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Eight ICP Mutual Fund
22nd 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 ]Market value
88,948,755 (1997: Rs. 226,605,334)] 3 54,105,833 59,676,834
Security deposit 100,000 -
Current Assets
Dividend receivable 696,000 617,934
Prepaid expenses 20,000 7,500
Current account with Investment Corporation of
Pakistan (ICP) 19,391,453 14,572,733
---------- ----------
20,107,453 15,198,167
Current Liabilities
Accrued expenses 55,191 45,967
Unclaimed dividend 13,062,239 21,433,456
Taxation - net 450,022 156,108
---------- ----------
13,567,452 21,635,531
---------- ----------
6,540,001 (6,437,364)
---------- ----------
60,745,834 53,239,470
========== ==========
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 reserves
Special reserve 125,000 125,000
Unappropriated income 10,620,834 3,114,470
---------- ----------
60,745,834 53,239,470
========== ==========
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
INCOME AND EXPENDITURE ACCOUNT FOR THE YEAR ENDED JUNE 30, 1998
Note 1998 1997
Rupees Rupees
INCOME
Dividend 5,450,650 5,695,422
Return on current account with ICP 770,883 2,085,863
Profit on sale of investment 19,489,000 11,807,847
Other income 9,541 -
---------- ----------
25,720,074 19,589,132
EXPENSES
Management fee 4 2,401,773 4,086,582
Auditors' remuneration 5 12,130 9,565
Expenses incurred in respect of issue of right certificates 6 - 731,748
Other expenses 7 294,807 290,615
---------- ----------
2,708,710 5,118,510
---------- ----------
Income before taxation 23,011,364 14,470,622
Taxation - Current year 8 505,000 -
---------- ----------
Income after taxation 22,506,364 14,470,622
Unappropriated income brought forward 3,114,470 13,643,848
---------- ----------
Available for appropriation 25,620,834 28,114,470
Interim dividend @ 30% (1997:50%) 15,000,000 25,000,000
---------- ----------
Unappropriated income carried forward 10,620,834 3,114,470
========== ==========
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 9 2,670,139 540,766
Sale of investment 25,060,001 17,054,100
Purchase of investment - (28,864,140)
Taxes paid (211,086) -
---------- ----------
Net cash inflow/(outflow) from operating activities 27,519,054 (11,269,274)
---------- ----------
CASH FLOW FROM INVESTING ACTIVITIES
Security deposit (100,000) -
Return on current account with ICP 770,883 2,085,863
---------- ----------
Net cash inflow from investing activities 670,883 2,085,863
CASH FLOW FROM FINANCING ACTIVITIES
Issue of right certificates - 40,000,000
Dividend paid (23,371,217) (21,364,929)
---------- ----------
Net cash (outflow)/inflow from financing activities (23,371,217) 18,635,071
---------- ----------
NET INCREASE IN CASH EQUIVALENT 4,818,720 9,451,660
CASH EQUIVALENT AT THE BEGINNING OF THE YEAR 14,572,733 5,121,073
---------- ----------
CASH EQUIVALENT AT THE END OF THE YEAR 10 19,391,453 14,572,733
========== ==========
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 1998
1. STATUS AND NATURE OF BUSINESS
In order generally to broaden the base of investment and to encourage investment in sound quoted shares, the Eighth ICP Mutual Fund
was floated by Investment Corporation of Pakistan, 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 Investment
(i) investment is valued at average cost where the 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 decline, i.e. for a
period not less than three years, 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 Revenue recognition
(i) Dividend income is recorded at the time of closure of share transfer books of the company declaring dividend;
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.
2.4 Taxation
Provision for taxation is based on taxable income at current rates for taxation after taking into account tax credits available, if any.
3. INVESTMENT IN QUOTED SHARES
Unless stated otherwise, the holdings are in the Ordinary shares of Rs. 10/- each
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
LEASING
26,000 26,000 Pakistan Industrial Leasing 13.63 354,380 9.25 240,500 13.63 354,380 13.50 351,000
Corporation Limited.
INVESTMENT BANKS
120,750 115,000 Askari Commercial Bank Ltd. 18.64 2,251,000 2,251,000 13.75 19.57 2,251,000 28.50 3,277,500
CEMENT
50,000 50,000 Cherat Cement Company Ltd. 20.51 1,025,500 10.20 510,000 20.81 1,025,500 20.75 1,037,500
50,000 50,000 Pakland Cement Limited. 13.01 650,500 4.10 205,000 13.01 650,500 9.70 485,000
FUEL AND ENERGY
236,908 236,908 Karachi Electric Supply 18.97 4,494,868 8.42 1,994,765 18.97 4,494,868 12.25 2,902,123
Corporation Limited.
132,250 115,000 Sui Northern Gas Pipelines 32.45 4,291,000 8.85 1,170,413 37.31 4,291,000 31.75 3,651,250
Company Limited.
3,226,924 3,153,847 Sui Southern Gas Company Ltd. 4.69 15,124,900 9.00 29,042,316 5.39 17,000,900 28.25 89,096,178
TRANSPORT AND COMMUNICATION
125,000 125,000 Pakistan Telecommunications    31.50 3,937,500 15.77 1,971,250 31.50 3,937,500 30.50 3,812,500
Company Limited "A".
CHEMICAL AND PHARMACEUTICAL
10,000 10,000 BOC (Pakistan) Limited. 149.01 1,490,100 90.00 900,000 149.01 1,490,100 139.00 1,390,000
9,600 4,800 Dawood Hercules Chemicals 69.67 668,800 120.00 1,152,000 139.33 668,800 140.50 674,400
Limited.
543,283 572,420 Engro Chemicals (Pakistan) Ltd.  12.99 7,055,497 51.25 27,843,254 14.93 8,548,497 142.00 81,283,640
100,000 100,000 Fauji Fertilizer Company Ltd. 68.66 6,866,400 51.37 5,137,000 68.66 6,866,400 78.75 7,875,000
381,000 481,000 ICl Pakistan Limited. 10.00 3,810,000 11.62 4,427,220 10.00 4,810,000 24.20 11,640,200
PAPER AND BOARD
10,002 97,780 Packages Limited. 12.06 120,668 36.00 360,072 13.53 1,322,669 62.00 6,062,360
LEATHER AND TENNARIES
293,333 266,667 Service Industries Limited. 6.70 1,964,720 42.05 12,334,653 7.37 1,964,720 49.00 13,066,683
---------- ---------- ---------- ----------
54,105,833 88,948,755 59,676,834 226,605,334
========== ========== ========== ==========
* 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.
4. MANAGEMENT FEE
The management fee is payable to Investment Corporation of Pakistan @ %% per annum on initial paid-up capital of the Fund. The man-
agement fee is respect of the additional capital raised by way of right issue is payable @ 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 on initial paid-up capital @ 1/2%
on Rs. 10 million 50,000 50,000
Management fee on capital raised through right issue
@ 3 % of net assets market value of the Fund
97,990,529 x 40,000,000 x 3%
50,000,000 2,351,773 4,036,582
---------- ----------
2,401,773 4,086,582
========== ==========
4.1 Net assets market value
Investment in quoted shares 88,948,755 226,605,334
Security deposit
Current assets
Dividend receivable 696,000 617,934
Prepaid expenses 20,000 7,500
Current account with ICP 21,793,226 18,659,315
---------- ----------
22,509,226 19,284,749
---------- ----------
111,557,981 245,890,083
Current liabilities
Accrued expenses 55,191 45,967
Unclaimed dividend 13,062,239 21,433,456
Taxation - net 450,022 156,108
---------- ----------
13,567,452 21,635.53
---------- ----------
97,990,529 224,254,552
========== ==========
5. AUDITORS' REMUNERATION
Taseer Hadi Ford Rhodes 1998 1997
Khalid Robson Rupees Rupees
& Co. Morow
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
========== ========== ========== ==========
6. EXPENSES INCURRED 1N RESPECT OF ISSUE OF RIGHT CERTIFICATES
Commission
Bank - 202,245
ICP - takeup - 49,965
- underwriting - 200,000
Consultancy services - 113,726
Advertising - 22,824
Postage - 22,827
Stamp duty - 100,000
Professional charges - -
Stock exchange listing fee - -
Printing charges - 20,161
---------- ----------
- 731,748
========== ==========
7. OTHER EXPENSES
Printing and stationery 46,196 35,590
Advertising and publicity 17,276 18,946
Professional charges 12,817 17,517
Listing fee - Stock exchange 46,250 35,000
- Central Depository Company 12,500 -
Excise duty 4,200 8,200
Computer related expenses 54,767 126,400
Postage 42,187 23,071
Professional tax 38,000 19,000
Bank charges 17,210 -
Share transfer stamps 2,045 5,400
Miscellaneous 1,359 1,491
---------- ----------
294,807 290,615
========== ==========
8. TAXATION
The income tax assessment of the Fund have been finalised upto and including assessment year 1997-98. However, the Fund has filed
appeals before the Commissioner of Income Tax (Appeals) relating to assessment years 1993-94, 1994-95, 1995-96 & 1996-97. In case of
adverse decision of appeals for the assessment years, no material tax liability is expected to arise.
9. CASH GENERATED FROM OPERATIONS
Income before taxation 23,011,364 14,470,622
Adjustment for non cash charges and other items:
Return on current account with ICP (770,883) (2,085,863)
Profit on sale of investment (19,489,000) (11,807,847)
Working capital changes 9.1 (81,342) (36,146)
---------- ----------
2,670,139 540,766
========== ==========
Note 1998 1997
Rupees Rupees
9.1 Working capital changes
(Increase) in current assets
Dividend receivable (78,066) (69,600)
Prepaid expenses (12,500) (6,250)
---------- ----------
(90,566) (75,850)
Increase in current liabilities
Accrued expenses 9,224 39,704
---------- ----------
(81,342) (36,146)
========== ==========
10. CASH EQUIVALENT
Current account with ICP 19,391,453 14,572,733
========== ==========
11. TRANSACTIONS WITH 1CP/MUTUAL FUNDS
11.1 Underwriting and take-up commission - 249,965
========== ==========
11.2 All transactions pertaining to the Mutual Fund are handled by ICP. Share transactions with ICP/Mutual Funds are as follows:
Sale of shares 22,630,000 -
========== ==========
11.3 Maximum amount due from associated company at the end of any month during the period was Rs. 19.612 million
(1997: Rs. 23.788 million).
12. GENERAL
12.1 Figures have been rounded off to the nearest rupee.
12.2 Figures have been rearranged for the purposes of comparison, wherever necessary.
PATTERN OF HOLDING OF THE CERTIFICATES HELD BY THE
CERTIFICATE HOLDERS AS AT ON 30TH JUNE,1998.
NUMBER OF TOTAL
CERTIFICATE CERTIFICATES
HOLDERS CERTIFICATE HELD HELD
706 From 1 to 100 CERTS 40,250
1035 From 101 to 500 CERTS 332,100
158 From 501 to 1,000 CERTS 138,600
187 From 1,001 to 5,000 CERTS 455,300
23 From 5,001 to 10,000 CERTS 164,000
4 From 10,001 to 15,000 CERTS 50,750
5 From 15,001 to 20,000 CERTS 90,750
1 From 20,001 to 25,000 CERTS 25,000
2 From 251,301 to 30,000 CERTS 55,500
1 From 45,001 to 50,000 CERTS 50,000
1 From 65,001 to 70,000 CERTS 66,500
2 From 75,001 to 80,000 CERTS 157,000
6 From 85,001 to Above CERTS 3,374,250
---------- ----------
1213 5,000,000
========== ==========
NO. OF