| 5TH ICP MUTUAL FUND |
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|
| 25TH
ANNUAL REPORT 1997 |
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|
|
| 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 |
|
|
|
|
Note |
1997 |
1996 |
|
| NET ASSETS |
|
|
Rupees |
Rupees |
|
|
|
|
| Investment
in quoted shares |
|
|
| [Market
value Rs. 50,494,248 |
|
|
| (1996:
Rs. 25,231,627)] |
|
4 |
38,231,614 |
8,220,450 |
|
|
|
|
| Current
Assets |
|
|
|
|
|
|
---------- |
---------- |
|
| Dividend
receivable |
|
87,500 |
- |
|
| Prepaid
expenses |
|
7,500 |
1,250 |
|
| Current
account with the |
|
|
|
| Investment
Corporation of Pakistan (ICP) |
|
15,821,688 |
1,113,317 |
|
| Taxation
- net |
|
67,280 |
67,280 |
|
|
|
---------- |
---------- |
|
|
|
15,983,968 |
1,181,847 |
|
|
|
|
|
|
| Current
Liabilities |
|
|
|
| Accrued
expenses |
|
44,526 |
5,222 |
|
| Unclaimed
dividend |
|
2,351,343 |
1,798,298 |
|
|
|
|
---------- |
---------- |
|
|
|
2,395,869 |
1,803,520 |
|
|
|
---------- |
---------- |
|
|
|
13,588,099 |
(621,673) |
|
|
|
---------- |
---------- |
|
|
|
51,819,713 |
7,598,777 |
|
|
|
|
========== |
========== |
|
| 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
(1996: 500,000) certificates of Rs. 10/- |
|
| each
fully paid in cash |
|
|
50,000,000 |
5,000,000 |
|
|
|
|
| Revenue
reserves |
|
|
|
| General
reserve |
|
|
75,000 |
75,000 |
|
| Unappropriated
income |
|
|
1,744,713 |
2,523,777 |
|
|
|
|
---------- |
---------- |
|
|
|
|
51,819,713 |
7,598,777 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 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 |
|
|
|
|
|
|
|
| Income
and Expenditure Account for the year ended 30th June, 1997 |
|
|
|
|
|
|
Note |
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
| INCOME |
|
|
|
|
|
|
| Dividend |
|
|
2,035,650 |
584,101 |
|
| Return
on current account with the lOP |
|
1,047,705 |
67,850 |
|
| Profit
on sale of investment |
|
3,923,663 |
3,348,811 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
7,007,018 |
4,000,762 |
|
| EXPENSES |
|
|
|
|
|
|
---------- |
---------- |
|
| Management
fee |
|
5 |
1,350,005 |
25,000 |
|
| Auditor's
remuneration |
|
6 |
9,565 |
9,214 |
|
| Expenses
incurred in respect of issue |
|
|
|
| of
right certificates |
|
7 |
1,170,053 |
234,827 |
|
| Other
expenses |
|
8 |
256,459 |
116,964 |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,786,082 |
386,005 |
|
|
|
|
---------- |
---------- |
|
| Income
before taxation |
|
|
4,220,936 |
3,614,757 |
|
| Taxation
- current year |
|
|
|
|
| -
Prior year |
|
9 |
- |
48,594 |
|
|
|
|
- |
5,508 |
|
|
|
|
---------- |
---------- |
|
|
|
|
- |
54,102 |
|
|
|
|
|
| Income
after taxation |
|
|
4,220,936 |
3,560,655 |
|
| Unappropriated
income brought forward |
|
2,523,777 |
213,122 |
|
|
|
|
---------- |
---------- |
|
| Available
for appropriation |
|
|
6,744,713 |
3,773,777 |
|
| Interim
dividend @ 10% (1996: 25%)on 5,000,000 |
|
|
|
| (1996:
500,000) certificates of Rs. 10/- each |
|
5,000,000 |
1,250,000 |
|
|
|
|
---------- |
---------- |
|
| Unappropriated
income carried forward |
|
1,744,713 |
2,523,777 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| 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 30th June, 1997 |
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
| Cash
generated from operations |
|
10 |
(804.879) |
231,096 |
|
| Sale
of investment |
|
|
11,868,061 |
5,091,886 |
|
| Purchase
of investment |
|
|
(37,955,561) |
(2,717,500) |
|
| Taxes paid |
|
|
- |
(75,778) |
|
|
|
|
---------- |
---------- |
|
| Net
cash (outflow)/inflow from operating activities |
26,892,379) |
2,529,704 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Return
on current account with the ICP |
|
1,047,705 |
67,850 |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from investing activities |
|
1,047,705 |
67,850 |
|
|
|
|
---------- |
---------- |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
| Issue
of right certificates |
|
|
45,000,000 |
- |
|
| Dividend
paid |
|
|
(4,446,955) |
(3,052.596) |
|
|
|
|
---------- |
---------- |
|
| Net
Cash inflow/(outflow) from financing activities |
40,553,045 |
(3,052,596) |
|
|
|
|
---------- |
---------- |
|
| NET
INCREASE/(DECREASE) IN CASH EQUIVALENT |
|
14,708,371 |
(455,042) |
|
| CASH
EQUIVALENT AT THE BEGINNING OF THE YEAR |
|
1,113,317 |
1,568,359 |
|
|
|
|
---------- |
---------- |
|
| CASH
EQUIVALENT AT THE END OF THE YEAR |
11 |
15,821,688 |
1,113,317 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| Notes
to the Accounts for the year ended 30th June, 1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| In
order generally to broaden the base of investments and to encourage
investment in sound quoted shares, the Fifth ICP |
|
| Mutual
Fund was floated by the Investment Corporation of Pakistan (ICP), acting as
Trustee to the fund and the fund' is listed on |
|
| stock
exchanges in Pakistan, |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
|
| 2.2
Investments |
|
| i)
Investment is valued at average cost where the cost is lower than the market
value; |
|
| ii)
in case 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
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 current rates for taxation after
taking into account tax credits |
|
| available,
if any. |
|
|
|
|
| 2.4
Revenue recognition |
|
| i)
Dividend income is recorded at the 1~me of closure of share transfer books of
the company declaring dividend: |
|
| ii)
return on current account with 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 Wazir All Industries Limited were acquired by the
Privatisation Commission (the Commission) |
|
| from
the fund through Investment Corporation of Pakistan (ICP) for onward
transmission to the bidders under the Privatisation |
|
| scheme
of the Government of Pakistan. |
|
|
| According
to 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 Wazir All Industries |
|
| amounted
to 84,660 and the amount advised by the Commission to date against these
expenses amounted to Rs. 56,446. |
|
|
| 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 |
|
|
| 40,000 |
- |
First Grindlays Modaraba |
|
11.28 |
451,200 |
11.50 |
460,000 |
- |
- |
- |
- |
|
|
|
|
|
|
|
|
INVESTMENT BANK |
|
|
| 49,500 |
- |
Bank Al-Habib Ltd |
|
25.60 |
1,267,200 |
28.50 |
1,410,750 |
- |
- |
- |
- |
|
|
|
|
|
SUGAR |
|
|
| 11,000 |
11,000 |
Dewan Sugar Mills Ltd. |
|
32.50 |
357,500 |
27.00 |
297,000 |
32.50 |
357,500 |
25.00 |
275,000 |
|
| 222,021 |
268,351 |
Habib Sugar Mills Ltd. |
|
4.72 |
1,046,918 |
11.50 |
2,553,242 |
5.66 |
1,518,918 |
13.25 |
3,555,651 |
|
| 51,617 |
46.93 |
Shahmurad Sugar Mills
Ltd. |
9.23 |
476,421 |
14.00 |
722,638 |
10.15 |
476,421 |
20.00 |
938,500 |
|
|
|
|
|
CEMENT |
|
|
| 50,000 |
- |
Cherat Cement Company
Ltd. |
19.17 |
958,710 |
20.75 |
1,037,500 |
- |
- |
- |
- |
|
| 40,000 |
- |
Lucky Cement Company Ltd. |
13.00 |
519,800 |
7.85 |
314,000 |
- |
- |
- |
- |
|
|
|
|
|
FUEL & ENERGY |
|
|
| 103,067 |
173,067 |
Karachi Electric Supply
Cor, Ltd. |
6.60 |
680,235 |
12.25 |
1,262,571 |
6.60 |
1,142,235 |
36.50 |
6,316,946 |
|
| 50,000 |
- |
Kohinoor Energy Ltd. |
|
16.50 |
824,900 |
12.00 |
600,000 |
13.80 |
- |
- |
- |
|
| 34,100 |
34,100 |
National Refinery Ltd. |
|
13.80 |
470,580 |
28.50 |
971,850 |
13.80 |
470,580 |
41.00 |
1,398,100 |
|
| 13,000 |
- |
Pakistan State Oil
Company Ltd. |
262.32 |
3,410,100 |
325.50 |
4,231,500 |
- |
- |
- |
- |
|
| 143,244 |
124,560 |
Sui Northem Gas Pipelines
Ltd. |
6.04 |
865,000 |
31.75 |
4,547,997 |
6.94 |
865,000 |
40.50 |
5,044,680 |
|
| 40,000 |
- |
Sui Southern Gas Co. Ltd. |
11.18 |
447,200 |
11.25 |
450,000 |
- |
- |
- |
- |
|
| 25,000 |
- |
Shell Pakistan Ltd |
|
14,161 |
3,540,150 |
23,800 |
5,950,000 |
- |
- |
- |
- |
|
|
|
|
|
AUTO & ENGINEERING |
|
|
| 50,000 |
- |
Pak Suzuki Motors Co.
Ltd. |
42.83 |
2,141,300 |
50.00 |
2,500,000 |
- |
- |
- |
- |
|
|
|
|
|
CABLES & ELECTRICAL |
|
|
| 16,500 |
- |
Philips Electrical
Industries |
82.36 |
1,359,000 |
57.50 |
948,750 |
- |
- |
- |
- |
|
|
of Pakistan Ltd. |
|
|
|
|
|
|
TRANSPORT |
|
|
| 100,000 |
- |
P.T.C.L. "A" |
|
33.06 |
3,306,350 |
30.50 |
3,050,000 |
- |
- |
- |
- |
|
|
|
|
|
CHEMICAL &
PHARMACEUTICAL. |
|
| 10,000 |
- |
BOC Pakistan Limited |
|
149.01 |
1,490,100 |
139.00 |
1,390,000 |
- |
- |
- |
- |
|
| 31,250 |
- |
Engro Chemicals Pakistan
Ltd. |
114.52 |
3,578,650 |
142.00 |
4,437,500 |
- |
- |
- |
- |
|
| 100,000 |
25,000 |
Fauji Fertilizer Company
Ltd. |
76.94 |
7,694,050 |
78.75 |
7,875,000 |
73.50 |
1,837,500 |
89.75 |
2,243,750 |
|
| 184,750 |
103,000 |
ICI Pakistan Ltd. |
|
10.00 |
1,847,500 |
24.20 |
4,470,950 |
15.07 |
1,552,296 |
53.00 |
5,459,000 |
|
|
|
|
|
PAPER & BOARD |
|
|
| 20,000 |
- |
Cherat Papersack Ltd. |
|
45.24 |
904,750 |
31.40 |
628,000 |
- |
- |
- |
- |
|
| 22,000 |
- |
Century Papers &
Board Mills Ltd. |
27.00 |
594,000 |
1,750 |
385,000 |
- |
- |
- |
- |
|
|
|
|
---------- |
|
---------- |
|
---------- |
|
---------- |
|
|
|
|
38,231,614 |
|
50,494,248 |
|
8,220,450 |
|
25,231,627 |
|
|
|
|
========== |
|
========== |
|
========== |
|
========== |
|
|
|
|
|
|
|
|
|
|
| *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. |
|
|
|
|
Rupees |
|
|
| Management
fee on initial paid-up capital |
|
| @ 1/2% on Rs. 5,000,000 |
|
25,000 |
|
|
|
|
|
|
| Management
fee on capital raised through right issue |
|
| @
3% of net assets market value of the fund for nine months |
|
|
|
|
|
| 65,432,351 |
x |
45,0O0,000 |
x 9 |
x @3% = |
1,325,005 |
|
|
|
|
50,000,000 |
12 |
|
---------- |
|
|
|
|
|
1,350,005 |
|
|
|
|
========== |
|
|
|
| 5.1
Net assets market value |
|
|
|
|
|
|
| Investment
in quoted shares |
|
50,494,247 |
|
|
|
|
|
| Current
assets |
|
|
| Dividend
receivable |
|
|
87,500 |
|
| Prepaid
expenses |
|
|
7,500 |
|
| Current
account with ICP |
|
17,171,693 |
|
| Taxation
- net |
|
|
67,280 |
|
|
|
|
---------- |
|
|
|
|
17,333,973 |
|
|
|
|
---------- |
|
| Current
liabilities |
|
|
67,828,220 |
|
|
|
|
|
---------- |
|
| Accrued
expenses |
|
|
(44,526) |
|
| Unclaimed
dividend |
|
|
(2,351,343) |
|
|
---------- |
|
|
|
(2,395,869) |
|
|
|
---------- |
|
|
|
65,432,351 |
|
|
========== |
|
| 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 |
9.21 |
|
|
|
========== |
========== |
========== |
========== |
|
|
|
|
|
| 7.
EXPENSES INCURRED IN RESPECT OF ISSUE OF RIGHT CERTIFICATES |
|
|
|
|
|
|
|
1997 |
1996 |
|
| Commission |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Banks |
|
|
|
|
78,297 |
- |
|
| ICP
- take up |
|
|
|
496,808 |
- |
|
| -
underwriting |
|
|
|
225,000 |
- |
|
| Consultancy
services |
|
|
|
123,530 |
38,288 |
|
| Advertising |
|
|
|
95,756 |
19,300 |
|
| Postage |
|
|
|
|
38,162 |
12,474 |
|
| Stamp duty |
|
|
|
|
112,500 |
- |
|
| Stock
exchange listing fee |
|
|
- |
154,285 |
|
| Miscellaneous |
|
|
|
- |
10,480 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
1,170,053 |
234,827 |
|
|
|
|
|
========== |
========== |
|
| 8.
OTHER EXPENSES |
|
|
|
|
|
|
|
|
|
|
|
| Printing
and stationery |
|
|
25,890 |
20,284 |
|
| Advertising
and publicity |
|
|
13,848 |
2,684 |
|
| Professional
charges |
|
|
|
17,255 |
2,878 |
|
| Stock
exchange listing fee |
|
|
35,000 |
13,750 |
|
| Excise
duty |
|
|
|
3,800 |
7,600 |
|
| Computer
related expenses |
|
|
122,100 |
48,832 |
|
| Postage |
|
|
|
|
3,096 |
10,597 |
|
| Professional
tax |
|
|
|
10,000 |
10,000 |
|
| Share
transfer stamps |
|
|
|
24,000 |
- |
|
| Miscellaneous |
|
|
|
1,470 |
330 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
256,459 |
116,964 |
|
|
|
|
========== |
========== |
|
| 9.
TAXATION |
|
|
| In
accordance with amendments introduced in Finance Act, 1997 to the Income Tax
Ordinance, 1979, no provision has been |
|
| made
for taxation as be fund has already declared more than 90% of its profits. |
|
|
|
|
| The
income-tax assessment of the fund have been finalised upto and including
assessment year 1996-97. However, tile 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. |
|
|
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
| 10.
CASH GENERATED FROM OPERATIONS |
|
|
|
|
| Profit
before taxation |
|
|
4,220,936 |
3,614,757 |
|
| Adjustment
for non cash charges and other items: |
|
|
| Profit
on sale of Investment |
|
|
(3,923,664) |
(3,348,811) |
|
| Return
on current account with the ICP |
|
(1,047,705) |
(67,850) |
|
| Working
capital changes |
|
10.1 |
(54,446) |
33,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
(804,879) |
231,096 |
|
|
|
|
========== |
========== |
|
|
|
| 10.1
Working capital changes |
|
| (Increase)/decrease
in current assets |
|
| Prepaid
expenses |
|
|
(6,250) |
- |
|
| Dividend
receivable |
|
|
(87,500) |
33,000 |
|
|
|
---------- |
---------- |
