AlAhli Diversified Saudi Riyal Fund
AlAhli Diversified Saudi Riyal Fund
AlAhli Diversified Saudi Riyal Fund – Interim Report A. Fund Manager 1. The Fund Manager is NCB Capital Company. Address: King Saud Road, P.O. Box 22216, Riyadh 11495, Kingdom of Saudi Arabia, Tel: +966 920000232
Fax +966 114060049
Website: www.alahlicapital.com
2. Sub-manager / investment adviser None 3. Investment activities During the first half of 2017, the fund focused on short term Murabaha investments with GCC banks. This was driven by mainly;
The liquidity needs of banks in the GCC.
The expectation of redemptions. The fund strategy was conservative given the circumstances, the strategy helped the fund manager over perform the benchmark.
4. Fund’s performance During the first half of 2017, the fund over-performed the benchmark by 0.08%. The Assets Under Management (AUM) have Increased by 19.1% and closed the period at SR 7.6 bln 5. T&C’s Material changes made The Fund Manager has made the following revisions to the fund terms and conditions:
Changing the fund name to “AlAhli Diversified Saudi Riyal Fund”
Appointment of Basmah Al Tuwaijri as an independent board members.
The fund has the right to invest in securities issued by the fund manager or its affiliates.
Amendments in paragraph (9) “Principal Investment Strategies” long-term Fixed income instruments are added to the investment universe, and amending the maximum limit on investing in other investment funds to be 50%.
NCB Capital is authorized by the Capital Market Authority of the Kingdom of Saudi Arabia under license number 37-06046. The registered office is at King Saud Road, NCB Regional Building P.O. Box 22216, 11495 Riyadh, Kingdom of Saudi Arabia T: +966 11 874 7106 F: +966 11 406 0049 www.alahlicapital.com
Also,
06046-37 شركة األهلي المالية (األهلي كابيتال) هي شركة مرخصــة من قبــل هيئة السـوق الماليــــة ترخيـص رقم ، 22216 ص ب، المبنى اإلقليمي للبنك األهلي التجاري، طريق الملك سعود:وعنوان مركزها الرئيسي المسجل. المملكة العربية السعودية، 11495 الرياض www.alahlicapital.com +966 11 406 0049 : ف+966 11 874 7106 :هـ
amendments in paragraph 25 by emphasizing conditions that might cause the fund manager to suspend subscriptions or redemptions requests. 6. The fund does not invest substantially in other investment funds. 7. No special commissions were received by the fund manager during the period.
B. Financial Statements
NCB Capital is authorized by the Capital Market Authority of the Kingdom of Saudi Arabia under license number 37-06046. The registered office is at King Saud Road, NCB Regional Building P.O. Box 22216, 11495 Riyadh, Kingdom of Saudi Arabia T: +966 11 874 7106 F: +966 11 406 0049 www.alahlicapital.com
06046-37 شركة األهلي المالية (األهلي كابيتال) هي شركة مرخصــة من قبــل هيئة السـوق الماليــــة ترخيـص رقم ، 22216 ص ب، المبنى اإلقليمي للبنك األهلي التجاري، طريق الملك سعود:وعنوان مركزها الرئيسي المسجل. المملكة العربية السعودية، 11495 الرياض www.alahlicapital.com +966 11 406 0049 : ف+966 11 874 7106 :هـ
AL-AHLI DIVERSIFIED SAUDI RIYAL FUND (Formerly Al-Ahli Diversified Saudi Riyal Trade Fund) (Managed by NCB Capital Company) INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 with REVIEW REPORT TO THE UNITHOLDER
AL–AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) INTERIM BALANCE SHEET As at 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated)
Notes
30 June 2017 (Unaudited)
31 December 2016 (Audited)
30 June 2016 (Unaudited)
6,685
5,607
86,962
ASSETS Cash and cash equivalents
7
Held to maturity investments
9 (i)
6,957,207
5,793,618
5,151,721
Held for trading investments
9 (ii)
665,358
604,711
5,000
7,629,250
6,403,936
5,243,683
Payable to unitholders on account of redemptions
1,181
4,298
1,981
Management fee payable
4,444
133
--
Total liabilities
5,625
4,431
1,981
7,623,625
6,399,505
5,241,702
5,920,705
5,016,391
4,159,746
1.2876
1.2757
1.2601
Total assets LIABILITIES
Net assets attributable to unitholders Units in issue in thousands (number)
10
Net assets value per unit (SR)
The accompanying notes 1 to 13 form an integral part of these interim financial statements. 2
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) INTERIM STATEMENT OF INCOME (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated)
30 June 2017
30 June 2016
Profit on Murabaha contracts
46,450
48,486
Sukuk income
37,927
35,758
Realised gain on sale of held for trading investments
3,498
3,333
Unrealized gain on held for trading investments
1,352
--
Other income
1,715
--
90,942
87,577
25,410
26,365
Audit fee
12
40
Shariah audit fee
13
14
Fund Board remuneration
7
9
CMA fee
4
4
248
252
Total expenses
25,694
26,684
NET INCOME FOR THE PERIOD
65,248
60,893
Note INVESTMENT REVENUE
Total revenue EXPENSES
8
Management fee
Administrative expenses
The accompanying notes 1 to 13 form an integral part of these interim financial statements. 3
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) INTERIM STATEMENT OF CASH FLOWS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 30 June 2017
30 June 2016
65,248
60,893
-(1,352) 63,896
26,684 -87,577
(1,163,589) (59,295)
3,688,614 (8,073)
(3,117) 4,311
905 --
Net cash (used in) / provided by operating activities
(1,157,794)
3,769,023
Cash flow from financing activities Proceeds from units sold Value of units redeemed
3,395,753 (2,236,881)
1,534,431 (5,219,785)
1,158,872
(3,685,354)
1,078
83,669
5,607
3,293
6,685
86,962
Note Cash flow from operating activities Net income for the period Adjustment for: Value of units reinvested Unrealized gain on held for trading investments Changes in operating assets and liabilities: (Increase) / decrease in held to maturity investments Increase in held for trading investments (Decrease) / increase in payable to unitholders on account of redemptions Increase in management fee payable
Net cash provided by / (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period
7
Cash and cash equivalents at the end of the period
The accompanying notes 1 to 13 form an integral part of these interim financial statements. 4
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) INTERIM STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated)
Note Net assets attributable to unitholders at the beginning of the period (audited) Net income for the period Increase / (decrease) in net assets from unit transactions during the period
30 June 2017
30 June 2016
6,399,505
8,839,479
65,248
60,893
3,395,753
1,534,431
--
26,684
(2,236,881)
(5,219,785)
1,158,872
(3,658,670)
7,623,625
5,241,702
10
Proceeds from units sold Value of units reinvested
8
Value of units redeemed
Net assets attributable to unitholders at the end of the period (unaudited)
The accompanying notes 1 to 13 form an integral part of these interim financial statements. 5
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 1.
THE FUND AND ITS ACTIVITIES
Al-Ahli Diversified Saudi Riyal Fund (formerly Al-Ahli Diversified Saudi Riyal Trade Fund) ("the Fund") is a Shariah compliant open-ended investment fund, managed by NCB Capital Company ("the Fund Manager"), a subsidiary of The National Commercial Bank (the "Bank"), for the benefit of the Fund's Unitholders. The Fund is established under Article 30 of the Investment Fund Regulations (the Regulations) issued by the Capital Market Authority (CMA). NCB Capital Company also acts as the custodian of the Fund. As defined in Capital Market Authority's Regulation No. 2-83-2005 dated 21 Jumada Awal 1426H (28 June 2005) the Fund Manager conducts following securities’ activities: a) b) c) d) e)
Dealing; Arranging; Managing; Advising; Custody;
The Fund offers investors the opportunity to participate in trade transactions which conform to Shariah principles, invest in Sukuks and other mutual funds or instrument that comply with Islamic Shariah investment principles. The terms and conditions of the Fund were originally approved by the Saudi Arabian Monetary Agency (SAMA) and subsequently endorsed by the CMA through its letter dated 16 December 2008. The Fund commenced its operations on 1 October 2003. The results for the six months period ended 30 June 2017 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2017. 2.
REGULATING AUTHORITY
The Fund is governed by the Regulations pursuant to resolution number 7-219-2006 dated 3 Dhul Hijja 1427H (corresponding to 24 December 2006) as amended by the Resolution No. 1/61/2016 of Board of the CMA dated 16 Sha’ban 1437H (corresponding to 23 May 2016) which provided detailed requirements for all funds within the Kingdom of Saudi Arabia. 3.
CHANGES IN FUND’S TERMS AND CONDITIONS
During the period ended 30 June 2017, the Fund Manager has made a revision to the terms and conditions of the Fund. The change in the terms and conditions relate to amend the strategy and name of the Fund. The change in the terms and conditions do not have any impact on these interim financial statements. The amendment in the strategy and name of the Fund was approved by CMA through its letter dated 5 December 2016. The change was notified by the Fund manager to the Unitholders through a letter dated 27 December 2016 and the changes were implemented from 21 March 2017.
6
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 4.
SUBSCRIPTIONS / REDEMPTIONS
The Fund is open for subscriptions / redemptions of units on every Saudi Business day. The net asset value of the fund is determined on each Saudi Business Day. All transactions for purchase / sale of units, are entered on the net assets value of the Fund, determined by dividing the value of net assets of the Fund by the number of outstanding units prior to such transaction. 5.
BASIS OF PREPARATION
Statement of compliance These interim financial statements are prepared in accordance with generally accepted accounting standards in the Kingdom of Saudi Arabia promulgated by Saudi Organization for Certified Public Accountants (“SOCPA”). The Fund prepares its interim financial statements as at and for the period ended on its last valuation date (note 12). The Fund presents comparative numbers of December in Balance Sheet and its related notes as additional information for benefit of Unitholders. Basis of measurement These interim financial statements have been prepared under the historical cost convention using the accrual basis of accounting and the going concern concept, except for held for trading investments which are carried at fair value. Functional and presentation currency These interim financial statements are presented in Saudi Arabian Riyals (SR), which is the Fund’s functional currency. All financial information presented in Saudi Arabian Riyals has been rounded to the nearest thousand. Use of estimates and judgments The preparation of the financial statements in conformity with the generally accepted accounting standards as applicable in the Kingdom of Saudi Arabia requires management to make judgments , estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any future years affected. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the interim financial statements have been consistent with those used in the preparation of annual financial statements of the Funds for the year ended December 31, 2016.
7
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 5.
BASIS OF PREPARATION (continued)
Use of estimates and judgments (continued) Valuation of financial assets Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As the Fund's financial instruments are accounted for under the historical cost convention, except for held for trading investments, differences may arise between the carrying values and fair values. The Fund Manager believes that at the reporting date, the fair values of the Fund's financial assets and liabilities are not materially different from their carrying values. The Fund measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:
Level 1: Fair value measurements using quoted price (unadjusted) in an active market for identical assets or liabilities. Level 2: Fair value measurements using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Fair value measurement using inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).
All financial assets of the fund, carried at fair value at the reporting date, are classified under hierarchy level 2. 6.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently in respect of all periods presented in these financial statements. a)
Investments
Investments having fixed or determinable payments and fixed maturity that the management has the positive intention and ability to hold to maturity are classified as held to maturity. Investments in Murabaha contracts and Sukuk are classified as Held to Maturity Investments are initially recognized at fair value including direct and incremental transaction cost. Subsequent to initial measurement these are measured at amortised cost less impairment losses, if any. Investments in Mutual Funds are classified as held for trading investments and are initially recognised at cost, being the fair value of consideration given. After initial recognition investments in mutual funds are valued at the unit price prevailing on the last valuation day of the period. Unrealised gains and losses are recognised in the statement of income. b)
Investment transaction
Investment transactions in Murabaha contracts and sukuk are accounted for as of the settlement date and investments in mutual funds are accounted for as of the trade date. 8
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 6.
SIGNIFICANT ACCOUNTING POLICIES (continued)
c)
Impairment of financial assets
An assessment is made at the balance sheet date to determine whether there is objective evidence that a specific financial asset may be impaired. If such evidence exists, any impairment loss is recognised in the statement of Income. If a financial asset is impaired, impairment is determined as follows: (i)
For assets carried at fair value, impairment is the difference between cost and fair value, less any impairment loss previously recognised in the statement of income; (ii) For assets carried at cost, impairment is the difference between carrying value and the present value of future cash flows discounted at the current market rate of return for a similar financial asset; (iii) For assets carried at amortised cost, impairment is the difference between carrying amount and the present value of future cash flows discounted at the original effective commission rate. d)
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where: (i) The rights to receive cash flows from the asset have expired; or (ii) The Fund has transferred its rights to receive cash flows from the asset; and (iii) Either (i) the Fund has transferred substantially all the risks and rewards of the asset, or (ii) the Fund has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Fund has transferred its rights to receive cash flows from an asset, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Fund’s continuing involvement in the asset. e)
Revenue recognition
Revenue on Murabaha contracts and Sukuk is recognised on a time-apportioned basis over the period of the contract based on the principal amounts outstanding. Increases or decreases in the difference between the cost and market value of the Fund’s investments in mutual funds at period end are recognised as unrealised gains or losses on held for trading investments in the statement of income. Realised gains and losses on held for trading investments sold are determined as difference between sales proceeds and cost determined on weighted average basis. f)
Foreign currency transactions
Transactions during the year in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the dates of the transactions. Monetary assets and liabilities that are denominated in a foreign currency are retranslated at the rate of exchange ruling at the balance sheet date. Exchange gains or losses are reflected in the statement of Income.
9
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 6.
SIGNIFICANT ACCOUNTING POLICIES (continued)
g)
Taxation/zakat
Taxation/zakat is the obligation of the unitholders and therefore, no provision for such liability is made in these financial statements. h)
Cash and cash equivalents
For the purposes of the statement of cashflows, cash and cash equivalents consist of bank balances. i)
Net asset value per unit
The net asset value per unit is of the fund is the monetary value of the asset minus its liabilities and expenses divided by the number of units outstanding at the period end. j)
Provisions and accruals
Provisions and accruals are recognized when the Fund has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and can be measured reliably. k)
Offsetting
Financial assets and liabilities are offset and reported net in the balance sheet when there is a legally enforceable right to set off the recognized amounts and when the Fund intends to settle on a net basis, or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under accounting standards generally accepted in the Kingdom of Saudi Arabia, or for gains and losses arising from a group of similar transactions. 7.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent cash held in current accounts with National Commercial Bank (a related party). 8.
MANAGEMENT FEE AND OTHER EXPENSES
The Fund is managed and administered by the Fund Manager. For these services, the Fund accrues, daily a management fee, as determined by the Fund Manager, which should not be more than the maximum annual rate of 0.75% p.a. of the Fund's daily net assets as set out in the Fund’s terms and conditions. The Fund Manager is also entitled to recover expenses incurred on behalf of the Fund relating to audit, custody, advisory, data processing and other similar charges. The maximum amount of such expenses that can be recovered from the Fund by the Fund Manager is restricted to 0.5% per annum of the Fund's net assets at the respective valuation days. These expenses have been recovered by the Fund Manager on an actual basis except for custody fess, which is borne by the Fund Manager. Until 23 July 2016, the Fund Manager was allocated units against settlement of the management fee and other expenses on every valuation day, which were reinvested in the Fund. Subsequent to this date these expenses are settled in cash. 10
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 9.
INVESTMENTS
i)
Held to maturity investments
Held to maturity investments comprises of the following: 30 June 31 December 2017 2016 (Unaudited) (Audited) Investment in Murabaha contracts (note 9 (i) (a)) Investment in Sukuks (note 9 (i) (b))
a)
30 June 2016 (Unaudited)
4,740,067 2,217,140
3,217,519 2,576,099
2,576,071 2,575,650
6,957,207
5,793,618
5,151,721
Investment in Murabaha contracts comprises of the following Murabaha: % of total Investment Value
Cost
Carrying value
Khaleeji Commercial Bank Masraf Al Rayan Qatar Islamic Bank Banque Saudi Fransi The Saudi Investment Bank Riyad Bank Alawwal Bank (formerly Saudi Hollandi Bank) Samba Financial Group Qatar National Bank Bank Al Jazira Gulf International Bank Emirates NBD
10.43 9.80 7.29 5.75 5.33 4.93 3.56 3.52 3.40 3.27 2.66 2.32
790,000 744,000 547,000 436,000 404,000 374,000 269,000 268,000 258,000 249,000 201,000 176,000
794,679 745,945 554,661 438,134 405,472 375,672 270,919 268,147 258,659 249,124 202,391 176,264
30 June 2017 (Unaudited)
62.26
4,716,000
4,740,067
31 December 2016 (Audited)
50.28
3,208,000
3,217,519
30 June 2016 (Unaudited)
50.07
2,535,000
2,576,071
Murabaha contracts as at 30 June 2017 carry profit ranging from 1.2 % to 3.8% (30 June 2016: 1.4% to 4%) and have maturities ranging from 1 to 11 months (30 June 2016: 1 to 12 months) from period end.
11
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 9.
INVESTMENTS (continued)
i)
Held to maturity investments (continued)
b)
Investment in Sukuks comprises of the following Sukuks: % of total Investment Value
Cost
Carrying value
Repayment terms
6 months SIBOR+110 bps 6 months SIBOR+ 115 bps
3.74 2.62
283,000 200,000
285,875 200,000
Semi-annually Semi-annually
3 months SIBOR+70 bps 6 months SIBOR+ 140 bps
1.96 1.96
150,000 150,000
150,536 150,489
Quarterly Semi-annually
6 months 3 months 6 months 6 months
SIBOR+115 bps SIBOR+110 bps SIBOR+ 110 bps SIBOR+ 100 bps
1.57 1.57 1.35 1.33
120,420 120,420 102,156 101,745
120,440 120,218 102,572 101,709
Semi-annually Quarterly Semi-annually Semi-annually
6 months 6 months 3 months 3 months 6 months 6 months 6 months 6 months 6 months 6 months 3 months 6 months
SIBOR+ 155 bps SIBOR+ 140 bps SIBOR+70 bps SIBOR+140 bps SIBOR+115 bps SIBOR+ 140 bps SIBOR+115 bps SIBOR+130 bps SIBOR+130 bps SIBOR+ 100 bps SIBOR+68 bps SIBOR+110 bps
1.33 1.32 1.31 1.31 1.31 1.25 1.06 0.99 0.99 0.85 0.65 0.31
102,203 100,000 100,025 100,000 100,000 96,000 80,000 75,000 75,000 65,258 50,000 23,128
101,038 100,700 100,092 100,035 100,000 96,036 80,688 75,172 75,172 65,656 50,141 23,370
Semi-annually Semi-annually Quarterly Quarterly Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Quarterly Semi-annually
6 months SIBOR+110 bps
0.22
17,083
17,201
Semi-annually
29
2,211,438
2,217,140
31 December 2016 (Audited)
40.27
2,565,735
2,576,099
30 June 2016 (Unaudited)
49.83
2,565,735
2,575,650
Coupon rate % Floating rate Sukuks The National Commercial Bank (a related party) Riyad Bank Saudi Electricity Company Samba Financial Group Alawwal Bank (formerly Saudi Hollandi Bank ) Banque Saudi Fransi Savola Group Al-Marai Company Alawwal Bank (formerly Saudi Hollandi Bank ) Arab National Bank Saudi Telecom Company Bank Saudi Fransi Riyad Bank The Saudi British Bank Al-Marai Company The Saudi British Bank The Saudi British Bank Al-Marai Company Riyad Bank Savola Group The National Commercial Bank (a related party) 30 June 2017 (Unaudited)
12
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 9.
INVESTMENTS (continued)
ii)
Held for trading investments % of total Investment Value
Cost
Value
Investment in mutual fund Al-Ahli Saudi Riyal Trade Fund (368,527,418 Units) (a related party) 30 June 2017 (Unaudited)
8.74 8.74
662,686 662,686
665,358 665,358
31 December 2016 (Audited)
6.85
603,390
604,711
30 June 2016 (Unaudited)
0.10
5,000
5,000
The expected maturity profile of the above held to maturity and held for trading investments is as follows: Up to 6 month
6 months – 1 year
1-3 years
3-5 years
Investment in Murabaha contracts
2,863,561
1,876,506
Investment in Sukuk
--
--
Al-Ahli Saudi Riyal Trade Fund
--
--
30 June 2017 (Unaudited)
2,863,561
1,876,506
31 December 2016 (Audited)
3,257,554
327,565
802,803
30 June 2016 (Unaudited)
2,553,103
35,202
916,795
--
Over 5 years
No fixed maturity
Total
--
--
--
4,740,067
1,034,115 200,630
982,395
--
2,217,140
--
--
665,358
665,358
1,034,115 200,630
982,395
665,358
7,622,565
425,677
980,019
604,711
6,398,329
666,601
980,020
5,000
5,156,721
--
13
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 10.
UNIT TRANSACTIONS
Transactions in units during the period are summarised as follows: For the sixmonths period ended 30 June 2017 Units’ 000
For the sixmonths period ended 30 June 2016 Units’ 000
Units at the beginning of the period (audited)
5,016,391
7,076,855
Units sold
2,648,120
1,223,435
Units reinvested
--
21,283
Units redeemed
(1,743,806)
(4,161,827)
Net increase / (decrease) increase in units
904,314
(2,917,109)
Units at the end of the period (unaudited)
5,920,705
4,159,746
As at 30 June 2017, top five unitholders represented 27.8% (30 June 2016: 26.93%) of the Fund’s units. 11.
RELATED PARTY TRANSACTIONS
In the ordinary course of its activities, the Fund transacts business with related parties on the basis of approved terms and conditions of the Fund. All related party transactions are approved by the Fund Board. Name of entity
Relationship
NCB Capital Company National Commercial Bank (NCB) Al-Ahli Takaful Company Al-Ahli Multi-Asset Conservative Fund Al-Ahli Multi-Asset Moderate Fund Al-Ahli Multi-Asset Growth Fund Al-Ahli Multi-Asset Income Plus Fund
Fund Manager Shareholder of Fund Manager Unitholder Unitholder Unitholder Unitholder Unitholder
In addition to the below disclosure, balances with related parties are also disclosed in note 7 and 9.
14
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 11.
RELATED PARTY TRANSACTIONS (continued)
The significant related party transactions entered into by the Fund during the period and balances resulting from such transactions are as follows:
Related party
Nature of transaction
NCBC
Management fee Expenses paid on behalf of the fund
Value of units held as at 30 June 2017 2016
Amount of transactions 2017 2016 25,410
26,365
284
319
Al-Ahli MultiAsset Conservative Fund
Subscription of units
20,500
1,500
Redemption of units
--
79,318
Al-Ahli MultiAsset Moderate Fund
Subscription of units
5,500
69,180
Redemption of units
13,000
28,368
Subscription of units
3,400
28,090
Redemption of units
13,000
14,182
Subscription of units
5,750
13,002
Al-Ahli MultiAsset Income Plus Fund
Redemption of units
--
--
Al-Ahli Takaful Company
Subscription of units
22,000
19,180
Redemption of units
18,000
25,500
Al-Ahli MultiAsset Growth Fund
15
446,452
190,957
20,568
--
34,474
41,045
650
14,015
18,227
13,002
6,863
15,699
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 12.
LAST VALUATION DAY
The last valuation day of the period was 22 June 2017 (30 June 2016: 30 June 2016). There is no significant change in the net asset value per unit of the Fund between last valuation and 30 June 2017. 13.
APPROVAL OF THE FINANCIAL STATEMENTS
These financial statements were approved by the Fund Manager on Dhul Qadah 23, 1438H, corresponding to August 15, 2017.
16
AlAhli Diversified Saudi Riyal Fund – Interim Report A. Fund Manager 1. The Fund Manager is NCB Capital Company. Address: King Saud Road, P.O. Box 22216, Riyadh 11495, Kingdom of Saudi Arabia, Tel: +966 920000232
Fax +966 114060049
Website: www.alahlicapital.com
2. Sub-manager / investment adviser None 3. Investment activities During the first half of 2017, the fund focused on short term Murabaha investments with GCC banks. This was driven by mainly;
The liquidity needs of banks in the GCC.
The expectation of redemptions. The fund strategy was conservative given the circumstances, the strategy helped the fund manager over perform the benchmark.
4. Fund’s performance During the first half of 2017, the fund over-performed the benchmark by 0.08%. The Assets Under Management (AUM) have Increased by 19.1% and closed the period at SR 7.6 bln 5. T&C’s Material changes made The Fund Manager has made the following revisions to the fund terms and conditions:
Changing the fund name to “AlAhli Diversified Saudi Riyal Fund”
Appointment of Basmah Al Tuwaijri as an independent board members.
The fund has the right to invest in securities issued by the fund manager or its affiliates.
Amendments in paragraph (9) “Principal Investment Strategies” long-term Fixed income instruments are added to the investment universe, and amending the maximum limit on investing in other investment funds to be 50%.
NCB Capital is authorized by the Capital Market Authority of the Kingdom of Saudi Arabia under license number 37-06046. The registered office is at King Saud Road, NCB Regional Building P.O. Box 22216, 11495 Riyadh, Kingdom of Saudi Arabia T: +966 11 874 7106 F: +966 11 406 0049 www.alahlicapital.com
Also,
06046-37 شركة األهلي المالية (األهلي كابيتال) هي شركة مرخصــة من قبــل هيئة السـوق الماليــــة ترخيـص رقم ، 22216 ص ب، المبنى اإلقليمي للبنك األهلي التجاري، طريق الملك سعود:وعنوان مركزها الرئيسي المسجل. المملكة العربية السعودية، 11495 الرياض www.alahlicapital.com +966 11 406 0049 : ف+966 11 874 7106 :هـ
amendments in paragraph 25 by emphasizing conditions that might cause the fund manager to suspend subscriptions or redemptions requests. 6. The fund does not invest substantially in other investment funds. 7. No special commissions were received by the fund manager during the period.
B. Financial Statements
NCB Capital is authorized by the Capital Market Authority of the Kingdom of Saudi Arabia under license number 37-06046. The registered office is at King Saud Road, NCB Regional Building P.O. Box 22216, 11495 Riyadh, Kingdom of Saudi Arabia T: +966 11 874 7106 F: +966 11 406 0049 www.alahlicapital.com
06046-37 شركة األهلي المالية (األهلي كابيتال) هي شركة مرخصــة من قبــل هيئة السـوق الماليــــة ترخيـص رقم ، 22216 ص ب، المبنى اإلقليمي للبنك األهلي التجاري، طريق الملك سعود:وعنوان مركزها الرئيسي المسجل. المملكة العربية السعودية، 11495 الرياض www.alahlicapital.com +966 11 406 0049 : ف+966 11 874 7106 :هـ
AL-AHLI DIVERSIFIED SAUDI RIYAL FUND (Formerly Al-Ahli Diversified Saudi Riyal Trade Fund) (Managed by NCB Capital Company) INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 with REVIEW REPORT TO THE UNITHOLDER
AL–AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) INTERIM BALANCE SHEET As at 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated)
Notes
30 June 2017 (Unaudited)
31 December 2016 (Audited)
30 June 2016 (Unaudited)
6,685
5,607
86,962
ASSETS Cash and cash equivalents
7
Held to maturity investments
9 (i)
6,957,207
5,793,618
5,151,721
Held for trading investments
9 (ii)
665,358
604,711
5,000
7,629,250
6,403,936
5,243,683
Payable to unitholders on account of redemptions
1,181
4,298
1,981
Management fee payable
4,444
133
--
Total liabilities
5,625
4,431
1,981
7,623,625
6,399,505
5,241,702
5,920,705
5,016,391
4,159,746
1.2876
1.2757
1.2601
Total assets LIABILITIES
Net assets attributable to unitholders Units in issue in thousands (number)
10
Net assets value per unit (SR)
The accompanying notes 1 to 13 form an integral part of these interim financial statements. 2
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) INTERIM STATEMENT OF INCOME (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated)
30 June 2017
30 June 2016
Profit on Murabaha contracts
46,450
48,486
Sukuk income
37,927
35,758
Realised gain on sale of held for trading investments
3,498
3,333
Unrealized gain on held for trading investments
1,352
--
Other income
1,715
--
90,942
87,577
25,410
26,365
Audit fee
12
40
Shariah audit fee
13
14
Fund Board remuneration
7
9
CMA fee
4
4
248
252
Total expenses
25,694
26,684
NET INCOME FOR THE PERIOD
65,248
60,893
Note INVESTMENT REVENUE
Total revenue EXPENSES
8
Management fee
Administrative expenses
The accompanying notes 1 to 13 form an integral part of these interim financial statements. 3
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) INTERIM STATEMENT OF CASH FLOWS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 30 June 2017
30 June 2016
65,248
60,893
-(1,352) 63,896
26,684 -87,577
(1,163,589) (59,295)
3,688,614 (8,073)
(3,117) 4,311
905 --
Net cash (used in) / provided by operating activities
(1,157,794)
3,769,023
Cash flow from financing activities Proceeds from units sold Value of units redeemed
3,395,753 (2,236,881)
1,534,431 (5,219,785)
1,158,872
(3,685,354)
1,078
83,669
5,607
3,293
6,685
86,962
Note Cash flow from operating activities Net income for the period Adjustment for: Value of units reinvested Unrealized gain on held for trading investments Changes in operating assets and liabilities: (Increase) / decrease in held to maturity investments Increase in held for trading investments (Decrease) / increase in payable to unitholders on account of redemptions Increase in management fee payable
Net cash provided by / (used in) financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the period
7
Cash and cash equivalents at the end of the period
The accompanying notes 1 to 13 form an integral part of these interim financial statements. 4
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) INTERIM STATEMENT OF CHANGES IN NET ASSETS ATTRIBUTABLE TO UNITHOLDERS For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated)
Note Net assets attributable to unitholders at the beginning of the period (audited) Net income for the period Increase / (decrease) in net assets from unit transactions during the period
30 June 2017
30 June 2016
6,399,505
8,839,479
65,248
60,893
3,395,753
1,534,431
--
26,684
(2,236,881)
(5,219,785)
1,158,872
(3,658,670)
7,623,625
5,241,702
10
Proceeds from units sold Value of units reinvested
8
Value of units redeemed
Net assets attributable to unitholders at the end of the period (unaudited)
The accompanying notes 1 to 13 form an integral part of these interim financial statements. 5
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 1.
THE FUND AND ITS ACTIVITIES
Al-Ahli Diversified Saudi Riyal Fund (formerly Al-Ahli Diversified Saudi Riyal Trade Fund) ("the Fund") is a Shariah compliant open-ended investment fund, managed by NCB Capital Company ("the Fund Manager"), a subsidiary of The National Commercial Bank (the "Bank"), for the benefit of the Fund's Unitholders. The Fund is established under Article 30 of the Investment Fund Regulations (the Regulations) issued by the Capital Market Authority (CMA). NCB Capital Company also acts as the custodian of the Fund. As defined in Capital Market Authority's Regulation No. 2-83-2005 dated 21 Jumada Awal 1426H (28 June 2005) the Fund Manager conducts following securities’ activities: a) b) c) d) e)
Dealing; Arranging; Managing; Advising; Custody;
The Fund offers investors the opportunity to participate in trade transactions which conform to Shariah principles, invest in Sukuks and other mutual funds or instrument that comply with Islamic Shariah investment principles. The terms and conditions of the Fund were originally approved by the Saudi Arabian Monetary Agency (SAMA) and subsequently endorsed by the CMA through its letter dated 16 December 2008. The Fund commenced its operations on 1 October 2003. The results for the six months period ended 30 June 2017 are not necessarily indicative of the results that may be expected for the financial year ending 31 December 2017. 2.
REGULATING AUTHORITY
The Fund is governed by the Regulations pursuant to resolution number 7-219-2006 dated 3 Dhul Hijja 1427H (corresponding to 24 December 2006) as amended by the Resolution No. 1/61/2016 of Board of the CMA dated 16 Sha’ban 1437H (corresponding to 23 May 2016) which provided detailed requirements for all funds within the Kingdom of Saudi Arabia. 3.
CHANGES IN FUND’S TERMS AND CONDITIONS
During the period ended 30 June 2017, the Fund Manager has made a revision to the terms and conditions of the Fund. The change in the terms and conditions relate to amend the strategy and name of the Fund. The change in the terms and conditions do not have any impact on these interim financial statements. The amendment in the strategy and name of the Fund was approved by CMA through its letter dated 5 December 2016. The change was notified by the Fund manager to the Unitholders through a letter dated 27 December 2016 and the changes were implemented from 21 March 2017.
6
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 4.
SUBSCRIPTIONS / REDEMPTIONS
The Fund is open for subscriptions / redemptions of units on every Saudi Business day. The net asset value of the fund is determined on each Saudi Business Day. All transactions for purchase / sale of units, are entered on the net assets value of the Fund, determined by dividing the value of net assets of the Fund by the number of outstanding units prior to such transaction. 5.
BASIS OF PREPARATION
Statement of compliance These interim financial statements are prepared in accordance with generally accepted accounting standards in the Kingdom of Saudi Arabia promulgated by Saudi Organization for Certified Public Accountants (“SOCPA”). The Fund prepares its interim financial statements as at and for the period ended on its last valuation date (note 12). The Fund presents comparative numbers of December in Balance Sheet and its related notes as additional information for benefit of Unitholders. Basis of measurement These interim financial statements have been prepared under the historical cost convention using the accrual basis of accounting and the going concern concept, except for held for trading investments which are carried at fair value. Functional and presentation currency These interim financial statements are presented in Saudi Arabian Riyals (SR), which is the Fund’s functional currency. All financial information presented in Saudi Arabian Riyals has been rounded to the nearest thousand. Use of estimates and judgments The preparation of the financial statements in conformity with the generally accepted accounting standards as applicable in the Kingdom of Saudi Arabia requires management to make judgments , estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, revenues and expenses. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognized in the year in which the estimates are revised and in any future years affected. Information about significant areas of estimation uncertainty and critical judgements in applying accounting policies that have the most significant effect on the amounts recognized in the interim financial statements have been consistent with those used in the preparation of annual financial statements of the Funds for the year ended December 31, 2016.
7
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 5.
BASIS OF PREPARATION (continued)
Use of estimates and judgments (continued) Valuation of financial assets Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. As the Fund's financial instruments are accounted for under the historical cost convention, except for held for trading investments, differences may arise between the carrying values and fair values. The Fund Manager believes that at the reporting date, the fair values of the Fund's financial assets and liabilities are not materially different from their carrying values. The Fund measures fair values using the following fair value hierarchy that reflects the significance of the inputs used in making the measurements:
Level 1: Fair value measurements using quoted price (unadjusted) in an active market for identical assets or liabilities. Level 2: Fair value measurements using inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices). Level 3: Fair value measurement using inputs for the asset or liability that are not based on observable market data (i.e. unobservable inputs).
All financial assets of the fund, carried at fair value at the reporting date, are classified under hierarchy level 2. 6.
SIGNIFICANT ACCOUNTING POLICIES
The accounting policies set out below have been applied consistently in respect of all periods presented in these financial statements. a)
Investments
Investments having fixed or determinable payments and fixed maturity that the management has the positive intention and ability to hold to maturity are classified as held to maturity. Investments in Murabaha contracts and Sukuk are classified as Held to Maturity Investments are initially recognized at fair value including direct and incremental transaction cost. Subsequent to initial measurement these are measured at amortised cost less impairment losses, if any. Investments in Mutual Funds are classified as held for trading investments and are initially recognised at cost, being the fair value of consideration given. After initial recognition investments in mutual funds are valued at the unit price prevailing on the last valuation day of the period. Unrealised gains and losses are recognised in the statement of income. b)
Investment transaction
Investment transactions in Murabaha contracts and sukuk are accounted for as of the settlement date and investments in mutual funds are accounted for as of the trade date. 8
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 6.
SIGNIFICANT ACCOUNTING POLICIES (continued)
c)
Impairment of financial assets
An assessment is made at the balance sheet date to determine whether there is objective evidence that a specific financial asset may be impaired. If such evidence exists, any impairment loss is recognised in the statement of Income. If a financial asset is impaired, impairment is determined as follows: (i)
For assets carried at fair value, impairment is the difference between cost and fair value, less any impairment loss previously recognised in the statement of income; (ii) For assets carried at cost, impairment is the difference between carrying value and the present value of future cash flows discounted at the current market rate of return for a similar financial asset; (iii) For assets carried at amortised cost, impairment is the difference between carrying amount and the present value of future cash flows discounted at the original effective commission rate. d)
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is derecognised where: (i) The rights to receive cash flows from the asset have expired; or (ii) The Fund has transferred its rights to receive cash flows from the asset; and (iii) Either (i) the Fund has transferred substantially all the risks and rewards of the asset, or (ii) the Fund has neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the asset. When the Fund has transferred its rights to receive cash flows from an asset, and has neither transferred nor retained substantially all of the risks and rewards of the asset nor transferred control of the asset, the asset is recognised to the extent of the Fund’s continuing involvement in the asset. e)
Revenue recognition
Revenue on Murabaha contracts and Sukuk is recognised on a time-apportioned basis over the period of the contract based on the principal amounts outstanding. Increases or decreases in the difference between the cost and market value of the Fund’s investments in mutual funds at period end are recognised as unrealised gains or losses on held for trading investments in the statement of income. Realised gains and losses on held for trading investments sold are determined as difference between sales proceeds and cost determined on weighted average basis. f)
Foreign currency transactions
Transactions during the year in currencies other than the functional currency are translated into the functional currency at the rates of exchange ruling at the dates of the transactions. Monetary assets and liabilities that are denominated in a foreign currency are retranslated at the rate of exchange ruling at the balance sheet date. Exchange gains or losses are reflected in the statement of Income.
9
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 6.
SIGNIFICANT ACCOUNTING POLICIES (continued)
g)
Taxation/zakat
Taxation/zakat is the obligation of the unitholders and therefore, no provision for such liability is made in these financial statements. h)
Cash and cash equivalents
For the purposes of the statement of cashflows, cash and cash equivalents consist of bank balances. i)
Net asset value per unit
The net asset value per unit is of the fund is the monetary value of the asset minus its liabilities and expenses divided by the number of units outstanding at the period end. j)
Provisions and accruals
Provisions and accruals are recognized when the Fund has an obligation (legal or constructive) arising from a past event, and the costs to settle the obligation are both probable and can be measured reliably. k)
Offsetting
Financial assets and liabilities are offset and reported net in the balance sheet when there is a legally enforceable right to set off the recognized amounts and when the Fund intends to settle on a net basis, or to realize the asset and settle the liability simultaneously. Income and expenses are presented on a net basis only when permitted under accounting standards generally accepted in the Kingdom of Saudi Arabia, or for gains and losses arising from a group of similar transactions. 7.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent cash held in current accounts with National Commercial Bank (a related party). 8.
MANAGEMENT FEE AND OTHER EXPENSES
The Fund is managed and administered by the Fund Manager. For these services, the Fund accrues, daily a management fee, as determined by the Fund Manager, which should not be more than the maximum annual rate of 0.75% p.a. of the Fund's daily net assets as set out in the Fund’s terms and conditions. The Fund Manager is also entitled to recover expenses incurred on behalf of the Fund relating to audit, custody, advisory, data processing and other similar charges. The maximum amount of such expenses that can be recovered from the Fund by the Fund Manager is restricted to 0.5% per annum of the Fund's net assets at the respective valuation days. These expenses have been recovered by the Fund Manager on an actual basis except for custody fess, which is borne by the Fund Manager. Until 23 July 2016, the Fund Manager was allocated units against settlement of the management fee and other expenses on every valuation day, which were reinvested in the Fund. Subsequent to this date these expenses are settled in cash. 10
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 9.
INVESTMENTS
i)
Held to maturity investments
Held to maturity investments comprises of the following: 30 June 31 December 2017 2016 (Unaudited) (Audited) Investment in Murabaha contracts (note 9 (i) (a)) Investment in Sukuks (note 9 (i) (b))
a)
30 June 2016 (Unaudited)
4,740,067 2,217,140
3,217,519 2,576,099
2,576,071 2,575,650
6,957,207
5,793,618
5,151,721
Investment in Murabaha contracts comprises of the following Murabaha: % of total Investment Value
Cost
Carrying value
Khaleeji Commercial Bank Masraf Al Rayan Qatar Islamic Bank Banque Saudi Fransi The Saudi Investment Bank Riyad Bank Alawwal Bank (formerly Saudi Hollandi Bank) Samba Financial Group Qatar National Bank Bank Al Jazira Gulf International Bank Emirates NBD
10.43 9.80 7.29 5.75 5.33 4.93 3.56 3.52 3.40 3.27 2.66 2.32
790,000 744,000 547,000 436,000 404,000 374,000 269,000 268,000 258,000 249,000 201,000 176,000
794,679 745,945 554,661 438,134 405,472 375,672 270,919 268,147 258,659 249,124 202,391 176,264
30 June 2017 (Unaudited)
62.26
4,716,000
4,740,067
31 December 2016 (Audited)
50.28
3,208,000
3,217,519
30 June 2016 (Unaudited)
50.07
2,535,000
2,576,071
Murabaha contracts as at 30 June 2017 carry profit ranging from 1.2 % to 3.8% (30 June 2016: 1.4% to 4%) and have maturities ranging from 1 to 11 months (30 June 2016: 1 to 12 months) from period end.
11
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 9.
INVESTMENTS (continued)
i)
Held to maturity investments (continued)
b)
Investment in Sukuks comprises of the following Sukuks: % of total Investment Value
Cost
Carrying value
Repayment terms
6 months SIBOR+110 bps 6 months SIBOR+ 115 bps
3.74 2.62
283,000 200,000
285,875 200,000
Semi-annually Semi-annually
3 months SIBOR+70 bps 6 months SIBOR+ 140 bps
1.96 1.96
150,000 150,000
150,536 150,489
Quarterly Semi-annually
6 months 3 months 6 months 6 months
SIBOR+115 bps SIBOR+110 bps SIBOR+ 110 bps SIBOR+ 100 bps
1.57 1.57 1.35 1.33
120,420 120,420 102,156 101,745
120,440 120,218 102,572 101,709
Semi-annually Quarterly Semi-annually Semi-annually
6 months 6 months 3 months 3 months 6 months 6 months 6 months 6 months 6 months 6 months 3 months 6 months
SIBOR+ 155 bps SIBOR+ 140 bps SIBOR+70 bps SIBOR+140 bps SIBOR+115 bps SIBOR+ 140 bps SIBOR+115 bps SIBOR+130 bps SIBOR+130 bps SIBOR+ 100 bps SIBOR+68 bps SIBOR+110 bps
1.33 1.32 1.31 1.31 1.31 1.25 1.06 0.99 0.99 0.85 0.65 0.31
102,203 100,000 100,025 100,000 100,000 96,000 80,000 75,000 75,000 65,258 50,000 23,128
101,038 100,700 100,092 100,035 100,000 96,036 80,688 75,172 75,172 65,656 50,141 23,370
Semi-annually Semi-annually Quarterly Quarterly Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Semi-annually Quarterly Semi-annually
6 months SIBOR+110 bps
0.22
17,083
17,201
Semi-annually
29
2,211,438
2,217,140
31 December 2016 (Audited)
40.27
2,565,735
2,576,099
30 June 2016 (Unaudited)
49.83
2,565,735
2,575,650
Coupon rate % Floating rate Sukuks The National Commercial Bank (a related party) Riyad Bank Saudi Electricity Company Samba Financial Group Alawwal Bank (formerly Saudi Hollandi Bank ) Banque Saudi Fransi Savola Group Al-Marai Company Alawwal Bank (formerly Saudi Hollandi Bank ) Arab National Bank Saudi Telecom Company Bank Saudi Fransi Riyad Bank The Saudi British Bank Al-Marai Company The Saudi British Bank The Saudi British Bank Al-Marai Company Riyad Bank Savola Group The National Commercial Bank (a related party) 30 June 2017 (Unaudited)
12
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 9.
INVESTMENTS (continued)
ii)
Held for trading investments % of total Investment Value
Cost
Value
Investment in mutual fund Al-Ahli Saudi Riyal Trade Fund (368,527,418 Units) (a related party) 30 June 2017 (Unaudited)
8.74 8.74
662,686 662,686
665,358 665,358
31 December 2016 (Audited)
6.85
603,390
604,711
30 June 2016 (Unaudited)
0.10
5,000
5,000
The expected maturity profile of the above held to maturity and held for trading investments is as follows: Up to 6 month
6 months – 1 year
1-3 years
3-5 years
Investment in Murabaha contracts
2,863,561
1,876,506
Investment in Sukuk
--
--
Al-Ahli Saudi Riyal Trade Fund
--
--
30 June 2017 (Unaudited)
2,863,561
1,876,506
31 December 2016 (Audited)
3,257,554
327,565
802,803
30 June 2016 (Unaudited)
2,553,103
35,202
916,795
--
Over 5 years
No fixed maturity
Total
--
--
--
4,740,067
1,034,115 200,630
982,395
--
2,217,140
--
--
665,358
665,358
1,034,115 200,630
982,395
665,358
7,622,565
425,677
980,019
604,711
6,398,329
666,601
980,020
5,000
5,156,721
--
13
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 10.
UNIT TRANSACTIONS
Transactions in units during the period are summarised as follows: For the sixmonths period ended 30 June 2017 Units’ 000
For the sixmonths period ended 30 June 2016 Units’ 000
Units at the beginning of the period (audited)
5,016,391
7,076,855
Units sold
2,648,120
1,223,435
Units reinvested
--
21,283
Units redeemed
(1,743,806)
(4,161,827)
Net increase / (decrease) increase in units
904,314
(2,917,109)
Units at the end of the period (unaudited)
5,920,705
4,159,746
As at 30 June 2017, top five unitholders represented 27.8% (30 June 2016: 26.93%) of the Fund’s units. 11.
RELATED PARTY TRANSACTIONS
In the ordinary course of its activities, the Fund transacts business with related parties on the basis of approved terms and conditions of the Fund. All related party transactions are approved by the Fund Board. Name of entity
Relationship
NCB Capital Company National Commercial Bank (NCB) Al-Ahli Takaful Company Al-Ahli Multi-Asset Conservative Fund Al-Ahli Multi-Asset Moderate Fund Al-Ahli Multi-Asset Growth Fund Al-Ahli Multi-Asset Income Plus Fund
Fund Manager Shareholder of Fund Manager Unitholder Unitholder Unitholder Unitholder Unitholder
In addition to the below disclosure, balances with related parties are also disclosed in note 7 and 9.
14
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 11.
RELATED PARTY TRANSACTIONS (continued)
The significant related party transactions entered into by the Fund during the period and balances resulting from such transactions are as follows:
Related party
Nature of transaction
NCBC
Management fee Expenses paid on behalf of the fund
Value of units held as at 30 June 2017 2016
Amount of transactions 2017 2016 25,410
26,365
284
319
Al-Ahli MultiAsset Conservative Fund
Subscription of units
20,500
1,500
Redemption of units
--
79,318
Al-Ahli MultiAsset Moderate Fund
Subscription of units
5,500
69,180
Redemption of units
13,000
28,368
Subscription of units
3,400
28,090
Redemption of units
13,000
14,182
Subscription of units
5,750
13,002
Al-Ahli MultiAsset Income Plus Fund
Redemption of units
--
--
Al-Ahli Takaful Company
Subscription of units
22,000
19,180
Redemption of units
18,000
25,500
Al-Ahli MultiAsset Growth Fund
15
446,452
190,957
20,568
--
34,474
41,045
650
14,015
18,227
13,002
6,863
15,699
AL –AHLI DIVERSIFIED SAUDI RIYAL FUND (FORMERLY AL–AHLI DIVERSIFIED SAUDI RIYAL TRADE FUND) (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS For the six months period ended 30 June 2017 (unaudited) Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 12.
LAST VALUATION DAY
The last valuation day of the period was 22 June 2017 (30 June 2016: 30 June 2016). There is no significant change in the net asset value per unit of the Fund between last valuation and 30 June 2017. 13.
APPROVAL OF THE FINANCIAL STATEMENTS
These financial statements were approved by the Fund Manager on Dhul Qadah 23, 1438H, corresponding to August 15, 2017.
16
