| 2ND ICP MUTUAL FUND |
|
|
|
|
|
|
|
|
|
|
|
| 29TH
ANNUAL REPORT 1997 |
|
|
|
|
| INVESTMENT
CORPORATION |
|
| OF
PAKISTAN |
|
|
| HEAD
OFFICE: |
|
MUTUAL FUNDS DEPTT: |
|
| N.B.P.
Building, 5th Floor, |
|
Dawood Centre, Ground
Floor, |
|
| P.O.
Box No. 5410, |
|
Moulvi Tamizuddin Khan
Road, Karachi |
|
| I.I.
Chundrigar Road, Karachi. |
|
Phones: 5686014-15,
5685104-105 |
|
| Phones:
2415860-10 Lines Telex: 20079 ICP PK. |
Telex: 20079 ICP PK.
29223 ICP PK. |
|
| 29223
ICP PK. Telefax: 92-021-2411684 |
Telefax: 92-021-5680035 |
|
|
|
| Balance
Sheet as at 30th June, 1997 |
|
|
| NET ASSETS |
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Investment
in quoted shares |
|
|
| (market
Value Rs. 68,870,838 |
|
|
| (1996:
Rs 51,138,525) |
|
|
4 |
46,476,754 |
20,922,917 |
|
|
|
|
| Current
Assets |
|
|
|
|
|
|
|
|
| Dividend
receivable |
|
|
|
165,00 |
- |
|
|
| Prepaid
expenses |
|
|
|
7,500 |
2,500 |
|
| Current
account with the |
|
|
| Investment
Corporation of Pakistan (ICP) |
|
8,999,660 |
5,553,514 |
|
| Taxation-net |
|
|
|
545,578 |
545,578 |
|
|
|
|
---------- |
---------- |
|
|
|
|
9,717,738 |
6,101,592 |
|
|
|
|
| Current
Liabilities |
|
|
|
|
|
|
| Accrued
expenses |
|
|
|
50,173 |
7,305 |
|
| Unclaimed
dividend |
|
|
|
4,601,894 |
4,875,449 |
|
|
|
|
---------- |
---------- |
|
|
|
|
4,652,067 |
4,882,754 |
|
|
|
|
---------- |
---------- |
|
|
|
|
5,065,671 |
1,218,838 |
|
|
|
|
---------- |
---------- |
|
|
|
|
51,542,425 |
22,141,755 |
|
|
|
|
========== |
========== |
|
|
|
|
| FINANCED
BY |
|
|
|
| Capital
and Reserves |
|
|
|
| Capital |
|
|
|
| Authorised |
|
|
|
| 5,000,000
Certificates (1996: 5,000,000) of |
|
| Rs.
10/- each |
|
|
|
50,000,000 |
50,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid-up |
|
|
|
|
| 5,000,000
certificates (1996: 150,000) of |
|
| Rs.
10/- (1996: Rs. 100/-) each fully paid in cash |
50,000,000 |
15,000,000 |
|
|
|
|
| Reserves |
|
|
|
| Revenue |
|
|
|
| Special |
|
|
|
150,000 |
150,000 |
|
| Unappropriated
income |
|
|
|
1,392,425 |
6,991,755 |
|
|
|
|
---------- |
---------- |
|
|
|
|
51,542,425 |
22,141,755 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| The
auditors' report is annexed hereto. |
|
|
| for
THE INVESTMENT CORPORATION OF PAKISTAN |
|
|
| ASADULLAH
KHAWAJA |
ZAHEER AHMED |
S.M. MUNEER |
|
| Managing
Director |
Director |
|
Director |
|
|
|
| Income
and Expenditure Account for the year ended 30th June, 1997 |
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
| INCOME |
|
|
|
|
|
|
|
| Dividend |
|
|
|
2,438,497 |
1,088,358 |
|
| Return
on current account with the ICP |
|
1,061,266 |
224,084 |
|
| Profit
on sale of investment |
|
|
1,946,350 |
11,414,006 |
|
|
|
|
---------- |
---------- |
|
|
|
|
5,446,113 |
12,726,448 |
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
|
|
|
---------- |
---------- |
|
| Management
fee |
|
|
5 |
1,259,335 |
75,000 |
|
| Auditor's
remuneration |
|
|
6 |
9,565 |
9,214 |
|
| Diminution
in the value of investment |
|
2,596,850 |
- |
|
| Expenses incurred in
respect of issue of |
|
|
|
| Right
certificates |
|
|
7 |
900,823 |
182,654 |
|
| Golden
handshake expenses |
|
|
- |
409,456 |
|
| Other
expenses |
|
|
8 |
278,870 |
156,246 |
|
|
|
|
---------- |
---------- |
|
|
|
|
5,045,443 |
832,570 |
|
|
|
|
---------- |
---------- |
|
|
|
|
400,670 |
11,893,878 |
|
|
|
|
|
| INCOME
BEFORE TAXATION |
|
|
|
|
| TAXATION |
|
|
|
|
|
|
|
|
|
| Current |
|
|
9 |
- |
130,779 |
|
| Prior |
|
|
|
- |
94,955 |
|
|
|
|
---------- |
---------- |
|
|
|
|
- |
225,734 |
|
|
|
|
---------- |
---------- |
|
|
|
|
| NET
INCOME FOR THE YEAR |
|
|
400,670 |
11,668,144 |
|
| UNAPPROPRIATED
INCOME BROUGHT FORWARD |
|
6,991,755 |
573,611 |
|
|
|
|
|
---------- |
---------- |
|
| AVAILABLE
FOR APPROPRIATION |
|
|
7,392,425 |
12,241,755 |
|
|
|
|
| Interim
dividend @ 12% (1996: 35%) on 5,000,000 Rs. 10/- each |
|
| (1996:
150,000 Certificates of Rs. 100/- each) |
|
6,000,000 |
5,250,000 |
|
|
|
|
| UNAPPROPRIATED
INCOME CARRIED FORWARD |
|
---------- |
---------- |
|
| TO
REVENUE RESERVE |
|
|
|
1,392,425 |
6,991,755 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of the accounts. |
|
|
| for
THE INVESTMENT CORPORATION OF PAKISTAN |
|
|
| ASADULLAH
KHAWAJA |
ZAHEER AHMED |
S.M. MUNEER |
|
| Managing
Director |
Director |
|
Director |
|
|
|
|
| Cash
Flow Statement for the year ended 30th June, 1997 |
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
| Cash
generated from Operations |
|
10 |
(137,228) |
417,038 |
|
| Sale
of investment |
|
|
|
3,568,700 |
18,086,505 |
|
| Purchase
of investment |
|
|
|
(29,773,037) |
(4,732,830) |
|
| Taxes paid |
|
|
|
- |
(300,759) |
|
|
|
|
---------- |
---------- |
|
| Net
cash (outflow)/inflow from operating activities |
(26,341,565) |
13,469,954 |
|
|
|
|
---------- |
---------- |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITY |
|
|
|
|
|
| Return
on current account with the ICP |
|
1,061,266 |
224,084 |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from Investing activity |
|
1,061,266 |
224,084 |
|
|
|
|
---------- |
---------- |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
| Issue
of Right Certificates |
|
|
35,000,000 |
- |
|
| Dividend
paid |
|
|
|
(6,273,555) |
(9,350,339) |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow/(outflow) from financing activities |
28,726,445 |
(9,350,339) |
|
|
|
|
---------- |
---------- |
|
| NET
INCREASE IN CASH EQUIVALENT |
|
|
3,446,146 |
4,343,699 |
|
| CASH
EQUIVALENT AT THE BEGINNING OF THE YEAR |
|
5,553,514 |
1,209,815 |
|
|
|
|
|
---------- |
---------- |
|
| CASH
EQUIVALENT AT THE END OF THE YEAR |
11 |
8,990,660 |
5,553,514 |
|
|
|
|
========== |
========== |
|
|
|
| Notes
to the Accounts for the year ended 30th June, 1997 |
|
|
| 1.
THE FUND AND ITS OPERATIONS |
|
|
| In
order to broaden the investment base and to encourage investment in shares of
companies quoted on the stock |
|
| exchanges
in the country the Second ICP Mutual Fund was established by the Investment
Corporation of Pakistan (ICP), acting as |
|
| its
Trustee, on May 16, 1968 under the ICP Ordinance, 1966. The Fund is listed on
the three Stock Exchanges in Pakistan. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under the historical cost convention without any
adjustment for the effect of |
|
| inflation. |
|
|
| 2.2
Investment |
|
| i)
Investments are valued at average cost where cost is lower than the market
value; |
|
| ii)
in cases where market value is lower than the carrying value, the carrying
value is reduced to recognise other than |
|
| temporary
decline i.e. for a period not less than three years, in order to arrive at
their book value; |
|
| iii)
profit or loss on sale of investment is accounted for in the year in which it
arises. |
|
|
| 2.3
Taxation |
|
| Provision
for taxation is based on taxable income at the current rates for taxation
after taking into account tax credits |
|
| available,
if any. |
|
|
| 2.4
Revenue recognition |
|
| i)
Dividend income is accounted for at the closure of share transfer books of
the company declaring dividend; |
|
| ii)
return on current account with the ICP is accounted for on the basis of the
PLS rate declared half yearly by a bank |
|
| on
PLS bank accounts. |
|
|
| 3.
BASIS OF ACCOUNTING FOR DISPOSAL OF SHARES OF PRIVATISED COMPANIES |
|
|
| In
previous years shares of Millat Tractors Limited, Metropolitan Steel
Corporation and Gharibwal Cement Industries Limited |
|
| were
acquired by the Privatisation Commission (the Commission) from the Fund
through the Investment Corporation of Pakistan |
|
| (ICP)
for onward transmission to the bidders under the Privatisation Scheme of the
Government of Pakistan. |
|
|
| According
to the agreements reached with the bidders, the price payable was subject to
adjustment for the difference |
|
| between
figures as per audited accounts at specified dates and unaudited balance
sheets used for the bidding purposes and |
|
| Commission's
share of costs of "golden handshake" payable to employees of the
privatised units. ICP was also advised that |
|
| proportionate
share of Commissions expenses will be deducted from the final disbursements.
Although certain amounts have been |
|
| advised
by the Commission as ICP's share of "golden handshake" expenses and
Commission expenses to be deducted from final |
|
| sale
price, final amounts have not yet been advised by the Commission. |
|
|
| To
cover the above uncertainties, ICP has had to make certain provisions on
adhoc basis. In order to ensure liquidity of the |
|
| Fund
for subsequent payment of dividend, ICP acquired the Fund's holding at
offered price less price adjustments and |
|
| proportionate
cost of "golden handshake" so far incurred and provision for
further costs. When exact amount of expenses, costs of |
|
| "golden
handshake" and price adjustments are determined the difference will be
recovered from or paid to the fund. |
|
|
| The
amount deducted by ICP for provisions for "golden handshake" and
Commissions expenses against Millat Tractors |
|
| Limited
amounted to Rs. 5,045,079, Metropolitan Steel Corporation amounted to Rs.
572,060 and Gharibwal Cement Industries |
|
| Limited
amounted to Rs. 2,949,840 and the amounts advised by the Commission to date
against these expenses amounted to Rs. |
|
| 1,763,220,
Rs. 1,011,411 and Rs. 376, 698 respectively. |
|
|
| 4.
INVESTMENT IN QUOTED SHARES |
|
|
| Unless
stated otherwise the holdings are in the ordinary shares of Rs. 10/- each. |
|
|
|
|
|
1997 |
|
1996 |
|
| 1996 |
1997 |
|
--------------------------------------------- |
--------------------------------------------- |
|
| ------------------------ |
|
Book Value |
Market Value |
Book Value |
Market Value |
|
| *Holding |
Name of the Company |
|
**Rate |
Amount |
**Rate |
Amount |
**Rate |
Amount |
**Rate |
Amount |
|
| No. of shares |
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
| ----------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
|
MODARABA |
|
| - |
50,000 |
1st Grindlays |
|
10.42 |
521,200 |
11.50 |
575,000 |
- |
- |
- |
- |
|
|
|
|
|
|
|
LEASING |
|
|
|
| - |
7,000 |
Orix Leasing |
|
49.19 |
344,350 |
40.75 |
285,250 |
- |
- |
- |
- |
|
|
|
|
|
TEXTILE SPINNING |
|
|
|
| 15,125 |
15,125 |
Gulshan Spinning Mills
Ltd. |
19.00 |
287,375 |
19.00 |
287,375 |
21.07 |
318,725 |
15.80 |
238,975 |
|
|
|
|
|
SUGAR & ALLIED |
|
|
|
| 212,220 |
254,664 |
Habib Sugar Mills Ltd
(Rs. 5) |
5.93 |
1,509,294 |
11.50 |
2,928,636 |
7.11 |
1,509,293 |
13.25 |
2,811,915 |
|
| 141,047 |
141,047 |
Mehran Sugar Mills Ltd. |
|
16.83 |
2,373,578 |
16.00 |
2,256,752 |
16.83 |
2,373,578 |
18.50 |
2,609,370 |
|
| 22,000 |
22,000 |
Sanghar Sugar Mills Ltd. |
|
16.91 |
372,000 |
11.00 |
242,000 |
16.91 |
372,000 |
19.25 |
423,500 |
|
|
|
|
|
CEMENT |
|
|
|
| 101,286 |
101,286 |
Cherat Cement Company
Ltd. |
6.39 |
646,816 |
20.75 |
2,101,685 |
6.39 |
646,816 |
27.50 |
2,785,365 |
|
| 105,000 |
105,000 |
Dadabhoy Cement
Industries Ltd |
8.00 |
840,000 |
8.00 |
840,000 |
32.43 |
3,405,500 |
8.25 |
866,250 |
|
| 15,690 |
18,002 |
Gharibwala Cement
Industries Ltd. |
2.98 |
54,199 |
23.20 |
422,240 |
3.45 |
54,199 |
26.75 |
419,708 |
|
|
|
|
|
FUEL & ENERGY |
|
|
|
| - |
100,000 |
Hub Power Company |
|
33.06 |
3,305,750 |
40.80 |
4,080,000 |
- |
- |
- |
- |
|
| 358,551 |
358,551 |
Karachi Electric Supply
Cor., Ltd. |
4.25 |
1,523,912 |
12.25 |
4,392,250 |
4.25 |
1,523,912 |
36.50 |
13,087,112 |
|
| 77,000 |
77,000 |
National Refinery Ltd. |
|
10.32 |
794,886 |
28.50 |
2,194,500 |
10.32 |
794,886 |
41.00 |
3,157,000 |
|
| - |
19,513 |
Pakistan State Oil
Company Ltd. |
261.07 |
5,094,191 |
325.50 |
6,351,482 |
- |
- |
- |
- |
|
| 81,000 |
93,150 |
Sui Northern Gas
Pipelines Ltd. |
6.04 |
562,500 |
31.75 |
2,957,513 |
6.94 |
562,500 |
40.50 |
3,280,500 |
|
| - |
25,000 |
Shell Pakistan |
|
141.61 |
3,540,150 |
238.00 |
5,950,000 |
- |
- |
- |
- |
|
|
|
|
|
AUTO AND ENGINEERING |
|
|
|
| - |
100,000 |
Pak Suzuki |
|
43.65 |
4,364,500 |
50.00 |
5,000,000 |
- |
- |
- |
- |
|
|
|
|
|
TRANSPORT |
|
|
|
| - |
100,000 |
P.T.C.L "A" |
|
33.25 |
3,325,000 |
30.50 |
3,050,000 |
- |
- |
- |
- |
|
|
|
|
|
CHEMICALS &
PHARMACEUTICAL |
|
|
| - |
8,900 |
BOC Pakistan Limited |
|
149.01 |
1,326,189 |
139.00 |
1,237,100 |
- |
- |
- |
- |
|
| - |
43,750 |
Engro Chemicals Pakistan
Ltd. |
113.06 |
4,946,180 |
142.00 |
6,212,500 |
- |
- |
- |
- |
|
| 100,000 |
100,000 |
Fauji Fertilizer Company
Ltd. |
68.75 |
6,875,000 |
78.75 |
7,875,000 |
68.75 |
6,875,000 |
89.75 |
8,975,000 |
|
| 65,230 |
212,227 |
ICI Pakistan Ltd. |
|
10.00 |
2,123,314 |
24.20 |
5,135,893 |
14.34 |
935,193 |
53.00 |
3,457,190 |
|
|
|
|
|
PAPER & BOARD |
|
|
|
| - |
20,100 |
Cherat Paper |
|
44.06 |
885,555 |
31.40 |
631,140 |
- |
- |
- |
- |
|
| 100,296 |
62,331 |
Packages Ltd. |
|
13.81 |
860,815 |
62.00 |
3,864,522 |
15.47 |
1,551,315 |
90.00 |
9,026,640 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
---------- |
|
|
|
46,476,754 |
|
68,870,838 |
|
20,922,917 |
|
51,138,525 |
|
|
|
========== |
|
========== |
|
========== |
|
========== |
|
|
| *The
above shares are held in the name of the investment Corporation of Pakistan
which acts as a Trustee to the Fund. |
|
| **Rounded
off to two decimal places. |
|
|
| 5.
MANAGEMENT FEE |
|
|
| The
management fee is payable to Investment Corporation of Pakistan @ 1/2% per
annum on the initial paid-up capital of the |
|
| Fund.
the management fee in respect of the additional capital raised by way of
Right Issue in August 1996 is payable upto 3% |
|
| per
annum of the net assets market value of the Fund to be determined of the
close of the financial year. |
|
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Management
fee @ 1/2% per annum of the initial |
|
| paid-up
capital of Rs. 15 million |
|
|
75,000 |
75,000 |
|
|
|
|
| Management
fee @ 3% per annum of the market |
|
| value
of net assets at the close of the year |
5.1 |
1,184,335 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,259,335 |
75,000 |
|
|
|
|
========== |
========== |
|
|
| 5.1
Market value of net assets at the close of the year |
|
|
| Investment
in quoted shares |
|
4 |
68,870,838 |
|
| Current
Assets |
|
|
| Dividend
receivable |
|
165,000 |
|
| Prepaid
Expense |
|
7,500 |
|
| Current
Account with the ICP |
|
10,258,995 |
|
| Taxation-net |
|
545,578 |
|
|
---------- |
|
|
10,977,073 |
|
|
---------- |
|
|
79,847,911 |
|
|
---------- |
|
| Current
Liabilities |
|
|
| Accrued
Expenses |
|
50,173 |
|
| Unclaimed
dividend |
|
4,601,894 |
|
|
---------- |
|
|
4,652,067 |
|
|
---------- |
|
|
75,195,844 |
|
|
========== |
|
|
| 75,195,844 |
x |
35,000,000 |
x 9 |
x 3% = |
1,184,335 |
|
|
|
|
|
50,000,000 |
12 |
|
========== |
|
|
|
| 6.
AUDITORS' REMUNERATION |
|
|
|
|
Taseer Hadi |
Ford Rhodes |
1997 |
1996 |
|
|
|
Khalid & Co. |
Robson Morrow |
Rupees |
Rupees |
|
|
|
|
| Audit Fee |
|
|
2,195 |
2,195 |
4,390 |
4,180 |
|
| Tax
services |
|
5,175 |
- |
5,175 |
5,034 |
|
|
|
---------- |
---------- |
---------- |
---------- |
|
|
|
7,370 |
2,195 |
9,565 |
9,214 |
|
|
|
========== |
========== |
========== |
========== |
|
|
|
|
| 7.
EXPENSES INCURRED IN RESPECT OF ISSUE OF RIGHT CERTIFICATES |
|
|
|
|
| Commission |
|
|
|
|
|
|
| Banks |
|
|
|
90,417 |
- |
|
| ICP-take
up |
|
|
310,446 |
- |
|
| - underwriting |
|
|
175,000 |
- |
|
| Consultancy
services |
|
|
103,922 |
36,907 |
|
| Advertising |
|
|
105,059 |
2,958 |
|
| Postage |
|
|
|
- |
11,871 |
|
| Stamp duty |
|
|
|
104,042 |
9,733 |
|
| Stock
exchange listing fee |
|
- |
120,000 |
|
| Professional
charges |
|
|
- |
1,185 |
|
| Printing
charges |
|
|
11,937 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
900,823 |
182,654 |
|
|
|
|
========== |
========== |
|
|
|
|
| 8.
OTHER EXPENSES |
|
|
|
|
|
| Printing
and stationery |
|
29,581 |
20,859 |
|
| Advertising
and publicity |
|
12,001 |
8,046 |
|
| Professional
charges |
|
|
17,255 |
3,635 |
|
| Stock
Exchange Listing fee |
|
37,500 |
17,500 |
|
| Excise
duty |
|
|
3,400 |
8,000 |
|
| Computer
related expenses |
|
128,700 |
51,491 |
|
| Postage |
|
|
|
7,490 |
30,800 |
|
| Professional
tax |
|
|
15,000 |
15,000 |
|
| Share
transfer stamps |
|
|
26,430 |
- |
|
| Miscellaneous |
|
|
1,513 |
915 |
|
|
|
|
---------- |
---------- |
|
|
|
|
278,870 |
156,246 |
|
|
|
|
========== |
========== |
|
|
| 9.
TAXATION |
|
|
| In
accordance with the amendments introduced in the Finance Act, 1997 to the
Income-tax Ordinance, 1997, no provision for |
|
| taxation
in respect of the current year has been made as the Fund has already
distributed more than 90% of its income. |
|
|
| The
income-tax assessment of the Fund has been finalised upto and including
assessment year 1996-97. However, the Fund |
|
| has
filed appeals before the Commissioner of income-tax (Appeal) relating to
assessment years 1993-94, 1994-95, 1995-96 |
|
| and
1996-97. In case of any adverse decision in respect of appeals for the above
referred assessment years, no materials tax |
|
| liability
is expected to arise. |
|
|
| 10.
CASH GENERATED FROM OPERATIONS |
|
|
|
|
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
|
| Profit
before taxation |
|
|
|
400,670 |
11,893,878 |
|
|
|
|
| Adjustment
for non cash charges and other items: |
|
| Return
on current account with the ICP |
|
(1,061,266) |
(224,084) |
|
| Profit
on sale of Investment |
|
|
(1,946,350) |
(11,414,006) |
|
| Diminution
in the value of investment |
|
2,596,850 |
- |
|
| Working
capital changes |
|
10.1 |
(127,132) |
161,250 |
|
