| Thu 29 Jun 2006, 17:40 | | Trackhedge (Proprietary) Limited - Annual Financia |
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JSE NRD
THG
Trackhedge (Proprietary) Limited - Annual Financial Statements For The Year
Ended 31 March 2006
Trackhedge (Proprietary) Limited
(Registration No. 2003/008245/07)
Issuer Code: THG
JSE Code: NRD
ISIN code: ZAE000047841
ANNUAL FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 MARCH 2006
NEWRAND TRUST
INCOME STATEMENT
for the year ended 31 March 2006 2006 2005
R R
Revenue 32 543 715 24 878 201
Dividends 29 988 994 23 655 868
Fee income: Securities lending 1 537 965 862 444
Interest earned 366 542 359 889
Other income 650 214 -
Expenses
Management and administrative expenses (3 304 055) (2 919 976)
Fair value adjustments (2 500 224) (2 164 216)
Profit for the year before taxation 26 739 436 19 794 009
Taxation - -
Profit for the year after taxation 26 739 436 19 794 009
Income distributions (24 890 912) (20 228 133)
Undistributed profit/(loss) for the year 1 848 524 (434 124)
BALANCE SHEET
at 31 March 2006 2006 2005
R R
Assets
Non Current Assets
Listed equities 1 578 367 294 933 926 534
Current assets 9 252 450 7 542 062
Accounts receivable 3 621 037 3 157 999
Cash and cash equivalents 5 631 413 4 384 063
Total assets 1 587 619 744 941 468 596
Equity and liabilities
Undistributed income 8 870 050 7 021 526
Non Current Liabilities
Liability - Trackhedge (Proprietary) 1 578 367 294 933 926 534
Limited
Current Liabilities
Accounts payable 382 400 520 536
Total equity and liabilities 1 587 619 744 941 468 596
CASH FLOW STATEMENT
for the year ended 31 March 2006 2006 2005
R R
Cash generated by operations (1 717 050) (6 290 395)
Interest income 366 542 359 889
Dividends paid (24 890 912) (20 228 133)
Dividends received 29 988 994 23 655 868
Net cash (utilised)/generated from 3 747 574 (2 502 771)
operating activities
Cash outflow from investing activities (2 500 224) (2 164 216)
Purchases of equities (575 128 484) (633 588 013)
Proceeds from sale of equities 572 628 260 631 423 797
Net increase/(decrease) in cash and cash 1 247 350 (4 666 987)
equivalents
Cash and cash equivalents at the 4 384 063 9 051 050
beginning of year
Cash and cash equivalents at the end of 5 631 413 4 384 063
year
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2006 Undistributed Total
income
R R
Opening balance 7 455 650 7 455 650
Profit for the period before 19 794 009 19 794 009
distribution
Income distributions (20 228 133) (20 228 133)
Balance at 31 March 2005 7 021 526 7 021 526
Profit for the year before distribution 26 739 436 26 739 436
Income distributions (24 890 912) (24 890 912)
Balance at 31 March 2006 8 870 050 8 870 050
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
For the year ended 31 March 2006
1. Accounting policies
The financial statements incorporate the principle accounting
policies set out below.
1.1 Statement of compliance
The financial statements are prepared in accordance with
International Financial Reporting Standard ("IFRS") and its
interpretations by International Accounting Standard Board
("IASB") and AC500 series issued by the Accounting Practices
Board, and in the manner required by the South African Companies
Act, 1973
1.2 Basis of preparation
The financial statements are prepared on a historic cost basis,
except for financial instruments, which are accounted for as set
out in note 1.3.
1.3 Financial instruments
Measurement
Financial instruments are initially measured at cost at
transaction date, which includes transaction costs. Subsequent to
initial recognition these instruments are measured as set out
below.
Investments
Listed investments are classified as held for trading and carried
at market value, which is allocated by reference to stock
exchange quoted selling prices at the close of business on the
balance sheet date.
Financial liabilities
The financial liability to Trackhedge (Proprietary) Limited is
stated at the fair value as represented by the market value of
the underlying portfolio of equities.
Other financial assets and liabilities
Other financial assets and liabilities namely trade and other
receivables and payable are measured at amortised cost less
impairment charges.
Cash and cash equivalents
Cash and cash equivalents are measured at fair value at balance
sheet date.
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.
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.
Derecognition of financial instruments
Financial instruments are recognised when, and only when, the
Company becomes a party to the contractual provisions of the
particular instrument.
The company 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 company;
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.
Investment income
Interest is recognised on a time proportion basis, taking account
of the principal outstanding and the effective rate over the
period to maturity, when it is probable that such income will
accrue to the Trust.
Dividends are recognised when the right to receive payment is
established. Scrip dividends have been accounted for as income.
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 liability
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.
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 reduced to the
extent that it is no longer probable that the related tax
benefits will be realised.
1.6 Forthcoming requirements
As at the date of authorisation of these financial statements,
the following standard and interpretations, which are relevant to
the company, were in issue but not yet effective, and have not
been early adopted in the financial statements.
IFRS 7: Disclosure (effective 1 January 2007)
IFRS 7 supersedes IAS 30, Disclosures in the Financial Statements
of Banks and Similar Financial Institutions and the disclosure
requirements in IAS 32. IFRS 7 requires additional disclosure
over and above that required by IAS 32 in respect of the
following:
* The significance of financial instruments for an entity"s
financial position and performance
* The nature and extent of risks arising from financial
instruments; and
* Capital objectives and policies
The adoption of IFRS will have no impact on the company"s
accounting policies for financial instruments.
2. Transition to IFRS
The transition to IFRS had no impact on reported earnings for
2006 or the company"s balance sheet on 31 March 2006 and 1 April
2004.
COMMENTARY
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) ("Issuer").
The 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.
Annual Report
These annual financial statements have been audited by the independent
auditors, KPMG Inc., and their unmodified audit report is available
for inspection at the company"s registered office.
TRACKHEDGE (PROPRIETARY) LIMITED
INCOME STATEMENT
for the year ended 31 March 2006 2006 2005
R R
Revenue 22 639 14 255
Interest income 20 578 14 255
Other income 2 061 -
Profit for the year before taxation 22 639 14 255
Income tax expense (5 968) (370 944)
Profit/(Loss) after taxation 16 671 (356 689)
BALANCE SHEET
at 31 March 2006 2006 2005
R R
Assets
Non Current Assets
Unlisted investments 1 578 367 294 933 926 534
Current assets 859 393 836 754
Accounts receivable 1 748 -
Cash and cash equivalents 857 645 836 754
Total assets 1 579 226 687 934 763 288
Equity and liabilities
Share capital and reserves 26 650 9 979
Ordinary share capital 1 1
Retained income 26 649 9 978
Non Current Liabilities
NewRand Index Securities 1 578 367 294 933 926 534
Current Liabilities
Taxation payable 832 743 826 775
Total equity and liabilities 1 579 226 687 934 763 288
CASH FLOW STATEMENT
for the year ended 31 March 2006 2006 2005
R R
Cash generated by operations 313 3 038 870
Interest received 20 578 14 255
Dividend paid - (2 216 372)
Net cash (utilised)/generated from 20 891 836 753
operating activities
Cash and cash equivalents at the 836 754 1
beginning of year
Cash and cash equivalents at the end of 857 645 836 754
year
STATEMENT OF CHANGES IN EQUITY
for the year ended 31 March 2006
Share Retained Total
capital income
R R R
Opening Balance 1 2 583 039 2 583 040
Loss for the year - (356 689) (356 689)
Dividends declared - (2 216 372) (2 216 372)
Balance at 31 March 2005 1 9 978 9 979
Profit for the year - 16 671 16 671
Balance at 31 March 2006 1 26 649 26 650
NOTES TO THE ANNUAL FINANCIAL STATEMENTS
For the year ended 31 March 2006
1. Accounting policies
The financial statements incorporate the principle accounting
policies set out below.
1.1 Statement of compliance
The financial statements are prepared in accordance with
International Financial Reporting Standard ("IFRS") and its
interpretations by International Accounting Standard Board
("IASB") and AC500 series issued by the Accounting Practices
Board, and in the manner required by the South African Companies
Act, 1973.
1.2 Basis of preparation
The financial statements are 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
Financial instruments are initially measured at fair value at
transaction date, which includes transaction costs. Subsequent to
initial recognition these instruments are measured as set out
below:
Investment
The unlisted investment in the NewRand Trust is classified as
held for trading and shown at fair value which is represented by
the net asset value of the Trust, net of distributions payable.
Financial liability
The financial liability to holders of the NewRand Index
Securities is stated at the fair value as represented by the
value of the NewRand FTSE Index.
Other financial assets and liabilities
Other financial assets and liabilities namely trade and other
receivables and payable are measured at amortised cost less
impairment charges.
Cash and cash equivalents
Cash and cash equivalents are measured at fair value at balance
sheet date.
Gains and losses on subsequent measurement
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 changes arise.
Offset
Financial assets and financial liabilities are offset and the net
amount reported in the balance sheet when the company 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
Financial instruments are recognised when, and only when, the
company becomes a party to the contractual provisions of the
particular instrument.
The company 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 company;
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 is comprised of interest.
Interest is recognised on a time proportion basis, taking account
of the principal outstanding and the effective rate over the
period to maturity, when it is probable that such income will
accrue to the company.
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 liability
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.
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 reduced to the
extent that it is no longer probable that the related tax
benefits will be realised.
1.6 Impairments
The carrying amounts of the company"s assets are reviewed at each
balance sheet date to determine whether there is an indication of
impairment. If any such indication exists, the asset"s
recoverable amount is estimated.
An impairment loss is recognised whenever the carrying amount of
an asset or its cash generating unit exceeds its recoverable
amount. Impairment losses are recognised in the income statement.
1.7 Provisions
Provisions are recognised when the company 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 discounted. The discount rate used is 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 Forthcoming requirements
As at the date of authorisation of these financial statements,
the following standard and interpretations, which are relevant to
the company, were in issue but not yet effective, and have not
been early adopted in the financial statements.
IFRS 7: Disclosure (effective 1 January 2007)
IFRS 7 supersedes IAS 30, Disclosures in the Financial Statements
of Banks and Similar Financial Institutions and the disclosure
requirements in IAS 32. IFRS 7 requires additional disclosure
over and above that required by IAS 32 in respect of the
following:
* The significance of financial instruments for an entity"s
financial position and performance
* The nature and extent of risks arising from financial
instruments; and
* Capital objectives and policies
The adoption of IFRS will have no impact on the company"s
accounting policies for financial instruments.
2. Transition to IFRS
The transition to IFRS had no impact on reported earnings for
2006 or the company"s balance sheet on 31 March 2006 and 1 April
2004.
COMMENTARY
Nature of business
Trackhedge (Proprietary) Limited (Registration number 2003/008245/07)
("Issuer" or "the company") is a private company incorporated in the
Republic of South Africa, the entire issued share capital of which is
held by the NewRand Owner Trust, a registered, discretionary trust.
The Issuer is a special purpose vehicle incorporated for the sole
purpose of issuing NewRand Index Securities ("Index Securities").
Index Securities are created with an objective to track the
performance of a customised index of Rand hedge shares created by Absa
Capital formerly known as Absa Corporate and Merchant Bank ("ACMB"), a
division of Absa Bank Limited and provided and calculated by FTSE and
the JSE Limited ("JSE") ("NewRand Index", "Index"). The Index
composition and calculation methodology were designed with an
objective to maximise long-term correlation with the Rand/USD exchange
rate.
Performance
The net asset value of the trust increased to R26 650 from R9 979 in
2005. At 31 March 2006, 98 019 966 (2005: 98 019 966) securities were
in issue with a total market value of R 1 578 367 296
(2005: R 933 926 534).
Annual Report
These annual financial statements have been audited by the independent
auditors, KPMG Inc., and their unmodified audit report is available
for inspection at the company"s registered office.
29 June 2006
Lead sponsor
Java Capital (Proprietary) Limited
Joint sponsor
ABSA Capital - Corporate Finance
Originator
ABSA Capital
Date: 29/06/2006 05:40:33 PM Produced by the JSE SENS Department
