for the year ended 30 June 2018
Assore Limited was incorporated in South Africa in 1950 and is a mining holding company engaged principally 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. Assore's principal investment is a 50% (2017: 50%) interest in Assmang Proprietary Limited (Assmang), which it controls jointly with African Rainbow Minerals Limited (ARM), which is also listed on the JSE. Assmang mines iron and manganese ores, and produces manganese alloys. In addition, the group mines chrome ore at Dwarsrivier Chrome Mine located near Steelpoort in the Lydenburg district. It also 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 and industrial 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 Chief executive officer's report.
The financial results of the group for the year ended 30 June 2018 are summarised below:
| Year ended 30 June | |||||||||
| 2018 R'000 |
2017 R'000 |
||||||||
| Turnover | 6 305 587 | 5 945 266 | |||||||
| Profit before joint-venture entity and foreign listed associate | 1 666 926 | 1 888 857 | |||||||
| Share of profit from joint-venture entity, after taxation | 3 524 287 | 3 266 282 | |||||||
| Share of losses in associates | (16 211) | (16 809) | |||||||
| Profit for the year | 5 175 002 | 5 138 330 | |||||||
| Profit attributable to non-controlling shareholders | (55 673) | (117 159) | |||||||
| Profit attributable to the shareholders of the holding company | 5 119 329 | 5 021 171 | |||||||
| Less: Dividends relating to the group's activities for the year under review | 2 270 554 | 1 444 478 | |||||||
| Interim dividend No 122 of 1 000 cents (2017: 600 cents) per share – declared on 20 February 2018 | 1 396 070 | 837 642 | |||||||
| Final dividend No 123 of 1 200 cents (2017: 800 cents) per share – declared on 5 September 2018 | 1 675 284 | 1 116 856 | |||||||
| Less: Dividends attributable to treasury shares | (800 800) | (510 020) | |||||||
| Profit for the year after dividends | 2 848 775 | 3 576 693 | |||||||
| The attributable interest of the company in the aggregate net profit and losses after taxation of subsidiary companies was as follows: | |||||||||
| – Profits | 1 505 909 | 1 843 787 | |||||||
| – Losses | (39 757) | (73 648) | |||||||
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 is set out herein, 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). The accounting policies are consistent with those of the previous year.
The financial statements have been prepared on a going concern basis and the directors have no reason to believe that 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 in 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 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 misstatements 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. The internal financial controls were assessed by the group's outsourced internal audit function and were found to be satisfactory.
Assore holds a 50% interest in Assmang, which it controls jointly with ARM in terms of a long-standing shareholders' agreement. In accordance with IFRS, Assmang is accounted for on the equity-accounting basis, and Assore has disclosed its share of Assmang's profit as "share of profit from joint-venture entity, after taxation". Set out below are the financial statements of Assmang in abridged format, which combine its continuing and previously discontinued operations.
Abridged consolidated comprehensive income statement of Assmang
| Year ended 30 June | ||||||||
| 2018 R'000 |
2017 R'000 |
|||||||
| Turnover | 27 548 235 | 26 280 018 | ||||||
| Profit before taxation | 9 994 479 | 9 101 268 | ||||||
| Taxation | (2 920 956) | (2 543 755) | ||||||
| Earnings | 7 073 523 | 6 557 513 | ||||||
| Other comprehensive income/(loss) | 265 267 | (445 405) | ||||||
| Dividends declared and paid during the year | (6 000 000) | (5 607 730) | ||||||
| Total comprehensive income for the year after dividends | 1 338 790 | 504 378 | ||||||
| 2018 R'000 |
2017 R'000 |
|||||||
| Assets | ||||||||
| Non-current assets | 26 509 377 | 25 073 561 | ||||||
| Current assets | ||||||||
| Inventories | 4 392 486 | 3 647 687 | ||||||
| Trade and other receivables | 5 522 327 | 4 317 489 | ||||||
| Financial assets | 228 367 | 275 632 | ||||||
| Cash resources | 5 014 065 | 6 330 426 | ||||||
| Total assets | 41 666 622 | 39 644 795 | ||||||
| Equity and liabilities | ||||||||
| Equity | 31 884 665 | 30 545 874 | ||||||
| Non-current liabilities | ||||||||
| Deferred taxation liability | 5 809 009 | 5 471 271 | ||||||
| Long-term provisions | 897 397 | 913 301 | ||||||
| Trade and other payables | 89 217 | 94 439 | ||||||
| Current liabilities | ||||||||
| Trade and other payables | 1 819 476 | 1 584 458 | ||||||
| Short-term provisions | 960 674 | 643 080 | ||||||
| Taxation | 206 184 | 392 372 | ||||||
| Total liabilities | 9 781 957 | 9 098 921 | ||||||
| Total equity and liabilities | 41 666 622 | 39 644 795 | ||||||
| Capital expenditure | 3 082 204 | 2 816 981 | ||||||
| Capital commitments | 2 844 692 | 2 586 774 | ||||||
| Directors' fees (refer note 1) R'000 |
Salaries R'000 |
Bonuses (refer note 2) R'000 |
Contributions to pension scheme R'000 |
Other fringe benefits (refer note 3) R'000 |
Total R'000 |
|||||||||
| 2018 | ||||||||||||||
| Executive | ||||||||||||||
| Desmond Sacco (Chairman) | 73 | 4 264 | 711 | — | 310 | 5 358 | ||||||||
| CE Walters (Chief executive officer – appointed 1 July 2017) | 96 | 5 904 | 12 526 | 1 234 | 1 422 | 21 182 | ||||||||
| RA Davies (Chief financial officer – appointed 20 February 2018) | 22 | 1 026 | 3 016 | 258 | 397 | 4 719 | ||||||||
| PE Sacco (Group marketing director) | 96 | 2 800 | 9 255 | 709 | 987 | 13 847 | ||||||||
| BH van Aswegen (Technical and operations director) | 96 | 3 119 | 10 512 | 790 | 1 093 | 15 610 | ||||||||
| Non-executive | ||||||||||||||
| EM Southey (Deputy chairman and lead independent director) | 750 | 750 | ||||||||||||
| DN Aitken | 300 | 300 | ||||||||||||
| TN Mgoduso | 400 | 400 | ||||||||||||
| S Mhlarhi | 400 | 400 | ||||||||||||
| WF Urmson | 600 | 600 | ||||||||||||
| 2 833 | 17 113 | 36 020 | 2 991 | 4 209 | 63 166 | |||||||||
| 2017 | ||||||||||||||
| Executive | ||||||||||||||
| Desmond Sacco (Chairman) | 110 | 4 264 | 355 | — | 311 | 5 040 | ||||||||
| CJ Cory (Chief executive officer – retired 30 June 2017) | 96 | 5 666 | 13 777 | 1 435 | 28 778 | 49 752 | ||||||||
| PE Sacco (Group marketing director) | 96 | 2 592 | 7 162 | 657 | 972 | 11 479 | ||||||||
| BH van Aswegen (Group operations and growth director) | 96 | 2 888 | 8 295 | 732 | 1 442 | 13 453 | ||||||||
| Non-executive | ||||||||||||||
| EM Southey (Deputy chairman and lead independent director) | 700 | 700 | ||||||||||||
| DN Aitken (appointed 1 March 2017) | 100 | 100 | ||||||||||||
| TN Mgoduso | 375 | 375 | ||||||||||||
| S Mhlarhi | 375 | 375 | ||||||||||||
| WF Urmson | 575 | 575 | ||||||||||||
| 2 523 | 15 410 | 29 589 | 2 824 | 31 503 | 81 849 | |||||||||
| Notes: | |
| 1. | Directors' fees include fees received from Assmang. |
| 2. | 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 the group's results for the year and the achievement of its long-term objectives. Directors owning shares in the group do so in their own right and disclosure thereof is made in this report below. |
| 3 | Other fringe benefits include medical aid contributions, car scheme allowances, life insurance contributions, group life contributions, use of assets and unemployment insurance fund contributions. In 2017, other fringe benefits paid to Mr Cory included an ex gratia payment made on his retirement after 28 years of service in the group. |
For more detail relating to the group's remuneration policy and structure, refer "Corporate governance and risk management report" of the 2018 integrated annual report.
Interests of the directors in the ordinary shares of the company at 30 June 2018 were as follows:
| Direct beneficial number of shares 2018 |
Indirect beneficial number of shares 2018 |
Direct beneficial number of shares 2017 |
Indirect beneficial number of shares 2017 |
|||||||||||
| Executive directors | ||||||||||||||
| Desmond Sacco | 990 000 | 32 430 489 | 990 000 | 32 430 489 | ||||||||||
| CE Walters | — | — | — | — | ||||||||||
| RA Davies | — | — | — | — | ||||||||||
| PE Sacco | 227 580 | — | 227 580 | — | ||||||||||
| BH van Aswegen | 6 305 | — | 4 505 | — | ||||||||||
| CJ Cory (retired 30 June 2017) | — | — | 50 000 | — | ||||||||||
| Non-executive directors | ||||||||||||||
| EM Southey | — | — | — | — | ||||||||||
| DN Aitken | — | — | — | — | ||||||||||
| TN Mgoduso | — | — | — | — | ||||||||||
| S Mhlarhi | — | — | — | — | ||||||||||
| WF Urmson | — | — | — | — | ||||||||||
| 1 223 885 | 32 430 489 | 1 272 085 | 32 430 489 | |||||||||||
Note: No changes in directors’ interest have occurred between 30 June 2018 and the date of issue of this report.
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 the herein.
In terms of the Memorandum of Incorporation (MoI), Messrs TN Mgoduso and S Mhlarhi 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.
| 2018 R'000 |
2017 R'000 |
|||||||
| Dividends declared during the year | ||||||||
| Final dividend No 121 of 800 cents (2017: 500 cents) per share – declared on 29 August 2017 | 1 116 856 | 698 035 | ||||||
| Interim dividend No 122 of 1 000 cents (2017: 600 cents) per share – declared on 20 February 2018 | 1 396 070 | 837 642 | ||||||
| Less: Dividends attributable to treasury shares | (656 207) | (400 400) | ||||||
| 1 856 719 | 1 135 277 | |||||||
| Dividends relating to results of the group for the year under review | ||||||||
| Interim dividend No. 122 of 1 000 cents (2017: 600 cents) per share – declared on 20 February 2018 | 1 396 070 | 837 642 | ||||||
| Final dividend No. 123 of 1 200 cents (2017: 800 cents) per share – declared on 5 September 2018 | 1 675 284 | 1 116 856 | ||||||
| Less: Dividends attributable to treasury shares | (800 800) | (510 020) | ||||||
| 2 270 554 | 1 444 478 | |||||||
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 2018. The directors are not aware of any material changes to this analysis between the year-end and the date of this report.
| 2018 | 2017 | |||||||||||
| Number of shares |
% | Number of shares |
% | |||||||||
| Shareholder spread | ||||||||||||
| Shares held by the public/non-public | ||||||||||||
| Non-public* | ||||||||||||
| – Holders in excess of 10% of the share capital | 105 021 450 | 75,23 | 105 021 450 | 75,23 | ||||||||
| – Directors of the company (direct and beneficial) | 1 223 885 | 0,88 | 1 272 085 | 0,91 | ||||||||
| 106 245 335 | 76,11 | 106 293 535 | 76,14 | |||||||||
| Public shareholders | 33 361 665 | 23,89 | 33 313 465 | 23,86 | ||||||||
| 139 607 000 | 100,00 | 139 607 000 | 100,00 | |||||||||
| Major shareholders | ||||||||||||
| Oresteel Investments Proprietary Limited | 73 190 000 | 52,43 | 73 190 000 | 52,43 | ||||||||
| Main Street 460 Proprietary Limited (RF) (held 100% by Main Street 350 Proprietary Limited (RF) which is held 51% and 49% by the Boleng Trust and Assore Limited respectively)# | 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)# | 16 464 450 | 11,79 | 16 464 450 | 11,79 | ||||||||
| 105 021 450 | 75,23 | 105 021 450 | 75,23 | |||||||||
| Directors of the company | 1 223 885 | 0,88 | 1 272 085 | 0,91 | ||||||||
| Others – less than 5% | 33 361 665 | 23,89 | 33 313 465 | 23,86 | ||||||||
| 139 607 000 | 100,00 | 139 607 000 | 100,00 | |||||||||
* As defined by Rule 4.25 of the JSE Listings Requirements.
^ Holding more than five percent of the issued share capital
# Refer "Black economic empowerment status report" of the 2018 integrated annual report.
The following special resolution was passed on 24 November 2017:
"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, as amended."
On 5 September 2018, the board declared a final dividend of 1 200 cents per share, amounting to R1 675,3 million, which was paid to shareholders on 1 October 2018.
