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JSE NRD
THG
THG - Trackhedge (PROPRIETARY) Limited - Abridged audited annual financial
statements for the year ended 31 March 2008
TRACKHEDGE (PROPRIETARY) LIMITED
(Registration number 2003/008245/07)
Issuer code: THG
JSE Code: NRD
ISIN: ZAE000047841
NEWRAND INDEX SECURITIES
ABRIDGED AUDITED ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2008
INCOME STATEMENT
NewRand Trust
for the year ended 31 March 2008
Notes 2008 2007
R R
Revenue 19 335 551 21 959 052
Dividends 17 656 796 20 106 297
Fee income: Securities lending 1 355 309 1 623 434
Interest earned 323 446 229 321
Expenses
Management and administrative expenses 10 (4 353 683) (4 056 244)
Fair value adjustments 7 (2 222 937) (2 433 729)
Undistributed income before taxation 7 12 758 931 15 469 079
Income tax expense 11 -
Undistributed income attributable to
investors 12 758 931 15 469 053
BALANCE SHEET
at 31 March 2008
Notes 2008 2007
R R
Assets
Non current assets
Listed equities 2 420 558 908 902 581 066
Current assets 277 200 598 7 785 487
Trade and other receivables 3 275 309 383 1 470 831
Cash and cash equivalents 1 891 215 6 314 656
Total assets 697 759 506 910 366 553
Liabilities
Net assets attributable to investors 4 421 834 178 910 053 303
Trade and other payables 5 275 925 328 313 250
Total equity and liabilities 697 759 506 910 366 553
CASH FLOW STATEMENT
for the year ended 31 March 2008
Notes 2008 2007
Cash flow from operating
activities R R
Cash utilised by operations 13 (1 224 848) (351 753)
Interest income 323 446 229 321
Dividends paid (18 955 898) (16 866 892)
Dividends received 17 656 796 20 106 297
Net cash (outflow)/inflow from
operating activities (2 200 504) 3 116 973
Cash outflow from investing
activities (2 222 937) (2 433 730)
Purchases of equities 14 (195 772 430) (591 134 309)
Proceeds from sale of equities 193 549 493 588 700 579
Net (decrease)/increase in cash
and cash equivalents (4 423 441) 683 243
Cash and cash equivalents at the
beginning of year 6 314 656 5 631 413
Cash and cash equivalents at the
end of year 1 891 215 6 314 656
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO INVESTORS
for the year ended 31 March 2008
Capital Income
attributable to attributable to
investors investors Total
R R R
Opening balance as at
1 April 2006 1 578 367 294 8 870 050 1 587 237 344
Undistributed
income/(loss)
attributable to
investors (1 397 813) (1 397 813)
Liquidation of
securities (922 253 548) (922 253 548)
Revaluation of
securities 246 467 320 246 467 320
Balance at
31 March 2007 902 581 066 7 472 237 910 053 303
Profit for the year
before distribution 12 758 931 12 758 931
Income distributions (18 955 898) (18 955 898)
Liquidation of
securities (532 289 761) (532 289 761)
Revaluation of
securities 50 267 603 50 267 603
Balance at 31 March 2008 420 558 908 1 275 270 421 834 178
NOTES TO THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2008
1. Accounting policies
The financial statements incorporate the principle accounting policies set out
below which have been applied consistently by NewRand Trust.
1.1 Statement of compliance
The financial statements are prepared in accordance with International
Financial Reporting Standards (IFRS) and it`s interpretations by the
International Financial Standards Board (IASB), and in the manner required by
the Trust Deed.
1.2 Basis of measurement
The financial statements have been prepared on a historical cost basis, except
for financial instruments, which are accounted for as set out in note 1.3
1.3 Financial instruments
Measurement
Non-derivative financial instruments comprise investments in equity and debt
securities, trade and other receivables, cash and cash equivalents, loans and
borrowings, trades and other payables.
Non-derivative financial instruments classified at fair value through profit or
loss if it is held or is designated as such upon initial recognition. Financial
instruments are designated at fair value through profit or loss if the Trust
manages investments and makes purchase and sale decisions based on their fair
value in accordance with the Trust`s risk management strategy. Upon initial
recognition, attributable transaction costs are recognised in profit or loss
when incurred. Subsequent to initial recognition non-derivative financial
instruments are measured as described below.
Cash and cash equivalents comprise cash balances and call deposits.
Fair value movements on financial liabilities and listed equities
The carrying value of the liability at fair value is the amount which NewRand
Trust is contractually required to pay to Trackhedge (Proprietary) Limited on
demand.
The value of the financial liability is affected by market value of the
underlying portfolio of equities, this is determined with reference to the
stock exchange quoted selling prices.
1.3 Financial instruments
Financial instruments designated at fair value
Financial liabilities designated at fair value through profit and loss. The
fair value designation, once made, is irrevocable. Measurement is initially at
fair value, with transaction costs taken directly to the income statement.
Subsequently, the fair value is remeasured, and gains and losses from changes
therein are recognised in profit and loss. The fair value will be as stated
above.
Other
Other non-derivative financial instruments are measured at amortised cost using
effective interest method, less any impairment losses.
Offset
Financial assets and financial liabilities are offset and the net amount
reported in the balance sheet when the Trust has a legally enforceable right to
set off the recognised amounts, and intends either to settle on a net basis, or
to realise the asset and settle the liability simultaneously.
Gains and losses on subsequent measurement
Unrealised gains and losses arising from a change in the fair value of
financial instruments are included in net profit or loss in the period in which
the change arises.
Derecognition of financial instruments
The trust derecognises a financial asset when and only when:
- The contractual rights to the cash flows arising from the financial assets
have expired or being forfeited by the trust; or
- It transfers the financial asset including substantially all the risks and
rewards of ownership of the assets; or
- It transfers the financial asset, neither retaining nor transferring
substantially all the risks and rewards of ownership of the asset, but no
longer retains control of the assets.
A financial liability is derecognised when and only when the liability is
extinguished, that is, when the obligation specified in the contract is
discharged, cancelled or has expired.
The difference between the carrying amount of a financial liability (or part
thereof) extinguished or transferred to another party and consideration paid,
including any non-cash assets transferred or liabilities assumed, is recognised
in the income statement.
1.4 Revenue
Revenue comprises fee income from securities lending activities and investment
income.
Securities lending fee income
The fees earned for the administration of securities lending activities are
accounted for on an accrual basis in the period in which the service is
rendered.
Finance income
Interest is recognised on a time proportion basis, taking account of the
principal outstanding and the effective interest rate over the period to
maturity, when it is probable that such income will accrue to the Trust.
Dividend income
Dividend income is recognised in profit and loss on the date that the Trust`s
right to receive payment is established.
1.5 Taxation
Income tax on the profit or loss for the period comprises current and deferred
tax. Income tax is recognised in the income statement except to the extent that
it relates to items recognised directly to equity, in which case it is
recognised in equity.
Current tax is the expected tax payable on the taxable income for the period,
using tax rates enacted or substantively enacted at the balance sheet date, and
any adjustment to tax payable in respect of previous periods.
Deferred taxation is provided using the balance sheet method based on temporary
differences. Temporary differences are differences between the carrying amount
of assets and liabilities for financial reporting purposes and their tax base.
The amount of deferred taxation provided is based on the expected manner of
realisation or settlement of the carrying amount of assets and liabilities
using tax rates enacted or substantively enacted at the balance sheet date.
Deferred taxation is charged to the income statement except to the extent that
it relates to a transaction that is recognised directly in equity, or a
business combination that is an acquisition. The effect on deferred taxation of
any changes in tax rates is recognised in the income statement, except to the
extent that it relates to items previously charged or credited directly to
equity.
Deferred tax assets and liabilities are offset if there is a legally
enforceable right to offset current tax liabilities and assets, and they relate
to income taxes levied by the same tax authority on the same taxable entity.
A deferred tax asset is recognised to the extent that it is probable that the
future taxable income will be available, against which the unutilised tax
losses and deductible temporary differences can be used. Deferred tax assets
are reviewed at each reporting and are reduced to the extent that it is no
longer probable that the related tax benefits will be realised.
1.6 Impairments
A financial asset is assessed at each reporting date to determine whether there
is any objective evidence that it is impaired. A financial asset is considered
to be impaired if objective evidence indicates that one or more events have had
a negative effect on the estimated future cash flows of that asset.
An impairment loss in respect of a financial asset measured at amortised cost
is calculated as the difference between the assets carrying amount, and the
present value of estimated future cash flows discounted at the financial
asset`s original effective interest rate.
All impairment losses are recognised in profit and loss.
An impairment loss is reversed if the reversal can be related to an event
occurring after the impairment loss was recognised. For financial asset
measured at cost and available-for-sale financial assets that are debts
securities, the reversal is recognised in profit or loss.
1.7 Provisions
Provisions are recognised when the Trust has a present legal or constructive
obligation as a result of past events, for which it is probable that an outflow
of economic benefits will occur, and where a reliable estimate can be made of
the amount of the obligation. Where the effect of discounting is material,
provisions are determined by discounting the expected future cash flows at a
pre-tax rate that reflects current market assessments of the time value of
money and, where appropriate, the risk specific to the liability.
Future operating costs or losses are not provided for.
1.8 New standard and interpretations adopted in the current year.
The following standards, amendments to standards, and interpretations,
effective for the first time in the current accounting period, and which are
relevant to the Trust, have been adopted in these financial statements:
- IAS 1 amendment, `Additional disclosures in relation to an entity`s capital`
(effective 1 January 2007); and
- IFRS 7 `Financial Instruments: Disclosures` (effective 1 January 2007). IFRS
7 supersedes IAS 32 `Financial Instruments: Disclosure and Presentation`. In
particular, IFRS 7 requires additional disclosure over and above that required
by IAS 32 in respect of:
(i) The significance of financial instruments for an entity`s financial
position and performance;
(ii) The nature and extent of risks arising from financial instruments; and
(iii) Capital objectives and policies.
1.9 Forthcoming requirements
The following standards, amendments to standards, and interpretations,
effective in future accounting periods, and which are relevant to the Trust
have not been early adopted in these financial statements:
- IAS 1 `Presentation of Financial Statements` (effective 1 January 2009). The
changes include a comprehensive revision of primary statements, and include a
requirement to introduce a statement of comprehensive income. There will be
some limited presentational changes as a result of the introduction of this
standard but no changes in measurement or recognition.
NEWRAND TRUST
TRUSTEES` REPORT FOR THE YEAR ENDED 31 MARCH 2008
The Trustees have pleasure in presenting their report for the year ended
31 March 2008.
Nature of business
NewRand Trust ("Trust") is a discretionary trust registered with the Master of
the High Court under number IT 3464/03. The Trustee is independent and has been
appointed by the Directors of Trackhedge (Proprietary) Limited (Registration
number 2003/008245/07) ("the Issuer").
The NewRand Trust pursues the objective of replicating, as far as possible and
practicable, the price and yield performance of the NewRand Index ("Index"), by
holding a portfolio that substantially represents all of the shares contained
in the Index in substantially the same weightings as they are included in the
Index. The composition of the NewRand Trust`s underlying portfolio is adjusted
periodically to conform to changes in the composition and weightings of the
shares in the Index, so as to ensure that the composition and weighting of the
underlying portfolio is, in so far as possible, a reflection of the composition
and weighting of the shares contained in the Index.
The principal capital beneficiary of the NewRand Trust is referred to as the
Issuer. Discretionary income beneficiaries of the NewRand Trust are the Issuer
and the holders of NewRand Index Securities ("Holders"). Holders are also
discretionary capital beneficiaries of the NewRand Trust, with respect to the
capital gains earned in any year by the NewRand Trust from tracking activities.
It is anticipated that the distribution amount of the NewRand Trust (comprising
dividends, manufactured dividends, interest and securities lending fees, less
expenses) shall be distributed quarterly to Holders, pro rata according to the
number of NewRand Index Securities held by each Holder. Holders shall have no
beneficial interest in the underlying portfolio.
Although the underlying portfolio is held by the NewRand Trust, Holders will
have no rights against the NewRand Trust, or in respect of its assets, or the
income earned from those assets, save in respect of any award made by the
Trustee to the Holder pursuant to an exercise by the Trustee of its discretion
in favour of the Holder. The NewRand Trust is a discretionary trust established
solely to provide the Issuer with a means of hedging its contractual
obligations to Holders. The relationship between the NewRand Trust and Issuer
does not confer any rights on Holders. The contractual rights embodied in
NewRand Securities are exercisable solely against the Issuer.
NewRand Index Securities are created with an objective to track the performance
of NewRand Index, a customized index of Rand hedge shares created by Absa
Capital formerly "ACMB", a division of Absa Bank Limited and provided and
calculated by FTSE and the JSE Securities Exchange of South Africa ("JSE"). The
Index composition and calculation methodology were designed with an objective
to maximize long-term correlation with the Rand/USD exchange rate.
Trustee
The Trustee at the date of this report is;
Webber Wentzel Bowens Trustees IV (Proprietary) Limited
(Registration number 2003/008362/07)
ANNUAL FINANCIAL STATEMENTS
These annual financial statements have been audited by the independent auditors,
KPMG Inc., and their unqualified audit report is available for inspection at the
Company`s registered office.
30 June 2008
Sponsor
Java Capital (Proprietary) Limited
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