AB Bank First Mutual Fund Trustee: Bangladesh General ... · Bangladesh General Insurance Company...

AB Bank First Mutual FundTrustee: Bangladesh General Insurance Company Limited42 Dilkusha Commercial AreaDhaka 1000

AB Bank First Mutual Fund

Auditors' report and financial statementsfor the period from 29 January 20 12 to 30 June 20 12

s. F. AHMED & CO

s. F. AHMED & COChartered Accountants-- Established: 1958

House 25, Road 13ABlock D, BananiDhaka 1213, Bangladesh

Phones: (880-2) 989-4258 & 989-4346Fax: 882-5135E-mails:(i)[email protected]

(ii) [email protected]

Auditors' Report to the Trustee of AB Bank First Mutual Fund

We have audited the accompanying financial statements of AB Bank First Mutual Fund (the Fund) namely,Statement of Financial Position (Balance Sheet) as of 30 June 2012 and the related Statement ofComprehensive Income (Revenue Account), statement of Cash Flows and notes thereto for the period from29 January 2012 to 30 June 2012.

Respective responsibi Iities of management and auditors

The preparation of these financial statements is the responsibility of the management of the Fund inaccordance with generally accepted accounting principles and International Accounting Standards/International Financial Reporting Standards so far adopted by the Institute of Chartered Accountants ofBangladesh as Bangladesh Accounting Standards/Bangladesh Financial Reporting Standards. Ourresponsibility is to express an independent opinion on these financial statements based on our audit.

Basis of our audit opinion

We conducted our audit in accordance with International Standards on Auditing as applicable inBangladesh. Those standards require that we plan and perform the audit to obtain a reasonable assurancewhether the financial statements are free of material misstatement. An audit includes examining, on a testbasis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting principles used and significant estimates made by management, as well asevaluating the overall presentation of financial statements. We believe that our audit provides a reasonablebasis for our opinion.

QQinion

In our opinion, the financial statements prepared in accordance with generally accepted accountingprinciples and International Accounting Standards/ International Financial Reporting Standards so faradopted by the Institute of Chartered Accountants of Bangladesh as Bangladesh AccountingStandards/Bangladesh Financial Reporting Standards give a true and fair view of the state of the Fund'saffairs as of 30 June 2012 and of the results of its operations and its cash flows for the period then endedand comply with the requirements of Securities and Exchange Commission (Mutual Fund) Bidhimala(Rules) 200 I, Trust Deed and other applicable laws and regulations.

We further report that:

a. we have obtained all the information and explanations which to the best of our knowledge and beliefwere necessary for the purpose 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 itappeared from our examination of those books;

c. the Statement of Financial Position (Balance Sheet) and Statement of Comprehensive Income (RevenueAccount) along with the notes thereto dealt with by this report are in agreement with the books ofaccount;

d. the investment was made as per Rule 56 of 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 25, Road 13A, Block D

Banani, Dhaka 1213, Bangladesh

Dated, 13 August 2012

~S. F. AHMED & CO

Chartered Accountants


Statement of Financial Position (Balance Sheet) at 30 June 2012

Amount (Taka)

ASSETS

Marketable securities -at costCorporate bondCash and bank balancesPreliminary and issue expensesOther current assetsTotal Assets

34567

347,073,741137,973,598

1,041,804,36747,325,3122,851,021

1,577,028,039

CAPITAL AND LIABILITIES

CapitalRetained earningsDividend equalization reserveMarket risk reserveCurrent liabilities and provisionsTotal Capital and Liabilities

8 1,500,000,0008,719,078

60,000,0003,022,5785,286,383

2.69

1,577,028,039

Net Asset Value per Unit

At CostAt Market

10.4810.46

ISee annexed notes

For AB Bank First Mutual Fund

~.Asset ManagerRACE Management PCL

;I'3-~- I. ~Trustee vyBangladesh General Insurance Company Limited

Signed in terms of our report of even date annexed

House 25, Road 13A, Block DBanani Dhaka 1213 Ban ladeshDated, 13 August 2012

~S. F. AHMED & COChartered Accountants

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Statement of Comprehensive Income (Revenue Account)

for the period from 29 January 2012 to 30 June 2012

INCOME

Dividend from investment in sharesProfit on sale of investmentInterest on bank deposits and bondsOther incomeTotal Income

EXPENDITURE

Amortization of prel irninary expensesManagement feesTrustee feesCDBL chargeCustodian feesAudit feeOther operating expensesTotal Expenditure

Less: Market risk reserveLess: Provision for income tax

Profit for the periodLess: Dividend equalization reserveAccumulated profit carried forward

Earnings per unit for the period

See annexed notes

Amount (Taka)

10

415,7501,773,693

95,383,34831,814

97,604,605

2.5 2,082,909

2.8 22,134,517

2.9 1,437,075486

2.10 12,66251,750

11 143,55025,862,949

2.6 3,022,5782.4

68,719,07860,000,0008,719,078

0.46


Iz{:t~~yTrusteeBangladesh General Insurance Company Limited


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~S. F. AHMED & CO

Chartered Accountants


Statement of Cash Flows for the eriod from 29 Januar 2012 to 30 June 2012

Cash Flows from Operating Activities:

Dividend incomeInterest on bank deposits and bondsOther incomeOther advance deposit and receivableOperating expensesOther operating expensesNet Cash from Operating Activities (A)

Cash Flows from Investing Activities:

Value of listed securitiesIssue and preliminary expensesFixed income instruments

et Cash Used in Investing Activities (B)

Cash Flows from Financing Activities:

Capital contribution

et Cash from Financing Activities (C)Net increase in Cash (D = A+B+C)Opening cash and bank balances (E)Closing cash and bank balances (F = D+E)


Amount (Taka)

415,75093,173,738

31,813(641,409)

(18,493,156)(500)

74,486,236

(345,300,048)(49,408,221 )

(137,973,598)(532,681,867)

1,500,000,0001,500,000,0001,041,804,369

1,041,804,369

I·-}·d~~TrusteeBangladesh General Insurance Company Limited


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~S. F. AHMED & COChartered Accountants


otes to financial statements for the eriod from 29 Januar 2012 to 30 June 2012

IGeneral II. Legal Status and Nature of Business

AB Bank First Mutual Fund (hereinafter called as "Fund") was established under a Trust Deed signedon 04 July 2011 between AB Bank Limited as a 'Sponsor' and the Bangladesh General InsuranceCompany Limited as a "Trustee". The Fund was registered under the Trust Act 1882 and subsequentlylisted with the Securities and Exchange Commission (SEC) on 21 July 2011 under the Securities andExchange Commission (Mutual Fund) Bidhimala (Rules) 2001. The operations of the Fund wascommenced on 29 January 2012 by listing with Dhaka and Chittagong Stock Exchanges.

As provided in Trust Deed, RACE Management PCL is the Manager of the Fund. RACE ManagementPCL was incorporated as a private limited company under Companies Act 1994 on March 2008 withan authorised and paid-up capital of Taka 5 crore.

AB Bank First Mutual Fund is a close-end Mutual Fund of ten years' tenure. The objectives of theFund are to provide regular dividend to the investors by investing the Fund both in capital and moneymarket instruments. The Fund consists of 150,000,000 units of Taka 10 each. The units of the Fundare transferable.

2. Si nificant Accountin Policies

2.1 Basis of preparation of accounts

These financial statements have been prepared under historical cost convention in accordancewith generally accepted accounting principles as laid down in the International AccountingStandards (IASs)lInternational Financial Reporting Standards (IFRSs), applicable to the Fundso far adopted by the Institute of Chartered Accountants of Bangladesh as BangladeshAccounting Standards (BASs)/Bangladesh Financial Reporting Standards (BFRs). Thedisclosures of information made in accordance with the requirements of Trust Deed, Securitiesand Exchange Rules 1987, Securities and Exchange Commission (Mutual Fund) Bidhimala(Rules) 200 I and other applicable Rules and regulations.

2.2 Presentation of financial statements

The fund was registered on 04 July 20 II under the Trust Act, 1882 and subsequently on 29January 2012 listed with Stock Exchanges and accordingly transactions started. There were notransactions except application for [PO, fund raised through issuance of unit and preliminaryexpenses during the period from 04 July 2011 to 29 January 2012. Therefore, no financialstatements have been prepared for that period. However, the financial statements are preparedand presented covering the period from 29 January 2012 to 30 June 2012 and the transactionsbefore the listing date where duly accounted for.

2.3 Investment

All purchases and sales of securities that require delivery within the time-frame established byregulation or market convention are recognised at the date of trading ie, the date on which theFund commits to purchase or sell the investment.

Bonus entitlements, if any, are not accounted for as income rather included in the portfolio toreduce the average cost.

2.3.1 Valuation of investment

Listed securities are valued at average closing quoted market prices prevailed as of 30.Iune 2012 on an aggregate portfol io basis.

Investment is recorded in the Financial position at cost.

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otes to financial statements for the period from 29 January 2012 to 30 June 2012

2.4 Taxation

The income of the Fund is exempted from Income Tax as per SRO No. 333-Act/lncomeTaxl2011 dated 10 November 2011, under Section 44(4) clause (b) of Income Tax Ordinance,1984; hence no provision for tax is required.

'. 2.5 Amoliization of preliminary expenses

Preliminary and issue expenses represent expenditure incurred prior to commencement ofoperations and establishment of the Fund. These costs are amortised within ten years' tenureafter adjusting interest income from escrow accounts as per trust deed and Securities andExchange Commission (Mutual Fund) Bidhimala (Rules) 2001.

2.6 Market risk reserve

Investment has been valued on aggregated portfolio basis and provision is required to be madeon portfolio value of investments as of 30 June 2012 which comes to Taka 3,022,578. Detailsare in note 3.1.

2.7 Dividend policy

As per Rule 66 of Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules)200 I, the Fund is required to distribute in the form of dividend to its unit holders an amountwhich 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 annualmanagement fees on weekly average net asset value (NAY) as per Rule 65 of Securities andExchange Commission (Mutual Fund) Bidhirnala (Rules) 2001 and as per Trust Deed @ 2.50%up to 5 crores, 2.00% on next 20 crores, 1.50% on next 25 crores and 1.00% on next remainingbalance of the weekly average NAY per annum.

2.9 Trustee fee

The Trustee is entitled to get an annual Trusteeship fee @ 0.10% of the net asset value perannum, payable semi-annually in advance basis during the entire life of the Fund as per TrustDeed.

2.10 Custodian fee

Investment Corporation of Bangladesh is entitled to receive a safekeeping fee @ 0.07% on thebalance of securities calculated on average monthend value per annum as a custodian.

2.11 Registration fee to SEC

An amount of Taka 3,000,000, which is 0.20% of unit value, was paid as registration fee toSEC as per Rules 10 and II of Securities and Exchange Commission (Mutual Fund) Bidhimala(Rules) 200 I .

2.12 Revenue reco nisation

Gains/losses arising on sale of investment are included in the Revenue Account on the date atwhich the transaction takes place. Dividend and interest income are recognised as per BAS-18and Securities and Exchange Commission (Mutual Fund) Bidhirnala (Rules), 200 I.

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Notes to financial statements for the period from 29 January 2012 to 30 June 2012

I Balance Sheet I Amount (Taka)

') Marketable Securities - At Cost 347,073,741J.

Equity shares (note 3.1)

'. 3.1 Sector-wise break up of investment in shares are as follows:

Sector/category Number of Amounts in Takashares Cost Market value Difference

Bank 1,826,330 77,579,118 66,269,021 (11,310,097)Corporate Bond 2,230 2,029,570 2,090,625 61,055Food and Allied 33,750 20,260,513 20,263,500 2,987Fuel and Power 11,000 855,785 785,400 (70,385)Insurance 112,200 33,094,538 34,533,170 1,438,632Mutual Fund 2,502,000 25,088,885 24,190,498 (898,387)NBFI 29,150 662,500 1,209,725 547,225Pharma 188,720 70,133,748 73,802,720 3,668,972Travel and Leisure 216,100 16,207,500 16,207,500Telecommunication 825,900 100,050,056 109,990,960 9,940,904Textile 28,000 1,111,527 753,200 (358,327)

5,775,380 347,073,741 350,096,319 (3,022,578)

4 Corporate Bonds

Trust Bank Ltd Bond 100,000,000Bank Asia Zero Coupon Bond 37,973,598

137,973,598

5 Cash and Bank Balances

Short term deposits with:

Sponsor account- AB Bank Ltd (A/C-4005-776830-430)Escrow account- AB Bank Ltd (AIC-4005-776832-430)IPO-BDT account- AB Bank Ltd (A/C-4005-776833-430)Sponsor account- EXIM Bank Ltd -276Sponsor account- Eastern Bank Ltd - 856Sponsor account - Southeast Bank Ltd (A/C 0072-13100000005)Sponsor account- EXIM Bank Ltd (A/C 00113100462655)Provisional investment account- Eastern Bank Ltd (A/C 1011360242484)BRAC Bank Ltd - 1001

536,947,6254,790,686

11,592,39342,686

375,463,96931,711,31230,977,29850,254,655

23,7431,041,804,367

An amount of Taka 80,000 which was collected during subscription of unit and would require to berefunded to the subscribers on demand which is deposited with the above-refund IPO account.

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AB Bank First Mutual FundNotes to financial statements for the period from 29 January 2012 to 30 June 2012

5.1 Bank accounts having nil balance

IPO-GBP-AB Bank Ltd (A/C-4005-776839-026)IPO-USD-AB Bank Ltd (A/C-4005-776834-040)IPO-EURO-AB Bank Ltd (A/C-4005-776836-021)

..

6 Preliminary and Issue Expenses

Total preliminary and issue expensesLess: Interest on escrow account

Less: Amortization of preliminary and issue expenses

7 Other Current Assets

Interest receivablesOther advance and deposits

8 Capital

150,000,000 units of Taka 10 each fully paid

9 Current Liabilities and Provisions

Payable to sundry securitiesManagement feesCustodian feesAudit feeWithholding income tax payableWithholding VAT payablePublication expenses

IRevenue Account I

10 Interest on Bank Deposits and Bonds

Interest onShort term depositsFixed depositsCorporate bonds

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Amount (Taka)

69,902,18120,493,96049,408,2212,082,909

47,325,312

2,209,611641,410

2,851,021

1,500,000,000

30,3824,042,333

12,66151,750

312,209737,048100,000

5,286,383

80,980,3116,035,4578,367,580

95,383,348


otes to financial statements for the period from 29 January 2012 to 30 June 2012

Amount (Taka)

II

Bank chargesOther expensesReports and periodicals expenses

43,050500

100,000143,550

12. Others

12.1 These notes form an integral part of the annexed financial statements and accordingly are to beread in conjunction therewith.

12.2 Figures in these notes and annexed financial statements have been rounded off to the nearest Taka.


~.Asset ManagerRACE Management PCL

d'!2-~~TrusteeBangladesh General Insurance Company Limited

Dhaka, BangladeshDated, 13 August 2012

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