| 6th ICP Mutual Fund |
|
|
|
|
|
|
|
|
|
|
|
|
| 24th
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. t49,804,665 |
|
|
|
| (1996:
Rs. 141,926,072)] |
|
4 |
44,819,839 |
15,714,254 |
|
|
|
|
| Current Assets |
|
|
|
|
|
|
--------------- |
--------------- |
|
| Dividend
receivable |
|
87,000 |
-- |
|
| Prepaid expense |
|
|
7.50 |
1,250 |
|
| Current
account with the |
|
|
|
| Investment
Corporation of Pakistan (ICP) |
|
22,555,628 |
3,699,593 |
|
| Taxation - net |
|
|
67,155 |
67,155 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
22,717,283 |
3,767,998 |
|
| Current
Liabilities |
|
|
|
|
|
|
--------------- |
--------------- |
|
| Accrued
expenses |
|
46,367 |
6,263 |
|
| Unclaimed
dividend |
|
15,355,473 |
3,833,317 |
|
| Proposed
dividend |
|
-- |
5,000,000 |
|
|
|
--------------- |
--------------- |
|
|
|
15,401,840 |
8,839,580 |
|
|
|
--------------- |
--------------- |
|
|
|
7,315,443 |
(5,071,582) |
|
|
|
--------------- |
--------------- |
|
|
|
52,135,382 |
10,642,672 |
|
|
|
========== |
========== |
|
| 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: 1,000,000) of |
|
|
| Rs.
10/- each fully paid in cash |
|
50,000,000 |
10,000,000 |
|
|
|
|
| Revenue
reserves |
|
|
|
| Unappropriated
income |
|
2,135,382 |
642,672 |
|
|
|
--------------- |
--------------- |
|
|
|
52,135,382 |
10,642,672 |
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
| The
auditors' report is annexed hereto. |
|
|
|
|
|
|
|
|
| Income
and Expenditure Account for the year ended June 30, 1997 |
|
|
|
|
|
|
Note |
1997 |
1996 |
|
| INCOME |
|
|
Rupees |
Rupees |
|
|
|
|
| Dividend |
|
|
3,645,060 |
1,997,264 |
|
| Return
on current account with the ICP |
|
|
1,510,034 |
424,267 |
|
| Profit
on sale of investment |
|
|
17,248,755 |
6,429,632 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
22,403,849 |
8,851,163 |
|
|
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
|
|
--------------- |
--------------- |
|
| Management fee |
|
5 |
2,930,919 |
50,000 |
|
| Auditor's
remuneration |
|
6 |
9,565 |
9,214 |
|
| Diminution
in the value of investment |
|
|
366,500 |
-- |
|
| Expenses
incurred in respect of issue of Right certificates |
7 |
796,108 |
208,740 |
|
| Other expenses |
|
8 |
308,047 |
142,359 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
4,411,139 |
410,313 |
|
|
|
|
--------------- |
--------------- |
|
| INCOME
BEFORE TAXATION |
|
|
17,992,710 |
8,440,850 |
|
| TAXATION |
|
|
|
--------------- |
--------------- |
|
| Current |
|
9 |
-- |
241,552 |
|
| Prior |
|
|
-- |
56,666 |
|
|
|
|
--------------- |
--------------- |
|
|
|
-- |
298,218 |
|
|
|
--------------- |
--------------- |
|
| NET
INCOME FOR THE YEAR |
|
17,992,710 |
8,142,632 |
|
| UNAPPROPRIATED
INCOME BROUGHT FORWARD |
|
642,672 |
1,500,040 |
|
|
|
|
--------------- |
--------------- |
|
| AVAILABLE
FOR APPROPRIATION |
|
18,635,382 |
9,642,672 |
|
| Interim dividend @ 33% (1996: 40%) on 5,000,000 (1996: |
Rs. 1,000,000) |
|
--------------- |
--------------- |
|
| Certificates
of Rs. 10/- each) |
|
16,500.00 |
4,000,000 |
|
|
|
|
| Final
proposed dividend Nil (1996: 10% |
|
|
| on
5,000,000 Certificates of Rs. 10/- each) |
|
-- |
5,000,000 |
|
|
|
--------------- |
--------------- |
|
|
|
16,500,000 |
9,000,000 |
|
|
|
|
| UNAPPROPRIATED
INCOME CARRIED FORWARD |
|
--------------- |
--------------- |
|
| TO
REVENUE RESERVE |
|
2,135,382 |
642,672 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| for
THE INVESTMENT CORPORATION OF PAKISTAN |
|
|
|
|
| Cash
Flow Statement for the year ended June 30, 1997 |
|
|
|
|
Note |
1997 |
1996 |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
Rupees |
Rupees |
|
|
|
|
| Cash
generated from operations |
|
10 |
(452,725) |
1,601.95 |
|
| Sale
of investment |
|
|
18,571,479 |
8,626,783 |
|
| Purchase
of investment |
|
|
(30,794,909) |
(3,737,502) |
|
| Taxes paid |
|
|
-- |
(287,530) |
|
|
|
|
--------------- |
--------------- |
|
| Net
cash (outflow)/inflow from operating activities |
|
|
(12,676,155) |
6,203,702 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITY |
|
|
|
| Return
on current account with the ICP |
|
|
1,510,034 |
424,267 |
|
|
|
|
--------------- |
--------------- |
|
| Net
cash inflow from investing activity |
|
|
1,510,034 |
424,267 |
|
|
|
|
--------------- |
--------------- |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
| Issue
of right certificates |
|
|
40,000,000 |
-- |
|
| Dividend paid |
|
|
(9,977,844) |
(8,449.120) |
|
|
|
|
--------------- |
--------------- |
|
| Net
cash inflow/(outflow) from financing activities |
|
|
30,022,156 |
(8,449,120) |
|
|
|
|
--------------- |
--------------- |
|
| NET
INCREASE / (DECREASE) IN CASH EQUIVALENT |
|
18,856,035 |
(1,821,151) |
|
| CASH
EQUIVALENT AT THE BEGINNING OF THE YEAR |
|
3,699,593 |
5,520,744 |
|
|
|
|
--------------- |
--------------- |
|
| CASH
EQUIVALENT AT THE END OF THE YEAR |
|
11 |
22,555,628 |
3,699,593 |
|
|
|
|
========== |
========== |
|
|
| 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 Sixth ICP Mutual Fund was established by the Investment
Corporation of Pakistan (ICP), acting as |
|
| its
Trustees on June 4, 1973 under the ICP Ordinance, 1996. The Fund ~s 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 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 time of 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, Wazir All Industries
Limited 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 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
bas s n 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's expenses against Kakakhel Industries |
|
| Limited
amounted to Rs. 632,352, Wazir All Industries Limited amounted to Rs. 151,879
and Gharibwal Cement Industries Limited |
|
| amounted
to Rs. 4,300,320 and the amounts advised by the Commission to date against
these expenses amounted to Rs. |
|
| 428,036,
Rs. 101,264 and Rs. 549,157 respectively. |
|
|
| 4.
INVESTMENTS IN QUOTED SHARES |
|
|
|
| Unless
stated otherwise, the holdings are in the Ordinary shares of Rs. 10/- each. |
|
|
|
| 1996 |
1997 |
|
|
1997 |
|
1996 |
|
|
|
|
Book Value |
Market Value |
Book Value |
Market Value |
|
|
Name of the Company |
|
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |
| *Holding |
|
**Rate |
Amount |
**Rate |
Amount |
**Rate |
Amount |
**Rate |
Amount |
| No of shares |
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
|
|
MODARABAS |
|
| -- |
100,000 |
1st Grindlays |
|
11.28 |
1,128,000 |
11.50 |
1,150.00 |
-- |
-- |
-- |
-- |
|
|
|
|
|
|
|
|
INVESTMENT BANKS |
|
|
| -- |
115,000 |
Askari Commercial Bank |
|
19.57 |
2,251,000 |
28.50 |
3,277,500 |
-- |
-- |
-- |
-- |
| -- |
21,450 |
Bank AI-Habib Ltd. |
|
25.18 |
540,150 |
28.50 |
611,325 |
-- |
-- |
-- |
-- |
|
|
|
|
|
SUGAR AND ALLIED
INDUSTRIES |
|
|
| 250,000 |
300,000 |
Habib Sugar Ltd (Rs. 5) |
|
5.79 |
1,736,041 |
11.50 |
3,450,000 |
6.94 |
1,736,043 |
13.25 |
3,312,500 |
| 85,998 |
85,998 |
Mirpurkhas Sugar Ltd. |
|
11.27 |
969,480 |
16.50 |
1,418,967 |
11.27 |
969,480 |
19.00 |
1,633,962 |
|
|
|
|
|
|
|
|
|
CEMENT |
|
|
| -- |
500,000 |
Cherat Cement Ltd. |
|
19.34 |
967,160 |
20.75 |
1,037,500 |
-- |
-- |
-- |
-- |
| 15,000 |
15,000 |
Dadabhoy Cement
Industries Ltd |
|
8.00 |
120,000 |
8.00 |
120,000 |
32.43 |
486,500 |
8.25 |
123.750 |
| 31489 |
36527 |
Gharibwal Cement
Industries Ltd |
|
2.85 |
14,183 |
23.20 |
847,426 |
3.31 |
104,183 |
26.75 |
842,331 |
|
|
|
|
|
|
FUEL AND ENERGY |
|
|
| -- |
100,000 |
The Hub Power Company
Ltd. |
|
32.41 |
3,240,500 |
40.80 |
4,080,000 |
-- |
-- |
-- |
-- |
| 209,468 |
209,468 |
Karachi Electric Supply
Cor., |
|
4.53 |
949,708 |
12.25 |
2,565,983 |
4.53 |
949,708 |
36.50 |
7.645.582 |
| 171,662 |
71,662 |
National Refinery Ltd. |
|
11.16 |
799,461 |
28.50 |
2,042,367 |
11.16 |
1,915,461 |
41.00 |
7.038,142 |
| 248,130 |
270,000 |
Pakistan State Oil
Company Ltd. |
|
3.94 |
1,062,508 |
325.50 |
87,885,000 |
5.12 |
1,269,230 |
413.00 |
102,477,690 |
| 120,240 |
138,276 |
Sui Northern Gas Pipeline
Ltd. |
|
16.46 |
2,275,500 |
31.75 |
4,390,263 |
18.92 |
2,275,500 |
40.50 |
4.869,720 |
| -- |
6,900 |
Shell Pakistan Ltd. |
|
150.01 |
1,035,069 |
238.00 |
1,642,200 |
-- |
-- |
-- |
-- |
|
|
|
|
AUTO AND ALLIED
ENGINEERING |
|
|
| -- |
17,000 |
Pak Suzuki Motors |
|
41.82 |
711,000 |
50.00 |
850,000 |
-- |
-- |
-- |
-- |
|
|
|
|
|
|
|
|
|
TRANSPORT AND
COMMUNICATION |
|
|
| -- |
100,000 |
P.T.C.L. "A" |
|
32.61 |
3,261,000 |
30.50 |
3,050,000 |
-- |
-- |
-- |
-- |
|
|
|
|
|
CHEMICAL &
PHARMACEUTICAL |
|
|
| -- |
10,000 |
BOC Pakistan Limited |
|
149.01 |
1,490,100 |
139.00 |
1,390,000 |
-- |
-- |
-- |
-- |
| -- |
6,000 |
Dawood Hercules Ltd |
|
139.00 |
834,000 |
140.50 |
843,000 |
-- |
-- |
-- |
-- |
| -- |
31,250 |
Engro Chemicals Ltd. |
|
113.97 |
3,561,600 |
142.00 |
4,437,500 |
-- |
-- |
-- |
-- |
| -- |
100,000 |
F.F.C. Jordan Fertilizer
Ltd. |
|
13.12 |
1,311,500 |
154.00 |
1,540,000 |
-- |
-- |
-- |
-- |
| 500,000 |
100,000 |
Fauji Fertilizer Ltd. |
|
76.26 |
7,625,500 |
78.75 |
7,875,000 |
73.50 |
3,675,000 |
89.75 |
4,487,500 |
|
|
|
|
PAPER AND BOARD |
|
|
| -- |
7,000 |
Cherat Paper Sack Ltd. |
|
23.32 |
163,230 |
31.40 |
219,800 |
-- |
-- |
-- |
-- |
| 101,685 |
113,887 |
Packages Ltd. |
|
18.39 |
2,094,747 |
62.00 |
7,060,994 |
20.60 |
2,094,747 |
90.00 |
9,151,650 |
|
|
|
|
VANASPATI AND ALLIED
INDUSTRIES |
|
|
| 16,345 |
16,345 |
Wazir All Industries Ltd. |
|
14.59 |
238,402 |
13.45 |
219,840 |
14.59 |
238,402 |
21.00 |
343,245 |
|
|
|
|
FOOD AND ALLIED |
|
|
| -- |
10,000 |
Lever Brothers Pakistan
Ltd. |
|
635.01 |
6,350,100 |
780.00 |
7,800,000 |
-- |
-- |
-- |
-- |
|
|
---------------- |
|
---------------- |
|
---------------- |
|
---------------- |
|
|
|
44,819,939 |
|
149,804,665 |
|
15,714,254 |
|
141,926,675 |
|
|
|
|
========== |
|
========== |
|
========== |
|
========== |
|
| *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 tee 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 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Management
fee @ 1/2% per annum of the initial |
|
|
| paid-up
capital of Rs. 10 million |
|
50,000 |
50,000 |
|
|
|
|
| Management
fee @ 3% per annum of the market |
|
|
| value
of net assets at the close of the year |
|
5.1 |
2,880,919 |
-- |
|
|
|
|
---------------- |
---------------- |
|
|
|
|
2,930,919 |
50,000 |
|
|
|
|
========== |
========== |
|
|
|
|
| 5.1
Market value of net assets at the close of the year |
|
|
|
|
|
|
| Investment
in quoted shares |
|
|
4 |
149,804,665 |
|
| Current assets |
|
|
---------------- |
|
| Dividend
receivable |
|
87,000 |
|
| Prepaid expense |
|
|
7,500 |
|
| Current
account with the lOP |
|
25,486,547 |
|
| Taxation - net |
|
|
67,155 |
|
|
---------------- |
|
|
|
25,648,202 |
|
|
|
---------------- |
|
|
|
175,452,867 |
|
|
========== |
|
| Current liabilities |
|
|
---------------- |
|
| Accrued
expenses |
|
46,367 |
|
| Unclaimed
dividend |
|
15,355,473 |
|
|
---------------- |
|
|
|
15,401,840 |
|
|
|
160,051,027 |
|
|
|
|
|
|
|
---------------- |
|
|
160,051,027 x |
40,000,000 |
x 9 x |
3% |
2,880,919 |
|
|
|
|
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 |
|
|
194,793 |
-- |
|
| ICP - take up |
|
|
72,322 |
-- |
|
|
- underwriting |
|
200,000 |
-- |
|
| Consultancy
services |
|
113,725 |
39,560 |
|
| Advertising |
|
|
81,924 |
6,600 |
|
| Postage |
|
|
22,827 |
13,530 |
|
| Stamp duty |
|
|
100,000 |
11,118 |
|
| Stock
Exchange listing fee |
|
-- |
137,143 |
|
| Professional
charges |
|
-- |
789 |
|
| Printing charges |
|
|
10,517 |
-- |
|
|
|
|
---------------- |
---------------- |
|
|
|
|
|
796,108 |
208,740 |
|
|
|
|
|
========== |
========== |
|
| 8.
OTHER EXPENSES |
|
|
|
|
|
|
| Printing
and stationery |
|
|
38,262 |
23,491 |
|
| Advertising
and publicity |
|
|
18,946 |
5,365 |
|
| Professionals
charges |
|
|
17,517 |
3,257 |
|
| Stock
Exchange Listing fee |
|
|
35,000 |
13,750 |
|
| Excise duty |
|
|
9,800 |
8,800 |
|
| Computer
related expenses |
|
|
127,900 |
51,185 |
|
| Postage |
|
|
23,071 |
20,832 |
|
| Professional tax |
|
|
15,000 |
15,000 |
|
| Share
transfer stamps |
|
|
21,060 |
-- |
|
| Other expenses |
|
|
1,491 |
679 |
|
|
|
|
---------------- |
---------------- |
|
|
|
|
308,047 |
142,359 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 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 |
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Profit
before taxation |
|
|
17,992,710 |
8,440,850 |
|
|
|
|
|
|
| Adjustment
for non cash charges and other items: |
|
|
|
|
| Return
on current account with the ICP |
|
|
(1,510,034) |
(424,267) |
