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: |
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| 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 |
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| 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 |
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| 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 ) | (refer ) | (refer notes and ) | ||||||||||||||||
| 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 | ||||||||||||||||||
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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 |
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| 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.