AMB DANA NABEEL Annual Report For the financial year ended 30 June 2018

Transcription

1 Level 34, Menara PNB 201-A Jalan Tun Razak Kuala Lumpur, Malaysia Tel: Fax: / AMB DANA NABEEL Annual Report For the financial year ended 30 June 2018

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3 CORPORATE INFORMATION MANAGER Amanah Mutual Berhad ( U) BUSINESS OFFICE 34th Floor Menara PNB 201-A Jalan Tun Razak Kuala Lumpur, Malaysia Telephone : Facsimile : / TRUSTEE AmanahRaya Trustees Berhad ( T) Tingkat 4, Wisma TAS No.21 Jalan Melaka Kuala Lumpur EXTERNAL INVESTMENT MANAGER ("EIM") Permodalan Nasional Berhad (38218-X) 4th Floor, Menara PNB, 201-A Jalan Tun Razak Kuala Lumpur Effective 15 August 2018, the EIM has been changed to: Maybank Islamic Asset Management Sdn Bhd ( K) Level 12, Tower C, Dataran Maybank 1 Jalan Maarof Kuala Lumpur

4 CONTENTS PAGE(S) Manager's Report 1-6 Statement by Manager 7 Trustee's Report 8 Report of the Shariah Committee 9 Independent Auditors' Report Statement of Comprehensive Income Statement of Financial Position 16 Statement of Changes in Equity 17 Statement of Cash Flows 18 Notes to the Financial Statements 19-48

5 Manager s report for the financial year ended 30 June 2018 A. Fund Information 1. Name of the Fund AMB Dana Nabeel (the Fund ) 2. Type of Fund Income 3. Category of Fund Money market fund (Shariah) 4. Duration of the Fund The Fund is an open-ended Fund. 5. Launch date / Commencement date 6 July 2011 / 27 July Fund s investment objective The Fund aims to provide investors with high-level liquidity and regular income stream to meet cash flow requirements based on Shariah principles while maintaining capital preservation*. * Capital preservation does not signify that the capital / principal invested is guaranteed/ protected by any party. 7. Fund distribution policy Income distribution will be on a monthly basis depending on the level of income (if any) the Fund generates as may be determined by the Manager in consultation with the Trustee. 8. Fund s performance benchmark Maybank 1-month GIA-i tier-1 rate 9. Has the Fund achieved its objective? For the financial year, the Fund fulfilled the objective in providing steady monthly income, liquidity and capital preservation to its unitholders throughout the current financial year under review. 10. The Fund's asset allocation policy The Fund will invest at least 90% of the Fund's assets in Islamic deposits, Shariah-compliant money market instruments and Sukuk with maturity of not more than 365 days, and up to 10% of the Fund's assets may be invested in Sukuk with a remaining maturity period of more than 365 days but less than 732 days. 11. Strategy employed for the period under review Funds were allocated into purely secure and highly liquid short-term Shariah-compliant money market deposit and sukuk. At least 5% of the investments were catered in money market placement with maturity within 7 days to cater for short-term liquidity, whereas a high proportion of the portfolio was in long-term tenures. The Fund lengthened the duration of its Shariahcompliant money market placement to take advantage of higher offered rates. Towards the financial year end, the Fund allocated a portion to short-term deposits of 1 month or less to meet redemptions by unitholders and avoid liquidity risks for risk management measures. 1

6 Manager s report for the financial year ended 30 June 2018 (cont'd) A. Fund Information (cont'd) 12. Net income distribution for the financial year ended 30 June 2018 The Fund distributed a total net income of RM12,213,917 to unitholders for the financial year ended 30 June The details are disclosed in 'Key performance data of the Fund' under Section B below. Below is the impact of the distributions to the Fund s NAV: Entitlement date Breakdown of unitholdings by size Payment Before After Gross/net Changes date distribution distribution distribution % RM RM sen (0.32) (0.30) (0.30) (0.30) (0.28) (0.30) (0.28) (0.28) (0.30) (0.28) (0.28) (0.26) Total Fund size As at 30 June 2018, the size of the Fund was 622,475,000 units. Breakdown of unitholdings as at 30 June 2018 Unitholdings 5,000 units and below 5,001 to 10,000 units 10,001 to 50,000 units 50,001 to 500,000 units 500,001 units and above Total No. of No. of unitholders % units ('000) % * , , ** 622, * Included 4,510 units held by the Manager ** Included 40,785,171 units held under Institutional Unit Trust Scheme Advisers 2

7 Manager s report for the financial year ended 30 June 2018 (cont'd) B. Performance Review 1. Key performance data of the Fund Category FY2018 FY2017 FY2016 Portfolio Islamic deposits (%) Unquoted sukuk (%) Cash and other net assets (%) Total (%) NAV (RM'000) 311, , ,559 Units in circulation ('000) 622, , ,875 NAV per unit (RM) Highest NAV per unit (RM) Lowest NAV per unit (RM) Net income distributed (RM) 12,213,917 12,445,029 10,744,846 Distribution dates First business day following the respective monthly distribution declaration date Gross/net distribution per unit (sen) Management Expense Ratio ("MER") (%) (2) Portfolio Turnover Ratio ("PTR") (times) (3) Investors are reminded that past performance of the Fund is not necessarily an indicative of its future performance and that unit prices and investment returns may fluctuate. Note: (1) Actual return of the Fund for the financial year is computed based on the daily average NAV per unit, net of Trustee's fees. (2) (3) The Fund's MER maintained at 0.40% in the current financial year under review. The Fund's PTR decreased to 0.13 times due to lower trading activities in the current financial year under review. 3

8 Manager s report for the financial year ended 30 June 2018 (cont'd) B. Performance Review (cont'd) 2. Performance of the Fund since inception to 30 June 2018 Since 1 year 3 years 5 years inception Category to to to to % % % % Capital growth (0.04) (0.04) (0.02) - Income distribution Total return of the Fund Benchmark Average total return Investors are reminded that past performance of the Fund is not necessarily an indicative of its future performance and that unit prices and investment returns may fluctuate. Performance of the Fund for 5 years to 30 June 2018 Benchmark: 17.70% Fund: 17.58% Source: Lipper For the financial year ended 30 June 2018, the Fund registered a return of 3.49% compared to the current benchmark which registered a return of 3.11% over the same period. The Fund outperformed by 0.38%. For the last five financial years, the Fund registered a compounded total return of 17.58% while the compounded return of the benchmark for the same period was 17.70%. The Fund underperformed the benchmark s return by 0.12%. 3. Annual total return of the Fund For the financial year % % % % % ended Capital return (0.04) Income return Total return Benchmark

9 Manager s report for the financial year ended 30 June 2018 (cont'd) B. Performance Review (cont'd) 4. Basis of calculation made in calculating the returns: The performance figures are a comparison of the growth/decline in NAV after taking into account all the distributions payable (if any) during the stipulated period. An illustration of the above would be as follows: Capital return = (NAV per unit end / NAV per unit begin) - 1 Income return = Income distribution per unit / NAV per unit ex-date Total return = (1+Capital return) x (1+Income return) - 1 C. Money Market Review During the financial year ended 30 June 2018, Bank Negara Malaysia's ("BNM") Monetary Policy Committee ("MPC") increased the Overnight Policy Rate ("OPR") by 25 basis points ("bps") to 3.25% from 3.00% in January The OPR adjustment aims to ensure that the country's economy continues to be on a solid growth path, stable inflation and backed by strong financial intermediation in the economy. With the increase in the OPR, the interbank rate increased and the 3-month Kuala Lumpur Interbank Offered Rate ("KLIBOR") rate increased from 3.43% to 3.69% in January 2018 and remained until the end of the financial year ended 30 June Foreign funds remained net sellers of local debts with RM6.7 billion outflows in June 2018, due to uncertainty arising from the Malaysian's 14th General Elections ("GE14") outcome and the global external factors. Total foreign holdings of domestic debt securities decreased to RM185.8 billion (May: RM192.5 billion) with 24.7% (May: 25.9%) of foreign holdings in Malaysian Government Securities ("MGS") and Government Investment ssue ("GII"). On a year to date ("YTD") basis (June 2018) foreign outflows on debts was RM20.9 billion vis-à-vis the full year 2017 foreign outflows of RM8 billion. For the financial period, yields of MGS increased across the board MGS's 1-year, 3-year and 10-year yields were broadly higher by 24, 27 and 27 bps respectively during the financial year of the Fund closing at 3.41%, 3.63% and 4.20%, respectively. In the corporate bond market, the relative yield movement was in tandem with the movement in government securities, however it was less volatile due the continued support and healthy demand by domestic investors. D. Market Outlook The liquidity of the banking system remained more than adequate. Financial institutions continue to operate with strong capital buffers and liquidity while financing growth to the private sector is consistent with the rate of economic activity. At the current OPR rate, the monetary accommodative level is consistent with the policy stance to ensure that domestic economies continue to be on a sustainable growth path in a stable core inflationary situation and supported by financial intermediation in a steady economy. Investors may still put more weight on US Federal Reserve s ("Fed") interest rate hike decisions with respect to their portfolio allocation decisions. With the rate normalisation cycle in the US finally cranking up on the back of an improved macro environment, we expect a larger chunk of global fund flows to flow back to the US. Bond market outflows are likely to continue in 2H

10 Manager s report for the financial year ended 30 June 2018 (cont'd) D. Market Outlook (cont'd) Moreover, we also expect foreign ownership of local government securities to stabilize as a bigger chunk of the government bonds are in the hands of long-term investors such as central banks and pension funds. Our domestic economic fundamentals will remain supportive of the country s bond market, which has become attractive to domestic absolute yield seekers and bargain hunting activities from local institutional funds as evidenced by the increasing bid-to-cover ("BTC") trend. This will minimise some volatilities in the market in the financial year of E. Investment Strategy Going Forward Going forward, given the lack of inflation pressures in the economy, we expect the OPR to be left unchanged at the current level at 3.25%. We view that the 10-year MGS yield will be supported ranging around 4.10% in its base case scenario. Given our interest-rate and bond market outlook, we will maintain relatively low to medium portfolio duration. The Fund will stay invested in short-term money market instruments with maturity not exceeding 365 days (1-year), with focus to extend duration at longer tenure to earn higher profit rate. At the same time, effort will carefully be given to gradually increase the sukuk weighting maturing of less than two years to near 10% of NAV in line with the Fund s mandate. F. Asset Allocation The Fund s asset allocation as at 30 June 2018 and 30 June 2017 is as follows: Asset allocation Islamic deposits Unquoted sukuk Total assets RM % RM % 284,990, ,882, ,056, ,705, ,046, ,588, Towards the financial year end, the Fund increased its allocation in Islamic deposits to meet redemptions by unitholders and avoid liquidity risks for risk management measures. G. Soft Commissions and Rebates During the financial year under review, the Manager and the External Investment Manager (Permodalan Nasional Berhad) did not receive any rebates or shared any commissions from brokers and/or any related body corporate in relation to its investments of the Fund. The Manager also did not receive any goods or services by way of soft commission during the financial year under review. The Manager will not retain any form of rebate or soft commission from, or otherwise share with, any broker in consideration for direct dealings in investments of the Fund unless the soft commission received is retained in the form of goods and services, such as research material, financial wire services and stock quotations systems incidental to investment management of the Fund or are demonstratable benefit to the Fund. 6

11 STATEMENT BY MANAGER TO THE UNITHOLDERS OF AMB DANA NABEEL We, being two of the Directors of Amanah Mutual Berhad, the Manager of AMB Dana Nabeel ("the Fund"), do hereby state that, in the opinion of the Manager, the accompanying financial statements of the Fund for the financial year ended 30 June 2018, together with the notes thereto, have been properly drawn up in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards, so as to give a true and fair view of the financial position of the Fund as at 30 June 2018, and of its financial performance and cash flows for the financial year then ended. Signed on behalf of Amanah Mutual Berhad, being the Manager of AMB Dana Nabeel, in accordance with a resolution of the Directors dated 27 August Dato' Noorizah binti Abdul Hamid Director Norlin binti Abdul Samad Director Kuala Lumpur, Malaysia 27 August

12 TRUSTEE'S REPORT FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018 TO THE UNITHOLDERS OF AMB DANA NABEEL We, AmanahRaya Trustees Berhad, have acted as Trustee of AMB Dana Nabeel for the financial year ended 30 June In our opinion, Amanah Mutual Berhad, the Manager, has managed AMB Dana Nabeel in accordance with the limitations imposed on the investment powers of the management company and the Trustee under the Deed, other provisions of the Deed, the applicable Securities Commission Malaysia's Guidelines on Unit Trust Funds, the Capital Markets and Services Act 2007 and other applicable laws during the financial year then ended. We are of the opinion that: (a) (b) (c) (d) the Fund is being managed in accordance with the limitations imposed on the investment powers of the Manager and the Trustee under the Deed, other provision of the Deed, the applicable Securities Commission Malaysia's Guidelines on the Unit Trust Funds, the Capital Market and Services Act 2007 and other applicable laws for the financial year ended 30 June 2018; Valuation/pricing is carried out in accordance with the Deed and any regulatory requirements; the creation and cancellation of units are carried out in accordance with the Deed and other regulatory requirement; and the distribution of returns made by AMB Dana Nabeel as declared by the Manager is in accordance with the investment objective of AMB Dana Nabeel. Yours faithfully AMANAHRAYA TRUSTEES BERHAD Habsah binti Bakar Chief Executive Officer Kuala Lumpur, Malaysia 27 August

13 REPORT OF THE SHARIAH COMMITTEE TO THE UNITHOLDERS OF AMB DANA NABEEL We have acted as the Shariah Committee of AMB Dana Nabeel ("the Fund") for the financial year ended 30 June Our responsibility is to ensure that the procedures and processes employed by Amanah Mutual Berhad ("the Manager") and that the provisions of the Deed dated 26 April 2011 and Supplementary Deeds (if any) are in accordance with Shariah principles. In our opinion, the Manager has managed and administered the Fund in accordance with Shariah principles and complied with applicable guidelines, ruling or decisions issued by the Securities Commission Malaysia ("SC") pertaining to Shariah matters. The investment portfolio of the Fund comprises investments which has been classified as Shariah-compliant by the Shariah Advisory Council ("SAC") of the SC or the SAC of Bank Negara Malaysia. The investments of the Fund has been endorsed as Shariah-compliant by this Shariah Committee. For and on behalf of the Shariah Committee members of AMB Dana Nabeel Datuk Dr Syed Othman Bin Syed Hussin Alhabshi Kuala Lumpur, Malaysia 27 August

14 Independent auditors report to the unitholders of AMB Dana Nabeel Report on the audit of the financial statements Opinion We have audited the financial statements of AMB Dana Nabeel ("the Fund"), which comprise the statement of financial position as at 30 June 2018, and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the financial year then ended, and notes to the financial statements, including a summary of accounting policies, as set out on pages 14 to 48. In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Fund as at 30 June 2018, and of its financial performance and cash flows for the year then ended in accordance with Malaysian Financial Reporting Standard and International Financial Reporting Standards. Basis for opinion We conducted our audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing. Our responsibilities under those standards are further described in the Auditors responsibilities for the audit of the financial statements section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion. Independence and other ethical responsibilities We are independent of the Fund in accordance with the By-Laws (on Professional Ethics, Conduct and Practice) of the Malaysian Institute of Accountants ( By-Laws ) and the International Ethics Standards Board for Accountants Code of Ethics for Professional Accountants ( IESBA Code ), and we have fulfilled our other ethical responsibilities in accordance with the By-Laws and the IESBA Code. Information other than the financial ftatements and auditors report thereon The Manager of the Fund is responsible for the other information. The other information comprises the information included in the Annual Report of the Fund, but does not include the financial statements of the Fund and our auditors report thereon. Our opinion on the financial statements of the Fund does not cover the other information and we do not and will not express any form of assurance conclusion thereon. In connection with our audit of the financial statements of the Fund, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is 10

15 Independent auditors report to the unitholders of AMB Dana Nabeel (cont'd) Responsibility of the Manager and Trustee for the financial statements The Manager of the Fund is responsible for the preparation of financial statements of the Fund that give a true and fair view in accordance with Malaysian Financial Reporting Standards and International Financial Reporting Standards. The Manager is also responsible for such internal control as the Manager determines is necessary to enable the preparation of financial statements of the Fund that are free from material misstatement, whether due to fraud or error. In preparing the financial statements of the Fund, the Manager is responsible for assessing the Fund's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the Manager either intend to liquidate the Fund or to cease operations, or have no realistic alternative but to do so. The Trustee is responsible for overseeing the Fund's financial reporting process. The Trustee is also responsible for ensuring that the Manager maintains proper accounting and other records as are necessary to enable true and fair presentation of these financial statements. Auditors responsibility for the audit of the financial statements Our objectives are to obtain reasonable assurance about whether the financial statements of the Fund as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with approved standards on auditing in Malaysia and International Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements. 11

16 Independent auditors report to the unitholders of AMB Dana Nabeel (cont'd) Auditors responsibility for the audit of the financial statements (cont'd.) As part of an audit in accordance with approved standards on auditing in Malaysia and International Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit. We also: Identify and assess the risks of material misstatement of the financial statements of the Fund, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control. Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Fund s internal control. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by the Manager. Conclude on the appropriateness of the Manager s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Fund's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors report to the related disclosures in the financial statements of the Fund or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors report. However, future events or conditions may cause the Fund to cease to continue as a going concern. Evaluate the overall presentation, structure and content of the financial statements of the Fund, including the disclosures, and whether the financial statements of the Fund represent the underlying transactions and events in a manner that achieves fair presentation. We communicate with the Manager regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit. 12

17 Independent auditors report to the unitholders of AMB Dana Nabeel (cont'd) Other matters This report is made solely to the unitholders of the Fund, as a body, in accordance with the Guidelines on Unit Trust Funds issued by the Securities Commission Malaysia and for no other purpose. We do not assume responsibility to any other person for the content of this report. Ernst & Young AF: 0039 Chartered Accountants Lee Pei Yin No /05/2019 J Chartered Accountant Kuala Lumpur, Malaysia 27 August

18 STATEMENT OF COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018 INCOME Note RM RM Profit from Sukuk 2,504,936 2,190,251 Profit sharing on Islamic deposits 10,834,164 12,093,543 Net (loss)/gain on fair value changes of fair value through profit or loss ("FVTPL") investments - Realised gain/(loss) 250 (12,800) - Unrealised (loss)/gain (109,735) 15,480 13,229,615 14,286,474 EXPENSES Manager's fee 4 1,089,031 1,650,527 Trustee's fee 5 124, ,041 Auditors' remuneration 12,000 12,000 Tax agent's fee 5,000 5,000 Administrative expenses 136, ,342 1,367,156 1,970,910 NET INCOME BEFORE TAXATION 11,862,459 12,315,564 TAXATION NET INCOME AFTER TAXATION, REPRESENTING TOTAL COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR 11,862,459 12,315,564 Total comprehensive income for the year is made up of the following: Realised income 11,972,194 12,300,084 Unrealised (loss)/income (109,735) 15,480 11,862,459 12,315,564 The accompanying notes form an integral part of the financial statements. 14

19 STATEMENT OF COMPREHENSIVE INCOME FOR THE YEAR ENDED 30 JUNE 2018 (CONT'D) Note RM RM Net distribution for the financial year 11 12,213,917 12,445,029 Gross/net distribution per unit (sen) Distribution date 11 First business First business day day immediately immediately following the following the respective respective monthly monthly distribution distribution declaration date declaration date The accompanying notes form an integral part of the financial statements. 15

20 STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE 2018 Note RM RM ASSETS Investments at FVTPL 7 25,056, ,705,635 Islamic deposits with financial institutions 8 284,990, ,882,779 Other receivables 9 2,230,361 2,236,759 Cash at bank 137 2,889 TOTAL ASSETS 312,276, ,828,062 LIABILITIES Provision for distribution 809, ,573 Other payables 30,700 36,116 Amount due to Manager , ,988 Amount due to Trustee 9,863 10,456 TOTAL LIABILITIES 1,018,291 1,834,133 NET ASSET VALUE ("NAV") OF THE FUND 311,258, ,993,929 EQUITY Unitholders' capital 12(a) 311,281, ,747,853 (Accumulated losses)/retained earnings 12(b) & (c) (23,382) 246,076 NAV ATTRIBUTABLE TO UNIT HOLDERS 311,258, ,993,929 NUMBER OF UNITS IN CIRCULATION ,475, ,695,000 NET ASSET VALUE PER UNIT, EX-DISTRIBUTION The accompanying notes form an integral part of the financial statements. 16

21 STATEMENT OF CHANGES IN EQUITY FOR THE FINANCIAL YEAR ENDED 30 JUNE 2018 (Accumulated losses) / Unit holders' retained capital earnings Total equity Note 12(b) and Note 12(a) Note 12(c) RM RM RM At 1 July ,183, , ,559,489 Total comprehensive income for the year - 12,315,564 12,315,564 Creation of units 882,088, ,088,060 Reinvestment of units 12,304,593-12,304,593 Cancellation of units (864,828,748) - (864,828,748) Distribution for the year (Note 11) - (12,445,029) (12,445,029) At 30 June ,747, , ,993,929 At 1 July ,747, , ,993,929 Total comprehensive income for the year - 11,862,459 11,862,459 Creation of units 394,210, ,210,005 Reinvestment of units 12,315,004-12,315,004 Cancellation of units (414,909,089) - (414,909,089) Distribution for the year (Note 11) (82,000) (12,131,917) (12,213,917) At 30 June ,281,773 (23,382) 311,258,391 The accompanying notes form an integral part of the financial statements. 17

22 STATEMENT OF CASH FLOWS FOR THE FINANCIAL YEAR ENDED 30 JUNE RM RM CASH FLOW FROM OPERATING AND INVESTING ACTIVITIES Proceeds from sale of investments 83,556,000 13,500,000 Purchase of investments (5,016,000) (75,166,500) Decrease in deposits with maturity more than 3 months 79,680,093 63,713,229 Profit from Sukuk received 3,172,206 1,762,563 Profit from Islamic deposits received 10,173,292 15,305,345 Manager's fee paid (1,029,997) (1,713,987) Trustee's fee paid (124,866) (133,591) Auditors' remuneration paid (20,500) (12,000) Other expenses paid (138,768) (169,279) Net cash generated from operating and investing activities 170,251,460 17,085,780 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from creation of units 394,224, ,088,060 Payments for cancellation of units (415,691,600) (864,021,172) Net cash (used in)/generated from financing activities (21,466,864) 18,066,888 NET INCREASE IN CASH AND CASH EQUIVALENTS 148,784,596 35,152,668 CASH AND CASH EQUIVALENTS AT BEGINNING OF THE FINANCIAL YEAR 83,577,249 48,424,581 CASH AND CASH EQUIVALENTS AT END OF THE FINANCIAL YEAR 232,361,845 83,577,249 CASH AND CASH EQUIVALENTS COMPRISE: Cash at bank 137 2,889 Islamic deposits with financial institutions (Note 8) 284,990, ,882,779 Less: Deposits with maturity of more than 3 months (52,628,326) (132,308,419) 232,361,845 83,577,249 The accompanying notes form an integral part of the financial statements. 18

23 1. THE FUND, MANAGER AND THEIR PRINCIPAL ACTIVITIES AMB Dana Nabeel (hereinafter referred to as "the Fund") was constituted pursuant to the executed Deed dated 26 April 2011 between Amanah Mutual Berhad as the Manager and AmanahRaya Trustees Berhad as the Trustee. The Fund commenced operations on 6 July 2011 and will continue to be in operations until terminated by the Trustee as provided under the Deed. The Fund's objective is to provide investors with high-level liquidity and regular income stream to meet cash flow requirements based on Shariah principles while maintaining capital preservation. The principal activity of the Fund is to invest at least 90% of the Fund's assets in Islamic deposits, Shariah-compliant money market instruments and Sukuk with maturity of not more than 365 days, and up to 10% of the Fund's assets may be invested in Sukuk with a remaining maturity period of more than 365 days but less than 732 days. The securities invested in would have a minimum local credit rating of at least 'BBB' (long-term rating) or 'P2' (short-term rating) by RAM Holdings Berhad ("RAM"), Malaysian Rating Corporation Berhad ("MARC") or equivalent rating agencies. The Manager, a company incorporated in Malaysia, is principally engaged in the management of unit trust funds. Amanah Saham Nasional Berhad ( ASNB ) and Permodalan Nasional Berhad, companies incorporated in Malaysia, were the holding and ultimate holding company of the Manager until 16 May Following the acquisition of AMB by Maybank Asset Management Sdn Bhd ( MAM ), the immediate and ultimate holding companies of the Manager have been changed to MAM and Malayan Banking Berhad ( MBB ) respectively effective 17 May The External Investment Manager of the Fund has been changed to Maybank Islamic Asset Management Sdn Bhd effective 15 August The financial statements were authorised for issue by the Board of Directors of AMB ("the Directors") in accordance with the resolution of the Directors on 27 August BASIS OF PREPARATION The financial statements for the year ended 30 June 2018 have been prepared in accordance with Malaysian Financial Reporting Standards ("MFRS") and International Financial Reporting Standards ("IFRS"). The Fund has adopted the MFRS, Amendments to Standards and Interpretations Committee ("IC") Interpretations which have become effective during the financial year. The adoption of the new pronouncements did not result in any material impact to the financial statements. The financial statements have been prepared on a historical cost basis except as disclosed in the accounting policies in Note 3 to the financial statements. All amounts are stated in Ringgit Malaysia ("RM"). 19

24 2. BASIS OF PREPARATION (CONT'D) (a) Standards and amendments to standards issued but not yet effective The following are standards, amendments to standards and interpretations issued by the MASB, but not yet effective, up to the date of issuance of the Fund's financial statements. The Fund intends to adopt the relevant standards, if applicable, when they become effective. Description Effective for annual periods beginning on or after Amendments to MFRS 2: Classification and Measurement of Share-based Payment Transactions 1 January 2018 MFRS 9: Financial Instruments 1 January 2018 MFRS 15: Revenue from Contracts with Customers 1 January 2018 Amendments to MFRS 140: Transfers of Investment Property 1 January 2018 Amendments to MFRS 4: Applying MFRS 9 Financial Instruments with MFRS 4 Insurance Contracts 1 January 2018 Amendments to MFRS 1 and 128 (Annual Improvements to MFRS cycle) 1 January 2018 IC Interpretation 22 Foreign Currency Transactions and Advance Consideration 1 January 2018 Amendments to MFRS 9: Prepayment Features with Negative Compensation 1 January 2019 Amendments to MFRS 128: Long-term Interests in Associates and Joint Ventures 1 January 2019 MFRS 16: Leases 1 January 2019 Amendments to MFRS 119: Plan Amendment, Curtailment or Settlement 1 January 2019 IC Interpretation 23: Uncertainty over Income Tax Treatments 1 January 2019 Amendments to MFRS 3 (Annual Improvements to MFRS Cycle) 1 January 2019 Amendments to MFRS 11 (Annual Improvements to MFRS Cycle) 1 January 2019 Amendments to MFRS 112 (Annual Improvements to MFRS Cycle) 1 January 2019 Amendments to MFRS 113 (Annual Improvements to MFRS Cycle) 1 January

25 2. BASIS OF PREPARATION (CONT'D) (a) Standards and amendments to standards issued but not yet effective (cont'd) Description Effective for annual periods beginning on or after Amendments to MFRS 2: Share-based Payment 1 January 2020 Amendments to MFRS 3: Business Combinations 1 January 2020 Amendments to MFRS 6: Exploration for and Evaluation of Mineral Resources 1 January 2020 Amendments to MFRS 14: Regulatory Deferral Accounts 1 January 2020 Amendments to MFRS 101: Presentation of Financial Statements 1 January 2020 Amendments to MFRS 108: Accounting Policies, Changes in Accounting Estimates and Errors 1 January 2020 Amendments to MFRS 134: Interim Financial Reporting 1 January 2020 Amendment to MFRS 137: Provisions, Contingent Liabilities and Contingent Assets 1 January 2020 Amendment to MFRS 138: Intangible Assets 1 January 2020 Amendments to IC Interpretation 12: Service Concession Arrangements 1 January 2020 Amendments to IC Interpretation 19: Extinguishing Financial Liabilities with Equity Instruments 1 January 2020 Amendments to IC Interpretation 22: Foreign Currency Transactions and Advance Consideration 1 January 2020 Amendments to IC Interpretation 132: Intangible Assets - Web Site Costs 1 January 2020 MFRS 17: Insurance Contracts 1 January 2021 Amendments to MFRS 10 and MFRS 128: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture Deferred (i) Early adoption of MFRS 9 Financial Instruments ("MFRS 9") The Fund has applied MFRS 9 and the related consequential amendments in advance of their effective dates. The date of initial application (i.e. the date on which the Fund has assessed its existing financial assets and financial liabilities) is 1 July

26 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Financial instruments Financial assets and financial liabilities are recognised when the Fund becomes a party to the contractual provision of the instrument. Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets and financial liabilities at FVTPL are recognised immediately in profit or loss. (b) Financial assets All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the market place. All recognised financial assets are subsequently measured in their entirety at amortised cost or fair value, depending on the classification of the assets. (i) Classification of financial assets Unless designated as at FVTPL on initial recognition, debt instruments that meet the following conditions are subsequently measured at amortised cost less impairment loss: - the assets are held within a business model whose objectives is to hold assets in order to collect contractual cash flows; and - the contractual terms of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding. Debt instruments that do not meet the criteria above are classified as either fair value through other comprehensive income ("FVTOCI") or FVTPL. The Fund classifies Islamic deposits with financial institutions, cash at bank and other receivables as 'financing and receivables', and is subsequently measured at amortised cost. Unquoted sukuk are classified as FVTPL. 22

27 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (b) Financial assets (cont'd) (ii) Financial assets at FVTPL Investments in equity instruments are classified as FVTPL, unless the Fund designates an investment that is not held for trading as FVTOCI on initial recognition. A financial asset is held for trading if: it has been acquired principally for the purpose of selling it in the near term; or on initial recognition it is part of the portfolio of identified financial instruments that the Fund manages together and has evidence of a recent actual pattern of short-term profittaking; or it is a derivative that is not designated and effective as a hedging instrument or a financial guarantee. Debt instruments that do not meet the amortised cost criteria (see above) are measured at FVTPL. In addition, debt instruments that meet the amortised cost criteria but are designated as at FVTPL are measured at FVTPL. A debt instrument may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. Debt instruments are reclassified from amortised cost to FVTPL when the business model is changed such that the amortised cost criteria are no longer met. Reclassification of debt instruments that are designated as at FVTPL on initial recognition is not allowed. Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognised in profit or loss. Profit income on debt instruments as at FVTPL is disclosed separately in the profit or loss. 23

28 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (b) Financial assets (cont'd) (iii) Impairment of financial assets Credit losses are recognised based on the 'Expected Credit Loss' ("ECL") model. The Fund recognises loss allowances for ECL on financial instruments that are not measured at FVTPL (financial assets that are debt instruments). The impairment model does not apply to equity investments. ECL are a probability-weighted estimate of credit losses. They are measured as follows: - Financial assets that are not credit-impaired at the reporting date: As the present value of all cash shortfalls (i.e. the difference between the cash flows due to the entity in accordance with the contract and the cash flows that the Fund expects to receive); - Financial assets that are credit-impaired at the reporting date: As the difference between the gross carrying amount and the present value of estimated future cash flows. At each reporting date, the Fund assesses whether financial assets carried at amortised cost are credit-impaired. A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred. Evidence that a financial asset is credit-impaired includes the following observable data: - Significant financial difficulty of the issuer or counterparty; - Significant downgrade in credit rating of the instrument by a rating agency; - A breach of contract such as a default or past due event; or - The disappearance of an active market for a security because of financial difficulties. For balances with short-term nature (e.g. amount due from Manager), full impairment will be recognised on uncollected balances after the grace period. 24

29 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (b) Financial assets (cont'd) (iv) Derecognition of financial assets The Fund derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another entity. If the Fund neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Fund recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Fund retains substantially all the risks and rewards of ownership of a transferred financial asset, the Fund continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received. On derecognition of financial asset classified as FVTPL, the cumulative unrealised gain or loss previously recognised is transferred to realised gain or loss on disposal in profit or loss. (c) Financial liabilities (i) Classification Financial liabilities are classified according to the substance of the contractual arrangements entered into and the definitions of a financial liability. The Fund classifies amount due to Trustee, amount due to Manager, other payables and provision for distribution as other financial liabilities. (ii) Recognition and measurement Financial liabilities, within the scope of MFRS 9, are recognised in the statement of financial position when, and only when, the Fund becomes a party to the contractual provisions of the financial instrument. The Fund s financial liabilities are recognised initially at fair value plus directly attributable transaction costs and subsequently measured at amortised cost using the effective profit rate method. (iii) Derecognition of financial liabilities The Fund derecognises financial liabilities when, and only when, the Fund's obligations are discharged, cancelled or expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss. 25

30 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (d) Unitholders' capital The unitholders contributions to the Fund meet the criteria to be classified as equity instruments under MFRS 132 Financial Instruments: Presentation. Those criteria include: - the units entitle the holder to a proportionate share of the Fund s NAV; - the units are the most subordinated class and class features are identical; - - there is no contractual obligations to deliver cash or another financial asset other than the obligation on the Fund to repurchase; and the total expected cash flows from the units over its life are based substantially on the profit or loss of the Fund. The outstanding units are carried at the redemption amount that is payable at each financial year if unitholder exercises the right to put the unit back to the Fund. Units are created and cancelled at prices based on the Fund's NAV per unit at the time of creation or cancellation. The Fund's NAV per unit is calculated by dividing the net assets attributable to unitholders with the total number of outstanding units. Distribution equalisation represents the average distributable amount included in the creation and cancellation prices of units. The amount is either refunded to unitholders by way of distribution and/or adjusted accordingly when units are cancelled. (e) Income recognition Income is recognised to the extent that it is probable that the economic benefits will flow to the Fund and the income can be reliably measured. Income is measured at the fair value of consideration received or receivable. Profit income from investments at amortised cost are accounted for on an accrual basis based on effective profit rate method. Realised gain on disposal of investments is measured as the difference between the net proceeds and costs. 26

31 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (f) Cash and cash equivalents For the purposes of the statement of cash flows, cash and cash equivalents include cash at bank and highly liquid instruments with maturities three months or less, which have an insignificant risk of changes in value. (g) Income tax Current tax assets and liabilities are measured at the amount expected to be recovered from or paid to the tax authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted by the reporting date. Current taxes are recognised in profit or loss except to the extent that the tax relates to items recognised outside profit or loss, either in other comprehensive income or directly in equity. No deferred tax is recognised as there are no material temporary differences. (h) Fair value measurement The Fund measures its financial assets at fair value at each reporting date. 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. The fair value measurement is based on the presumption that the transaction to sell or transfer the liability takes place either: - - In the principal market for the asset or liability, or In the absence of a principal market, in the most advantageous market for the asset or liability. The principal or the most advantageous market must be accessible to by the Fund. The fair value of an asset or a liability is measured using the assumptions that market participants would use when pricing the asset or liability, assuming that market participants act in their economic best interest. The Fund uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs. 27

32 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (h) Fair value measurement (cont'd) All assets for which fair value is measured or disclosed in the financial statements are categorised within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole: - - Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2: Inputs that are based on observable market data, either directly or indirectly. - Level 3: Inputs that are not based on observable market data. For assets that are recognised in the financial statements on a recurring basis, the Fund determines whether transfers have occurred between Levels in the hierarchy by re-assessing categorisation (based on the lowest level input that is significant to the fair value measurement as a whole) at the end of each reporting period. (i) Distributions Any distribution to the Fund s unitholders is accounted for as a deduction from realised reserves except where distribution is sourced out of distribution equalisation which is accounted for as a deduction from unitholders capital. A proposed distribution is recognised as a liability in the year in which it is approved. (j) Segment reporting Operating segments are reported in a manner consistent with the internal reporting used by the chief operating decision-maker. The chief operating decision-maker is responsible for the allocating resources and assessing performance of the operating segments. (k) Purification of income The Fund is required to cleanse or purify any income or gains generated by Shariah noncompliant activities or sources, based on the method of purification which has been approved by the Shariah Committee. The purification exercise is done by channelling the purification amount to charitable bodies as advised by the Shariah Adviser and this exercise is performed by the Manager when relevant information has been obtained. The calculation of the purification amount must further be endorsed by the Shariah Adviser for verification before the purification is done. 28

33 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONT'D) (l) Significant accounting estimates and judgements The preparation of the Fund's financial statements requires the Manager to make judgements, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities and the disclosure of contingent liabilities at the reporting date. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of the asset or liability in the future. No major judgements have been made by the Manager in applying the Fund's accounting policies. There are no key assumptions concerning the future and other key sources of estimation uncertainty at the reporting date, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year. 4. MANAGER'S FEE The Manager's fee is computed daily based on a fee not exceeding 0.50% (2017: 0.50%) per annum ("p.a.") of the NAV of the Fund, before deducting Manager's fee and Trustee's fee for the day. 5. TRUSTEE'S FEE The Trustee's fee is payable to AmanahRaya Trustees Berhad as follows: Fund's NAV (RM) Up to 100 million million million million million More than 800 million Trustee Fees (RM) 0.08% of the NAV of the Fund subject to a minimum of RM18,000 p.a. 80,000 p.a. 120,000 p.a. 160,000 p.a. 200,000 p.a. To be reviewed The Trustee's fee is computed proportionately based on the NAV of the Fund, before deducting Manager's fee and Trustee's fee for the day, calculated on a daily basis. 29