| Fri 2 Oct 2009, 17:29 | | BIPINF - Bips Government Inflation Linked Bond Fund - Abridged Audited Results |
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JSE BIPINF
BIPS
BIPINF - Bips Government Inflation Linked Bond Fund - Abridged Audited Results
For The Period 1 June 2009 To 30 June 2009
Bips Government Inflation Linked Bond Fund
A portfolio in the Bips Collective Investment Scheme ("the
portfolio") registered in terms of the Collective Investment Schemes
Control Act, 45 of 2002
Share Code: BIPINF
ISIN: ZAE000134185
ABRIDGED AUDITED RESULTS FOR THE PERIOD 1 JUNE 2009 TO 30 JUNE 2009
The BIPS Collective Investment Scheme ("the Scheme") was established
in accordance with the provisions of the Collective Investment Schemes
Control Act (CISCA) with effect from 12 April 2008. The BIPS Government
Inflation Linked Bond Fund ("the Fund") was established as a portfolio of
the Scheme in accordance with paragraph A of the deed of the scheme on 5
March 2009.
The Fund is a passive investment fund with the aim of providing returns
linked to the performance of the Government Inflation Linked Bond Index
("GILBx") in terms of both price performance, as well as income from the
component securities in the index. The portfolio will aim to track the
performance of the index.
INCOME STATEMENT
FOR THE PERIOD 1 JUNE 2009 TO 30 JUNE 2009
2009
R
Revenue
Interest income 1 203 978
Expenses
Management and administrative (83 738)
expenses
Profit before taxation 1 120 240
Taxation -
Profit for the period 1 120 240
BALANCE SHEET
AS AT 30 JUNE 2009
2009
R
Assets
Non-current assets
Listed investments held at fair 125 166 147
value through profit and loss
Current assets
Cash and cash equivalents 1 290 275
Total assets 126 456 422
Equity and liabilities
Equity
Net assets attributable to 125 252 444
investors
Current liabilities
Trade and other payables 1 203 978
Total equity and liabilities 126 456 422
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO INVESTORS
FOR THE PERIOD 1 JUNE 2009 TO 30 JUNE 2009
Capital Income
Attributable to attributable to
Investors investors Total
R R R
Balance at 1 June 2009 - -
Creations of BIPS 125 252 444 - 125 252 444
Government Inflation
Linked Bond Fund
securities
Profit for the period - 1 120 240 1 120 240
Income distributions - (1 120 240) (1 120 240)
Balance as at 30 June 2009 125 252 444 - 125 252 444
CASH FLOW STATEMENT
FOR THE PERIOD 1 JUNE 2009 TO 30 JUNE 2009
2009
R
Cash flow from operating activities 1 203 978
Cash generated from operations -
Interest income 1 203 978
Cash flow from investing activities (125 166 147)
Investments in government bonds (125 166 147)
Cash flow from financing activities 125 252 444
Creations of securities 125 252 444
Net increase in cash and cash 1 290 275
equivalents
Cash an cash equivalents at the -
beginning of the period
Cash and cash equivalents at the end 1 290 275
of the period
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD 1 JUNE 2009 TO 30 JUNE 2009
1. Accounting policies
The financial statements incorporate the principal policies set out
below.
1.1 Basis of preparation
The financial statements are prepared on a historic cost basis, except
for financial instruments, which are accounted for as set out below. No
comparative figures have been presented as this is the fund`s first
period of operations.
1.2 Statement of compliance
The financial statements are prepared in accordance with International
Financial Reporting Standards issued by the International Standards Board
(IASB), and in accordance with the requirements of the Trust Deed and
Collective Investment Schemes Control Act No 45 of 2002.
1.3 Financial instruments
Measurement
Financial instruments, being government bonds, are recognised when,
and only when, the Fund becomes a party to the contractual provisions
of that particular instrument. Financial instruments are initially
measured at fair value, and for instruments not at fair value through
profit and loss, any directly attributable transaction costs.
Subsequent to initial recognition these instruments are measured as
set out below.
Investments
Listed investments are measured at fair value through profit and loss. Fair
value is determined with reference to quoted market prices at the balance sheet
date, as published in the financial press at reporting date.
Trade and other receivables
Trade and other receivables originated by the Fund are measured at amortised
cost using the effective interest method, less impairments losses. Trade and
other receivables are short term in nature and are not discounted.
Cash and cash equivalents
Cash and cash equivalents are measured at amortised cost.
Financial liabilities
Financial liabilities, other than those held at fair value through profit and
loss, are measured using the effective interest method.
Financial liabilities arsing from the securities issued by the Fund are carried
at the fair value representing the investor`s right to a residual interest in
the Fund`s net assets, i.e. the Net Asset Value of the Fund
Fair value gains and losses on subsequent measurement
Unrealised gains and losses arising from a change in the fair value
on financial instruments are included in net profit or loss in the
period in which the change arises.
Offset
Financial assets and financial liabilities are offset and the net amount
reported in the balance sheet when the Fund 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.
Derecognition of financial instruments
The Fund derecognising financial assets when and only when -
- The contractual right to the cash flows arsing from the
financial assets have expired or have been forfeited by the Fund; or
- It transfers the financial assets including substantially all
the risks and rewards of ownership of the assets; or
- It transfers the financial assets, neither retaining nor
transferring substantially all the risks and reward of ownership of
the asset, but no longer retains control of the assets.
A financial liabilities id derecognised when and only when the liability is
extinguished. This 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 investment income.
1.5 Investment income
Interest income is recognised in the income statement, using the effective rate
method taking into account the expected timing and amount of cash flows.
1.6 Taxation
Under the current system of taxation in South Africa, the Fund is exempt from
paying tax on income or capital gains. Both income and capital gains are taxed
in the hands of the investors.
1.7 Expenses
Expenses are recognised as incurred.
1.8 mpairment
Financial assets that are stated at cost or amortised cost are reviewed at each
balance sheet date to determine whether there is objective evidence of
impairment. If any such indication exists, an impairment loss is recognised in
the income statement as the difference between the asset`s carrying amount and
the present value of estimated future cash flows discounted at the financial
asset`s
original effective interest rate. If in a subsequent period the amount of an
impairment loss recognised on a financial asset carried at amortised cost
decrease can be linked objectively to an event occurred after the write down,
the write down is reversed through the income statement.
1.9Finance costs
Distributions payable on redeemable units are recognised in the income statement
as finance costs under distributions.
1.10 Redeemable securities
All redeemable securities issued by the scheme provide investors with the right
to require redemption for the cash or in specie at the value proportionate to
the investors` share. Such instruments give rise to financial liabilities for
the net asset value of the redemption amount in the balance sheet. In
accordance with the Trust Deed and Collective Investment Schemes Control Act,
the Fund is contractually obliged to redeem securities at the net asset value.
1.11 New standards and interpretations adopted in the current
financial period
The following standard is effective for annual periods on or after 1
January 2009 and early adopted by management in the current financial
period:
IAS 32 (Amendment) Financial instruments; Presentation, and IAS 1
(Amendment), Presentation of the financial statements - Puttable
financial instruments and obligations arising on liquidation. The
amended standards requires entities to classify puttable financial
instruments and instruments or components of instruments that impose
on the entity on obligation to deliver to another party a pro-rata
share of the net assets of the entity only on liquidation as equity
provided the financial statements have particular features and meet
specific conditions.
1.12 Standards and interpretations not yet effective
The following new standards and interpretations are not yet effective
for the current financial period. The fund will comply with the new
statements from the effective date:
IFRS 7 Financial Instruments: Disclosures (effective for periods
commencing 1 January 2009). The amendments to IFRS 7 will require
enhanced disclosures about fair value measurements and liquidity
risk. The amendment addresses disclosure in the financial statements
and will not affect recognition and measurement.
IAS 1 (revised) presentation of Financial Statements (effective for
periods commencing 1 January 2009) The main change in the revised IAS
1 is the requirement to present all non-owner transactions in the
statement of comprehensive income. The amendment also requires two
sets of comparative numbers to provide for the financial position in
any year where there has been a restatement or reclassification of
balances.
Standards and interpretations not yet effective and which will not be
applicable to the fund are:
- IFRS 1 and IAS 27 (revised) cost of an investment in a
subsidiary jointly controlled entity or associate
- IFRS 2 (amended) conditions and cancellations
- IFRIC 15 Real Estate Sales
- IFRIC 16 Hedges of a Net Investment of a Foreign Operation
- IFRIC 17 Distribution of Non-Cash Assets to Owners
- IFRIC 18 Transfers of Assets from Customer
- IFRIC 3 and IAS 27 (revised) Business Combinations and
Consolidated and Separate Financial Statement.
-- IFRS 8 Operating Segments
- IAS 23 (amended) Borrowing Costs
- IAS 39 (amended) Eligible Hedging items
1.13 Critical accounting estimates and judgements in applying
accounting policies
Assumptions and estimates form an integral part of financial
reporting and have an impact on the amounts reported. Assumptions are
based on historical experience and expectations of future outcomes
and anticipated changes in the environment.
No significant accounting estimates and judgements have been applied
in the financial statements of the fund.
2. Management and administration expenses
The Manager is entitled to a service charge for the administration of the
scheme, as determined by the Manager from time to time of the market value of
the total assets of the portfolio.
During the period a service fee of 39 (thirty nine) basis points of the total
market value of the portfolio has been applied.
3. Distributions
The fund effects quarterly distributions. All distributions are
made out of income received by the fund.
The record date for the below distribution was 3 July 2009.
12,73 cents per BIPS Inflation-X security
Declared 24 June 2009 and paid 6 July 2009 (1 120
240)
(1 120
240)
4. Taxation
Any taxable income realised during the year, whether of a capital or revenue
nature, has been distributed to the holders of the BIPS Government Inflation
Linked Bond securities.
As a result, both income and capital gains are taxed in the hands of the
investors.
5. Risk analysis
The Fund is a passive investor in inflation linked bonds issued by
the government of the Republic of South Africa in percentages to
which each bond contributes to the GILBx. The risk that management
must control is that the fund does not track the GILBx.
Exposure to investment, credit, market and operational risks arise in
the normal course of investment activities in government bonds. The
entity`s acceptance of risk is directly attributable to the risks
associated with any investment in government bonds.
The objectives for managing the risks associated with financial instruments
held for investment purposes as well as a brief description of the relevant
risks and methods adopted to mitigate these risks, are outlined in more detail
below.
Management monitors compliance in terms of the CISCA requirements and
reports are submitted to the Financial Services Board (FSB) on a monthly
basis. Capital adequacy requirements as required by CISCA are maintained
by the Manager of the Fund.
Daily pricing of the funds is publicly available.
The Audit Committee oversees management`s compliance with the Fund`s risk
management framework in relation to the risks faced by the portfolio.
The Fund`s exposure to the following risks from its use of financial
instruments:
- Credit risk;
- Investment risk;
- Tracking risk;
- Operational risk;
- Liquidity risk;
- Market risk;
The abovementioned risks have been addressed in the below in more
detail.
5.1 Credit risk
The Fund`s exposure to credit risk could be as a result of a counterparty
transaction failing to meet its contractual obligations.
This could arise primarily from the Fund`s investment activities.
Credit risk is limited as assets of the Fund are government inflation
linked bonds rated AAA. Cash float is held at ABSA, which is rated AAA.
5.2 Tracking risk
The Fund portfolio is reweighted monthly and rebalanced quarterly in line with
the nominal in issue of the current four inflation linked bonds issued by
National Treasury.
5.3 Investment risk
There can be no assurance that the Fund will achieve its investment
objectives.
5.4 Operational risk
Asset manager purely executes and administers trades. The asset
management function relies on Asset Liability Matching systems that
the bank uses for its own internal risk management. Assets are held
in custody at ABSA Trust. Trades are all in listed government bonds
which settle through STRATE and are held on immobilised form at
STRATE.
5.5 Liquidity risk
Liquidity risk is the risk that the portfolio will not be able to
meet its financial obligations towards investors when they fall due.
The approach to managing liquidity risk is to ensure that the portfolio
would be able to pay suitable distributions to investors on a quarterly
basis. All dividend distributions are approved by the Trustee and
calculated by the Manager.
In the primary market, participatory interests are created and destroyed
through the delivery of the underlying bonds. There is no obligation to
accept or deliver cash to unit holders who wish to create or destroy
units.
Market makers will attempt to maintain a high degree of liquidity through
continuously offering to buy and sell the Fund participatory interests at
prices around NAV of the participatory interest, thereby ensuring tight
buy and sell spreads. Under normal circumstances and conditions, the
investor will be able to buy or sell Fund securities from the market
makers.
5.6 Market risk
Fund is an index tracking fund. It aims to match the performance of the
GILBx.
Market risk exists where the significant changes in government bond
prices will affect the value of the portfolio`s financial instruments.
The investment mandates indicates that the portfolio is passively managed
and as a result the management of the market risk is not possible.
The value of participatory interests and distributions payable by the
Fund will rise and fall as the capital values of the underlying
securities housed in the portfolio and the income flowing there from
fluctuates. Prospective investors should be prepared for the possibility
that they may sustain a loss.
These financial statements have been audited by the independent
auditors, PricewaterhouseCoopers Incorporated, and their unqualified
audit opinion is available for inspection at the company`s registered
head office. A full copy of the financial statements is available on the
BIPS website www.bipsetf.co.za.
30 September 2009
Sponsor
Bridge Capital Advisors (Pty) Limited
Trustee
ABSA Bank Limited
Managers
Bips Investment Managers (Pty) Limited
2 October 2009
Date: 02/10/2009 17:29:45 Produced by the JSE SENS Department.
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