Company Releases

2015
  • Final results for the year ended 30 June 2015

    – Substantially lower prices for iron and manganese ores
    – Impairment charges recorded of R886 million
    – Record sales volumes of iron and chrome ores
    – Headline earnings for the year reduced by 53,3%
    – Strong cash position
    – Final dividend declared of R3,00 per share

    Chairman Des Sacco, commented:
    “The financial results for the year were significantly affected by lower prices for iron and manganese ores and challenging operating conditions, specifically increased costs in electricity and labour which far exceed inflation. However, record sales volumes were achieved for iron and chrome ore and a strong cash position was maintained.”

    Consolidated income statement

    R’000 Year ended
    30 June
    2015
    Reviewed
    Year ended
    30 June
    2014
    Audited
    Revenue 3 357 297  2 894 596
    Turnover 2 526 096  1 768 561
    Cost of sales (2 376 827) (1 649 450)
    Gross profit 149 269  119 111
    Fees and commission earned from joint venture 643 442  926 060
    Other income 205 672  200 384
    Impairment of non-financial assets – group (365 073)
    Impairment of financial assets (114 258) (26 327)*
    Other expenses (408 869) (460 023)*
    Finance costs (33 391) (61 152)
    Profit before taxation and joint venture 76 792  698 053
    Taxation (102 293) (240 486)
    (Loss)/profit after taxation, before joint venture (25 501) 457 567
    Share of profit from joint venture, after taxation 1 317 138  3 572 155
    Share of loss of associate, after taxation (1 197)
    Profit for the period 1 290 440  4 029 722
    Attributable to:
    Shareholders of the holding company – group and associate 1 403 371  4 005 123
    Non-controlling shareholders (112 931) 24 599
    As above 1 290 440  4 029 722
    Earnings as above 1 403 371  4 005 123
    Impairment of non-financial assets 771 261  276 922
    Impairment of financial assets 114 258  26 327
    Loss on disposal of fixed assets 10 009  542
    Taxation effect of above items (180 831) (79 024)
    Non-controlling shareholders’ portion (141 717)
    Headline earnings 1 976 351  4 229 890
    Earnings per share (basic and diluted – cents) 1 360  3 881
    Headline earnings per share (basic and diluted – cents) 1 915  4 098
    Dividends per share declared in respect of the profit for the year (cents) 600  1 000
    – Interim 300  450
    – Final 300  550
    Weighted average number of ordinary shares (million)
    Ordinary shares in issue 139,61  139,61
    Weighted impact of treasury shares held in trust (36,40) (36,40)
    103,21  103,21
    * Other expenses have been restated in order to disclose the impairment of financial assets separately.

    Consolidated statement of comprehensive income

    R’000 Year ended
    30 June
    2015
    Reviewed
    Year ended
    30 June
    2014
    Audited
    Profit for the year (as above) 1 290 440  4 029 722
    Items that may be reclassified into the income statement dependent on the outcome of a future event (11 428) 94 183
    (Loss)/gain on revaluation to market value of available-for-sale investments after taxation (24 209) 52 434
    (Loss)/gain on revaluation to market value of available-for-sale investments (29 758) 59 452
    Deferred capital gains tax thereon 5 549  (7 018)
    Exchange differences on translation of foreign operations 15 506  4 973
    Actuarial (loss)/gain on pension fund after taxation (2 725) 36 776
    Total comprehensive income for the year, net of tax 1 279 012  4 123 905
    Attributable to:
    Shareholders of the holding company 1 384 130  4 096 869
    Non-controlling shareholders (105 118) 27 036
    As above 1 279 012  4 123 905

    Consolidated statement of cash flow

    R’000  Year ended
    30 June
    2015
    Reviewed
    Year ended
    30 June
    2014
    Audited
    Cash (utilised)/generated by operations (962 774) (725 162)
    Cash retained from investing activities 817 093  1 638 776
    Acquisition of available-for-sale investment –  (161 926)
    Long-term liabilities repaid –  (500 000)
    Other financing activities 422 278  189 164
    Increase in cash for the year 276 597  440 852
    Cash resources at beginning of year 2 144 598  1 703 746
    Cash resources per statement of financial position 2 421 195  2 144 598

    Consolidated statement of financial position

    R’000 At
    30 June
    2015
    Reviewed
    At
    30 June
    2014
    Audited
    ASSETS
    Non-current assets
    Property, plant and equipment and intangible assets 256 504 552 191
    Investments
    – joint venture 14 585 308 14 768 170
    – available-for-sale 233 972 377 988
    – associate 120 756
    – other 47 808 46 613
    Pension fund surplus 57 474 56 973
    Deferred taxation 4 964
    Total non-current assets 15 306 786 15 801 935
    Current assets
    Inventories 924 762 627 190
    Trade and other receivables 410 325 383 923
    Restricted cash 450 000
    Cash resources 2 421 195 2 144 598
    Total current assets 4 206 282 3 155 711
    TOTAL ASSETS 19 513 068 18 957 646
    EQUITY AND LIABILITIES
    Share capital and reserves
    Ordinary shareholders’ interest 17 808 956 17 302 592
    Non-controlling interest 15 765 150 271
    Total equity 17 824 721 17 452 863
    Non-current liabilities
    Net deferred taxation liabilities 63 426
    Long-term liabilities
    – interest-bearing 346 100 346 100
    – non-interest-bearing 21 081 27 134
    Total non-current liabilities 367 181 436 660
    Current liabilities
    Interest-bearing 960 866 538 588
    Non-interest-bearing 360 300 529 535
    Total current liabilities 1 321 166 1 068 123
    TOTAL EQUITY AND LIABILITIES 19 513 068 18 957 646

    Consolidated statement of changes in equity

    R’000  Year ended
    30 June
    2015
    Reviewed
    Year ended
    30 June
    2014
    Audited
    Share capital, share premium and other reserves
    Balance at beginning of year 418 583  326 837
    Other comprehensive (loss)/income for the year (19 747) 91 746
    Net (decrease)/increase in the market value of available-for-sale investments (24 209) 52 434
    Actuarial gains/(losses) on pension plan after taxation (2 725) 36 776
    Foreign currency translation reserve arising on consolidation 7 187  2 536
    Balance at beginning and end of year 398 836  418 583
    Treasury shares
    Balance at beginning and end of the year (5 051 583) (5 051 583)
    Retained earnings
    Balance at beginning of year 21 935 592  18 756 125
    Profit for the period attributable to shareholders 1 403 371  4 005 123
    Ordinary dividends declared during the year (877 260) (825 656)
    – total dividends declared (1 186 660) (1 116 856)
    – dividends on treasury shares held in BEE trusts 309 400  291 200
    Balance at end of year 22 461 703  21 935 592
    Ordinary shareholders’ interest 17 808 956  17 302 592
    Non-controlling interests
    Balance at beginning of year 150 271  128 910
    Share of total comprehensive income (134 506) 21 361
    – profit for the year (112 931) 24 599
    – other comprehensive income 7 813  2 437
    – dividends paid to non-controlling shareholders (29 388) (5 675)
    Balance at end of year 15 765  150 271
    Total equity 17 824 721  17 452 863

    Segmental information

    Associate mining and beneficiation
    R’000 Iron ore Manganese Chrome Sub-total Marketing and shipping Other mining and beneficiation Eliminations and adjustments* Consolidated
    Year ended 30 June 2015 – reviewed
    Revenues
    Third party 12 622 422  7 152 284  1 798 712  21 573 418  3 007 156  350 161  (21 573 438) 3 357 297 
    Inter-segment –  –  –  –  5 101  –  (5 101) – 
    Total revenues 12 622 422  7 152 284  1 798 712  21 573 418  3 012 257  350 161  (21 578 539) 3 357 297 
    Contribution to profit after taxation 2 381 257  94 165  183 802  2 659 224  197 485  (222 986) (2 659 224) (25 501)
    Impairment of financial and non-financial assets (147 114) (665 262) –  (812 376) (114 258) (365 073) 406 188  (885 519)
    Year ended 30 June 2014 – audited
    Revenues
    Third party 18 101 329 8 309 121 1 609 868 28 020 318 2 541 872 352 724 (28 020 318) 2 894 596
    Inter-segment 6 479 (6 479)
    Total revenues 18 101 329 8 309 121 1 609 868 28 020 318 2 548 351 352 724 (28 026 797) 2 894 596
    Contribution to profit after taxation 6 357 416 684 025 127 817 7 169 258 504 298 (46 731) (7 169 258) 457 567
    Impairment of financial and non-financial assets (519 880) (519 880) (26 327) (16 982) 259 940 (303 249)
    *Eliminations and adjustments comprise mainly the adjustments required to give effect to the requirement of IFRS to equity account the group’s investment in Assmang.

    Fair values of financial instruments
    The group uses the following hierarchy for determining and disclosing the fair value inputs of financial instruments:
    Level 1 – quoted prices in an active market that are unadjusted for identical assets or liabilities.
    Level 2 – valuation techniques using inputs, which are directly or indirectly observable.
    Level 3 – valuations based on data that is not observable (not applicable to the group).

    The values of all other financial instruments recognised, but not subsequently measured at fair value, approximate fair value.

    Year ended 30 June 2015 – Reviewed
    R’000 Level 1 Total
    Assets measured at fair value
    Available-for-sale investments 233 972 233 972
    Other investments 47 808 47 808
    281 780 281 780
    Year ended 30 June 2014 – Audited
    R’000 Level 1 Total
    Assets measured at fair value
    Available-for-sale investments 377 988 377 988
    Other investments 46 613 46 613
    424 601 424 601

    Commentary
    Results
    Headline earnings for the financial year to 30 June 2015 declined by 53,3% to R2,0 billion, compared to R4,2 billion in the previous financial year, while profit for the year, which is stated after impairment charges of R886 million, decreased by 68,0% to R1,3 billion, compared to R4,0 billion. These declines are due mainly to the lower level of headline earnings of Assmang Proprietary Limited (Assmang) for the year, which were lower by 56,8%, at R3,3 billion compared to the previous financial year and impairment charges in Assmang amounting to R812 million.

    Assore holds a 50% interest in Assmang, which it controls jointly with African Rainbow Minerals Limited (ARM) and which, in terms of International Financial Reporting Standards (IFRS) is accounted for on the equity accounting basis. Accordingly, Assore has disclosed its 50% share of Assmang’s profit after taxation in its income statement as “Share of profit from joint venture after taxation”.

    Average index prices for iron ore (62% iron content, fines grade, delivered in China) were 41,6% lower than the prior year, at US dollars 72 per tonne and those for manganese ore (44% manganese content, lumpy grade, delivered in China) were 21,6% lower, at US dollars 3,88 per manganese unit. The declines in prices were caused by lower-than-expected demand from China and increased global supply. Manganese alloy prices also reduced during the year although the decline for refined alloys was less than for high carbon ferromanganese. Steady increases in the demand for stainless steel resulted in prices for chrome ore generally remaining fairly stable over the year. The lower US dollar selling prices for the group’s products were partly offset by a weaker rand/US dollar exchange rate, which across the year, was 8,0% weaker than the previous year. Based on lower turnover, commission income declined over the previous year by 30,5%.

    Following a technical and financial review of the underground chrome mines at Rustenburg Minerals, the group has decided to suspend indefinitely further underground development, resulting in an impairment charge of R365 million. In addition, Assmang has closed its last operational furnace at Machadodorp Works and a further ferromanganese furnace at Cato Ridge Works has been closed due to the weak alloy market and increased electricity and labour costs necessitating impairment charges amounting to R812 million, of which 50% has been included in the Group’s results. An additional impairment charge of R114 million was recorded against the group’s share portfolio, due to declines in the share prices of the shares in which the group is invested.

    Sales volumes
    Assmang achieved record sales volumes of iron ore, brought about by strong local demand, which was met from the Beeshoek Iron Ore Mine and improvements in the throughput of the off-grade plant at Khumani Iron Ore Mine. Record sales volumes of chrome ore were also achieved by Dwarsrivier Chrome Mine, due to better availability of rail capacity.

    The table below sets out Assmang’s sales volumes for the year:

    Year ended 30 June Increase/
    (decrease)
    %
    Metric tonnes ‘000 2015 2014
    Iron ore 16 185 15 640 3
    Manganese ore* 2 736 2 708 1
    Manganese alloys 223 279 (20)
    Chrome ore 1 068 988 8
    *Excluding intra-group sales to alloy plants.

    Expansion and capital expenditure
    On 24 June 2015, Assore announced the acquisition from ARM of its 50% indirect share of Dwarsrivier Chrome Mine (Dwarsrivier) (held in Assmang) for a consideration of R450 million. The completion of the transaction is subject to certain conditions precedent, the most significant of which is the consent required, in terms of the Mineral Resources and Petroleum Development Act, by the Department of Mineral Resources (DMR) for the transfer of the mining right from Assmang to a new entity that will operate Dwarsrivier (the “Section 11” transfer). This amount has been disclosed as “Restricted cash” in the Consolidated statement of financial position. The consideration will be adjusted for capital expenditure net of financial results from the operation in the intervening period until the Section 11 transfer is achieved. Once consent is granted, Assore will own 100% of Dwarsrivier, retrospective to 1 July 2014.

    Capital expenditure for the year by Assmang amounted to R3,8 billion (2014: R3,6 billion), of which R1,3 billion was spent in Assmang’s Manganese Division on the sustainability and expansion of the Black Rock Mines, which will increase the mines’ capacity to 4 million tonnes per annum by 2017. A further R730 million was spent on wastestripping in Assmang’s Iron Ore Division, with R441 million spent at Beeshoek Iron Ore Mine and R289 million at Khumani Iron Ore Mine.

    Construction at Sakura Ferroalloys in Malaysia, in which Assmang holds a 54,36% interest, is progressing well, within budget and on schedule to be commissioned by the fourth calendar quarter of the current year and to achieve design capacity of 110 000 tonnes of high carbon ferromanganese and 70 000 tonnes of silico manganese alloys annually by the end of the next financial year.

    Outlook
    Growth in crude steel production is expected to remain subdued for the short to medium term with the Chinese economy, in particular, showing continued signs of weakness and reduced demand. Economic growth in the rest of the world is also expected to remain muted and, combined with the increased supply of low cost iron ore and central and local government support for Chinese iron ore mines, prices are not anticipated to recover over this period and may deteriorate further from current levels. Similar dynamics are evident in the markets for manganese, where additional mine capacity has resulted in oversupply of mostly medium grade ores. This low priced ore and the poor demand from the largest seaborne markets in North America and Europe will continue to depress manganese alloy prices for the foreseeable future. Stainless steel demand appears to be stronger and prices for chrome ore are not expected to change significantly.

    The cost of mining and production in South Africa is becoming increasingly expensive, due largely to price increases in electricity and labour which far exceed inflation, resulting in the group embarking on various right-sizing and restructuring projects in an attempt to improve and maintain the competitiveness of its operations.

    In addition to the impacts of the above market dynamics, the results of the group remain significantly exposed to fluctuations in exchange rates.

    Dividends
    The results in this announcement include the interim dividend of 300 cents (2014: 450 cents) per share which was declared on 10 February 2015 and paid to shareholders on 9 March 2015. In line with the results for the year, the board of directors of Assore (the board) has declared a final dividend of 300 cents (2014: 550 cents) per share, making a total dividend in respect of results for the year of 600 cents (2014: 1 000 cents) per share. The final dividend will be paid to shareholders on or about 21 September 2015 and, in accordance with IFRS, is not included in the results contained in this announcement as it was declared after year end.

    Accounting policies, basis of preparation and review by auditors
    The financial results for the year under review have been prepared under the supervision of Mr CJ Cory, CA(SA), and in accordance with IAS 34 Interim Financial Reporting and comply with International Financial Reporting Standards (IFRS), the SAICA Financial Reporting Guides as issued by the Accounting Practices Committee, the Listings Requirements of the JSE Limited (JSE) and the Companies Act No 71 of 2008, as amended. The accounting policies applied are consistent with those adopted in the financial year ended 30 June 2014 and amendments and improvements to IFRS effective in the year have not had any significant impact on the results or disclosures of the group for the year under review. Ernst & Young Inc., the group’s auditors, have reviewed and issued an unmodified report on the condensed financial results included in this announcement in accordance with ISRE 2410 – Review of Interim Financial Information Performed by the Independent Auditor of the Entity. A copy of their report is available for inspection at the registered office of the company.

    Directors
    Since the interim results announcement on 10 February 2015, Mr RJ Carpenter resigned from the board as a non-executive director on 15 June 2015, after 51 years’ service in the group, 25 years of which were as an executive director.

    Declaration of final dividend
    Shareholders are advised that on 25 August 2015, the board declared final gross dividend number 117 (the dividend), of 300 (2014: 550) cents per share (gross) for the year ended 30 June 2015.

    In terms of paragraph 11.17 of the Listings Requirements of the JSE, shareholders are advised of the following with regard to the declaration:

    1. The dividend has been declared from retained earnings.
    2. The local dividend tax (dividend tax) rate of 15% will apply.
    3. The net local dividend amount is 255,0 cents per share for shareholders liable to pay dividends tax.
    4. The issued ordinary share capital of Assore is 139 607 000 shares, of which 36 400 000 shares are accounted for as treasury shares in terms of IFRS and are therefore excluded from earnings per share calculations.
    5. Assore’s Income Tax reference number is 9045/018/84/4.

    The salient dates are as follows:

    Last day for trading to qualify for and participate in the final dividend Friday, 11 September 2015
    Trading “ex dividend” commences Monday, 14 September 2015
    Record date Friday, 18 September 2015
    Dividend payment date Monday, 21 September 2015
    Dates (inclusive) between which share certificates may not be dematerialised or rematerialised Monday, 14 September 2015 to
    Friday, 18 September 2015.

    On behalf of the board

    Desmond Sacco CJ Cory
    Chairman Chief Executive Officer

    Johannesburg
    26 August 2015

    Directors:
    Executive Desmond Sacco (Chairman), CJ Cory (Chief Executive Officer), AD Stalker (Marketing), BH van Aswegen (Technical and Operations)
    Non-executive EM Southey* (Deputy Chairman and Lead Independent Director), TN Mogoduso*, S Mhlarhi*, IN Mkhari*, WF Urmson* Alternate PE Sacco
    *Independent

    Registered office Assore House, 15 Fricker Road, IIlovo Boulevard, Johannesburg, 2196

    Company secretary 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

    Note to editors:
    Assore holds a 50% interest in Assmang Limited (Assmang), which it controls jointly with African Rainbow Minerals Limited (ARM).

    Further enquiries:
    Singular Systems

  • TRADING STATEMENT
    download PDF (9kb)
  • ASSORE AND AFRICAN RAINBOW MINERALS LIMITED CONCLUDE DEFINITIVE AGREEMENTS FOR ASSORE’S ACQUISITION OF A 50% INDIRECT INTEREST IN THE DWARSRIVIER CHROME MINE
    download PDF (20kb)
  • Change To Board Of Directors
    download PDF (5kb)
  • ASSORE AND AFRICAN RAINBOW MINERALS LIMITED HAVE REACHED IN PRINCIPLE AGREEMENT ON ASSORE’S ACQUISITION OF A 50% INDIRECT INTEREST IN THE DWARSRIVIER CHROME MINE
    download PDF (146kb)
  • ASSORE HAS SUBSCRIBED FOR A 29.9% INTEREST IN IRONRIDGE
    download PDF (11kb)
  • CHANGE TO BOARD OF DIRECTORS
    download PDF (9kb)
2002
  • Kumba to Settle Debt in 2-Year Timeframe

    Miningweb(Johannesburg)
    December 20, 2001
    Posted to the web December 21, 2001
    David Mckay

    A key thrust of Kumba Resources’ first two years of existence will be the reduction of its debt pile which currently translates into a debt to equity ratio of 78 percent. However, the company is keen to emphasise that this financial ratio is misleading because it assumes shareholder equity of about R3.3 billion. It should be noted that the carry over of assets from parent company, Iscor, was completed at a book value.

    A truer gauge of Kumba’s indebtedness is to assume a market value on its assets of R8 billion. This, therefore, reduces the debt to equity ratio to about 30 percent. Viewed from this point, Kumba is hopeful it can reduce debt to equity ratio to about 25 percent: “We’d be quite comfortable at this level,” says Kumba’s general manager for corporate finance, Fred Clarke. Kumba still has some non-core assets to sell including its stake in the information technology company, AST, which is estimated to be worth between R400 million to R420 million.

    CAPITAL STRUCTURE OF KUMBA – PROFORMA AS OF JULY 1, 2001

    Clarke says Kumba is highly cash generative. Earnings can cover annual debt repayments four times over not including the input of Kumba’s investment in Ticor. “We feel this is a more informative financial ratio to look at,” he says.
    Kumba’s debt was inherited from Iscor, the company from which Kumba was unbundled in November.

    Iscor over-capitalised its Saldanha Steel development such that a project that should have cost R5 billion cost upwards of R8 billion. This was partly due to poor cash flow from Iscor’s steel products and all time interest rate highs in South Africa at the time of peak funding for Saldanha Steel.

    Clarke says the division of debt between Kumba and Iscor in terms of the unbundling was based on the ability of each company to repay that debt.

    Kumba’s projects are not cash dependent for the first two years which will enable the company to channel forecast cash flow of R1 billion a year. The R2.2 billion mineral sands project, which is the first major venture that Kumba must finance, has been secured in non-recourse debt. In additon to this there is estimated capital expenditure likely to be no more than R800 million a year.

    Thereafter, the company may press the button on the Sishen South iron ore expansion which could cost about R1.6 billion to complete. A feasibility is under way to establish a truer picture of the capital outlay. It may be possible, for instance, to outsource a mining contractor to develop the project. The exploitation of possible synergies with iron ore operator, Assmang, could also reduce annual operating and development costs.

    Kumba is also investigating a A$1.3 billion development of the Hope Downs iron ore project. But this could take years to come to fruition and should not be viewed as having a short-term impact on the balance sheet.

    In any event, Clarke says there is no particular need for Kumba to seek loan finance in the short-term. This is despite a decline in the cost of capital partly informed by a reduction in interest rates worldwide. The shrinkage in the mining finance industry as a result of asset consolidation is also causing a shortage in clients for banks making the financial services sector more competitive. Kumba will finance future deals on equity participation or develop other assets through joint ventures. Therefore, the burden on Kumba’s balance sheet is likely to be minimised.

    Group Revenue: Cash Generative.

    Kumba has three times dividend cover but Clarke says the company’s dividend policy will be goverened by affordability. It’s likely the first Kumba dividend will be paid from June 2003 with earnings from the current financial year (2002) being channelled into repaying debt

    Copyright © 2002 Miningweb. Distributed by AllAfrica