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ASR
ASR
ASR - Assore Limited - Results for the half-year ended 31 December 2011
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 2011
- Interim profit up 52,4% to R2,1 billion
- High US Dollar iron ore prices
- All BEE ownership now broad-based
COMMENTARY
RESULTS
Headline earnings for the six months to 31 December 2011 have increased by
48,5%, to R2 067 million, compared to the same period in the previous
financial year. This is due mainly to increased earnings for the period of
Assmang Limited ("Assmang"), together with increased commissions earned on
improved sales volumes of Group commodities.
Assore holds a 50% interest in Assmang, which is proportionately
consolidated in accordance with International Financial Reporting Standards
("IFRS"). Assmang`s headline earnings increased by 57,2% to R3 949 million
compared to the same period in the previous financial year. Higher average
US Dollar selling prices for iron ore and increased sales volumes for
Assmang`s commodities compared to the six-month period ending 31 December
2010, combined with a weaker average Rand/US Dollar exchange rate for the
period, contributed positively to the increased level of earnings.
Market conditions for most of the Group`s commodities have deteriorated,
mostly due to the sovereign debt issues in Europe. With the exception of
iron ore, demand has declined, with resultant price erosion in the current
period under review, compared to the same period in the previous financial
year. Prices for iron ore were higher, although pricing in the current
period was more volatile. The weaker Rand/US Dollar exchange rate
compensated for some of the impact of the price erosion, while additional
export volumes of iron ore resulted in an increased level of contribution
to the Group`s earnings. Turnover for the period under review improved in
comparison to the same period in the previous financial year with an
increase of 40,2% amounting to R6,4 billion from R4,6 billion in 2010.
On 8 December 2011, shareholders were advised of the Company`s intention to
enter into the second phase of its third empowerment transaction, which was
approved by shareholders in a meeting convened for this purpose on 19
January 2012. As a result, all of Assore`s black-controlled shares,
amounting to 26,07% of the Company`s ordinary shares, are now controlled by
broad-based BEE groupings, increasing the Group`s weighted number of
treasury shares to 31,97 million. The bridging loan pursuant to the first
phase of the transaction will be settled by the issue of preference shares
to the Standard Bank of South Africa Limited ("SBSA"). Refer "Event after
the reporting period" below.
SALES VOLUMES
Sales volumes for the current period were higher for iron ore and manganese
commodities, while sales of charge chrome and chrome ore were lower than
for the comparable period.
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 2011 2010 %
Iron ore 6 781 4 039 68
Manganese ore* 1 590 1 456 9
Manganese alloys* 104 87 20
Charge chrome 86 91 (5)
Chrome ore* 211 213 (1)
* Excluding intra-group sales to alloy plants.
CAPITAL EXPENDITURE
The bulk of the Group`s capital expenditure occurs in Assmang, where more
than R2,1 billion was spent on capital items in the period. R928 million
was spent on Assmang`s Khumani Expansion Project ("KEP"), which remains
within budget and ahead of schedule. An additional R669 million was spent
at Khumani Mine on ramp-up capital, enabling the mine to produce the
intended 14 million tons of iron ore per annum for the export market. The
conversion of ferrochrome capacity to ferromanganese capacity at the
Machadodorp Works continues, and R39 million was spent on the conversion of
two furnaces. The bulk of the remainder of Assmang`s capital expenditure
is of an ongoing replacement nature.
OUTLOOK
Chinese steel production has declined for the second consecutive quarter,
while sovereign debt issues in Europe persist. Prices for iron ore appear
to have settled in a band lower than the high levels experienced in the
second half of the previous financial year. Certain high cost Chinese iron
ore miners have stopped production as a result, causing reasonably strong
demand for seaborne iron ore. Slow economic growth in Europe and elsewhere
is also placing pressure on prices of the Group`s other commodities. Since
most of the Group`s commodities continue to be exported, it remains
significantly exposed to fluctuations in the Rand/US Dollar exchange rate.
These factors make it difficult to predict the future performance of the
Group in the second half of the financial year with any certainty.
DIVIDENDS
The results in the announcement include the final dividend relating to the
previous financial year of 250 cents (2010: 240 cents) per share, which was
declared on 24 August 2011 and paid to shareholders on 19 September 2011.
The board intends declaring an interim dividend in April 2012 of 250 (2011:
200) cents per share, having regard to the requirements of the Companies
Act and other regulatory requirements.
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. The accounting policies applied are consistent
with those adopted in the financial year ended 30 June 2011. Revisions and
amendments to, and interpretations of IFRS effective in the period have not
had any impact on the results or disclosures of the Group.
EVENT AFTER THE REPORTING PERIOD
The special and ordinary resolutions tabled at the general meeting of
shareholders on 19 January 2012 relating to the second phase of the Group`s
third empowerment transaction were approved by the requisite majorities of
shareholders. In terms of the transaction, the Company will issue
preference shares to SBSA on 21 February 2012, which will replace the
bridging loan provided to a special-purpose vehicle ("SPV"), while
subscribing for preference shares in the same amount in the SPV.
Accordingly, an amount of R2,2 billion will be transferred to interest-
bearing long-term liabilities from interest-bearing current liabilities.
DIRECTORS
Since 1 July 2011, the following changes to the board of directors have
taken place:
- 19 August 2011 - following the conclusion of the first phase of the third
empowerment transaction, Mr MC Ramaphosa (and his alternate, Mr RM Smith)
resigned as a non-executive director;
- 7 October, and 1 November 2011 respectively, Ms ZP Manase was appointed
and resigned as an independent non-executive director, due to a potential
conflict of interest;
- 10 October 2011 - Messrs AD Stalker and BH van Aswegen were appointed as
alternate directors to Messrs CJ Cory and PC Crous respectively; and
- 31 December 2011 - Dr JC van der Horst retired from the board, after an
aggregate tenure of 17 years` service.
On behalf of the board
Desmond Sacco CJ Cory Johannesburg
Chairman Chief Executive Officer 15 February 2012
CONSOLIDATED INCOME STATEMENT
Half-year ended Year ended
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Revenue 6 843 807 4 768 682 11 180 037
Turnover 6 386 024 4 553 507 10 547 806
Cost of sales (3 337 372) (2 420 111) (6 044 740)
Gross profit 3 048 652 2 133 396 4 503 066
Other income 626 209 221 785 848 731
Other expenses (476 455) (205 493) (457 797)
Finance costs (126 199) (40 137) (77 790)
Profit before taxation 3 072 207 2 109 551 4 816 210
and State`s share of
profits
Taxation and State`s (934 057) (706 284) (1 566 524)
share of profits
Profit for the period 2 138 150 1 403 267 3 249 686
Earnings attributable
to:
Shareholders of the 2 129 171 1 392 501 3 219 754
holding company
Non-controlling 8 979 10 766 29 932
shareholders
As above 2 138 150 1 403 267 3 249 686
Earnings as above 2 129 171 1 392 501 3 219 754
Adjusted for:
Profit on disposal (net
of tax):
- on available-for-sale (61 057) - -
investments
- of property, plant and (646) (537) (407)
equipment
Headline earnings 2 067 468 1 391 964 3 219 347
Earnings per share 1 978 1 164 2 691
(basic and diluted -
cents)
Headline earnings per 1 921 1 163 2 690
share (basic and diluted
- cents)
Dividends per share
declared in respect of
the profit
for the period (cents) 200 450
- Interim 200 200
- Final 250
Weighted average number
of ordinary shares
(million)
Ordinary shares in issue 139,61 139,61 139,61
Weighted impact of (31,97) (19,94) (19,94)
treasury shares
Average for the period 107,64 119,67 119,67
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half-year ended Year ended
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Profit for the year (as 2 138 150 1 403 267 3 249 686
above)
Other comprehensive (55 414) 155 293 204 882
(loss)/income for the year
net of tax
Net (loss)/gain on (88 372) 185 132 242 336
revaluation of available-
for-sale investments to
market value
Deferred capital gains 26 793 (25 918) (33 927)
taxation thereon
(61 579) 159 214 208 409
Exchange gain/(loss) on 6 165 (3 921) (3 527)
translation of foreign
operations
Total comprehensive income
for the year
net of tax 2 082 736 1 558 560 3 454 568
Attributable to:
Shareholders of the 2 073 757 1 547 794 3 424 636
holding company
Non-controlling 8 979 10 766 29 932
shareholders
As above 2 082 736 1 558 560 3 454 568
CONSOLIDATED STATEMENT OF CASH FLOW
Half-year ended Year ended
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Cash generated from 1 720 406 1 052 720 3 521 328
operations
Cash utilised in (3 690 782) (1 064 135) (2 193 127)
investing activities
Cash generated 2 782 572 (51 735) (901 376)
by/(utilised in)
financing activities
Increase/(decrease) in 812 196 (63 150) 426 825
cash for the period
Cash resources at 2 334 734 1 907 909 1 907 909
beginning of period
Cash resources per 3 146 930 1 844 759 2 334 734
statement of financial
position
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half-year ended Year ended
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Share capital, share
premium and
other reserves
Balance at beginning of 734 092 529 210 529 210
year
Other comprehensive (55 414) 155 293 204 882
(loss)/income
Balance at end of period 678 678 684 503 734 092
Treasury shares
Balance at beginning of (2 359 028) (2 359 028) (2 359 028)
year
Treasury shares (2 692 555) - -
purchased during the
period
Balance at end of period (5 051 583) (2 359 028) (2 359 028)
Retained earnings
Balance at beginning of 12 390 460 9 697 261 9 697 261
year
Profit for the period 2 129 171 1 392 501 3 219 754
Ordinary dividends
declared during the
period
Numbers 109 at R2,50 per
share
(2010: R2,40 per share) (258 018) (287 210) (526 555)
Balance at end of period 14 261 613 10 802 552 12 390 460
Ordinary shareholders` 9 888 708 9 128 027 10 765 524
interest
Non-controlling
interests
Balance at beginning of 114 287 102 035 102 035
year
Share of total 8 979 10 766 29 932
comprehensive income
Dividends paid to non- (5 901) (12 678) (14 153)
controlling shareholders
Share of foreign 6 165 (3 921) (3 527)
currency translation
reserve arising on
consolidation
Balance at end of period 123 530 96 202 114 287
Total equity 10 012 238 9 224 229 10 879 811
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
At At At
31 December 31 December 30 June
2011 2010 2011
Unaudited Unaudited Audited
R`000 R`000 R`000
Assets
Non-current assets
Property, plant and 8 826 922 7 225 307 8 027 352
equipment and mining rights
Investments
- available-for-sale 695 870 787 982 887 249
investments
- other 65 905 77 168 30 789
Other financial assets 73 583 45 217 53 051
Total non-current assets 9 662 280 8 135 674 8 998 441
Current assets
Inventories 2 377 587 2 093 667 2 005 577
Trade and other receivables 2 123 947 1 536 430 1 632 270
Cash resources 3 146 930 1 844 759 2 334 734
Total current assets 7 648 464 5 474 856 5 972 581
Total assets 17 310 744 13 610 530 14 971 022
Equity and liabilities
Share capital and reserves
Ordinary shareholders` 9 888 708 9 128 027 10 765 524
interest
Non-controlling interests 123 530 96 202 114 287
Total equity 10 012 238 9 224 229 10 879 811
Non-current liabilities
Net deferred taxation 2 345 564 1 949 783 2 173 621
liabilities
Long-term liabilities 242 801 223 318 222 888
Total non-current 2 588 365 2 173 101 2 396 509
liabilities
Current liabilities
Interest-bearing 2 918 145 1 078 256 154 147
Non-interest-bearing 1 791 996 1 134 944 1 540 555
Total current liabilities 4 710 141 2 213 200 1 694 702
Total equity and 17 310 744 13 610 530 14 971 022
liabilities
Net asset value per share 93,0 76,9 91,0
(Rand)
Capital expenditure (R 1 048,7 1 050,8 2 112,5
million)
Capital commitments (R 3 240,1 2 686,8 3 282,4
million)
SEGMENTAL INFORMATION
Joint venture mining and beneficiation
R`000 Iron ore Manganese Chrome Sub-total
Half-year ended 31
December 2011 -
unaudited
Revenues
- third party 7 518 677 3 457 439 962 441 11 938 557
- inter-segmental - - - -
Total 7 518 677 3 457 439 962 441 11 938 557
Contribution to after- 3 125 669 834 030 (9 706) 3 949 993
tax profit
Half-year ended 31
December 2010 -
unaudited
Revenues
- third party 3 987 044 3 204 236 921 297 8 112 577
- inter-segmental - - - -
Total 3 987 044 3 204 236 921 297 8 112 577
Contribution to after- 1 749 747 849 501 (87 159) 2 512 089
tax profit
SEGMENTAL INFORMATION (continued)
Other
Marketing mining and
R`000 and shipping benefication Treasury
Half-year ended 31 December
2011 - unaudited
Revenues
- third party 603 162 248 877 22 490
- inter-segmental 387 818 129 410 -
Total 990 980 378 287 22 490
Contribution to after-tax 202 303 (1 759) (31 080)
profit
Half-year ended 31 December
2010 - unaudited
Revenues
- third party 567 865 129 675 14 854
- inter-segmental 268 770 1 680 -
Total 836 635 131 355 14 854
Contribution to after-tax 170 260 6 551 (23 351)
profit
SEGMENTAL INFORMATION (continued)
Consolidation
R`000 adjustments* Consolidated
Half-year ended 31 December 2011 -
unaudited
Revenues
- third party (5 969 279) 6 843 807
- inter-segmental (517 228) -
Total (6 486 507) 6 843 807
Contribution to after-tax profit (1 981 307) 2 138 150
Half-year ended 31 December 2010 -
unaudited
Revenues
- third party (4 056 289) 4 768 682
- inter-segmental (270 450) -
Total (4 326 739) 4 768 682
Contribution to after-tax profit (1 262 282) 1 403 267
* Consolidation adjustments mainly give effect to the elimination of
the 50% share attributable to the other joint venture party in
Assmang.
Directors:
Executive: Desmond Sacco (Chairman), CJ Cory (Chief Executive Officer), PC
Crous (Technical and Operations)
Non-executive: EM Southey, (Deputy Chairman and Lead Independent Director),
RJ Carpenter, DMJ Ncube, WF Urmson
Alternate: PE Sacco, AD Stalker, BH van Aswegen
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
Date: 15/02/2012 16:01:01 Produced by the JSE SENS Department.
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