| Second ICP Mutual Fund |
|
|
|
|
|
|
|
|
|
|
|
| 30th
Annual Report 1998 |
|
|
| INVESTMENT
CORPORATION OF PAKISTAN |
|
|
|
| Balance
Sheet As at 30 June 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| NET ASSETS |
|
|
|
|
|
|
| Investment
in quoted shares |
|
|
| [Market
value Rs. 43,004,297 (1997: Rs. 68,870,838)] |
4 |
55,453,912 |
46,476,754 |
|
|
|
|
| Security
deposit |
|
|
100,000 |
- |
|
|
|
|
|
|
|
| Current
Assets |
|
|
| Dividend
receivable |
|
|
900,000 |
165,000 |
|
| Prepaid
expenses |
|
|
20,000 |
7,500 |
|
| Current
account with Investment Corporation of |
|
6,088,753 |
8,999,660 |
|
| Pakistan
(ICP) |
|
|
|
| Taxation
- net |
|
635,657 |
545,578 |
|
|
|
---------- |
---------- |
|
|
|
7,644,410 |
9,717,738 |
|
|
|
|
|
| Current
Liabilities |
|
|
|
| Accrued
expenses |
|
48,811 |
50,173 |
|
| Unclaimed
dividend |
|
5,880,551 |
4,601,894 |
|
|
|
---------- |
---------- |
|
|
|
5,929,362 |
4,652,067 |
|
|
|
---------- |
---------- |
|
|
|
1,715,048 |
5,065,671 |
|
|
|
---------- |
---------- |
|
|
|
57,268,960 |
51,542,425 |
|
|
|
|
|
========== |
========== |
|
| 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 |
|
|
|
|
|
|
|
|
| General
reserve |
|
150,000 |
150,000 |
|
| Unappropriated
income |
|
7,118,960 |
1,392,425 |
|
|
|
---------- |
---------- |
|
|
|
57,268,960 |
51,542,425 |
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
for INVESTMENT CORPORATION OF PAKISTAN |
|
|
| ASADULLAH
KHAWAJA |
SYED MUZAFAR ALI SHAH |
SHAUKAT TAREEN |
|
| Managing
Director |
Director |
|
Director |
|
|
|
| Income
and Expenditure Account For the year ended 30 June 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| INCOME |
|
|
|
|
|
|
| Dividend |
|
|
|
3,601,060 |
2,438,497 |
|
| Return
on current account with ICP |
|
|
701,026 |
1,061,266 |
|
| Profit
on sale of investment |
|
|
6,279,730 |
1,946,350 |
|
| Other
income |
|
|
14,063 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
10,595,879 |
5,446,113 |
|
|
|
|
|
|
| EXPENSES |
|
|
|
| Management
fee |
|
5 |
1,038,004 |
1,259,335 |
|
| Auditors'
remuneration |
|
6 |
12,130 |
9,565 |
|
| Diminution
in the value of investment |
|
- |
2,596,850 |
|
| Expenses
incurred in respect of issue of |
7 |
- |
900,823 |
|
|
right certificates |
|
|
| Other
expenses |
|
8 |
277,216 |
278,870 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,327,350 |
5,045,443 |
|
|
|
|
---------- |
---------- |
|
|
|
|
9,268,529 |
400,670 |
|
| Reversal
of excess provision for Golden |
|
| Handshake
expenses |
|
3 |
5,855,006 |
- |
|
|
|
|
---------- |
---------- |
|
| Income
before taxation |
|
|
15,123,535 |
400,670 |
|
| Taxation
- Current year |
|
9 |
397,000 |
- |
|
|
|
|
---------- |
---------- |
|
| Income
after taxation |
|
|
14,726,535 |
400,670 |
|
| Unappropriated
income brought forward |
|
1,392,425 |
6,991,755 |
|
|
|
|
---------- |
---------- |
|
| Available
for appropriation |
|
|
16,118,960 |
7,392,425 |
|
| Interim
dividend @ 18% (1997:12%) |
|
|
9,000,000 |
6,000,000 |
|
|
|
|
---------- |
---------- |
|
| Unappropriated
income carried forward |
|
7,118,960 |
1,392,425 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
for INVESTMENT CORPORATION OF PAKISTAN |
|
|
|
| ASADULLAH
KHAWAJA |
SYED MUZAFAR ALI SHAH |
SHAUKAT TAREEN |
|
| Managing
Director |
Director |
|
Director |
|
|
|
| Cash
Flow Statement For the year ended 30 June 1998 |
|
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Cash
generated from operations |
|
10 |
7,393,917 |
(137,228) |
|
| Sale
of investment |
|
|
10,737,500 |
3,568,700 |
|
| Purchase
of investment |
|
|
(13,434,928) |
(29,773,037) |
|
| Taxes paid |
|
|
(487,079) |
- |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow/(outflow) from operating activities |
|
4,209,410 |
(26,341,565) |
|
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
| Security
deposit |
|
|
(100,000) |
- |
|
| Return
on current account with ICP |
|
701,026 |
1,061,266 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from investing activities |
|
601,026 |
1,061,266 |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Issue
of right certificates |
|
|
- |
35,000,000 |
|
| Dividend
paid |
|
|
(7,721,343) |
(6,273,555) |
|
|
|
|
---------- |
---------- |
|
| Net
cash (outflow)/inflow from financing activities |
|
(7,721,343) |
28,726,445 |
|
|
|
---------- |
---------- |
|
| NET
(DECREASE)/INCREASE IN CASH EQUIVALENT |
|
(2,910,907) |
3,446,146 |
|
| CASH
EQUIVALENT AT BEGINNING OF THE YEAR |
|
8,999,660 |
5,553,514 |
|
|
|
|
---------- |
---------- |
|
| CASH
EQUIVALENT AT END OF THE YEAR |
|
11 |
6,088,753 |
8,999,660 |
|
|
|
|
========== |
========== |
|
|
|
| Notes
to the Accounts For the year ended 30 June 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 Second 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
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 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 PRIVATIZED COMPANIES |
|
| In
previous years shares of Millat Tractors Limited, Metropolitan Steel
Corporation and Gharibwal Cement 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. However, to date no amounts has been deducted
on account of share of Commission's 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 handshake and |
|
| privatization
expenses. Accordingly, ICP has decided to reverse the balance of excess
provision held in their books. |
|
|
|
| Name
of Company |
|
Amount |
Amount |
Amount of |
|
|
originally |
notified |
excess |
|
|
provided |
by the |
provision |
|
|
|
Commission |
reversed |
|
|
| Millat
Tractors Limited |
|
5,045,084 |
1,763,220 |
3,281,864 |
|
| Metropolitan
Steel |
|
1,011,411 |
1,011,411 |
- |
|
| Corporation |
|
|
|
| Gharibwal
Cement Industries Limited |
2,949,840 |
376,698 |
2,573,142 |
|
|
|
---------- |
---------- |
---------- |
|
|
Rupees |
9,006,335 |
3,151,329 |
5,855,006 |
|
|
|
========== |
========== |
========== |
|
|
| 4.
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 |
|
|
|
Modaraba |
|
| 54,000 |
50,000 |
First Grindlays Modaraba |
|
9.65 |
521,200 |
10.75 |
580,500 |
10.42 |
521,200 |
11.50 |
575,000 |
|
|
|
|
|
Leasing |
|
|
| 7,000 |
7,000 |
Orix Leasing (Pakistan)
Limited. |
49.19 |
344,350 |
30.00 |
210,000 |
49.19 |
344,350 |
40.75 |
285,250 |
|
|
|
|
|
Textile Spinning |
|
|
| 15,125 |
15,125 |
Gulshan Spinning Mills
Limited. |
19.00 |
287,375 |
15.00 |
226,875 |
19.00 |
287,375 |
19.00 |
287,375 |
|
|
|
|
|
Sugar and Allied |
|
|
|
| 286,497 |
254,664 |
Habib Sugar Mills
Limited. |
|
5.27 |
1,509,293 |
7.50 |
2,148,728 |
5.93 |
1,509,294 |
11.50 |
2,928,636 |
|
|
(Rs. 5) |
|
|
| 141,047 |
141,047 |
Mehran Sugar Mills
Limited. |
|
16.83 |
2,373,578 |
11.75 |
1,657,302 |
16.83 |
2,373,578 |
16.00 |
2,256,752 |
|
| 22,000 |
22,000 |
Sanghat Sugar Mills
Limited. |
|
16.91 |
372,000 |
8.50 |
187,000 |
16.91 |
372,000 |
11.00 |
242,000 |
|
|
|
|
|
|
Cement |
|
|
|
| 101,286 |
101,286 |
Cherat Cement Company
Ltd. |
|
6.39 |
646,816 |
1020 |
1,033,117 |
6.39 |
646,816 |
20.75 |
2,101,685 |
|
| 105,000 |
105,000 |
Dadabhoy Cement
Industries Ltd. |
8.00 |
840,000 |
3.50 |
367,500 |
8.00 |
840,000 |
8.00 |
840,000 |
|
| 18,200 |
18,200 |
Gharibwal Cement
Industries |
|
2.98 |
54,199 |
5.00 |
91,000 |
2.98 |
54,199 |
23.20 |
422,240 |
|
|
Limited. |
|
|
|
Fuel and Energy |
|
| 75,000 |
100,000 |
Hub Power Company
Limited. |
|
43.27 |
3,245,500 |
12.37 |
927,750 |
33.06 |
3,305,750 |
40.80 |
4,080,000 |
|
| 183,551 |
358,551 |
Karachi Electric Supply |
|
4.25 |
780,162 |
8.42 |
1,545,499 |
4.25 |
1,523,912 |
12.25 |
4,392,250 |
|
|
Corporation Limited. |
|
|
| 77,000 |
77,000 |
National Refinery
Limited. |
|
10.32 |
794,886 |
15.50 |
1,193,500 |
10.32 |
794,886 |
28.50 |
2,194,500 |
|
| 18,915 |
19,513 |
Pakistan State Oil
Company |
|
217.56 |
4,115,170 |
73.75 |
1,394,981 |
261.07 |
5,094,191 |
325.50 |
6,351,482 |
|
|
Limited. |
|
|
| 25,000 |
25,000 |
Shell Pakistan Limited. |
|
141.61 |
3,540,150 |
146.50 |
3,662,500 |
141.61 |
3,540,150 |
238.00 |
5,950,000 |
|
| 12,500 |
- |
Shell Pakistan Limited.
(right) |
130.00 |
1,625,000 |
202.00 |
2,525,000 |
|
| 107,122 |
93,150 |
Sui Northern Gas
Pipelines |
|
5.25 |
562,500 |
8.85 |
948,030 |
6.40 |
562,500 |
31.75 |
2,957,513 |
|
|
Company Limited. |
|
|
|
Auto and Engineering |
|
| 100,000 |
100,000 |
Pak Suzuki Motor Company |
|
43.65 |
4,364,500 |
34.00 |
3,400,000 |
43.65 |
4,364,500 |
50.00 |
5,000,000 |
|
|
Limited. |
|
|
|
|
|
|
Transport and
Communication |
|
|
| 100,000 |
100,000 |
Pakistan
Telecommunication |
|
33.25 |
3,325,000 |
15.77 |
1,577,000 |
33.25 |
3,325,000 |
30.50 |
3,050,000 |
|
|
Corporation Limited
"A". |
|
|
|
|
|
|
|
Chemical and
Pharmaceutical |
|
|
|
| 8,900 |
8,900 |
BOC (Pakistan) Limited. |
|
149.01 |
1,326,189 |
90.00 |
801,000 |
149.01 |
1,326,189 |
139.00 |
1,237,100 |
|
| 73,312 |
43,750 |
Engro Chemicals Pakistan
Ltd. |
99.11 |
7,266,180 |
51.25 |
3,757,240 |
113.06 |
4,946,180 |
142.00 |
6,212,500 |
|
| 150,000 |
100,000 |
Fauji Fertilizer Company
Ltd. |
75.60 |
11,339,705 |
51.37 |
7,705,500 |
68.75 |
6,875,000 |
78.75 |
7,875,000 |
|
| 116,500 |
- |
FFC Jordan Fertilizer
Company |
20.18 |
2,350,475 |
12.97 |
1,511,005 |
- |
- |
- |
- |
|
|
Limited. |
|
|
| 212,227 |
212,227 |
ICl Pakistan Limited. |
|
10.00 |
2,123,314 |
11.62 |
2,466,078 |
10.00 |
2,123,314 |
24.20 |
5,135,893 |
|
|
|
|
|
|
Paper and Board |
|
|
| 20,100 |
20,100 |
Cherat Papersack Limited. |
|
44.06 |
885,555 |
28.00 |
562,800 |
44.06 |
885,555 |
31.40 |
631,140 |
|
| 70,122 |
62,331 |
Packages Limited. |
|
12.28 |
860,815 |
36.00 |
2,524,392 |
13.81 |
860,815 |
62.00 |
3,864,523 |
|
|
|
|
---------- |
|
---------- |
|
---------- |
|
---------- |
|
|
|
|
|
55,453,912 |
|
43,004,297 |
|
46,476,754 |
|
68,870,838 |
|
|
========== |
|
========== |
|
========== |
|
========== |
|
|
|
|
|
|
|
|
|
|
| 5.
MANAGEMENT FEE |
|
| The
management fee is payable to Investment Corporation of Pakistan @ 1/2% per
annum on initial paid-up capital of the Fund. The man- |
|
| agement
fee in 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. |
|
|
|
|
1998 |
1997 |
|
|
|
(Rupees) |
(Rupees) |
|
|
|
|
| Management
fee on initial paid-up capital @ 1/2 % |
|
| on
Rs. 15 million |
|
75,000 |
75,000 |
|
|
|
|
| Management
fee on capital raised through right issue |
|
| @
3 % of net assets market value of the Fund |
|
| 45.857,349
x 35,000,000 x 3% |
|
|
50,000,000 |
|
963,004 |
1,184,335 |
|
|
|
---------- |
---------- |
|
|
|
1,038,004 |
1,259,335 |
|
|
|
========== |
========== |
|
|
|
|
|
| 5.1
Net assets market value |
|
|
| Investment
in quoted shares |
|
43,004,297 |
68,870,838 |
|
| Security
deposit |
|
100,000 |
- |
|
| Current
assets |
|
|
| Dividend
receivable |
|
900,000 |
165,000 |
|
| Prepaid
expense |
|
20,000 |
7,500 |
|
| Current
account with ICP |
|
7,126,757 |
10,258,995 |
|
| Taxation
- net |
|
635,657 |
545,578 |
|
|
|
---------- |
---------- |
|
|
|
8,682,414 |
10,977,073 |
|
|
|
---------- |
---------- |
|
|
|
51,786,711 |
79,847,911 |
|
| Current
liabilities |
|
|
| Accrued
expenses |
|
48,811 |
50,173 |
|
| Unclaimed
dividend |
|
5,880,551 |
4,601,894 |
|
|
|
---------- |
---------- |
|
|
|
5,929,362 |
4,652,067 |
|
|
|
---------- |
---------- |
|
|
|
45,857,349 |
75,195,844 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| 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 |
|
|
|
|
|
|
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Commission |
|
|
|
| Banks |
|
|
|
|
- |
90,417 |
|
| ICP
- take-up |
|
|
|
- |
310,446 |
|
| -
underwriting |
|
|
|
- |
175,000 |
|
| Consultancy
services |
|
|
|
- |
103,922 |
|
| Advertising |
|
|
|
|
- |
105,059 |
|
| Stamp duty |
|
|
|
|
- |
104,042 |
|
| Printing
charges |
|
|
|
- |
11,937 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
- |
900,823 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| 8.
OTHER EXPENSES |
|
|
|
|
|
| Printing
and stationery |
|
46,085 |
29.58 |
|
| Advertising
and publicity |
|
17,276 |
12,001 |
|
| Professional
charges |
|
12,817 |
17,255 |
|
| Listing
fee - Stock exchange |
|
46,250 |
37,500 |
|
|
- Central Depository
Company |
|
12,500 |
- |
|
| Excise duty |
|
3,400 |
3,400 |
|
| Computer
related expenses |
|
51,888 |
128,700 |
|
| Postage |
|
42,186 |
7,490 |
|
| Professional
tax |
|
38,000 |
15,000 |
|
| Bank
charges |
|
4,130 |
- |
|
| Share
transfer stamps |
|
1,325 |
26,430 |
|
| Miscellaneous |
|
1,359 |
1,513 |
|
|
|
---------- |
---------- |
|
|
|
277,216 |
278,870 |
|
|
|
|
========== |
========== |
|
|
| 9. 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. |
|
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| 10.
CASH GENERATED FROM OPERATIONS |
|
|
|
|
|
| Income
before taxation |
|
|
15,123,535 |
400,670 |
|
|
|
|
|
| Adjustment
for non cash charges and other items: |
|
|
|
