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Directors' report

NATURE OF BUSINESS
Assore Limited, which was incorporated in 1950, is a mining holding company principally engaged in ventures involving base minerals and metals.The company’s shares are listed on the 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% (2008: 50%) interest in Assmang Limited (Assmang) which it controls jointly with African Rainbow Minerals Limited (ARM). Assmang mines manganese, iron and chrome ores and produces manganese and chrome alloys.

In addition, the group mines chrome ore and Wonderstone (a type of pyrophyllite) a portion of which is beneficiated to produce high-precision components and wear, and acid resistant tiles.

The group, through its wholly owned subsidiary, Ore & Metal Company Limited, is responsible for marketing all products produced by its joint venture entities 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 review of operations.

FINANCIAL RESULTS
The financial position of the group and company and their results for the year ended 30 June 2009 are set out in the annual financial statements of the group (refer to page 49) and company (refer to page 95) included in this report.The results of the group for the year are summarised below:

  
Year ended 30 June   
   2009      2008   
   R’000      R’000   
Turnover    8 818 655      9 158 937   
Profit for the year    3 267 387      3 178 365   
Attributable to:           
Shareholders of the holding company    3 241 452      3 069 522   
Minority shareholders    25 935      108 843   
   3 267 387      3 178 365   
Profit attributable to the shareholders of the holding company as above    3 241 452      3 069 522   
Dividends relating to the group’s activities for the year under review           
(refer to dividends below)    478 687      307 408   
Interim dividend No 104 of 1 000 cents (2008: 250 cents) per share           
– declared on 19 February 2009    275 717      70 000   
Final dividend No 105 of 1 000 cents (2008: 1 000 cents) per share           
– declared on 26 August 2009    275 717      280 000   
Less: dividends attributable to treasury shares    (72 747)     (42 592)  
          
Profit for the year after dividends    2 762 765      2 762 114   
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% (2008: 50%) share           
– Profit for the year    995 740      2 515 968   
Subsidiary companies           
– Profit    1 040 116      347 918   
– Losses    115 504      28 190   
          
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 within this report, 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 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 amount of all assets included on the balance sheet is reasonably stated.

In order to discharge their responsibilities with regard to the financial statements, the directors ensure, through the group’s duly appointed Audit 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 and 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% (2008: 50%) of the ordinary share capital of Assmang. In accordance with IFRS, the results of Assmang are accounted for by Assore using the proportionate consolidation method and the financial information set out below has been extracted from the audited financial statements of Assmang and its subsidiary companies for the year ended 30 June 2009.

The calculation of profit for consolidation purposes was based on the profit of Assmang for the year ended 30 June 2009 and dividends declared during that period.

  
Year ended 30 June  
     2009     2008  
     R’000     R’000  
Abridged consolidated income statement of Assmang            
Turnover     15 263 603     14 835 456  
Profit before taxation and State’s share of profit     9 923 181     8 227 883  
Taxation and State’s share of profit     3 604 023     2 691 992  
Earnings     6 319 158     5 535 891  
Dividends declared during the year     4 302 732     479 008  
Profit for the year after dividends paid     2 016 426     5 056 883  
Earnings per share (rands)            
– attributable     1 780,94     1 560,19  
– headline     1 775,59     1 564,13  
Dividends paid per share (rands)            
– final     563,65     35,00  
– interim     649,00     100,00  
     1 212,65     135,00  
    
    
At 30 June  
     2009     2008  
     R’000     R’000  
Abridged consolidated balance sheet of Assmang            
Assets            
Non-current assets     9 265 451     7 196 333  
Current assets     7 627 763     8 561 439  
Total assets     16 893 214     15 757 772  
Equity and liabilities            
Total equity     11 988 594     9 972 168  
Non-current liabilities     2 816 757     1 782 717  
Current liabilities            
– interest-bearing     14 807     511 829  
– non-interest-bearing     2 073 056     3 491 058  
Total equity and liabilities     16 893 214     15 757 772  
Capital expenditure (Rm)     2 780     2 900  
Capital commitments (Rm)     7 175     1 473  

DIRECTORS’ EMOLUMENTS  
                             
Emoluments paid to the directors for the year under review are as follows:                      
                                
     Directors’               Contributions     Other fringe       
     fees          Bonuses     to pension     benefits       
     (refer note 1)     Salary     (refer note 2)     scheme     (refer note 3)     Total  
     R’000     R’000     R’000     R’000     R’000     R’000  
2009                                
Executive                                
Desmond Sacco (Chairman)     110     3 806     317     –     463     4 696  
R J Carpenter (Deputy Chairman)     96     3 619     11 636     822     233     16 406  
C J Cory (Chief Executive Officer)     96     3 305     11 494     750     251     15 896  
P C Crous (Technical and Operations)     96     2 904     11 313     659     211     15 183  
Non-executive                                
P N Boynton* (resigned 2 January 2009)     60                         60  
B M Hawksworth     150                         150  
M C Ramaphosa*     120                         120  
E M Southey (appointed 2 January 2009)     60                         60  
J C van der Horst     120                         120  
Alternate                                
J W Lewis (resigned 31 August 2009)     –     1 321     5 597     300     223     7 441  
N G Sacco     –     1 338     72     84     34     1 528  
P E Sacco     36     432     72     88     118     746  
R Smith     –     –     –     –     –     –  
     944     16 725     40 501     2 703     1 533     62 406  
2008                                
                             
Executive                                
Desmond Sacco (Chairman)     110     3 398     283     –     419     4 210  
R J Carpenter (Deputy Chairman)     96     3 232     11 843     734     243     16 148  
C J Cory (Chief Executive Officer)     96     2 950     11 682     671     249     15 648  
P C Crous (Technical and Operations)     96     2 592     11 478     600     211     14 977  
Non-executive                                
P N Boynton*     120                         120  
B M Hawksworth     150                         150  
M C Ramaphosa*     120                         120  
J C van der Horst     120                         120  
Alternate                                
J W Lewis     –     1 180     5 673     272     218     7 343  
N G Sacco     –     439     28     24     13     504  
P E Sacco     15     360     114     72     127     688  
R Smith     –     –     –     –     –     –  
     923     14 151     41 101     2 373     1 480     60 028  
*Fees paid to employer                                

Notes

  • Directors’ fees for executives include fees received from Assmang Limited.
  • 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 (refer to page 54).
  • 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.
  • None of the directors or their immediate families hold any options to acquire shares in the company nor are they entitled to any gains by way of commissions, profit-sharing arrangements or contracts entered into with group companies.

DIRECTORS’ INTERESTS IN SHARES OF THE COMPANY

Interests of the directors in the ordinary shares of the company at 30 June 2009 were as follows, and the company is unaware of any material change in these interests between year-end and the date of this report.
      Direct beneficiall  

  
Indirect beneficial
   Number of shares  

  
Number of shares
      2009       2008      2009      2008  
Executive directors                           
Desmond Sacco       167 500       65 000      6 486 098      6 486 098  
R J Carpenter       22 400       22 400      –      –  
C J Cory       10 000       10 000      –      –  
P C Crous       3 000       3 000      –      –  
Non-executive directors                           
P N Boynton (resigned 2 January 2009)             –      –      –  
B M Hawksworth       1 000       –      –      –  
M C Ramaphosa             –      1 106 000      1 106 000  
E M Southey (appointed 2 January 2009)             –      –      –  
Dr J C van der Horst             –      –      –  
Alternate directors                           
J W Lewis (resigned 31 August 2009)       2 500       2 500      –      –  
N G Sacco       34 050       34 050      –      –  
P E Sacco       35 350       35 050      –      –  
R Smith             –      –      –  
      275 800       172 000      7 592 098      7 592 098  
                          
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 2009.The directors are not aware of any material changes to this analysis between the year-end and the date of this report.
      2009     2008  
     %     %  
Shareholder spread             
Shares held by the public/non-public             
Non-public*             
– Holders in excess of 10% of the share capital      74,91     74,51  
– Directors of the company      1,00     0,61  
     75,91     75,12  
Public (677 shareholders 2008: 637)      24,09     24,88  
     100,00     100,00  
*As defined by Rule 4.25 of the JSE Listings Requirements             
Major shareholders             
Oresteel Investments (Proprietary) Limited      53,09     52,28  
Main Street 343 (Proprietary) Limited (a wholly owned subsidiary             
of Shanduka Resources (Proprietary) Limited)      11,94     11,76  
Main Street 460 (Proprietary) Limited (a wholly owned subsidiary             
of Assore Limited)      9,88     –  
The Standard Bank of South Africa Limited      –     10,47  
Old Mutual Life Assurance Company (South Africa) Limited      –     4,57  
     74,91     79,08  
Others – less than 5%      25,09     20,92  
     100,00     100,00  
SPECIAL RESOLUTION

On 26 February 2009, amendments were made to the rights and privileges attached to the 220 variable rate cumulative redeemable preference shares (shares) pursuant to the voluntary redemption of 75 shares redeemed prior to the original specified redemption date.

DIVIDENDS

In accordance with the group’s accounting policy for dividends, only dividends which are declared during the financial year are recorded in the financial statements and are summarised as follows:

      2009     2008  
     R’000     R’000  
Final dividend No 103 of 1 000 cents (2008: 200 cents) per share             
– declared on 27 August 2008      280 000     56 000  
Interim dividend No 104 of 1 000 cents (2008: 250 cents) per share             
– declared on 19 February 2009      275 717     70 000  
Less: dividends attributable to treasury shares      (76 311)     (4 392)  
     479 406     121 608  
Dividends which relate to the group’s activities for the year under review             
are summarised as follows:             
Interim dividend No 104 of 1 000 cents (2008: 250 cents) per share             
– declared on 19 February 2009      275 717     70 000  
Final dividend No 105 of 1 000 cents (2008: 1 000 cents) per share             
– declared on 26 August 2009      275 717     280 000  
Less: dividends attributable to treasury shares      (72 747)     (42 592)  
     478 687     307 408  
POST-BALANCE SHEET EVENT   
       
         

Besides the declaration of the final dividend on 26 August 2009 referred to above, no other events have occurred that would have had a material impact on the results and financial position of the group and company for the financial year.

HOLDING COMPANY

The company’s holding company is Oresteel Investments (Proprietary) Limited.

DIRECTORATE AND SECRETARY

The names of the directors at the date of this report and the name of the company secretary, including its business and postal addresses, are set out on this page of this report.

On 2 January 2009, Mr P N Boynton resigned as director, and Mr E M Southey was appointed as an independent non-executive director on the same date. On 31 August 2009, Mr J W Lewis resigned as alternate director to Mr R J Carpenter. In terms of the company’s Articles of Association, Messrs B M Hawksworth, M C Ramaphosa, E M Southey and Dr J C van der Horst are required to retire by rotation at the forthcoming Annual General Meeting. All of the abovementioned directors, being eligible, offer themselves for re-election. (Refer to pages 8 and 9 for a short curriculum vitae for these and the other directors of the company.



Johannesburg

28 October 2009