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Eight ICP Mutual Fund
Annual Report 1999
If undelivered please return to:
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: 921-2360-69 Telex: 20079 ICP PK. 29223 ICP PK.
Telefax: 92-21-2388-89 Telefax: 92-021-5680035
E-mail: icp@paknet2-3.ptc.pk E-mail: icpkb@paknet3.ptc.pk
BALANCE SHEET AS AT JUNE 30, 1999
Note 1999 1998
Rupees Rupees
NET ASSETS
Investment in quoted shares 3 61,124,838 54,105,833
[Market value Rs.101,653,607 (1998: Rs. 88,948,755)]
Security deposit 100,000 100,000
Current assets
Dividend receivable 1,166,026 696,000
Prepaid expenses 7,500 20,000
Current account with the Investment Corporation
of Pakistan (ICP) 18,973,846 19,391,453
Taxation - net 164,083 --
------------------ ------------------
20,311,455 20,107,453
Current liabilities
Accrued expenses 19,338 55,191
Unclaimed dividend 1,552,430 13,062,239
Taxation - net -- 450,022
Dividend payable 17,500,000 --
------------------ ------------------
19,071,768 13,567,452
------------------ ------------------
1,239,687 6,540,001
------------------ ------------------
62,464,525 60,745,834
========== ==========
FINANCED BY
Capital and Reserves
Capital
Authorised
5,000,000 (1998: 5,000,000) Certificates of Rs. 10 each 50,000,000 50,000,000
========== ==========
Issued, subscribed and paid-up
5,000,000 (1998: 5,000,000) Certificates of Rs.10 each
fully paid in cash 50,000,000 50,000,000
Revenue reserve
Special reserve 125,000 125,000
Unappropriated income 12,339,525 10,620,834
------------------ ------------------
62,464,525 60,745,834
========== ==========
The annexed notes form an integral part of these accounts.
for Investment Corporation of Pakistan
ASADULLAH KHAWAJA ISTAQBAL MEHDI S.M. MUNEER
Managing Director Director Director
INCOME AND EXPENDITURE ACCOUNT
FOR THE YEAR ENDED JUNE 30, 1999
Note 1999 1998
Rupees Rupees
INCOME
Dividend 6,047,292 5,450,650
Return on current account with the ICP 1,500,386 770,883
profit on sale of investment 14,563,570 19,489,000
Other income 2,327 9,541
------------------ ------------------
22,113,575 25,720,074
EXPENSES
Management fee 5 2,941,839 2,401,773
Auditors' remuneration 6 14,730 12,130
Other expenses 7 212,945 294,807
------------------ ------------------
3,169,514 2,708,710
------------------ ------------------
INCOME BEFORE TAXATION 18,944,061 23,011,364
TAXATION
Current 8 -- 505,000
Prior (274,630) --
------------------ ------------------
(274,630) 505,000
------------------ ------------------
INCOME AFTER TAXATION 19,218,691 22,506,364
UNAPPROPRIATED INCOME BROUGHT FORWARD 10,620,834 3,114,470
------------------ ------------------
AVAILABLE FOR APPROPRIATION 29,839,525 25,620,834
------------------ ------------------
Interim dividend Nil (1998: @ 30%) -- 15,000,000
Final divided @ 35% (1998: Nil) 17,500,000 --
------------------ ------------------
17,500,000 15,000,000
------------------ ------------------
UNAPPROPRIATED INCOME CARRIED FORWARD 12,339,525 10,620,834
========== ==========
BASIC EARNINGS PER SHARE (CERTIFICATE) 9 3.84 4.50
========== ==========
The annexed notes form an integral part of these accounts.
for Investment Corporation of Pakistan
ASADULLAH KHAWAJA ISTAQBAL MEHDI S.M. MUNEER
Managing Director Director Director
CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 1999
Note 1999 1998
Rupees Rupees
CASH FLOW FROM OPERATING ACTIVITIES
Cash generated from operations 10 2,386,726 2,670,139
Sale of investment 16,960,225 25,060,001
Purchase of investment (9,415,660) --
Taxes paid (339,475) (211,086)
------------------ ------------------
Net cash inflow from operating activities 9,591,816 27,519,054
------------------ ------------------
CASH FLOW FROM INVESTING ACTIVITIES
Security deposit -- (100,000)
Return on current account with ICP 1,500,386 770,883
------------------ ------------------
Net cash inflow from investing activities 1,500,386 670,883
------------------ ------------------
CASH FLOW FROM FINANCING ACTIVITIES
Dividend paid (11,509,809) (23,371,217)
------------------ ------------------
Net cash out flow from financing activities (11,509,809) (23,371,217)
------------------ ------------------
NET (DECREASE) / INCREASE IN CASH EQUIVALENT (417,607) 4,818,720
CASH EQUIVALENT AT THE BEGINNING OF THE YEAR 19,391,453 14,572,733
------------------ ------------------
CASH EQUIVALENT AT THE END OF THE YEAR 11 18,973,846 19,391,453
========== ==========
for Investment Corporation of Pakistan
ASADULLAH KHAWAJA ISTAQBAL MEHDI S.M. MUNEER
Managing Director Director Director
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 1999
1. STATUS AND NATURE OF BUSINESS
In order generally to broaden the base of investment and to encourage investment in sound quoted shares, the Eight ICP Mutual Fund was established by the Investment
Corporation of Pakistan (ICP), acting as its Trustee, on May 17, 1976, under the ICP Ordinance, 1966. The Fund is listed on the stock exchanges in Pakistan.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
2.1 Basis of presentation
These accounts have been prepared in accordance with International Accounting Standards, as applicable in Pakistan.
2.2 Accounting convention
These accounts have been prepared under the historical cost convention.
2.3 Investment
(i) Investment is valued at average cost where cost is lower than the market value; determined on the
basis of the average of the highest and lowest quotation on the balance sheet date;
(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.
2.4 Taxation
Provision for taxation is based on taxable income at current rates for taxation after taking into account tax credits available, if any.
2.5 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. INVESTMENT IN QUOTED SHARES
Unless stated otherwise, the holdings are in the Ordinary shares of Rs. 10 each
1999 1998 1999 1998
*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
31,200 26,000 Pakistan Industrial Leasing Corporation Ltd. 11.36 354,380 5.00 156,000 13.63 354,380 9.25 240,500
Banks/Investment Banks
140,750 120,750 Askari Commercial Bank Ltd. 17.74 2,497,000 12.07 1,698,852 18.64 2,251,000 13.75 1,660,312
Cement
52,000 50,000 Cherat Cement Company Ltd. 20.07 1,043,660 13.00 676,000 20.51 1,025,500 10.20 510,000
50,000 50,000 Pakland Cement Ltd. 13.01 650,500 4.75 237,500 13.01 650,500 4.10 205,000
Fuel and Energy
236,908 236,908 Karachi Electric Supply Corporation Ltd. 18.97 4,494,868 8.67 2,053,992 18.97 4,494,868 8.42 1,994,765
152,087 132,250 Sui Northern Gas Pipelines Company Ltd. 28.21 4,291,000 8.37 1,272,968 32.45 4,291,000 8.85 1,170,413
3,549,616 3,226,924 Sui Southern Gas Company Ltd. 4.26 15,124,900 8.60 30,526,698 4.69 15,124,900 9.00 29,042,316
75,000 -- Hub Power Company Limited 13.34 1,000,500 14.07 1,055,250 -- -- -- --
6,000 -- Pakistan State Oil 49.75 298,500 92.75 556,500 -- -- -- --
25,000 -- Shell Pakistan 161.80 4,045,000 163.00 4,075,000 -- -- -- --
Transport and Communication
125,000 125,000 P.T.C.L. "A" 31.50 3,397,500 20.02 2,502,500 31.50 3,937,500 15.77 1,971,250
Chemical and Pharmaceutical
11,500 10,000 BOC (Pakistan) Ltd. 129.57 1,490,100 81.00 931,500 149.01 1,490,100 90.00 900,000
4,520 9,600 Dawood Hercules Chemicals Ltd. (Rs. 5) 58.06 668,800 102.00 1,175,040 69.67 668,800 120.00 1,152,000
430,539 543,283 Engro Chemical Pakistan Ltd. 10.82 4,658,842 73.67 31,717,808 12.99 7,055,497 51.25 27,843,254
179,000 100,000 Fauji Fertilizer Company Ltd. 59.63 10,673,900 41.17 7,369,430 68.66 6,866,400 51.37 5,137,000
381,000 381,000 ICI Pakistan Ltd. 10.00 3,810,000 9.00 3,429,000 10.00 3,810,000 11.62 4,427,220
Paper and Board
11,502 10,002 Packages Ltd. 10.49 120,668 41.00 471,582 12.06 120,668 36.00 360,072
Leather and Tennaries
293,333 293,333 Service Industries Ltd. 6.70 1,964,720 40.05 11,747,987 6.70 1,964,720 42.05 12,334,653
------------------ ------------------ ------------------ ------------------
61,124,838 101,653,607 54,105,833 88,948,755
========== ========== ========== ==========
*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. STATEMENT OF CHANGES IN EQUITY
Issued,
subscribed & General Unappropriated
paid-up capital reserve Income Total
Rupees Rupees Rupees Rupees
Balance as at 30 June 1997 50,000,000 125,000 3,114,470 53,239,470
Net Income for the year -- -- 22,506,364 22,506,364
Dividend -- -- (15,000,000) (15,000,000)
------------------ ------------------ ------------------ ------------------
Balance as at 30 June 1998 50,000,000 125,000 10,620,834 60,745,834
Net income for the year -- -- 19,218,691 19,218,691
Dividend -- -- (17,500,000) (17,500,000)
------------------ ------------------ ------------------ ------------------
Balance as at 30 June 1999 50,000.00 125,000 12,339,525 62,464,525
========== ========== ========== ==========
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 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 1999 1998
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
120,493,294 x 40,000,000 x 3%
                        50,000,000 2,891,938 2,351,773
------------------ ------------------
2,941,839 2,401,773
========== ==========
5.1 Net assets market value
Investment in quoted shares 3 101,653,607 88,948,755
Security deposit 100,000 100,000
Current assets
Dividend receivable 1,166,026 696,000
Prepaid expenses 7,500 20,000
Current account with the ICP 18,973,846 21,793,226
Taxation - net 164,083 --
------------------ ------------------
20,311,455 22,509,226
------------------ ------------------
122,065,062 111,557,981
Current liabilities
Accrued expenses 19,338 55,191
Unclaimed dividend 1,552,430 13,062,239
Taxation - net -- 450,022
------------------ ------------------
1,571,768 13,567,452
------------------ ------------------
120,493,294 97,990,529
========== ==========
6. AUDITORS REMUNERATION
Taseer Hadi Ford, Rhodes, 1999 1998
Khalid & Co. Robson, Rupees Rupees
Morrow
Audit fee 2,950 2,950 5,900 5,130
Tax services 8,830 -- 8,830 7,000
------------------ ------------------ ------------------ ------------------
11,780 2,950 14,730 12,130
========== ========== ========== ==========
Note 1999 1998
Rupees Rupees
7. OTHER EXPENSES
Printing and stationery 7,537 46,196
Advertising and publicity 11,518 17,276
Professional charges 3,558 12,817
Listing fee - stock exchanges 46,250 46,250
                    - Central Depository Company 24,998 12,500
Excise duty -- 4,200
Computer related expenses 44,706 54,767
Postage 14,716 42,187
Professional tax 38,000 38,000
Bank charges 16,803 17,210
Share transfer stamps -- 2,045
Miscellaneous 4,859 1,359
------------------ ------------------
212,945 294,807
========== ==========
8. TAXATION
The income-tax assessment of the Fund have been finalised upto and including assessment year 1998-99. 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 and 1998-99.
In case of adverse decision in respect of appeals for the assessment years, no material tax liability is expected to arise.
9. BASIC EARNINGS PER SHARE (CERTIFICATE)
Income after taxation 19,218,691 22,506,364
========== ==========
Number of Certificates 5,000,000 5,000,000
========== ==========
Basic earnings per share (certificate) 3.84 4.50
========== ==========
10. CASH GENERATED FROM OPERATIONS
Income before taxation