NNAAMMAALL GGRROOWWTTHH FFUUNNDD
IInntteerriimm RReeppoorrtt
For the Six months ended 30th September 2015
National Asset Management Limited
Union Bank Building,
64, Galle Road , Colombo 3.
Phone : 2445911 Fax : 2445903 Email : [email protected]
Table of Contents
Report of the Investment Manager 1
Statement of Comprehensive Income 2
Statement Of Financial Position 3
Statement of Movement in Unit Holders Fund 4
Notes To the Accounts 5 - 8
Corporate Information 9
NAMAL GROWTH FUNDInterim Report 2015
NAMAL GROWTH FUND INTERIM REPORT
3%9%
11%
13%
20%
22%
22%
Healthcare
Telecommunications
Power and Energy
Divesified Holdings
Manufacturing
Banks, Finance andInsurance
Beverage, Food andTobacco
Dear Investor,
We take pleasure in presenting the interim report of the Namal Growth Fund (NGF) for the six months ended 30th September 2015.
Performance Review
The NGF generated a return of 3.50% for the six month period under review, outperforming the benchmark All Share Price Index (ASPI) and the S&P Sri Lanka 20 Index (S&P SL20), which gained 3.38% and fell by 0.68%, respectively.
For the period ended September 2015, the Fund’s total investment income declined 45.6% YoY to Rs. 34.1m driven by unrealized losses on fund`s equity holdings. Performance of Sri Lanka equity market was particularly weak during the first half of the year considering the political and policy uncertanities that prevailed over the period. Despite poor market conditions, investment income from dividends, interest and realized gains recorded a significant increase of 239%. The fund recorded a profit of Rs. 21.4m for the six months under review, a decrease of 62.9% YoY.
Market Review The ASPI decreased 3.40% YTD (Jan-Sep 2015) while the S&P SL20 declined 6.43% YTD (Jan-Sep 2015). The average daily turnover dropped to Rs 1,081m during the six months from Rs 1,510m in the comparative period last year. Sri Lankan equity market witnessed a net outflow of Rs. 6.1bn (Apr-Sep 2015) as foreign investors exited emerging markets on the fear of economic slowdown and the US rate hike. Foreign participation stood at 30.6% of turnover for the six month ending September.
Benchmark 12 month Treasury bill auction yields increased by 38 basis points to 7.18% over the six month period under review. CBSL reduced its policy rates by 50bps in April 2015 and accordingly, Standard Deposit Facility and Standing Lending Facility were reduced to 6.00% and 7.00%, respectively. In subsequent monetary policy reviews, CBSL kept policy rates unchanged. Inflationary pressures eased with the CCPI (annual average) declining from 2.5% to 0.7% by September 2015.
On the economic front, the Balance of Payments position deteriorated to record a deficit of USD 1.8b in the first eight months of the year, compared to a surplus of USD 2.1b over the corresponding period of 2014. Trade deficit widened by 5.0% YoY to USD 5.4b. Earnings from tourism and workers’ remittances increased during the period by 17.1% YoY (USD 1.8b) and 1.8% YoY (USD 4.5b), respectively.
Portfolio Composition
The Fund has an 82.8% allocation to equity, with the remainder in Debentures and Repos.
NGF’s highest equity concentrations are in banks finance and insurance sector followed by beverage food and tobacco and manufacturing sector.
Notable position changes at individual stock level were establishing positions in Dialog, ACL, Softlogic Holdings and Hemas Holdings. We also divested our positions in Asiri Hospitals and Hotel Services (Kingsbury).
Sincerely, The Fund Management Team 15th November 2015
Performance Comparison
(Non-annualised returns)
6M* (%)
12M (%)
24M (%)
36M (%)
ASPI 3.38 -2.78 21.50 18.07
S&P -0.68 -5.25 19.03 18.06
NGF 3.50 0.27 35.43 44.64
* Six month period ending 30 Sep 2015
Asset Allocation
Sector Allocation
Top 5 Equity Holdings
83%
16%
1%
Equity
Repos
Debentures
12.44%
7.71%
7.42%
6.95%
5.87%
0% 5% 10% 15%
Sampath Bank
Hemas…
Dialog Axiata
Lanka IOC
Tokyo Cement
*As a % of total equity holdings1
STATEMENT OF COMPREHENSIVE INCOME
For the six month period ended 30 September 2015
Note 2015 2014
Rs. Rs.
INVESTMENT INCOME
Dividend income 11.1 8.44 6.08
Interest income 11.2 7.74 2.20
Net realised (losses)/gains on financial assets held for trading 7.3 37.00 7.40
Net change in unrealised gains/(losses) on financial assets held for trading 7.4 (19.08) 47.00
Total investment income 34.11 62.68
EXPENSES
Management and Registrar fees 6.19 2.79
Trustee fees 0.96 0.44
Audit fee and expenses 0.21 0.15
Professional charges 0.04 ‐
Other expenses 0.10 0.01
Brokerage Expenses 5.19 1.60
Total operating expenses 12.68 4.98
Net operating profit/(loss) 21.43 57.69
FINANCE COST
Interest expense (0.00) (0.08)
PROFIT/(LOSS) AFTER DEDUCTIONS AND BEFORE TAX 21.42 57.61
Income tax expense ‐ ‐
PROFIT/(LOSS) AFTER DISTRIBUTIONS AND TAX 21.42 57.61
INCREASE/(DECREASE) IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 21.42 57.61
INTERIM REPORT 2015
NAMAL GROWTH FUND
2
STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS
For the six month period ended 30 September 2015
2015 2014
Rs. Rs.
UNIT HOLDERS' FUNDS AT THE BEGINNING OF THE PERIOD 659.23 286.08
Increase/ (decrease) in net assets attributable to Unit Holders 21.42 57.61
Received on unit creations 71.54 61.88
Payments on unit redemptions (11.94) (9.57)
UNIT HOLDERS' FUNDS AT THE END OF THE PERIOD 740.25 396.00
INTERIM REPORT 2015
NAMAL GROWTH FUND
4
NOTES TO THE FINANCIAL STATEMENTS
For the six month period ended 30 September 2015
1
2 Income is recognised on accrual basis
3
4
5
6
INTERIM REPORT 2015
NAMAL GROWTH FUND
All figures areprovisional and unaudited. Wherenecessary comparative figures have been
adjusted to confirm with the changes in presentation in the current period.
There are no material Contingent Liabilities or contingent Assets which requiredisclosure
in the financial statements.
No circumstances have arisen since the Balance Sheet date, which would require
adjustments or disclosure in the Financial Statements.
Interest on repurchase agreements is shown together with the applicable notional tax
credit which is set off against the income tax payable by the fund.
The profit and income of the fund is liable for income tax at the rate of 10% for the year of
assessment 2015/2016 as specified in part A of the Second Schedule to the Inland
Revenue Act No 10 of 2006
5
NOTES TO THE FINANCIAL STATEMENTS
For the six month period ended 30 September 2015
7 FINANCIAL ASSETS ‐ HELD FOR TRADING 2015 2014
Rs. Rs.
Quoted equity securities (7.1) 604.32 327.73
Debt securities ‐ quoted debentures (7.2) 10.35 13.37
614.67 341.10
7.1 Quoted equity securities
Cost as at 30 September 560.87 248.50
Appreciation/(depreciation) of market value quoted equity securities 43.47 79.23
Market Value as at 30 September 604.32 327.73
7.1.1 Company Number of Market Number of Market
Shares Value Shares Value
Banks, Finance and Insurance
Commercial Bank of Ceylon PLC ‐
Voting ‐ ‐ 50,000 7.80
Union Bank 250,000 5.38 ‐ ‐
Sampath Bank PLC 353,932 91.39 114,800 27.76
Seylan Bank Non voting 200,000 20.39 150,000 8.02
Nations Trust bank PLC 160,000 15.55 160,000 14.40963,932 132.70 474,800.00 57.98
Beverages, Food and Tobacco
Nestle Lanka 10,000 20.99 ‐ ‐
lanka Milk food 185,000 26.83 ‐ ‐
Lion Brewery 37,449 23.22 ‐ ‐
Distilleries Company of Sri Lanka PLC 100,000 27.49 ‐ ‐
Cargills Ceylon PLC 213,316 36.26 180,410 29.77
Renuka Agri Foods PLC 420,000 1.85 420,000 1.72
965,765 136.63 600,410 31.49
Diversified Holdings
Hemas Holdings 666,480 56.65 ‐ ‐
Softlogic Holdings 1,400,000 21.14
2,066,480 77.79 ‐ ‐
Health Care
Ceylon Hospitals PLC (Durdans)
Voting 100,763 11.99 100,763 10.51
Ceylon Hospitals PLC (Durdans) ‐
Non Voting 54,360 4.38 54,360 4.40
Asiri Hospital PLC ‐ ‐ 2,611,000 60.84
155,123 16.37 2,766,123.00 75.75
Hotels and Travels
Hotel Services (Ceylon) PLC ‐ Kingsbury ‐ ‐ 392,700 7.19
‐ ‐ 392,700 7.19
Manufacturing
ACL Cables PLC 212,103 22.99 171,653 13.22
Tokyo Cement Company Lank PLC
Non Voting 214,641 8.61 488,000 20.98
Tokyo Cement Company Lank PLC
Voting 862,000 43.10 550,000 30.41
Royal Ceramic PLC 150,000 17.75 150,000 17.33
TJL 857,689 27.02 70,400 5.00
2,296,433 119.47 1,430,053 86.94
Investment Trusts
Renuka Holdings PLC 197,403 7.82
‐ ‐ 197,403.00 7.82
Power and Energy
Laugfs Gas PLC 400,000 15.80 134,173 5.42
Lanka IOC PLC 1,239,250 51.06 1,239,250 55.15
1,639,250 66.86 1,373,423 60.57
Telecommunication
Dialog Axiata PLC 5,000,000 54.50 ‐ ‐
5,000,000 54.50 ‐ ‐
Total value of quoted equity securities in
(At Market Value) 13,086,983 604.32 7,234,912 327.73
NAMAL GROWTH FUND
20142015
INTERIM REPORT 2015
6
NOTES TO THE FINANCIAL STATEMENTS
For the six month period ended 30 September 2015
7 FINANCIAL ASSETS ‐ HELD FOR TRADING (contd..)
7.2 Quoted debentures
Cost Market Cost Market
Value Value
Rs. Rs.
Lanka Orix Leasing Company PLC ‐ ‐ 2.00 2.09
Lion Brewary PLC 5.00 5.21 5.00 5.72
Haylys PLC 5.00 5.14 5.00 5.56
10.00 10.35 12.00 13.37
7.3 Net realised (losses)/gains on financial assets held for trading 2015 2014
Rs. Rs.
Equity securities
Proceeds on sale of equity shares 147.41 55.62
Average cost of equity shares sold (110.42) (48.22)
37.00 7.40
7.4 Net change in unrealised gains/(losses) on financial assets held for trading
Equity securities (18.89) 46.73
Debt securities ‐ quoted debentures (0.19) 0.27
(19.08) 47.00
8 FINANCIAL ASSETS ‐ LOANS AND RECEIVABLES
2015 2014
Carrying Carrying
Value Value
Rs. Rs.
8.2 Repurchase agreements 114.48 47.29
114.48 47.29
INTERIM REPORT 2015
NAMAL GROWTH FUND
20142015
7
NOTES TO THE FINANCIAL STATEMENTS
For the six month period ended 30 September 2015
9 ACCRUED INCOME AND OTHER RECEIVABLES 2015 2014
Rs. Rs.
Dividend receivable 1.75 0.31
Receivable on unit creations 0.05 0.16
Debenture Interest Reciveble 0.35 ‐2.15 0.47
10 ACCRUED EXPENSES 2015 2014
Rs. Rs.
Fund management and registrar fee payable 1.09 0.54
Trustee fee payable 0.17 0.08
Audit fee 0.15 0.11
Payable on unit redemptions 0.01 ‐1.41 0.73
11 INVESTMENT INCOME 2015 2014
Rs. Rs.
11 Dividend income 8.44 6.08
11 Interest income
Interest on Treasury bill repurchase agreements 6.87 1.34
Interest on debentures 0.76 0.82
Interest on savings account 0.11 0.047.74 2.20
NAMAL GROWTH FUND
INTERIM REPORT 2015
8
CORPORATE INFORMATION
Trustee &Deutsche Bank AG
86 ,Galle Road
Colombo 03
Auditors Ernst & Young
Chartered Accountants
201, De Saram Place
Colombo 10
Bankers Deutsche Bank AG
86, Galle Road
Colombo 03
Lawyers F J & G De Saram
Attorneys‐at‐Law & Notries Public
216, De Saram Place
Colombo 10
ManagersNational Asset Management Limited (NAMAL)
Union Bank Building
64,Galle Road
Colombo 03
National Asset Management Limited
Board of Directors (As of September 30, 2015)
Mr. Alexis Lovell Chairman
Mr.Ajith Wijeyasekera Deputy Chairman
Mr. Indrajit Wickramasinghe Director
Mr. Palitha Gamage Director
Mr. Tyronne de Silva Director
Mr. Malinda Samaratunga Director
Mr. Suren Madhanayake Director
Mr. Avancka Herat Director
Ms. Khoo Siew Bee Director
Interim Report 2015
NAMALGROWTH FUND
9
