Home > Financial statements > Company financial statements > Notes to the company financial statements

Financial statements

Notes to the company financial statements
for the year ended 30 June 2012

    2012  2011 
    R'000  R'000 

1.

Investment in group companies

    
  Joint-venture entity (refer below) 468 153  468 153 
  Subsidiary companies (refer below) 2 439  2 439 
    470 592  470 592 
  Investment in joint-venture entity    
  Assmang Limited    
  1 774 103 (2011: 1 774 103) ordinary shares at cost 468 153  468 153 
  Directors' valuation 41 728 532  30 650 717 
  Investment in subsidiary companies    
  Shares at cost (refer note 13) 2 439  2 439 
  Amounts due by/(to) subsidiary companies (refer note 13)    
  Loan accounts receivable 4 930 610  2 137 344 
  Loan accounts payable (1 078 041) (628 039)
  Current accounts payable –  (14 598)
    3 852 569  1 494 707 
  Loan accounts receivable include cumulative redeemable preference shares issued to subsidiary companies in the amount of R4 336 307 (2011: R1 501 407), and have dividend rates of 0,75% (2011: 0,75%) below the prime interest overdraft rate, published by the Standard Bank of South Africa Limited, and have no fixed terms of redemption. The remainder of loan accounts receivable and all loan accounts payable are interest-free with no fixed terms of repayment.    

2.

Available-for-sale investments

    
  Listed – at market value    
  Balance at beginning of year 887 249  602 851 
  Purchases at cost –  42 062 
  Disposals at carrying value (refer note 12.6) (663 650) – 
  Fair value adjustment 15 734  242 336 
       
  Balance at end of year 239 333  887 249 
  Unlisted – at cost and directors' valuation 125  125 
    239 458  887 374 
  Listed investments at year-end comprise:    
  Listed – at cost 166 967  358 417 
  Fair value adjustment transferred to other reserves (refer note 5) 72 366  528 832 
  As above 239 333  887 249 
       

3.

Share capital

    
  Authorised    
  200 000 000 (2011: 200 000 000) ordinary shares of 0,5 cents each 1 000  1 000 
  Issued    
  Balance at beginning and end of year (139 607 000 (2011: 139 607 000) ordinary shares of 0,5 cents each) 698  698 
       

4.

Share premium

    
  Balance at year-end and end of year 264 092  264 092 
       

5.

Other reserves

    
  Surplus on the revaluation to fair value of available-for-sale investments per note 2 72 366  528 832 
  Less: Deferred capital gains tax (refer note 6) (13 495) (73 821)
    58 871  455 011 
       

6.

Deferred taxation on available-for-sale investments

    
  Balance at beginning of year 73 821  39 893 
  Movement for the year (60 326) 33 928 
  Balance at end of year 13 495  73 821 
       

7.

Long-term borrowings

    
  Redeemable preference shares    
  23 100 unsecured, cumulative, redeemable, preference shares (shares) issued at R100 000 per share to the Standard Bank of South Africa Limited (SBSA) on 24 February 2012  2 310 000  – 
  Voluntary redemptions during the year:    
  26 March 2012 – 2 139 shares redeemed at a discount of R5 200 000  (213 900) – 
  25 June 2012 – 5 000 shares (500 000) – 
  Balance at end of year 1 596 100  – 
  Redeemable at the latest by the following dates (R'000):    
  24 February 2015  672 100     
  24 February 2016  462 000     
  24 February 2017  462 000     
    1 596 100     
         

8.

Revenue

    
  Revenue comprises:    
  Dividends received 1 162 405  1 128 849 
  Interest received 29 570  27 436 
    1 191 975  1 156 285 
       

9.

Profit before taxation

    
  Profit before taxation is stated after taking into account the following items of income and expenditure:    
  Income    
  Dividends received from: 1 162 405  1 128 849 
  – Joint-venture entity 1 000 000  1 000 000 
  – Joint-venture entity on preference shares issued to BEE SPVs 136 250  92 644 
  – Available-for-sale investments 26 140  36 205 
  – Unlisted investments 15  – 
  Interest received 29 570  27 436 
  Expenditure    
  Auditors' remuneration    
  – audit fees 111  101 
  Directors remuneration paid by a subsidiary 76 296  76 369 
       
  – directors' fees 918  1 134 
  – other services 75 378  75 235 
  Finance costs – preference share dividends paid and accrued 50 179  56 337 
       

10.

Taxation

    
  South African normal taxation    
  – current year 9 721  11 147 
  – overprovision relating to prior years –  (8 400)
       
  Capital gains tax 66 108  – 
  Secondary tax on companies –  30 727 
  Securities transfer taxation 1 625  1 220 
    77 454  34 694 
       
  Reconciliation of tax rate (%)    
  Statutory tax rate 28,00  28,00 
  Adjusted for:    
  Dividend income (19,94) (27,96)
  Exempt income (4,05) (1,56)
  Prior year adjustment –  (0,70)
  Disallowable expenditure 0,86  1,02 
  Capital gains tax on disposal of available-for-sale investments 1,14  – 
  Secondary tax on companies –  2,70 
  Securities transfer taxation 0,03  0,10 
  Other (1,30) 1,47 
  Effective tax rate 4,74  3,07 
       

11.

Dividends

    
  Dividends declared during the year    
  Final dividend No 109 of 250 cents (2011: 240 cents) per share    
  – declared on 9 September 2011  349 018  335 057 
  Interim dividend No 110 of 250 cents (2011: 200 cents) per share    
  – declared on 16 April 2012  349 018  279 214 
    698 036  614 271 
  Per share (cents) 500  440 
  Dividends relating to the activities of the group for the year under review    
  Interim dividend No 110 of 250 cents (2011: 200 cents) per share    
  – declared on 16 April 2012  349 018  279 214 
  Final dividend No 111 of 300 cents (2011: 250 cents) per share    
  – declared on 31 August 2012  418 821  349 018 
    767 839  628 232 
  Per share (cents) 550  450 
       

12.

Notes to the statement of cash flow

    
12.1 Cash utilised in operations    
  Profit before taxation 1 632 571  1 130 605 
  Adjusted for:    
    (1 649 923) 1 135 393 
  – Dividends received (1 162 405) (1 128 849)
  – Interest received (29 570) (27 436)
  – Profit on disposal of available-for-sale investments (472 200) – 
  – Discount and fees on redemption of preference shares (5 200) (35 445)
  – Other income (30 727) – 
  – Finance costs 50 179  56 337 
       
    (17 352) (4 788)
12.2 Investment income    
  Dividends received (refer note 9) 1 162 405  1 128 849 
       
12.3 Movements in working capital    
  Increase in other receivables (56 865) (14 598)
  (Increase)/decrease in amounts owing by group companies (14 598) 11 076 
  (Decrease)/increase in other payables (11 816) 13 571 
    (83 279) 10 049 
12.4 Taxation paid    
       
  Unpaid at beginning of year (1 564) (7 361)
  Charged to the income statement (77 454) (34 694)
  Unpaid at end of year 4 347  1 564 
    (74 671) (40 491)
       
12.5 Dividends paid    
  Unpaid at beginning of year (571) (245)
  Declared during the year (698 036) (614 271)
  Unpaid at end of year 912  571 
    (697 695) (613 945)
       
12.6 Proceeds on disposal of available-for-sale investments (refer note 2)    
  Comprises:    
  Cost at acquisition 191 450  – 
  Profit on disposal (refer note 12.1) 472 200  – 
    663 650  – 
       
      Direct/        
      indirect        
    Issued interest        
    share in share     Amounts due from/(to)
    capital capital Shares at cost subsidiary companies
    2012/2011  2012/2011  2012  2011  2012  2011 
    R % R 000  R 000  R 000  R 000 

13.

Interest of company in its subsidiary companies

            
  Incorporated in South Africa            
  African Mining and Trust            
  Company Limited 1 000 000  100  1 200  1 200  –  (14 598)
  Ceramox Proprietary Limited(D) 100  100  1 124  1 124  –  – 
  Erf 1263 Parkview Extension 1 Proprietary Limited 1  100  –  –  –  – 
  Erven 27 and 28 Illovo Proprietary Limited 100  100  –  –  –  – 
  Erven 40 and 41 Illovo Proprietary Limited 100  100  –  –  –  – 
  General Nominees Proprietary Limited(D) 4  100  –  –  –  – 
  Group Line Projects Proprietary Limited(D) 100  100  36 228  –     
  Main Street 350 Proprietary Limited (RF) 99  49  –  –  2 080 610  2 137 344 
  Main Street 460 Proprietary Limited (RF) –  –  –  –  –  – 
  Main Street 904 Proprietary Limited (RF) 28 500  –  –  –  2 850 000  – 
  Minerais Holdings Proprietary Limited 100  100  10 887  10 887     
  Ore & Metal Company Limited 100 000  100  105  105  (1 078 041) (628 039)
  Rustenburg Minerals Development            
  Company Proprietary Limited 232 143  56  232 143  232 143  –  – 
  Wonderstone Limited 10 000  100  10  10  –  – 
  Wonderstone 1937 Limited(D) 45 940  100  35  35  –  – 
  Xertech Proprietary Limited 100  100  –  –  –  – 
  Zeerust Chrome Mines Limited 1 300 000  100  1 114  1 114  –  – 
  Incorporated in Namibia            
  Krantzberg Mines Limited 500 000  100  –  –  –  – 
  Incorporated in the United States of America            
  Minerais U.S. LLC 17 756 100  51  11 418  11 418  –  – 
        294 264  258 036  3 852 569  1 494 707 
  Less – held indirectly     (290 711) (254 483) –  – 
    – provided against     (1 114) (1 114) –  – 
  Per note 1     2 439  2 439  3 852 569  1 494 707 
  (D) Dormant companies

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
  –Market risk
   
  Details of the company's 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 company's financial statements together with information regarding management of capital.
   
  The board of directors has overall responsibility for the establishment and oversight of the company's risk management framework. The board has delegated its responsibility to the Executive Committee, which 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 company's 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 company's activities.
   
  The roles and responsibilities of the committee include:
  –approval of all counterparties;
  –approval of new instruments;
  –approval of the group's 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 value 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 recognised in the statement of financial position:
               
            2012  2011 
            R'000  R'000 
               
  Loans to group companies 4 930 610  2 137 344 
  Cash resources 241 409  20 197 
  Other receivables – local 74 346  17 481 
               
  Ageing of other receivables (preference dividends receivable from subsidiary companies)
  Aged as follows:
   
    2012  2011 
    Receivables     Receivables    
    not Receivables Carrying not Receivables Carrying
    impaired impaired value impaired impaired value
    R'000  R'000  R'000  R'000  R'000  R'000 
               
  Not past due, not impaired 74 346  –  74 346  17 481  –  17 481 
  Loans and receivables
  Other receivables are unsecured and overdue amounts are individually assessed and if it is evident that an amount will not be recovered, it is impaired and legal action is instituted to recover the amounts.
   
14.2 Liquidity risk
  The Executive Committee manages the liquidity structure of the company's 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).
   
  The borrowing capacity of the company is determined by its Memorandum of Incorporation in terms of which there is no restriction on its borrowing powers.
   
  Exposure to liquidity risk
  The following are the cash flows of the company's financial assets and liabilities at year-end as determined by contractual maturity date including interest receipts and payments but excluding the impact of any netting agreements with the third parties concerned.
   
          Between Between  
      Carrying Less than 4 and 12  1 and 5  More than
      amount 4 months months years 5 years
    R'000  R'000  R'000  R'000  R'000 
  2012          
  Financial assets          
  Investment in group companies 470 592  –  –  –  470 592 
  Investments 239 458  –  –  –  239 458 
  Loans to group companies 4 930 610  –  –  –  4 930 610 
  Other receivables 74 346  74 346  –  –  – 
  Cash resources 241 409  241 409  –  –  – 
      5 956 415  315 755  –  –  5 640 660 
  Financial liabilities          
  Preference shares issued 1 596 100  –  102 752  1 854 043  – 
  Loans from group companies 1 078 041  –  –  1 078 041  – 
  Other payables 19 959  19 959  –  –  – 
  Guarantees 180 000  180 000  –  –  – 
      2 874 115  199 959  102 752  2 932 084  – 
  2011          
  Financial assets          
  Investment in group companies 470 592  –  –  –  470 592 
  Investments 887 374  –  –  –  887 374 
  Loans to group companies 2 137 344  –  –  –  2 137 344 
  Other receivables 17 481  17 481  –  –  – 
  Cash resources 20 197  20 197  –  –  – 
      3 532 988  37 678  –  –  3 495 310 
  Financial liabilities          
  Loans from group companies 628 039  –  –  628 039  – 
  Other payables 31 434  31 434  –  –  – 
  Amounts due to group companies 14 598  14 598  –  –  – 
  Guarantees 180 000  180 000  –  –  – 
      854 071  226 032  –  628 039  – 
14.3 Market risk
  Market risk is defined as the risk that movements in market risk factors will affect the company's revenue and operational costs as well as the value of its holdings of financial instruments. The objective of the company's market risk management policy is to manage and control market risk exposures to minimise the impact of adverse market movements with respect to revenue protection and to optimise the funding of the business operations.
   
  Market risk information is prepared and submitted to the Executive Committee where it is monitored and further analysed to be used in the decision-making process. The information submitted includes information on currency and interest rates and is used by the committee to determine the market risk strategy going forward. In addition, key market risk information is reported to the Executive Committee on a weekly basis and forecasts against budget are prepared on a monthly basis.
   
  Interest rate risk
  Interest rate risk arises due to adverse movements in domestic and foreign interest rates. The company is primarily exposed to downward interest rate movements on floating investments purchased and to upward movements on overdrafts and other borrowings. There is no other exposure to fair value interest rate risk as all fixed rate financial instruments are measured at amortised cost.
   
  The board determines the interest rate risk strategy based on economic expectations and recommendations received from the Executive Committee. Interest rates are monitored on a regular basis and the policy is to maintain short-term cash surpluses at floating rates of interest.
   
  At the reporting date the interest rate profile of the company's interest-bearing financial instruments was as follows:
            2012  2011 
            R'000  R'000 
  Variable rate instruments    
  Liabilities    
  Preference shares (included in long-term borrowings, refer note 7) 1 596 100  – 
  Assets    
  Cash resources 241 408  20 196 
  Fair value sensitivity analysis for fixed rate instruments    
  The company does not account for any fixed rate financial assets and liabilities at fair value through profit and loss, therefore a change in interest rates at the reporting date would not affect profit or loss.    
  Cash flow sensitivity analysis for variable rate instruments    
  An increase of 50 basis points in interest rates at the reporting date would have decreased profit after tax by the amounts shown below. This assumes that all other variables remain constant. There is no impact on the company's equity.    
  Variable rate instruments         (7 112) 73 
  Net effect on profit or loss is equal but opposite for a 50 basis points increase on the variable rate financial instruments listed above.
   
  Equity price risk
  The company's listed and unlisted investments are susceptible to market price risk arising from uncertainties about future values of the investments. The company manages the equity price risk through monitoring developments in the mining and metal industries. The executive directors review and approve all investment decisions.
   
  At the reporting date, the exposure to listed investment securities at fair value was R239,3 million. A decrease of 1% on the relevant market index could have an impact of approximately R2,4 million on the income or equity attributable to the company, depending on whether or not the decline is significant or prolonged. An increase of 1% in the value of the listed investments would only impact equity, but would not have an effect on profit or loss.
   
  At the reporting date, the exposure to unlisted equity investments at fair value was R34,7 million. A change of 1% in the overall earnings stream of the valuations performed would result in an increase or decrease of R0,3 million.
   
14.4 Fair value of financial assets and liabilities
  The categorisation of each class of financial asset and liability, including their fair values, are included below:
    Available-   Liabilities at Other Total  
    for-sale Loans and amortised assets and carrying Fair
    investments receivables cost liabilities value value
    R'000  R'000  R'000  R'000  R'000  R'000 
  2012            
  Financial assets            
  Investment in group companies       470 592  470 592  470 592 
  Investments 239 333      125  239 458  239 458 
  Loans to group companies   4 930 610      4 930 610  4 930 610 
  Other receivables   74 346      74 346  74 346 
  Cash resources   241 409      241 409  241 409 
    239 333  5 246 365    470 717  5 956 415  5 956 415 
  Financial liabilities            
               
  Preference shares issued     1 596 100    1 596 100  1 596 100 
  Loans from group companies     1 078 041    1 078 041  1 078 041 
  Other payables     19 959    19 959  19 959 
        2 694 100    2 694 100  2 694 100 
  2011            
  Financial assets            
  Investment in group companies       470 592  470 592  470 592 
  Investments 887 249      125  887 374  887 374 
  Loans to group companies   2 137 344      2 137 344  2 137 344 
  Other receivables   17 481      17 481  17 481 
  Cash resources   20 197      20 197  20 197 
    887 249  2 175 022    470 717  3 532 988  3 532 988 
  Financial liabilities            
  Loans from group companies     628 039    628 039  628 039 
  Other payables     31 434    31 434  31 434 
  Amounts due to group companies     14 598    14 598  14 598 
        674 071    674 071  674 071 
  Fair value hierarchy
  The company uses the following hierarchy for determining and disclosing the fair value of financial instruments by valuation technique:
 
Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities;
Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly; and
Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.
   
   
            2012  2011 
            R'000  R'000 
  Available-for-sale investments as above measured at level 1  239 458  887 374 
   

15.

Capital management
  The company holds interests in companies that own mineral rights over resources with remaining lives which vary in accordance with current commodity 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 board's 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 total equity. 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 group's approach to capital management during the year.
   
    2012  2011 
    R'000  R'000 

16.

Contingent liabilities

    
  Guarantees    
  Guarantees issued to bankers as security for facilities provided to subsidiary companies 415 260  338 813 
  The company holds a back-to-back guarantee of R180 million (2011: R180 million) issued by the joint-venture entity in respect of claims made in terms of the abovementioned guarantees.    

17.

Related-party transactions
  Transactions with related parties are concluded at arm's length and under similar terms and conditions to third parties. The following significant related-party transactions occurred during the year:
  Management fees paid to subsidiary company 137  105 
  Dividends received from joint-venture entity 1 000 000  1 000 000 
  Preference dividends received from subsidiary companies 136 250  92 644 
   
ASSORE Integrated Annual Report 2012

 Top of page