| Wed 11 Jul 2007, 8:30 | | FCPD - Foord Compass - Preliminary Report For The |
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JSE FCPD
FCPD
FCPD - Foord Compass - Preliminary Report For The Six Months Ended 30 June 2007
And Interest Payment And Election
FOORD COMPASS LIMITED
(Incorporated in the Republic of South Africa)
(Registration number 1987/003591/06)
JSE code: FCPD ISIN: ZAE000054466
("the company")
PRELIMINARY REPORT FOR THE SIX MONTHS ENDED 30 JUNE 2007 AND INTEREST PAYMENT
AND ELECTION
BALANCE SHEET Unaudited Unaudited Audited
at 30 June 2007 30 June 30 June 31 Dec
2007 2006 2006
Notes R`m R`m R`m
ASSETS
Non-current assets
Long-term investments 278.5 223.5 285.4
Current assets 425.4 365.0 535.0
Net trading investments 2 27.0 285.6 (56.0)
Trade receivables and unsettled 16.0 16.6 541.9
sales
Cash 382.4 62.8 49.1
Total assets 703.9 588.5 820.4
EQUITY AND LIABILITIES
Capital and reserves 18.9 14.2 22.6
Ordinary share capital 0.1 0.1 0.1
Accumulated profits 18.8 14.1 22.5
Non-current liabilities 654.1 545.0 602.7
Unsecured debentures 3 632.4 545.0 584.5
Deferred taxation 21.7 - 18.2
Current liabilities 30.9 29.3 195.1
Accounts payable 3.0 4.4 13.5
Trade payables and unsettled - - 136.0
purchases
Debenture interest payable 27.9 24.9 45.6
Total equity and liabilities 703.9 588.5 820.4
Number of debentures in issue 77,562,099 75,543,777 75,543,777
Number of ordinary shares in 8,800,070 8,800,070 8,800,070
issue
Cents Cents Cents
Net attributable asset value per 851.347 754.504 834.251
debenture (cum interest)
Net attributable asset value per 815.347 721.504 773.846
debenture (ex interest)
Net attributable asset value per 214.771 161.760 255.705
ordinary share
INCOME STATEMENT Unaudited Unaudited Audited
6 months 6 months Year ended
to to
30 June 30 June 31 Dec
2007 2006 2006
Notes R`m R`m R`m
Investment income 8.2 20.5 36.8
Realised trading profits 46.8 15.3 61.5
Administration expenditure (5.0) (6.9) (19.9)
Net distributable profit 50.0 28.9 78.4
Unrealised trading profits 3.1 (1.8) 9.5
(losses)
Realised profits on sale of long- 19.8 6.9 8.0
term investments
Revaluation of long-term (4.6) 25.2 75.1
investments
Net portfolio income before 68.3 59.2 171.0
debenture interest
Debenture interest (27.9) (24.9) (70.6)
Revaluation of debentures 3 (30.5) (28.5) (68.0)
Profit before taxation 9.9 5.8 32.4
Taxation expense 4 (3.5) (0.1) (18.3)
Profit for the period 6.4 5.7 14.1
Cents Cents Cents
Debenture interest per debenture 36.000 33.000 93.404
Earnings per debenture 75.295 70.750 191.044
Earnings per ordinary share 72.727 66.215 160.413
STATEMENT OF CHANGES IN Ordinary Accumulated
SHAREHOLDERS` EQUITY
share profits Total
capital
R`m R`m R`m
Balance at 1 January 2006 0.1 14.0 14.1
Dividends - (5.6) (5.6)
Profit for the year - 14.1 14.1
Balance at 31 Dec 2006 0.1 22.5 22.6
Dividends - (10.1) (10.1)
Profit for the period - 6.4 6.4
Balance at 30 June 2007 0.1 18.8 18.9
Balance at 1 January 2006 0.1 14.0 14.1
Dividends - (5.6) (5.6)
Profit for the period - 5.7 5.7
Balance at 30 June 2006 0.1 14.1 14.2
CASH FLOW STATEMENT Unaudited Unaudited Audited
6 months 6 months Year ended
to to
30 June 30 June 31 Dec
2007 2006 2006
R`m R`m R`m
Net cash inflow (outflow) from 293.8 (190.0) (192.7)
trading activities
Net cash inflow (outflow) from 22.1 (48.1) (59.1)
investing activities
Net cash received from issue of 17.4 247.2 247.2
debentures
Net increase (decrease) in cash 333.3 9.1 (4.6)
resources
Cash resources at beginning of 49.1 53.7 53.7
period
Cash resources at end of period 382.4 62.8 49.1
NOTES TO THE PRELIMINARY REPORT
1. Accounting policies
These interim financial statements are prepared in accordance with International
Financial Reporting Standards ("IFRS"). The principal accounting policies used
in the preparation of these financial statements in terms of IFRS are consistent
with those applied for the year ended 31 December 2006.
2. Net trading investments Unaudited Unaudited Audited
30 June 2007 30 June 2006 31 Dec 2006
R`m R`m R`m
Gross long positions 412.0 312.9 290.3
Gross short positions (385.0) (27.3) (346.3)
Net trading investments 27.0 285.6 (56.0)
3. Unsecured debentures
Unaudited Unaudited Audited
30 June 2007 30 June 2006 31 Dec 2006
R`m R`m R`m
Unsecured debentures comprise
Debenture capital at issue price 445.2 427.8 427.8
Cumulative revaluation of 187.2 117.2 156.7
debentures
Fair value of debentures 632.4 545.0 584.5
Reconciliation of balance
Balance at beginning of period 584.5 269.3 269.3
Net proceeds on issue of 17.4 247.2 247.2
debentures
Revaluation - current period 30.5 28.5 68.0
Balance at end of period 632.4 545.0 584.5
Revaluation of debentures
Net portfolio income before 68.3 59.2 171.0
debenture interest
90% allocation to debenture 61.5 53.4 153.9
holders
Less: proportionate share of (3.1) - (15.3)
normal taxation expense
Less: interest distribution for (27.9) (24.9) (70.6)
the period
Revaluation - current period 30.5 28.5 68.0
4. Taxation
The taxation expense for the period relates to a deferred taxation charge (30
June 2006: a charge for secondary tax on companies). The company has an
estimated taxation loss for normal taxation purposes of R4.6 million at 30 June
2007 (30 June 2006: R15.3 million) which is available to be set off against
future taxable income. The estimated benefit, which at current taxation rates
amounts to R1.3 million (30 June 2006: R4.5 million), has been utilised to
reduce the deferred taxation liability disclosed on the balance sheet.
COMMENT
The board is pleased to announce an interim interest distribution of 36 cents
per debenture, an increase of 3 cents per debenture over the distribution for
the corresponding period last year. The distribution results in an income yield
on the debentures of 4.7% for the half year. A capital return of 5.1% brings
the total return on the debentures to 9.8% for the six months ended 30 June 2007
(30 June 2006: 10.3%). Annualised net asset value returns on the debentures
since 1 January 2002 are 26.1% per year.
Debentures earned the following Unaudited Unaudited Audited
returns for the period:
6 months 6 months Year to
to to
30 June 30 June 31 Dec
2007 2006 2006
Income 4.7% 4.8% 13.7%
Capital 5.1% 5.5% 13.0%
Total return * 9.8% 10.3% 26.7%
Benchmark (CPI + 10% per annum) ** 8.9% 7.4% 15.8%
* Calculated with reference to monthly net attributable asset values per
debenture
** Lagged one month
Our annual report commented on the risks of short-term setbacks or volatility
within South African equities and listed property. With the market having
achieved a 15% return in the six months to June, these risks have not
diminished. To manage the risk of capital loss, the net effective exposure to
equities and property has been reduced. The conviction that bond prices will
weaken on rising interest rate and inflation expectations remains. The fund has
benefited from its short exposure to bonds and the fund manager expects further
gains in this area.
The major strategy changes in the reporting period reflect the concerns about
rising inflation and hence interest rates. Allocations to South African equity
and property have been reduced, while the allocation to foreign assets has been
increased. The manager believes that foreign valuations and earnings prospects
are more favourable than in South Africa. Investment in offshore assets adds
significant risk diversification benefits. The portfolio remains almost equally
apportioned between the long-term and trading portfolios.
The asset allocation of the portfolio at 30 June 2007 (at effective economic
exposures) is as follows:
30 June 31 Dec
2007 2006
Equities (net position) 29% 52%
Listed property 12% 20%
Fixed interest -40% -39%
Foreign assets 34% 4%
Cash 65% 63%
100% 100%
ISSUE OF DEBENTURES FOR CASH
The directors announce that the company has placed debentures to the value of
R465 million with selected institutional investors ("the cash issue") subsequent
to 30 June 2007. The issue was in response to specified demand for the
debentures in volumes that could not be acquired in the market. The debenture
issue takes the debenture capital to over R1 billion and therefore satisfies the
long-term objectives the board set for achieving meaningful size and a balanced
debenture holder spread. Issues of this magnitude will not be considered for at
least another three years. The focus will continue to be on generating returns
in excess of CPI + 10%, however the board acknowledges the increased challenge
arising from managing a larger portfolio.
The cash issue debentures will be issued at the ex-interest net attributable
asset value determined as at 30 June 2007, amounting to 815.347 cents per
debenture. The cash issue debentures will not participate in interest
distribution number 40, and accordingly the distribution to existing debenture
holders will not be diluted. The financial effects of the cash issue will be
to:
- increase the carrying value of the debentures to R1 098 million; and
- increase the number of debentures in issue to 134,591,017.
The cash issue is subject to the listing of the cash issue debentures by the JSE
Limited ("the JSE") and application will be made for the cash issue debentures
to be listed on the JSE on 30 July 2007.
INTEREST PAYMENT AND ELECTION
Notice is hereby given that a debenture interest payment (number 40) of 36 cents
per debenture in respect of the six months ended 30 June 2007 is payable to
debenture holders recorded in the debenture register of the company on the
record date. The last day to trade in the debentures for purposes of
entitlement to the interest payment will be Friday, 27 July 2007. The
debentures will commence trading ex the interest payment on Monday, 30 July 2007
and the record date will be Friday, 3 August 2007. The interest will be payable
on Monday, 6 August 2007. Debenture certificates may not be dematerialised or
rematerialised between Monday, 30 July 2007 and Friday, 3 August 2007, both days
inclusive.
IMPORTANT: ELECTION TO RECEIVE A CASH INTEREST PAYMENT
As provided for in section 6.4 of the Debenture Trust Deed, the board has
resolved that the debenture interest payment will be settled by the issue of
debentures to debenture holders recorded in the debenture register at the close
of business on the record date ("the interest debentures"). The motivation for
this decision is to retain cash and build capital for debenture holders.
Debenture holders may, however, elect to receive a cash interest payment instead
of the interest debentures ("the cash election"). The tax implications of the
settlement of the debenture interest payment by the issue of interest debentures
or by the payment of cash should be the same. However, debenture holders are
encouraged to consult their professional advisors should they be in any doubt as
to the appropriate action to take.
Certificated debenture holders who wish to elect to receive the cash interest
payment in respect of all or a part of their debenture holding, must complete
the Form of Election (mailed under separate cover) in accordance with the
instructions therein and return such election form to the company`s transfer
secretaries to be received by no later than 12:00 on the record date, being
Friday, 3 August 2007. Dematerialised debenture holders who wish to elect to
receive the cash interest payment in respect of all or a part of their debenture
holding must, in terms of the agreement between themselves and their CSDP or
broker, instruct their CSDP or broker accordingly.
If the cash election is not made by dematerialised debenture holders by the cut-
off time stipulated by their CSDP or broker, or by 12:00 on Friday, 3 August
2007 in the case of certificated debenture holders, debenture holders will be
deemed to have elected to receive new fully paid Foord Compass Limited Variable
Rate debentures. As indicated above, the last day to trade in the company`s
debentures on the JSE to ensure a purchaser appears as an owner on the record
date will be Friday, 27 July 2007. The number of interest debentures to be
issued ("the ratio") will be determined with reference to the weighted average
traded price of the debentures on the JSE for the five trading days ending at
the close of business on Thursday, 19 July 2007, less the interest distribution
of 36 cents. Debenture holders will be notified of the ratio on the
finalisation date, being Friday, 20 July 2007. Only rounded numbers of interest
debentures will be issued based on conventional rounding principles. No
fractions will be paid. The right to receive interest debentures may not be
traded on the JSE.
Subject to JSE approval of the cash election, application will be made to the
JSE Limited for a listing of the maximum number of interest debentures to be
issued with effect from the commencement of business on Monday, 30 July 2007.
An adjustment to the number of interest debentures listed will be made on or
about Tuesday, 7 August 2007 in accordance with the actual number of interest
debentures issued having regard to the cash elections made.
Cheques and/or new debenture certificates will be posted by registered post to
certificated debenture holders and the safe custody accounts updated and/or
credited by CSDPs or brokers of dematerialised debenture holders on or about
Monday, 6 August 2007.
Signed on behalf of the board
CLR HIRSCHSOHN D FOORD
10 July 2007
Directors: CLR HIRSCHSOHN (Chairman), D FOORD*, JC GREYLING, MO HODGES*, DA
MOIR * British
Company secretary: PE CLUER
Date: 11/07/2007 08:30:02 Produced by the JSE SENS Department.
