2014 - 2015 NAMAL AHEAD OF THE PACK Acuity Value Fund ANNUAL REPORT ANNUAL REPORT 2014 / 2015
Contents
About NAMAL 01
Chairman's Review 03
Board of Directors 05
Management Team 09
NAMAL Funds 12
Investment Manager’s Report 16
NAMAL Acuity Value Fund 25
Unit Information 46
Corporate Information 48 About
1 ANNUAL REPORT 2014 / 2015
About NAMAL
National Asset Management Limited (NAMAL) is the pioneer Unit Trust management company in Sri Lanka established in 1991. Over 20 years of experience and a successful track record of investing in equity and xed income markets, NAMAL launched the rst Unit Trust to be licensed in Sri Lanka (National Equity Fund) and the rst listed Unit Trust (NAMAL Acuity Value Fund). We operate eight Unit Trusts and o er private portfolio management services as well. A subsidiary of Union Bank of Colombo PLC, our shareholders include DFCC Bank PLC and Ennid Capital (Pvt) Limited. We have a highly experienced and professional management team with widespread experience in domestic and international capital markets.
Our Investment Philosophy
Our philosophy is to identify and invest in “compounders” – high quality companies with dominant business models, intangible assets, pricing power and low capital intensity. The investment philosophy is clearly re ected in our Investment Management process.
Our primary objective is to provide enhanced long term growth while ensuring preservation of capital.
Our Unit Trusts
Unit Trusts enable individual investors to bene t from professional fund management, investment performance, portfolio diversi cation, additional investment alternatives and risk management for a low minimum investment. In addition, investors have the ability to redeem their investments on a daily basis in the event of an emergency. Investing in Unit Trusts allows you to plan and invest for your future nancial wealth, signi cant life milestones and your prosperous retirement while enjoying peace of mind.
All NAMAL Unit Trusts are licensed and regulated by the Securities and Exchange Commission of Sri Lanka.
2 Chairman’s Review
3 “We remain committed to delivering long term capital appreciation and income to our investors by adopting conservative, fundamental based investment management”.
Dear Investors,
It is my pleasure to send this Report and accounts of the Funds to our investors for the year ended 31st March 2015.
The Company achieved a 15% growth in Assets under Management (AuM) to Rs. 15 Bn during the year under review. The Funds continued to deliver strong performance to investors. NAMAL Growth Fund was ranked No. 3 of 65 Unit Trusts in the industry with returns of 42.4% in CY2014. NAMAL’s agship National Equity Fund ranked No 2 in the balanced category with returns of 33.4% in CY2014 having been the best performing Unit Trust in both 2012 and 2013. The National Equity Fund has provided an annualized return of 14.8% since inception in 1991. Our xed income funds, NAMAL High Yield Fund and NAMAL Income Fund continue to provide attractive tax adjusted returns.
The year ahead will be challenging with an impending Parliamentary election following the Presidential election. While foreseeing some near term political uncertainties and challenges stemming from domestic political and macro-economic issues, we are optimistic about the long term growth of the Sri Lankan economy and its capital markets. We remain committed to delivering long term capital appreciation and income to our investors by adopting conservative, fundamental based investment management.
I wish to thank our sta , the Securities and Exchange Commission of Sri Lanka, the Trustees and our market counterparties for their contribution. Most importantly I wish to extend my sincere appreciation to our loyal investors, many of whom have remained with NAMAL since inception, for the trust they have placed in us. I am con dent NAMAL will repay your trust by continuing to deliver excellent performance in the future.
Alexis Lovell, MBE Chairman
4 Board of Directors
5 ANNUAL REPORT 2014 / 2015
Board of Directors
Alexis Lovell Ajith Wijeyesekera Indrajit Wickramasinghe Chairman Deputy Chairman
Palitha Gamage Ms Khoo Siew Bee Avancka Herat
Suren Madanayake Malinda Samaratunga
Not in picture: Tyrone De Silva
6 ANNUAL REPORT 2014 / 2015
Pro les of the Board of Directors
Mr. Alexis Lovell, MBE – Chairman
Mr. Lovell is the Deputy Chairman of Union Bank of Colombo PLC. He counts over thirty years of experience in Finance and Investment Banking. Mr. Lovell is a Chartered Management Accountant, UK and holds a post graduate degree in Business Administration. He was awarded the MBE (Most Distinguished Order of the British Empire) by Her Majesty the Queen of England for services to Investment Banking.
Mr. Ajith Wijeyesekera - Deputy Chairman
Mr. Wijeyesekera is a renowned entrepreneur/ business leader with over 30 years’ experience in business management. An eminent personality in the Sri Lankan apparel industry, he is the Founder Chairman/Managing Director of Union Apparels (Pvt) Limited, a well-established manufacturer of garments for export markets, consisting of ve manufacturing units with a turnover of Rs. 4 billion and a workforce of over 3500.
He is also the Founder Chairman/Managing Director of Union Resorts, the owning company of The Blue Water, Wadduwa, a luxury ve star resort hotel, NorthStar Holdings an investment company, Union Industrial Washing (Pvt) Limited and the elite fashion store, Dilly's Fashions (Pvt) Ltd.
Mr. Indrajit Wickramasinghe
Indrajit Wickramasinghe is currently the Director/Chief Executive O cer of Union Bank of Colombo Plc. He counts for over 25 years of Management experience having worked in both the nancial and consumer sectors in both local and multinational companies. He holds an MBA from the University of Sri Jayewardenepura, a Fellow of the Chartered Institute of Marketing UK, a Chartered Marketer, a Member of the Association of the Professional Bankers and a member of the Oxford Business Alumni, University of Oxford.
Prior to his appointment as Director/CEO of Union Bank he served as the Chief Operating O cer of NDB Bank where he was responsible for all business areas including Retail Banking, Corporate Banking, SME Banking and Project Finance. Prior to that he held positions as a Vice President looking after functions such as HR, Marketing and seven years as Vice President heading Retail Banking. Mr. Wickramasinghe was also a Non-Executive Director of Eagle Insurance /Aviva NDB Insurance, NDB Capital Holdings PLC, NDB Securities (Pvt) Ltd and Development Holdings (Pvt) Ltd. He currently serves as a Non-Executive Director of the Credit Information Bureau of Sri Lanka, National Asset Management Ltd and UB Finance Company Ltd.
Mr. Malinda Samaratunga
Mr. Malinda Samaratunga is an Associate Member of the Chartered Institute of Management Accountants, UK and a Fellow Member of the Certi ed Management Accountants, Sri Lanka. He holds a Master of Business Administration (MBA) and a Bachelor of Science (B.Sc.) degree both from the University of Colombo.
Mr. Samaratunga counts over 14 years of extensive experience in Finance & Management in the Banking & Financial sectors. He currently functions in the bank in the capacity of the Chief Financial O cer. He also serves on the Board of UB Finance Co. Ltd. and National Asset Management Limited. Prior to joining the Bank; he was the Assistant General Manager – Finance & Treasury of Commercial Leasing and Finance Company PLC.
7 ANNUAL REPORT 2014 / 2015
Mr. Suren Madanayake
Mr. Suren Madanayake had his education at Royal College, Colombo and quali ed as a Mechanical Engineer from the University of Texas at Austin, USA. He was appointed to the Board of ACL Cables PLC in June 1991 and appointed as Managing Director in September 2005. When Kelani Cables PLC was acquired in October 1999, he was appointed as Managing Director of Kelani Cables PLC and Lanka Olex Cables (Private) Ltd which is the holding Company of Kelani Cables PLC. In 2003 he was appointed as Deputy Chairman of Kelani Cables PLC.
He also serves as the Chairman of Resus Energy PLC, Managing Director of ACL Plastics PLC and Director of ACL Electric (Pvt) Ltd., Ceylon Bulbs & Electricals Ltd., ACL Metals & Alloys (Pvt.) Ltd., ACL Polymers (Pvt.) Ltd., ACL-Kelani Magnet Wire (Pvt.) Ltd., Ceylon Copper (Pvt.) Ltd., SM Lighting (Pvt) Ltd., Fab Foods (Pvt.) Ltd., Ceylon Tapioca Ltd., E-Commerce Technologies (Pvt) Ltd., Destination Ceylon (Pvt.) Ltd., Pan Asia Power PLC and National Asset Management (Pvt) Ltd. He also serves as Trustee of CCC Foundation of Sri Lanka, which is an approved charity.
Ms. Khoo Siew Bee
Ms. Siew Bee has extensive experience in all aspects of corporate nance work in Asia, the US and Europe. Her previous positions include Director & Country Manager of Schroders Taiwan, Director of Schroders Hong Kong, Director of Schroders Singapore and Mergers & Acquisitions Director (Asia Paci c) of Monsanto Singapore Pte. Ltd. Ms. Siew Bee is a Director of BP De Silva Holdings Pte Ltd., and a number of its subsidiary and associate companies.
Mr. Tyrone De Silva
Mr. De Silva is a Senior Vice President and Head of the Corporate Banking and Investment Banking Departments at DFCC Bank. He joined the Bank in 1989 and has been involved throughout in the Bank's Corporate Finance and Capital Markets business.
He serves as a member of Bank's Credit, Investment and Asset Liability Committees and as nominee Director on the Boards of some of the Bank's other subsidiary and associate companies.
Mr. De Silva holds a Master's Degree in Business Administration from the University of Warwick, UK. He is also a Graduate Member of the Institute of Mechanical Engineers, UK.
Mr. Palitha Gamage
Mr. Palitha Gamage is a career banker with over 25 years of experience at DFCC Bank. He has served in several senior managerial positions in Corporate Banking, SME Banking, Investment Banking and Planning within the bank. In addition, he also served as Head of Corporate Credit at DFCC Vardhana Bank. Presently, he holds the position Executive Vice President (Planning and Operations) at DFCC Bank; a post he has held since 2013. Prior to joining DFCC Bank, he worked as a Civil Engineer at State Engineering Corporation of Sri Lanka. He served as a member of the Governing Board of the National Institute of Business Management for three years from 2010. During his career, Mr. Gamage has attended a multitude of local and foreign training programs and workshops covering various aspects of banking.
Mr. Gamage holds a B. Sc (Engineering) Hons degree from the University of Moratuwa, Sri Lanka and a MBA from the Asian Institute of Technology, Thailand. He is an Associate of the Chartered Institute of Management Accounts (CIMA), UK and a Corporate Member of the Institute of Engineers, Sri Lanka.
Mr. Avancka Herat Mr. Herat is the Executive Director of NAMAL. (Please refer management team pro le.)
8 ANNUAL REPORT 2014 / 2015
NAMAL Risk Committee Mr. Avancka Herat – Chairman Mr. Charana Jayasuriya – Head - Sales & Structuring Mrs. Pushpika Jeevaratne – Head of Compliance & Risk Mr. Sanjeewa Fernando – VP Integrated Risk Management ( DFCC Bank) Mr. Suhen Vanigasooriya – VP Risk Management ( Union Bank) Mrs. Achini Devasinghe – Senior Manager Risk Management (Union Bank)
NAMAL Investment Committee Mr. Alex Lovell – Chairman Mr. Malinda Samaratunga – Director Mr. Avancka Herat – Director/CEO Mr. Tyrone De Silva – Director
NAMAL Remuneration Committee Mr. Palitha Gamage – Chairman Mr. Indrajit Wickramasinghe – Director Mr. Avancka Herat – Director/CEO Mr. Suren Madanayake – Director
Internal Audit Committee Mr. Suren Madanayake – Chairman Mr. Tyrone De Silva – Director Mr. Avancka Herat – Director/CEO Mr. Malinda Samaratunga – Director
9 Management Team
10 ANNUAL REPORT 2014 / 2015
Pro les of the Management Team
Mr. Avancka Herat, Executive Director/Chief Investment O cer
Mr. Herat has over 20 years experience in the nancial services sector in the areas of investment banking, investment management and corporate nance. He has extensive regional experience having worked for investments banks and MNC’s including Jardine Fleming, JP Morgan and Caltex. He has worked in Singapore, Hong Kong and Thailand specializing in key sectors such as Petroleum, Telecoms, Power and Energy, Cement, MNC’s and Small Caps. Prior to joining NAMAL, Mr. Herat was the Chief Investment O cer/Director of Aegis Fund Management (Pvt) Ltd, managing the funds of DCSL Group, including Sri Lanka Insurance Corporation Ltd.
Mr. Herat holds a BSc (Hons) in Business Management from University of Swansea, Wales and MSc in Business Finance from University of London, Uxbridge.
Mr. Charana Jayasuriya, Head – Sales & Structuring
Mr. Jayasuriya has over 15 years experience in the capital markets of Sri Lanka and United Kingdom in asset management, investment banking and nancial regulation. Prior to joining NAMAL, Mr. Jayasuriya was Fund Manager for Aegis Fund Management (Pvt) Ltd managing the funds of DCSL Group, including Sri Lanka Insurance Corporation Ltd specialising in xed income and foreign currency.
Mr. Jayasuriya holds a LLB (Hons) Law and LLM in Banking & Finance Law from University College London and completed the Advanced Asset Management Programme at INSEAD.
Mrs. Pushpika Jeevaratne, Head of Compliance
Mrs. Jeevaratne has over 10 years experience in the nancial services sector. She has worked for Vanik and DP Capital Management prior to joining NAMAL.
Mrs. Jeevaratne holds a BSc.(Eng) from the University of Moratuwa and is a member of the Chartered Institute of Management Accountants (UK)
Mr. Tharaka Mudalige, Senior Sales Manager- Retail Sales
Mr. Mudalige has over 9 years experience in Financial Services Sales including Life Insurance and General Insurance specialising in Bancassurance. Prior to joining NAMAL, Mr. Mudalige was the Manager Sales – Bancassurance for AVIVA NDB Insurance PLC.
Mr. Mudalige is an Associate Member of the Chartered Institute of Management Accountants (UK)
Mrs. Menaka Fernando, Finance Manager
Mrs. Fernando has more than 6 years experience in Accounting, Auditing and Advisory Services at Kreston MNS & Co.
Mrs. Fernando is a member of the Institute of Chartered Accountants of Sri Lanka and the Association of Accounting Technicians of Sri Lanka.
11 Funds
12 ANNUAL REPORT 2014 / 2015
NAMAL Funds
NAMAL NAMAL Name of Fund National Equity Fund NAMAL IPO Fund Growth Fund Sharia Fund
Fund Type Balanced Growth Growth Growth
Objective Income and Long Term Growth Long Term Capital Growth Capital Growth Capital Growth
Sharia Compliant Listed Equity & Fixed Listed Equity & Fixed Listed Equity & Fixed Listed Equity & Invest In Income Securities Income Securities Income Securities Income Securities Time Frame of Medium to Long Term Medium to Long Term Medium to Long Term Medium to Long Term Investment
High to Moderate High to Moderate High to Moderate High Risk - High Return Risk-Return Risk / Return Risk/Return Risk/Return
Dividends Annual No Set Pattern No Set Pattern -
Minimum Rs.1,000 Rs.5,000 Rs.10,000 Rs.10,000 Investment
Front-End Fee 5.00% 5.00% 2.50% 3.50%
1.25% (Additional 1.5% if 1.75% (Additional 1.5% Management Fee 1.50% 1.50% Net Return exceeds if Net Return exceeds 15%p.a in a Quarter) 15% p.a in a Quarter)
Exit Fee No No No No
Registrar Fee 0.25% 0.25% No No
Trustee Fee 0.20% 0.25% 0.20% 0.20%
Provides current income Invest in high quality Invest in Professionally Access the Colombo Advantages and long term capital growth handpicked stocks Selected IPO Securities Stock Exchange in a Sharia Compliant Flexibility to invest upto 80% Flexibility to invest upto Daily Liquidity Manner in the stock market 90% in the stock market
Minimum investment is low Ability to participate in a diversi ed portfolio of listed shares
13 ANNUAL REPORT 2014 / 2015
NAMAL NAMAL Name of Fund NAMAL Income Fund NAMAL Gilt Fund High Yield Fund Money Market Fund
Fund Type Fixed Income Money Market Income Gilt
Objective Income Cash Management Income Income
Short Term Commercial Papers, Government Securities Fixed Income Securities Trust Certi cates & Fixed Income Securities and Government Invest In of less than 12 months Corporate Debt Guaranteed Securities Time Frame of Short Term Short Term Medium to Long Term Medium to Long Term Investment
Risk-Return Moderate to Low Risk - Returns Low Risk / Return Medium to Long Term Low Risk / Return
Dividends Regular Quarterly Semi Annual -
Minimum Rs.10,000 Rs.10,000 Rs.10,000 Rs.10,000 Investment
Front-End Fee No No No No
Management Fee 0.50% 0.25% 0.60% 0.35%
Exit Fee No No 1.00% (If withdrawn No prior to 1 year)
Registrar Fee No 0.05% 0.15% Rs 240,000 per annum
Trustee Fee 0.15% 0.15% Rs.200,000 per annum 0.15%
Obtains Signi cantly Higher Provides current income Invest in high quality Invests in Government Advantages Yields than Treasury Bills & at minimum risk income producing securities Fixed Deposits instruments Dividends paid quarterly Daily Liquidity Receive regular dividend income
14 ANNUAL REPORT 2014 / 2015
Highlights of NAMAL Funds
National Equity Fund NAMAL Growth Fund NAMAL Acuity Value Fund NAMAL IPO Fund Fund Performance YoY 11.88% 16.25% 19.91% Growth / (decline) (8.28%)
Fund Size Rs. 2.29 Bn 645.16 Mn 1.33 Bn 5.56 Mn No dividend paid in line Dividend (Rs. Per unit) 1.50 2.50 - with fund objectives
14.76%* 16.72%** Return per unit holder Rs. 100,000 invested at Rs. 100,000 invested at 20.28%* 2.05%* (since inception) inception is worth inception is worth (returns are annualised (returns are annualised since Rs. 2.5 Mn today Rs. 1.5 Mn today since 2009) 2011)
* * assuming re-investment of dividends since inception. Returns are annualized
NAMAL Income Fund NAMAL Money Market Fund NAMAL Gilt Fund** NAMAL High Yield Fund Fund Performance YoY 6.33% 5.99% 5.61% 6.64% Growth / (decline)
Fund Size Rs. 193.11 Mn 456.56 Mn 1.12 Bn 5.43 Bn
Dividend (Rs. Per Share) 0.35 0.60 - -
Tax Equivalent Yield 8.79%* 8.32%* 7.79%* 9.22%* * for institutional investors who pay 28% corporate tax **6 months ending 31st March 2015
15 Investment Manager’s Report
16 ANNUAL REPORT 2014 / 2015
Investment Manager’s Report
Economic outlook
Steady economic growth
Sri Lanka’s real GDP growth grew by 7.4% in 2014 compared to 7.2% in the preceding year. Favourable macroeconomic conditions coupled with relaxed monetary policy and low in ation contributed to sustained growth. The economy was driven by strong domestic consumption expenditure, while investments on construction provided an impetus to economic expansion. Economic growth was broad based with strong growth in the Industry sector and continued expansion in Services sector. The Agriculture sector was a ected by adverse weather conditions.
The Services sector (constituting 57.6% of GDP) grew by 6.5% (6.4% in 2013) to be key driver of GDP growth. Domestic economic activity helped sustain growth with signi cant contributions from Wholesale and Retail subsector (22.8% of GDP), Transport and Telecommunication services (14.6% of GDP) and Banking Insurance and Real Estate (8.7% of GDP).
The Industry sector (constituting 32.3% of GDP) grew by 11.4% (9.9% in 2013) driven by continued expansion in construction and manufacturing sectors.
The Agricultural sector (constituting 10.1% of GDP) grew by 0.3% (4.7% in 2013) due to adverse weather conditions.
Per capita GDP rose to USD 3,625 in 2014 (USD 3,280 in 2013)
Following the Presidential Election in 2015, the newly-elected government is optimistic that good governance and transparency will foster an investor friendly environment which will support a high growth trajectory.
Fig 01: Steady growth in GDP to 7.4% in CY2014 % 10.0
8.0
6.0
4.0
2.0
0.0 199 1 199 2 199 3 199 4 199 5 199 6 199 7 199 8 199 9 200 0 200 1 200 2 200 3 200 4 200 5 200 6 200 7 200 8 200 9 201 0 201 1 201 2 201 3 201 4 (2.0)
Source: CBSL Annual Report & Website
17 ANNUAL REPORT 2014 / 2015
Fig 02: Sectoral growth
% 14.0
12.0 10.0 8.0 6.0 4.0 2.0 0.0 (2.0) 1986 1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014 (4.0) (6.0) (8.0) Agriculture Industry Services
Source: CBSL Annual Report & Website
Trade de cit widens
The trade de cit expanded 8.9% YoY to USD 8.3Bn in CY14 after two years of decline. Earnings from exports increased 7.1% to USD 11.1Bn while expenditure on imports increased 7.9% YoY to USD 19.4Bn. Export growth was driven by industrial exports which increased by 6.6% YoY with textiles and garments increasing by 9.4% to USD 4.9Bn. Garments exports to the EU and the USA increased by 10.6% and 8.8% respectively. Import growth was underpinned by imports of motor vehicles for personal use due to tari reduction and depreciation of Japanese Yen.
The current account de cit narrowed to USD 2.0Bn in CY14 (USD 2.5Bn in CY13) due to continued growth in worker remittances (USD 6.2Bn in CY14) and increased earnings from tourism, transport and IT related services.
These developments improved the overall BOP surplus of USD 1.4Bn in 2014 compared to USD 985Mn in 2013. Gross o cial reserves rose to USD 8.2Bn by end CY14, equivalent to ve months of imports.
Fig 03: Trade de cit expands
USD m
2,500 2,000 1,500 1,000 500 0 2007 2008 2009 2010 2011 2012 2013 2014 2015 (500) (1,000) (1,500)
Exports Imports Trade Deficit
Source: CBSL Annual Report & Website
18 ANNUAL REPORT 2014 / 2015
Stable Rupee
The Sri Lanka Rupee remained stable against the USD during 2014. Increased earnings from exports of goods and services, higher workers’ remittances and in ows to the nancial account were o -set by out ows of short term investments and a surge in demand by importers during the fourth quarter of 2014.
The Central Bank entered a currency swap agreement with the Reserve Bank of India and re-paid USD 500Mn Sovereign Bond maturity.
Fig 04: Stable Rupee in CY 2014
LKR/USD Depreciation 160 20% 140 15% 120 10% 100 80 5% 60 0% 40 -5% 20 0 -10% 1-Jan-10 1-Jan-11 1-Jan-12 1-Jan-13 1-Jan-14 1-Jan-15 1-Sep-10 1-Sep-11 1-Sep-12 1-Sep-13 1-Sep-14 1-May-10 1-May-11 1-May-12 1-May-13 1-May-14
LKR/USD (LHS) Depreciation YTD (RHS)
Source: CBSL Annual Report & Website
Fig 05: FII Investments in Treasury Bills & Bonds m 10,000 70% 8,000 60% 50% 6,000 40% 4,000 30% 20% 2,000 10% 0 0%
31-Jan-1031-Mar-1031-May-1031-Jul-10 31-Sep-1031-Nov-1031-Jan-1131-Mar-1131-May-1131-Jul-1131-Sep-1131-Nov-1131-Jan-1231-Mar-1231-May-1231-Jul-12 31-Sep-1231-Nov-1231-Jan-1331-Mar-1331-May-1331-Jul-1331-Sep-1331-Nov-1331-Jan-1431-Mar-1431-May-1431-Jul-1431-Sep-1431-Nov-1431-Jan-1531-Mar-15
Foreign investments in treasury bills and bonds (USD Mn) Gross official reserve (USD m) FI as a % of gross official reserve
Source: CBSL Annual Report & Website
19 ANNUAL REPORT 2014 / 2015
In ation
Demand management policies, improved supply conditions and downward revision of administered prices have resulted in in ation at low single digit levels for the sixth consecutive year. Headline in ation fell further to 2.1% in December 2014 in comparison to 4.7% YoY. Annual average rate of headline in ation plummeted by 52% to end at 3.3% in December 2014 from 6.9% in December 2013 supported by prudent monetary management, a relatively stable exchange rate and a moderation in international commodity prices. Core in ation stood at 3.2% YoY compared to 2.1% at the end of 2013.
Fig 06: In ation remains single digits
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0% 2010 2011 2012 2013 2014 2015
CCPI (Point to Point) CCPI (Annual Average)
Source: CBSL Annual Report & Website
Monetary policy
A stable economic environment coupled with benign in ation expectations allowed Central Bank to continue easing monetary policy during the year. Overall policy rates were maintained with the Standing deposit Facility rate at 6.50% and the standing lending rate at 8.00% and SRR at 6.00% with further reduction in rates expected in CY15.
Monetary policy easing coupled with increased credit by commercial banks to the private sector led to excess rupee liquidity in the money market averaging around Rs. 120Bn during the year. Market liquidity was further boosted by Central Bank purchasing USD 545Mn from the domestic foreign exchange market injecting Rs. 71Bn to the domestic money markets. This led to downward adjustment in market rates, with the benchmark one year Treasury Bill yield declining by 0.25% YoY to 6.80% by March 2015.
Yields on government securities declined across all maturities although there was a sharp increase mid-year.
Fig 07: Policy rates reduced further in CY14
% 14.0 12.0 10.0 8.0 6.0 4.0 2.0 0.0 17-Oct-08 17-Oct-09 17-Oct-10 17-Oct-11 17-Oct-12 17-Oct-13 17-Oct-14
Repurchase rate (%) Reverse Repurchase (%) SRR (%)
Source: CBSL Annual Report & Website
20 ANNUAL REPORT 2014 / 2015
Fig 08: Banking sector credit growth
Rs. b 2010 2011 2012 2013 2014 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 0 0.9
(100) 0.8
(200) 0.7 (300) 0.6 (400) 0.5 (500) 0.4 (600) 0.3 (700) (800) 0.2 (900) 0.1 Loan-deposit gap Loan/deposits ratio (1,000) 0
Source: CBSL Annual Report & Website
Fig 09: Real interest rates increases
14.0%
12.0%
10.0%
8.0%
6.0%
4.0%
2.0%
0.0% Jul Jul Jul Jul Jul Jan Jan Jan Jan Jan Jan Sep Sep Sep Sep Sep Nov Nov Nov Nov Nov Mar Mar Mar Mar Mar Mar May May May May May
2010 2011 2012 2013 2014 2015
1 year T bill rate Inflation Real rate
Source: CBSL Annual Report & Website
Budget De cit Widens
The budget de cit rose to 6.0% of GDP in CY14, in contrast to the target of 5.2% and reversing the declining trend witnessed in recent years. Populist measures in the 2014 Budget prior to the Presidential Election and 2015 Interim Budget could further impact the budget de cit in CY15.
The IMF has voiced concerned about the declining trend in government revenue and the absence of measures to achieve a more durable increase in tax collection. Coupled with the increase in recurrent spending in the revised 2015 budget there could be further pressure on the budget de cit.
21 ANNUAL REPORT 2014 / 2015
Fig 10: Budget de cit widens
% 12.0
10.0
8.0
6.0
4.0
2.0
0.0 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014
Source: CBSL Annual Report
Equity Market Review
ASPI Performs Strongly
The ASPI gained 23.4% YoY to close the year at 7,299 while more liquid S&P SL20 gained 25.3% YoY to close the year at 4,089 in CY14. Daily average turnover rose 70.9% YoY to Rs. 1,415.0 Mn per day in CY14 compared to Rs. 828.4 Mn per day in CY13. Foreign Funds (FII’s) were net buyers in CY14, continuing the momentum from CY13 although net FII fell by 2.5% YoY. Foreign participation was 27.8% in CY14 (36.1% in CY13).
Market was trading at 19.7X historical earnings in CY14 as per market earnings reported by the CSE.
In terms of sector performance, Power & energy showed highest returns with 55.2%, followed by Manufacturing Sector (45.1%), Telecommunication Sector (41.6%) and Banks, Finance & Insurance Sector (40.0%). Information Technology (-0.9%) and Beverage, Food & Tobacco (5.3%) showed the lowest returns.
The ASPI peaked at 7,548 in November 2014 before falling back after the announcement of early Presidential Elections. The ASPI made the highest annual gain since the 2010 post-con ict rally. The ASPI (up 23.4% YoY) has performed well compared to regional markets in CY14. India (Sensex up 29.9% YoY) and Singapore (Straits Times up 6.2% YoY) have shown strong performance, while Hong Kong managed to record a moderate return (Hang Seng up 1.3% YoY) for the year CY14. The year US market continued its strong rally, gaining 11.4% YoY (S&P 500) in CY14.
ASPI continue to trade attractively valued around 10X-15X forward earnings (with assumption of 20% + growth in corporate earnings in CY15) while the yield ratio has further narrowed due to falling interest rates signaling further upside in equities.
22 ANNUAL REPORT 2014 / 2015
Fig 11: ASPI outperforms Regional Indices
600.0
500.0
400.0
300.0
200.0
100.0
0.0 3-Jan-05 3-Jan-06 3-Jan-07 3-Jan-08 3-Jan-09 3-Jan-10 3-Jan-11 3-Jan-12 3-Jan-13 3-Jan-14 3-Jan-15
Hang Seng Sensex S&P 500 Straits Times ASPI
Source: The Wall Street Journal
Fig.12: Foreign Funds (FII) remain net buyers
LKR m 20,000
15,000
10,000
5,000
0
Fig 13: Yield Ratio improves 4 95 98 01 04 93 96 07 10 99 13 1 02 05 08 11 93 96 99 02 05 08 11 14 94 97 00 03 06 09 12 ------l l l l l l l r - r - r - r - r - r - r - (5,000) c - u u u u u u u a n a n a n a n a n a n a n a n J J J J J J J J J J J J J J J Oct - Oct - Oct - Oct - Oct - Oct - Oct - A p A p A p A p A p A p A p D e (10,000)
(15,000)
Source: CSE
Fig 13: Yield Ratio improves
% 16.0
14.0 12.0 10.0 Post Tax TB Yield 8.0 6.0
4.0 2.0 Post Tax Dividend Yield 0.0 13 14 15 11 12 09 10 05 06 07 08 99 00 01 02 03 04 92 93 94 95 96 97 98 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 2 0 1 9 2 0 2 0 2 0 2 0 2 0 1 9 1 9 1 9 1 9 1 9 1 9 1 9
Source: CBSL Website & CSE
23 ANNUAL REPORT 2014 / 2015
Fig 14: ASPI data
CY2014 CY2013 % Change
ASPI 7,299 5,913 23.44%
S&P SL20 4,089 3,264 25.28%
Average Daily Turnover (Rs. Mn) 1,415 828 70.89%
Net FII (Rs. Mn) 22,069 22,635 -2.50%
Foreign participation 27.79% 36.09% -8.30%
Source: CSE
Future market outlook
Sri Lanka will continue to be amongst the most attractive frontier markets due to economic growth. Investment in infrastructure, increased productivity and free trade agreements with India will sustain higher growth rates relative to frontier market peers. Short term market performance could be impacted by the impending Parliamentary elections and pressure on the exchange rate from increasing US interest rates. However we believe Sri Lanka is likely to maintain current economic momentum with expectations of improved corporate earnings.
As institutional investors, we attempt to price macroeconomic risks into individual investments while maintaining our distinctive investment philosophy and style. We continue to focus on identifying investments that are attractively valued which could outperform both on relative basis and absolute basis while looking at opportunities to exit from counters we consider relative to their underlying value. We continue to be bullish on Health Care, Food and Beverage, FMCG, Banking and Infrastructure services and certain manufacturing stocks where we see strong potential for growth in the medium to long term.
Fig 15: Market PER multiples attractive on forward earnings
Log scale 4.4
4.1
3.8 25x 3.5 10x 3.2
2.9 5x 2.6 2x 2.3
2.0
1.7
1.4 05 06 04 07 08 09 03 10 11 12 13 15 01 02 14 00 99 98 96 97 95 94 93 91 92 90 89 b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - b - e e e e e e e e e e e e e e e e e e e e e e e e e e e F F F F F F F F F F F F F F F F F F F F F F F F F F F
Source: CSE & NAMAL Estimates
24 Acuity Value Fund
25 ANNUAL REPORT 2014 / 2015
Fund Performance Review
Investment Strategy NAMAL Acuity Value Fund (NAVF) is a growth fund listed on Colombo Stock Exchange which aims to provide long term capital apprecia- tion by investing in equity. The Fund can allocate a maximum of 100% to equity.
The investment strategy is market neutral and based on fundamental research to identify stocks trading below intrinsic value. The Fund has invested in fundamentally strong companies that are exposed to the key sectors of the economy. These investments will enable the Fund to perform strongly notwithstanding any short-term market volatility.
The Fund aims to deliver consistent capital appreciation to investors whilst ensuring preservation of capital.
Asset Allocation The Fund invested 91.1% in Equities and 6.2% in Debentures, with the balance invested in Repos as at 31st March 2015. The main sector allocations in equity are Banks, Finance & Insurance (36.1%), Healthcare (23.4%) and Manufacturing (16.9%).
Performance Review The Fund generated a return of 19.9% while the All Share Price Index increased by 14.3% for the year ending 31st March 2015. The Fund’s NAV increased by 17.7% during the period under review.
The Fund value was Rs. 1,335 million as at 31st March 2015. The total investment income for the year was Rs. 252.5 million, up 24.9% YoY.
Return to Investors The Fund has provided an annualized return of 20.3% to investors since inception in 2009.
The Fund paid a dividend of Rs. 2.50 per unit for FY2015, bringing the cumulative dividends paid to Rs. 11.50 per unit since inception in 2009.
Investment Management Team, National Asset Management Ltd
26 ANNUAL REPORT 2014 / 2015
Fig 1: Fund Performance Fund Performance and Market Returns as at 31st March 2015 12 months 24 months 36 months NAMAL Acuity Value Fund 19.91% 41.98% 56.58% ASPI 14.28% 18.91% 25.83% S & P SL20 17.45% 16.97% 29.04%
*Note 1) Performance up to 31st March 2015 as published by the Unit Trust Association of Sri Lanka 2) All returns are adjusted for dividends 3) Returns are not annualized 4) Past performance should not be taken as a guide to future performance
Fig 2: Top Five Equity Holdings
The Company No of Shares Value (Rs.) % of NAV Asiri Hospitals PLC 10,665,149 215,436,010 16.22% Sampath Bank PLC 792,238 199,723,200 15.03% Lanka IOC PLC 3,100,000 124,930,000 9.40% Tokyo Cement PLC (Non-Voting) 2,218,863 82,985,476 6.25% Tokyo Cement PLC (Voting) 1,500,000 82,350,000 6.20%
Fig 3: Sector Allocation
Telecommunication 1.85%
Hotels and Travels 2.19%
Beverage, Food and Tobacco 3.21%
or Diversi ed Holding 5.36% c t e S Power and Energy 11.00%
Manufacturing 16.89%
Healthcare 23.40%
Banks, Finance and Insurance 36.11%
0% 5% 10% 15% 20% 25% 30% 35% 40% as a % of Total Equity
27 ANNUAL REPORT 2014 / 2015
Ernst & Young Tel : +94 11 2463500 Chartered Accountants Fax Gen : +94 11 2697369 201 De Saram Place Tax : +94 11 5578180 P.O. Box 101 [email protected] Colombo 10 ey.com Sri Lanka
ADBT/CPEG/TIF
INDEPENDENT AUDITORS’ REPORT TO THE UNIT HOLDERS OF NAMAL ACUITY VALUE FUND
Report on the Financial Statements
We have audited the accompanying nancial statements of NAMAL Acuity Value Fund, (“the Fund”), which comprise the statement of nancial position as at 31 March 2015, and the statement of comprehensive income, statement of movement in unit holders’ funds and, cash ow statement for the year then ended, and a summary of signi cant accounting policies and other explanatory information set out on pages 7 to 19.
Management’s Responsibility for the Financial Statements
National Asset Management Limited, the Managers and the Trustee of the Unit Trust are responsible for the preparation of these nancial statements that give a true and fair view in accordance with Sri Lanka Accounting Standards, and for such internal controls as Management determines is necessary to enable the preparation of nancial statements that are free from material misstatement, whether due to fraud or error.
Auditor’s Responsibility
Our responsibility is to express an opinion on these nancial statements based on our audit. We conducted our audit in accordance with Sri Lanka Auditing Standards. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the nancial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the nancial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation of the nancial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the e ectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as evaluating the overall presentation of the nancial statements.
We believe that the audit evidence we have obtained is su cient and appropriate to provide a basis for our audit opinion.
Opinion
In our opinion, the nancial statements give a true and fair view of the nancial position of the Fund as at 31 March 2015, and of its nancial performance and cash ows for the year then ended in accordance with Sri Lanka Accounting Standards.
Report on other legal and regulatory requirements
As required by Section 163(2) of the Companies Act No. 7 of 2007, we state the following:
a) The basis of opinion and Scope and Limitations of the audit are as stated above. b) In our opinion : • We have obtained all the information and explanations that were required for the audit and, as far as appears from our examination, proper accounting records have been kept by the Fund, • The nancial statements of the Fund, comply with the requirements of Section 151 of the Companies Act No. 7 of 2007
18 May 2015 Colombo
Partners: A D B Talwatte FCA FCMA M P D Cooray FCA FCMA R N de Saram ACA FCMA Ms. N A De Silva ACA Ms. Y A de Silva ACA W R H Fernando FCA FCMA W K B S P Fernando FCA FCMA A P A Gunasekera FCA FCMA A Herath FCA D K Huhangamuwa FCA FCMA LLB (Lond) H M A Jayesinghe FCA FCMA Ms. A A Lodowyke FCA FCMA Ms. G G S Manatunga ACA N M Sulaiman ACA ACMA B E Wijesuriya ACA ACMA
28 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund STATEMENT OF FINANCIAL POSITION As at 31 March 2015
Notes 2015 2014 ASSETS Rs. Rs.
Cash at bank 900,535 816 ,533 Financial assets - Held for trading 4 1,289,251,387 1,069,984,691 Financial assets - Loans and receivables 5 35 ,572,722 51,799,832 Other receivables 7 5,332,575 7,739,647 Income tax recoverable 6,784,451 6,167,766 Total assets 1,337,841,670 1,136,508,469
LIABILITIES Accrued expenses 8 2,509,798 1 ,289,734 Total liabilities 2,509,798 1 ,289,734
NET ASSETS 1,335,331,872 1,135,218,735
UNIT HOLDERS' FUNDS Net assets attributable to Unit Holders 1,335,331,872 1,135,218,735
These Financial Statements were approved by the Management Company, and adopted by the Trustees.
………………………… ………………………… ……………………………….. Director Director Trustee Management Company Management Company
*The accounting policies and notes on pages 33 to 45 form an integral part of these Financial Statements.
18 May 2015 Colombo
29 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund STATEMENT OF COMPREHENSIVE INCOME Year ended 31 March 2015
2015 2014 Notes Rs. Rs.
INVESTMENT INCOME Dividend income 9.1 35,404,107 29,337,559 Interest income 9.2 14,254,383 17,354,358 Net realised gains on nancial assets held for trading 4.3 33,039,384 62,680,999 Net change in unrealised gains on nancial assets held for trading 4.4 169,763,152 92,811,147 Total investment income 252,461,026 202,184,063
EXPENSES Management fees (13,479,540) (10,575,906) Trustee fees (2,951,975) (2,321,632) Custodian fees (268,208) (268,800) Audit fee and expenses (173,070) (143,326) Professional charges (75,118) (62,093) Brokerage charges (6,776,393) (8,970,877) Other expenses (1,730,895) (504,916) Total operating expenses (25,455,200) (22,847,550)
Net operating pro t 227,005,827 179,336,513
FINANCE COST Interest expense (14,689) (925)
PROFIT AFTER DEDUCTIONS AND BEFORE TAX 226,991,137 179,335,588
Income tax expense 10 - -
PROFIT AFTER TAX 226,991,137 179,335,588
INCREASE IN NET ASSETS ATTRIBUTABLE TO UNIT HOLDERS 226,991,137 179,335,588
*The accounting policies and notes on pages 33 to 45 form an integral part of these Financial Statements.
30 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund STATEMENT OF CHANGES IN UNITHOLDERS' FUNDS Year ended 31 March 2015
Note 2015 2014 Rs. Rs.
UNIT HOLDERS' FUNDS AT THE BEGINNING OF THE YEAR 1,135,218,735 9 61,258,747
Increase in net assets attributable to Unit Holders 226,991,137 179,335,588
Income distribution to unit holders 11 (26,878,000) (5,375,600)
UNIT HOLDERS' FUNDS AT THE END OF THE YEAR 1,335,331,872 1,135,218,735
*The accounting policies and notes on pages 33 to 45 form an integral part of these Financial Statements.
31 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund STATEMENT OF CASH FLOWS Year ended 31 March 2015
2015 2014 Rs. Rs. Cash ows from operating activities Dividend received 3 7,811,179 2 8,530,487 Interest received 1 3,657,563 1 3,729,557 Proceeds from sale of investments 3 ,223,469,787 4 ,897,695,270 Payments on purchase of investments ( 3,223,726,701) ( 4,889,167,905) Operating expenses paid ( 24,235,136) ( 45,251,462) Net cash generated from operating activities 26,976,691 5,535,947
Cash ows from nancing activities Income distribution ( 26,878,000) (5,375,600) Interest paid on borrowings ( 14,689) (925) Proceeds from borrowings 50,500,000 5,000,925 Repayment of borrowings ( 50,500,000) (5,000,925) Net cash used in nancing activities ( 26,892,689) (5,376,525)
Net increase in cash and cash equivalents 84,002 159,422 Cash and cash equivalents at the beginning of the year 816,533 657,111 Cash and cash equivalents at the end of the year 900,535 816,533
*The accounting policies and notes on pages 33 to 45 form an integral part of these Financial Statements.
32 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
1. GENERAL INFORMATION
NAMAL Acuity Value Fund is a closed ended unit trust fund approved by the Securities and Exchange Commission of Sri Lanka. The fund was launched on 07 September 2009.
The fund is managed by National Asset Management Limited, which is incorporated and domiciled in Sri Lanka. The registered o ce of the management company is located at 7th Floor, Union Bank Head O ce, No. 64, Galle Road, Colombo 03. The Trustee of the fund is Deutsche Bank AG having its place of business at No. 86, Galle Road, Colombo 03.
The investment objective of the fund is to achieve long term capital appreciation for the Unit Holders by adopting a dynamic asset allocation strategy for investments in listed and unlisted xed income securities.
2. ACCOUNTING POLICIES 2.1 BASIS OF PREPARATION
The nancial statements are prepared in accordance with and comply with the Sri Lanka Accounting Standards issued by the Institute of Chartered Accountants of Sri Lanka and adopted as directed by the Securities and Exchange Commission of Sri Lanka.
The nancial statements have been prepared on the historical cost basis except for the nancial assets at fair value through pro t or loss. The nancial statements are presented in Sri Lankan rupees. The statement of nancial position is presented broadly in order of a liquidity basis.
2.1.1 Statement of Compliance
These nancial statements have been prepared in accordance with Sri Lanka Accounting Standards comprising SLFRSs and LKASs (hereafter "SLFRS") which are e ective from 01 January 2012.
2.1.2 Comparative Information
The accounting policies have been consistently applied by the Fund with those of the previous nancial year in accordance with LKAS 01 Presentation of Financial Statements. Further, comparative information is reclassi ed wherever necessary to conform to the current presentation.
2.2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 2.2.1 Financial instruments – initial recognition and subsequent measurements 2.2.1.1 Date of recognition
All nancial assets are initially recognized on the trade date, i.e the date that the fund becomes a party to the contractual provisions of the instrument. This includes purchases of nancial assets that require delivery of assets within the time frame generally established by regulation or convention in the market place.
2.2.1.2 Initial measurement of nancial instruments
The classi cation of nancial instruments at initial recognition depends on their purpose and characteristics and the management intention in acquiring them. All nancial assets are measured initially at the fair value plus transaction costs, except in the cases of nancial assets recorded at fair value through pro t or loss.
33 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
2.2.1.3 Financial assets - Loans and receivables
Loans and receivables are non derivative nancial assets with xed or determinable payments that are not quoted on an active market. Loans and receivables in the statement of nancial position comprise of repurchase agreements, commercial papers and placements with other banks.
After initial measurement, loans and receivables are subsequently measured at amortised cost using the e ective interest rate, less allowance for impairment. The amortization is included in the “interest income” in the statement of comprehensive income. The losses arising from impairment is recognised in the statement of comprehensive income in “credit loss expense”.
Interest income is recognized by applying the e ective interest rate, except for short term receivables when the recognition of interest would be immaterial.
2.2.1.4 Financial assets at fair value through pro t or loss
Financial assets are classi ed as fair value through pro t or loss (FVTPL) if they are held for trading or are designated at fair value though pro t or loss. Financial assets are classi ed as held-for-trading if they are acquired for the purpose of selling or repurchasing in the near term. Up on the initial recognition, transaction cost are directly attributable to the acquisition are recognized in pro t or loss as incurred.
• Financial assets held for trading
Financial assets, held for trading are recorded in the statement of nancial position at fair value. Changes in fair value are recognised in the ‘net change in nancial assets held for trading’ in the statement of comprehensive income. Interest income or expense and dividend income are recorded in “investment income’ according to the terms of the contract. Included in this classi cation are quoted equity securities and quoted debentures.
2.2.1.5 Determination of fair value
The fair value for nancial instruments traded in active markets at the reporting date is based on their quoted market price or dealer price quotations (bid price for long positions and ask price for short positions), without any deduction for transaction costs.
For all other nancial instruments not traded in an active market, the fair value is determined by using appropriate valuation techniques. Valuation techniques include the discounted cash ow method, comparison with similar instruments for which market observable prices exist, options pricing models, credit models and other relevant valuation models.
An analysis of fair values of nancial instruments and further details as to how they are measured are provided in Note 6.
2.2.1.6 Derecognition of nancial assets
A nancial asset is derecognised when,
1) The rights to receive cash ows from the asset have expired. 2) The fund has transferred its rights to receive cash ows from the asset or has assumed an obligation to pay the received cash ows in full without material delay to a third party under a ‘pass–through’ arrangement; and either,
• The fund has transferred substantially all the risks and rewards of the asset or • The fund has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset.
34 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
2.2.3 Recognition of income
Revenue is recognised to the extent that it is probable that the economic bene ts will ow to the fund and the revenue can be reliably measured.
Interest income
For all nancial instruments measured at amortised cost, interest income is recorded using the e ective interest rate (EIR), which is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the nancial instrument or a shorter period, where appropriate, to the net carrying amount of the nancial asset.
Interest income from repurchase agreements and government treasury bills are recognised at gross of notional tax credit or withholding tax.
Dividend income
Income is recognised when the right to receive the dividend is established, normally being the ex-dividend date. Dividend income is recognized net of withholding tax, if any.
2.2.4 Cash and cash equivalents
Cash and cash equivalents in the statement of nancial position comprise cash at bank.
For the purpose of the statement of cash ows, cash and cash equivalents consist of cash and cash equivalents as de ned above.
2.2.5 Income tax
Current tax assets and liabilities for the current and prior year are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date. The fund is liable to pay income tax at the rate 10% in accordance with the Inland Revenue Act No. 10 of 2006.
2.2.6 Expenses
The management participation fees of the fund is as follows:
Management Fee - 1.0% of Net Asset Value of the Fund Trustee Fee - 0.2% of Net Asset Value of the Fund
Custody Fee - Flat Fee of Rs. 20,000 per month
2.2.7 Accrued expenses
Payables are initially recognised at fair value, which is the fair value of the consideration to be paid in the future for service received, whether or not billed to the fund, and subsequently at amortised cost.
35 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
2.2.8 Unit Holders’ funds and net assets attributable to Unit Holders
Unit Holders’ funds has been calculated as the di erence between the carrying amounts of the assets and the carrying amounts of the liabilities, other than those due to Unit Holders as at the reporting date.
Units can be issued and redeemed based on the fund’s net asset value per unit, calculated by dividing the net assets of the fund calculated in accordance with the valuation guidelines issued by the Unit Trust Association of Sri Lanka and approved by the Securities and Exchange Commission of Sri Lanka, by the number of units in issue. Income not distributed is included in net assets attributable to Unit Holders.
2. 3 SIGNIFICANT ACCOUNTING JUDGEMENTS, ESTIMATES AND ASSUMPTIONS 2.3.1 Fair value of nancial instruments
Management considers credit, liquidity and market risk and assesses the impact on valuation of investments when determining the fair value. Following are the key sources of estimation uncertainty at the statement of reporting date that have signi cant risk of causing a material adjustment to the carrying amount of assets and liabilities within the next nancial year. a) Fair value of securities not quoted in an active market and over the-counter derivative instruments Management uses its judgment in determining the appropriate valuation technique for nancial instruments that are not quoted in an active market. Valuation techniques commonly used by market practitioners are applied. Other nancial instruments are valued using a discounted cash ow analysis based on the assumptions supported, where possible, by observable market prices or rates.
2.3.2 Impairment losses on nancial assets – Loans and receivables
The fund reviews its nancial investments classi ed as loans and receivables at each reporting date to assess whether they are impaired. In particular management judgment is required in the estimation of the amount and timing of future cash ows when determining the impairment loss. These estimates are based on assumptions about a number of factors and actual results may di er, resulting future changes to the allowance.
2.4 NEW ACCOUNTING STANDARDS ISSUED BUT NOT EFFECTIVE AS AT STATEMENT OF FINANCIAL POSITION DATE
The standards and interpretations that are issued but not yet e ective up to the date of issuance of the Company's nancial statements are disclosed below. The Company intends to adopt these standards, if applicable, when they become e ective.
SLFRS 9-Financial Instruments: Classi cation and Measurement SLFRS 9, as issued re ects the rst phase of work on replacement of LKAS 39 and applies to classi cation and measurement of nancial assets and liabilities.
This standard was originally e ective for annual periods commencing on or after 01 January 2015.However e ective date has been deferred subsequently.
SLFRS 14 -Regulatory Deferral Accounts The scope of this standard is limited to rst-time adopters of SLFRS that already recognize regulatory deferral account balances in their nancial statements. Consequently, the nancial statements of rate regulated entities that already apply SLFRS, or that do not otherwise recognise such balances, will not be a ected by this standard. This standard is e ective for the annual periods beginning on or after 01 January 2016.
SLFRS 15 -Revenue from Contracts with Customers SLFRS 15 establishes a comprehensive framework for determining whether, how much and when revenue is recognised. It replaces existing revenue recognition guidance, including LKAS 18 Revenue, LKAS 11 Construction Contracts and IFRIC 13 Customer Loyalty Programmes. This standard is e ective for the annual periods beginning on or after 01 January 2017.
36 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
3. FINANCIAL INSTRUMENTS AND RISK MANAGEMENT
(a) Financial instruments
The fund’s principal nancial assets comprise investments in trading securities, repurchase agreements, xed deposits and cash at bank. The main purpose of these nancial instruments is to generate a return on the investment made by Unit Holders. The fund’s equity comprises amounts attributable to Unit Holders, which are the amounts owed to Unit Holders of the fund. The fund also has other nancial instruments such as receivables and payables which arise directly from its operations.
In accordance with LKAS 39 Financial Instruments: Recognition and Measurement, the fund’s bank balance, repurchase agreements and xed deposits are classi ed as ‘loans and receivables’ and valued at amortised cost. Trading securities are classi ed as ‘held for trading’, meaning they are valued at fair value through pro t or loss. Amounts attributable to Unit Holders are classi ed as ‘equity’ and are carried at the redemption amount being net asset value. Payables are designated as ‘other nancial liabilities’ at amortised cost.
(b) Financial risk management objectives, policies and processes
Risks arising from holding nancial instruments are inherent in the fund’s activities, and are managed through a process of ongoing identi cation, measurement and monitoring. The fund is exposed to credit risk, market risk, and liquidity risk.
Financial instruments of the fund comprise investments in trading securities for the purpose of generating a return on the investment made by Unit Holders, in addition to cash at bank, and other nancial instruments such as receivables and payables, which arise directly from its operations.
The manager is responsible for identifying and controlling the risk that arise from these nancial instruments. The manager agrees policies for managing each of the risks identi ed below.
The risks are measured using a method that re ects the expected impact on the statement of comprehensive income and statement of nancial position of the fund from reasonably possible changes in the relevant risk variables. Information about these risk exposures at the reporting date, measured on this basis, is disclosed below.
The manager also monitors information about the total fair value of nancial instruments exposed to risk, as well as compliance with established investment mandate limits. These mandate limits re ect the investment strategy and market environment of the fund, as well as the level of risk that the fund is willing to accept, with additional emphasis on selected industries. This information is prepared and reported to relevant parties within the manager on a regular basis as deemed appropriate, including the Fund manager, other key management, and Group’s integrated risk management committee of the manager and ultimately the Trustees of the fund.
Concentration of risk arises when a number of nancial instruments or contracts are entered in to with the same counterparty, or where a number of counterparties are engaged in similar business activities, or activities in the same geographic region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly a ected by changes in economics, political or other conditions.
37 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
(c) Credit risk
Credit risk is the risk that the counterparty to the nancial instrument will fail to discharge an obligation and cause the fund to incur a nancial loss.
The fund’s exposure to credit risk from its nancial assets arises from default of the counterparty, with the current exposure equal to the fair value of these instruments as detailed below. It is the fund’s policy to enter into nancial instruments with reputable counterparties. The details are as follows:
31 March 2015
The fund does not have nancial assets which are exposed to credit risk as at 31 March 2015.
31 March 2014
Counter Party Credit Rating Rating Agency Softlogic Holdings PLC BBB+ Fitch Rating Union Bank of Colombo PLC BBB Ram Rating
Risk concentration of credit risk exposure:
Concentration of credit risk is managed by counterparty and by market sector. The fund is also subject to credit risk on its bank balance and receivables. The credit risk exposure on these instruments is not deemed to be signi cant.
The fund’s maximum exposure to credit risk can be analysed as follows:
2015 2014 Rs. 000 Rs. 000 NAMAL Acuity Value Fund - Investments Conservative 35,572 29,064 Balanced - 22,735 Growth 1,289,251 1,069,985
(d) Market risk
Market risk represents the risk that the value of the fund’s investments portfolios will uctuate as a result of changes in market prices.
This risk is managed by ensuring that all investment activities are undertaken in accordance with established mandate limits and investments strategies. As such, Unit Holders can manage this risk through their choices of which investment portfolios to participate in.
The fund uses a range of di erent fund managers for investment assets. Where a Unit Holder is invested in more than one investment portfolio, this reduces the impact of a particular manager underperforming. Within the underlying investment portfolio, diversi cation is achieved at a number of levels. The diversi ed portfolios are invested across a range of investment sectors. Within each sector of the diversi ed portfolios, the fund managers invest in a variety of securities.
Price risk
Price risk is the risk that the fair value of the fund’s investment in trading securities will uctuate as a result of changes in the price of the fund’s investments in trading securities. Price risk exposure arises from the fund’s investment portfolios.
The table below shows the impact on the statement of comprehensive income and statement of nancial position due to a reasonably possible change in the price of the fund’s investment in trading securities in note 4, with all other variables held constant:
38 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
31 March 2015 31 March 2014 Increase/ (decrease) Increase/ (decrease) Increase/ (decrease) Increase/ (decrease) in pro t before tax in net assets in pro t before tax in net assets Rs. 000 attributable to Rs. 000 attributable to Unit Holders Unit Holders Change in price Rs. 000 Rs. 000 of the fund’s investment in trading securities:
+10% 120,418 120,418 99,074 99,074 -10% (120,418) (120,418) (99,074) (99,074)
The above gures are calculated across the entire investment portfolio on an annual basis. There is a corresponding change to the fair value of trading securities within the statement of nancial position.
Interest rate risk
Interest rate risk is the risk that the value of a nancial instrument will uctuate as a result of changes in market interest rates.
The fund’s exposure to interest rate risk primarily arises from changes in interest rates applicable to the balance held at the bank and the listed debentures.
Foreign exchange risk
Foreign exchange risk is the risk that value of a nancial instrument will uctuate as a result of changes in foreign exchange rates.
The fund is not exposed to foreign exchange risk since the nancial instruments of the fund denominated in Sri Lankan Rupees.
(e) Liquidity risk
Liquidity risk is the risk that the fund will encounter di culty in raising funds to meet its obligation to pay Unit Holders.
Due to the nature of a unit trust, it is unlikely that a signi cant number of Unit Holders would exit at the same time. However, to control liquidity risk, the Fund investments in nancial instruments, which under normal market conditions are readily convertible to cash. In addition, the fund invests within established limits to ensure there is no concentration of risk.
Payables have no contractual maturities but are typically settled within ve market days. Receivables outstanding at balance date are due to be settled within seven market days of balance date. Due to the short term nature of these nancial instruments, carrying value approximates fair value. The e ect of discounting is not signi cant as there is little di erence between undiscounted and discounted cash ows.
39 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
4. FINANCIAL ASSETS - HELD FOR TRADING 2015 2014 Rs. Rs. Quoted equity securities (4.1) 1,204,186,204 990,741,517 Debt securities - quoted debentures (4.2) 85,065,183 79,243,175 1,289,251,387 1,069,984,691 4.1 Quoted equity securities
Cost as at 31 March 953,152,611 910,364,581 Appreciation of market value quoted equity securities 251,033,593 80,376,936 Market value as at 31 March 1,204,186,204 990,741,517
2015 2014 4.1.1 Company Number of Market Holdings Number of Market Holdings Shares Value as a % of Shares Value as a % of Net Asset Net Asset Rs. Value Rs. Value Banks, Finance and Insurance Central Finance Company PLC 108,499 27,135,600 2% 108,499 19,638,319 2% Commercial Bank of Ceylon PLC - Non Voting - - - 423,409 41,070,673 4% Commercial Bank of Ceylon PLC - Voting - - - 1,260,000 154,980,000 14% Hatton National Bank PLC - Voting - - - 250,000 37,500,000 3% Nations Trust Bank PLC 1,200,000 120,120,000 9% 1,200,000 77,880,000 7% Union Bank of Colombo PLC 617,822 14,889,510 1% 495,259 9,261,343 1% Seylan Bank PLC - Non Voting 1,150,000 72,910,000 5% - - - Sampath Bank PLC 792,238 199,723,200 15% 667,238 121,504,040 11% 434,778,310 32% 461,834,375 42%
Beverages, Food and Tobacco Renuka Agri Foods PLC 8,220,240 38,635,128 3% 8,220,240 25,482,744 2% 38,635,128 3% 25,482,744 2%
Construction and Engineering Access Engineering PLC - - - 615,000 13,837,500 1% - - 13,837,500 1%
Diversi ed Holdings Softlogic Holdings PLC 2,000,000 26,400,000 2% - - - Hemas Holdings PLC 518,292 38,198,120 3% - - - 64,598,120 5% - -
Health Care Ceylon Hospitals PLC (Durdans) - Non Voting 800,000 60,080,000 4% 800,000 61,600,000 5% Ceylon Hospitals PLC (Durdans) - Voting 54,541 6,212,220 0% 54,541 6,272,215 1% Asiri Hospitals PLC 10,665,149 215,436,010 16% 10,665,149 236,766,308 21% 281,728,230 20% 304,638,523 27%
Hotels and Travels The Kingsbury PLC 1,650,000 26,400,000 2% 1,650,000 21,120,000 2% 26,400,000 2% 21,120,000 2%
Manufacturing ACL Cables PLC 500,000 38,000,000 3% 500,000 30,500,000 3% Alumex PLC - - - 357,100 5,070,820 0% Tokyo Cement Company Lank PLC - Voting 1,500,000 82,350,000 6% 1,011,737 36,624,879 3% Tokyo Cement Company Lank PLC - Non Voting 2,218,863 82,985,476 6% 1,754,450 50,879,050 4% 203,335,476 15% 123,074,749 10%
40 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
4. FINANCIAL ASSETS - HELD FOR TRADING (contd..)
2015 2014 4.1.1 Company Number of Market Holdings Number of Market Holdings Shares Value as a % of Shares Value as a % of Net Asset Net Asset Rs. Value Rs. Value Investment Trusts Renuka Holdings PLC - - - 804,877 25,353,626 2% - - 25,353,626 2%
Telecommunication Dialog Axiata PLC 2,142,100 22,277,840 2% - - - 22,277,840 2% - -
Power & Energy Lanka IOC PLC 3,100,000 124,930,000 9% 400,000 15,400,000 1% Laugfs Gas PLC - Voting 209,000 7,503,100 1% - - - 132,433,100 10% 15,400,000 1%
Total value of quoted equity securities (At market value) 1,204,186,204 90% 990,741,517 87%
4.2 Quoted debentures 2015 2014 Cost Market Holding as a Cost Market Holding as a Value % of Net Value % of Net Rs. Rs. Asset Value Rs. Rs. Asset Value
Lanka Orix Leasing Company PLC 20,000,000 20,635,466 2% 20,000,000 20,800,246 2% Hatton National Bank PLC 3,167,100 3,750,361 0% 3,167,100 3,731,302 0% Central Finance PLC 4,600,000 4,956,350 0% 4,600,000 5,055,074 0% Lion Brewery PLC 10,000,000 10,960,816 1% 10,000,000 11,025,529 1% Softlogic Holdings PLC 25,000,000 27,167,971 2% 25,000,000 27,627,559 2% Hayleys PLC 10,000,000 10,794,267 1% 10,000,000 11,003,464 1% Richard Pieris & Company PLC 3,110,000 3,299,120 0% - - - Hemas Holdings PLC 3,260,000 3,500,832 0% - - - 79,137,100 85,065,183 6% 72,767,100 79,243,175 6%
4.3 Net realised in gains on nancial assets held for trading 2015 2014 Rs. Rs. Equity securities Proceeds on sale of equity shares 360,371,544 501,549,891 Average cost of equity shares sold (327,332,160) (438,868,893) 33,039,384 62,680,999
4.4 Net change in unrealised gains on nancial assets held for trading
Equity securities 170,656,657 88,084,982 Debt securities - quoted debentures (893,505) 4,726,165 169,763,152 92,811,147
5. FINANCIAL ASSETS - LOANS AND RECEIVABLES 2015 2014 Carrying Holding as a Carrying Holding as a Value % of Net Value % of Net Rs. Asset Value Rs. Asset Value 5.1 Repurchase agreements
DFCC Vardhana Bank 35,572,722 3% - - First Capital Treasuries Limited - - 26,426,121 3% Wealth Trust Securities Limited - - 2,638,217 1% 35,572,722 3% 29,064,338 4% 5.2 Placements with other banks - xed deposits
Union Bank of Colombo PLC - - 22,735,494 2% - - 22,735,494 2%
35,572,722 3% 51,799,832 6%
41 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
6. FAIR VALUE OF FINANCIAL INSTRUMENTS
Determination of fair value and fair value hierarchy
SLFRS 7 Financial Instruments: Disclosures require fair value measurements to be disclosed by the source of inputs, using a three level hierarchy. The hierarchy for measuring fair value consists of Levels 1 to 3:
Level 1 – An investment in a fund is classi ed in Level 1 of the hierarchy when that investment is quoted in an active market and measured at the unadjusted quoted price at the reporting date.
Level 2 – An investment in a fund is classi ed in Level 2 of the hierarchy when that investment is measured using inputs that are directly observable at the reporting date.
Level 3 – An investment in a fund is classi ed in Level 3 of the hierarchy when the investment is measured using unobservable inputs at the reporting date.
The following assumptions used to value the level 2 securities where there is no active trading price is available:
a Quoted Securities All quoted securities are valued at the last trading price. However, if there is no trades for last 90 calendar days for a particular quoted security (ies), those quoted securities are valued on mark to market basis using the daily yield curve released by the Central Bank of Sri Lanka (CBSL) until the next trading day, including any risk premium attached to the instrument.
b Risk Premium The risk premium for valuation of quoted and unquoted debt securities shall continue to be calculated as the di erence between the yield on the corporate debt and the yield on the government security of a similar maturity at the time of investing.
The following table shows an analysis of nancial instruments recorded at fair value by level of the fair value hierarchy:
As at 31 March 2015 Level 1 Level 2 Level 3 Total Rs. Rs. Rs. Rs. Financial assets - held for trading
Quoted equity securities 1,204,186,204 - - 1,204,186,204 Quoted debentures - 85 ,065,183 - 85,065,183
As at 31 March 2014
Financial assets - held for trading
Quoted equity securities 990,741,517 - - 990,741,517 Quoted debentures - 79 ,243,175 - 79,243,175
7. OTHER RECEIVABLES 2015 2014 Rs. Rs.
Dividend receivable 5,332,575 7,739,647 5,332,575 7,739,647
8. ACCRUED EXPENSES 2015 2014 Rs. Rs.
Fund management fee payable 1,182,983 942,883 Trustee and Custodian fee payable 279,996 229,811 Audit fee 117,040 117,040 VAT on Management Fees Payable 929,779 - 2,509,798 1,289,734
42 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
2015 2014 9. INVESTMENT INCOME Rs. Rs.
9.1 Dividend income 35,404,107 29,337,559
9.2 Interest income Interest on Treasury bill repurchase agreements (9.2.1) 2,854,489 4,470,978 Interest on xed deposits 505,836 3,545,559 Interest on commercial papers - 1,703,393 Interest on debentures 10,803,092 7,538,014 Interest on savings 90,967 96,414 14,254,383 17,354,358
9.2.1 Interest income on Treasury bill repurchase agreements has been recognised gross of notional taxes.
10. INCOME TAX 2015 2014 Rs. Rs.
10.1 Tax expense for the year - - - -
10.2 A reconciliation between the tax expense and the product of taxable pro t multiplied by the statutory tax rate is as follows:
Operating pro t before tax 226,991,137 179,335,588 Aggregate allowable expenses/ net gains (195,096,363) (146,521,269) Allowable tax credits (43,867,199) (34,535,573) Total stutory income (11,972,425) (1,721,254)
Utilisation of previously unrecognised tax losses - - Taxable income - -
Income tax at the rate of 10% (2014-10%) Income tax expense reported in the Statement of Comprehensive Income - -
Carried forward unutilized tax losses 1,721,254 - Tax losses incurred during the year 11,972,425 1,721,254 Less: Tax losses claimed - - Brought forward unutilized tax losses 13,693,679 1,721,254
11. DISTRIBUTION
The fund announced and paid the following dividends during the year.
No. of Total Dividend per Unit Date of declaration units in issue Dividend Rs. Rs. 2.50 25 September 2014 10,751,200 26,878,000
43 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
12. CONTINGENCIES
There are no material contingencies existing as at the reporting date that require adjustments to or disclosures in the nancial statements.
13. EVENTS AFTER THE REPORTING DATE
There have been no material events occurring after the reporting date that require adjustments to or disclosures in the nancial statements.
14. CAPITAL COMMITMENTS
The fund does not has signi cant capital commitments as at the reporting date.
15. UNITS IN ISSUE AND UNIT PRICE
Units in issue and deemed to be issue as at 31 March 2015 is 10,751,200.0 (2014 - 10,751,200.0 ) and the net asset value as at that date per unit was Rs.123.57 (2014 - Rs. 105.01).
16. RELATED PARTY TRANSACTIONS
16.1 The following have been identi ed as related party transaction of NAMAL Acuity Value Fund for the year ended 31 March 2015 in accordance with LKAS 24 - "Related Party Disclosures".
Name of Company Names of Directors Nature of Transactions
National Asset Management Ltd. Fund has paid Rs. 13,239,432/- as management & registrar (Managing Company) fees during the year. The fee payable as at 31 March 2015, is Rs. 1,182,982/-.
Deutsche Bank AG Fund has paid Rs. 3,169,998/- as trustee and custodian fees Colombo Branch (Trustee) during the year. The fee payable as at 31 March 2015, is Rs. 279,995/-.
DFCC Bank PLC Mr. I. J. P. Gamage DFCC holds 30% (2014 -30%) of equity of National Asset (Executive Vice President) Management Limited. Mr. T. W. De Silva (Senior Vice President) Value of Units held by DFCC Bank PLC in NAMAL Acuity Value Fund as at 31 March 2015 is Rs. 261,079,931/- (2014 - Rs. 316,951,683 /- ). No of units held is 2,112,810 units, (2014 - 3,018,300 units).
The value of investments in Treasury bill repurchase agreements during the year with DFCC Vardhana Bank PLC is Rs.1,443,670,456/-. Interest received during the year is Rs.1,041,041,076/-. Investments in Treasury bill Repurchase agreements as of 31 March 2015 is Rs.35,572,722/-. DFCC Vardhana Bank PLC is a subsidiary of DFCC Bank PLC.
44 ANNUAL REPORT 2014 / 2015
NAMAL Acuity Value Fund NOTES TO THE FINANCIAL STATEMENTS Year ended 31 March 2015
16. RELATED PARTY TRANSACTIONS (Contd..)
Union Bank of Colombo PLC Mr. Alexis Lovell Union Bank of Colombo PLC holds 51% (2014 - 51%) of Mr. Indrajit Wickramasinghe equity of National Asset Management Limited.
The value of Fixed deposit investments during the year with Union Bank of Colombo PLC is Rs.22,813,968/-. Interest received during the year is Rs. 505,835/-.
Investments in xed deposits as of 31 March 2015 is Nil.
Ennid Capital (Private) Limited Mr. Avancka Herat Ennid Capital (Pvt) Ltd. holds 19% (2014 - 19%) of equity of National Asset Management Limited.
16.2 Unit Holdings of the Key Management Personnel of NAMAL Acuity Value Fund as at 31 March 2015 is as follows.
Name Relationship No. of Units Value of Unit Holding
Mr. Suren Madanayake Director 2,700 333,639
45 ANNUAL REPORT 2014 / 2015
UNIT INFORMATION
Analysis of Unitholders according to the Number of Units as at 31st March 2015
Holding Units Range No. of No. of Unitholders Units %
1-200 250 23,893 0.22 201-1,000 175 113,755 1.06 1,001-2,000 56 98,503 0.92 2,001-4,000 27 85,798 0.80 4,001-6,000 27 139,361 1.30 6,001-8,000 4 27,895 0.26 8,001-10,000 13 128,130 1.19 10,001-20,000 15 214,091 1.99 20,001-40,000 11 319,660 2.97 40,001- & Above 13 9,600,114 89.29
594 10,751,200 100.00
No. of No. of Holding Categories of Unit Holders Unitholders Units % Individuals 543 1,271,161 11.82 Company 51 9,480,039 88.18 594 10,751,200 100.00
Share Price Movement The market prices during the year Rs.
Highest Price 103.00 Lowest Price 85.00 Last Traded Price 90.00
Net Asset Value of a unit as at 31st March, 2015 123.57
46 ANNUAL REPORT 2014 / 2015
List of 20 Major Unit Holders based on their unitholdings as at 31st March, 2015
Name No. of Holding Units %
Hatton National Bank PLC A/C No 1 3,000,000 27.90 Central Finance Company PLC 2,744,900 25.53 DFCC Bank PLC A/C No 1 2,112,810 19.65 Mellon Bank N.A-The Frontier Emerging Markets Fund 900,000 8.37 Mr.S.A. Ratnayake 229,786 2.14 Mr.V.Sharda 138,600 1.29 Bartleet Religare Securities (Pvt) Ltd. 100,000 0.93 HNB AssurancePLC A/C No 2 (Life Insurance Fund) 80,000 0.74 Freudenberg Shipping Agencies Limited 77,702 0.72 East West Properties PLC 73,200 0.68 Life Insurance Corporation Lanka Ltd. 56,980 0.53 Mr.W.K. G.N. Perera 50,000 0.47 Mrs. G. Muralidaran 43,116 0.40 HNB AssurancePLC A/C No 1 (General Insurance Fund) 34,400 0.32 Merchant Bank of Sri Lanka Ltd. A/C No 1 30,550 0.28 Mr.H.A.Van Starrex 30,490 0.28 Mr.K.S.M.De Silva 28,472 0.26 Mr. W. A. D. U. C. Perera 25,100 0.23 Perera and Sons Caterers (Pvt) Ltd 25,000 0.23 Perera and Sons Distributors (Pvt) Ltd 25,000 0.23 Mr.A.N. Dias 25,000 0.23 Senkadagala Finance Company PLC 25,000 0.23
47 ANNUAL REPORT 2014 / 2015
Corporate Information
NATIONAL ASSET MANAGEMENT LIMITED
DIRECTORS Mr. Alexis Lovell, MBE – Chairman Mr. Ajith Wijeyesekera - Deputy Chairman Mr. Indrajit Wickramasinghe Mr. Malinda Samaratunga Mr. Suren Madanayake Ms. Khoo Siew Bee Mr. Tyrone De Silva Mr. Palitha Gamage Mr. Avancka Herat
UNIT TRUST INFORMATION National Asset Management Ltd MANAGEMENT COMPANY 7th Floor, Union Bank Head O ce 64, Galle Road, Colombo 3.
TRUSTEE & CUSTODIAN Deutsche Bank AG 86 Galle Road, Colombo 3.
AUDITORS Ernst and Young Chartered Accountants 201, De Saram Place Colombo 10.
BANKERS Union Bank Of Colombo PLC 64, Galle Road, Colombo 3.
Deutsche Bank AG 86, Galle Road, Colombo 3.
LAWYERS F J & G de Saram Attorneys-at-Law & Notaries Public 216, De Saram Place, Colombo 10.
48 ANNUAL REPORT 2014 / 2015
Declaration By Trustees And Managing Company
DECLARATION 1
Declaration by Trustee and Management Company as per SEC Circular No: 02/2009 on Guidelines for Trustees and Managing Companies of Unit Trusts Funds.
Deutsche Bank AG, the Trustee and National Asset Management Ltd, the Managers of the NAMAL Acuity Value Fund hereby declare that
1. the requirements of the Guidelines for Trustees and Managing Companies of Unit Trust Funds set by the Securities and Exchange Commission of Sri Lanka (SEC), the Trust Deed, the SEC Act, the Explanatory Memorandum, directives issued by the SEC from time to time have been complied with during the period.
2. the transactions were and will be carried out at an arm’s length basis and on terms which are best available for the fund, as well as act, at all times, in the best interest of the fund’s unit holders.
DECLARATION 2
As per the section 4.3 c (iv) of the Listing Rule of the Colombo Stock Exchange.
Deutsche Bank AG, the Trustee and National Asset Management Ltd, the Managers of the NAMAL Acuity Value Fund hereby declare that the requirements of the Trust Deed, the Securities and Exchange Commission of Sri Lanka Act No 36 of 1987, the Explanatory Memorandum, directives issued by the Securities and Exchange Commission from time to time have been complied with and is in compliance.
…………………………….. …………………………….. …………………………………………… Director Director Authorised Signatories Management Company Management Company Trustee NAMAL Acuity Value Fund
49 ANNUAL REPORT 2014 / 2015
"The SEC in approving this Annual Report has taken reasonable care to ensure the accuracy of the information included herein. However, National Asset Management Limited is at all times responsible for the information included in this Annual Report" 50 National Asset Management Ltd. | No.64 Galle Road, Colombo 03. | T: 9411 2445911 | www.namalfunds.com