AlAhli Saudi Riyal Trade Fund
AlAhli Saudi Riyal Trade Fund
AlAhli Saudi Riyal Trade 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 local and 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 The fund over-performed the benchmark by 0.28%. The Assets Under Management (AUM) have increased by 28.8% and closed the period at SR 21.2 Bln. 5. T&C’s Material changes The fund manager has not made any changes to the terms and conditions of the fund. 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 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 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)
30 June 2017 (Unaudited)
Note
31 December 2016 (Audited)
30 June 2016 (Unaudited)
ASSETS Cash and cash equivalents
6
201,025
1,312
66
Held to maturity investments
8
21,088,202
16,523,233
13,249,631
21,289,227
16,524,545
13,249,697
Payable to unitholders on account of redemptions
20,153
14,751
5,796
Management fee payable
11,547
296
--
Total liabilities
31,700
15,047
5,796
21,257,527
16,509,498
13,243,901
11,774,060
9,230,330
7,503,500
1.8055
1.7886
1.7650
Total assets LIABILITY
Net assets attributable to unitholders Units in issue in thousands (number)
9
Net assets value per unit (SR)
The accompanying notes 1 to 12 form an integral part of these interim financial statements. 2
AL-AHLI 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)
Note
30 June 2017
30 June 2016
INVESTMENT REVENUE Profit on Murabaha contracts
251,073
167,292
--
1,064
251,073
168,356
62,978
46,061
Audit fee
21
72
Shariah audit fee
13
14
Fund Board remuneration
7
9
CMA fee
4
4
700
676
63,723
46,836
187,350
121,520
Realised gain on sale of held for trading investments Total revenue EXPENSES
7
Management fee
Administrative expenses Total expenses NET INCOME FOR THE PERIOD
The accompanying notes 1 to 12 form an integral part of these interim financial statements. 3
AL-AHLI 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)
Note Cash flow from operating activities Net income for the period Adjustment for: Value of units reinvested
30 June 2017
30 June 2016
187,350
121,520
-187,350
46,836 168,356
(4,564,969) --
1,693,528 712,380
5,402 11,251
1,427 --
Net cash (used in) / provided by operating activities
(4,360,966)
2,575,691
Cash flow from financing activities Proceeds from units sold Value of units redeemed
12,146,417 (7,585,738)
5,563,762 (8,142,535)
4,560,679
(2,578,773)
199,713
(3,082)
1,312
3,148
201,025
66
Changes in operating assets and liabilities: (Increase) / decrease in held to maturity investments Decrease in held for trading investments Increase in payable to Unitholders on account of redemptions Increase in management fee payable
Net cash provided by / (used in) financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period
6
The accompanying notes 1 to 12 form an integral part of these interim financial statements. 4
AL-AHLI 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)
Notes 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
16,509,498
15,654,318
187,350
121,520
12,146,417
5,563,762
--
46,836
(7,585,738)
(8,142,535)
4,560,679
(2,531,937)
21,257,527
13,243,901
9
Proceeds from units sold Value of units reinvested
7
Value of units redeemed
Net assets attributable to unitholders at the end of the period (unaudited)
The accompanying notes 1 to 12 form an integral part of these interim financial statements. 5
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 1.
THE FUND AND ITS ACTIVITIES
Al-Ahli 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 assets of the Fund principally comprise murabaha contracts and the Fund offers investors the opportunity to participate in trade transactions which conform to Shariah principles. The Fund purchases goods then contracts to sell them at a mark-up on deferred payment terms. The murabaha trading contracts are for terms of less than a year, and usually less than 6 months. The terms and conditions of the Fund were originally approved by the Saudi Arabian Monetary Agency (SAMA) and subsequently endorsed by the CMA through their letter dated 18 Dhul Hijja 1429H (corresponding to 16 December 2008). The Fund commenced its activities on 5 April 1995. 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 issued by the CMA pursuant to resolution number 7-2192006 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.
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.
6
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 4.
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 11). 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. 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, 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.
7
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 4.
BASIS OF PREPARATION (continued)
Valuation of financial assets (continued) 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. 5.
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 SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 5. c)
SIGNIFICANT ACCOUNTING POLICIES (continued) 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) (ii) (iii)
d)
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; 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; 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. 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) (ii) (iii)
The rights to receive cash flows from the asset have expired; or The Fund has transferred its rights to receive cash flows from the asset; and 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 SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 5.
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 calculated by dividing the net assets attributable to Unitholders included in the balance sheet 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. 6.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent cash held in current accounts with National Commercial Bank (a related party). 7.
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 0.65% 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 SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 8.
INVESTMENTS
Held to maturity investments % of total Value Investment in Murabaha contracts Riyadh Bank Arab National Bank Saudi American Bank Qatar National Bank Emirates NBD The Saudi Investment Bank Qatar Islamic Bank Masraf Al Rayan Alawwal Bank (formerly Saudi Hollandi Bank) Gulf International Bank , Bahrain Banque Saudi Fransi National Bank of Kuwait Bank AlJazira Khaleeji Commercial Bank B.S.C Abu Dhabi Commercial Bank Bank Muscat (S.A.O.G) Saudi British Bank Bank AlBilad National Bank of Fujairah, UAE
Cost
Carrying value
11.95 10.71 9.07 8.96 8.91 8.62 6.98 6.43 5.92 5.40 4.57 2.86 2.38 2.16 1.71 1.48 1.05 0.48 0.36
2,509,000 2,236,000 1,911,000 1,858,000 1,829,000 1,803,000 1,463,000 1,348,000 1,244,000 1,132,000 952,000 600,000 501,000 449,000 360,000 310,000 220,000 100,000 75,000
2,522,037 2,258,366 1,911,932 1,888,977 1,879,184 1,817,989 1,472,797 1,355,080 1,249,217 1,138,512 964,712 603,336 501,711 454,863 361,224 311,127 220,963 100,476 75,699
30 June 2017 (Unaudited)
100
20,900,000
21,088,202
31 December 2016 (Audited)
100
16,403,900
16,523,233
30 June 2016 (Unaudited)
100
13,132,500
13,249,631
Murabaha contracts as at 30 June 2017 carry profit ranging from 1.05% to 4.1% (June 2016: 1.4% to 3.8% and have maturities ranging from 1 to 17 months (June 2016: 1 to 12 months) from period end.
11
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 8.
INVESTMENTS (continued)
The expected maturity profile of the above held to maturity and held for trading investments is as follows: Up to 1 month
1 – 6 months
6 months – 1 year
1 – 3 year
Total
Investment in Murabaha
5,831,922
10,225,823
5,000,477
--
21,088,202
30 June 2017 (Unaudited)
5,831,922
10,225,823
5,000,477
--
21,088,202
31 December 2016 (Audited)
3,545,220
8,146,550
4,831,463
--
16,523,233
30 June 2016 (Unaudited)
3,207,546
8,206,116
1,835,969
--
13,249,631
9.
UNIT TRANSACTIONS
Transactions in units during the period are summarised as follows: For the six -months 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)
9,230,330
8,945,792
Units sold
6,760,158
3,165,630
Units reinvested
--
26,662
Units redeemed
(4,216,428)
(4,634,584)
2,543,730 ══════════ 11,774,060 ══════════
(1,442,292) ══════════ 7,503,500 ══════════
Net increase / (decrease) in units Units at the end of the period (unaudited)
As at 30 June 2017, top five unitholders represented 18.57% (30 June 2016: 23.96%) of the Fund’s units.
12
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 10.
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 Diversified Saudi Riyal Trade Fund Al-Ahli AlKhayyal Residential Development Fund Al-Ahli SEDCO Residential Development Fund Al-Ahli Multi-Asset Income Plus Fund Al-Ahli Alkhayrat Capital Secured Fund Al-Ahli Global Equity Fund
Fund Manager Shareholder of Fund Manager Unitholder Unitholder Unitholder Unitholder Unitholder Unitholder Unitholder Unitholder Unitholder Unitholder
In addition to the below disclosure, balances with related parties are also disclosed in note 6 and 8. 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
Amount of transactions 2017 2016 62,978
46,061
745
775
Subscription of units
16,200
114,500
Redemption of units
42,312
110,533
Subscription of units Al Ahli MultiAsset Moderate Fund Redemption of units
--
31,000
27,209
21,300
Subscription of units
--
5,000
Redemption of units
18,810
8,453
Expenses paid on behalf of the fund Al Ahli MultiAsset Conservative Fund
Al Ahli MultiAsset Growth Fund
13
Value of units as at 30 June 2017 2016
223,686
5,597
21,093
4,087
125
9,728
--
804
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 10.
RELATED PARTY TRANSACTIONS (continued)
Related party
Nature of transaction
Value of units held as at 30 June 2017 2016
Amount of transactions 2017 2016
Subscription of units
942,000
2,205,900
Redemption of units
886,500
2,203,794
Subscription of units
11,500
29,900
Redemption of units
21,760
30,000
Subscription of units
11,044
61,137
Redemption of units
14
89,614
Al-Ahli SEDCO Residential Development Fund
Subscription of units
148
--
Redemption of units
10,641
119,361
Al-Ahli MultiAsset Income Plus Fund
Subscription of units
5,750
13,002
Redemption of units
5000
--
Subscription of units
--
--
Redemption of units
--
169
Subscription of units
2,000
--
Redemption of units
3,309
--
Al-Ahli Diversified SR Trade Fund
Al-Ahli Takaful Company Al-Ahli AlKhayyal Residential Development Fund
Al-Ahli Alkhayrat Capital Secured Fund Al-Ahli Global Equity Fund
11.
368,527
5,000
840
3,989
6,442
6,365
12,060
82,102
13,219
13,002
--
--
--
--
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. 12.
APPROVAL OF THE FINANCIAL STATEMENTS
These interim financial statements were approved by the Fund Manager on Dhul Qadah 23, 1438H, corresponding to August 15, 2017.
14
AlAhli Saudi Riyal Trade 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 local and 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 The fund over-performed the benchmark by 0.28%. The Assets Under Management (AUM) have increased by 28.8% and closed the period at SR 21.2 Bln. 5. T&C’s Material changes The fund manager has not made any changes to the terms and conditions of the fund. 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 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 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)
30 June 2017 (Unaudited)
Note
31 December 2016 (Audited)
30 June 2016 (Unaudited)
ASSETS Cash and cash equivalents
6
201,025
1,312
66
Held to maturity investments
8
21,088,202
16,523,233
13,249,631
21,289,227
16,524,545
13,249,697
Payable to unitholders on account of redemptions
20,153
14,751
5,796
Management fee payable
11,547
296
--
Total liabilities
31,700
15,047
5,796
21,257,527
16,509,498
13,243,901
11,774,060
9,230,330
7,503,500
1.8055
1.7886
1.7650
Total assets LIABILITY
Net assets attributable to unitholders Units in issue in thousands (number)
9
Net assets value per unit (SR)
The accompanying notes 1 to 12 form an integral part of these interim financial statements. 2
AL-AHLI 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)
Note
30 June 2017
30 June 2016
INVESTMENT REVENUE Profit on Murabaha contracts
251,073
167,292
--
1,064
251,073
168,356
62,978
46,061
Audit fee
21
72
Shariah audit fee
13
14
Fund Board remuneration
7
9
CMA fee
4
4
700
676
63,723
46,836
187,350
121,520
Realised gain on sale of held for trading investments Total revenue EXPENSES
7
Management fee
Administrative expenses Total expenses NET INCOME FOR THE PERIOD
The accompanying notes 1 to 12 form an integral part of these interim financial statements. 3
AL-AHLI 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)
Note Cash flow from operating activities Net income for the period Adjustment for: Value of units reinvested
30 June 2017
30 June 2016
187,350
121,520
-187,350
46,836 168,356
(4,564,969) --
1,693,528 712,380
5,402 11,251
1,427 --
Net cash (used in) / provided by operating activities
(4,360,966)
2,575,691
Cash flow from financing activities Proceeds from units sold Value of units redeemed
12,146,417 (7,585,738)
5,563,762 (8,142,535)
4,560,679
(2,578,773)
199,713
(3,082)
1,312
3,148
201,025
66
Changes in operating assets and liabilities: (Increase) / decrease in held to maturity investments Decrease in held for trading investments Increase in payable to Unitholders on account of redemptions Increase in management fee payable
Net cash provided by / (used in) financing activities Net increase / (decrease) in cash and cash equivalents Cash and cash equivalents at the beginning of the period Cash and cash equivalents at the end of the period
6
The accompanying notes 1 to 12 form an integral part of these interim financial statements. 4
AL-AHLI 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)
Notes 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
16,509,498
15,654,318
187,350
121,520
12,146,417
5,563,762
--
46,836
(7,585,738)
(8,142,535)
4,560,679
(2,531,937)
21,257,527
13,243,901
9
Proceeds from units sold Value of units reinvested
7
Value of units redeemed
Net assets attributable to unitholders at the end of the period (unaudited)
The accompanying notes 1 to 12 form an integral part of these interim financial statements. 5
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 1.
THE FUND AND ITS ACTIVITIES
Al-Ahli 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 assets of the Fund principally comprise murabaha contracts and the Fund offers investors the opportunity to participate in trade transactions which conform to Shariah principles. The Fund purchases goods then contracts to sell them at a mark-up on deferred payment terms. The murabaha trading contracts are for terms of less than a year, and usually less than 6 months. The terms and conditions of the Fund were originally approved by the Saudi Arabian Monetary Agency (SAMA) and subsequently endorsed by the CMA through their letter dated 18 Dhul Hijja 1429H (corresponding to 16 December 2008). The Fund commenced its activities on 5 April 1995. 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 issued by the CMA pursuant to resolution number 7-2192006 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.
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.
6
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 4.
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 11). 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. 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, 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.
7
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 4.
BASIS OF PREPARATION (continued)
Valuation of financial assets (continued) 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. 5.
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 SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 5. c)
SIGNIFICANT ACCOUNTING POLICIES (continued) 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) (ii) (iii)
d)
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; 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; 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. 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) (ii) (iii)
The rights to receive cash flows from the asset have expired; or The Fund has transferred its rights to receive cash flows from the asset; and 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 SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 5.
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 calculated by dividing the net assets attributable to Unitholders included in the balance sheet 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. 6.
CASH AND CASH EQUIVALENTS
Cash and cash equivalents represent cash held in current accounts with National Commercial Bank (a related party). 7.
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 0.65% 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 SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 8.
INVESTMENTS
Held to maturity investments % of total Value Investment in Murabaha contracts Riyadh Bank Arab National Bank Saudi American Bank Qatar National Bank Emirates NBD The Saudi Investment Bank Qatar Islamic Bank Masraf Al Rayan Alawwal Bank (formerly Saudi Hollandi Bank) Gulf International Bank , Bahrain Banque Saudi Fransi National Bank of Kuwait Bank AlJazira Khaleeji Commercial Bank B.S.C Abu Dhabi Commercial Bank Bank Muscat (S.A.O.G) Saudi British Bank Bank AlBilad National Bank of Fujairah, UAE
Cost
Carrying value
11.95 10.71 9.07 8.96 8.91 8.62 6.98 6.43 5.92 5.40 4.57 2.86 2.38 2.16 1.71 1.48 1.05 0.48 0.36
2,509,000 2,236,000 1,911,000 1,858,000 1,829,000 1,803,000 1,463,000 1,348,000 1,244,000 1,132,000 952,000 600,000 501,000 449,000 360,000 310,000 220,000 100,000 75,000
2,522,037 2,258,366 1,911,932 1,888,977 1,879,184 1,817,989 1,472,797 1,355,080 1,249,217 1,138,512 964,712 603,336 501,711 454,863 361,224 311,127 220,963 100,476 75,699
30 June 2017 (Unaudited)
100
20,900,000
21,088,202
31 December 2016 (Audited)
100
16,403,900
16,523,233
30 June 2016 (Unaudited)
100
13,132,500
13,249,631
Murabaha contracts as at 30 June 2017 carry profit ranging from 1.05% to 4.1% (June 2016: 1.4% to 3.8% and have maturities ranging from 1 to 17 months (June 2016: 1 to 12 months) from period end.
11
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 8.
INVESTMENTS (continued)
The expected maturity profile of the above held to maturity and held for trading investments is as follows: Up to 1 month
1 – 6 months
6 months – 1 year
1 – 3 year
Total
Investment in Murabaha
5,831,922
10,225,823
5,000,477
--
21,088,202
30 June 2017 (Unaudited)
5,831,922
10,225,823
5,000,477
--
21,088,202
31 December 2016 (Audited)
3,545,220
8,146,550
4,831,463
--
16,523,233
30 June 2016 (Unaudited)
3,207,546
8,206,116
1,835,969
--
13,249,631
9.
UNIT TRANSACTIONS
Transactions in units during the period are summarised as follows: For the six -months 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)
9,230,330
8,945,792
Units sold
6,760,158
3,165,630
Units reinvested
--
26,662
Units redeemed
(4,216,428)
(4,634,584)
2,543,730 ══════════ 11,774,060 ══════════
(1,442,292) ══════════ 7,503,500 ══════════
Net increase / (decrease) in units Units at the end of the period (unaudited)
As at 30 June 2017, top five unitholders represented 18.57% (30 June 2016: 23.96%) of the Fund’s units.
12
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 10.
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 Diversified Saudi Riyal Trade Fund Al-Ahli AlKhayyal Residential Development Fund Al-Ahli SEDCO Residential Development Fund Al-Ahli Multi-Asset Income Plus Fund Al-Ahli Alkhayrat Capital Secured Fund Al-Ahli Global Equity Fund
Fund Manager Shareholder of Fund Manager Unitholder Unitholder Unitholder Unitholder Unitholder Unitholder Unitholder Unitholder Unitholder Unitholder
In addition to the below disclosure, balances with related parties are also disclosed in note 6 and 8. 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
Amount of transactions 2017 2016 62,978
46,061
745
775
Subscription of units
16,200
114,500
Redemption of units
42,312
110,533
Subscription of units Al Ahli MultiAsset Moderate Fund Redemption of units
--
31,000
27,209
21,300
Subscription of units
--
5,000
Redemption of units
18,810
8,453
Expenses paid on behalf of the fund Al Ahli MultiAsset Conservative Fund
Al Ahli MultiAsset Growth Fund
13
Value of units as at 30 June 2017 2016
223,686
5,597
21,093
4,087
125
9,728
--
804
AL-AHLI SAUDI RIYAL TRADE FUND (Managed by NCB Capital Company) NOTES TO THE INTERIM FINANCIAL STATEMENTS (unaudited) For the six months period ended 30 June 2017 Expressed in Saudi Arabian Riyals ‘000 (unless otherwise stated) 10.
RELATED PARTY TRANSACTIONS (continued)
Related party
Nature of transaction
Value of units held as at 30 June 2017 2016
Amount of transactions 2017 2016
Subscription of units
942,000
2,205,900
Redemption of units
886,500
2,203,794
Subscription of units
11,500
29,900
Redemption of units
21,760
30,000
Subscription of units
11,044
61,137
Redemption of units
14
89,614
Al-Ahli SEDCO Residential Development Fund
Subscription of units
148
--
Redemption of units
10,641
119,361
Al-Ahli MultiAsset Income Plus Fund
Subscription of units
5,750
13,002
Redemption of units
5000
--
Subscription of units
--
--
Redemption of units
--
169
Subscription of units
2,000
--
Redemption of units
3,309
--
Al-Ahli Diversified SR Trade Fund
Al-Ahli Takaful Company Al-Ahli AlKhayyal Residential Development Fund
Al-Ahli Alkhayrat Capital Secured Fund Al-Ahli Global Equity Fund
11.
368,527
5,000
840
3,989
6,442
6,365
12,060
82,102
13,219
13,002
--
--
--
--
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. 12.
APPROVAL OF THE FINANCIAL STATEMENTS
These interim financial statements were approved by the Fund Manager on Dhul Qadah 23, 1438H, corresponding to August 15, 2017.
14
