NAMAL ACUITY VALUE FUND
Interim Report
For the six months ended 29th September 2019
National Asset Management Limited 07, Glen Aber Place, Colombo 3.
Phone: 0112445911 Fax: 0112445903 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 Financial Statements 5-8
Corporate Information 9
NAMAL ACUITY VALUE FUNDInterim Report 2019
NAMAL ACUITY VALUE FUND INTERIM REPORT
1HFY20
Dear Investor,
We take pleasure in presenting the interim report of the NAMAL Acuity Value Fund (NAVF) for the 6 month period ended 30th September 2019.
Performance Review The NAVF gained 5.5% for the six months period ended September 2019, while the benchmark All Share Price Index (ASPI) gained 3.26% and the S&P Sri Lanka 20 Index (S&P SL20) gained 0.76% during the period.
During the period under review, the fund realized a gain on equity investments amounting to LKR 21.7 Mn. The unrealized gain for the period was LKR 4.7 Mn compared to an unrealized loss of LKR 159.1 Mn a year earlier. This led to a total investment gain of LKR 72.9 Mn for the period. The fund reported a net profit of LKR 58 Mn against a loss of LKR 266 Mn a year ago.
Market Review The ASPI gained 3.26% and the S&P SL 20 gained 0.76% during the period under review. Foreigners
became net purchasers during the period. The low interest rate regime that prevailed in many foreign
markets had led investors to focus on foreign markets. For the 6 month period, CSE recorded a net
inflow of LKR 3,534 Mn. Participation from foreigners stood at 38.1%, while average daily turnover for
the period was LKR 665.7 Mn.
(Source: CSE, JB Portal)
The benchmark 12 month Treasury Yields declined during the 1H FY19 and stood at 8.41%. The
decrease was led by CBSL reducing Standing Lending Facility Rate by 100bps to 8% at the end of the
period under review. Private sector credit growth followed a downward trend during the period
mainly due to the political uncertainty that was hanging over the market. (Source: CBSL)
The Sri Lankan economy reported a GDP growth of 2.6% for 1H CY19. Growth was mainly led by the
strong performance of the agricultural sector which grew by 3.2% YoY. Industries sector saw a modest
growth of 2.3% while the services sector grew by 2.8%. Within the industries sector, the construction
subsector recorded a healthy growth rate of 4.7%. Within the services sector, telecommunications, IT
and financial services all saw significant growth for the period under review (10.9%, 11.9% and 8.8%
respectively). On the external sector, as of August 2019, the trade deficit declined by 36.5% YoY and
stood at USD 540 Mn. Significant growth in textile and garments exports as well as reduction personal
vehicle imports helped to narrow the trade deficit. Tourism earnings declined by 28.3% to USD 270
Mn, while worker remittances declined by 3% to USD 518 Mn. The overall BoP position to August 2019
posted a surplus of USD 1,451 Mn. (Source: Department of Census and Statistics, CBSL and External
Sector Performance August 2019)
Portfolio Composition Since The Fund matured on 29th Spetmeber 2019, the entirety of the portfolio was liqudated by the end of the period. However, the fund held the unlisted shares of Laugfs Lesiure, Laugfs Eco and Laugfs Power as at 30th September 2019.
Sincerely, The Fund Management Team 13th November 2019
Performance Comparison
(Non-annualised returns)
6M* (%)
12M (%)
60M (%)
**Since Inception
(%)
ASPI 3.26% -2.11% -20.88% 120.05%
S&P SL 20
0.76% -8.07% -31.66% 81.72%
NAVF 5.5% -3.1% -21.5% 123.41%
* Six month period ending 30th September 2019
**Since inception of NAVF
Asset Allocation
Equity Allocation
Equity2%
Cash and Cash Equivalents (Net of
Payables)98%
100%Power and Energy
1
STATEMENT OF COMPREHENSIVE INCOMEFor the 06 month period ended 29th September
2019 2018Note Rs. Rs.
16,044,078 21,394,538 11 30,429,340 9,464,255 7.3 21,727,280 (126,166,670) 7.4 4,657,467 (159,082,388)
INVESTMENT INCOMEDividend incomeInterest incomeRealised gains/(losses) on financial assets - fair value through profit or loss Unrealised (losses)/gains on fair value through profit or lossTotal Investment Income 72,858,166 (254,390,264)
EXPENSESManagement and registrar fees (5,066,810) (6,308,874) Trustee and custodian fees (1,279,680) (1,560,397) Audit fees (703,800) (164,504) Professional charges (551,804) (90,362) Other expenses (7,221,560) (3,419,819) Total operating expenses (14,823,653) (11,543,956)
NET OPERATING PROFIT/(LOSS) 58,034,513 (265,934,220)
FINANCE COSTInterest expense - (3,144)
PROFIT AFTER DEDUCTIONS AND BEFORE TAX 58,034,513 (265,937,364)
Income tax expense - -
PROFIT AFTER TAX FOR THE PERIOD 58,034,513 (265,937,364)
INCREASE IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 58,034,513 (265,937,364)
NAMAL ACUITY VALUE FUND
Interim Report 2019
2
STATEMENT OF CHANGES IN UNIT HOLDERS' FUNDSFor the 06 month period ended 29th September
2019 2018Rs. Rs.
974,214,448 1,347,477,142
58,034,513 (265,937,364)
UNIT HOLDERS' FUND AT THE BEGINNING OF THE PERIOD
Increase in net assets attributable to unit holders
UNIT HOLDERS' FUNDS AT THE END OF THE PERIOD 1,032,248,961 1,081,539,778
NAMAL ACUITY VALUE FUND
Interim Report 2019
4
NAMAL ACUITY VALUE FUND Interim Report 2019
NOTES TO THE FINANCIAL STATEMENTSFor the 06 month period ended 29th September 2019
1. All figures have been audited. Where necessary comparative figures have been adjusted to confirm with the changes in presentation in the current period.
2. Income is recognised on an accrual basis.
3. There are no material Contingent Liabilities or contingent Assets which require disclosure in the financial statements.
4. No circumstances have arisen since the Balance Sheet date, which would require adjustments or disclosure in the Financial Statements.
5. Share Price MovementThe market prices during the 6 months period ended 29 September 2019 2018 Highest Price ( Rs.) 95.00 100.00 Lowest Price (Rs.) 80.00 81.00 Last Traded Price ( Rs.) 93.00 81.00
6. Net Asset Value of a unit as at September 29th (Rs.) 95.64 99.73 (Applicable to 10,751,200 units)
7 FINANCIAL ASSETS - FAIR VALUE THROUGH PROFIT OR LOSS 2019 2018Rs. Rs.
Quoted equity securities (Note 7.1) - 714,448,682 Unquoted equity securities (Note 7.1.1) 22,955,311 -Debt Securities-quoted Debentures (Note 7.2) - 3,429,887 Market Value 22,955,311 717,878,569
7.1 Quoted Equity Securities
Cost as at 29.09.2019 - 920,902,877 Appreciation/(Depriciation) of market value quoted equity securities - (206,454,195)
- 714,448,682
CompanyNumber of Market Holdings Number of Market Holdings
Shares Value as a % of Shares Value as a % of Rs. Net Asset Rs. Net Asset
Banks, Finance and Insurance Value Value
Hatton National Bank LTD. - - - 641,326 134,678,460 12.44%Seylan Bank-NV - - - 1,238,551 48,922,765 4.52%
- - 183,601,225 16.96%
Beverages, Food and TobaccoRenuka Agri Foods - - - 5,958,698 11,321,526 1.05%
- - 11,321,526 1.05%
29.09.2019 30.09.2018
5
Construction & EngineeringAccess Engineering - - - 3,644,821 50,663,012 4.68%
- - 50,663,012 4.68%
Diversified HoldingsHayleys LTD - - - 29,530 5,513,251 0.51%
- - 5,513,251 0.51%
Health CareLanka Hospital Corporation LTD - - - 800,000 32,080,000 2.96%
- - 32,080,000 2.96%
ManufacturingTokyo Cement - - - 1,800,000 49,320,000 4.55%Tokyo Cement - NV - - - 2,782,635 66,226,713 6.12%Textured Jersey Lanka LTD - - - 2,455,000 70,704,000 6.53%
- - 186,250,713 17.20%
Power & EnergyLaugfs Gas Eco Sri LTD - - - 1,339,563 1,446,728 0.13%Laugfs Gas Leisure LTD. - - - 1,339,563 10,381,613 0.96%Laugfs Gas Power LTD. - - - 1,339,563 6,510,276 0.60%Laugfs Gas-V - - - 1,339,563 23,710,265 2.19%Lanka IOC - - - 3,100,000 86,800,000 8.02%
- - 128,848,883 11.90%
TelecommunicationDialog - - - 9,762,191 116,170,073 10.73%
- - 116,170,073 10.73%
Total value of Equity Investments in - - 714,448,682 65.99%Quoted Shares (At Market Value)
7.1. 1 Unquoted Equity Securities29.09.2019 30.09.2019
Number of Market Holdings Market HoldingsShares Value as a % of Number of Value as a % of
Rs. Net Asset Shares Rs. Net Asset Value Value
Power & Energy
Laugfs Leisure Ltd 1,339,563 1,178,815 1.1% - - -Laugfs Power Ltd 1,339,563 10,616,961 0.11% - - -Laugfs Eco Sri Ltd 1,339,563 11,159,534 1.00% - - -Unquoted Shares (At Market Value) 22,955,311 2.21% - - -
7.2 Quoted Debentures As at As at
Cost Market ValueHolding as a
% of Net Asset value
Cost Market ValueHolding as a
% of Net Asset value
Rs. Rs. Rs. Rs.Hemas Holdings - - - 3,260,000.00 3,429,887.03 0.32%
- - - 3,260,000.00 3,429,887.03 0.32%
7.3 Realised gains/ (losses) on financial assets- fair value through profit or loss29.09.2019 30.09.2018
Equity securities Rs. Rs.Proceeds on sale of equity shares 811,122,067 297,081,930 Average cost of equity share sold (789,396,985) (423,248,600)
21,725,082 (126,166,670) Realised gain on debentures 2,197.83 -
21,727,280 (126,166,670)
7.4 Unrealised gains/(losses) on financial assets - fair value through profit or loss29.09.2019 30.09.2018
Rs. Rs.Equity securities 4,657,467 (159,064,331) Debt securities-quoted debentures - (18,057)
4,657,467 (159,082,388)
29.09.2019 30.09.2018
6
NOTES TO THE FINANCIAL STATEMENTSFor the 06 month period ended 29th September 2019
8 FINANCIAL ASSETS - LOANS AND RECEIVABLES 2019 2018Rs. Rs.
8.1 Treasury Bills Repurchase Agreements
First Capital Treasuries PLC - 18,911,593 - 18,911,593
8.2 Investment in Commercial Papers
Dunamis Capital PLC - 83,590,763 Lanka Orix Leasing Co.PLC - 65,388,264 First Capital Holdings PLC - 104,192,822 Softlogic Holdings PLC - 81,167,603
- 334,339,452
- 353,251,045
9 OTHER RECEIVABLES 2019 2018Rs. Rs.
Dividend Receivable 444,275 - 444,275 -
10 ACCRUED EXPENSES 2019 2018Rs. Rs.
Fund management fees payable 839,399 928,607 Trustee fee and Custodian fee payable 211,129 231,993 Audit fee payable 703,509 115,335 Annual Report Charges 209,257 -Consultancy Fees Payable 216,470 -Distribution Expenses 551,804 -
2,731,568 1,275,935
11 INTEREST INCOME06 month period
ended06 month
period ended29.09.2019 30.09.2018
Rs. Rs. Interest on
Treasury bill repurchase agreements - 1,982,024 Debentures 26,127 349,478 Savings account 407,297 120,124 Commercial Paper 20,691,677 7,012,630 Fixed Deposits 5,872,149 -Money Market Savings Ac 3,432,089 -
30,429,340 9,464,255
12 DISTRIBUTIONThe fund has not announced a dividend distribution for the period ended August 31, 2019.
NAMAL ACUITY VALUE FUNDInterim Report 2019
7
13NET ASSET VALUE
2019Rs.
Net Asset Value as per Financial Statements 1,032,248,961 Reduction in Consultancy Fee (81,991) Unrealised loss adjustment on unquoted shares (4,656,879) Audit Fee Provision 175,442 Provision for Distribution and Annual Report Charges 572,102 Published Net Asset Value 1,028,257,635
Number of units outstanding 10,751,200
Published Net Asset Value per Unit 95.64
RECONCILIATION BETWEEN THE NET ASSET VALUE AS PER FINANCIAL STATEMENTS AND THE PUBLISHED
8
CORPORATE INFORMATION
Trustee & Custodian Deutsche Bank AG86 ,Galle RoadColombo 03
Auditors Ernst & YoungChartered Accountants201, De Saram PlaceColombo 10
Bankers Deutsche Bank AG86, Galle RoadColombo 03
Lawyers F J & G De SaramAttorneys-at-Law & Notries Public216, De Saram PlaceColombo 10
Managers & Registrars National Asset Management Limited (NAMAL) No. 07 ,Glen Aber Place,Colombo 03
National Asset Management LimitedBoard of Directors (As of 29th September 2019)
Mr. Alexis Lovell ChairmanMr. Indrajit Wickramasinghe DirectorMr. Tyronne de Silva DirectorMr. Malinda Samaratunga DirectorMr. Wijenanada Dambawinne DirectorMr. Suren Madhanayake DirectorMs. Khoo Siew Bee DirectorMr.Kapila Nanayakkara DirectorMr. Rusiru Abeyasinghe Director
NAMAL ACUITY VALUE FUNDInterim Report 2019
9
