1 INVESTMENT IN JOINT-VENTURE ENTITY
 

The group’s principal investment is a 50% (2018: 50%) interest in Assmang Proprietary Limited (Assmang), a South African company which it jointly controls with African Rainbow Minerals (ARM) which is also listed on the JSE. Assmang mines iron and manganese ores and produces manganese alloys. In accordance with IFRS, the results of Assmang are accounted for by Assore using the equity method. The financial information set out below has been extracted from the audited financial statements of Assmang and its subsidiary companies for the year ended 30 June 2019.

    2019 
R’000 		       2018 
R’000 		  
Consolidated income statement of Assmang              
Turnover       35 613 171             27 548 235    
Cost of sales     (18 445 160)          (16 206 770)   
Gross profit     17 168 011           11 341 465    
Other operating income     1 298 861           1 356 756    
Other operating expenses     (4 943 576)          (3 469 816)   
Profit from operations     13 523 296           9 228 405    
(Loss)/profit from joint-venture entity     (1 120 950)          236 606    
Income from investments     614 102           597 514    
Finance costs     (96 203)          (68 046)   
Profit before taxation     12 920 245           9 994 479    
Taxation     (3 822 504)          (2 920 956)   
Profit for the year, net of taxation     9 097 741           7 073 523    
Other comprehensive income     18 631           265 267    
Total comprehensive income for the year, net of taxation (group interest therein 50% (2018: 50%)) (refer "Equity accounted results for Assmang" below)    9 116 372           7 338 790    
Dividends declared during the year     6 630 000           6 000 000    
Abridged consolidated statement of financial position of Assmang                      
Total assets                      
Non-current assets     27 153 112           26 509 377    
Current assets                      
   Inventories     4 961 281           4 392 486    
   Trade and other receivables     7 473 455           5 522 327    
   Financial assets     187 845           228 367    
   Cash resources     6 104 583           5 014 065    
      45 880 276           41 666 622    
Total liabilities                      
Non-current liabilities                      
   Deferred taxation     6 358 502           5 809 009    
   Long-term provisions     1 079 186           897 397    
   Trade and other payables     84 519           89 217    
Current liabilities                      
   Trade and other payables     2 664 249           1 819 476    
   Short-term provisions     983 207           960 674    
   Taxation     308 326           206 184    
   Financial liabilities     31 250           —    
      11 509 239           9 781 957    
Net assets     34 371 037           31 884 665    
Proportion of the group’s ownership     50%           50%    
Carrying amount of investment                      
Opening balance     15 984 321           15 327 400    
Share of profit, net of taxation     4 536 396           3 524 287    
Share of other comprehensive income, net of taxation     9 315           132 634    
Less: Dividends received     (3 315 000)          (3 000 000)   
Carrying amount of investment in statement of financial position     17 215 032           15 984 321    
Capital expenditure     4 407 332           3 082 204    
Capital commitments     3 847 951           2 844 692    
– contracted for     1 755 706           941 078    
– not contracted for     2 092 245           1 903 614    
Equity accounted results of Assmang                      
Total comprehensive income for the year, net of taxation     9 116 372           7 338 790    
Less: Other comprehensive income from operations     (18 631)          (265 267)   
Assmang profit after taxation     9 097 741           7 073 523    
50% thereof     4 548 870           3 536 761    
Group consolidation adjustments     (12 474)          (12 474)   
Share of profit from joint-venture entity after taxation per income statement     4 536 396           3 524 287    
Impairment of assets                      
The carrying values of the following assets were fully impaired at year-end, as no future economic benefits were expected to arise from these operations:                      
– property, plant and equipment of Sakura Ferroalloys Sdn Bhd (Malaysia) (Sakura)    625 874           —    
– investment in associate of joint venture     387 542           —    
– Black Rock – winder     41 911           —    
– feasibility studies relating to manganese operations     —           51 900    
      1 055 327           51 900    

2019 saw several major ferroalloy producers announce production cuts in an attempt to curb loses and achieve a more balanced ferroalloy market, which was, and remains oversupplied. Elevated input costs and weak alloy prices pressurised profit margins, which are not expected to recover in the short term. Accordingly, by way of using a discounted cash flow model, management at Sakura have recorded an impairment charge against its property, plant and equipment of Malaysian ringgit (MYR) 338 million, of which Assmang's equity-accounted portion (54,36%) amounts to R626 million. In addition, management at Assmang have assessed Assmang's equity-accounted carrying value its joint venture investment in Sakura, in comparison to its determined fair value (less cost to sell) and have recorded an additional impairment charge in this respect of R388 million. Assore's 50% share of the sum of these charges amounts to R507 million.