| 4TH ICP MUTUAL FUND |
|
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|
|
|
|
|
|
|
|
|
|
|
| 27TH
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 June 30, 1997 |
|
|
|
|
Note |
1997 |
1996 |
|
| NET ASSETS |
|
|
Rupees |
Rupees |
|
|
|
|
| Investment
in quoted shares |
|
|
| [Market
value Rs. 280,740,129 |
|
|
| (1996:
Rs. 263,825,816)] |
|
4 |
69,640,175 |
30,961,235 |
|
|
|
|
| Current
Assets |
|
|
|
|
|
|
---------- |
---------- |
|
| Dividend
receivable |
|
|
101,250 |
- |
|
| Prepaid
expenses |
|
|
7,500 |
2,500 |
|
| Current
account with the |
|
|
| Investment
Corporation of Pakistan (ICP) |
|
3,377,761 |
16,659,260 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
3,486,511 |
16,661,760 |
|
| Current
Liabilities |
|
|
|
|
|
|
---------- |
---------- |
|
| Accrued
expenses |
|
54,171 |
7,305 |
|
| Taxation
- net |
|
115,710 |
115,710 |
|
| Unclaimed
dividend |
|
20,619,344 |
9,512,598 |
|
| Proposed
dividend |
|
- |
12,500,000 |
|
|
|
---------- |
---------- |
|
|
|
20,789,225 |
22,135,613 |
|
|
|
---------- |
---------- |
|
|
|
(17,302,714) |
(5,473,853) |
|
|
|
---------- |
---------- |
|
|
|
52,337,461 |
25,487,382 |
|
|
|
|
========== |
========== |
|
| 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 |
|
|
|
|
| Revenue
reserves |
|
|
|
| Unappropriated
income |
|
2,337,461 |
10,487,382 |
|
|
|
---------- |
---------- |
|
|
|
|
|
52,337,461 |
25,487,382 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| 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 June 30, 1997 |
|
|
|
|
Note |
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
| INCOME |
|
|
|
|
|
|
| Dividend |
|
|
4,984,716 |
2,900,741 |
|
| Return
on current account with the ICP |
|
1,416,940 |
801,862 |
|
| Profit
on sale of investment |
|
13,494,000 |
28,525,960 |
|
|
|
---------- |
---------- |
|
|
|
19,895,656 |
32,228,563 |
|
| EXPENDITURE |
|
|
|
---------- |
---------- |
|
| Management
fee |
|
5 |
4,291,734 |
75,000 |
|
| Auditor's
remuneration |
|
6 |
9,565 |
9,214 |
|
| Diminution
in the value of investment |
|
152,500 |
- |
|
| Expenses incurred in
respect of issue of |
|
|
|
| right
certificates |
|
7 |
728,611 |
182,651 |
|
| Other
expenses |
|
8 |
363,167 |
194,796 |
|
|
|
|
---------- |
---------- |
|
|
|
|
5,545,577 |
461,661 |
|
|
|
|
---------- |
---------- |
|
| INCOME
BEFORE TAXATION |
|
|
14,350,079 |
31,766,902 |
|
|
|
|
|
|
|
| TAXATION |
|
|
|
|
|
| Current |
|
9 |
- |
427,814 |
|
| Prior |
|
|
- |
61,419 |
|
|
|
|
---------- |
---------- |
|
|
|
|
- |
489,233 |
|
|
|
|
---------- |
---------- |
|
| NET
INCOME FOR THE YEAR |
|
|
14,350,079 |
31,277,669 |
|
| UNAPPROPRIATED
INCOME BROUGHT FORWARD |
|
10,487,382 |
1,459,713 |
|
|
|
|
|
---------- |
---------- |
|
| AVAILABLE
FOR APPROPRIATION |
|
|
24,837,461 |
32,737,382 |
|
|
|
|
|
|
|
| Interim
dividend @45% (1996: 65%) on 5,000,000 (1996: |
150,000) |
|
|
|
|
| Certificates
of Rs. 10/- (1996: Rs. 100/-) each |
|
22,500,000 |
9,750,000 |
|
|
|
|
| Final
proposed dividend Nill (1966: 25%) |
|
| on
5,000,000 Certificates of Rs. 10/- each |
|
- |
12,500,000 |
|
|
|
---------- |
---------- |
|
|
|
22,500,000 |
22,250,000 |
|
|
|
|
| UNAPPROPRIATED
INCOME CARRIED FORWARD |
|
---------- |
---------- |
|
| TO
REVENUE RESERVE |
|
|
2,337,461 |
10,487,382 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these 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 June 30, 1997 |
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
| Cash
generated from operations |
|
10 |
(467,745) |
2,488,580 |
|
| Sale
of investment |
|
|
16,581,500 |
31,359,250 |
|
| Purchase
of investment |
|
|
(41,918,940) |
(15,810,800) |
|
| Taxes paid |
|
|
- |
(522,728) |
|
|
|
|
---------- |
---------- |
|
| Net
cash (outflow)inflow from operating activities |
(25,805,185) |
17,514,302 |
|
|
|
---------- |
---------- |
|
| CASH
FLOW FROM INVESTING ACTIVITY |
|
|
| Return
on current account with the ICP |
|
1,416,940 |
801,862 |
|
|
|
---------- |
---------- |
|
| Net
cash inflow from investing activity |
|
1,416,940 |
801,862 |
|
|
|
---------- |
---------- |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Issue
of right certificates |
|
35,000,000 |
- |
|
| Dividend
paid |
|
(23,893,254) |
(9,664,210) |
|
|
|
---------- |
---------- |
|
| Net
cash inflow/(outflow) from financing activities |
11,106,746 |
(9,664,210) |
|
|
|
---------- |
---------- |
|
| NET
(DECREASE)/INCREASE IN CASH EQUIVALENT |
|
(13,281,499) |
8,651,954 |
|
| CASH
EQUIVALENT AT THE BEGINNING OF THE YEAR |
|
16,659,260 |
8,007,306 |
|
|
|
|
---------- |
---------- |
|
| CASH
EQUIVALENT AT THE END OF THE YEAR |
11 |
3,377,761 |
16,659,260 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| Notes
to the Accounts for the year ended June 30, 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 Fourth ICP Mutual Fund was established by the Investment
Corporation of Pakistan (ICP), acting as |
|
| its
Trustee on May 13, 1970 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
Investments |
|
| i)
Investments are valued at average cost where cost is lower than the market
value; |
|
| ii)
in cases where market value is lower than 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 Kakakhel 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 Commission's 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
Commission expenses against Kakakhel Industries |
|
| Limited
amounted to Rs. 1 304,084, and the amounts advised by the Commission to date
against these expenses amounted to |
|
| Rs.
882,727. |
|
|
| 4.
INVESTMENTS IN QUOTED SHARES |
|
| Unless
stated otherwise the holdings are in the ordinary shares of Rs. 10/- each. |
|
|
|
|
|
|
1997 |
|
1996 |
|
| 1997 |
1996 |
|
---------------------------------------------- |
---------------------------------------------- |
|
| -------------------- |
|
Book Value |
Market Value |
Book Value |
Market Value |
|
| *Holding |
|
--------------------- |
--------------------- |
--------------------- |
--------------------- |
|
| No of shares |
Name of the Company |
|
**Rate |
Amount |
**Rate |
Amount |
**Rate |
Amount |
**Rate |
Amount |
|
|
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
| ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
|
|
|
|
|
MODARABA |
|
|
| - |
50,000 |
1st Grindlays |
|
11.02 |
550,875 |
11.50 |
575,000 |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
INVESTMENT BANKS |
|
|
| - |
230,000 |
Askari Commercial |
19.57 |
4,502,000 |
28.50 |
6,555,000 |
- |
- |
- |
- |
|
| - |
55,000 |
Bank AI-Habib |
|
25.62 |
1,409,000 |
28.50 |
1,567,500 |
- |
- |
- |
- |
|
|
|
|
|
|
TEXTILE SPINNING |
|
|
| 10,000 |
10,000 |
AI-Hamd Textile Mills
Ltd. |
3.50 |
35,000 |
3.50 |
35,000 |
18.75 |
187,500 |
6.60 |
66,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
SUGAR & ALLIED |
|
|
| 48,121 |
52,933 |
Bawany Sugar Mills Ltd. |
|
12.68 |
671,000 |
16.30 |
862,808 |
13.94 |
671,000 |
|
30.00 ,1,443,630 |
|
| 16,500 |
16,500 |
Dewan Sugar Mills Ltd. |
|
32.50 |
536,250 |
27.00 |
445.50 |
32.50 |
536,250 |
25.00 |
412,500 |
|
|
|
|
|
|
|
|
|
|
|
|
CEMENT |
|
|
| - |
50,000 |
Cherat Cement |
|
19.21 |
960,340 |
20.75 |
1,037,500 |
- |
- |
- |
- |
|
| - |
30,000 |
Lucky Cement |
|
13.30 |
398,900 |
7.85 |
235,500 |
- |
- |
- |
- |
|
|
|
|
|
|
FUEL & ENERGY |
|
|
| 571,795 |
571,795 |
Karachi Electric Supply
Cor., Ltd. |
4.83 |
2,762,208 |
12.25 |
7,004,489 |
4.83 |
2,762,208 |
36.50 |
20,870,513 |
|
| 70,000 |
70,000 |
National Refinery Ltd. |
|
14.76 |
1,033,500 |
28.50 |
1,995,000 |
14.76 |
1,033,500 |
41.00 |
2,870,000 |
|
| 478,521 |
597,077 |
Pakistan State Oil |
|
6.64 |
3,967,539 |
325.50 |
194,348,564 |
8.64 |
4,133,539 |
413.00 |
197,629,173 |
|
| 84,240 |
96,876 |
Sui Northern Gas
Pipelines Ltd. |
6.04 |
585000 |
31.75 |
3,075,813 |
6.94 |
585,000 |
40.50 |
3,411,720 |
|
| - |
35,000 |
Shell Pakistan |
|
137.06 |
4,797,150 |
238.00 |
8,330,000 |
- |
- |
- |
- |
|
| - |
230,000 |
Sui Southern Gas
Pipelines Ltd. |
29.36 |
6,752,000 |
282~ |
6,497,500 |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
|
|
ENGINEERING |
|
|
| - |
50,000 |
Crescent Steel |
|
39.01 |
1,950,500 |
28.50 |
1,425,000 |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
AUTO AND ENGINEERING |
|
|
| - |
50,000 |
Pak Suzuki |
|
43.43 |
2,171,300 |
50.00 |
2,500,000 |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
|
TRANSPORT |
|
|
| - |
100,000 |
P.T.C.L "A" |
|
33.87 |
3,386,750 |
30.50 |
3,050,000 |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
|
CHEMICAL &
PHARMACEUTICAL |
|
|
| - |
12,500 |
Engro Chemical |
|
112.01 |
1,400,100 |
142.00 |
1,775,000 |
- |
- |
- |
- |
|
| 64,000 |
200,000 |
F.F.C Jordan |
|
14.24 |
2,847,525 |
15.40 |
3,080,000 |
15.04 |
962,270 |
15.90 |
1,017,600 |
|
| - |
50,000 |
Fauji Fertilizer |
|
79.01 |
3,950,500 |
78.75 |
3,937,500 |
- |
- |
- |
- |
|
| 301,670 |
1,082,097 |
ICI Pakistan Ltd. |
|
21.27 |
23,019,110 |
24.20 |
26,186,747 |
50.44 |
15,214,840 |
53.00 |
15,988,510 |
|
|
|
|
|
|
PAPER AND BOARD |
|
|
| 223,513 |
100,334 |
Packages Ltd. |
|
19.47 |
1,953,628 |
62.00 |
6,220,708 |
21.81 |
4,875,128 |
90.00 |
20,116,170 |
|
|
|
|
---------- |
|
---------- |
|
---------- |
|
---------- |
|
|
|
|
|
69,640,175 |
|
280,740,129 |
|
30,961,235 |
|
263,825,816 |
|
|
|
|
|
========== |
|
========== |
|
========== |
|
========== |
|
| *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 at the
close of the financial year. |
|
|
|
|
Note |
1997 |
1996 |
|
| Management
fee @ 1/2% per annum of the initial |
|
Rupees |
Rupees |
|
| paid-up
capital of Rs. 15 million |
|
|
| Management
fee @ 3% per annum of the market |
|
75,000 |
75,000 |
|
| value
of net assets at the close of the year |
5.1 |
4,216,734 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
4,291,734 |
75,000 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 5.1
Market value of net assets at the close of the year |
|
|
| Investment
in quoted shares |
|
4 |
280,740,129 |
|
|
|
| Current
assets |
|
|
|
---------- |
|
|
|
| Dividend
receivable |
|
|
|
101,250 |
|
|
|
| Prepaid
expenses |
|
|
|
7,500 |
|
|
|
| Current
Account with the ICP |
|
|
7,669,495 |
|
|
|
|
|
|
---------- |
|
|
|
|
|
7,778,245 |
|
|
|
|
---------- |
|
|
|
|
288,518,374 |
|
|
|
|
|
| Current
liabilities |
|
|
|
|
|
|
---------- |
|
| Accrued
expenses |
|
|
|
54,171 |
|
|
|
| Taxation
- net |
|
|
|
115,710 |
|
|
|
| Unclaimed
dividend |
|
|
|
20,619,344 |
|
|
|
|
|
|
---------- |
|
|
|
|
|
20,789,225 |
|
|
|
267,729.15 |
|
|
|
|
|
|
|
---------- |
|
| 267,729,149 |
x |
35,000,000 |
x 9 |
x 3% = |
4,216,734 |
|
|
|
|
|
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 |
|
|
|
|
172,975 |
- |
|
| ICP
- take up |
|
|
|
62,655 |
- |
|
| -
underwriting |
|
|
|
175,000 |
- |
|
| Consultancy
services |
|
|
|
103,923 |
36,904 |
|
| Advertising |
|
|
|
|
92,759 |
2,958 |
|
| Postage |
|
|
|
|
16,542 |
11,871 |
|
| Stamp duty |
|
|
|
|
87,500 |
9,733 |
|
| Stock
exchange listing fee |
|
|
- |
120,000 |
|
| Professional
charges |
|
|
|
- |
1,185 |
|
| Printing
charges |
|
|
|
17,257 |
- |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
728,611 |
182,651 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 8.
OTHER EXPENSES |
|
|
|
1997 |
1996 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Printing
and stationery |
|
|
60,832 |
39,716 |
|
| Advertising
and publicity |
|
|
18,022 |
8,046 |
|
| Professionals
charges |
|
|
|
17,517 |
3,635 |
|
| Stock
exchange listing fee |
|
|
37,500 |
17,500 |
|
| Excise duty |
|
|
|
15,800 |
17,600 |
|
| Computer
related expenses |
|
|
152,700 |
61,081 |
|
| Postage |
|
|
|
27,033 |
31,400 |
|
| Professional
tax |
|
|
|
15,000 |
15,000 |
|
| Share
transfer stamps |
|
|
|
17,250 |
- |
|
| Miscellaneous |
|
|
|
1,513 |
818 |
|
|
|
|
|
---------- |
---------- |
|
|
|
363,167 |
194,796 |
|
|
|
|
========== |
========== |
|
|
|
|
| 9. TAXATION |
|
| In
accordance with the amendments introduced in the Finance Act, 1997 to the
Income-tax Ordinance 1979, 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 material tax |
|
| liability
is expected to arise. |
|
|
| 10.
CASH GENERATED FROM OPERATIONS |
|
| Profit
before taxation |
|
14,350,079 |
31,766,902 |
|
| Adjustment
for non cash charges and other items: |
|
