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RAFISA - Audited Results for the year ended 31 December 2013
NewFunds eRAFI (TM) Overall SA Index ETF Portfolio
Share code: RAFISA
ISIN: ZAE000117149
("eRAFI (TM) Overall ETF" or "the ETF")
A Portfolio in the NewFunds Collective Investment Scheme in Securities registered as such in terms of the Collective Investment Schemes Control Act, 45 of 2002
Preparer / Compiler : The financial statements were independently compiled by Deloitte and Touche
Associate Director: Shaun Govender (CA) SA
Supervised by : The NewFunds Collective Investment Scheme is managed by NewFunds Proprietary Limited, a 100% owned
subsidiary of Absa Bank Limited. The preparation of these annual financial statements therefore fall under the
direct supervision of Absa Bank Limited, represented by Francois Roussouw (CA) SA. All references to
"manager" and "management" relate to NewFunds Proprietary Limited
SUMMARISED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2013
STATEMENT OF FINANCIAL POSITION FOR THE YEAR ENDED 31 DECEMBER 2013
12 months ended 9 months ended
31 December 2013 31 December 2012
R R
ASSETS
Non-current assets
Investments: eRAFI Overall Portfolio 132,723,047 115,067,608
Current assets
Trade and other receivables 908 -
Cash and cash equivalents 824,715 743,927
Total assets 133,548,670 115,811,535
LIABILITIES
Current liabilities
Trade and other payables 425,630 9,019
Total liabilities 425,630 9,019
Net assets attributable to investors 133,123,040 115,802,516
STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 31 DECEMBER 2012
12 months ended 9 months ended
31 December 2013 31 December 2012
R R
Revenue 4,168,839 3,262,297
Dividend income 4,141,419 3,225,066
Interest income 27,420 34,480
Scrip lending income - 2,751
Realised gains on financial
instruments 6,313,284 6,060,168
Unrealised (loss)on financial
instruments 10,717,165 6,578,688
Other operating expenditure
Management and administration
expenses (139,430) (108,091)
Increase in net assets attributable
to investors before tax 21,059,859 15,793,062
Taxation Expense - -
Increase in net assets attributable
to investors before distribution 21,059,859 15,793,062
Income distribution (3,739,335) -
Increase in net assets attributable
to investors after distribution 17,320,524 15,793,062
Represented by:
Income attributable to investors 290,075 3,154,206
Capital (loss)attributable
to investors 17,030,449 12,638,856
STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO INVESTORS FOR THE YEAR ENDED 31 DECEMBER 2013
Capital attributable Income attributable Net assets attributable
to investors to investors to investors
R R R
Balance at 31 March 2012 99,861,325 148,129 100,009,454
Increase in net assets attributable
to investors 12,638,856 3,154,206 15,793,062
Balance at 31 December 2012 112,500,181 3,302,335 115,802,516
Increase in net assets attributable
to investors 17,030,449 290,075 17,320,524
Balance at 31 December 2013 129,530,630 3,592,410 133,123,040
STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2013
12 months ended 9 months ended
31 December 2013 31 December 2012
R R
Cash flows from operating activities
Cash generated / (utilised)
in operations 276,274 (99,666)
Purchases of equity securities (36,379,209) (43,716,375)
Proceeds from sale of equity
securities 35,754,219 40,154,151
Interest income 27,420 34,480
Scrip lending income - 2,751
Dividend income 4,141,419 3,225,066
Distributions (3,739,335) -
Capital distributions re-invested - 21,938
Net cash generated / (utilised)
in operating activities 80,788 (377,655)
Net movement in cash and cash
equivalents 80,788 (377,655)
Cash and cash equivalents at
the beginning of year 743,927 1,121,582
Cash and cash equivalents at
the end of year 824,715 743,927
NOTES TO THE SUMMARISED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2013
Accounting policies
1. Presentation of the financial statements
The presentation and disclosures of the summarised financial statements are in accordance with IAS 34. The significant accounting policies
applied in the preparation of these financial statements are set out below. These policies have been consistently applied to all the periods
presented, unless otherwise stated.
1.1 Statement of compliance
The audited annual financial statements have been prepared in accordance with the International Financial Reporting Standards ("IFRS"),
Interpretations issued by the International Financial Reporting Interpretation Committee ("IFRIC"), and in the manner required by the
Collective Investment Schemes Control Act of 2002, the Trust Deeds, JSE Listing Requirements and the SAICA Financial Reporting Guides.
1.2 Basis of accounting and measurement
The financial statements have been prepared on an accrual basis of accounting, except for cash flow information. The measurement basis used
is the historical cost basis, except where specifically indicated in the accounting policies.
1.3 Functional and presentation currency
The financial statements are presented in South African Rand, which is the Scheme's functional and presentation currency. All financial
information is presented to the nearest Rand.
1.4 Use of estimates, assumptions and judgements
The preparation of financial statements in conformity with IFRS requires management to make judgements, estimates and assumptions that affect
the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. Actual results may differ from these
estimates.
Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which
the estimates are revised and in any future periods affected. Management has determined that the underlying assumptions are appropriate and the
Scheme's financial statements therefore present the financial position fairly.
Information about significant areas of estimation uncertainty and critical judgements in applying the accounting policies that have the most
significant effect on the amounts recognised in the financial statements are included in the individual notes to the financial statements.
1.5 Financial instruments
Financial instruments are initially measured at fair value and are subsequently measured on the basis as set out below. Transaction costs of
instruments carried at fair value through profit and loss are recognised immediately through the profit and loss component of the statement of
comprehensive income. For other categories of financial instruments, transaction costs (which include incremental costs) and transaction income
(i.e. initiation fees) are capitalised to the initial carrying amount.
Financial instruments are recognised on the date when the entity enters into contractual arrangements with counterparties to purchase or sell the
financial instruments.
The Scheme is required to group instruments into classes that are appropriate to the nature of the information disclosed and take into account the
characteristics of those financial instruments. Classes of financial instruments have been determined by referring to the nature and extent of risks
arising from the financial instruments and how these are managed.
1.5.1 Financial instruments at fair value through profit or loss
This category includes investments in portfolios and net assets attributable to investors (redeemable securities).
Financial instruments are classified in this category if they meet one or more of the criteria set out below at initial recognition, and are so
designated by management. The entity may only designate financial instruments at fair value through profit and loss when the designation results
in more relevant information, as follows:
- It eliminates or significantly reduces valuation or recognition inconsistencies that would arise from measuring financial assets or
financial
liabilities, or recognising gains or losses on them, on different bases.
- When groups of financial assets, financial liabilities or combinations thereof are managed, and their performance evaluated, on a fair
value basis in accordance with a documented risk management or investment strategy, and where information about the entity's
financial instruments is reported to management on that basis. The entity has documented risk management and investment strategies designed to manage
such assets at fair value, taking into consideration the relationship of assets to liabilities in a way that
mitigates market risks.
- The entity can also designate a financial instrument at fair value through profit or loss if it relates to a contract containing one or more
embedded derivatives that significantly modify the cash flows resulting from that contract.
The fair value designation, once made, is irrevocable. Measurement is initially at fair value, with transaction costs taken directly to the profit
and loss component of the statement of comprehensive income. Subsequent to initial recognition, the fair value is remeasured, and gains and losses
from changes therein are recognised in the statement of comprehensive income.
Interest income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income, within interest.
Dividend income from financial assets at fair value through profit or loss is recognised in the statement of comprehensive income within dividend
income when the Scheme’s right to receive payments is established.
Investment in portfolio
The Scheme comprises of thirteen portfolios.
Creation and redemption
Creation and redemption are recorded on trade date using historic cost being the previous day closing index price.
Net assets attributable to investors (redeemable securities)
All redeemable securities provided by the portfolios provide investors with the right to request redemption for cash or in specie at the value
proportionate to each investor's share. The securities are redeemable at any time at the option of the security holder and are therefore classified
as financial liabilities.
1.5.2 Financial instruments at amortised cost.
The effective interest method is a method of calculating the amortised cost of a financial instruments and of allocating the interest income or
interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts
throughout the expected life of the financial instrument, or, when appropriate, a shorter period, to the net carrying amount of the financial instrument.
The calculation includes all fees paid or received between parties to the contract that are an integral part of the effective interest rate,
transaction costs and all other premiums or discounts.
1.5.3 Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. Loans and
receivables comprises of trade and other receivables. Trade and other receivables includes interest income receivable and dividends receivable.
After initial measurement, loans and receivables are subsequently measured at amortised cost using the effective interest rate method, less allowance
for impairment. Amortised cost is calculated by taking into account any discount or premium on acquisition and fees and costs that are an integral part
of the effective interest rate. The interest is included in the profit and loss component of the statement of comprehensive income. The carrying amount
of loans considered to be impaired on the statement of financial position is reduced through the use of an appropriate impairment methodology.
Once a loan has been written down as a result of an impairment loss, interest income is thereafter recognised using the rate of interest used to
discount the future cash flows for the purpose of measuring the impairment loss.
Cash and cash equivalents
Comprise of cash balances and call deposits with an original maturity of three months or less measured at amortised cost at reporting date. The
carrying value approximates the fair value.
1.5.4 Financial liabilities
Financial liabilities are measured at amortised cost except for liabilities designated at fair value which are held at fair value through profit and
loss. Financial liabilities comprise of trade & other payables.
Trade and other payables comprise of management and trustee fee payables and are measured at amortised cost using the effective interest method.
The carrying value approximates the fair value.
1.5.5 Impairment of financial assets at amortised cost
An impairment assessment of financial assets at amortised cost is performed at each reporting date.
Amortised cost instruments are considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the
estimated future cash flows of that asset.
An impairment loss in respect of an amortised cost investment is calculated as the difference between its carrying amount and the present value of
the estimated future cash flows, discounted at the original effective interest rate.
Loans and receivables are stated net of identified and unidentified impairments.
A financial asset or group of financial assets is considered impaired if, and only if, there is objective evidence of impairment as a result of one
or more events that occurred after the initial recognition of the asset (known as the loss event) and that loss event (or events) has an impact on
the estimated future cash flows of the financial asset or group of financial assets and can be reliably measured. In determining whether a loss event
has occurred, advances are subjected to regular evaluations that take cognisance of, inter alia, past experience of the economic climate similar to the
current economic climate, overall customer risk profile and payment record and the realisable value of any collateral.
Objective evidence that a financial asset or group of assets is impaired includes observable data that comes to the attention of the entity and may
include the following loss events:
- Significant financial difficulty of the issuer or borrower.
- A breach of contract, such as a default or delinquency in interest or principal payments.
- The Scheme granting to the borrower, for economic or legal reasons relating to the borrower’s financial difficulty, a concession that
the lender would not otherwise consider.
- It becoming probable that the borrower will enter insolvency or other financial reorganisation.
- The disappearance of an active market for that financial asset because of financial difficulties.
Observable data indicating that there is a measurable decrease in the estimated future cash flows from a group of financial assets since the
initial recognition of those assets, although the decrease cannot yet be identified with the individual financial assets in the group, including:
- adverse changes in the payment status of borrowers in the group; or
- national or local economic conditions that correlate with defaults on the assets in the group.
The entity first assesses whether objective evidence of impairment exists individually for financial assets that are individually significant, and
individually or collectively for financial assets that are not individually significant. If the entity determines that no objective evidence of
impairment exists for an individually assessed financial asset, whether significant or not, it includes the asset in a group of financial assets with
similar credit risk characteristics and collectively assesses that group for impairment. Assets that are individually assessed for impairment and for
which an impairment loss is or continues to be recognised, are not included in a collective assessment of impairment.
The amount of impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses) discounted at the financial asset’s original effective interest rate. The carrying amount of the asset is reduced
through the use of a provision account and the amount of the impairment loss is recognised in the profit and loss component of the statement of
comprehensive income. If a loan receivable or held-to-maturity investment has a variable interest rate, the discount rate for measuring any impairment
loss is the current effective interest rate determined under the contract.
1.5.6 Derecognition of financial assets
A financial asset (or, where applicable a part of a financial asset or part of a group of similar financial assets) is derecognised where:
- the rights to receive cash flows from the asset have been discharged, cancelled or have expired; or
- The entity retains the rights to receive cash flows from the asset but has assumed an obligation to pay for them in full without material delay
to a third party under a pass-through arrangement; and
- the entity has transferred its rights to receive cash flows from the asset and either:
- has transferred substantially all of the risks and rewards of the asset; or
- has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
1.5.7 Derecognition of financial liabilities
A financial liability is derecognised when the obligation under the liability is discharged, cancelled or expires. Where an existing financial
liability is replaced by another from the same party on substantially different terms, or the terms of an existing liability are substantially
modified (taking into account both quantitative and qualitative factors), such an exchange or modification is treated as a derecognition of the
original liability and the recognition of a new liability, and the difference in the respective carrying amounts is recognised in the profit and
loss component of the statement of comprehensive income.
Where the terms of an existing liability are not substantially modified, the liability is not derecognised. Costs incurred on such transactions
are treated as an adjustment to the carrying amount of the liability and are amortised over the remaining term of the modified liability.
1.5.8 Fair value
The listed underlying investments are carried at fair value through profit or loss such as those designated by management under the fair value option.
The fair value of a financial instrument is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
The method of determining the fair value of financial instruments can be analysed into the following categories:
(a) Level 1 - Unadjusted quoted prices in active markets where the quoted price is readily available and the price represents actual and
regularly occurring market transactions on an arm’s length basis.
(b) Level 2 - Valuation techniques using market observable inputs. Such techniques may include:
- using recent arm’s length market transactions;
- reference to the current fair value of similar instruments; and
- discounted cash flow analysis, pricing models or other techniques commonly used by market participants.
(c) Level 3 - Valuation techniques, as described in (b) above, for which not all inputs are market observable prices or rates. Such a
financial instrument is initially recognised at the transaction price, which is the best indicator of fair value, although the value obtained
from the relevant valuation model may differ. The difference between the transaction price and the model value, commonly referred to
as ‘day one profit and loss’, is either amortised over the life of the transaction, deferred until the instrument's fair value can be
determined using market observable inputs, or realised through settlement.
The valuation techniques in (b) and (c) use inputs such as interest rate yield curves, equity prices, volatilities of the underlying and correlations
between inputs. The models used in these valuation techniques are calibrated against industry standards, economic models and to observed transaction prices,
where available.
The best evidence of fair value at initial recognition is the transaction price (i.e. the fair value of the consideration given or received), unless the
fair value of that instrument is evidenced by comparison with other observable current market transactions in the same instrument
(i.e. without modification or repackaging) or based on a valuation technique whose variables include only data from observable markets.
1.6 Offsetting
Financial assets and liabilities are offset and the net amount reported in the statement of financial position when the entity holds a current legally
enforceable right to set off the recognised amounts and intends to either settle on a net basis, or realise the asset and settle the liability
simultaneously.
1.7 Revenue
Income comprises of interest income, coupon interest income, dividend income and scrip lending income. It is recognised to the extent that it is
probable that there will be an inflow of economic benefits and the income can be reliably measured.
Interest income is recognised in the statement of comprehensive income on a time-proportionate basis using the effective interest method and includes
interest income from debt securities.
Dividends from equity investments are recognised in the statement of comprehensive income when the shareholders’ rights to receive payment have been
established except, to the extent that dividends clearly reflect a realisation of the underlying investments.
Securities lending fee income are fees earned for the administration of securities lending activities and are accounted for on the accrual basis in
the period in which the service is rendered. Revenue from lending securities is recognised in profit or loss in proportion to the stage of completion
of the transaction at the reporting date. The stage of completion is assessed by reference to amount of scrip lent out.
1.8 Distributions
In accordance with the Scheme's Trust Deed, the price index portfolios distribute their distributable income and any other amounts determined by the
management scheme to security holders in cash.
As per the Scheme's Trust Deed, the total return index portfolios re-invest the distributions on behalf of investors through the purchase of additional
Constituent Securities in the weightings of the specific index.
1.9 Fair value gains and losses
Realised profits or losses on the disposal of investments are the differences between the fair value of the consideration received less any directly
attributable costs, on the sale of equity investments, and its carrying value at the start of the full reporting period.
Unrealised profits or losses on the revaluation of investments are the movements in the carrying value of investments between the start and end of
the accounting period.
1.10 Taxation
Income is taxed in the hands of the investor if the portfolio distributes within 12 months of having received income, failing which income will
be deemed to be received by and accrued to the portfolio and will be taxed in its hands. Capital gains and losses are ultimately taxed in the investors
hands on disposal of their participatory interest.
1.11 Provisions, contingent liabilities and commitments
Provisions are recognised when the Scheme has a present constructive or legal obligation as a result of past events and it is probable that an outflow
of resources, embodying economic benefits, will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made.
Provisions are measured at the present value of management’s best estimate of the expenditure required to settle the present obligation at the reporting
date. The discount rate used to determine the present value reflects the market assessments of the time value of money and the increases specific to the
liability.
Transactions are classified as contingent liabilities where the existence of the Scheme’s possible obligations depends on uncertain future events beyond
the Scheme’s control or when the Scheme has a present obligation that is not probable or which the Scheme is unable to measure reliably.
Items are classified as commitments where the Scheme commits itself to future transactions or if the items will result in the acquisition of assets.
A provision for onerous contracts is recognised when the expected benefits to be derived by the Scheme from a contract is lower than the unavoidable cost
of meeting its obligation under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract
and the expected net cost of fulfilling the contract. Before a provision is established, the Scheme recognises any impairment loss on the assets associated
with that contract.
1.12 Operating Segments
The portfolios, eRAFI Overall, NewSA, Shariah, eRAFI Financial, eRAFI Industrial, eRAFI Resources, MAPPS Growth, MAPPS Protect, Swix40, TRACI 3 Month,
Equity Momentum, ILBI, GOVI, trade under the umbrella of the NewFunds Collective Investment Schemes (CIS) as separate exchange traded funds. Each of the
mentioned funds is separately listed and trades on the JSE. Thus each of the separate portfolios fall within the scope of IFRS 8: Operating Segments.
Comparative segment information has been presented in conformity with the requirements of such standards. The application of the standard only impacts
the presentation and disclosure aspect of the financial statements.
1.13 Scrip lending
Securities lent are retained in the statement of financial position when substantially all the risks and rewards of ownership remain with the Scheme.
Securities will only be repurchased when the lender defaults. This collateral (as a form of guarantee) is only deposited with the lender if required
in terms of the Global Master Securities Lending Arrangement.
2. New standards and interpretations
2.1 Standards and interpretations effective and adopted in the current period
The application of the Scheme's accounting policies are consistent with those adopted in the prior year, except for those standards and amendments
which became effective in the current year.
IFRS 13 Fair Value Measurement
This standard which is applicable to financial periods beginning on or after 1 January 2013, replaces guidance on fair value measurement in existing
IFRS accounting standards by providing a single source of guidance to prescribe how fair value should be measured. The standard requires
(with some exceptions) entities to classify fair value measurements into a ‘fair value hierarchy’ based on the nature of the inputs. The standard also
requires entities to make various disclosures depending on the nature and level of the fair value measurement.
2.2 Standards and interpretations not yet effective
A number of new standards, amendments to standards and interpretations issued are not yet effective for the current reporting period and have not been
applied in preparing these financial statements, only those standards, amendments and interpretations which were assessed to be applicable to the Schemes
are disclosed below.
IFRS 9 Financial Instruments (IFRS 9)
This standard was initially published in November 2009 as the first step in replacing IAS 39 and contains new requirements for the classification and
measurement for financial assets. The classification and measurement requirements of financial liabilities were added to IFRS 9 in October 2010. In July
2011, the International Accounting Standards Board ("IASB") communicated in an Exposure Draft its intention to postpone the mandatory application of
IFRS 9 to annual periods beginning no earlier than 1 January 2017 with early application of certain paragraphs permitted.
The IASB decided not to require the restatement of comparative financial statements for the initial application of the classification and measurement
requirement of IFRS 9, but instead to require modified disclosures on transition from the classification and measurement requirements of IAS 39 to those
of IFRS 9.
The impact of this standard on the Scheme’s annual financial statements is currently being assessed.
IAS 32 Financial Instruments: Presentation (amendments) (2011)
IAS 32 (amendments) (2011) Offsetting Financial Assets and Financial Liabilities, was issued in December 2011 and is effective for annual periods
beginning on or after 1 January 2014. The offsetting requirements in IAS 32 have been retained, such that a financial asset and a financial liability
shall be offset and the net amount presented in the statement of financial position when, and only when, an entity currently 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.
The amendment to IAS 32 provides more application guidance on when the criterion for offsetting would be considered to be met. An entity shall apply the
amendments retrospectively.
This amendment is not expected to have a material impact on the Scheme’s annual financial statements.
Amendments from Annual Improvement Projects
Amendments resulting from Annual Improvements 2011-2013 Cycle
In December 2013, the IASB issued Annual Improvements to IFRSs 2011-2013 Cycle, a collection of amendments to IFRSs. The amendments are effective for
annual periods beginning on or after 1 July 2014, although entities are permitted to adopt them earlier.
IFRS 13 Fair Value Measurement: Amendments to scope of the portfolio exception - The objective of this amendment is to clarify that the portfolio
exception applies to all contracts within the scope of IAS 39 Financial Instruments: Recognition and Measurement or IFRS 9 Financial Instruments,
regardless of whether they meet the definitions of financial assets or financial liabilities as defined in IAS 32 Financial Instruments: Presentation.
The amendment requires prospective adoption.
The impact of this standard on the Scheme’s annual financial statements is currently being assessed.
Amendments resulting from Annual Improvements 2010-2012 Cycle
In December 2013, the IASB issued Annual Improvements to IFRSs 2010-2012 Cycle, a collection of amendments to IFRSs. With limited exception, the
amendments below are effective for annual periods beginning on or after 1 July 2014, although entities are permitted to apply them earlier.
IFRS 13 Fair Value Measurement: Short-term receivables and payables - The IASB clarified that short-term receivables and payables with no stated
interest rates can be held at invoice amounts when the effect of discounting is immaterial. The amendment is effective as from the date of publication.
The impact of this standard on the Scheme’s annual financial statements is currently being assessed.
IAS 24 Related Party Disclosures: Amendment regarding management entities - The amendment clarifies that a management entity, which is defined as an
entity that provides key management personnel services, may be a related party subject to the related party disclosures. In addition, an entity that
uses a management entity is required to disclose the expenses incurred for management services. The amendments are required to be applied retrospectively.
The impact of this standard on the Scheme’s annual financial statements is currently being assessed.
Audit report
Ernst & Young, the NewFunds Collective Investment Scheme’s independent auditor, has audited the annual financial statements of the NewFunds
eRAFIâ„¢ Overall SA Index ETF from which the summarised results contained in this announcement have been derived, and has expressed an unmodified
opinion on the annual financial statements. Their audit report is available for inspection at the CIS’s registered office.
3 Distributions
12 months ended 9 months ended
31 December 2013 31 December 2012
R R
20.29 cents per security declared on 4 December 2012 and paid 23 January 2013 600,000 -
30.37 cents per security declared on 7 March 2013 and paid 24 April 2013 898,105 -
11.64 cents per security declared on 6 June 2013 and paid 23 July 2013 344,300 -
50.12 cents per security declared on 5 September 2013 and paid 22 October 2013 1,482,315 -
20.29 cents per security declared on 28 November 2013 and paid 21 January 2014 414,615 -
3,739,335 -
4 Participatory interests
Net assets due to eRAFI™ Overall investors relate to the Scheme’s obligation to deliver the underlying baskets of shares constituting
2 957 255 (December 2012: 2 957 255) eRAFIâ„¢ Index Securities listed on the Exchange Traded Funds sector of the JSE.
Reconciliation of fair value
Number of Units Value at date of
creation/ liquidation
Opening balance – fair value 2,957,255 115,067,608
Total fair value adjustments - 10,717,165
New issues during the year - -
Redemptions during the year
Realised gain - 6,313,284
Rebalancing effect - 624,990
Fair value at 31 December 2013 2,957,255 132,723,047
Opening balance – fair value 2,957,255 98,888,467
Total fair value adjustments - 2,977,650
New issues during the year - -
Redemptions during the year
Realised gain - 6,060,168
Rebalancing effect - 7,141,323
Fair value at 31 December 2012 2,957,255 115,067,608
5 Related Party Transactions
Period ended Period ended
31 December 2012 31 March 2012
5.1 Balances R R
Payable to NewFunds Proprietary Limited (9,722) (7,876)
Payable to Standard Bank for fees (1,294) (1,143)
Participatory interests held by Absa CIB (99,551,108) (91,043,431)
BGA / ASA Shares held 1,986,924 2,106,908
5.2 Transactions
Management fee 103,184 72,515
Standard Bank fees 36,247 32,478
Absa CIB distributions paid for
particpatory interests held 2,349,663 474,752
Fair value adjustment on Absa CIB
participatory interest held (8,507,677) (12,801,209)
Fair value adjustment on BGA/ASA
shares held 299,423 (321,999)
6. Fair values versus carrying amounts of financial instruments not held at fair value
The fair value of the 'cash and cash equivalents', 'trade and other receivables' and 'trade and other payables' approximates the carrying value
because the instruments are short term in nature.
There has been no change in fair values as a result of a change in credit risk.
7. Fair Value hierarchy disclosures
The table below shows the Company’s financial instruments that are recognised and subsequently measured at fair value analysed by valuation technique.
The classification of instruments is based on the lowest level input that is significant to the fair value measurement in its entirety. All the fair
values disclosed are recurring fair value measurements. A description of the nature of the techniques used to calculate valuations based on observable
inputs and valuations based on unobservable inputs is set out in the table below:
Level 1 Level 2 Level 3
12 months ended 31 December 2013
Financial assets designated at fair value
Investment in listed shares 132,723,047 - -
Net assets attributable to investors - 133,123,040 -
9 months ended 31 December 2012
Financial assets designated at fair value
Investment in listed shares 115,067,608 - -
Net assets attributable to investors - 115,802,516 -
Valuations based on observable inputs include:
Level 1
Financial instruments valued with reference to unadjusted quoted prices for identical assets or liabilities in active markets where the quoted price is
readily available and the price represents actual and regularly occurring market transactions on an arm’s length basis.
An active market is one in which transactions occur with sufficient volume and frequency to provide pricing information on an ongoing basis.
This category includes active listed equities and bonds.
Level 2
Financial instruments valued using inputs other than quoted prices as described above for Level 1 but which are observable for the asset or liability,
either directly or indirectly, such as:
- quoted price for similar assets or liabilities in an active market;
- quoted price for identical or similar assets or liabilities in inactive markets;
- valuation model using observable inputs; and
- valuation model using inputs derived from/corroborated by observable market data.
The valuation technique applied in order to value the level 2 financial instruments is the Net Asset Value, which is linked to the price of the underlying
market traded instruments.
Valuations based on unobservable inputs include:
Level 3
Financial instruments valued using inputs that are not based on observable market data (unobservable data) such as an entity’s own assumptions about
assumptions of market participants in pricing the asset or liability. The Scheme has no instruments that fit this criteria.
8. Events after reporting period
The trustees are not aware of any events after the reporting date and the date of authorisation of these annual financial statements (as defined per IAS 10:
Events After The Reporting Period).
The annual financial statements were approved by the trustees on the date in the statement of trustees' responsibility and approval.
The annual financial statements cannot be amended after issue.
Total Expense Ratios
Increased customer demand for greater transparency in financial services and the recognition thereof by the collective investment industry requires
Collective Investment Scheme (CIS) managers to calculate and publish a Total Expense Ratio (TER) for each portfolio under their management. This is a
requirement in terms of the Association of Collective Investment Scheme (ACI) standard on the calculation and publication of Total expense ratio.
The ACI Guidelines on TERs require that a fund must be in existence for more than 6 months before expense ratios can be calculated and published. The
expense ratios below are unaudited.
The total expenses ratio by definition as expressed in the ASI standards is a measure of the portfolio's assets that were relinquished as payment for
services rendered in the management of the portfolio. This is expressed as percentage of the fraction; total expenses paid for by a portfolio for the
previous 12 months divided by the daily average net asset value for the previous 12 months.
Period ended Period ended
31 December 2012 31 March 2012
eRAFI Overall Annualised 0.10% 0.12%
The complete set of financial statements are available on Absa Capital's website (www.absacapitaletfs.com).
Copies of the full announcement may be requested by emailing etf@absacapital.com
31 March 2014
Sponsor
Absa Bank Limited (acting through its Corporate and Investment Banking division)
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