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SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS
For the year ended 28 February 2018
AFRICA ETF ISSUER (RF) LIMITED
(Registration number: 2013/022008/06)
SUMMARISED UNAUDITED ANNUAL FINANCIAL STATMENTS
For the year ended 28 February 2018
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
Share code: ETFGLD
ISIN: ZAE000182523
Share code: ETFPLT
ISIN: ZAE000182556
Share code: ETFPLD
ISIN: ZAE000182531
Share code: ETFRHO
ISIN: ZAE000210787
Preparer/Compiler The summarised unaudited annual financial
statements were independently compiled by
Maitland Group
South Africa Limited under the supervision of
Pravesh Daya, CA (SA) (Global Markets Client
Solutions Manager at Standard Bank).
Supervisor Africa ETF Issuer (RF) Limited is managed by
The Standard Bank of South Africa Limited
("Standard Bank"). All References to manager
and management relate to The Standard Bank of
South Africa Limited. These summarised
unaudited annual financial statements are under
the direction and supervision of Standard Bank.
Page 1
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
SUMMARISED UNAUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2018
STATEMENT OF FINANCIAL POSITION
At 28 February 2018
Notes
2018 2017
R R
Assets
Cash and cash equivalents 57,342,020 40,613,719
Trade and other receivables 578,070 260,345
Bullion Investments 4 5,781,767,579 6,777,704,780
Current tax receivable 612,823 505,044
Deferred tax 3 1,718,800 192,312
Total Assets 5,842,019,292 6,819,276,200
EQUITY AND LIABILITIES
Equity
Share capital 120 120
Retained income 58,858,649 40,391,241
Total Equity 58,858,769 40,391,361
Liabilities
Trade and other payables 4,414,317 4,414,110
Debentures 5 5,778,746,206 6,774,470,729
Total Liabilities 5,783,160,523 6,778,884,839
Total Equity and Liabilities 5,842,019,292 6,819,276,200
-
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AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
SUMMARISED UNAUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2018
STATEMENT OF COMPREHENSIVE INCOME
For the year ended 28 February 2018
Notes
2018 2017
R R
Management fee income 27,737,120 25,705,711
Other income 7,573,957 2,101,490
Operating expenses (7,860,669) (7,582,710)
Fair value adjustment on Bullion Investments 4 196,996,772 967,700,474
Fair value adjustment on Debentures 5 (202,412,485) (968,479,735)
Operating profit 22,034,695 19,445,230
Finance income 3,611,111 2,164,506
Finance cost (256) (8,644)
Profit before taxation 25,645,550 21,601,092
Taxation 6 (7,178,142) (6,061,294)
Profit for the year 18,467,408 15,539,798
Profit for the year attributable to:
Owners of the company 18,467,408 15,539,798
Other comprehensive income - -
Total comprehensive income for the year 18,467,408 15,539,798
Total comprehensive income attributable to:
Owners of the Company 18,467,408 15,539,798
Page 3
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
SUMMARISED UNAUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2018
STATEMENT OF CHANGES IN EQUITY
For the year ended 28 February 2018
Retained
Share capital income Total equity
R R R
Balances as at 29 February 2016 120 24,851,443 24,851,563
Changes in equity - - -
Total comprehensive income for the year - 15,539,798 15,539,798
Total changes - 15,539,798 15,539,798
Balances as at 28 February 2017 120 40,391,241 40,391,361
Changes in equity - - -
Total comprehensive income for the year - 18,467,408 18,467,408
Total changes - 18,467,408 18,467,408
Balances as at 28 February 2018 120 58,858,649 58,858,769
Page 4
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
SUMMARISED UNAUDITED RESULTS FOR THE YEAR ENDED 28 FEBRUARY 2018
STATEMENT OF CASH FLOWS
For the year ended 28 February 2018
2018 2017
Notes R R
Cash flows from operating activities
Cash generated from operations 21,929,855 19,678,640
Tax paid (8,812,409) (6,216,569)
Finance income 3,611,111 2,164,506
Finance expense (256) (8,644)
Net cash from operating activities 16,728,301 15,617,933
Cash flows from investing activities
Sale of Bullion 4 2,670,887,070 2,052,910,580
Purchase of Bullion 4 (1,504,370,378) (1,681,825,448)
Net cash from investing activities 1,166,516,692 371,085,132
Cash flows from financing activities
Creation of debentures 5 1,504,370,378 1,681,825,448
Debentures redeemed 5 (2,670,887,070) (2,052,910,580)
Net cash from financing activities (1,166,516,692) (371,085,132)
Net movement in cash and cash equivalents 16,728,301 15,617,933
Cash and cash equivalents at the beginning of the year 0 40,613,719 24,995,786
Cash and cash equivalents at the end of the year 0 57,342,020 40,613,719
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AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS
For the year ended 28 February 2018
1. Presentation of the annual financial statements
The significant accounting policies applied in the preparation of these annual financial statements are set out
below. These policies have been consistently applied to all the years presented, unless otherwise stated.
1.1 Statement of compliance
The summarised unaudited annual financial statements have been prepared in accordance with International
Financial Reporting Standards ("IFRS") and in the manner required by the Companies Act, 71 of 2008 and the
JSE Listings Requirements.
1.2 Basis of accounting and measurement
The annual financial statements have been prepared in accordance with going concern principles using the
historical cost basis, unless otherwise stated in the detailed accounting policies below.
1.3 Functional and presentation currency
The annual financial statements are presented in South African Rand, which is the Company's functional
currency. All financial information is presented to the nearest Rand.
1.4 Use of estimates, assumptions and judgements
In the preparation of the annual financial statements, management is required to make estimates and
assumptions that affect reported income, expenses, assets, liabilities and disclosure of contingent assets and
liabilities. Use of available information and the application of judgement is inherent in the formation of estimates.
Actual results in the future could differ from these estimates, which may be material to the financial statements
within the next financial year.
Judgements made by management that could have a significant effect on the amounts recognised in the
financial statements include:
· Estimated fair value of Debentures
Management uses the estimate that the value of the debentures at year end is equal to the value of the
underlying metal referenced by the debentures at year end.
· Assessment to determine the Company's functional currency
Management has assessed the functional currency of the business to be the South African Rand. Although
the commodities are quoted and generally trade in USD, the debentures are listed in ZAR on the JSE. The
South African Rand is also the currency that is used by management to assess the performance of the
business on an ongoing basis.
Page 6
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
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 or loss are
recognised immediately through the profit and loss component of the statement of comprehensive
income. For other categories of financial instruments, transaction costs (incremental costs directly
attributable to the acquisition, issue or disposal of a financial instrument) and transaction income (i.e.
initiation fees) are capitalised to the initial carrying amount.
Financial instruments are recognised on the date when the Company enters into contractual
arrangements with counterparties to purchase or sell the financial instruments.
Financial instruments designated at fair value through profit or loss
Financial assets and financial liabilities classified in this category are those that have been designated
by management upon initial recognition. Management may only designate an instrument at fair value
through profit or loss upon initial recognition when the following criteria are met:
· the designation eliminates or significantly reduces the inconsistent treatment that would otherwise
arise from measuring the assets or liabilities or recognising gains or losses on them on a different
basis.
· the assets and liabilities are managed and their performance evaluated on a fair value basis, in
accordance with a documented risk management or investment strategy which significantly modifies
the cash flows that would otherwise be required by the contract.
Financial assets and financial liabilities at fair value through profit or loss are recorded in the statement
of financial position at fair value. Changes in fair value are recorded in the profit or loss section in the
statement of comprehensive income.
Trade and other receivables
Trade and other receivables are initially recognised at fair value and subsequently measured at
amortised cost. Trade and other receivables are short term in nature and are not discounted.
Page 7
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
1.5.1 Financial liabilities
After initial recognition the debentures are held at fair value and this fair value is referenced to the price
of Gold, Platinum, Palladium and Rhodium bullion respectively.
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. The
carrying value of the liability at fair value and the amount which the Company is contractually required to
pay the holder on redemption approximate each other.
Classification of financial liabilities at fair value through profit or loss
The Company classifies the debenture liability at fair value through profit or loss if they are acquired
principally for the purpose of selling in the short term, i.e. are held for trading. They are presented as
current liabilities if they are expected to be sold within 12 months after the end of the reporting period;
otherwise they are presented as non-current liabilities. The Company has elected to designate any
financial liabilities at fair value through profit or loss.
Amounts recognised in profit or loss
Changes in fair values of financial liabilities at fair value through profit or loss are recorded in Fair value
adjustment on Debentures in profit or loss.
1.5.2 Fair value
The fair value of financial instruments that are traded in active markets at each reporting date is
determined by reference to quoted market prices or dealer price quotations, without any deduction for
transaction costs. For financial instruments not traded in an active market, the fair value is determined
using appropriate valuation techniques. Such techniques may include, using recent arm’s length market
transactions, reference to the current fair value of another instrument that is substantially the same, a
discounted cash flow analysis or other valuation models. An analysis of fair values of financial
instruments and further details as to how they are measured is provided in note 8.
Page 8
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
1.6 Share capital
Ordinary share capital
Incremental costs directly attributable to the issue of ordinary shares and share options are recognised as a
deduction from equity.
1.7 Revenue
Revenue is recognised at the fair value of the consideration received or receivable to the extent that it is
probable that the economic benefits will flow to the Company and the revenue can be reliably measured. The
following criteria are applicable to the following significant revenue categories:
Management fee income
The management fee income consists of a fee accrued daily on all the company's holdings of the relevant
commodity which that ETF references, calculated at the applicable rate set by the company, which is 0.25%
per annum (excluding VAT) for the Gold ETF, 0.30% per annum (excluding VAT) for the Platinum ETF, 0.35%
per annum (excluding VAT) for the Palladium ETF and 0.75% per annum (excluding VAT) for the Rhodium
ETF.
1.8 Finance income
Finance income comprises of interest income on funds invested. Interest income is recognised as it accrues
in profit or loss, using the effective interest method.
1.9 Cash and cash equivalents
For the purposes of the statement of cash flows, cash comprises of cash on hand and demand deposits.
Cash equivalents comprise highly liquid investments that are convertible into cash with an insignificant risk of
changes in value with original maturities of less than three months.
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AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
1.10 Tax
Current tax
The current tax liability or asset is the expected tax payable or recoverable, using tax rates and tax laws
enacted or substantively enacted at the reporting date, and any adjustment to tax payable in respect of
prior years. The taxation charge in the annual financial statements for amounts due to fiscal authorities in
the various territories in which the Company operates, includes estimates based on a judgement of the
application of law and practice in certain cases to determine the quantification of any liability arising. In
arriving at such estimates, management assesses the relative merits and risks of the tax treatment for
similar classes of transactions, taking into account statutory, judicial and regulatory guidance and, where
appropriate, external advice.
Deferred tax
Deferred income tax is provided, using the balance sheet method, on temporary differences arising
between the tax bases and carrying amounts of property and equipment, certain financial instruments
including derivative contracts, provisions for pensions and other post-retirements benefits and tax losses
carried forward. In relation to acquisitions, deferred tax is raised on the difference between the fair values
of net assets acquired and their tax bases in the annual financial statements. Deferred income tax is
determined using tax rates (and laws) that have been enacted or substantially enacted by the reporting
date and are expected to apply when the related deferred income tax asset is realised or the deferred
income tax liability is settled.
Deferred tax assets are recognised where it is probable that future taxable profit will be available against
which the temporary differences can be utilised.
The tax effects of income tax losses available for carry forward are recognised as an asset when it is
probable that future taxable profits will be available against which these losses can be utilised.
The carrying amount of deferred income tax assets is reviewed at each reporting date and reduced to the
extend that it is no longer probable that sufficient taxable profit will be available to allow all or part of the
deferred income tax asset to be utilised. Unrecognised deferred income tax assets are reassessed at
each reporting date and are recognised to the extent that it has become probable that future taxable
profit will allow the deferred tax asset to be recovered.
Deferred income tax assets and deferred income tax liabilities are offset, if a legally enforceable right
exists to set off current tax assets against current income tax liabilities and the deferred income taxes
relate to the same taxable entity and the same taxation authority.
Page 10
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
1.10 Tax (Continued)
Value Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of VAT, except:
· where the VAT incurred on a purchase of assets or services is not recoverable from the taxation
authority, in which case the VAT is recognised as part of the asset or expense; and
· receivables and payables that are stated with the amount of VAT included.
1.11 Gold, Platinum, Palladium and Rhodium Bullion
Gold, Platinum, Palladium and Rhodium Bullion are commodities that the Company buys and/or sells for
others or on their own account in order to generate a return of the respective Debenture and/or to realise
fees. The Company enables investors to track the performance of commodities through investing in the
respective debentures linked to Gold, Platinum, Palladium and Rhodium. There is an active market for the
respective commodities with trading prices publically available. The most appropriate policy is to hold Bullion
as an investment held at fair value through profit and loss.
Bullion is initially measured at fair value and is subsequently measured on the basis as set out below.
Transaction costs of Bullion carried at fair value through profit or loss are recognised immediately through the
profit and loss component of the statement of comprehensive income.
Bullion is recognised on the date when the Company enters into contractual arrangements with
counterparties to purchase Bullion.
It is subsequently measured at fair value and recorded on the statement of financial position. Changes in fair
value are recorded in the profit and loss section in the statement of comprehensive income.
The fair value of Bullion is affected by the market and is determined with reference to the exchange quoted
selling price of gold / platinum / palladium / rhodium per ounce known as Gold AM fix, Platinum AM fix,
Palladium AM fix and Rhodium AM fix.
Page 11
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
2. New Standards and Interpretations
2.1 Standards and interpretations effective and adopted in the current year
The application of the Company's accounting policies are consistent with those adopted in the prior year.
IAS 7 Statement of Cash Flows
This standard became effective for reporting periods beginning on or after 1 January 2017. The additional
disclosures help investors to evaluate changes in liabilities arising from financing activities, including changes
from cash flows and non-cash changes (such as foreign exchange gains or losses). The amendment does
not have a material impact on the disclosure of the Company's annual financial statements.
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 annual financial statements. Only those
standards, amendments and interpretations which were assessed to be applicable to the Company are
disclosed below:
IFRS 9 Financial Instruments
During July 2014 the IASB issued IFRS 9 as a complete standard including the requirements previously
issued and the additional amendments to introduce a new expected loss impairment model and limited
changes to the classification and measurement requirements for financial assets.
This amendment completes the IASB's financial instruments project and the standard is effective for reporting
periods beginning on or after 1 January 2018 with early adoption permitted (subject to local endorsement
requirements). The amendment is not expected to have a material impact on the disclosure and measurement
of the Company's annual financial statements.
Page 12
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
2. New Standards and Interpretations (Continued)
2.2 Standards and interpretations not yet effective (Continued)
IFRS 15 Revenue from Contracts with Customers
The core principle of the new Standard is for companies to recognise revenue to depict the transfer of
goods or services to customers in amounts that reflect the consideration (that is, payment) to which the
company expects to be entitled in exchange for those goods or services. IFRS 15 establishes a five-step
model that will apply to revenue earned from a contract with a customer regardless of the type of revenue
transaction or industry. The standard’s requirements will also apply to the recognition of some gains and
losses of some non-financial assets that are not an output of the entity’s ordinary activities.
The new standard will also result in enhanced disclosures about revenue, provide guidance for
transactions that were not previously addressed comprehensively (for example, service revenue and
contract modifications). The standard also improves guidance for multiple-element arrangements. The
standard is effective for annual periods beginning on or after 1 January 2018. The new standard is not
expected to have a material impact on the Company's annual financial statements.
IFRIC 22 Foreign Currency Transactions and Advance Consideration
This interpretation addresses the exchange rate to use in transactions that involve advance consideration
paid or received in a foreign currency. The interpretation is not expected to have a material impact on the
disclosure of the Company's annual financial statements.
Page 13
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
2018 2017
R R
3. Deferred tax
Deferred tax asset
Deferred tax asset 1,718,800 192,312
Reconciliation of movement in deferred tax (liability) / asset
Opening balance 192,312 165,907
Fair value movements on Precious Metals (55,159,096) (270,956,133)
Fair value movements on Precious Metals debentures 56,675,495 271,174,326
Accruals (4,008) (194,185)
Prepayments 14,097 2,397
1,718,800 192,312
Tax effects of temporary differences between tax and
book value for:
Fair value on Bullion Investment (263,129,961) (207,970,865)
Fair value on Debentures 264,874,429 208,198,934
Accruals 28,344 32,352
Prepayments (54,012) (68,109)
1,718,800 192,312
4. Bullion investments
Gold
Fair value at the beginning of the year 120,821,451 38,985,266
Gold purchases during the year 15,857,480 94,711,390
Gold redemptions during the year (40,246,206) -
Proceeds on gold sales during the year (300,543) (169,121)
Fair value adjustment for the year (4,420,385) (12,706,084)
91,711,797 120,821,451
As at 28 February 2018, 5,926.26 (2017: 7,428.99) ounces of gold bullion to the value of approximately
R91,661,767 (2017: R120,772,649) has been pledged in favour of AfricaGold Security Trust as security
for the guarantee provided by AfricaGold Security Trust against Africa ETF Issuer's obligations under the
AfricaGold debentures. The balance of the gold bullion holdings which have not been pledged are for
Africa ETF Issuer's own account. Refer to note 10 for details on the Security Trust.
Page 14
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
2018 2017
R R
4. Bullion investments (Continued)
Platinum
Fair value at the beginning of the year 1,781,563,254 1,710,375,670
Platinum purchases during the year 250,893,669 395,308,053
Platinum redemptions during the year (81,438,754) (136,074,903)
Proceeds on platinum sales during the year (6,862,831) (5,863,596)
Fair value adjustment for the year (255,937,685) (182,181,970)
1,688,217,653 1,781,563,254
As at 28 February 2018, 147,021.78 (2017: 133,664.79) ounces of platinum bullion to the value of
approximately R1,687,529,599 (2017: R1,780,832,407) has been pledged in favour of AfricaPlatinum
Security Trust as security for the guarantee provided by AfricaPlatinum Security Trust against the Africa ETF
Issuer’s obligations under the AfricaPlatinum Debentures. The balance of the platinum bullion holdings
which have not been pledged are for Africa ETF Issuer’s own account. Refer to note 10 for details on the
Security Trust.
Palladium
Fair value at the beginning of the year 4,312,611,657 4,452,249,398
Palladium purchases during the year 1,237,619,229 637,864,018
Palladium redemptions during the year (2,420,610,004) (1,848,821,294)
Proceeds on palladium sales during the year (15,283,407) (19,484,037)
Fair value adjustment for the year 143,242,877 1,090,803,572
3,257,580,352 4,312,611,657
As at 28 February 2018, 265,288.37 (2017: 423,987.49) ounces of palladium bullion to the value of
approximately R3,256,075,120 (2017: R4,310,954,890) has been pledged in favour of AfricaPalladium
Security Trust as security for the guarantee provided by AfricaPalladium Security Trust against Africa ETF
Issuer’s obligations under the AfricaPalladium Debentures. The balance of the palladium bullion holdings
which have not been pledged are for Africa ETF Issuer’s own account. Refer to note 10 for details on the
Security Trust.
Rhodium
Fair value at the beginning of the year 562,708,418 7,933,802
Rhodium purchases during the year - 553,941,987
Rhodium redemptions during the year (128,592,106) (68,014,383)
Proceeds on Rhodium sales during the year (3,970,500) (2,937,944)
Fair value adjustment for the year 314,111,965 71,784,956
744,257,777 562,708,418
As at 28 February 2018, 33,995 (2017: 46,655.68) ounces of rhodium bullion to the value of approximately
R743,479,720 (2017: R561,962,440) has been pledged in favour of AfricaRhodium Security Trust as
security for the guarantee provided by AfricaRhodium Security Trust against Africa ETF Issuer’s obligations
under the AfricaRhodium Debentures. The balance of the rhodium bullion holdings which have not been
pledged are for Africa ETF Issuer’s own account. Refer to note 10 for details on the Security Trust.
Total bullion investments
Fair value at the beginning of the year 6,777,704,780 6,209,544,136
Total bullion purchases during the year 1,504,370,378 1,681,825,448
Total bullion redemptions during the year (2,670,887,070) (2,052,910,580)
Proceeds on total bullion sales during the year (26,417,281) (28,454,698)
Fair value adjustment for the year 196,996,772 967,700,474
5,781,767,579 6,777,704,780
Page 15
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
4. Bullion investments (Continued)
Risk
The Precious Metals are held by the custodians, JP Morgan Chase Bank (Gold, Platinum and
Palladium) and Johnson Matthey (Rhodium) in their vaults. The Custodians are London Bullion Market
Association ("LBMA") as well as London Platinum and Palladium Market (LPPM) members and are in
good standing with both associations. There is a risk that the Precious Metals could be lost, stolen or
damaged, therefore the Company would not be able to request the sale or delivery of Precious Metals
for itself or on behalf of any qualifying debenture holder. The custodians have suitable all risk
insurance cover for all the holdings in the custodians’ vaults and this cover has been reviewed by
management. The cover includes general risks such as theft and/ or fraud but excludes catastrophic
risks such as acts of God.
5. Debentures
The unsecured debenture values are linked to the respective gold, platinum, palladium and rhodium
prices and are listed on the Exchange Traded Index Funds sector of the Johannesburg Stock
Exchange. The date of initial issue of the debentures was 4 December 2015 for Rhodium, 24 March
2014 for Palladium and 7 April 2014 for Platinum and Gold.
The Debentures do not bear interest and rank pari passu among each other. The debenture holders
have not acquired any ownership, right or beneficial interest in or to any Gold, Platinum, Palladium or
Rhodium Bullion held by the Company. The holder can redeem a debenture as long as the conditions
for redemption as set out in the prospectus have been met. Based on certain contingent events the
Company has the option to settle the debentures; these events are not expected to occur in the
normal course of business. The debenture holder has the option to put the debenture back to the
Company. Details of the redemption process are set out in the prospectus.
Fair value movements on debentures
The carrying value of the liability at fair value and the amount which the Company is contractually
required to pay the holder on redemption, approximate each other.
Fair value adjustments increasing the debenture liability in the current year equals R202,412,485
(2017: R968,479,735).
The changes in fair value of the liability attributable to changes in credit risk is Rnil (2017: Rnil). The
constant credit spread approach was applied from the date the liabilities were originated. No changes
in the credit risk of the liabilities and the applicable credit spreads were observed after origin.
Page 16
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
5. Debentures (Continued)
2018 2018 2017 2017
Number of Number of
debentures R debentures R
Reconciliation - Gold
Fair value at the beginning of the year 750,000 120,721,010 200,000 38,944,395
Creation of debentures 100,000 15,857,480 550,000 94,711,390
Redemptions of debentures (250,000) (40,246,206) -
Gold fee accrual (incl VAT) - (313,157) - (206,806)
Fair value adjustment - (4,357,359) - (12,727,969)
Gold debentures 600,000 91,661,768 750,000 120,721,010
Reconciliation - Platinum
Fair value at the beginning of the year 13,500,000 1,780,832,404 11,800,000 1,709,800,836
Creation of debentures 2,000,000 250,893,669 2,700,000 395,308,053
Redemptions of debentures (600,000) (81,438,754) (1,000,000) (136,074,903)
Platinum fee accrual (incl VAT) - (6,251,690) - (6,264,092)
Fair value adjustment - (256,506,030) - (181,937,490)
Platinum debentures 14,900,000 1,687,529,599 13,500,000 1,780,832,404
Reconciliation - Palladium
Fair value at the beginning of the year 42,900,000 4,310,954,876 57,200,000 4,449,712,542
Creation of debentures 10,600,000 1,237,619,229 7,400,000 637,864,018
Redemptions of debentures (26,550,000) (2,420,610,004) (21,700,000) (1,848,821,294)
Palladium fee accrual (incl VAT) - (19,385,088) - (19,308,066)
Fair value adjustment - 147,496,107 - 1,091,507,676
Palladium debentures 26,950,000 3,256,075,120 42,900,000 4,310,954,876
Reconciliation - Rhodium
Fair value at the beginning of the year 4,715,555 561,962,439 75,000 7,922,862
Creation of debentures - - 5,290,555 553,941,987
Redemptions of debentures (1,250,000) (128,592,106) (650,000) (68,014,383)
Rhodium fee accrual (incl VAT) - (5,670,381) - (3,525,545)
Fair value adjustment - 315,779,767 - 71,637,518
Rhodium debentures 3,465,555 743,479,719 4,715,555 561,962,439
Reconciliation - Total debentures
Fair value at the beginning of the year 6,774,470,729 6,206,380,635
Creation of debentures 1,504,370,378 1,681,825,448
Redemptions of debentures (2,670,887,070) (2,052,910,580)
Total fee accrual (incl VAT) (31,620,316) (29,304,509)
Fair value adjustment 202,412,485 968,479,735
Total debentures 5,778,746,206 6,774,470,729
For the gold, platinum and palladium debentures, the fair value is derived from multiplying the number of
ounces with the AM fix (price of an ounce of gold / platinum and palladium), and also with the ZAR/USD
exchange rate taken around the same time on 28 February 2018. For the rhodium debentures, the fair
value is derived from a price received from an independent data provider and the same ZAR/USD as per
the gold, platinum and palladium ETFs. This is different from the Fund’s published NAVs in order to
account for currency and price movements on 28 February 2018.
Page 17
.
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
5. Debentures (Continued)
Quarterly review of the gold prices per ounce US$ R/$ R
31 May 2017 1,264 13.0795 16,530
31 August 2017 1,306 13.0272 17,011
30 November 2017 1,295 13.6860 17,721
28 February 2018 1,320 11.7148 15,467
Quarterly review of the gold debenture values per
debenture R
31 May 2017 163.52
31 August 2017 168.14
30 November 2017 175.01
28 February 2018 152.77
Quarterly review of the platinum prices per ounce US$ R/$ R
31 May 2017 946 13.0904 12,384
31 August 2017 991 13.0328 12,916
30 November 2017 946 13.6700 12,932
28 February 2018 981 11.7004 11,478
Quarterly review of the platinum debenture values per
debenture R
31 May 2017 122.50
31 August 2017 127.66
30 November 2017 127.71
28 February 2018 113.26
Quarterly review of the palladium prices per ounce US$ R/$ R
31 May 2017 796 13.0904 10,420
31 August 2017 940 13.0328 12,251
30 November 2017 1002 13.6700 13,697
28 February 2018 1049 11.7004 12,274
Quarterly review of the palladium debenture values
per debenture R
31 May 2017 102.88
31 August 2017 120.83
30 November 2017 134.97
28 February 2018 120.82
Quarterly review of the rhodium prices per ounce US$ R/$ R
31 May 2017 920 13.1350 12,084
31 August 2017 1,130 13.0310 14,725
30 November 2017 1,513 13.6751 20,684
28 February 2018 1,860 11.7582 21,870
Page 18
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
5. Debentures (Continued)
Quarterly review of the rhodium debenture values per R
31 May 2017 119.30
31 August 2017 145.06
30 November 2017 203.32
28 February 2018 214.53
Africa ETF Issuer (RF) Limited debentures are primary listed on the Johannesburg Stock
Precious Metals debentures Number of listed Stock Exchange
Palladium 26,950,000 Namibian Stock Exchange
2018 2017
R R
6. Taxation
Major components of the tax expense
South African normal tax
Current year 8,704,630 6,087,699
Current taxation 8,704,630 6,087,699
Deferred tax
Current year (1,526,488) (26,405)
Deferred taxation (1,526,488) (26,405)
Total taxation 7,178,142 6,061,294
Reconciliation of the tax expense
Reconciliation between accounting profit and tax expense
Operating profit before tax 25,645,550 21,601,092
Tax at the applicable tax rate of 28% 7,180,754 6,048,306
Tax effect of amounts which are not deductible (taxable) in
calculating taxable income:
SARS Interest and penalties - 12,988
Income not taxable (2,612) -
7,178,142 6,061,294
7. Fair value of financial instruments
Financial instruments at amortised cost carried on the statement of financial position include
cash and cash equivalents, trade and other receivables, and trade and other payables. As at 28
February 2018, for all these instruments, the carrying amounts approximate the fair values of the
respective assets and liabilities because the instruments are short term in nature, therefore no
further hierarchy disclosure were made for these instruments.
Page 19
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
8. Fair value hierarchy
The table below shows the Company's assets and liabilities that are recognised and subsequently
measured at fair value and are analysed by valuation techniques. The classification of assets and liabilities
is based on the lowest level input that is significant to the fair value measurement in its entirety. 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:
Recurring fair value measurements
Valuations Valuations Valuations
with reference based on based on
to observable observable un-
prices inputs observable
inputs
Level 1 Level 2 Level 3 Total
R R R R
2018
Assets
Bullion investment 5,781,767,579 - - 5,781,767,579
Total assets 5,781,767,579 - - 5,781,767,579
Liabilities
Debentures - 5,778,746,206 - 5,778,746,206
Total liabilities - 5,778,746,206 - 5,778,746,206
Valuations Valuations Valuations
with reference based on based on
to observable observable un-
prices inputs observable
inputs
Level 1 Level 2 Level 3 Total
R R R R
2017
Assets
Bullion investment 6,777,704,780 - - 6,777,704,780
Total assets 6,777,704,780 - - 6,777,704,780
Liabilities
Debentures - 6,774,470,729 - 6,774,470,729
Total liabilities - 6,774,470,729 - 6,774,470,729
Note that a level 1 fair value was not used for debentures as we applied a bid-ask adjustment to the level 1
fair value.
Debentures are level 2 in nature, even though there is a quoted market price. The requirement for a
frequently traded instrument is not met, due to the nature of the Debenture (i.e. the value of the debenture
changes more frequently than the actual trading on the Debenture, as a result of the changes in metal
price).
Page 20
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
8. Fair value hierarchy (Continued)
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.
Level 2
Financial instruments valued using inputs other than quoted prices as described above for Level 1
including:
· 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 instrument is with reference to the
value of the underlying bullion investments after deducting the current sales. The bullion investments and
the sales values are calculated with reference to the Rand value of the underlying precious metal.
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. At year end there are no financial instruments classified at level 3.
2018 2017
R R
9. Related parties
Key management personnel:
· Maitland Group South Africa Limited
· The Standard Bank of South Africa Limited
Holding Company
· Africa Funds Issuer Owner Trust
Related party balances
The Standard Bank of South Africa Limited
Cash and cash equivalents 57,341,900 40,613,599
Maitland Group South Africa Limited
Fees payable (397,343) (653,926)
Page 21
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
2018 2017
R R
9. Related parties (Continued)
Related party transactions
The Africa Funds Issuer Owner Trust owns 100% (2017: 100%) of the ordinary shares in the entity.
The founder of the Africa Funds Issuer Owner Trust is The Standard Bank of South Africa Limited. The
Trustees of Africa Funds Issuer Owner Trust are Maitland Group South Africa Limited.
The Standard Bank of South Africa Limited
Interest paid 7,573,957 (8,644)
Interest income (63,924,647) 2,151,640
Maitland Group South Africa Limited
Fees for fund administration (1,359,118) (1,796,411)
Fees for corporate services (310,954) (689,401)
Page 22
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
10. Unconsolidated structured entities
The Africa ETF Issuer's obligations under the Debentures are not secured by any of the assets of the
Africa ETF Issuer (including any Commodity held by the Africa ETF Issuer from time to time), but the
payment obligations of the Africa ETF Issuer under the Debentures are secured by the relevant Security
Trust binding itself under a Guarantee issued in favour of the Debenture Holders in respect of the relevant
Class of Debentures as guarantor, guaranteeing the Africa ETF Issuer's obligations under the relevant
Debentures.
The AfricaPlatinum Security Trust is a special purpose trust established in terms of the AfricaPlatinum
Security Trust Deed for the purposes of issuing a Guarantee in favour of the AfricaPlatinum Debenture
Holders and the creditors in respect of the Platinum ETF. As at the date of this Prospectus, the trustee of
the AfricaPlatinum Security Trust is Maitland Group South Africa Limited.
The AfricaPalladium Security Trust is a special purpose trust established in terms of the AfricaPalladium
Security Trust Deed for the purposes of issuing a Guarantee in favour of the AfricaPalladium Debenture
Holders and the creditors in respect of the Palladium ETF. As at the date of this Prospectus, the trustee of
the AfricaPalladium Security Trust is Maitland Group South Africa Limited.
The AfricaGold Security Trust is a special purpose trust established in terms of the AfricaGold Security
Trust Deed for the purposes of issuing a Guarantee in favour of the AfricaGold Debenture Holders and
the creditors in respect of the Gold ETF. As at the date of this Prospectus, the trustee of the AfricaGold
Security Trust is Maitland Group South Africa Limited.
The AfricaRhodium Security Trust is a special purpose trust established in terms of the AfricaRhodium
Security Trust Deed for the purposes of issuing a Guarantee in favour of the AfricaRhodium Debenture
Holders and the creditors in respect of the Rhodium ETF. As at the date of this Prospectus, the trustee of
the AfricaRhodium Security Trust is Maitland Group South Africa Limited.
The AfricaPlatinum Security Trust has issued a Guarantee in favour of the AfricaPlatinum Debenture
Holders and other creditors in respect of the Platinum ETF. The AfricaPalladium Security Trust has issued
a Guarantee in favour of the AfricaPalladium Debenture Holders and other creditors in respect of the
Palladium ETF. The AfricaGold Security Trust has issued a guarantee in favour of the AfricaGold
Debenture Holders and other creditors in respect of the Gold ETF. The AfricaRhodium Security Trust has
issued a guarantee in favour of the AfricaRhodium Debenture Holders and other creditors in respect of
the Rhodium ETF. Each Security Trust is ring-fenced to the specific metal to which it relates.
In terms of each Guarantee, the liability of the relevant Security Trust is limited to the amount recovered
under the Indemnity granted in its favour and the Security granted in respect thereof in terms of the
relevant Security Agreement. In relation to each Class of Debentures the interests of the creditors will be
represented by the corresponding Security Trust. In terms of the applicable Debenture Conditions the
relevant Security Trust is required to enforce the Security granted to it on behalf of the creditors and issue
an Enforcement Notice to the Africa ETF Issuer if called upon to do so by an Extraordinary Resolution of
the Debenture Holders under that Class of Debentures. Creditors will not be able to enforce the Security
themselves nor to take any action against the Africa ETF Issuer in respect of the Security or otherwise,
nor to enforce claims against the Africa ETF Issuer except through the relevant Security Trust unless the
Guarantee structure is not enforceable or the relevant Security Trust is sequestrated or fails to act within a
reasonable time of being called upon to do so.
Page 23
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
10. Unconsolidated structured entities (Continued)
If the Security Trust is sequestrated, creditors shall be entitled to take action themselves to enforce claims
directly against the Africa ETF Issuer by delivering an Enforcement Notice in respect of a Debenture but,
in such circumstances, the applicable Security held by the Security Trust will be bypassed and thus no
longer be effective as a means of achieving distribution of the Africa ETF Issuer's assets which relate to
that Debenture in accordance with the relevant Priority of Payments.
11. Events after the reporting period
At the board meeting held on 11 May 2018, the Company declared an ordinary dividend of
R 50,000,000.
No other events, which are likely to have a material effect on the Company’s results in the current year,
have occurred between the year-end date and the date of this report.
The annual financial statements were approved by the directors on the date in the statement of directors'
responsibility.
The annual financial statements cannot be amended after issue.
Page 24
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS (CONTINUED)
For the year ended 28 February 2018
12. Presentation of statement of financial position in order of liquidity
The Company does not have a clearly identifiable operating cycle and therefore does not present
current and non-current assets and liabilities separately in the statement of financial position. Instead,
assets and liabilities are presented in order of their liquidity. The following table provides information
on the amounts expected to be recovered before and after 12 months after the reporting period.
28 February 2018
Amounts expected to be recovered or settled
Within 12 months after After 12 months after
the reporting period the reporting period Total
R R R
Assets
Cash and cash equivalents 57,342,020 - 57,342,020
Trade and other receivables 578,070 - 578,070
Bullion Investments 1 5,781,767,579 - 5,781,767,579
Current tax receivable 612,823 - 612,823
Deferred tax - 1,718,800 1,718,800
Total Assets 5,840,300,492 1,718,800 5,842,019,292
Liabilities
Trade and other payables 4,414,317 - 4,414,317
Debentures 5,778,746,206 - 5,778,746,206
Total Liabilities 5,783,160,523 - 5,783,160,523
28 February 2017
Amounts expected to be recovered or settled
Within 12 months after After 12 months after
the reporting period the reporting period Total
R R R
Assets
Cash and cash equivalents 40,613,719 - 40,613,719
Trade and other receivables 260,345 - 260,345
Bullion Investments 1 6,777,704,780 - 6,777,704,780
Current tax receivable 505,044 - 505,044
Deferred tax - 192,312 192,312
Total Assets 6,819,083,888 192,312 6,819,276,200
Liabilities
Trade and other payables 4,414,110 - 4,414,110
Debentures 6,774,470,729 - 6,774,470,729
Total Liabilities 6,778,884,839 - 6,778,884,839
1. The bullion investments are liquid in nature. These are classified as current as they back the debentures, which are
also current in nature.
Page 25
AFRICA ETF ISSUER (RF) LIMITED
Registration number: 2013/022008/06
NOTES TO THE SUMMARISED UNAUDITED ANNUAL FINANCIAL STATEMENTS
For the year ended 28 February 2018
Audit report
This summarised report is extracted from audited information, but is not itself audited. PricewaterhouseCoopers Inc.,
Africa ETF's independent auditor, has audited the annual financial statements of Africa ETF Issuer (RF) Limited
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 Africa ETF's
registered office.
The complete set of financial statements are available on www.standardbank.co.za.
Copies of the full announcement may be requested by emailing africaetf@standardbank.co.za .
Directors' responsibility
The summarised unaudited annual financial statements are extracted from audited information, but are not itself
audited.
The directors take full responsibility for the preparation of the summarised unaudited annual financial statements
and the financial information has been extracted correctly from the underlying audited financial statements.
31/05/2018
Sponsor Standard Bank of South Africa Limited
Page 26
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