Charge chrome 275 232 19
Chrome ore* 304 172 77
* Excludes intra-group sales
The divisional contributions to headline earnings of Assmang for the year were
as follows:
2008 2007
Rm Rm %
increase
Iron ore division 780 679 15
Manganese division 4 087 576 610
Chrome division 683 76 799
Total - Assmang 5 550 1 331 317
Attributable to Assore 50% 2 775 666 317
The performance of the manganese division was affected by the disruption to
production caused by the explosion at No. 6 furnace at Cato Ridge which took
place on 24 February 2008. Furnace No. 6 is currently being rebuilt and is
planned to be recommissioned in November 2008. Production losses are expected to
continue into the new financial year until furnace No. 6 is fully operational.
Where possible, contractual sales have been met by selling stock.
CAPITAL EXPENDITURE
The bulk of the group`s capital expenditure occurs in Assmang and is summarised
by division for the year as follows:
2008 2007
Rm Rm
Iron ore division 2 231 1 735
Manganese division 511 297
Chrome division 158 199
Total - Assmang 2 900 2 231
Of the R2,23 billion spent in the iron ore division, R2,1 billion related to the
construction of the Khumani Iron Ore mine which is on schedule and within budget
to produce at a rate of 10,0 million tons per annum commencing the first quarter
of 2009. The remainder of the capital expenditure related to rebuilding and
upgrading the furnaces at Cato Ridge (R102 million) and replacement of
equipment, expansion of housing facilities and upgrading of environmental
projects.
OUTLOOK
The demand for carbon steel materials is expected to remain strong with prices
for manganese ore, manganese alloys and iron ore at record levels. Assmang will
continue to take full advantage of the Richards Bay and Durban ports to maximise
the export of manganese ore.
The production of stainless steel is expected to increase marginally worldwide,
but there could be some pressure on ferrochrome prices due to increased
production volumes.
Following a successful pre-feasibility study, agreement has been reached to
proceed with a feasibility study on a 6 million ton expansion at Khumani Iron
Ore mine estimated to cost R7,3 billion, which would increase annual capacity to
16,0 million tons per annum. Start up expenditure on the study of R1,2 billion
has been approved and the study should be completed by the second quarter of
calendar 2009. In line with commitments received from Transnet on the additional
rail and port capacity required, 4 million tons will be sold in the export
market and the balance of 2 million tons will be placed into the local market.
DISCLOSURE OF SPECIFIC SHARE REPURCHASES
Shareholders were advised in terms of a circular dated 12 August 2008 that, with
effect from 23 June 2008, Assore had entered into an arrangement with The
Standard Bank of South Africa Limited (Standard Bank) in terms of which Standard
Bank agreed to purchase 2 931 653 Assore shares from Old Mutual Life Assurance
Company (South Africa) Limited (Old Mutual) and warehouse such Assore shares for
and on behalf of Assore for a specified period of time in order to provide
Assore an opportunity to seek the requisite approval from shareholders for
Assore to repurchase the abovementioned shares for an amount of approximately
R2,23 billion, being the consideration paid by Standard Bank to Old Mutual.
Shareholders will be requested to approve this and other related transactions at
the general meeting convened for Thursday, 4 September 2008. The Assore shares
to be purchased from Standard Bank have been disclosed in this announcement as
treasury shares having a value equal to the purchase consideration payable by
Assore to Standard Bank and have been deducted from issued share capital as
required by IFRS. The corresponding liability to Standard Bank has been included
in interest-bearing current liabilities.
DIVIDENDS
The results in this announcement include the interim dividend of 250 cents
(2007: 150 cents) per share which was declared on 18 February 2008 and paid to
shareholders on 17 March 2008.
In line with the results for the year the Board has declared an increased
dividend of 1 000 cents (2007: 200 cents) making a total dividend for the year
of 1 250 cents per share (2007: 350 cents). The final dividend will be paid to
shareholders on or about 22 September 2008 and is not included in the results as
it was declared after year-end.
AUDIT REVIEW
Ernst & Young Inc., the group`s auditors, has reviewed the financial results
included in this announcement and a copy of their review report is available for
inspection at the registered office of the company.
ACCOUNTING POLICIES AND BASIS OF PREPARATION
The financial statements included in this announcement have been prepared on the
historical cost basis except for financial instruments that are fairly valued
and incorporate accounting policies which are consistent with those adopted in
the financial year ended 30 June 2007 with the exception of the adoption of the
following policies in response to changes in IFRS:
IFRS 4: Insurance contracts
IFRS 7: Financial Instruments: Disclosures
IAS 1: Presentation of Financial Statements
IFRIC 11: IFRS 2: Group and Treasury Share Transactions
The adoption of these amendments, standards and interpretation has had no effect
on the financial statements of the group except for the disclosure of additional
information where applicable.
DECLARATION OF FINAL DIVIDEND
Final dividend No. 103 of 1 000 cents per share was declared on 27 August 2008,
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 Friday, 12 September 2008.
The company`s ordinary shares will commence trading "ex" dividend from the
commencement of business on Monday, 15 September 2008.
The record date will be Friday, 19 September 2008.
Dividend cheques in payment of this dividend to holders of certificated shares
will be posted on or about Monday, 22 September. 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, 22 September
2008.
Share certificates may not be dematerialised or rematerialised between Monday,
15 September and Friday, 19 September 2008, both days inclusive.
On behalf of the board
Desmond Sacco CJ Cory
Chairman Chief Executive Officer
Johannesburg
29 August 2008
Registered office Transfer office Directors
Assore House Computershare Executive
Investor
15 Fricker Road Services (Pty) Ltd Desmond Sacco
IIlovo Boulevard 70 Marshall Street (Chairman)
Johannesburg 2196 Johannesburg 2001 RJ Carpenter
(Deputy Chairman)
CJ Cory (Chief
Executive Officer)
PC Crous
(Technical and
Operations)
Company Non-executive
secretaries
African Mining and PN Boynton
Trust Company
Limited
BM Hawksworth
MC Ramaphosa
Dr JC van der
Horst
Assore Limited Alternate
Company JW Lewis (British)
Registration NG Sacco
Number:
1950/037394/06
Share code: ASR PE Sacco
ISIN: ZAE000017117 R Smith
www.assore.com
Sponsor to Assore
Standard Bank
Date: 29/08/2008 17:03:02 Produced by the JSE SENS Department.
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