? Interim profit up 52,4% to R2,1 billion
? High US Dollar iron or e prices
? All BEE o wnership no w broad-based
Assore Limited
Company Registration Number : 1950/037394/06
Share code: ASR
ISIN: ZAE000146932
RESU LTS FOR T h E h ALF-YEAR ENDED 31 DECEMBER 2011("Assore" or "Group" or "Company")
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 propor
tionately consolidated in accordance with International
Financial Repor ting 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 expor t 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
repor ting period" below.
CONSOLIDATED INCOME STATEMENT
Half-year ended Year ended
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/
Metric tons '000 | 31 December 2011 | 31 December (decrease) 2010 % |
Iron ore Manganese ore* Manganese alloys* Charge chrome Chrome ore* | 6 781 1 590 104 86 211 | 4 039 68 1 456 9 87 20 91 (5) 213 (1) |
* Excluding intra-group sales to alloy plants.
CAPITAL EXPENDITUREThe 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 expor t 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 quar ter, 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 expor ted, 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 cer tainty.
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
Half-year ended Year ended
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.
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 Repor ting. 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.
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 STATEMENT OF FINANCIAL POSITION
31 December 2011 Unaudited R'000 | 31 December 30 June 2010 2011 Unaudited Audited R'000 R'000 | |
Revenue | 6 843 807 | 4 768 682 11 180 037 |
Turnover Cost of sales | 6 386 024 (3 337 372) | 4 553 507 10 547 806 (2 420 111) (6 044 740) |
Gross profit Other income Other expenses Finance costs | 3 048 652 626 209 (476 455) (126 199) | 2 133 396 4 503 066 221 785 848 731 (205 493) (457 797) (40 137) (77 790) |
Profit before taxation and State's share of profits Taxation and State's share of profits | 3 072 207 (934 057) | 2 109 551 4 816 210 (706 284) (1 566 524) |
Profit for the period | 2 138 150 | 1 403 267 3 249 686 |
Earnings attributable to: Shareholders of the holding company Non-controlling shareholders | 2 129 171 8 979 | 1 392 501 3 219 754 10 766 29 932 |
As above | 2 138 150 | 1 403 267 3 249 686 |
Earnings as above Adjusted for : Profit on disposal (net of tax): - on available-for-sale investments - of proper ty, plant and equipment | 2 129 171 (61 057) (646) | 1 392 501 3 219 754 - - (537) (407) |
headline earnings | 2 067 468 | 1 391 964 3 219 347 |
Earnings per share (basic and diluted - cents) Headline earnings per share (basic and diluted - cents) | 1 978 1 921 | 1 164 2 691 1 163 2 690 |
Dividends per share declared in respect of the profit for the period (cents) - Interim - Final Weighted average number of ordinary shares (million) Ordinary shares in issue Weighted impact of treasury shares | 139,61 (31,97) | 200 450 200 200 250 139,61 139,61 (19,94) (19,94) |
Average for the period | 107,64 | 119,67 119,67 |
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
Half-year ended Year ended
SEGMENTAL INFORMATION
Joint venture mining and beneficiation Other Marketing mining and Consolidation R'000 Iron ore Manganese Chrome Sub-total and shipping benefication Treasury adjustments* Consolidatedhalf-year ended 31 December 2011 - unaudited
Revenues
- third party 7 518 677 3 457 439 962 441 11 938 557 603 162 248 877 22 490 (5 969 279) 6 843 807
- inter-segmental - - - - 387 818 129 410 - (517 228) - Total 7 518 677 3 457 439 962 441 11 938 557 990 980 378 287 22 490 (6 486 507) 6 843 807
Contribution to after-tax profit 3 125 669 834 030 (9 706) 3 949 993 202 303 (1 759) (31 080) (1 981 307) 2 138 150
Half-year ended 31 December 2010 - unaudited
Revenues
- third par ty 3 987 044 3 204 236 921 297 8 112 577 567 865 129 675 14 854 (4 056 289) 4 768 682
- inter-segmental - - - - 268 770 1 680 - (270 450) -
CONSOLIDATED STATEMENT OF CASH FLOW
Half-year ended Year ended
Total 3 987 044 3 204 236 921 297 8 112 577 836 635 131 355 14 854 (4 326 739) 4 768 682
Contribution to after-tax profit 1 749 747 849 501 (87 159) 2 512 089 170 260 6 551 (23 351) (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 Cor y (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 Transfer office: Computershare Investor Ser vices Proprietar y Limited, 70 Marshall Street, Johannesburg, 2001 Company secretaries: African Mining and Trust Company Limited Sponsor: The Standard Bank of South Africa Limitedwww.assore.com
BASTION GRAPHICS
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Results for the half-year ended 31 December 2011 |