| Fifth ICP Mutual Fund |
|
|
|
|
|
|
|
|
|
|
| 26th
Annual Report 1998 |
|
|
| INVESTMENT
CORPORATION OF PAKISTAN |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| NET ASSETS |
|
|
|
|
|
|
| Investment
in quoted shares |
|
4 |
45,322,299 |
38,231,614 |
|
| [Market
value Rs.29,741,199(1997:Rs.50,494,248)] |
|
|
|
|
|
|
| Long
term deposit |
|
|
|
100,000 |
- |
|
| Current
assets |
|
|
|
| Dividend
receivable |
|
|
|
958,875 |
87,500 |
|
| Prepaid
expenses |
|
|
|
20,000 |
7,500 |
|
| Current
account with the Investment Corporation |
|
| of
Pakistan (ICP) |
|
|
13,319,266 |
15,821,688 |
|
| Taxation
- net |
|
|
|
- |
67,280 |
|
|
|
|
---------- |
---------- |
|
|
|
|
14,298,141 |
15,983,968 |
|
| Current
liabilities |
|
|
|
| Accrued
expenses |
|
|
|
57,221 |
44,526 |
|
| Unclaimed
dividend |
|
|
|
2,210,523 |
2,351,343 |
|
| Taxation
- net |
|
|
|
18,600 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,286,344 |
2,395,869 |
|
|
|
|
---------- |
---------- |
|
|
|
|
12,011,797 |
13,588,099 |
|
|
|
|
---------- |
---------- |
|
|
|
|
57,434,096 |
51,819,713 |
|
|
|
|
========== |
========== |
|
| FINANCED BY |
|
|
|
| Capital
and Reserves |
|
|
|
| Capital |
|
|
|
|
| Authorised |
|
|
|
| 5,000,000
Certificates of Rs. 10/- each |
|
50,000,000 |
50,000,000 |
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
|
| 5,000,000
Certificates of Rs. 10/- each fully paid in cash |
50,000,000 |
50,000,000 |
|
| Revenue
reserve |
|
|
| General
reserve |
|
|
75,000 |
75,000 |
|
| Unappropriated
income |
|
|
7,359,096 |
1,744,713 |
|
|
|
---------- |
---------- |
|
|
|
|
57,434,096 |
51,819,713 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
| The
auditors' report is annexed hereto. |
|
|
|
|
for the Investment Corporation of Pakistan |
|
|
| ASADULLAH
KHAWAJA |
SYED MUZAFAR ALI SHAH |
SHAUKAT TAREEN |
|
| Managing
Director |
Director |
|
Director |
|
|
|
| INCOME
AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED JUNE 30, 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| INCOME |
|
|
|
|
|
|
| Dividend |
|
|
2,710,988 |
2,035,650 |
|
| Return
on current account with the 1CP |
|
1,513,730 |
1,047,705 |
|
| Profit
on sale of investment |
|
8,423,813 |
3,923,663 |
|
| Other
Income |
|
5,020 |
- |
|
|
|
---------- |
---------- |
|
|
|
12,653,551 |
7,007,018 |
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
| Management
fee |
|
5 |
1,187,082 |
1,350,005 |
|
| Auditors'
remuneration |
|
6 |
12,130 |
9,565 |
|
| Expenses incurred in respect of |
|
|
| issue
of Right certificates |
|
7 |
-- |
1,170,053 |
|
| Other
expenses |
|
8 |
288,170 |
256,459 |
|
|
|
|
---------- |
---------- |
|
|
|
1,487,382 |
2,786,082 |
|
|
|
---------- |
---------- |
|
|
|
11,166,169 |
4,220,936 |
|
|
|
|
|
| WRITE
BACK OF PROVISION IN RESPECT OF GOLDEN |
|
| HANDSHAKE
EXPENSES |
|
3 |
28,214 |
- |
|
|
|
|
|
---------- |
---------- |
|
| INCOME
BEFORE TAXATION |
|
|
11,194,383 |
4,220,936 |
|
| TAXATION |
|
|
|
|
|
| Current |
|
9 |
580,000 |
- |
|
|
|
|
---------- |
---------- |
|
| NET
INCOME FOR THE YEAR |
|
|
10,614,383 |
4,220,936 |
|
| UNAPPROPRIATED
INCOME BROUGHT FORWARD |
|
1,744,713 |
2,523,777 |
|
|
|
|
|
---------- |
---------- |
|
| AVAILABLE
FOR APPROPRIATION |
|
|
12,359,096 |
6,744,713 |
|
| Interim
dividend @ 10% (1997: 10%) |
|
|
5,000,000 |
5,000,000 |
|
| UNAPPROPRIATED
INCOME CARRIED FORWARD |
|
---------- |
---------- |
|
| TO
REVENUE RESERVE |
|
|
7,359,096 |
1,744,713 |
|
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
for the Investment Corporation of Pakistan |
|
|
| ASADULLAH
KHAWAJA |
SYED MUZAFAR ALI SHAH |
SHAUKAT TAREEN |
|
| Managing
Director |
Director |
|
Director |
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
generated from operations |
|
10 |
385,660 |
(804,879) |
|
| Sale
of investment |
|
|
14,678,013 |
11,868,061 |
|
| Purchase
of investment |
|
|
(13,344,885) |
(37,955,561) |
|
| Taxes paid |
|
|
(494,120) |
- |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow/(outflow) from operating activities |
1,224,668 |
(26,892,379) |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Return
on current account with the ICP |
|
1,513,730 |
1,047,705 |
|
| Long
term deposit |
|
(100,000) |
- |
|
|
|
---------- |
---------- |
|
| Net
cash inflow from investing activities |
|
1,413,730 |
1,047,705 |
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
| Issue
of Right certificates |
|
|
- |
45,000,000 |
|
| Dividend
paid |
|
|
(5,140,820) |
(4,446,955) |
|
|
|
|
---------- |
---------- |
|
| Net
cash (outflow)/inflow from financing activities |
(5,140,820) |
40,553,045 |
|
|
|
|
---------- |
---------- |
|
| NET
INCREASE IN CASH EQUIVALENT |
|
|
(2,502,422) |
14,708,371 |
|
| CASH
EQUIVALENT AT THE BEGINNING OF THE YEAR |
|
15,821,688 |
1,113,317 |
|
|
|
|
|
---------- |
---------- |
|
| CASH
EQUIVALENT AT THE END OF THE YEAR |
11 |
13,319,266 |
15,821,688 |
|
|
|
|
|
========== |
========== |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 1998 |
|
|
| 1.
THE FUND AND ITS OPERATIONS |
|
| In
order to broaden the base and to encourage investment in shares of companies
quoted on the stock exchanges in the country, the Fifth |
|
| ICP
Mutual Fund was established by the Investment Corporation of Pakistan (1CP),
acting as its trustee; on June 26, 1972 under the ICP |
|
| Ordinance,
1966. The Fund is listed on 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. |
|
|
|
|
| 2.2
Investment |
|
|
|
| (i)
Investment is valued at average cost where cost is lower than the market
value, determined on the basis of the average of |
|
| the
highest and the lowest quotation on the balance sheet date; |
|
|
| (ii)
in cases where market value is lower than carrying value, the carrying value
is reduced to recognise other than a 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 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
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 |
|
| would
be deducted from the final disbursements. However, to date no amount have
been deducted on account of share of commissions' |
|
| expenses. |
|
|
| To
cover the above uncertainties, ICP has had to make certain provisions on
adhoc basis. In order to ensure liquidity of the Fund for sub- |
|
| sequent
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. |
|
| Subsequent
to the year end, ICP has been advised that there are no further amounts due
from ICP on account of golden hand shake and |
|
| privatisation
expenses. Accordingly, ICP has decided to reverse the balance of excess
provision held in their books. |
|
|
|
|
|
Amount of |
Amount of |
|
|
|
Amount |
expenses |
excess |
|
|
|
originally |
notified |
provision |
|
| Name
of Company |
|
provided for |
by the |
reversed |
|
|
|
|
Commission |
|
|
|
|
|
|
| Wazir
Ali Industries |
|
84,660 |
56,446 |
28,214 |
|
|
|
========== |
========== |
========== |
|
|
|
|
|
|
|
| 3.
INVESTMENT IN QUOTED SHARES |
|
| Unless
stated otherwise, the holdings are in the Ordinary shares of Rs. 10/- each |
|
|
| 1998 |
1997 |
|
|
1998 |
|
1997 |
|
| *Holding |
Name of the company |
|
Book value |
Market value |
Book value |
Market value |
| No. of shares |
|
**Rate |
Amount |
**Rate |
Amount |
**Rate |
Amount |
**Rate |
Amount |
|
|
Rupees |
|
Rupees |
|
Rupees |
|
Rupees |
|
|
MODARABAS |
|
| 40000 |
103200 |
F.G. Modaraba |
|
10.51 |
1,085,250 |
10.75 |
1,109,400 |
11.28 |
451,200 |
11.50 |
460,000 |
| - |
27000 |
Habib Bank Modaraba |
|
6.87 |
185,535 |
5.67 |
153,090 |
- |
- |
- |
- |
|
|
|
|
|
INVESTMENT BANKS |
|
|
|
| 49500 |
56925 |
Bank Al Habib Limited |
|
22.26 |
1,267,200 |
23.00 |
1,309,275 |
25.60 |
1,267,200 |
28.50 |
1.410,750 |
|
|
|
|
SUGAR |
|
|
| 11000 |
11000 |
Dewan Sugar Mills Ltd. |
|
32.50 |
357,500 |
19.00 |
209,000 |
32.50 |
357,500 |
27.00 |
297,000 |
| 222021 |
249773 |
Habib Sugar Mills Ltd.
(Rs.5) |
4.19 |
1,046,918 |
7.50 |
1,873,298 |
4.72 |
1,046,918 |
11.50 |
2,553,242 |
| 51617 |
51617 |
Shahmurad Sugar Mills
Ltd. |
9.22 |
476,421 |
17.75 |
916,203 |
9.23 |
476,421 |
14.00 |
722,638 |
|
|
|
|
CEMENT |
|
|
|
| 50000 |
50000 |
Cherat Cement Company
Ltd. |
19.17 |
958,710 |
10.20 |
510,000 |
19.17 |
958,710 |
20.75 |
1,037,500 |
| 40000 |
40000 |
Lucky Cement Company Ltd. |
12.99 |
519,800 |
3.90 |
156,000 |
13.00 |
519,800 |
7.85 |
314,000 |
|
|
|
|
FUEL AND ENERGY |
|
|
| 103067 |
67 |
Karachi Electric Supply |
|
6.49 |
435.00 |
8.42 |
564 |
6.60 |
680,235 |
12.25 |
1,262,571 |
|
Corporation Ltd. |
|
|
| 50000 |
50000 |
Kohinoor Energy Ltd. |
|
16.49 |
824,900 |
4.87 |
243,500 |
16.50 |
824,900 |
12.00 |
600,000 |
| 34100 |
34100 |
National Refinery Limited |
13.80 |
470,580 |
15.50 |
528,550 |
13.80 |
470,580 |
28.50 |
971,850 |
| 13000 |
25600 |
Pakistan State Oil
Company |
254.30 |
6,510,300 |
73.75 |
1,888,000 |
262.32 |
3,410,100 |
325.50 |
4,231,500 |
|
Limited. |
|
|
| 143244 |
49730 |
Sui Northern Gas Company
Ltd. |
5.24 |
261,000 |
8.85 |
440,110 |
6.04 |
865,000.00 |
31.75 |
4,547,997 |
| 40000 |
|
Sui Southern Gas Company
Ltd. |
|
|
11.18 |
447,200 |
11.25 |
450,000 |
| 25000 |
5000 |
Shell Pakistan Ltd. |
|
141.59 |
707,950 |
146.50 |
732,500 |
141.61 |
3,540,150 |
238.00 |
5,950,000 |
| - |
10000 |
Shell Pakistan Ltd. {RP) |
130.00 |
1,300,000 |
202.00 |
2,020,000 |
- |
- |
- |
- |
| - |
36500 |
Mari Gas |
|
23.11 |
843,750 |
17.50 |
638,750 |
- |
- |
- |
- |
| - |
40000 |
S. Electric Power |
|
11.18 |
447,200 |
3.00 |
120,000 |
- |
- |
- |
- |
|
|
|
|
AUTO AND ALLIED
ENGINEERING |
|
| 50000 |
50000 |
Pak Suzuki Motors Company |
42.82 |
2,141,300 |
34.00 |
1,700,000 |
42.83 |
2,141,300 |
50.00 |
2,500,000 |
|
Limited. |
|
|
|
|
|
|
|
CABLES & ELECTRICAL |
|
|
|
| 16500 |
12705 |
Phillips Electrical
Industries |
74.87 |
951,300 |
34.09 |
433,113 |
82.36 |
1,359,000 |
57.50 |
948,750 |
|
of Pakistan Ltd. |
|
|
| - |
4950 |
Refrigeration
Manufacturing |
82.36 |
407,700 |
1,200 |
59,400 |
|
|
Company |
|
|
|
|
|
|
TRANSPORT AND
COMMUNICATION |
|
| 100000 |
100000 |
P.T.C.L. "A" |
|
33.06 |
3,306,350 |
15.77 |
1,577,000 |
33.06 |
3,306,350 |
30.50 |
3,050,000 |
|
|
|
|
CHEMICAL AND
PHARMACEUTICAL |
|
|
|
| 10000 |
10000 |
BOC Pakistan Limited |
|
149.01 |
1,490,100 |
90.00 |
900,000 |
149.01 |
1,490,100 |
139.00 |
1,390,000 |
| 31250 |
37237 |
Engro Chemicals (Pakistan) Ltd. |
86.04 |
5,785,300 |
51.25 |
3,445,896 |
114.52 |
3,578,650 |
142.00 |
4,437,500 |
| 100000 |
155000 |
Fauji Fertilizer Ltd. |
80.50 |
12,478,050 |
51.37 |
7,962,350 |
76.94 |
7,694,050 |
78.75 |
7,875,000 |
| 184750 |
- |
IC1 Pakistan Ltd. |
|
- |
- |
- |
- |
10.00 |
1,847,500 |
24.20 |
4,470,950 |
|
|
|
|
PAPER AND BOARD |
|
|
| 20000 |
20000 |
Cherat Papersack Company Ltd. |
45.23 |
904,750 |
28.00 |
560,000 |
45.24 |
904,750 |
31.40 |
628,000 |
| 22000 |
22000 |
Century Papers &
Board |
|
27.00 |
594,000 |
11.60 |
255,200.00 |
27.00 |
594,000 |
17.50 |
385,000 |
|
Company Ltd. |
|
|
---------- |
|
---------- |
|
---------- |
|
---------- |
|
|
45,322,299 |
|
29,741,199 |
|
38,231,614 |
|
50,494,248 |
|
|
|
========== |
|
========== |
|
========== |
|
========== |
|
| *
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 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 |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Management
fee @ 1/2% per annum of the initial |
|
| paid-up
capital of Rs.5 million |
|
|
25,000 |
25,000 |
|
| Management
fee @ 3 % per annum of the market |
|
| value
of net assets at the close of the year |
5.1 |
* 1,162,082 |
1,325,005 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,187,082 |
1,350,005 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 5.1
Market value of net assets at the close |
|
|
| of the year |
|
|
|
| Investment
in quoted shares |
|
4 |
29,741,199 |
50,494,247 |
|
| Long
term deposit |
|
|
|
100,000 |
- |
|
| Current
assets |
|
|
|
|
|
|
| Dividend
receivable |
|
|
958,875 |
87,500 |
|
| Prepaid
expenses |
|
|
20,000 |
7,500 |
|
| Current
account with the ICP |
|
|
14,506,348 |
17,171,693 |
|
| Taxation
- net |
|
|
- |
67,280 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
15,485,223 |
17,333,973 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
45,326,422 |
67,828,220 |
|
| Current
liabilities |
|
|
|
| Accrued
expenses |
|
|
57,221 |
44,526 |
|
| Unclaimed
dividend |
|
|
2,210,523 |
2,351,343 |
|
| Taxation
- net |
|
|
18,600 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,286,344 |
2,395,869 |
|
|
|
|
---------- |
---------- |
|
|
|
|
43,040,078 |
65,432,351 |
|
|
|
|
========== |
========== |
|
|
| 1998: |
(43,040,078 |
x |
45,000,000 |
) |
|
@ 3 % = |
1,162,082 |
|
|
|
|
50,000,000 |
|
========== |
|
|
|
|
|
|
| 1997: |
(65,432,351 |
x |
45,000,000 |
9 ) |
|
@ 3 % = |
1,325,005 |
|
|
|
|
50,000,000 |
12 |
|
========== |
|
|
|
|
|
|
|
| 6.
AUDITORS' REMUNERATION |
|
|
|
|
|
|
Ford, Rhodes, |
|
|
|
|
Taseer Hadi |
Robson, |
1998 |
1997 |
|
|
|
Khalid & Co. |
Morrow |
Rupees |
Rupees |
|
|
|
|
|
| Audit fee |
|
2,565 |
2,565 |
5,130 |
4,390 |
|
| Tax
services |
|
7,000 |
- |
7,000 |
5,175 |
|
|
|
---------- |
---------- |
---------- |
---------- |
|
|
|
9,565 |
2,565 |
12,130 |
9,565 |
|
|
|
========== |
========== |
========== |
========== |
|
|
| 7.
EXPENSES INCURRED IN RESPECT OF ISSUE OF RIGHT CERTIFICATES |
|
| Commission |
|
|
|
| Banks |
|
|
- |
78,297 |
|
| Trustee
- take up |
|
|
- |
496,808 |
|
|
- underwriting |
|
|
- |
225,000 |
|
| Consultancy
services |
|
|
- |
123,530 |
|
| Advertising |
|
|
- |
95,756 |
|
| Postage |
|
|
- |
38,162 |
|
| Stamp duty |
|
|
- |
112,500 |
|
|
|
---------- |
---------- |
|
|
|
- |
1,170,053 |
|
|
|
========== |
========== |
|
|
|
|
| 8.
OTHER EXPENSES |
|
|
|
| Printing
and stationery |
|
|
48,556 |
25,890 |
|
|
|
| Advertising
and publicity |
|
17,276 |
13,848 |
|
|
|
| Professional
charges |
|
|
12,817 |
17,255 |
|
|
|
| Listing
fee - stock exchanges |
|
46,250 |
35,000 |
|
|
|
|
- central depository
company |
|
12,500 |
- |
|
|
|
| Computer
related expenses |
|
53,609 |
122,100 |
|
|
|
| Postage |
|
|
42,186 |
3,096 |
|
|
|
| Professional
tax |
|
|
38,000 |
10,000 |
|
|
|
| Share
transfer stamps |
|
|
8,375 |
24,000 |
|
|
|
| Bank
charges |
|
|
3,442 |
- |
|
|
|
| Excise duty |
|
|
3,800 |
3,800 |
|
|
|
| Miscellaneous |
|
|
1,359 |
1,470 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
288,170 |
256,459 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| 9. TAXATION |
|
|
|
| The
income4ax assessment of the Fund has been finalised upto and including
assessment year 1997-98. However, the Fund bas 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 respec |
