2017 ANNUAL REPORT AND FINANCIAL STATEMENTS 2017 ANNUAL REPORT AND FINANCIAL STATEMENTS SAS FORTUNE FUND LIMITED 3 SAS FORTUNE FUND LIMITED CORPORATE INFORMATION The Manager: SAS Investment Management Ltd. (SAS-IM) 14th Floor WTCA Building, Indep. Avenue, Accra Tel: +233-302-661770/2/008/880 +233-302-661900 Fax: +233-302-663999 E-mail: [email protected] Website: www.sasghana.com Directors of the Fund: Maxwell Logan (Chairman) Togbe Afede XIV Apiigy Afenu (Removed on 6th July 2017) Nana Soglo Alloh (Removed on 6th July 2017) Paul Hammond The Custodian: Standard Chartered Securities Services Head Office P. O. Box 768 Accra Independent Auditors: Nexia Debrah & Co. (Chartered Accountants) BCB Legacy House # 1 Nii Amugi Avenue East Adabraka, Accra P. O. Box CT 1552 Cantonments, Accra Solicitors: R. S. Agbenoto and Associates 4th Floor Total House 25 Liberia Road Secretary: Accra Nominees Cedar House No. 13 Samora Machel Road Asylum Down, Accra 4 CONTENTS Corporate Information 4 Chairman’s Report 8-9 Fund Manager’s Report 10-15 Report of the Directors 16-17 Report of the Auditors 18-21 Statement of Investment Assets 22-23 Statement of Comprehensive Income 24 Statement of Financial Position 25 Statement of Cash Flows 26 Portfolio Summary 28 SAS Notes to the Financial Statements 29-37 FORTUNE FUND REPORT Report of the Custodian 38-40 Information on Directors 41 AND FINANCIAL STATEMENTS 5 SAS FORTUNE FUND LIMITED NOTICE OF MEETING NOTICE is hereby given that the 13th Annual General Meeting of the Members of the SAS Fortune Fund will be held on Thursday July 26, 2018 at the British Council Hall, Liberia Road, Accra at 12.30 p.m. to transact the following ordinary business:- To receive and adopt the Audited Financial Statements for the year ended December 31, 2017 together with the Reports of the Directors and Auditors thereon. 1. To appoint Directors. 2. To re-elect Directors. 3. To fix Directors’ Remuneration for the ensuing year 4. To authorise the Directors to negotiate and determine the remuneration of the Auditors for the ensuing year. BY ORDER OF THE BOARD ACCRA NOMINEES LIMITED COMPANY SECRETARIES Registered Office, Accra. Dated this 11th day of June, 2018 NOTE: A member entitled to attend and vote at the meeting is entitled to appoint a proxy to attend and vote instead of him/her and such proxy need not be a member of the Fund. A proxy form is attached. Executed forms of proxy should be deposited at the Registered Office of the Fund Manager, 14th Floor Accra World Trade Centre, Independence Avenue, Accra, not less than 48 hours prior to the time of the meeting. 6 SAS FORTUNE FUND LIMITED ADMISSION CARD To the Annual General Meeting of Members to be held on Thursday July 26, 2018 at the British Council Hall, Liberia Road, Accra, at 12.30 p.m. NOTE: This admission card must be produced by the shareholder or his proxy in order to obtain entrance to the Annual General Meeting. Shareholders or their proxies are requested to sign the admission card before attending this meeting. ……………………………………………………………………………………………… Name of Shareholder …………………………............ …………………………............ Signature Date SAS FORTUNE FUND REPORT AND FINANCIAL STATEMENTS 7 CHAIRMAN’S REPORT Dear Valued Shareholders, It is with immense pleasure that I welcome you to the 13th Annual General Meeting of SAS Fortune Fund Ltd. and what a remarkable journey we have had. All in all, 2017 was a good year for SAS Fortune Fund and we have grown the fund by more than doubling the assets under management. Not only that, we have the happy news of having also made good strides in our constant quest to optimize returns for you our shareholders. My report is to share with you the operating environment the Fund was exposed to and what our team has been able to achieve during the year 2017. Operating Environment The global economy has strengthened as protracted fragilities resulting from global financial crisis have subsided. Global economic growth reached 3 per cent in 2017, the highest growth rate since 2011. The growth rate is expected to remain steady for 2018 even though it will remain unevenly distributed across countries and regions. Economic prospects for many commodity exporters such as Ghana will remain particularly challenging as insignificant growth in per capita GDP is anticipated in several parts of Africa, Western Asia, and Latin America and the Caribbean. Ghana’s economy also ended on a good note in the year 2017. GDP grew in annual terms by 8.50% in 2017 which is the fastest growth rate in five years. The impressive growth seemed to have been principally fueled by production output in oil and gas sector. Again, an ease in inflationary pressures stimulated household consumption during the year. Further, the elevated prices for oil and gold which form Ghana’s key commodity exports have also spurred GDP growth. It is anticipated that these growth driver commodities (oil, gold and cocoa) will continue to be the backbone of Ghana’s economy. A favorable global commodity price outlook, together with an anticipated increase in oil production should bolster economic activity in 2018. Inflationary pressures are expected to further reduce in 2018 which will boost domestic demand. In the monetary area of the economy, declining inflation, supported by a fall in interest rates and the Ghana cedi’s stability during the year 2017 propelled the Bank of Ghana to reduce policy rate from 25.50% in December 2016 to 20% in December 2017. Similarly, the 91-day Treasury bill rate closed the year at 13.35% from 16.43% in December 2016 whilst the 182- day treasury bill rate declined by 376 basis points to end the year at 13.88%, all of which have contributed to fueling a comparative climate of buoyancy. The Ghana Stock Exchange Composite Index which measures the return on all shares listed on the Ghana Stock Exchange recorded 52.73% at the end of the year 2017 as compared to -15.33% and -11.77 in the preceding years of 2016 and 2015 respectively. The 52.73% 8 performance of the stock market was the best performance over the last 3 years. This improved performance in the GSE Composite Index seemed to have been propelled by the afore- mentioned improvements in the general economic indicators, the re-emergence of investor confidence in the equities listed on the Ghana Stock Exchange and the removal of tax on gains made from the Ghana Stock Market. The Stock Market is expected to remain bullish at least up to the first half of 2018 as we expect to witness falling fixed income rates and experience other economic phenomena which we expect will drive the current trends. We envisage vibrancy in activities in equities on the Ghana Stock Market as new entrants like MTN and other key corporates in the Ghanaian economy are expected to join the bourse. The Fund The SAS Fortune Fund also posted an impressive performance during the year 2017 as it mimicked the performance of the securities traded on the Ghana Stock Exchange. The Fund made a year to date return of 43.16% at the end of 2017 compared to 6.30% and -0.71% in 2016 and 2015 respectively. The Fund out-performed the average return posted by all Equity Mutual Funds in Ghana in 2017 and was the favorite Fund for both existing and new shareholders during the year. The total net assets of the Fund grew by 106% during the year 2017 from GHS 3.396 million to GHS 6.981 million as compared to 14.30% growth in 2016. The Fund is expected to continue to do well in 2018 as we expect the Stock Market to remain bullish during the year. The Fund has started on a good note by posting a return of 19.77% at the end of first quarter 2018. Last year, I invited you to buy more shares of the Fund. I believe the shareholders who did will be smiling at the return posted by the Fund during the year. Again, last year, we were determined to grow the Fund; we achieved an unprecedented rate of over 100% growth of the Fund during the year 2017 but we are not resting as we determine to do even more. In this regard, we will continue to provide the leadership and the strategic direction for company and to see it grow and remain the best mutual fund in Ghana. Conclusion I would like to extend my utmost appreciation to my colleague Directors for their leadership and direction as I invite them and the shareholders to join me applaud the Fund Management team for their tireless and determined application to making the fund grow into the very best in all respects. I am very proud of the support we have received in the past year from the entire SAS staff. in the past year. Without their support and taking up and playing various support roles with such distinction, we would in all probability not have achieved this success. Last but even most important, we, the Directors, Fund Management Team and the entire SAS staff would like to thank the shareholders for their investiture of trust in not only choosing but keeping faith with us over the past years. We pledge to you our continued exertion and best efforts to keep our SAS Fortune Fund the best performing equity mutual fund in Ghana. Thank you very much and may God bless us all. Maxwell Logan, Chairman 9 SAS FORTUNE FUND LIMITED FUND MANAGER’S REPORT Dear Shareholders, Once again, we dearly welcome you to the 13th Annual General meeting of the SAS Fortune Fund Limited.