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Foord Compass Limited - Interim Results For The Six Months Ended 30 June 2004
FOORD COMPASS LIMITED
(formerly Compass Property Holdings Limited)
(Incorporated in the Republic of South Africa)
(Registration number 1987/003591/06)
Share code: FCPD ISIN: ZAE000054466
(`the company`)
INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2004
The directors hereby report on the unaudited results of the group for the six
months ended 30 June 2004.
GROUP BALANCE SHEET
at 30 June 2004 Unaudited Unaudited Audited
30 June 30 June 31 Dec
2004 2003 2003
R`000 R`000 R`000
ASSETS
Non-current assets
Long-term investments 93 357 66 705 90 895
Current assets
Trading investments 38 253 69 582 36 760
Net trade receivables 54 836 6 097 32 908
Cash and cash equivalents 1 116 50 410 54 153
94 205 126 089 123 821
Total assets 187 562 192 794 214 716
EQUITY AND LIABILITIES
Capital and reserves
Ordinary share capital 88 88 88
Accumulated profits 1 173 1 688 4 788
1 261 1 776 4 876
Long-term liabilities
Unsecured debentures 175 862 179 310 190 645
Current liabilities
Accounts payable 584 685 2 625
Debenture interest payable 9 855 11 023 16 570
10 439 11 708 19 195
Total equity and liabilities 187 562 192 794 214 716
Cents Cents Cents
Net attributable asset value per 14.3 20.2 55.4
ordinary share
Net attributable asset value per 446.1 454.9 483.6
debenture
GROUP INCOME STATEMENT
for the six month period ended 30
June 2004
Unaudited Unaudited Audited
6 months 6 months Year ended
to to
30 June 30 June 31 Dec
2004 2003 2003
R`000 R`000 R`000
Investment income 6 674 8 154 17 974
Realised trading profits 5 058 5 357 16 675
Administration expenditure (1 650) (1 263) (4 493)
Distributable profit 10 082 12 248 30 156
Unrealised trading (losses) (8 658) 415 3 387
profits
Realised (losses) profits on sale (1 770) - 838
of long-term investments
Revaluation of long-term (5 997) (1 373) 7 915
investments
Net portfolio (loss) income (6 343) 11 290 42 296
before debenture interest
Debenture interest (9 855) (11 023) (27 594)
Revaluation of unsecured 14 783 862 (10 473)
debentures
(Loss) profit before taxation (1 415) 1 129 4 229
Taxation - - -
(Loss) profit after taxation (1 415) 1 129 4 229
Number of debentures in issue 39 419 774 39 419 774 39 419 774
Cents Cents Cents
Debenture interest per debenture 25.000 27.965 70.000
(Loss) earnings per ordinary (16.079) 12.829 48.056
share
Headline (loss) earnings per (16.079) 12.829 48.056
ordinary share
GROUP STATEMENT OF CHANGES IN
EQUITY
for the six month period ended 30 Ordinary Accumulated Total
June 2004 Share profits
capital
R`000 R`000 R`000
Balance at 1 January 2003 88 559 647
Profit after taxation for the year - 4 229 4 229
Balance at 31 December 2003 88 4 788 4 876
Loss after taxation for the period - (1 415) (1 415)
Dividends - (2 200) (2 200)
Balance at 30 June 2004 88 1 173 1 261
Balance at 1 January 2003 88 559 647
Profit after taxation for the - 1 129 1 129
period
Balance at 30 June 2003 88 1 688 1 776
GROUP CASH FLOW STATEMENT
for the six month period ended 30 Unaudited Unaudited Audited
June 2004
6 months 6 months Year ended
to 30 to 30 June 31 Dec
June 2003 2003
2004
R`000 R`000 R`000
Cash utilised in from operating (24 038) (60 605) (31 496)
activities
Dividends paid (2 200) - -
Debenture interest paid (16 570) (5 548) (16 435)
Net cash outflow from operating (42 808) (66 153) (47 931)
activities
Net cash (outflow) inflow from (10 229) 1 367 (13 112)
investing activities
Net cash inflow from financing - 108 462 108 462
activities
Net (decrease) increase in cash (53 037) 43 676 47 419
resources
Cash resources at beginning of 54 153 6 734 6 734
period
Cash resources at end of period 1 116 50 410 54 153
NOTES TO INTERIM FINANCIAL STATEMENTS
1. Accounting policies
The financial statements have been prepared in accordance with South African
Statements of Generally Accepted Accounting Practice. The principal accounting
policies used in the preparation of these financial statements are consistent
with those applied for the year ended 31 December 2003. The financial
statements for the year-ended 31 December 2003 disclosed a change in accounting
policy for the revaluation of long-term investments and unsecured debentures,
which are now carried at their fair values.
2. Unsecured debentures
Unaudited Unaudited Audited
30 June 30 June 31 Dec
2004 2003 2003
R`000 R`000 R`000
Unsecured debentures comprise
Debenture capital 180 561 180 561 180 561
Undistributed share of (losses) (4 699) (1 251) 10 084
reserves
Fair value of unsecured debentures 175 862 179 310 190 645
Reconciliation of balance
Balance at beginning of period 190 645 71 710 71 710
Net proceeds on issue of - 108 462 108 462
debentures
Revaluation as per income (14 783) (862) 10 473
statement
Balance at end of period 175 862 179 310 190 645
Revaluation of unsecured
debentures
Net portfolio (loss) income before (6 343) 11 290 42 296
debenture interest
Allocated as follows:
- 10% to ordinary shareholders (634) 1 129 4 229
- 90% to debenture holders (5 709) 10 161 38 067
Less: minimum interest (9 074) (11 023) (27 594)
distribution
Retained debenture (losses) (14 783) (862) 10 473
earnings (debited) credited to
carrying value of debentures
3. Taxation
The group and company have an estimated taxation loss for normal taxation
purposes of R25 424 000 at 30 June 2004 (30 June 2003: R20 601 000) which is
available to be set off against future taxable income. The estimated future
benefit at current taxation rates amounts to R7 627 200 at 30 June 2004 (30 June
2003: R6 457 800). The group and company have an estimated capital gains
taxation loss for capital gains taxation purposes of R4 247 000 at 30 June 2004
(30 June 2003: R2 278 098) which is available to be set off against future
taxable capital gains.
CHANGE IN ACCOUNTING POLICY
The effects of the change in accounting policy referred to in Note 1 in respect
of the six months ended 30 June 2003 are summarised as follows:
Unaudited Unaudited
6 months 6 months
to 30 to 30 June
June 2003 2003 (as
(as previously
currently reported)
reported) R`000
R`000 Change
R`000
Revaluation of long-term (1 373) - (1 373)
investments taken to income
statement and not to equity
Revaluation of trading investments 415 415
taken to income statement and not
to equity
Revaluation of unsecured 862 - 862
debentures
Net decrease in profit after (96) - (96)
taxation
Effect on EPS and HEPS (cents) (1.09) - (1.09)
Unaudited Unaudited Change
30 June 30 June 2003 R`000
2003 (as (as previously
currently reported)
reported) R`000
R`000
Carrying value of unsecured 179 310 180 561 (1 251)
debentures
Net attributable asset value per 454.91 456.00 (1.09)
debenture (cents)
OPERATING PERFORMANCE
The portfolio lost 4.8% net of administration fees for the six months ended 30
June 2004. The loss is attributable to the unexpected strength of the rand, the
consequent decline in the overall stock market and lower cash holdings. Since
active management of the portfolio commenced in January 2002, the portfolio has
returned 11.3% per annum, net of expenses, against a change in consumer price
inflation (CPI) of 5.8% per annum. The portfolio is managed on an absolute
return basis against a benchmark of CPI + 10%.
The current distribution of 25.000c, amounting to 5.46% of the capital value of
the debentures, is lower by 2.965c than the corresponding distribution at 30
June 2003 (27.965c, or 6.10% of the capital value of the debentures).
The asset allocation of the portfolio at market values at 30 June 2004 is set
out below.
Equities 55%
Listed property 35%
Cash - net of bonds 10%
100%
COMMENTARY AND ECONOMIC OUTLOOK
The diversification away from listed property assets over the preceding two
years has had a negative performance result in the short-term. We anticipate
this impact to be temporary and that in due course, superior returns will be
achieved from South African equities.
Our financial markets continue to adjust to the impact of a more stimulatory
environment and to the stronger than expected Rand. We believe South African
equities have not fully incorporated the positive effects of a sustainable low
inflation and interest rate environment, and therefore currently offer great
value. On a longer-term basis, economic activity in the United States and China
is likely to remain healthy, which should result in increased demand for base
metals and commodities.
This scenario, together with stronger consumer demand, increased infrastructure
spending and the benefits of Government`s fiscal discipline programme, creates
the conditions for a higher level of economic activity. Increased internal
demand and higher exports of commodities put the country in a strong growth
position in a low inflationary environment.
Given the lower interest rate environment and strong rand, debenture holders
should expect a lower distribution for the year ending 31 December 2004.
However, if equity markets recover as we anticipate, the 2003 distribution of
70c per debenture may be achieved.
INTEREST DECLARATION
Notice is hereby given that a debenture interest payment (number 34) of 25.000
cents per debenture in respect of the six months ended 30 June 2004 is payable
to debenture holders recorded as such in the books of the company on the record
date. The last day for trade in the debentures for purposes of entitlement to
the interest payment will be Thursday, 5 August 2004. The debentures will
commence trading ex the interest payment on Friday, 6 August 2004 and the record
date will be Friday, 13 August 2004. The interest will be paid on Monday, 16
August 2004. Debenture certificates may not be dematerialised or rematerialised
between Friday, 6 August and Friday, 13 August 2004, both days inclusive.
Signed on behalf of the board
CLR HIRSCHSOHN D FOORD
12 July 2004
Directors: C L R Hirschsohn (Chairman), D Foord*, B T Ackerman,
M O Hodges*, D A Moir, J C Greyling *British
Date: 12/07/2004 05:10:07 PM Produced by the JSE SENS Department
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