NOTES TO THE COMPANY FINANCIAL STATEMENTS
FOR THE YEAR ENDED 30 JUNE 2010
2010 |
2009 | |||
---|---|---|---|---|
R000 |
R000 | |||
1. |
INVESTMENT IN GROUP COMPANIES |
|||
Joint-venture entity (refer detail below) | 468 153 |
468 153 | ||
Subsidiary companies (refer below) | 1 514 646 |
27 440 | ||
1 982 799 |
495 593 | |||
Investment in joint-venture entity | ||||
Assmang Limited | ||||
1 774 103 (2009: 1 774 103) ordinary shares at cost | 468 153 |
468 153 | ||
Directors valuation | 19 265 766 |
13 238 529 | ||
Investment in subsidiary companies (refer note 13) | ||||
Shares at cost | 1 514 646 |
27 440 | ||
Amounts due by/(to) subsidiary companies | ||||
Loan accounts receivable | 635 932 |
1 349 368 | ||
Loan accounts payable | (628 039) |
(558 041) | ||
Current accounts payable | (3 522) |
(189) | ||
Refer note 13 | 4 371 |
791 138 | ||
2. |
AVAILABLE-FOR-SALE INVESTMENTS |
|||
Listed at market value | ||||
Balance at beginning of year | 415 066 |
590 066 | ||
Purchases at cost | 20 690 |
117 813 | ||
Disposals at carrying value | |
(3 584) | ||
Fair value adjustment | 167 095 |
(289 229) | ||
Balance at end of year (below) | 602 851 |
415 066 | ||
Unlisted at cost and directors valuation | 125 |
125 | ||
602 976 |
415 191 | |||
Listed at cost | 316 355 |
295 665 | ||
Cumulative fair value adjustment transferred to other reserves (refer note 5) | 286 496 |
119 401 | ||
As above | 602 851 |
415 066 | ||
3. |
SHARE CAPITAL |
|||
Authorised | ||||
40 000 000 (2009: 40 000 000) ordinary shares of 2,5 cents each | 1 000 |
1 000 | ||
Issued | ||||
Balance at beginning of year (27 571 653 (2009: 28 000 000) ordinary shares of 2,5 cents each) | 689 |
700 | ||
Shares issued during the year (349 747 ordinary shares of 2,5 cents each) at a premium of R668,30 each in terms of the authority granted at a general meeting held on 19 January 2010 | 9 |
| ||
Shares repurchased and cancelled during the year (428 347 ordinary shares of 2,5 cents each) in terms of the authority granted by shareholders at a general meeting held on 4 September 2008 | |
(11) | ||
Balance at end of year (27 921 400 (2009: 27 571 653) ordinary shares of 2,5 cents each) | 698 |
689 | ||
Subsequent to the year-end, the share capital was subdivided on a five-for-one basis (refer directors report for more detail). | ||||
4. |
SHARE PREMIUM |
|||
Balance at beginning of year | 30 358 |
30 358 | ||
Arising on shares issued during the year (refer note 3) | 233 734 |
| ||
Balance at end of year | 264 092 |
30 358 | ||
5. |
OTHER RESERVES |
|||
Surplus on the revaluation to fair value (after tax) of available-for-sale | ||||
investments per note 2 | 286 496 |
119 401 | ||
Less: Deferred capital gains taxation | (39 893) |
(16 500) | ||
246 603 |
102 901 | |||
6. |
DEFERRED TAXATION |
|||
Balance at beginning of year | 16 500 |
56 992 | ||
Revaluation of available-for-sale investments at year-end (refer note 5) | 23 393 |
(40 492) | ||
Balance at end of year | 39 893 |
16 500 | ||
7. |
SHORT-TERM BORROWINGS |
|||
220 cumulative, redeemable, variable rate preference shares issued to Standard Bank of South Africa Limited (SBSA) on 15 September 2008, which are required to be redeemed in tranches of at least R500 million annually, commencing on the last day of February in 2010. At 30 June 2010, 127 shares (2009: 77 shares) were redeemed in the amount of R1 252 million (2009: R752 million) of which 77 shares were voluntarily redeemed in the amount of R752 million, in terms of authority granted by shareholders in a general meeting on 3 February 2009. The shares have a par value of 1 cent each, and were issued and are redeemable at a premium of R9 999 999,99 each. The preference dividends accrue at a rate linked to the prime lending rate applied by SBSA. | 930 000 |
1 430 000 | ||
8. |
REVENUE |
|||
Revenue comprises: | ||||
Dividends received | 517 919 |
2 171 396 | ||
Interest received | 66 695 |
73 073 | ||
584 614 |
2 244 469 | |||
9. |
PROFIT BEFORE TAXATION |
|||
Profit before taxation is stated after taking into account the following items of income and expenditure: | ||||
Income | ||||
Dividends received | 517 919 |
2 171 669 | ||
joint-venture entity | 500 149 |
2 151 366 | ||
available-for-sale investments | 17 770 |
20 303 | ||
Interest received | 66 695 |
73 073 | ||
Preference dividend accrual adjustment | 2 955 |
| ||
Expenditure | ||||
Auditors remuneration | 101 |
92 | ||
Directors remuneration paid by subsidiary company | 54 785 |
62 406 | ||
directors fees | 1 059 |
944 | ||
other services | 53 726 |
61 462 | ||
10. |
TAXATION |
|||
South African normal tax | ||||
current year | 18 970 |
20 445 | ||
under/(over)provision relating to prior years | 5 040 |
(1) | ||
Capital gains tax | |
2 672 | ||
24 010 |
23 116 | |||
The company has unused credits in respect of secondary tax on companies of | ||||
R176,1 million (2009: R689,6 million). Deferred tax asset has not been raised | ||||
on these amounts as there is no certainty that the credits will be utilised | ||||
in the foreseeable future. | ||||
Reconciliation of tax charge as a percentage of profit before taxation | ||||
Statutory tax rate | 28,00 |
28,00 | ||
Adjusted for: | ||||
Dividend income | (14,29) |
(45,23) | ||
Exempt income | (11,63) |
(0,40) | ||
Capital gains tax on disposal of available-for-sale investments | |
0,20 | ||
Disallowable expenditure | |
19,52 | ||
Other | 0,30 |
(0,37) | ||
Effective tax rate | 2,38 |
1,72 | ||
11. |
DIVIDENDS |
|||
Dividends declared during the year | ||||
Final dividend No 105 of 1 000 cents (2009: 1 000 cents) per share | ||||
declared on 26 August 2009 | 275 717 |
280 000 | ||
Interim dividend No 106 of | ||||
declared on 27 March 2010 | 139 607 |
275 717 | ||
415 324 |
555 717 | |||
Per share (cents) | 1 500 |
2 000 | ||
Dividends relating to the activities of the company for the year under review | ||||
Interim dividend No 106 of 500 cents (2009: 1 000 cents) per share | ||||
declared on 27 March 2010 | 139 607 |
275 717 | ||
Final dividend No 107 of 1 200 cents (2009: 1 000 cents) per share | ||||
declared on 1 September 2010 | 335 057 |
275 717 | ||
474 664 |
551 434 | |||
Per share (cents) | 1 700 | 2 000 | ||
Issued share capital |
Direct interest in share capital |
Shares at cost |
Shares at cost |
Amounts due from/(to) subsidiary companies |
||||
2010 and 2009 |
2010 and 2009 |
2010 |
2009 |
2010 |
2009 |
|||
---|---|---|---|---|---|---|---|---|
R |
% |
R000 |
R000 |
R000 |
R000 |
|||
13. |
INTEREST OF COMPANY IN ITS SUBSIDIARY COMPANIES |
|||||||
Incorporated in South Africa | ||||||||
Ordinary shares | ||||||||
African Mining and Trust Company Limited | 1 000 000 |
100 |
1 200 |
1 200 |
38 080 |
41 411 |
||
Ceramox (Proprietary) Limited | 100 |
100 |
1 124 |
1 124 |
|
|
||
Erven 40 and 41 Illovo (Proprietary) Limited | 100 |
100 |
|
|
|
|
||
Erven 27 and 28 Illovo (Proprietary) Limited | 100 |
100 |
|
|
|
|
||
Erf 1263 Parkview Extension 1 (Proprietary) Limited | 1 |
100 |
|
|
|
|
||
General Nominees (Proprietary) Limited^ | 4 |
100 |
|
|
|
|
||
Main Street 460 (Proprietary) Limited | 100 |
100 |
|
|
|
1 987 828 |
||
Ore & Metal Company Limited | 100 000 |
|
105 |
105 |
(628 039) |
(558 041) |
||
Rustenburg Minerals | ||||||||
Development Company | ||||||||
(Proprietary) Limited | 232 143 |
56 |
|
|
|
|
||
Wonderstone Limited | 10 000 |
100 |
10 |
10 |
|
|
||
Wonderstone 1937 Limited^ | 45 940 |
100 |
35 |
35 |
|
|
||
Xertech (Proprietary) Limited | 100 |
100 |
|
|
|
|
||
Zeerust Chrome Mines Limited | 1 300 000 |
100 |
1 114 |
1 114 |
|
|
||
Preference shares | ||||||||
Main Street 350 (Proprietary) Limited* | 99 |
|
1 512 206 |
25 000 |
594 330 |
6 |
||
Incorporated in Namibia | ||||||||
Krantzberg Mines Limited^ | 500 000 |
100 |
|
|
|
|
||
Incorporated in Mozambique | ||||||||
Amhold Limitada^ | 2 |
100 |
|
|
|
|
||
Incorporated in United States of America | ||||||||
Minerais U.S. LLC | 17 756 100 |
51 |
11 418 |
11 418 |
|
|
||
1 527 212 |
40 006 |
4 371 |
1 471 204 |
|||||
Less: | held indirectly | (11 452) |
(11 452) |
|||||
provided against | (1 114) |
(1 114) |
|
(680 066) |
||||
Per note 1 | 1 514 646 |
27 440 |
4 371 |
791 138 |
||||
^ Dormant companies | ||||||||
* 2009: R5 000 | ||||||||
14. |
FINANCIAL RISK MANAGEMENT |
|||
The company is exposed to various financial risks due to the nature and diversity of its activities and the use of various financial instruments. These risks include: | ||||
credit risk; | ||||
liquidity risk; and | ||||
market risk. | ||||
Details of the companys exposure to each of the above risks and its objectives, policies and processes for measuring and managing these risks are included specifically in this note and more generally throughout the companys financial statements together with information regarding management of capital. | ||||
The board of directors has overall responsibility for the establishment and oversight of the companys risk management framework. The board is responsible for the development and monitoring of risk management policies within the company. The committee meets on an ad hoc basis and regularly reports to the board on its activities. The companys risk management policies are established to identify and analyse the risks faced by the company, to set appropriate risk limits and controls, and to monitor risks and adherence to limits. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the companys activities. | ||||
The roles and responsibilities of the committee include: | ||||
– approval of new instruments; | ||||
– approval of the groups foreign exchange transaction policy; | ||||
– approval of the investment policy; | ||||
– approval of treasury policy; and | ||||
– approval of long-term funding requirements. | ||||
The company also has an internal audit function, which undertakes regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the Audit and Risk Committee. | ||||
14.1 |
Credit risk |
|||
Credit exposure and concentrations of credit risk | ||||
The carrying amount of financial assets represents the maximum credit exposure at the reporting date and the following table indicates various concentrations of credit risk for all non-derivative financial assets held: | ||||
2010 |
2009 |
|||
---|---|---|---|---|
R000 |
R000 |
|||
Amounts due from group companies (refer note 1) | 635 932 |
1 349 368 |
||
Other receivables local | 2 883 |
133 |
||
638 815 |
1 349 501 |
|||
Amounts receivable by the company comprise loans to subsidiary companies and interest receivable. Loans to group companies have no fixed terms of repayment, and interest is receivable from a reputable financial institution. These amounts are unsecured, and are not overdue, and therefore are not impaired. In addition, the loans to group companies are interest free and have no fixed terms of repayment. | ||||
14.2 |
Liquidity risk |
|||
The Executive Committee manages the liquidity structure of the companys assets, liabilities and commitments so as to ensure that cash flows are sufficiently balanced within the company as a whole. | ||||
Surplus funds are deposited in liquid assets (ie negotiable certificates of deposits and call deposits) | ||||
Undrawn credit facilities | ||||
In terms of its Articles of Association, the company has unlimited borrowing capacity. At year-end, external borrowings amounted to R930,0 million (2009: R1 430,0 million). | ||||
Exposure to liquidity risk | ||||
The following are the cash flows of the groups financial assets and liabilities at year-end as determined by the contractual maturity date including interest receipts and payments but excluding the impact of any netting agreements with the third parties concerned. | ||||
14.4 |
Fair value of financial assets and liabilities |
||||||||
The categorisation of each class of financial asset and liability, including their fair values, is included below: | |||||||||
Available-for-sale investments | Loans and receivables | Liabilities atamortised cost | Other assets and liabilities | Total carrying value | Fair value | ||||
Note | R000 | R000 | R000 | R000 | R000 | R000 | |||
2010 |
|||||||||
Financial assets | |||||||||
Investment in group | |||||||||
companies | 1 | 1 982 799 |
1 982 799 |
1 982 799 |
|||||
Available-for-sale | |||||||||
investments | 2 | 602 851 |
125 |
602 976 |
602 976 |
||||
Loans to group | |||||||||
companies | 1 | 635 932 |
635 932 |
635 932 |
|||||
Other receivables | 2 883 |
2 883 |
2 883 |
||||||
Cash resources | 495 493 |
495 493 |
495 493 |
||||||
602 851 |
1 134 308 |
1 982 924 |
3 720 083 |
3 720 083 |
|||||
Financial liabilities | |||||||||
Loans from group | |||||||||
companies | 628 039 |
628 039 |
628 039 |
||||||
Other payables | 17 784 |
17 784 |
17 784 |
||||||
Amounts due to group companies | 3 522 |
3 522 |
3 522 |
||||||
Short-term borrowings | 7 | 930 000 |
930 000 |
930 000 |
|||||
1 579 345 |
1 579 345 |
1 579 345 |
|||||||
2009 |
|||||||||
Financial assets | |||||||||
Investment in group companies | 1 | 495 593 |
495 593 |
495 593 |
|||||
Available-for-sale investments | 2 | 415 066 |
125 |
415 191 |
415 191 |
||||
Loans to group companies | 1 | 1 349 368 |
1 349 368 |
1 349 368 |
|||||
Other receivables | 133 |
133 |
133 |
||||||
Cash resources | 932 727 |
932 727 |
932 727 |
||||||
415 066 |
2 282 228 |
495 718 |
3 193 012 |
3 193 012 |
|||||
Financial liabilities | |||||||||
Loans from group companies | 558 041 |
558 041 |
558 041 |
||||||
Other payables | 34 853 |
34 853 |
34 853 |
||||||
Amounts due from group companies | 189 |
189 |
189 |
||||||
Short-term borrowings | 1 430 000 |
1 430 000 |
1 430 000 |
||||||
2 023 083 |
2 023 083 |
2 023 083 |
|||||||
Determination of fair values | |||||||||
Quoted market prices at reporting date have been used to determine the fair value of available-for-sale investments. Where quoted market prices are not available, a valuation technique, most commonly discounted cash flows, was used. For other receivables and payables, the fair value was determined using the discounted cash flow method at market-related interest rate. Carrying amounts approximate fair value for all other financial assets and liabilities. | |||||||||
Fair value hierarchy | |||||||||
The company uses the following hierarchy for determining the fair value of financial instruments measured at fair value: | |||||||||
Level 1: | quoted prices in active markets for identical assets or liabilities; | ||||||||
Level 2: | other techniques using inputs that are observable, either directly or indirectly; and | ||||||||
Level 3: | techniques using inputs that are not based on observable market data. | ||||||||
2010 |
2009 |
||||||||
R'000 |
R'000 |
||||||||
Available-for-sale investments, measured at Level 1 | 602 851 |
415 066 |
|||||||
15. |
CAPITAL MANAGEMENT |
||||||||
The company holds interests in companies that own mineral rights over resources with remaining lines which vary in accordance with current prices (refer Mineral Resources and Reserves). Decisions to exploit resources would be made at board level and only following the completion of a bankable study based on the current life of mine and estimated capital cost, operating cost and cost of finance, where required, so that the deposit can be mined on a sustainable basis to the end of its estimated life. | |||||||||
The boards policy is therefore to maintain a strong capital base so as to maintain stakeholder confidence and to sustain future development of the business. The company considers its capital to comprise of total equity. The company may adjust its capital structure by way of issuing new shares and is dependent on its shareholders for additional capital as required. The company manages its capital structure in light of changes in economic conditions and the board of directors monitors the capital adequacy, solvency and liquidity of the company on a continuous basis. | |||||||||
There were no changes in the companys approach to capital management during the year. | |||||||||
2010 |
2009 |
||||||||
R’000 |
R’000 |
||||||||
16. |
CONTINGENT LIABILITIES |
||||||||
Guarantees | |||||||||
Guarantees of US dollars 50 million (2009: US dollars 50 million) issued to bankers as security for facilities provided to foreign subsidiary company | 382 940 |
386 000 |
|||||||
Joint-venture entity | |||||||||
The company has issued guarantees to bankers to secure a short-term export finance agreement facility of R180 million (2009: R180 million) provided to a subsidiary company. The facility is primarily utilised for and on behalf of Assmang in which the company holds a 50% interest and which in turn has provided a back-to-back guarantee to the company against any claims made by bankers in terms of this facility. | |||||||||
BEE transactions | |||||||||
Certain preference shares were issued as part of the BEE transaction entered into in 2006 (refer Black economic empowerment report). If an event of default, as defined in the contract, is triggered in relation to the preference shares, the provisions of the relevant put option and call agreements entered into will apply. | |||||||||
The company has also provided a guarantee to secure the banking facility extended to Mampa (refer Black economic empowerment report) which at year-end amounted to R3,5 million (2009: R5,6 million). The company in turn holds a back-to-back pledge over Mampas interest in RMDC in the event that the guarantee is called up. |