| Fourth ICP Mutual Fund |
|
|
|
|
|
|
|
|
|
|
| 28th
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.
95,841,513 (1997: Rs. 280,740,129)] |
4 |
66,792,123 |
69,640,175 |
|
|
|
|
|
| Security
deposit |
|
|
100,000 |
- |
|
|
|
|
|
|
|
| Current
Assets |
|
|
|
|
| Dividend
receivable |
|
|
300,000 |
101,250 |
|
| Prepaid
expenses |
|
|
20,000 |
7,500 |
|
| Current
account with Investment Corporation |
|
|
| of
Pakistan (ICP) |
|
|
10,770,499 |
3,377,761 |
|
|
|
|
---------- |
---------- |
|
|
|
|
11,090,499 |
3,486,511 |
|
| Current
Liabilities |
|
|
|
| Accrued
expenses |
|
63,311 |
54,171 |
|
| Unclaimed
dividend |
|
16,619,315 |
20,619,344 |
|
| Taxation
- net |
|
137,807 |
115,710 |
|
|
|
|
---------- |
---------- |
|
|
|
16,820,433 |
20,789,225 |
|
|
|
---------- |
---------- |
|
|
|
(5,729,934) |
(17,302,714) |
|
|
|
---------- |
---------- |
|
|
|
61,162,189 |
52,337,461 |
|
|
|
========== |
========== |
|
| FINANCED BY |
|
|
|
| Capital
and reserve |
|
|
|
|
|
|
|
| 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. I0/- each |
|
|
| fully
paid in cash |
|
50,000,000 |
50,000,000 |
|
|
|
|
| Revenue
reserve |
|
|
|
| Unappropriated
income |
|
11,162,189 |
2,337,461 |
|
|
|
---------- |
---------- |
|
|
|
61,162,189 |
52,337,461 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 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 |
|
|
|
6,939,861 |
4,984,716 |
|
| Return
on current account with ICP |
|
|
355,501 |
1,416,940 |
|
| Profit
on sale of investment |
|
|
23,137,523 |
13,494,000 |
|
| Other
Income |
|
|
14,063 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
30,446,948 |
19,895,656 |
|
| EXPENSES |
|
|
|
|
| Management
fee |
|
5 |
2,011,689 |
4,291,734 |
|
| Auditors'
remuneration |
|
6 |
12,130 |
9,565 |
|
| Diminution
in the value of investment |
|
- |
152,500 |
|
| Expenses
incurred in respect of issue of right |
|
| certificates |
|
7 |
- |
728,611 |
|
| Other
expenses |
|
8 |
326,607 |
363,167 |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,350,426 |
5,545,577 |
|
|
|
|
---------- |
---------- |
|
|
|
|
28,096,522 |
5,545,577 |
|
|
|
|
| Provision
for Golden Handshake expenses |
3 |
(1,311,794) |
- |
|
|
|
|
---------- |
---------- |
|
| Income
before taxation |
|
|
26,784,728 |
14,350,079 |
|
|
|
|
|
| Taxation
- Current |
|
9 |
460,000 |
- |
|
|
|
|
---------- |
---------- |
|
| Income
after taxation |
|
|
26,324,728 |
14,350,079 |
|
|
|
|
| Unappropriated
income brought forward |
|
2,337,461 |
10,487,382 |
|
|
|
|
---------- |
---------- |
|
| Available
for appropriation |
|
|
28,662,189 |
24,837,461 |
|
|
|
|
| Interim
dividend @ 35% (1997:45%) |
|
|
17,500,000 |
22,500,000 |
|
|
|
|
---------- |
---------- |
|
| Unappropriated
income carried forward |
|
11,162,189 |
2,337,461 |
|
|
|
|
========== |
========== |
|
|
| 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 |
3,089,594 |
(467,745) |
|
| Sale
of investment |
|
|
28,260,575 |
16,581,500 |
|
| Purchase
of investment |
|
|
(2,275,000) |
(41,918,940) |
|
| Taxes paid |
|
|
(437,903) |
- |
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow/(outflow) from operating activities |
28,637,266 |
(25,805,185) |
|
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Security
deposit |
|
|
(100,000) |
- |
|
| Return
on current account with ICP |
|
355,501 |
1,416,940 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from investing activities |
|
255,501 |
1,416,940 |
|
|
|
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Issue
of right certificates |
|
|
- |
35,000,000 |
|
| Dividend
paid |
|
|
(21,500,029) |
(23,893,254) |
|
|
|
|
---------- |
---------- |
|
| Net
cash (outflow)/inflow from financing activities |
(21,500,029) |
11,106,746 |
|
|
|
|
---------- |
---------- |
|
| NET
INCREASE/(DECREASE) IN CASH EQUIVALENT |
|
7,392,738 |
(13,281,499) |
|
| CASH
EQUIVALENT AT THE BEGINNING OF THE YEAR |
|
3,377,761 |
16,659,260 |
|
|
|
|
---------- |
---------- |
|
| CASH
EQUIVALENT AT THE END OF THE YEAR |
11 |
10,770,499 |
3,377,761 |
|
|
|
|
========== |
========== |
|
|
|
| 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 Fourth 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 flare 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; |
|
|
| (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. |
|
|
| 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.
BASIS OF ACCOUNTING FOR DISPOSAL |
|
| OF
SHARES OF PRIVATISED COMPANIES |
|
|
|
|
| In
previous years shares of Kakakhel Industries Limited (KIL) 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. |
|
|
|
|
| During
the year, ICP made an additional provision for expenses notified by the
Commission in respect of KIL. |
|
|
|
|
| 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. |
|
|
|
| Name
of Company |
|
Amount |
Provided |
Total |
Amount |
|
|
|
|
Originally |
during |
Provision |
notified |
|
|
|
|
provided |
the year |
|
by the |
|
|
|
|
Commission |
|
|
|
|
| Kakakhel
Industries |
|
| Limited
(Rupees) |
|
1,304,083 |
1,311,794 |
2,615,877 |
2,615,877 |
|
|
|
|
========== |
========== |
========== |
========== |
|
|
|
|
|
|
| 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 |
10.20 |
550,875 |
10.75 |
580,500 |
11.02 |
550,875 |
11.50 |
575,000 |
|
|
|
|
INVESTMENT BANKS |
|
|
| 241,500 |
230,000 |
Askari Commercial Bank |
|
18.64 |
4,502,000 |
13.75 |
3,320,625 |
19.57 |
4,502,000 |
28.50 |
6,555,000 |
|
Limited. |
|
|
| 63,250 |
55,000 |
Bank Commerce AI-Habib |
|
22.28 |
1,409,000 |
23.00 |
1,454,750 |
25.62 |
1,409,000 |
28.50 |
1,567,500 |
|
Limited. |
|
|
|
|
|
|
|
TEXTILE SPINNING |
|
|
|
| 10,000 |
10,000 |
Al Hamd Textile Mills
Limited. |
3.50 |
35,000 |
4.50 |
45.00 |
3.50 |
35,000 |
3.50 |
35,000 |
|
|
|
|
SUGAR AND ALLIED |
|
|
| 45,079 |
52,933 |
Bawany Sugar Mills
Limited. |
12.07 |
544,200 |
1,267 |
571,151 |
12.68 |
671,000 |
16.30 |
862,808 |
| 16.50 |
16,500 |
Dewan Sugar Mills
Limited. |
32.50 |
536,250 |
1,900 |
313,500 |
32.50 |
536,250 |
27.00 |
445.50 |
|
|
|
|
|
CEMENT |
|
|
|
| 50,000 |
50,000 |
Cherat Cement Company |
|
19.21 |
960,340 |
10.20 |
510,000 |
19.21 |
960,340 |
20.75 |
1,037,500 |
|
Limited. |
|
|
|
| 30,000 |
30,000 |
Lucky Cement Limited. |
|
13.30 |
398,900 |
3.90 |
117,000 |
13.30 |
398,900 |
7.85 |
235,500 |
|
|
|
|
FUEL AND ENERGY |
|
|
|
| 71,795 |
571,795 |
Karachi Electric Supply |
|
4.84 |
347,208 |
8.42 |
604,514 |
4.83 |
2,762,208 |
12.25 |
7,004,489 |
|
Corporation Limited. |
|
|
|
| 70,000 |
70,000 |
National Refinery
Limited. |
14.76 |
1,033,500 |
15.50 |
1,085,000 |
14.76 |
1,033,500 |
28.50 |
1,995,000 |
| 669,492 |
597,077 |
Pakistan State Oil
Company |
5.54 |
3,707,160 |
73.75 |
49,375,035 |
6.64 |
3,967,539 |
325.50 |
194,348,564 |
|
Limited. |
|
|
|
| 35,000 |
35,000 |
Shell Pakistan Limited. |
|
13,706 |
4,797,150 |
146.50 |
5,127,500 |
137.06 |
4,797,150 |
238.00 |
8,330,000 |
| 17,500 |
- |
Shell Pakistan Ltd
(right) |
130.00 |
2,275,000 |
202.00 |
3,535,000 |
|
| 111,407 |
96,876 |
Sui Northern Gas
Pipelines |
5.25 |
585,000 |
8.85 |
985,952 |
6.04 |
585,000 |
31.75 |
3,075,813 |
|
Company Limited. |
|
|
|
| 264,500 |
230,000 |
Sui Southern Gas Company |
25.53 |
6,752,000 |
9.00 |
2,380,500 |
29.36 |
6,752,000 |
28.25 |
6,497,500 |
|
Limited. |
|
|
|
AUTO AND ENGINEERING |
|
| 66,125 |
50,000 |
Crescent Steel Mills
Limited. |
29.50 |
1,950.50 |
24.00 |
1,587.00 |
39.01 |
1,950,500 |
28.50 |
1,425,000 |
| 50,000 |
50,000 |
Pak Suzuki Motor Company |
43.43 |
2,171,300 |
34.00 |
1,700,000 |
43.43 |
2,171,300 |
50.00 |
2,500,000 |
|
Limited. |
|
|
|
|
|
|
TRANSPORT AND
COMMUNICATION |
|
| 1,000,130 |
100,000 |
Pakistan Telecommunications |
33.87 |
3,386,750 |
15.77 |
1,577,000 |
33.87 |
3,386,750 |
30.50 |
3,050,000 |
|
Company Limited
"A". |
|
|
|
|
|
|
|
CHEMICAL AND
PHARMACEUTICAL |
|
|
|
| 14,375 |
12,500 |
Engro Chemical (Pakistan) |
97.40 |
1,400,100 |
51.25 |
736,719 |
112.01 |
1,400,100 |
142.00 |
1,775,000 |
|
Limited. |
|
|
| 200,000 |
200,000 |
FFC Jordan Fertilizer
Company |
14.24 |
2,847,525 |
12.97 |
2,594,000 |
14.24 |
2,847,525 |
15.40 |
3,080,000 |
|
Limited. |
|
|
| 50,000 |
50,000 |
Fauji Fertilizer Company
Ltd. |
79.01 |
3,950,500 |
51.37 |
2,568,500 |
79.01 |
3,950,500 |
78.75 |
3,937,500 |
| 982,097 |
1,082,097 |
ICI Pakistan Limited. |
|
21.27 |
20,892,110 |
11.62 |
11,411,967 |
21.27 |
23,019,110 |
24.20 |
26,186,747 |
|
|
|
|
PAPER AND BOARD |
|
|
| 101,675 |
100,334 |
Packages Limited. |
|
17.31 |
1,759,755 |
36.00 |
3,660,300 |
19.47 |
1,953,628 |
62.00 |
6,220,708 |
|
|
|
---------- |
|
---------- |
|
---------- |
|
---------- |
|
|
|
66,792,123 |
|
95,841,513 |
|
69,640,175 |
|
280,740,129 |
|
|
========== |
|
========== |
|
========== |
|
========== |
|
| *
The above shares are held in the name of the Investment Corporation of
Pakistan which acts as a Trustee to die Fund, |
|
|
| **
Rounded off to two decimal places. |
|
|
| 5.
MANAGEMENT FEE |
|
| The
management fee is payable to Investment Corporation oŁ Pakistan @ ~A % 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. 15 million |
|
|
75,000 |
75,000 |
|
|
|
|
| Management
fee on capital raised through right issue |
|
| @
3 % of net assets market value of the Fund |
|
| 92.223.268
x 35,000,000 x 3% |
|
|
|
50,000,000 |
|
|
|
1,936,689 |
4,216,734 |
|
|
|
|
---------- |
---------- |
|
|
|
|
2,011,689 |
4,291,734 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| 5.1
Net assets market value |
|
| Investment
in quoted shares |
|
|
95,841,513 |
280,740,129 |
|
| Security
deposit |
|
|
|
100,000 |
- |
|
|
|
|
|
|
| Current
assets |
|
|
|
|
| Dividend
receivable |
|
300,000 |
101,250 |
|
| Prepaid
expenses |
|
20,000 |
7,500 |
|
| Current
account with ICP |
|
12,782,188 |
7,669,495 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
13,102,188 |
7,778,245 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
109,043,701 |
288,518,374 |
|
| Current
liabilities |
|
|
| Unclaimed
dividend |
|
16,619,315 |
20,619,344 |
|
| Taxation
- net |
|
137,807 |
115,710 |
|
|
|
|
|
---------- |
---------- |
|
|
|
16,820,433 |
20,789,225 |
|
|
|
---------- |
---------- |
|
|
|
92,223,268 |
267,729,149 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| 6.
AUDITORS' REMUNERATION |
|
|
Taseer Hadi |
Ford Rhodes |
1998 |
1997 |
|
|
Khalid |
Robson |
Rupees |
Rupees |
|
|
|
& Co. |
Morrow |
|
|
| 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 |
|
|
| Bank |
|
|
|
- |
172,975 |
|
| ICP
- takeup |
|
|
- |
62,655 |
|
| -
underwriting |
|
|
- |
175,000 |
|
| Consultancy
services |
|
|
- |
103,923 |
|
| Advertising |
|
|
|
- |
92,759 |
|
| Postage |
|
|
|
- |
16,542 |
|
| Stamp duty |
|
|
|
- |
87,500 |
|
| Printing
charges |
|
|
- |
17,257 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
- |
728,611 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| 8.
OTHER EXPENSES |
|
|
|
|
|
| Printing
and stationery |
|
60,926 |
60,832 |
|
| Advertising
and publicity |
|
17,276 |
18,022 |
|
| Professional
charges |
|
12,817 |
17,517 |
|
| Listing
fee - Stock exchange |
|
46,250 |
37,500 |
|
|
- Central Depository
Company |
|
12,500 |
- |
|
| Excise duty |
|
|
7,400 |
15,800 |
|
| Computer
related expenses |
|
62,333 |
152,700 |
|
| Postage |
|
|
48,648 |
27,033 |
|
| Professional
tax |
|
38.00 |
15,000 |
|
| Bank
charges |
|
15,488 |
- |
|
| Share
transfer stamps |
|
3,620 |
17,250 |
|
| Miscellaneous |
|
1,349 |
1,513 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
326,607 |
363,167 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| 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 |
|
|
|
26,784,728 |
14,350,079 |
|
| Adjustment
for non cash charges and oilier items: |
|
|
| Return
on current account with ICP |
|
|
(355,501) |
(1,416,940) |
|
| Profit
on sale of investment |
|
|
(23,137,523) |
(13,494,000) |
|
| Diminution
in the value of investment |
|
- |
152,500 |
|
| Working
capital changes |
|
|
|
(202,110) |
(59,384) |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
3,089,594 |
(467,745) |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| 10.1
Working capital changes |
|
|
|
|
|
| (Increase1
in current assets |
|
|
