| Tue 21 Jul 2009, 12:31 | | FCPD - Foord Compass - Preliminary Report for the Six Months Ended 30 June 2009 |
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JSE FCPD
FCPD
FCPD - Foord Compass - Preliminary Report for the Six Months Ended 30 June 2009
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 2009 AND INTEREST PAYMENT
AND ELECTION
CONDENSED STATEMENT OF FINANCIAL POSITION
Unaudited Unaudited Audited
at 30 June 2009 30 June 30 June 31 Dec
2009 2008 2008
Notes R`m R`m R`m
ASSETS
Current assets
Investments 3 1005.7 1106.0 1224.8
Income receivables and unsettled 23.1 6.3 26.3
sales
Cash and deposits 528.8 414.3 388.6
Total assets 1557.6 1526.6 1639.7
EQUITY AND LIABILITIES
Capital and reserves 21.5 17.1 17.6
Ordinary share capital 0.1 0.1 0.1
Accumulated profits 21.4 17.0 17.5
Non-current liabilities 955.8 1024.8 952.8
Unsecured debentures 4 955.1 1017.0 950.7
Deferred taxation 0.7 7.8 2.1
Current liabilities 580.3 484.7 669.3
Accounts payable 2.2 2.0 2.1
Taxation 1.7 4.5 3.5
Short investment positions 519.7 428.3 579.0
Unsettled purchases 1.5 - 4.8
Debenture interest payable 55.2 49.9 79.9
Total equity and liabilities 1557.6 1526.6 1639.7
Number of debentures in issue 141575823 138635118 138730846
Number of ordinary shares in 8800070 8800070 8800070
issue
Cents Cents Cents
Net attributable asset value per 713.6 769.6 742.9
debenture (cum interest)
Net attributable asset value per 674.6 733.6 685.3
debenture (ex interest)
Net attributable asset value per 244.3 194.3 200.0
ordinary share
CONDENSED STATEMENT OF COMPREHENSIVE INCOME
Audited
Unaudited Unaudited
6 months 6 months Year
to to ended
30 June 30 June 31 Dec
2009 2008 2008
Notes R`m R`m R`m
Investment income 72.8 30.9 129.4
Realised trading (losses) (0.5) 35.6 26.6
profits
Operating expenditure (6.2) (5.7) (11.9)
Net distributable profit 66.1 60.8 144.1
Capital profits on sale of 4.1 13.0 13.1
investments
Revaluation of investments (25.8) (24.7) (98.8)
Net portfolio income before 44.4 49.1 58.4
debenture interest
Debenture interest (55.2) (49.9) (129.8)
Revaluation of debentures 4 15.0 (0.5) 66.5
Profit (loss) before taxation 4.2 (1.3) (4.9)
Taxation (expense) credit 5 (0.3) 4.8 8.9
Profit for the period 3.9 3.5 4.0
Cents Cents Cents
Debenture interest per debenture 39.0 36.0 93.8
(weighted)
Earnings per debenture 28.5 36.4 45.7
Earnings per ordinary share 44.3 39.8 45.5
CONDENSED STATEMENT OF CHANGES IN SHAREHOLDERS` EQUITY
Ordinary Accumulate Total
share d profits
capital
R`m R`m R`m
Balance at 1 January 2008 (audited) 0.1 13.5 13.6
Profit for the year - 4.0 4.0
Balance at 31 December 2008 0.1 17.5 17.6
(audited)
Profit for the period - 3.9 3.9
Balance at 30 June 2009 (unaudited) 0.1 21.4 21.5
Balance at 1 January 2008 (audited) 0.1 13.5 13.6
Profit for the period - 3.5 3.5
Balance at 30 June 2008 (unaudited) 0.1 17.0 17.1
CONDENSED STATEMENT OF CASH FLOWS
Audited
Unaudited Unaudited
6 months 6 months Year
to to ended
30 June 30 June 31 Dec
2009 2008 2008
R`m R`m R`m
Net cash inflow from operating 204.2 252.0 278.1
activities
Interest and taxation paid (83.4) (59.3) (111.8)
Net cash received from issue of 19.4 17.8 18.5
debentures
Net increase in cash resources 140.2 210.5 184.8
Cash resources at beginning of 388.6 203.8 203.8
period
Cash resources at end of period 528.8 414.3 388.6
NOTES TO THE INTERIM FINANCIAL STATEMENTS
1. Basis of preparation and significant accounting policies
The condensed financial statements have been prepared using accounting
policies consistent with International Financial Reporting Standards and in
accordance with International Accounting Standard (IAS) 34 Interim
Financial Reporting. The condensed financial statements have been prepared
under the historical cost convention, except for the revaluation of
financial instruments.
The same accounting policies, presentation and methods of computation are
followed in these condensed financial statements as were applied in the
preparation of the company`s financial statements for the year ended 31
December 2008. During the period, the company adopted IAS 1 Presentation of
Financial Statements, which is effective for annual periods commencing 1
January 2009.
2. Operating segments
The company has one principal operating segment and accordingly additional
segmental disclosures have not been made.
3. Investments
Investments comprise listed and unlisted securities managed to achieve a
total return which over the long-term exceeds the investment objective. In
managing the investment portfolio, securities may be held for trading
within twelve months or may be realised over longer periods as deemed
appropriate by the manager.
4. Unsecured debentures Audited
Unaudited Unaudited
30 June 30 June 31 Dec
2009 2008 2008
R`m R`m R`m
Unsecured debentures comprise
Debenture capital at issue price 960.0 939.9 940.6
Cumulative revaluation of debentures (4.9) 77.1 10.1
Fair value of debentures 955.1 1017.0 950.7
Reconciliation of balance
Balance at beginning of period 950.7 998.7 998.7
Net proceeds on issue of debentures 19.4 17.8 18.5
Revaluation - current period (15.0) 0.5 (66.5)
Balance at end of period 955.1 1017.0 950.7
Revaluation of debentures
Net portfolio income before debenture 44.4 49.1 58.4
interest
90% allocation to debenture holders 40.0 44.2 52.6
Add: proportionate share of deferred 0.2 6.2 10.7
taxation credit
Less: interest distribution for the (55.2) (49.9) (129.8)
period
Revaluation - current period (15.0) 0.5 (66.5)
5. Taxation
Taxation comprises
Current taxation - current period 1.7 3.2 4.8
Deferred taxation - current period (1.4) (8.0) (13.7)
Net charge (credit) to income statement 0.3 (4.8) (8.9)
These results have not been reviewed by the company`s auditors, Deloitte &
Touche.
RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2009
The board is pleased to announce an 8% increase in the interim interest
distribution to debenture holders of 39 cents per debenture (30 June 2008: 36
cents). This distribution yields an income return per debenture of 5.7% for the
half year. Net distributable profit increased 9% to R66 million. Investment
income for the period more than doubled, driven by the receipt of some special
dividends and a substantial increase in interest income due to higher average
cash levels and investment in corporate debt at high yields. These increases
offset a decline in realised trading profits. Net portfolio income after capital
profits and investment revaluation was R44 million (30 June 2008: R49 million).
The total debenture capital value increased slightly over the six months from
R951 million to R955 million, while the net attributable asset value (NAAV) per
debenture decreased marginally to 675 cents (31 December 2008: 685 cents).
Debentures earned the following returns for the period:
Audited
Unaudited Unaudited
6 months 6 months Year to
to to
30 June 30 June 31 Dec
2009 2008 2008
Income 5.7% 4.9% 12.8%
Capital -1.6% 0.1% -6.5%
Total return * 4.1% 5.0% 6.3%
Benchmark (CPI + 10% per annum) ** 7.6% 12.4% 19.5%
* Calculated with reference to monthly net attributable asset values per
debenture
** Lagged one month
It is disappointing that the return achieved continues to fall below the
portfolio`s own benchmark and investment objective of SA CPI + 10%. However,
under the prevailing circumstances, it is gratifying that there is income growth
greater than inflation and the income yield remains attractively high on an
investment which continues to outperform the JSE All Share Index.
The Board has reviewed the company`s investment objective and benchmark of SA
CPI + 10% and re-affirms its belief that it is an appropriate objective for the
longer term.
COMMENTARY
The first half of 2009 saw most equity markets continue their bear trend
(established in 2007/08) until March 2009. Since then, a sharp upward rally has
been in progress, resulting in some impressive growth for the six months.
Emerging markets grew an average of 36% in USD, while the World Equity Index was
up only 7% for the period. Global bond yields continued to rise, while interest
rates fell or remained at record-low levels. Property prices declined further.
There were some strong price gains in the commodities complex. All these price
moves were against a backdrop of a world in economic recession, consequential
high and rising unemployment and of massive economic stimulus packages. The
rand appreciated 24% against the US dollar over the half year.
The investment portfolio has benefited from its diversified asset allocation
strategy in that all asset sectors contributed positively to the portfolio
return for the six month period. Equities and SA fixed interest, in particular,
did well contributing 4% each to the total return. The strong rand offset a
positive USD return from foreign assets to yield a -3% contribution.
The current asset allocation at effective economic exposures is set out below:
Domestic Foreign Total
30 June 31 Dec 30 June 31 Dec 30 June 31 Dec
2009 2008 2009 2008 2009 2008
Equities 27% 39% 16% 23% 43% 62%
Listed property 11% 6% 0% 0% 11% 6%
Government bonds -47% -50% 0% 0% -47% -50%
Corporate debt 4% 5% 13% 10% 17% 15%
Commodities 0% 0% 2% 2% 2% 2%
Cash and money market 60% 57% 14% 8% 74% 65%
55% 57% 45% 43% 100% 100%
Equity exposure has been reduced over the last six months. The proceeds have
been applied to increasing the listed property position with the balance
remaining in cash.
The asset allocation strategy continues to reflect the uncertainty of the future
with a broad spread of asset classes across a number of geographies. We remain
cautious on equity and government bond investments and retain high levels of
cash, both as protection and to take advantage of opportunities which may arise.
INTEREST PAYMENT AND ELECTION
Notice is hereby given that a debenture interest payment (number 44) of 39 cents
per debenture in respect of the six months ended 30 June 2009 is payable to
debenture holders recorded in the debenture register of the company on the
record date. In compliance with the Listings Requirements, the following dates
are applicable:
Last date to trade Thursday, 6 August 2009
Debentures trade ex-interest Friday, 7 August 2009
Record date Friday, 14 August 2009
Payment date Monday, 17 August 2009
IMPORTANT: ELECTION TO RECEIVE DEBENTURES IN LIEU OF A CASH INTEREST PAYMENT
As provided for in section 6.4 of the Debenture Trust Deed, the board has
resolved that debenture holders recorded in the debenture register at the close
of business on the record date may elect to receive new fully paid Foord Compass
Limited Variable Rate debentures in lieu of a cash interest payment ("the
debentures"). The motivation for this decision is to retain cash and build
capital for debenture holders. The tax implications of the settlement of the
debenture interest payment by the issue of 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 debentures in
respect of all or a part of their interest entitlement, 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, 14 August
2009. Dematerialised debenture holders who wish to elect to receive debentures
in respect of all or a part of their interest entitlement must, in terms of the
agreement between themselves and their Central Securities Depository Participant
("CSDP") or broker, instruct their CSDP or broker accordingly.
If the election to receive debentures is not made by dematerialised debenture
holders by the cut-off time stipulated by their CSDP or broker, or by 12:00 on
Friday, 14 August 2009 in the case of certificated debenture holders, debenture
holders will be deemed to have elected to receive a cash interest payment. As
indicated above, the last day to trade in the company`s debentures on the JSE to
ensure that a purchaser appears as an owner on the record date will be Thursday,
6 August 2009. The number of debentures to be issued ("the ratio") will be
determined with reference to the ex-interest net attributable asset value per
debenture as at 30 June 2009 of 674.6 cents. Accordingly, the ratio is 5.781
interest debentures for each 100 debentures held on the record date. Only
rounded numbers of interest debentures will be issued based on conventional
rounding principles. No fractions will be paid. The right to receive
debentures may not be traded on the JSE.
Subject to JSE approval of the debenture election, application will be made to
the JSE Limited for a listing of the maximum number of debentures to be issued
with effect from the commencement of business on Monday, 17 August 2009. An
adjustment to the number of debentures listed will be made on or about Tuesday,
18 August 2009 in accordance with the actual number of debentures issued having
regard to the 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, 17 August 2009.
Signed on behalf of the board
MO HODGES D FOORD
20 July 2009
Directors: MO HODGES* (Chairman), D FOORD*, JC GREYLING, DA MOIR, JC VAN
NIEKERK * British
Company secretary: PE CLUER
Sponsor: Barnard Jacobs Mellet Corporate Finance (Pty) Limited
www.foordcompass.co.za
21 July 2009
Date: 21/07/2009 12:31:01 Produced by the JSE SENS Department.
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