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SYGNIA ITRIX (RF) PROPRIETARY LIMITED - ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2017

Release Date: 28/03/2018 17:45
Code(s): SYGUS     PDF:  
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ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2017

The Sygnia Itrix Collective Investment Scheme
Sygnia Itrix MSCI USA Exchange Traded Fund (The Fund)
JSE code: SYGUS
ISIN: ZAE000249546

A portfolio in the Sygnia Itrix Collective Investment Scheme (Sygnia Itrix),
registered as such in terms of the Collective Investment Schemes Control Act, 45 of
2002 (CISCA).

ABRIDGED AUDITED RESULTS FOR THE YEAR ENDED 31 DECEMBER 2017



STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME

FOR THE YEAR ENDED 31 DECEMBER 2017

                                                                                RESTATED
                                                                    2017            2016
                                                                       R               R
    REVENUE
    Investment income                                         97 052 083     103 149 551
    Net fair value gain on investments at fair value
                                                             848 434 818     412 335 407
    through profit or loss
                                                             945 487 901     515 484 958

    EXPENSES
    Management and administrative expenses                 (38 362 220)     (36 137 859)
    Foreign exchange gain/(loss) on dividends                     6 900         (22 604)
                                                           (38 355 320)     (36 160 463)

    OPERATING PROFIT BEFORE DISTRIBUTION                     907 131 581     479 324 495
    Comprising:
    Income available for distribution before tax              58 696 763      66 989 088
    Capital gain retained                                    848 434 818     412 335 407

    Distributions                                          (42 914 453)     (48 295 669)

    Profit before tax                                        864 217 128     431 028 826

    Withholding tax                                        (14 416 993)     (15 783 525)

    Profit for the year                                      849 800 135     415 245 301

    Other comprehensive income not reclassified to
    profit or loss
    Translation of functional currency to ZAR             (501 340 192)    (603 801 342)
    Total comprehensive income and increase/(decrease)
    in net assets attributable to holders of redeemable      348 459 943   (188 556 041)
    securities




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STATEMENT OF FINANCIAL POSITION

AS AT 31 DECEMBER 2017

                                                                    2017            2016
                                                                       R               R
    ASSETS
    Listed investments held at fair value through profit
                                                           4 873 247 837   4 441 523 450
    or loss
    Trade and other receivables                                4 289 649       4 877 639
    Cash and cash equivalents                                 27 387 260      37 241 792
    Total assets                                           4 904 924 746   4 483 642 881

    LIABILITIES
    Net assets attributable to holders of redeemable
                                                           4 881 625 952   4 442 721 575
    securities
    Trade and other payables                                  23 298 794      40 921 306
    Total liabilities                                      4 904 924 746   4 483 642 881



STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO HOLDERS OF REDEEMABLE SECURITIES

FOR THE YEAR ENDED 31 DECEMBER 2017


                                                                                           R
    BALANCE AT 1 JANUARY 2016                                                4 808 933 486

    Profit for the year                                                        415 245 301
    Creation of redeemable securities                                          263 465 187
    Redemption of securities                                                 (441 121 057)
    Foreign currency translation adjustments                                 (603 801 342)

    BALANCE AT 31 DECEMBER 2016                                              4 442 721 575

    Profit for the year                                                        849 800 135
    Creation of redeemable securities                                           90 444 434
    Redemption of securities                                                             -
    Foreign currency translation adjustments                                 (501 340 192)

    BALANCE AT 31 DECEMBER 2017                                              4 881 625 952




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STATEMENT OF CASH FLOWS

FOR THE YEAR ENDED 31 DECEMBER 2017


                                                                 2017            2016
                                                                    R               R
    Cash utilised by operations                          (14 128 089)    (16 547 637)
    Dividends received                                     97 364 173     103 241 649
    Management fees paid                                 (54 107 382)    (35 608 268)
    Interest received                                           4 813          91 173
    Net cash inflow from operating activities              29 133 515      51 176 917

    Cash (outflow)/inflow from investing activities      (84 622 858)     167 088 767
    (Purchase)/sale of listed investments                (84 622 858)     167 088 767

    Cash inflow/(outflow) from financing activities        45 634 811   (234 855 712)
    Proceeds on creation of redeemable securities          90 444 434     263 465 187
    Redemption of securities                                        -   (441 121 057)
    Distributions paid to investors                      (44 809 623)    (57 199 842)

    Net decrease in cash and cash equivalents             (9 854 532)    (16 590 028)
    Cash and cash equivalents at the beginning of year     37 241 792      53 831 820
    Cash and cash equivalents at the end of year           27 387 260      37 241 792


    SYGNIA ITRIX MSCI USA REDEEMABLE SECURITIES
                                                                 2017            2016
                                                               Number          Number
    Total redeemable securities in issue                  156 000 000     153 000 000



In terms of the Trust Deed and CISCA, the Fund would be required to pay the net asset
value attributable to investors on redemption of securities.

Vested income beneficiaries include all holders of Sygnia Itrix MSCI USA redeemable
securities.

CREATIONS AND REDEMPTIONS

There were no (2016: 15 000 000) redemptions during the year amounting to a value of
nil (2016: R441 121 057).

There were 3 000 000 (2016: 9 000 000) creations during the year amounting to a
value of R90 444 434 (2016: R263 465 187).




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DISTRIBUTIONS

The Fund effects semi–annual distributions. All distributions are made out of the
income of the Fund.

The rebates represent an investor’s partial reduction of the 85.5 basis points
management fee charged (2016: 85.5 basis points management fee charged).

The rebate is calculated using a sliding scale that is dependent on the size of the
investor’s investment.

During the year under review the following distributions were effected by Sygnia
Itrix MSCI USA Redeemable Security:


                                                                   2017           2016
                                                                      R              R
    Declared distributions                                 (40 481 579)   (44 872 088)

    0.13717 rand per security
    Declared June 2017 and paid July 2017                  (21 398 520)
    0.14481 rand per security
    Declared June 2016 and paid July 2016                                 (23 893 861)

    0.12218 rand per security
    Declared December 2017 and paid January 2018           (19 083 059)
    0.13541 rand per security
    Declared December 2016 and paid January 2017                          (20 978 227)

    Management fees refunded during the year as a rebate
                                                           (2 432 874)     (3 423 581)
    distribution

    Total distribution expense for the year                (42 914 453)   (48 295 669)



TOTAL EXPENSE RATIO (TER)

The TER represents the total expense to the Fund. The only expense of the Fund is
the management fee payable to the Manager, which is calculated at 0.855% of the assets
under management on a daily basis (2016: 0.855% of assets under management). The Fund
had a TER of 85.5 basis points (2016: 85.5 basis points).

The TER disclosed is calculated based on the highest management fee scale applicable.
The actual management fee scale is a sliding scale with significant fee reductions
applied for larger investment amounts.

Increased consumer 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 for
each fund under their management.

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This is a requirement in terms of the Association for Savings and Investments South
Africa (ASISA) standard on the calculation and publication of total expense ratios.

STATEMENT OF COMPLIANCE

The information in this summarised report has been extracted from the audited annual
financial statements, which were prepared in accordance with the JSE Listing
Requirements for abridged reports, and the requirements of CISCA, in order to meet
the requirements of the Trust Deed approved by the Financial Services Board.

The listing requirements require abridged reports to be prepared in accordance with
the framework concepts and the measurement and recognition of International Financial
Reporting Standards (IFRS) and the SAICA Financial Reporting Guides as issued by the
Accounting Practices Committee, and the Financial Reporting Pronouncements as issued
by Financial Reporting Standards Council and to also, as a minimum, contain the
information required by IAS 34 Interim Financial Reporting. This announcement does
not include the information required pursuant to paragraph 16A(j) of IAS 34. The full
report is available on the issuer’s website, at the issuer’s registered offices and
upon request.

These financial statements were authorised for issue by the board of directors of
the Manager on 27 March 2018.

ACCOUNTING POLICIES

The accounting policies applied in the preparation of the financial statements from
which the summary financial statements were derived are in terms of International
Financial Reporting Standards and are consistent with those accounting policies
applied in the preparation of the previous annual financial statements except for
the correction of the foreign currency to presentation currency translation which
has been reflected in other comprehensive income. The correction hereof had no
impact on the amounts reflected in the Statement of Financial Position, Statement of
Cash flows or the Profit/(loss) Before Tax presented in 2016.

NEW STANDARDS AND INTERPRETATIONS NOT YET ADOPTED

The following standards, amendments to standards and interpretations effective for
the first time in future accounting periods and which are relevant to the Fund have
not been early adopted.

IFRS 9 Financial Instruments - IFRS 9 will be effective for the Fund’s annual reporting
period starting 1 January 2018. IFRS 9 will replace the current classification,
recognition and measurement requirements of IAS 39 Financial Instruments: Recognition
and Measurement. Management expects that the impact of the application of IFRS 9 in
the financial statements will be minimal for the following reasons:




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•   The Fund’s largest financial instruments are listed equity instruments. These
    instruments are currently measured at fair value through profit or loss. IFRS 9
    requires that all equity instruments be measured at fair value with changes in
    profit or loss, except for those equity instruments not held for trading and for
    which the entity has elected to present the changes in fair value in other
    comprehensive income. The Fund is not making use of this alternative accounting
    option.
•   Trade and other receivables are comprised of short-term receivables with established
    rights and low risk of default. These instruments will continue to be measured at
    amortised cost in accordance with IFRS 9. It is expected that any associated credit
    losses on these receivables will be minimal.
•   The financial liabilities are comprised mostly of redeemable securities, which are
    designated at fair value through profit or loss. The Fund will continue to designate
    the liabilities at fair value through profit or loss in accordance with IFRS 9.
    This is because the liabilities are managed and the performance evaluated on a fair
    value basis.
•   Trade and other payables that are financial instruments will continue to be measured
    at amortised cost. These payables are comprised of short-term payables.
•   Fair value changes, dividend income and equalisation on investment appropriations
    will be recognised in accordance with IFRS 9. The recognition and measurement of
    these items will remain consistent with the current accounting policy.

IFRS 15 Revenue from Contracts with Customers - IFRS 15 will be effective for the
Fund’s annual reporting period starting 1 January 2018. IFRS 15 replaces the current
effective standards on recognition and measurement of revenues, including IAS 18
Revenue. Management expects that there will be no impact on the application of IFRS 15
due to the following:
•  IFRS 15 excludes those contractual rights and obligations within the scope of IFRS
   9. As noted above, all investment returns will be accounted for in accordance with
   IFRS 9.

IFRS 16 Leases - IFRS 16 will be effective for the Fund’s annual reporting period
starting 1 January 2019. IFRS 16 provides a single-lessee accounting model, specifying
how leases will be recognised, measured and disclosed. Management expects that there
will be no impact on the application of IFRS 16 in the current reporting period.

IFRS 17 Insurance Contracts - IFRS 17 will be effective for the Fund's annual reporting
period starting 1 January 2021. IFRS 17 provides a single accounting model that measures
insurance contracts using current estimates. Management expects that there will be no
impact on the application of IFRS 17 in the current reporting period.

INVESTMENT INCOME

Investment income comprises:
•  Interest income earned on cash and cash equivalents;
•  Cash equalisation component on creations (at the time of creation it represents
   the income portion attributable to the net asset value at the time that is payable
   by the creating party); and


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•   Dividends from listed equities held at fair value through profit or loss.

INTEREST INCOME

Interest income is recognised in profit or loss using the effective interest method,
taking into account the expected timing and amount of cash flows.

DIVIDEND INCOME

Dividend income is recognised when the right to receive the payment is established.
This is usually the ex-dividend date for quoted equities.

AUDIT REPORT

This summarised report is itself not reviewed or audited, but is extracted from the
underlying audited information. The audited annual financial statements for the year
ended 31 December 2017 from which the summarised report has been extracted were audited
by Deloitte and Touche, who expressed an unmodified opinion thereon. A copy of the
auditor’s report on the audited annual financial statements is available for inspection
at the company’s registered office together with the annual financial statements
identified in the respective auditor’s reports.

A full copy of these financial statements is available on the Sygnia website:
https://www.sygnia.co.za/etfs/documents.

DIRECTORS’ RESPONSIBILITY

The directors take full responsibility for the preparation of the abridged report
and confirm that the financial information was correctly extracted from the
underlying annual financial statements.

Sponsor
Vunani Corporate Finance

Trustee
Standard Bank of SA Limited

Manager
Sygnia Itrix (RF) Proprietary Limited



28 March 2018




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