Directors’ report

FOR THE YEAR ENDED 30 JUNE 2013

Nature of business

Assore Limited was incorporated in South Africa in 1950 and is a mining holding company principally engaged in ventures involving base minerals and metals. The company’s shares are listed on JSE Limited (the JSE) under “Assore” in the general mining sector and its ultimate holding company is Oresteel Investments Proprietary Limited.

The group’s principal investment is a 50% (2012: 50%) interest in Assmang Limited (Assmang) which it controls jointly with African Rainbow Minerals Limited (ARM) which is also listed on the JSE. Assmang mines iron, manganese and chrome ores and produces manganese alloys. In addition, the group mines Wonderstone (a type of pyrophyllite), a portion of which is beneficiated to produce high-precision components, and wear and acid-resistant tiles, which are installed in various mining, industrial and filtration applications.

The group, through its wholly owned subsidiary, Ore & Metal Company Limited, is responsible for marketing all products produced by its joint-venture and subsidiary companies, the bulk of which is exported and the remainder either used in the group’s beneficiation processes or sold locally. Details of the group’s activities are set out, by activity, in the operational review and commentary (refer pages 44 to 48).

Financial results

The financial results of the group for the year ended 30 June 2013 are summarised below:

2013  2012 
R’000  R’000 
Turnover 13 500 864  12 947 766 
Profit for the year 3 428 368  4 047 034 
Attributable to:
Shareholders of the holding company 3 425 644  4 033 013 
Non-controlling shareholders 2 724  14 021 
As above 3 428 368  4 047 034 
Profit attributable to the shareholders of the holding company as
above
3 425 644  4 033 013 
Dividends relating to the group’s activities for the year under
review (refer dividends below)
619 243  567 639 
Interim dividend No 112 of 250 cents (2012: 250 cents) per share –
declared on 12 February 2013
349 018  349 018 
Final dividend No 113 of 350 cents (2012: 300 cents) per share –
declared on 27 August 2013
488 625  418 821 
Less: Dividends attributable to treasury shares held in trust (218 400) (200 200)
Profit for the year after dividends 2 806 401  3 465 374 
The attributable interest of the company in the aggregate net profit and
losses after taxation of group companies was as follows:
Jointly controlled entity – 50% (2012: 50%) share
– consolidated profit after taxatioin 3 092 477  3 429 520 
Subsidiary companies
– profit after taxation 430 365  283 691 
– losses (56 195) (299 210)

 

Control over financial reporting

The directors of the company are responsible for the preparation and fair presentation of the financial statements and related financial information included in this report. The external auditors, Ernst & Young Inc., whose report appears on page 81, are responsible for expressing an opinion on the financial statements based on their audit.

The financial statements included in this report are based on judgements and estimates which are intended to be both reasonable and prudent and have been prepared by management in accordance with International Financial Reporting Standards (IFRS) based on appropriate accounting policies which, unless otherwise indicated, have been applied consistently with the previous year.

The financial statements have been prepared on a going-concern basis and the directors have no reason to believe that any of the businesses in the group except the synthetic diamond operation, Xertech, will not be a going concern in the year ahead. With regard to the valuation of assets, the directors are of the opinion that the carrying amounts of all assets included on the statement of financial position are appropriately valued.

In order to discharge their responsibilities with regard to the financial statements, the directors ensure, through the group’s appointed Audit and Risk Committee, that management maintains adequate accounting records and systems of internal control which are developed and reviewed for effectiveness on an ongoing basis. The systems of internal control are based on established organisational structures, policies and procedures, including budgeting and forecasting disciplines and are managed and controlled by suitably trained personnel who are organised in structures with appropriate segregation of authorities and duties. While internal controls are intended to adequately safeguard the group’s assets and prevent or detect material misstatement and loss, these systems can only be expected to provide reasonable, and not absolute, assurance as to the reliability of the financial information included in this report.

Jointly controlled entity


The group owns 50% (2012: 50%) of the ordinary share capital of Assmang. In accordance with IFRS, the results of Assmang are accounted for by Assore using the proportionate consolidated method and the financial information set out below has been constructed from the audited financial statements of Assmang and its subsidiary companies for the year ended 30 June 2013. The new accounting standards, of IFRS 10, 11 and 12 become effective for the financial years commencing after 1 January 2013 and will accordingly be implemented with the group’s interim reporting for the period ending on 31 December 2013. The impact of these new standards has been assessed by management in conjunction with the external auditors. The investment in Assmang, which it jointly manages and controls with its joint-venture partner, ARM, will no longer be proportionately consolidated as it has been assessed to be a joint venture under these new accounting standards. This will have a significant impact on the presentation of the consolidated financial statements but will have no impact on earnings or net assets.

The calculation of profit for consolidation purposes was based on the profit of Assmang for the year ended 30 June 2013 and dividends declared during that period, and the financial statements are presented in summarised format below:

2013  2012 
R’000  R’000 
Abridged consolidated income statement of Assmang
Turnover 5 289 897  23 688 390 
Profit before taxation 8 700 829  9 468 517 
Taxation  2 490 927  2 584 529 
Earnings 6 209 902  6 883 988 
Dividends declared during the year  3 000 000  2 000 000
Profit for the year after dividends paid  3 209 902  4 883 988 
Abridged consolidated statement of financial position of
Assmang
Assets
Non-current assets 20 057 500   17 937 554 
Current assets 14 417 612  12 269 155 
Total assets 34 475 112  30 206 709 
Equity and liabilities
Total equity  25 601 215   22 391 314 
Non-current liabilities  5 569 599  5 121 923 
Current liabilities  3 304 298  2 693 472 
Total equity and liabilities  34 475 112   30 206 709 
Capital expenditure 4 064 104  4 517 412 
Capital commitments 3 682 506  3 643 748#
# Restated

 

Contributions Other
Directors’ to pension fringe
fees Salary Bonuses scheme benefits Total
R’000  R’000  R’000  R’000  R’000  R’000 

Directors’ emoluments

2013 
Executive
Desmond Sacco (Chairman) 110  4 264  355  –  613  5 342 
CJ Cory (Chief Executive Officer) 96  4 364  14 406  1 121  376  20 363 
PC Crous (retired 31 August 2012) 16  615  –  158  40 365  41 154 
AD Stalker (appointed Group Marketing Director 1 September 2012) 86  2 180  9 552  560  248  12 626 
BH van Aswegen (appointed Group Technical Director 1 September 2012) 80  2 103  9 497  537  288  12 505 
Non-executive 385  385 
EM Southey (Deputy Chairman and lead independent director) 165  165 
RJ Carpenter 162  162 
S Mhlarhi (appointed 15 October 2012) 318  318 
WF Urmson
Alternate
PE Sacco 36  1 540  7 176  387  267  9 406 
1 454  15 066  40 986  2 763  42 157  102 426 
(refer note 1) (refer note 2) (refer notes3 and 4)
2012 
Executive
Desmond Sacco (Chairman) 110  4 264  355  –  582  5 311 
CJ Cory (Chief Executive Officer) 96  4 196  14 894  1 078  359  20 623 
PC Crous (Technical and Operations Director) 96  3 688  14 422  947  231  19 384 
Non-executive
EM Southey (Deputy Chairman and lead independent director) 300  300 
RJ Carpenter 150  150 
ZP Manase (appointed 7 October 2011/ resigned 1 November 2011) 11  11 
DMJ Ncube (resigned 3 May 2012) 125  125 
MC Ramaphosa (resigned 19 August 2011) 20  20 
WF Urmson 200  200 
Dr JC van der Horst (resigned 31 December 2011) 75  75 
Alternate
PE Sacco 36  1 426  6 277  351  232  8 322 
AD Stalker (appointed 14 October 2011) 36  1 730  8 503  444  243  10956 
BH van Aswegen (appointed 14 October 2011) 1 669  8 468  423  259  10 819 
1 255  16 973  52 919  3 243  1 906  76 296 
Notes
1. Due to the shareholding structure, the company is unable to offer directors remuneration by way of share incentive or option arrangements and bonuses are determined based on results for the year. Directors owning shares in the group do so in their own right and disclosure thereof is made in this report.
2. Other fringe benefits include medical aid contributions, car scheme allowances, life insurance contributions, leave paid out, study loan benefits, use of assets and unemployment insurance fund contributions.
3. Other benefits paid to Mr PC Crous in 2013, include an ex-gratia payment on his retirement after 21 years’ service to the group.

 

Directors’ interests in shares of the company

nterests of the directors in the ordinary shares of the company at 30 June 2013 were as follows, and other than mentioned below, the company is unaware of any material change in these interests between year-end and the date of this report.

2013  2012 
Direct Indirect Direct Indirect
beneficial beneficial beneficial beneficial
number number number number
of shares of shares of shares of shares
Executive directors
Desmond Sacco 868 500  32 430 490  868 500  32 430 490 
CJ Cory 50 000  –  50 000  – 
PC Crous –  –  12 000  – 
AD Stalker –  –  –  – 
BH van Aswegen 4 505  –  4 505  – 
Non-executive directors
EM Southey –  –  –  – 
RJ Carpenter 25 000  –  25 000  – 
S Mhlarhi (appointed 15 October 2012) –  –  –  – 
WF Urmson –  –  –  – 
Alternate director
PE Sacco 202 500  –  198 750  – 
1 150 505  32 430 490  1 162 755  32 430 490 

 

Directorate and secretary

The names of the directors, at the date of this report, and details of the Company Secretary, including its business and postal addresses, are set out on page 148 of this report.

There have been no changes to the board of directors of the company since the previous integrated annual report was published.

n terms of the Memorandum of Incorporation (MoI), Messrs Desmond Sacco, CJ Cory and WF Urmson are required to retire by rotation at the forthcoming Annual General Meeting (AGM). The aforementioned directors, being eligible, offer themselves for re-election and a brief curriculum vitae for each of these directors is included in the notice of the AGM which was sent to members by registered mail on 29 October 2013.

Analysis of shareholding

The following analysis of shareholders, in accordance with the JSE Listings Requirements, has been established, based on an examination of the company’s share register at 30 June 2013. The directors are not aware of any material changes to this analysis between the year-end and the date of this report.

2013  2012 
Number of Number of
shares % shares %
Shareholder spread
Shares held by the public/non-public
Non-public shareholders, 10 (2012: 11)
– holders in excess of 10% of the share capital 105 021 450  75,23  105 021 450  75,23 
– directors of the company 1 150 505  0,82  1 162 755  0,83 
106 171 955  76,05  106 184 205  76,06 
Public shareholders 1 983 (2012: 2 108) 33 435 045  23,95  33 422 795  23,94 
139 607 000  100,00  139 607 000  100,00 
Major shareholders, holding 5% or more
Oresteel Investments Proprietary Limited 73 190 000  52,43  7 319 000  52,43 
Main Street 460 Proprietary Limited (RF) (controlled by the Boleng Trust, refer “Black economic empowerment status report”, page 58) 15 367 000  11,01  15 367 000  11,01 
Main Street 904 Proprietary Limited (RF) (held 51% and 49% by the Fricker Road
Trust and the Assore Employee Trust respectively, refer “Black economic empowerment status report”, page 58) 16 464 450  11,79  16 464 450  11,79 
105 021 450  75,23  105 021 450  75,23 
Others – less than 5% 34 585 550  24,77  34 585 550  24,77 
139 607 000  100,00  139 607 000  100,00 

 

2013  2012 
R’000  R’000 

Dividends

Dividends declared during the year
Final dividend No 111 of 300 cents (2012: 250 cents) per share – declared on 31 August 2012 418 821  349 018 
Interim dividend No 112 of 250 cents (2012: 250 cents) per share – declared on 12 February 2013 349 018  349 018 
Less: Dividends attributable to treasury shares (200 200) (182 000)
Per consolidated statement of changes in equity 567 639  516 036 
Dividends relating to results of the group for the year under review
Interim dividend No 112 of 250 cents (2012: 250 cents) per share – declared on 12 February 2013  349 018  349 018 
Final dividend No 113 of 350 cents (2012: 300 cents) per share – declared on 27 August 2013  488 625  418 821 
Less: Dividends attributable to treasury shares (218 400) (200 200)
619 243  567 639 

Special resolutions

The following special resolutions were passed on 30 November 2012:

  • That the annual remuneration payable to non-executive directors be increased as follows:
    • Deputy Chairman from R250 000 to R300 000;
    • Non-executive directors (excluding the Deputy Chairman) from R150 000 to R180 000; and
    • Members of each of the Audit and Risk Committee, Remuneration Committee or Social and Ethics Committee from R50 000 to R60 000.
  • That the board may authorise the company to directly or indirectly provide financial assistance to any present or future subsidiary or inter-related companies of Assore as contemplated in section 45 of the Companies Act.

Event after the reporting period

On 27 August 2013, the board declared a final dividend of 350 cents per share amounting to R488,6 million, which was paid to shareholders on 23 September 2013.