Popular Life First Mutual Fund. Auditors' report and financial statements for the year ended 30 June 2013

Transcription

1 Popular Life First Mutual Fund Trustee: Bangladesh General Insurance Company Limited 42 Dilkusha Commercial Area Dhaka 1000 Popular Life First Mutual Fund Auditors' report and financial statements for the year ended 30 June 2013 House # 51 (3rd floor), Road # 9, Block # F, Banani, Dhaka Telephones (880-2): PABX & s:ensfaco@citechco.net Website: (ij) sfaco@sfahmedco.org 1213, Bangladesh

2 -- Established: 1958 House # 51 (3rd Floor) Road # 9, Block # F, Banani Dhaka 12l3, Bangladesh Phones: (880-2) & s:(i)sfaco@citechco.net (ii) sfaco@sfahmedco.org Auditors' Report to the Trustee of Popular Life First Mutual Fund We have audited the accompanying financial statements of Popular Life First Mutual Fund (the Fund), which comprise the statement of financial position (balance sheet) as at 30 June 2013, statement of comprehensive income (revenue account) and statement of cash flows for the year ended 30 June 2013, and a summary of significant accounting policies and other explanatory notes. Management's responsibility for the financial statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with Bangladesh Financial Reporting Standards / Bangladesh Accounting Standards and other applicable laws and regulations. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances. Auditors' responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain a reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditors' judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, we consider internal control relevant to the entity's preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.. Opinion In our opinion, the financial statements prepared in accordance with Bangladesh Financial Reporting Standards / Bangladesh Accounting Standards give a true and fair view of the state of the Fund's affairs as of 30 June 2013 and of the results of its operations and its cash flows for the year then ended and comply with the requirements of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001, Trust Deed and other applicable laws and regulations. We also report that: a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; b. in our opinion, proper books of account as required by law have been kept by the Fund so far as it appeared from our examination of those books; c. the statement of financial position (balance sheet) and statement of comprehensive income (revenue account) dealt with by the report are in agreement with the books of account and returns; d. the investment was made as per Rule 56 of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001; and e. the expenditure incurred and payments made were for the purpose of the Fund's business. House # 51 (3rd floor), Road # 9, Block # F Banani. Dhaka 1213, Bangladesh Dated, 13 August 2013 ~ Chartered Accountants

3 Popular Life First Mutual Fund Statement of Financial Position (Balance Sheet) at 30 June 2013 Assets Marketable (listed) securities - at cost Non-listed securities -at cost Cash and bank balances Preliminary and issue expenses Other current assets Total Assets Amounts in Taka At At 30 June June ,289,688, ,515, ,654,999 41,317,321 24,301,014 1,269,762,974 99,960, ,789,038 47,011,581 7,472,822 2,382,477,534 2,279,996,703 Capital and Liabilities Capital Retained earnings/(losses) Market risk reserve Current liabilities and provisions Total Capital and Liabilities 8 2,000,000,000 2,000,000,000 58,553,632 (99,870,155) ,665, ,407, ,257,908 11,459,826 2,382,4 77,534 2,279,996,703 Net asset value per Unit At cost At market price I See annexed notes For Popular Life First Mutual Fund li?thv~ Trustee Ban ladesh General Insurance Com an Limited Signed in terms of our report of even date annexed ~ --2--

4 Popular Life First Mutual Fund Statement of Comprehensive Income (Revenue Account) for the year ended 30 June 2013 Income Dividend from investment in shares Profit on sale of investment Interest on bank deposits and bonds Other income Total Income 10 Amounts in Taka Year ended Year ended 30June June ,702,153 7,525, ,471,954 23,932,242 10,636, ,938, , ,700,0 I0 147,668,121 Expenditure Amortisation of preliminary and issue expenses Management fees Trustee fees Custodian fees Annual listing fees CDBL charges Bank charges Audit fee Other operating expenses Total Expenditure Profit before provision Market risk reserve Profit during the year Accumulated losses brought forward Accumulated profit/(iosses) carried forward Earnings per unit for the year 2.5 5,654,601 5,674, ,735,757 31,089, ,275,283 1,961, , , ,200,000 2,200,000 54, ,304 85, ,741 57,500 57, , ,100 37,017,262 43,295, ,682, ,372,857 50,741,038 (198,743,812) 158,423,787 (94,370,955) (99,870,155) (5,499,200) 58,553,632 (99,870,155) 0.79 (0.47) IlChv~ Trustee Ban ladesh General Insurance Com an Limited Signed in terms of our report of even date annexed ~ --3--

5 Statement of Cash Flows for the year ended 30 June 2013 Cash flows from operating activities: Dividend income Interest on bank deposits and bonds Annual listing fee Other advance, deposit and receivable Current liabilities and provisions Other operating expenses Other income Net cash from operating activities (A) Amounts in Taka Year ended Year ended 30 June June ,969, ,726,564 (2,200,000) (370,047) (29,00 1,447) 96,124,831 25,542, ,799,57\ (200,000) (1,334,279) (36,429,698) 457, , ,996,265 Cash flows from investing activities: Value of listed securities Non-listed securities Receivable from sundry securities Application for investment in shares Preliminary and issue expenses Net cash used in investing activities (B) Cash flows from financing activities: Capital contribution Net cash from financing activities (C) Net decrease in cash (D=A+B+C) Opening cash and cash equivalents (E) Closing cash and cash equivalents (F = D+E) (26,345,804) (285,555,556) 31,642,490 (280,258,870) (184,134,039) 855,789, ,654,999 (205,645,286) (99,960,288) 169,57\,966 (94,754,050) (6,750,000) (237,537,658) (134,541,394) 990,330, ,789,038 For Popular Life First Mutual Fund,r/9thv4 Trustee Ban ladesh General Insurance Com an Limited Signed in terms of our report of even date annexed.~ --4--

6 Notes to financial statements for the year ended 30 June 2013 IGeneral I. Legal status and nature of business Popular Life First Mutual Fund (hereinafter called as "Fund") was established under a Trust Deed signed on 21 April 2010 between Popular Life Insurance Company Limited as a 'Sponsor' and the Bangladesh General Insurance Company Limited as a "Trustee". The Fund was registered under the Trust Act 1882 and subsequently listed with the Bangladesh Securities and Exchange Commission (BSEC) on 29 April 20 I0 under the Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) The operations of the Fund was commenced on 19 October 20 I0 by listing with Dhaka and Chittagong Stock Exchanges. As provided in Trust Deed, RACE Management PCL is the Fund Manager. RACE Management PCL was incorporated as a private limited company under Companies Act 1994 on March Popular Life First Mutual Fund is a close-end Mutual Fund of ten years' tenure. The objectives of the Fund are to provide regular dividend to the investors by investing the Fund both in capital and money market instruments. The Fund consists of200,000,000 units of Taka 10 each. The units of the Fund are transferable. 2. Significant accounting policies 2.1 Basis of preparation of accounts These financial statements have been prepared under historical cost convention in accordance with generally accepted accounting principles as laid down in the International Accounting Standards (IASs)/international Financial Reporting Standards (IFRSs), applicable to the Fund so far adopted by the Institute of of Bangladesh as Bangladesh Accounting Standards (BASs)/Bangladesh Financial Reporting Standards (BFRSs). The disclosures of information made in accordance with the requirements of Trust Deed, Securities and Exchange Rules 1987, Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001 and other applicable Rules and regulations. 2.2 Presentation of financial statements The fund was registered on 21 April 20 I0 under the Trust Act 1882 and subsequently listed with Stock Exchanges on 19 October 2010 and started transactions accordingly. These financial statements are prepared and presented covering the period from 0 I July 2012 to 30 June Investment All purchases and sales of securities that require delivery within the time-frame established by regulation or market convention are recognised at the date of trading ie, the date on which the Fund commits to purchase or sell the investment. Bonus entitlements, if any, are not accounted for as income rather included in the portfolio to reduce the average cost Valuation of investment 2.4 Taxation Listed securities are valued at average closing quoted market prices prevailed as of 30 June 2013 on an aggregate portfolio basis. Investment is recorded in the Financial position at cost. The income of the Fund is exempted from Income Tax as per SRO No. 333-Actllncome Tax/2011 dated 10 November 2011, under Section 44(4) clause (b) of Income Tax Ordinance, 1984; hence no provision for tax is required

7 Notes to financial statements for the year ended 30 June Amortisation of preliminary and issue expenses Preliminary and issue expenses represent expenditure incurred prior to commencement of operations and establishment of the Fund. These costs are amortised within ten years' tenure after adjusting interest income from escrow accounts as per trust deed and Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 200 I. 2.6 Market risk reserve Investment has been valued on aggregated portfolio basis and provision is required to be made on portfolio value of investment as on June 30, 2013 which comes to Taka 317,665,993, last year on June 30,2012 total provision was Taka 368,407,032. As the current year required provision is less than the earlier year of Taka 50,741,039, this has been transfered to revenue account as income. Details are in note Dividend policy As per Rule 66 of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001 as amended, the Fund is required to distribute its profit in the form of dividend either in cash or reinvestment (bonus share) or both to its unit holders an amount which shall not be less than 70% of annual profit during the year, net provisions. 2.8 Management fee RACE Management PCL, the management company of the Fund is to be paid an annual management fees on weekly average net asset value (NA V) as per Rule 65 of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001 and as per Trust 2.50% up to 5 crores, 2.00% on next 20 crores, 1.50% on next 25 crores and 1.00% on next remaining balance of the weekly average NA V per annum. 2.9 Trustee fee The Trustee is entitled to get an annual Trusteeship 0.10% of the net asset value per annum, payable semi-annually 2.10 Custodian fee in advance basis during the entire life of the Fund as per Trust Deed. BRAe Bank Limited is entitled to receive a safekeeping 0.07% on the balance of securities calculated on average month-end 2.11 Annual listing fee Annual fee of Taka 2,000,000 value per annum as a custodian. (at the rate of 0.10% of the fund size) was also paid to BSEC as per Rules 10 and II of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) Revenue recognition Gains/losses arising on sale of investment are included in the Revenue Account on the date at which the transaction takes place. Dividend and interest income are recognized as per BAS-18 and Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules)

8 Notes to financial statements for the year ended 30 June 2013 Amounts in Taka I Balance Sheet I At At 30 June June Marketable (listed) securities - at cost Equity shares (note 3.1) 1,289,688,356 1,269,762,974 Sector-wise break up of investment in shares are as under: Sector/category Number of Amounts in Taka shares Cost Market value Difference Bank 5,223, ,173, ,818,072 (90,355,377) Cement 121,200 40,825,336 40,602,000 (223,336) Ceramic 36,469 1,670,741 1,903, ,941 Corporate Bond 30,490 30,457,284 34,208,885 3,751,601 Engineering 120,795 14,897,210 8,668,320 (6,228,890) Food and Allied 63,150 41,390,837 67,273,695 25,882,858 Fuel and Power 2,070, ,636, ,326,601 (61,309,441 ) Insurance 248,718 41,232,825 24,598,845 ( 16,633,980) Miscellaneous 65,369 32,471,119 23,543,512 (8,927,607) Mutual Funds 16,730, ,709, ,292,405 (54,417,511) NBFI 426, ,869, ,512,572 (76,356,502) Pharma 321,491 89,753,488 84,946,169 (4,807,319) Services and Real Estate 20,872 2,975, ,026 (2,376,23 I) Tannery 78,500 38,034,178 30,002,650 (8,031,528) Telecommunication 370,180 82,239,258 67,151,540 (15,087,718) Textile 380,773 22,465,366 10,573,806 (11,891,560) Travel & Leisure 298,085 24,886,975 34,000,583 9,113,609 26,605,849 1,289,688, ,022,363 (317,665,993) 4. Non listed security -at cost SK. Akijuddin Ltd Short Term Bond 160,000,000 Trust Bank Unsecured Suordinated Bond 90,000,000 90,000,000 Renata Ltd Short Term Bond 70,000,000 Farmers' Bank Ltd - shares 25,555,556 Bank Asia Zero Coupon Bond 9,960,288 9,960, ,515,844 99,960, Cash and bank balances Fixed deposits 140,512,827 20,000,000 Short term deposits with: Sponsor account- Southeast Bank Ltd (AlC ) 223,876,687 The Premier Bank Ltd (AlC ) 158,580,263 The Premier Bank Ltd (AlC-O ) 71,887, I,533, 180 ONE Bank Ltd (A/C-O ) 58,132,419 Eastern Bank Ltd (AlC-1O ) 15,059, ,320,268 BRAC Bank Ltd (AlC ) 3,266,220 2,594,278 United Commercial Bank Ltd (AlC ) 9,873 81,860,204 The City Bank Ltd (AlC I) 2,100 2,705 AB Bank Ltd (AlC ) 22 1,938 Southeast Bank Ltd (Ne-OOnI3I ) 321,279,731 Eastern Bank Ltd (NC-IO ) 20,101,655 IPa - BRAC Bank Ltd (AlC ) 288,655 95,080 Escrow account - BRAC Bank Ltd (AlC I) 39, ,654, ,789,038 An amount of Taka 6,198,642 which was collected during subscription of units would require to be refunded to the subscribers on demand which is deposited with the above-refund IPa account

9 Notes to financial statements for the year ended 30 June Bank accounts having nil balance Amounts in Taka At At 30 June June 2012 IPO-USD account-brac Bank Ltd (AlC I) IPO-GBP account-brac Bank Ltd (AlC-150 II ) IPO-EURO account-brac Bank Ltd (AlC-150 II ) The above foreign currency accounts were opened/maintained for collection/refund of share application money (unit capital) from non- resident Bangladeshis, book balances of those bank accounts become "nil" after issuance of refund warrants but as per bank statements their closing balances are USD , GBP and EURO respectively at 30 June 2013 against which reconciliation statements were prepared. 6. Preliminary and issue expenses Opening balance Less: Interest on escrow account Less: Amortisation of preliminary Closing balance 7. Other current assets and issue expenses 47,011,581 53,184,538 39, ,076 46,971,922 52,686,462 5,654,601 5,674,881 41,317,321 47,011,581 Interest receivable Receivable from sale of marketable securities Other advance and deposits Dividend receivable Security deposit 11,886,623 3,101,574 8,135,143 1,194,438 2,607,686 2,237,640 1,171, , , ,000 24,301,014 7,472, Capital 200,000,000 units of Taka 10 each fully paid-up 2,000,000,000 2,000,000, Current liabilities and provisions Withholding income tax payable Custodian fees Preliminary expenses Withholding VAT payable Publication expenses Management fees Audit fee Payable to sundry securities 2,829,598 1,405,250 1,285, , ,000 97,977 45,000 1,419 3,176,388 1,278,406 1,285, , ,000 45,000 5,364,550 6,257,908 11,459,826 Revenue Account 10. Interest on Bank Deposits and Bonds Interest on Short tenn deposits Corporate bonds Fixed deposits Amounts Year ended in Taka Year ended 30 June June ,343,323 29,011,853 15,116,778 36,014,358 12,174,886 64,748, ,471, ,938,

10 Notes to financial statements for the year ended 30 June Others 11.1 These notes form an integral part of the annexed financial statements and accordingly are to be read in conjunction therewith Figures in these notes and annexed financial statements have been rounded off to the nearest Taka Figures of previous year have been rearranged wherever considered necessary, to conform the current year's presentation. /i!l-. For Popular Life First Mutual Fund Asset Manager RACE Management PCL Bangladesh General Insurance Company Limited Dhaka, Bangladesh Dated, 13 August