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Summarised consolidated financial statements and dividend declaration for the year ended 31 December 2018
Merafe Resources Limited
(incorporated in the Republic of South Africa)
Registration Number: 1987/003452/06
JSE Share code: MRF
ISIN: ZAE000060000
("Merafe" or the "Company")
SUMMARISED CONSOLIDATED FINANCIAL STATEMENTS AND DIVIDEND DECLARATION
for the year ended 31 December 2018
Sponsor
One Capital Sponsor Services (Pty) Ltd
Executive Directors
Z Matlala (Chief Executive Officer), D Chocho (Financial Director)
Non-executive Directors
CK Molefe (Chairman)*, NB Majova*, A Mngomezulu*, M Vuso*, G Motau*
M Mosweu, S Blankfield
Company Secretary
CorpStat Governance Services
Registered office
Building B, 2nd Floor, Ballyoaks Office Park, 35 Ballyclare Drive,
Bryanston, 2191
Transfer secretaries
Link Market Services South Africa (Pty) Ltd
Investor relations
Ditabe Chocho Tel:+27 11 783 4780 or +27 83 462 3040
Email: ditabe@meraferesources.co.za
*Independent
CEO Commentary on results
Despite a challenging operational environment, Merafe produced a pleasing set of financial results for the
2018 financial year. The uncertainty created by geopolitical events such as Brexit and trade wars resulted
in lower realised CIF ferrochrome prices. Profit after tax decreased by 25% mainly as a result of lower
ferrochrome sales volumes, lower average net CIF ferrochrome price and a marginally stronger average
Rand:US$ exchange rate. A total dividend of R351 million has been released to shareholders for the year.
Preparation of this report
The following individuals were responsible for the preparation of this report:
- Masechaba Masemola CA(SA) Financial Manager
- Ditabe Chocho CA(SA) Financial Director
2018 year in review
KEY FEATURES
- 10% improvement in TRIFR to 3.39
(2017: 3.74)
- 3% increase in ferrochrome production to 407kt
(2017: 395kt)
- 5% decrease in revenue to R5 606 million
(2017: R5 889 million)
- Increase in production cost per tonne managed to 9%
- 19% decrease in EBITDA to R1 345 million
(2017: R1 665 million)
- 25% decrease in HEPS to 27.2 cents
(2017: 36.4 cents)
- Cashflow from operating activities decreased to R478 million
(2017: R1 400 million)
- Solid financial position with net cash of R281 million
(2017: R600 million)
- 16% increase in total dividend to a record R351 million
(2017: R301 million)
Commentary
Financial review
The results for the year ended 31 December 2018 have been prepared in accordance with International
Financial Reporting Standards (IFRS).
Rounding of figures may result in minor computational discrepancies of the tabulations.
Merafe's revenue and operating income is primarily generated from the Glencore-Merafe Chrome Venture
(Venture) which is one of the global market leaders in ferrochrome production, with a total installed
capacity of 2.3 million tonnes of ferrochrome per annum. Merafe shares in 20.5% of the earnings before
interest, taxation, depreciation and amortisation (EBITDA) from the Venture. Merafe has one reportable
segment being the mining and beneficiation of chrome ore into ferrochrome and as a result no segment
report has been presented.
Merafe's share of revenue from the Venture decreased by 5% from the prior year to R5 606 million
(2017: R5 889 million). Ferrochrome revenue decreased by 6% year on year to R4 849 million
(2017: R5 163 million) primarily as a result of a 7% decrease in net CIF prices and a 1% decrease
in ferrochrome sales volumes to 372kt (2017: 375kt).
Chrome ore revenue increased by 3% year on year to R747 million (2017: R726 million), driven by a
16% average sales price increase. This was partially offset by a 23% decrease in sales volumes to
248kt (2017: 322kt).
Merafe's portion of the Venture's EBITDA for the year ended 31 December 2018 is R1 409.4 million
(2017: R1 705.5 million). The EBITDA includes Merafe's attributable share of standing charges of
R131.5 million (2017: R117.5 million) and a foreign exchange gain of R141.5 million (2017: foreign
exchange loss R73.4 million).
After accounting for corporate costs of R44.4 million (2017: R40.4 million), which include a cash settled
share-based payment expense of R3.1 million (2017: R5.6 million), Merafe's EBITDA reached R1 345.9 million
(2017: R1 665.2 million). Corporate costs include Corporate Social Investment expenses of R3.3 million
(2017: R3.5 million) following contributions to the Adopt-a-School Project. This project primarily relates
to the Company's intervention in the development and upgrade of infrastructure as well as social and
academic skills of two schools within the areas we operate in.
Profit for the year ended 31 December 2018 amounted to R683.4 million (2017: R914.1 million), after taking
into account depreciation of R405.5 million (2017: R368.2 million), net financing income of R4.0 million
(2017: net financing expense R19.3 million) and taxation expense of R260.86 million (2017: R363.65 million).
The taxation expense includes deferred tax credit of R29.6 million (2017: R47.4 million) which arose primarily
as a result of temporary differences on property, plant and equipment as well as those relating to provisions
and accruals. There is no unredeemed capital expenditure balance at 31 December 2018 given that taxable profits
exceeded capital expenditure.
Depreciation increased year on year primarily as a result of capital expenditure for the year as well as a
review of assets at year end that resulted in accelerated depreciation at our smelters. The assets review
included a reassessment of the useful lives of permanent structures and furnaces. This led to accelerated
depreciation of R38 million (2017: R30 million) on affected assets.
Sustaining capital expenditure increased by 2% to R412.0 million (2017: R403.0 million). This is necessary
stay-in-business spending coupled with the Venture's ongoing efforts to improve safety, costs and
efficiencies across all operations.
The R200 million unsecured, three-year revolving credit facility with ABSA remained unutilised for the year.
At 31 December 2018, Merafe had cash and cash equivalents of R280.6 million (2017: R671.7 million) which
comprised of cash held by Merafe of R235.8 million (2017: R464.0 million) and R45.0 million
2017: R207.7 million) being Merafe's share of the cash balance in the Venture.
Trade and other receivables increased by 10% compared to the previous year primarily as a result of the
weaker closing Rand:US$ exchange rate. The Rand:US$ exchange rate closed at R14.4 (2017: R12.4) as at
31 December 2018.
The increase in inventories is a function of higher raw materials and finished goods. The increase in raw
materials is mainly due to higher chrome ore stock levels at a higher average cost as well as an increase
in the reductant cost per tonne. The increase in finished goods is a function of higher production volumes
compared to sales volumes as well as higher production costs. Finished goods volumes on hand at year end
represent approximately four to five months of sales.
The Board declared a final dividend of R151 million (2017: R226 million), which is 6 cents per share
(2017: 9 cents per share). This amounts to a full year dividend of R351 million (14 cents per share)
compared to R301 million (12 cents per share) for the previous financial year.
Safety
Safety remains the most important priority for the Venture. Our total recordable injury frequency rate
(TRIFR) reduced by 10% to 3.39 from 3.74 at the end of 2017. We were saddened by the fatality at our
Thorncliffe mine in August 2018. Due to a fall of ground incident, Mr Ntandazo Dlela (47), a team
leader who worked for one of our mining contractors, was fatally wounded. In the same incident, his
colleague Mr Mzubanzi Nkomo, was injured but has since fully recovered.
The safety of all our employees remains a critical focus area and all efforts continue to be made to ensure
that the highest standards of safety remain in place at all the Venture's operations. Continued focus on our
catastrophic hazards and assurance verification of critical controls continue into 2019.
Operational Review
Merafe's attributable ferrochrome production from the Venture for the year ended 31 December 2018 increased
to a new record high of 407kt (2017: 395kt) which is equivalent to installed capacity utilisation of 85%.
A number of annual production records were once again achieved during 2018 including ferrochrome production
at the Lion smelter and the Wonderkop smelter as well as an annual pellet production record at the
Bokamoso sintering plant at the Wonderkop smelter.
Total production cost per tonne of ferrochrome increased by 9% despite inflationary pressures.
This was achieved as a result of:
- time in use management during the high electricity tariff winter months;
- increased production that diluted overheads;
- electricity tariff increases of only 5.2% effective 1 April 2018; and
- ongoing operational cost control initiatives.
The electricity situation in the country is concerning given the financial, structural and operational
challenges that face Eskom. Eskom's situation exposes the Venture, and indeed the entire country, to both tariff
and electricity supply risks. The Venture continues to monitor the situation through involvement in various
committees between the industry and Eskom. Additionally, the Venture continues to explore energy efficient means
of producing our products. These various initiatives have contributed to the Venture remaining the lowest cost
ferrochrome producer in South Africa.
The Venture has been able to conclude three-year agreements with our unions at all our operations except the
eastern mines. This brings about welcome certainty for the business as well as for our employees.
Market Review
In 2018, global stainless steel production is estimated to have increased by 6.1%^ year on year, on par with
2017's increased production, despite increasing macroeconomic uncertainty in key producing regions.
Asia continued to be the major source of increase in production. Indonesian production reached 2.3 million^
tons in 2018 and was the primary driver of global growth, largely as a result of stainless steel projects
commissioned during 2017, recording their first full year of production. India's year on year production
growth rate is estimated to have reached 9.2%^ in 2018, a significant increase from the growth rate seen
in 2017. Total annual production in China is estimated to have reached 26.6 million^ tons in 2018, with
all time high production having occurred during Q4. China's full year melt accounted for an estimated
51.7%^ of global output.
Production in the rest of the world mostly held firm year on year. Total US production is estimated to
have increased by 1.3%^ from 2017, while Europe's production is estimated to have remained largely flat
year on year.
Growth in stainless steel melt rates translated into healthy demand for ferrochrome throughout most of the
year. During Q1 and Q2 of 2018, power supply issues coupled with environmental inspections intermittently
disrupted Chinese ferrochrome production, particularly in Inner Mongolia. During these periods, China's
role as swing producer of ferrochrome was reinforced, as spot prices increased due to lower availability
of domestically produced Chinese ferrochrome.
Global ferrochrome production in 2018 is estimated to have reached 13.4 million^ tons, matching the
stainless steel growth rate of 6.1%^ year on year. China's domestic production is estimated to have
increased by 8.5%^ year on year, exceeding South Africa's growth of 5.3%^.
As a result of ferrochrome production growth in China, demand for South African chrome ore increased further
in 2018. According to official customs statistics, China imported a total of 14.3 million* tons of chrome ore
during the year, 3.1%* more than in 2017. The share of imported South African ore increased to 76.1%*, up
from 72.3%* a year earlier, realising a 8.5%* growth rate year on year.
Outlook
Global GDP and stainless steel production are both forecast to grow in 2019 with Indonesia's contribution
to the stainless steel industry continuing to become more meaningful. This will underpin projected growth
in demand for ferrochrome. The Venture's past and continued investment in the efficiency of its operations
enables it to take advantage of expansion in the market. Locally, Eskom remains a key risk factor for the
Venture in 2019.
In accordance with our strategy, we remain committed to maximising return to our shareholders in the near
term in the form of dividends and will continue to assess opportunities to deliver shareholder value.
Chris Molefe Zanele Matlala
Independent Non-executive Chairman Chief Executive Officer
Sandton
11 March 2019
* GTA Global Trade International Services
^ CRU commodity market analysts
Summarised consolidated financial statements
The following summarised financial statements were not audited, however, the information has been extracted
from the audited consolidated annual financial statements.
Summarised consolidated statement of comprehensive income
For the year ended
31 December 31 December
2018 2017
Audited Audited
R'000 R'000
Revenue 5 606 324 5 888 945
EBITDA 1 345 940 1 665 259
Depreciation (405 548) (368 212)
Net Financing income (expense) 4 082 (19 325)
Profit before taxation 944 475 1 277 722
Taxation (261 059) (363 604)
Profit and total comprehensive income for the year 683 416 914 118
Basic earnings per share (cents) 27.2 36.4
Diluted earnings per share (cents) 27.2 36.4
Ordinary shares in issue 2 510 704 248 2 510 704 248
Weighted average number of shares for the year 2 510 704 248 2 510 704 248
Diluted weighted average number of shares for the year 2 510 704 248 2 510 704 248
Summarised consolidated statement of financial position
As at
31 December
31 December 2017
2018 Audited
Audited R'000
R'000 (Restated)
Assets
Property, plant and equipment 3 277 588 3 271 155
Investment in subsidiaries** - -
Long term receivable 12 995 13 864
Deferred tax asset 17 945 17 726
Total non-current assets 3 308 528 3 302 745
Inventories*** 2 042 621 1 497 798
Current tax asset 26 368 -
Trade and other receivables 920 231 883 249
Cash and cash equivalents 282 037 671 655
Total current assets 3 271 257 3 052 702
Total assets 6 579 785 6 355 447
Equity - -
Share capital 25 107 25 107
Share premium 1 269 575 1 269 575
Retained earnings 3 598 296 3 340 843
Total equity attributable to equity holders 4 892 978 4 635 525
Liabilities
Loans and borrowings non-current 9 879 11 094
Share-based payment liability 3 518 5 379
Provisions 371 904 287 518
Deferred tax liability 751 103 780 485
Total non-current liabilities 1 136 404 1 084 476
Loans and borrowings current 1 233 1 044
Trade and other payables 544 731 550 556
Working capital loan* - 72 272
Share-based payment liability 3 257 3 376
Bank overdraft 1 182 -
Current tax liability - 8 198
Total current liabilities 550 403 635 446
Total liabilities 1 686 807 1 719 922
Total equity and liabilities 6 579 785 6 355 447
* The working capital loan was reclassified from trade and other receivables to a current
liability in the 2017 year. This was also a prior period error.
** Less than one thousand.
*** Inventory of R8.3 million (2017: Rnil) was written down in the 2018 financial year.
Statement of changes in equity
For the year ended
31 December 31 December
2018 2017
Audited Audited
R'000 R'000
Issued share capital - ordinary shares 25 107 25 107
Balance at the beginning and end of the year 25 107 25 107
Share premium - ordinary shares 1 269 575 1 269 575
Balance at beginning and end of the year 1 269 575 1 269 575
Retained earnings 3 598 296 3 340 843
Balance at beginning of the year 3 340 843 2 602 474
Total comprehensive income for the year 683 416 914 118
Dividends paid (425 963) (175 749)
Total equity for the end of the year 4 892 978 4 635 525
Summarised consolidated statement of cash flow
For the year ended
31 December 31 December
2018 2017
Audited Audited
R'000 R'000
Profit before tax 944 475 1 277 722
Depreciation 405 548 368 212
Finance income (18 595) (8 633)
Finance expense 14 512 27 958
Share-based payment expense 3 097 5 588
Share grants exercised (5 077) (11 053)
Embedded derivative expense 34 570 155 852
Provisions 84 386 135 771
Effect of exchange rate fluctuations on cash held during the year 30 042 47 175
Adjusted for working capital changes (705 332) (219 666)
Cash generated from operating activities 787 627 1 778 926
Interest paid (968) (21 125)
Interest received 17 253 8 514
Taxation paid (325 417) (366 441)
Net cash from operating activities 478 495 1 399 874
Sustaining capital expenditure (412 074) (402 973)
Expansionary capital expenditure (190) (823)
Net cash utilised in investing activities (412 264) (403 796)
Dividends paid (425 963) (175 749)
Loans repaid during the year (1 026) (364 803)
Net cash utilised in financing activities (426 989) (540 552)
Net (decrease)/increase in cash and cash equivalents (360 758) 455 526
Cash and cash equivalents at 1 January 671 655 263 304
Effect of foreign exchange rate changes (30 042) (47 175)
Cash and cash equivalents at 31 December 280 855 671 655
Notes to the summarised consolidated financial statements
1. Basis of preparation
On 8 March 2019, the Board of directors (the Board) of Merafe Resources Limited (the Company) approved
the audited consolidated annual financial statements of the Merafe Group (Group) and the Company for
the year ended 31 December 2018.
These summarised consolidated financial statements have been prepared under the supervision of
Ditabe Chocho CA(SA) (Financial Director), in accordance with the framework concepts, the measurement
and recognition requirements of International Financial Reporting Standards (IFRS), the requirements
of the Companies Act 71 of 2008, as amended, the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, the Financial Pronouncements as issued by Financial Reporting Standards
Council and as a minimum contain the information required by IAS 34 Interim Financial Reporting.
The Board takes full responsibility for the preparation of the summarised consolidated financial statements,
which are unaudited and unreviewed. The financial information has been extracted from the underlying audited
consolidated annual financial statements.
The accounting policies applied in the preparation of the audited consolidated annual financial statements
from which the summarised consolidated financial statements were derived are in terms of IFRS and are
consistent with those accounting policies applied in the preparation of the previous years audited
consolidated annual financial statements.
The consolidated annual financial statements from which the summarised consolidated financial statements
were derived have been audited by the Group's auditors, Deloitte & Touche. Their unmodified audit report
and the audited consolidated annual financial statements are available for inspection at Merafe's registered
office and on our website (http://www.meraferesources.co.za/stake-annual-results.php).
1.1 Accounting policies
The accounting policies applied in the preparation of these results are in terms of IFRS and are consistent
with those applied in the previous consolidated annual financial statements, except for the adoption of
various revised and/or new standards. For the impact of adoption of new standards, refer to note 1 of the
accounting policies disclosures in the annual financial statements. The Group did not early adopt any new,
revised or amended accounting standards or interpretations.
1.2 Critical accounting judgements and key sources of estimation uncertainty
The preparation of the summarised consolidated financial statements requires management to make judgements,
estimates and assumptions that affect the application of accounting policies and the reported amounts of
assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical
experience and various other factors that are believed to be reasonable under the circumstances, the results
of which form the basis of making the judgements about carrying values of assets and liabilities that are
not readily apparent from other sources. Actual results may differ from these estimates.
The estimates are reviewed on an ongoing basis. Underlying assumptions are also reviewed on an ongoing
basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised.
In particular, information about significant areas of estimation, uncertainty and critical judgements in
applying accounting policies that have the most significant effect on the amount recognised in the
summarised consolidated financial statements are as follows:
- Measurement of depreciation and impairment, useful lives and residual values of property,
plant and equipment
- Inputs used in the determination of the fair value of the share-based payment transactions
- Lease classification between operating and finance lease and depreciation of finance lease assets
- Assumptions used in calculation of the life of the mines/smelters, estimation of the closure and
restoration costs and inputs used in the calculation of the present value of the provision for
closure and restoration costs
- Recognition of deferred tax asset and projection of future taxable income to recover the deferred
tax asset
- Consolidation: control assessment
- Fair value measurement of embedded derivative
These disclosures are included in the audited consolidated annual financial statements.
2. Determination of fair values
A number of the accounting policies and disclosures require the determination of fair value, for both
financial and non-financial assets and liabilities.
Fair values have been determined for measurement and/or disclosure purposes based on the methods as
indicated below.
2.1 Embedded derivatives
The embedded derivative is included in trade and other payables at fair value. The fair value of the
embedded derivative is based on the latest available ferrochrome prices and closing foreign exchange
rate. The embedded derivative at 31 December 2018 was R48.7 million liability (2017: R35.2 million asset)
and is based on level 2 hierarchy per IFRS 13. The valuation is based on observable market inputs of
prices and exchange rates.
2.2 Share-based payment transactions
The fair value of employee share options and share grants is measured using the Black-Scholes Merton model.
Measurement inputs include share price on measurement date, exercise price of the instrument, expected
volatility (based on weighted average historic volatility adjusted for changes expected due to publicly
available information), weighted average expected life of the instruments (based on historical experience
and general option holder behaviour), expected dividends, and the risk-free interest rate (based on
Government bonds).
3. Prior period error
The Group has restated its previously reported financial statements as at 31 December 2017 and updated
the relevant disclosures. In the prior year, the working capital loan was initially incorrectly disclosed
under trade receivables and other receivables. The loan was subsequently correctly disclosed as a liability.
However, the correction was erroneously disclosed as a reclassification instead of a prior period error.
The impact of the restatement was an increase in current assets and an increase in current liabilities by
an amount of R72.2 million.
For the year ended
Post Pre
restatement restatement
2017 2017
R'000 R'000
Trade receivables 883 249 810 977
Working capital loan liability (72 272) -
For the year ended
31 December 31 December
2018 2017
Audited Audited
R'000 R'000
4. Headline earnings per share (cents) 27.2 36.4
Diluted headline earnings per share (cents) 27.2 36.4
Profit, total comprehensive income for 683 416 914 118
the year and headline earnings
5. Capital Commitments 178 957 184 089
Contracted but not provided for 47 335 52 448
Authorised but not contracted for 131 622 131 641
6. Related parties
Related party transactions and balances
During the current financial year, management performed a re-assessment of its Related Party
relationships in accordance with IAS 24, Related Party Disclosures. The Glencore Plc Group is
a related party taking into consideration the shareholding and related significant influence
coupled with the substance of the relationship. Significant transactions and balances with all
entities within the Glencore Plc Group are therefore disclosed together with the comparative
figures.
All related party transactions were concluded on an arms-length basis and relate to Merafe's
attributable 20.5% interest in the Venture. There are no outstanding commitments at year end.
Name of related Description of Transactions and
party relationship balance#
The Venture In July 2004, Glencore and Merafe Refer note 23.4 for the amounts that are
Ferrochrome pooled and shared included in the consolidated financial
ferrochrome assets to form the statements of the group.
Venture.
Merafe Chrome Merafe Chrome is a wholly owned Dividends were paid to the Company by Merafe
and Alloys subsidiary of the Company. Chrome of R425 million (2017: R175 million).
(Pty) Ltd
A loan account is recognised with the Company and
Merafe Ferrochrome as per note 3. The balance owing
to the Company is R1.75 billion (2017: R1.5 billion).
The loan account is of a long-term nature, is
interest free, unsecured and does not have
fixed repayment terms.
Merafe Ferrochrome Merafe Ferrochrome is a The Company charges Merafe Ferrochrome a
and Mining (Pty) Ltd wholly-owned subsidiary of management fee as per note 15. Dividends were paid
Merafe Chrome. to Merafe Chrome of R425 million (2017: R175 million).
At year end a loan of R459 million (2017: R226 million)
is owing by Merafe Resources to Merafe Ferrochrome as
per note 14. The loan account is of a short-term
nature, is interest free, unsecured and does not
have fixed repayment terms.
Merafe Kroondal The Trust, which was registered on There is a loan of R108k (2017: R97k) with the Company
Rehabilitation 31 May 2006, was established to which relates to the payment of audit
Trust (SE) provide funds for the rehabilitation fees.
of land involved in any prospecting
or mining operations of Merafe The loan account is of a long-term nature,
Ferrochrome of the Kroondal is interest free, unsecured and does not have
mine and to discharge any liability fixed repayment terms.
which might arise in terms of the
Atmospheric Pollution Prevention
Act of 1965, the Environment
Conservation Act, No. 50 of
1991,the Water Act, No. 54 of 1956
and any such other legislation as
may be enacted in the future.
The environmental obligations and
correspondingliability remains the
sole responsibility of the Venture.
Merafe Resources The Trust was established for No transactions occurred during the year.
Limited the purpose of implementing the The trust is dormant.
Share Incentive company's share incentive scheme
Scheme in 1999. The trust operates and
administers share options which the
company may grant to participants.
Industrial Development The IDC holds 21.8% of the issued The IDC received the non-executive directors'
Corporation of share capital of the Company fees for Ms M Mosweu as disclosed in
South Africa Limited and has the ability to note 23.2. IDC received dividends declared by
Limited (IDC) exercise significant influence over the Company.
the Company as a result of
its shareholding. At year end there are no amounts due to the IDC.
Glencore (Nederland) GN holds 28.7% of the issued share No transactions occurred during the year.
B.V. (GN) capital of the Company and has the GN received dividends declared by the
ability to exercise significant Company.
influence over the Company as a
result of its shareholding.
PSG Konsult PSG holds 5.8% of the issued share No transactions occurred during the year.
capital of the Company and has the
ability to exercise significant
influence over the Company as a
result of its shareholding.
Mr C Molefe, Directors of the Company. Refer to note 23.2 for transactions
Ms M Mosweu, There were changes in the with directors.
Ms B Majova, directorate during 2018.
Mr A Mngomezulu,
Ms K Nondumo1,
Ms Z Matlala,
Ms K Bissessor2,
Mr S Blankfield,
Mr D Chocho3,
Ms M Vuso4
Glencore Limited GLS acts as the Venture's Sale of ferrochrome R468 million (2017: R738 million).
(Stamford) (GLS) exclusive marketing agent to sell
ferrochrome on its behalf and Commission expense R12 million (2017: R21 million).
acts as distributor in the USA and
Canada. Interest expense R5 million (2017: R5 million).
Receivable at the end of the year R131 million
(2017: R205 million) which is reduced as and when
GLS receives funds from customers.
Glencore Glencore International AG acts as Commission expense on sale of ferrochrome and chrome
International AG the Venture's exclusivemarketing ore R220 million (2017: R229 million).
agent to sell ferrochrome and
chrome ore on its behalf. Marketing fee expense R2 million (2017: R2 million).
The Venture purchases various raw Interest income R0.5 million (2017: R4 million).
materials from Glencore International
AG on an ongoing basis. Purchase of raw materials R227 million (2017: R227 million).
The Venture sells chrome ore to
Glencore International AG on an ad Sale of chrome ore Rnil (2017: Rnil).
hoc basis.
Balance owing at the end of the year R42 million
(2017: R36 million) payable on confirmation of
final sales.
African Carbon African Carbon Manufacturers Purchase of raw materials R17 million (2017: R18 million).
Manufacturers (Pty) Ltd sells raw materials to the
(Pty) Ltd Venture. Balance owing at the end of the year R2 million
(2017: R2 million) payable 30 days from statement date.
African Fine Carbon African Fine Carbon (Pty) Ltd sells Purchase of raw materials R37 million (2017: R22 million).
(Pty) Ltd raw materials to the Venture.
Balance owing at the end of the year R5 million
(2017: R3 million) payable 30 days from statement date.
Chartech Technology Chartech Technology (Pty) Ltd sells Purchase of raw materials R34 million (2017: R28 million).
(Pty) Ltd raw materials to the Venture.
Balance owing at the end of the year R4 million
(2017: R2 million) payable 30 days from statement date.
Glencore Property Glencore Property Management Lion housing lease Rnil million (2017: R6 million).
Management Company (Pty) Ltd owns and
Company (Pty) Ltd manages employee housing at the Balance owing at the end of the year Rnil (2017: Rnil).
Lion operation.
Glencore Operations GOSA is Merafe Ferrochrome and Employee costs R146 million (2017: R32 million).
South Africa Mining (Pty) Ltd's partner in
(Pty) Ltd (GOSA) the Venture. Head-office costs R19 million (2017: R23 million).
Training costs R7 million (2017: R4 million).
Lion housing R14 million (2017: R7 million).
Balance owing at the end of the year R7 million
(2017: R2 million) payable 10 days after month end.
GOSA received the non-executive directors' fees for
Mr S Blankfield as disclosed in note 23.2.
Access World Access World (South Africa) (Pty) Ltd Storage of ferrochrome and chrome ore R12 million
(South Africa) is a warehousing company that (2017: R12 million).
Pty Ltd provides storage facilities of
ferrochrome and chrome ore to the Outstanding balance owing at the end of the
Venture. year R1 million (2017: R3 million) payable
30 days after statement date.
1. Resigned on 8 May 2018.
2. Resigned on 31 August 2018.
3. Appointed 1 August 2018.
4. Appointed 30 July 2018.
# All reference to note numbers relates to reference in the consolidated financial statements of the Group.
7. Taxation
The Groups effective tax rate is 27.7% (2017: 28.5%) for the year ended 31 December 2018.
8. Events after the reporting period
Other than the dividend declared on 11 March 2019, there have been no material events subsequent to
the 31 December 2018.
9. Contingent liabilities
No contingent liabilities as at 31 December 2018.
10. Directors
Ms Matsotso Vuso was appointed as an independent non-executive director and as a chairman of the Company's
audit and risk committee effective 30 July 2018. She replaced Ms Karabo Nondumo, who resigned on 8 May 2018,
in the same capacity.
Ms Kajal Bissessor resigned as Financial Director effective 31 August 2018 and Mr Ditabe Chocho was appointed
effective 1 August 2018 as her replacement.
Ms Hlokammoni Grathel Motau was appointed as an independent non-executive director and as a member of the
Company's audit and risk committee effective 1 January 2019.
11. Declaration of an ordinary dividend for the year ended 31 December 2018
Notice is hereby given that on 11 March 2019 the Board declared a gross cash final ordinary dividend of
R150 642 255 (6 cents per share) to holders of ordinary shares. The dividend will be paid out of
income reserves.
The ordinary dividend will be subject to a local dividend tax rate of 20%. The net ordinary dividend, to
those shareholders who are not exempt from paying dividend tax, is therefore 4.8 cents per share and 6 cents
per share for shareholders exempt from paying dividend tax.
Merafe's income tax number is 9 550 008 602. The number of ordinary shares issued at the date of this
announcement is 2 510 704 248.
The important dates pertaining to the dividend are as follows:
Declaration date (as envisaged in the JSE Listings Requirements) Monday, 11 March 2019
Last day for ordinary shares to trade cum ordinary dividend: Tuesday, 26 March 2019
Ordinary shares commence trading ex-ordinary dividend: Wednesday, 27 March 2019
Record date: Friday, 29 March 2019
Payment date: Monday, 1 April 2019
Shares may not be dematerialised/rematerialised between Wednesday, 27 March 2019 and Friday, 29 March 2019,
both days inclusive. Where applicable, in terms of instructions received by the Company from certificated
shareholders, the payment of the dividend will be made electronically to shareholders' bank accounts on payment
date. In the absence of specific mandates, cheques will be posted to shareholders. Shareholders who have
dematerialised their shares will have their accounts with their CSDP or broker credited on Monday,
1 April 2019.
www.meraferesources.co.za
Date: 11/03/2019 08:00:00 Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited ('JSE').
The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of
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