| 7th ICP Mutual Fund |
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| 22nd
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 |
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|
|
| Balance
Sheet as at 30th June, 1997 |
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
| NET ASSETS |
|
|
|
|
|
|
| Investment
in quoted shares |
|
|
|
| [Market
value Rs. 75,385,923 |
|
|
|
| (1996:
Rs. 51,353,944) |
|
|
4 |
44,048,932 |
16,902,303 |
|
|
|
|
| Current Assets |
|
|
|
|
|
|
-------------------- |
-------------------- |
|
| Dividend
receivable |
|
|
|
66,200 |
-- |
|
| Prepaid expense |
|
|
|
7,500 |
1,250 |
|
| Current
account with |
|
|
|
| Investment
Corporation of Pakistan (ICP) |
|
|
11,006,121 |
1,501,707 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
11,079,821 |
1,502,957 |
|
| Current
Liabilities |
|
|
|
|
|
|
-------------------- |
-------------------- |
|
| Accrued
expenses |
|
|
|
44,567 |
6,263 |
|
| Unclaimed
dividend |
|
|
|
3,220,988 |
1,607,636 |
|
| Taxation-net |
|
|
|
44,081 |
44,081 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
3,309,636 |
1,657,980 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
7,770,175 |
(155,023) |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
51,819,117 |
16,747,280 |
|
|
|
|
========== |
========== |
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|
|
|
| FINANCED BY |
|
|
|
| Capital
and Reserves |
|
|
|
| Capital |
|
|
|
| Authorised |
|
|
|
| 5,000,000
(1996: 5,000,000) certificates of |
|
|
| Rs. 10/- each |
|
|
|
50,000,000 |
50,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid-up |
|
|
|
| 5,000,000
(1996: 1,000,000) certificates of |
|
|
| Rs. 10/- each |
|
|
|
50,000,000 |
10,000,000 |
|
|
|
|
| Unappropriated
income |
|
|
|
1,819,117 |
6,747,280 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
51,819,117 |
16,747,280 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
for THE INVESTMENT CORPORATION OF PAKISTAN |
|
|
|
| Income
and Expenditure Account for the year ended 30th June, 1997 |
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
| INCOME |
|
|
|
|
|
|
| Dividend |
|
|
|
2,296,965 |
1,298,163 |
|
| Return
on current account with ICP |
|
|
|
1,407,946 |
79,176 |
|
| Profit
on sale of investment |
|
|
|
1,657,783 |
7,714,600 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
5,362,694 |
9,091,939 |
|
| EXPENSES |
|
|
|
|
|
|
| Management fee |
|
|
5 |
1,575,163 |
50,000 |
|
| Auditor's
remuneration |
|
|
6 |
9,565 |
9,214 |
|
| Expenses
incurred in respect of issue of right certificates |
7 |
898,345 |
208,741 |
|
| Other expenses |
|
|
8 |
307,784 |
129,289 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
2,790,857 |
397,244 |
|
|
|
|
-------------------- |
-------------------- |
|
| INCOME
BEFORE TAXATION |
|
|
|
2,571,837 |
8,694,695 |
|
|
|
|
|
| TAXATION |
|
|
|
|
|
|
| Current Year |
|
|
9 |
-- |
89,347 |
|
| Prior year |
|
|
|
-- |
95,795 |
|
|
|
|
-------------------- |
-------------------- |
|
| INCOME
AFTER TAXATION |
|
|
|
-- |
185,142 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
|
2,571,837 |
8,509,553 |
|
|
|
|
|
|
|
| UNAPPROPRIATED
INCOME BROUGHT FORWARD |
|
6,747,280 |
737,727 |
|
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
|
9,319,117 |
9,247,280 |
|
| AVAILABLE
FOR APPROPRIATION |
|
|
|
|
|
| Interim
dividend @15% (1996: 25%) on |
|
|
| 5,000,000
(1996: 1,000,000) Certificates of Rs. 10/- each |
|
|
7,500,000 |
2,500,000 |
|
|
|
|
-------------------- |
-------------------- |
|
| UNAPPROPRIATED
INCOME CARRIED FORWARD |
|
1,819,117 |
6,747,280 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
for THE INVESTMENT CORPORATION OF PAKISTAN |
|
|
|
| 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 |
(528,038) |
900,919 |
|
| Sale
of investment |
|
|
|
5,472,339 |
10,801,098 |
|
| Purchase
of Investment |
|
|
|
(30,961,185) |
(7,129,260) |
|
| Taxes paid |
|
|
|
-- |
(179,597) |
|
|
|
|
-------------------- |
-------------------- |
|
| Net
cash (outflow)/inflow from operating activities |
|
|
(26,016,884) |
4,393,160 |
|
|
|
|
-------------------- |
-------------------- |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
| Return
on current account with ICP |
|
|
|
1,407,946 |
79,176 |
|
|
|
|
-------------------- |
-------------------- |
|
| Net
cash inflow from investing activities |
|
|
1,407,946 |
79,179 |
|
|
|
|
-------------------- |
-------------------- |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
| Issue
of Right certificates |
|
|
|
40,000,000 |
-- |
|
| Dividend paid |
|
|
|
(5,886,648) |
(4,745,841) |
|
|
|
|
-------------------- |
-------------------- |
|
| Net
cash inflow/(outflow) from financing activities |
|
|
34,113,352 |
(4,745,841) |
|
|
|
|
-------------------- |
-------------------- |
|
| NET
INCREASE/(DECREASE) IN CASH EQUIVALENT |
|
9,504,414 |
(273,505) |
|
| CASH
EQUIVALENT AT THE BEGINNING OF THE YEAR |
|
1,501,707 |
1,775,212 |
|
|
|
|
|
-------------------- |
-------------------- |
|
| CASH
EQUIVALENT AT THE END OF THE YEAR |
|
11 |
11,006,121 |
1,501,707 |
|
|
|
|
========== |
========== |
|
|
| 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 Seventh 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 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 investments 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 time of closure of shares 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 Kakakhel 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 Kakakhel Industries |
|
| Limited
amounted to Rs. 869,400 and the amount advised by the Commission to-date
against these expenses amounted to Rs. 588,492. |
|
|
| 4.
INVESTMENT IN QUOTED SHARES |
|
| Unless
stated otherwise the holdings are in the ordinary shares of Rs. 10/- each. |
|
|
| 1997 |
1996 |
|
1997 |
|
1996 |
|
|
| *Holding |
Name of the Company |
|
Book Value |
Market Value |
Book Value |
Market Value |
|
| No of shares |
|
**Rate |
Amount |
**Rate |
Amount |
**Rate |
Amount |
**Rate |
Amount |
|
|
|
|
|
MODARABA |
|
|
|
| 14,500 |
-- |
First Grindlays Modaraba |
|
10.63 |
154,135 |
11.50 |
166,750 |
-- |
-- |
-- |
-- |
|
|
|
|
|
|
TEXTILE SPINNING |
|
|
|
| 26,750 |
26,750 |
KHALID SIRAJ TEXTILE
MILLS LTD. |
4.25 |
113,688 |
4.15 |
111,013 |
4.25 |
113,688 |
3.90 |
104,325 |
|
|
|
|
|
|
SUGAR |
|
|
|
| 120,000 |
100,000 |
Habib Sugar Mills Ltd |
|
5.91 |
708,929 |
11.50 |
1,380,000 |
7.09 |
708,929 |
13.25 |
1,325,000 |
|
|
|
|
|
|
CEMENT |
|
|
|
| 133,960 |
33,960 |
Cherat Cement Company
Ltd. |
|
16.56 |
2,219,000 |
20.75 |
2,779,670 |
4.95 |
168,000 |
27.50 |
933,900 |
|
| 50,000 |
-- |
Lucky Cement Co. Ltd |
|
11.33 |
566,500 |
7.85 |
392,500 |
-- |
-- |
-- |
-- |
|
|
|
|
|
|
FUEL & ENERGY |
|
|
|
| 100,000 |
-- |
Hub Power Company Ltd. |
|
32.28 |
3,228,000 |
40.80 |
4,080,000 |
-- |
-- |
-- |
-- |
|
| 97,500 |
97,506 |
Karachi Electric Supply
Corporation |
|
6.63 |
646,610 |
12.25 |
1,194,449 |
6.63 |
646,610 |
36.50 |
3,558,969 |
|
| 155,000 |
155,000 |
National Refinery Ltd. |
|
12.33 |
1,910,422 |
28.50 |
4,417,500 |
12.33 |
1,910,422 |
41.00 |
6,355,000 |
|
| 13,000 |
-- |
Pakistan State Oil
Company Ltd. |
|
262.32 |
3,410,100 |
325.50 |
4,231,500 |
-- |
-- |
-- |
-- |
|
| 30,000 |
-- |
Shell Pakistan Ltd. |
|
129.18 |
3,875,500 |
238.00 |
7,140,000 |
-- |
-- |
-- |
-- |
|
|
|
|
|
|
TRANSPORT |
|
|
|
| 100,000 |
-- |
P.T.C.L "A" |
|
33.69 |
3,369,000 |
30.50 |
3,050,000 |
-- |
-- |
-- |
-- |
|
|
|
|
|
|
CHEMICAL &
PHARMACEUTICAL |
|
|
| 10,000 |
-- |
BOC Pakistan Limited |
|
149.01 |
1,490,100 |
139.00 |
1,390,000 |
-- |
-- |
-- |
-- |
|
| 3,100 |
-- |
Dawood Hercules Chemicals
Ltd. |
|
138.61 |
429,700 |
140.50 |
435,550 |
-- |
-- |
-- |
-- |
|
| 37,000 |
-- |
Engro Chemical (Pak) Ltd. |
|
112.51 |
4,163,000 |
142.00 |
5,254,000 |
-- |
-- |
-- |
-- |
|
| 50,000 |
-- |
F.F.C. Jordan Fertilizer
Ltd. |
|
13.13 |
656,500 |
15.40 |
770,000 |
-- |
-- |
-- |
-- |
|
| 100,000 |
100,000 |
Fauji Fertilizer Co. Ltd. |
|
66.29 |
6,628,500 |
78.75 |
7,875,000 |
66.29 |
6,628,500 |
89.75 |
8,975,000 |
|
| 757,385 |
263,620 |
ICI Pakistan Ltd. |
|
10.00 |
7,576,647 |
24.20 |
18,328,717 |
14.45 |
3,810,477 |
53.00 |
13,971,860 |
|
|
|
|
|
|
PAPER & BOARD |
|
|
|
| 199,827 |
179,221 |
Packages Ltd. |
|
14.53 |
2,902,601 |
62.00 |
12,389,274 |
16.27 |
2,915,677 |
90.00 |
16,129,890 |
|
|
-------------------- |
|
-------------------- |
|
-------------------- |
|
-------------------- |
|
|
44,048,932 |
|
75,385,923 |
|
16,902,303 |
|
51,353,944 |
|
|
========== |
|
========== |
|
========== |
|
========== |
|
|
| *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. 10,000,000 |
|
50,000 |
|
|
| Management
fee on capital raised through right issue |
|
| @ 3% of
net assets market value of the fund for nine months |
|
|
|
84,731,271 |
x 40,000,000 |
x 9 |
@ 3%
= |
1,525,163 |
|
|
|
50,000,000 |
12 |
|
-------------------- |
|
|
1,575,163 |
|
|
========== |
|
|
| 5.1
Net assets market value |
|
|
| Investment
in quoted shares |
|
75,385,923 |
|
|
| Current assets |
|
|
-------------------- |
|
| Dividend
receivable |
|
66,200 |
|
| Prepaid expense |
|
7,500 |
|
| Current
account with ICP |
|
12,581,284 |
|
|
-------------------- |
|
|
12,654,984 |
|
|
-------------------- |
|
|
88,040,907 |
|
|
| Current liabilities |
|
|
-------------------- |
|
| Accrued
expenses |
|
(44,567) |
|
| Unclaimed
dividend |
|
(3,220,988) |
|
| Taxation-net |
|
(44,081) |
|
|
-------------------- |
|
|
(3,309,636) |
|
|
-------------------- |
|
|
84,731,271 |
|
|
========== |
|
|
| 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 |
|
112,995 |
-- |
|
| ICP-take up |
|
317,715 |
-- |
|
| -underwriting |
|
200,000 |
-- |
|
| Consultancy
services |
|
113,725 |
48,773 |
|
| Advertising |
|
22,824 |
11,708 |
|
| Postage |
|
100,000 |
11,118 |
|
| Stamp duty |
|
31,086 |
-- |
|
| Stock
exchange listing fee |
|
-- |
137,142 |
|
|
-------------------- |
-------------------- |
|
|
898,345 |
208,741 |
|
|
========== |
========== |
|
|
| 8.
OTHER EXPENSES |
|
|
| Printing
and stationery |
|
23,910 |
17,401 |
|
| Advertising
and publicity |
|
84,025 |
5,365 |
|
| Professionals
charges |
|
17,255 |
3,257 |
|
| Stock
exchange listing fee |
|
35,000 |
13,750 |
|
| Excise duty |
|
2,800 |
5,600 |
|
| Computer
related expenses |
|
119,100 |
47,645 |
|
| Postage |
|
2,273 |
20,592 |
|
| Professional tax |
|
15,000 |
15,000 |
|
| Share
transfer stamps |
|
6,930 |
-- |
|
| Miscellaneous |
|
1,491 |
679 |
|
|
-------------------- |
-------------------- |
|
|
307,784 |
129,289 |
|
|
========== |
========== |
|
|
| 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 the fund has already declared more than 90% of its profits. |
|
|
| The
income-tax assessment of the fund have been finalised upto and including
assessment years 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 adverse decision of appeals for the said assessment
years, no material tax liability is expected to arise. |
|
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| 10.
CASH GENERATED FROM OPERATIONS |
|
|
|
|
|
| Profit
before taxation |
|
|
|
2,571,837 |
8,694,695 |
|
|
|
|
| Adjustment
for non cash charges and other items: |
|
|
| Profit
on sale of Investment |
|
|
|
(1,657,783) |
(7,714,600) |
|
| Return
on current account with ICP |
|
|
|
(1,407,946) |
(79,176) |
|
| Working
capital changes |
|
|
10.1 |
(34,146) |
-- |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
(528,038) |
900,919 |
|
|
|
|
========== |
========== |
|
|
|
|
| 10.1
Working capital changes |
|
|
|
| (Decrease) in current assets |
|
|
|
|
|
| Dividend
receivable |
|
|
|
(66,200) |
-- |
|
| Prepaid expense |
|
|
|
(6,250) |
-- |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
(72,450) |
-- |
|
|
|
|
|
|
|
| Increase
in current liabilities |
|
|
|
|
|
| Accrued
expenses |
|
|
|
38,304 |
239,000 |
|
|
|
|
-------------------- |
-------------------- |
|
|
|
|
(34,146) |
239,000 |
|
|
|
|
========== |
========== |
|
|
|
|
| 11.
CASH EQUIVALENT |
|
|
|
| Current
account with ICP |
|
|
|
11,006,121 |
1,501,707 |
|
|
|
|
========== |
========== |
|
| 12.
TRANSACTIONS WITH ICP |
|
|
|
| 12.1
Underwriting and take-up commission |
|
|
517,715 |
-- |
|
|
|
|
========== |
========== |
|
| 12.2
All transaction pertaining to the Mutual Fund are handled by ICP. |
|
| Share
transactions with ICP were as follows: |
|
|
|
|
|
| Sale of shares |
|
|
|
-- |
2,880,297 |
|
|
|
|
========== |
========== |
|
|
| 12.3
Maximum amount due from associated company at the end of any month |
|
| during
the period was Rs. 17.957 million (1996: Rs. 5.112 million.) |
|
|
| 13. GENERAL |
|
| 13.1
Figures have been rounded off to the nearest rupee. |
|
| 13.2
Figures have been rearranged for the purposes of comparison, wherever
necessary. |
|
|
|
|
for THE INVESTMENT CORPORATION OF PAKISTAN |
|
|
|
| Pattern
of holding of the Certificates held by the Certificate-holders as at 30th
June, 1997. |
|
|
|
|
NO. OF CERTIFICATES |
|
CERTIFICATES |
|
TOTAL CERTIFICATES |
|
|
HOLDERS |
|
HELD |
|
HELD |
|
|
|
1224 |
|
FROM |
1 |
to |
100 |
Certs |
81,400 |
|
|
706 |
|
FROM |
101 |
to |
500 |
Certs |
262,200 |
|
|
196 |
|
FROM |
