RNS Number:9798K
Old Mutual South Africa Trust PLC
24 October 2006
Old Mutual South Africa Trust plc
Preliminary announcement of the Final Results for the year ended 31 August 2006
Chairman's Statement
The net asset value ('NAV') of the Old Mutual South Africa Trust plc (the '
Trust') increased by 17.3% for the year to 31 August 2006. The portfolio
benefited from overweight positions in the diversified mining sector, but
overweight positions in banks and telecommunication shares and underweight
positions in platinum and gold shares detracted from performance. During the
last 12 months gearing ranged from 3% to 10% of net assets, being utilised when
market conditions presented an opportunity. The year end market capitalisation
of all shares in issue was #83.2m, representing a discount to NAV of 3.9%.
Dividend
The Board proposes a final dividend for the year ended 31 August 2006 of 2.99p
per ordinary 10p share payable on 13 December 2006 to shareholders on the
register of members at the close of business on 3 November 2006. Shareholders
will be aware that the Trust does not have a specific income target and dividend
income is not expected to be a material part of the overall investment return.
Outlook
The South African equity market has performed well for the year ended 31 August
2006, with the Trust's benchmark, the FTSE/JSE All Share Index (the "Index"),
returning 20.4% in capital sterling terms (42.4% in rand). This performance has
been generated by good earnings growth and a re-rating of the price to earnings
ratio of the overall market. The recent weakness in the rand has hindered
sterling returns.
The Investment Manager believes that the market is unlikely to re-rate
significantly over the next 12 months and that returns will mainly be generated
by earnings growth and dividend payments combined with any currency movement.
The Investment Manager further believes that the economic outlook in South
Africa remains supportive of bullish equity behaviour with lower inflation,
higher GDP growth and sustainable lower and less volatile interest rates than in
the past. However a short term slowdown in the growth momentum, albeit to still
attractive levels, is likely.
Continuation as an investment trust
At the Annual General Meeting in 2001, shareholders approved a special
resolution to amend the Trust's Articles of Association so that shareholders are
offered the opportunity to vote on the continuation of the Trust on an annual
basis. At the Annual General Meeting on 7 December 2005 shareholders voted to
continue the Trust for a further year. At the Annual General Meeting to be held
on Wednesday, 6 December 2006, shareholders will be given the opportunity to
vote again on the continuation of the Trust.
The Board believes that the investment objective and purpose of the Trust remain
valid and that it will continue to offer investors long term investment
opportunities from companies quoted on the JSE Securities Exchange South Africa.
The Trust has performed well since the benchmark change on 1 January 2002, with
the NAV outperforming the Index by 24.7%. The Board believes that the continued
appointment of the Investment Manager is in the interests of shareholders.
Over the 12 month period the discount/premium of share price to NAV has been in
the range of -9% and +2%. There were no share buy backs during the period.
The Board recommends that shareholders vote in favour of the continuation
resolution at the Annual General Meeting on Wednesday, 6 December 2006.
Hamish Leslie Melville
24 October 2006
Income Statement
for the year ended 31 August 2006
Restated (see note 5b)
Unaudited Audited
Year ended 31 August 2006 Year ended 31 August 2005
Revenue Capital Revenue Capital
Return Return Return Return
Total Total
Note #'000 #'000 #'000 #'000 #'000 #'000
Gains on investments
held at fair value - 12,308 12,308 - 23,661 23,661
Exchange gains on
capital items - 613 613 - 13 13
Income 2,693 - 2,693 1,984 - 1,984
Management fee (158) (474) (632) (112) (336) (448)
Performance fee - - - - (350) (350)
Other administrative
expenses (328) - (328) (323) - (323)
------------- ------------- ------------- ------------- ------------- -------------
Net return on ordinary
activities before
finance charges and
taxation 2,207 12,447 14,654 1,549 22,988 24,537
Finance charges (100) (301) (401) (74) (222) (296)
------------- ------------- ------------- ------------- ------------- -------------
Net return on ordinary
activities before
taxation 2,107 12,146 14,253 1,475 22,766 24,241
Taxation on ordinary
activities (617) 141 (476) (418) 187 (231)
------------- ------------- ------------- ------------- ------------- -------------
Net return on ordinary
activities after
taxation 1,490 12,287 13,777 1,057 22,953 24,010
======== ======== ======== ======== ======== ========
Return per ordinary
share 2 2.99p 24.67p 27.66p 2.12p 46.09p 48.21p
======== ======== ======== ======== ======== ========
All revenue and capital items in the above statement derive from continuing
operations.
The total column of this statement represents the profit and loss account of the
Company.
The Company had no recognised gains or losses other than those disclosed in the
Income Statement and Reconciliation of Movements in Shareholders' Funds.
Reconciliation of Movement in Shareholders' Funds
Called-up Share premium Warrant Capital
account reserve redemption Special Capital Revenue
share capital exercised reserve reserve reserves reserve Total
#'000 #'000 #'000 #'000 #'000 #'000 #'000 #'000
Year ended
31 August 2006
At 31 August
2005 (as
restated see 4,980 19,001 26 252 19,802 27,716 2,035 73,812
note 5a)
Net return from
ordinary
activities - - - - - 12,287 1,490 13,777
Dividend paid in
respect of year
ended 31 August
2005 - - - - - - (1,056) (1,056)
------------- ------------- ------------- ------------- ----------- ------------- ------------- ----------
At 31 August 4,980 19,001 26 252 19,802 40,003 2,469 86,533
2006 ======== ======== ======== ======== ======= ======== ======== ========
Year ended
31 August 2005
At 31 August
2004 (as
restated see 4,980 19,001 26 252 19,802 4,763 1,740 50,564
note 4)
Net return from
ordinary
activities - - - - - 22,953 1,057 24,010
Dividend paid in
respect of year
ended 31 August
2004 - - - - - - (762) (762)
------------- ------------- ------------- ------------- ----------- ------------- ------------- ----------
At 31 August 4,980 19,001 26 252 19,802 27,716 2,035 73,812
2005
======== ======== ======== ======== ======= ======== ======== ========
Balance Sheet
as at 31 August 2006
Audited
Restated
Unaudited (See note 5a)
31 August 2006 31 August 2005
Note #'000 #'000
Investments held at fair value
Listed at market value 91,557 79,020
-------------- --------------
Current assets
Debtors 382 137
Cash at bank 361 120
-------------- --------------
743 257
Creditors- amounts falling due within one year (5,767) (5,465)
-------------- --------------
Net current liabilities (5,024) (5,208)
-------------- --------------
Total net assets 86,533 73,812
======== ========
Capital and reserves
Called-up share capital 4,980 4,980
Share premium account 19,001 19,001
Warrant reserve-exercised 26 26
Capital redemption reserve 252 252
Special reserve 19,802 19,802
Capital reserves
- realised 21,693 3,370
- unrealised 18,310 24,346
Revenue reserve 2,469 2,035
-------------- --------------
Equity shareholders' funds 3 86,533 73,812
======== ========
Net asset value per ordinary share 173.8p 148.2p
======== ========
Cash Flow Statement
for the year ended 31 August 2006
Year ended Year ended
31 August 2006 31 August 2005
#'000 #'000
Net cash inflow from operating 1,346 1,301
activities
---------------- ----------------
Net cash outflow from servicing of (402) (293)
finance
---------------- ----------------
Taxation paid (229) (26)
---------------- ----------------
Financial investment
Purchase of investments (54,834) (41,278)
Sale of investments 54,430 37,553
---------------- ----------------
Net cash outflow from financial (404) (3,725)
investment
---------------- ----------------
Equity dividend paid (1,056) (762)
---------------- ----------------
Net cash outflow before financing (745) (3,505)
---------------- ----------------
Financing
Drawdown of short term loans 789 3,545
---------------- ----------------
Net cash inflow from financing 789 3,545
---------------- ----------------
Increase in cash 44 40
========= =========
Notes to the Accounts
For the year ended 31 August 2006
1 Accounting Policies
a) Basis of accounting
The accounts have been prepared under the historical cost convention, modified
to include fixed asset investments at valuation and in accordance with the
Companies Act 1985, accounting standards applicable in the United Kingdom and
with the Statement of Recommended Practice "Financial Statements of Investment
Trust Companies" revised December 2005 (the 'Revised SORP').
As referred to in the Chairman's Statement above, a resolution regarding the
continuation of the Company as an investment trust will be put to the
shareholders at the Annual General Meeting on Wednesday, 6 December 2006. The
Directors are recommending that shareholders vote in favour of the resolution
that the Company should continue. However, it is possible that shareholders may
vote against this resolution and that the Directors will be required to draw up
proposals for consideration by shareholders for the unitsation or other
reconstruction of the Company. In light of their recommendation to
shareholders, the Directors believe that it is appropriate for the accounts to
be prepared on a going concern basis. Accordingly, the accounts do not include
any adjustments which might arise from the reconstruction or liquidation of the
Company. Such adjustments would include expenses of reconstruction or
liquidation along with any costs associated with realising the investment
portfolio. These adjustments would result in a reduction in the net asset value
per share at the time attributable to ordinary shareholders.
b) Changes in presentation
The Company has adopted the provisions of the Revised SORP and revised UK
Accounting Standards which has resulted in some changes to the presentation of
the Company's accounts and restatement of prior year numbers.
The Statement of Total Return is now called the Income Statement. Dividends
payable to equity shareholders are no longer reflected in the Income Statement,
although they continue to be shown in the Reconciliation of Movements in
Shareholders' Funds which is now presented as a primary statement.
c) Changes in accounting policies
The Company has changed its accounting policy for the valuation of listed
investments and the recognition of dividends payable to equity shareholders in
accordance with the provisions of FRS 26 - Financial instruments: Recognition
and Measurement ('FRS 26') and FRS 21 - Events after the balance sheet date ('
FRS 21') respectively. These changes in policy and the associated impact on the
results of the Company are referred to below.
d) Valuation of fixed asset investments
Investments - prior to 1 September 2005, listed investments were valued at
middle market prices. Following the introduction of FRS 26, listed investments
have been designated by the Board as held at fair value through profit or loss
and accordingly are valued at fair value, deemed to be bid market prices. The
adoption of bid market prices at 1 September 2005 decreased the value of listed
investments by #239,000 (31 August 2004: #116,000).
Changes in the fair value of investments held at fair value through profit or
loss and gains or losses on disposal are recognised in the Income Statement as "
Gains or losses on investments held at fair value ". Also included within this
caption are transaction costs in relation to the purchase or sale of
investments, including the difference between the purchase price of an
investment and its bid price at the date of purchase.
e) Dividends payable to equity shareholders
Under FRS 21 dividends should not be accrued in the accounts unless they have
been approved by shareholders before the balance sheet date. Dividends payable
to equity shareholders are therefore recognised in the Reconciliation of
Movements in Shareholders' Funds when they have been approved by shareholders
and become a liability of the Company.
There is no impact from this change on the recognised gains and losses in 2005.
However, the net assets at 31 August 2005 have been impacted as disclosed in
note 5a. The effect of this change is to increase net assets at 31 August 2005
by #1,056,000 (or 2.12p per share) (31 August 2004: #762,000 or 1.53p per
share).
f) Management expenses and finance costs
75% of investment management fees and finance costs are allocated to the capital
reserve. Any performance fee payable is allocated wholly to capital as it is
attributable to capital performance. Other operating expenses are charged to
the revenue account in full.
g) Income recognition
Dividend income is included in the accounts when the investments concerned are
quoted ex-dividend. Interest receivable is included in the accounts on an
accruals basis.
h) Bank borrowings
Interest bearing bank loans and overdrafts are recorded as the proceeds
received, net of direct issue costs. Finance charges, including interest
payable, premiums on settlement or redemption are accounted for on an accruals
basis in the income statement using the effective interest rate method and are
added to the carrying amount of the instrument to the extent that they are not
settled in the period in which they arise.
i) Functional Currency
FRS 23 - "The effects of changes in foreign exchange rates", introduced the dual
concept of functional currencies and presentational currency. Functional
currency is the currency in which an entity measures its results and position.
Presentational currency is the currency in which an entity chooses to present
its financial statements, and it may differ from the functional currency. The
Directors have reviewed the series of indicators to be considered when
determining functional currency, and have agreed that sterling remains the most
appropriate functional currency.
j) Foreign currency translation
Transactions involving foreign currencies are translated into sterling at a rate
of exchange ruling at the date of the transaction. Investments and foreign
currency balances are converted into sterling at the rate of exchange ruling at
the balance sheet date.
Exchange gains and losses relating to investments and foreign currency balances
are taken to capital reserves. Realised and unrealised exchange gains on
non-capital assets or liabilities are taken to the Income Statement in the
period in which they arise. In the Income Statement, exchange movements relating
to investments are included within gains or losses on investments held at fair
value. Exchange movements relating to foreign currency balances are disclosed
separately on the face of the Income Statement.
k) Warrant reserve
The warrant reserve recognised that a proportion of the proceeds for the issue
of ordinary shares with warrants attached were attributable to the warrants. The
reserve relating to the warrants which were not exercised was transferred to
capital reserve when the warrants lapsed or when purchased or cancelled by the
Company. The reserve relating to warrants which were exercised has been
transferred to the warrant reserve - exercised.
l) Taxation
The charge for taxation is based on the net revenue for the period. Deferred tax
is recognised, without discounting, in respect of all timing differences between
the treatment of certain items for taxation and accounting purposes which have
arisen but not reversed at the balance sheet date. Except as otherwise required
by Financial Reporting Standard 19. Because the Company intends each year to
qualify as an investment trust under Section 842 of the Income and Corporation
Taxes Act 1988, no provision is made for deferred taxation in respect of gains
that have been realised, or are expected to be realised in the future on sales
of fixed asset investments. The tax relief available to the Company on its
management, administrative and finance costs is allocated between revenue and
capital according to the marginal basis whereby revenue expenses are matched
first against taxable income arising in the revenue account.
2. Return per ordinary share
Basic revenue return per ordinary share is based on the net revenue on ordinary
activities after taxation of #1,490,000 (2005: #1,057,000), and on 49,801,063
(2005:49,801,063) ordinary shares, being the weighted average number of ordinary
shares in issue during the year.
Basic capital return per ordinary share is based on the net capital gains for
the year of #12,287,000 (2005 restated: #22,953,000), and on 49,801,063 (2005:
49,801,063) ordinary shares, being the weighted average number of ordinary
shares in issue during the year.
3. Net asset value per ordinary share
Basic net asset value per ordinary share is based on net assets of #86,533,000
(2005: restated #73,812,000) and on 49,801,063 (2005: 49,801,063) ordinary
shares in issue at the year end.
4. Restatement of balances at 31 August 2004
Previously reported Restated
31 August 2004 Adjustments 31 August 2004
Note #'000 #'000 #'000
Fixed assets
Investments 1 51,240 (116) 51,124
-------------------- -------------------- --------------------
Current assets 833 - 833
Creditors: amounts falling due
within one year 2 (2,155) 762 (1,393)
-------------------- -------------------- --------------------
Net current liabilities (1,322) 762 (560)
-------------------- -------------------- --------------------
Net assets 49,918 646 50,564
=========== =========== ===========
Capital and reserves
Called-up share capital 4,980 - 4,980
Share premium 19,001 - 19,001
Warrant reserve-exercised 26 - 26
Capital redemption reserve 252 - 252
Special reserve 19,802 - 19,802
Capital reserves 1 4,879 (116) 4,763
Revenue reserve 2 978 762 1,740
-------------------- -------------------- --------------------
49,918 646 50,564
=========== =========== ===========
Net asset value per ordinary 100.2p 1.3p 101.5p
share
=========== =========== ===========
Notes
1 Following the introduction of FRS 26, listed investments have been designated
as held at fair value and are valued at fair value deemed to be bid market
prices. The adoption of bid market prices at 31 August 2004 decreased the value
of listed investments by #116,000.
2 Under FRS 21 dividends should not be accrued in the accounts unless they have
been approved by shareholders before the balance sheet date. Dividends payable
to equity shareholders are recognised in the Reconciliation of Movement in
Shareholders' Funds when they have been approved by shareholders and become a
liability of the Company. The effect of this change is to increase net assets at
31 August 2004 by #762,000.
5(a) Restatement of balances at 31 August 2005
Previously reported Restated
31 August 2005 Adjustments 31 August 2005
Note #'000 #'000 #'000
Fixed assets
Investments 1 79,259 (239) 79,020
-------------------- -------------------- --------------------
Current assets 257 - 257
Creditors: amounts falling due
within one year 2 (6,521) 1,056 (5,465)
-------------------- -------------------- --------------------
Net current liabilities (6,264) 1,056 (5,208)
-------------------- -------------------- --------------------
Net assets 72,995 817 73,812
=========== =========== ===========
Capital and reserves
Called-up share capital 4,980 - 4,980
Share premium 19,001 - 19,001
Warrant reserve-exercised 26 - 26
Capital redemption reserve 252 - 252
Special reserve 19,802 - 19,802
Capital reserves 1 27,955 (239) 27,716
Revenue reserve 2 979 1,056 2,035
-------------------- -------------------- --------------------
72,995 817 73,812
=========== =========== ===========
Net asset value per ordinary 146.6p 1.6p 148.2p
share
=========== =========== ===========
Notes
1 Following the introduction of FRS 26, listed investments have been designated
as held at fair value and are valued at fair value deemed to be bid market
prices. The adoption of bid market prices at 31 August 2005 decreased the value
of listed investments by #239,000.
2 Under FRS 21 dividends should not be accrued in the accounts unless they have
been approved by shareholders before the balance sheet date. Dividends payable
to equity shareholders are recognised in the Reconciliation of Movement in
Shareholders' Funds when they have been approved by shareholders and become a
liability of the Company. The effect of this change is to increase net assets at
31 August 2005 by #1,056,000.
5(b) Reconciliation of the Statement of Total Return to the Income Statement for
the year ended 31 August 2005
#'000
Net return from ordinary activities after taxation per Statement of Total Return 24,133
Change from mid to bid basis at 31 August 2004* 116
Change from mid to bid basis at 31 August 2005* (239)
------------
Net return from ordinary activities after taxation per Income Statement 24,010
=======
* Investments at 31 August 2004 and 31 August 2005 are required to be fair
valued under FRS 26.
These values differ from the previous valuations by #116,000 and #239,000
respectively.
6. Dividend
Subject to shareholder approval at the Annual General Meeting, a final dividend
of 2.99p per share will be paid on 13 December 2006 to all shareholders on the
Register of Members at the close of business on 3 November 2006. The shares
will be quoted ex-dividend on 1 November 2006.
7. Report and Accounts
The above financial information for the year ended 31 August 2006 does not
constitute statutory accounts as defined in Section 240 of the Companies Act
1985. The comparative financial information is based on statutory accounts for
the year ended 31 August 2005. These accounts, upon which the Auditors issued
an unqualified opinion, have been delivered to the Registrar of Companies.
Statutory accounts for the year ended 31 August 2006 will be delivered to the
Registrar of Companies in due course.
The annual report and accounts will be issued to shareholders in mid November
2006 and further copies will be available from the Company's registered office.
The Company's Annual General Meeting will be held on Wednesday, 6 December 2006
at 10.30 am at Old Mutual Place, 2 Lambeth Hill, London, EC4V 4GG.
For further information, please contact:
Susan Venables
BNP Paribas Secretarial Services Limited
Tel: 020 7410 5971
24 October 2006
This information is provided by RNS
The company news service from the London Stock Exchange
END
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