PIIPFirst Mutual Fund Trustee: Bangladesh General ...

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

PHP First Mutual Fund

Auditors'report and financial statementsfor the year ended 30 June 2012

S. F. AHMED & COChartered AccountantsHouse 25 Road 13A Block D Banani Dhaka 1213 Ban ladeshTeleQhone~~80-2J.;..YABX 989-4346 & 989-4258 Others 881-6467 & 881-510 Ifax 880-2 : [email protected] sfaco sfahmedco.,QrgWebsite: www.sfahmedco.org

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'Re ort to the Trustee ofPHP First Mutual Fund

We have audited the accompanying financial statements of PHP 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 year ended 30June 2012.

Respective responsibi Iities of management and aud itors

The preparation of these financial statements is the responsibi Iity 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 in Bangladesh.Those standards require that we plan and perform the audit to obtain a reasonable assurance whether thefinancial statements are free of material misstatement. An audit includes examining, on a test basis, evidencesupporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting principles used and significant estimates made by management, as well as evaluating the overallpresentation of financial statements. We believe that our audit provides a reasonable basis for our opinion.

Opinion

In our opinion, the financial statements prepared in accordance with generally accepted accounting principlesand International Accounting Standards/ International Financial Reporting Standards so far adopted by theInstitute of Chartered Accountants of Bangladesh as Bangladesh Accounting Standards/Bangladesh FinancialReporting Standards give a true and fair view of the state of the Fund's affairs as of 30 June 2012 and of theresults of its operations and its cash flows for the year then ended and comply with the requirements ofSecurities and Exchange Corum ission (Mutual Fund) Bidh imala (Rules) 2001, Trust Deed and otherapplicable laws and regulations.

We further report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief werenecessary for the purpose of our audit and made due verifica\ion 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 of account;

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 were made for the purpose of the Fund's business .

I-louse 25, Road 13A, Block D

Banani, Dhaka 1213, Bangladesh

Dated, 13 August 2012

.~S. F. AHMED & CO

Chartered Accountants

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

At AtNotes 30June2012 30June2011

ASSETS

~ Marketable securities -at cost 3 1,425,172,508 1,042,395,976Corporate bonds 4 112,500,000 22,500,000Cash and bank balances 5 590,520,554 911,211,051Preliminary and issue expenses 6 55,569,408 62,376,120Other current assets 7 6,787,083 79,709,215Total Assets 2,190,549,553 2,118,192,362

CAPITAL AND LIABILITlES

CapitalRetained earningsMarket risk reserveCurrent liabilities and provisionsTotal Capital and Liabi Iities

8 2,000,000,000 2,000,000,000(230,870,532) (97,661,712)

3.1 413,689,519 194,096,550

9 7,730,566 21,757,5242,190,549,553 2,118,192,362

Net Asset Value per UnitAt CostAt Market

10.918.85

10.48

9.51

Isee annexed notes

For PHP First Mutual Fund

~.Asset ManagerRACE Management PCL

;t;~TrusteeBangladesh General Insurance Company Limited

Signed in terms of our report of even date annexed

~S. F. AHMED & COChartered Accountants

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Statement of Comprehensive Income (Revenue Account)for the year ended 30 June 2012

Amounts in Taka

I COMEotes

Year ended Year ended30June2012 30June2011

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

10

27,511,18822,067,04780,239,895

161,477 _129,979,607

7,920,15540,155,95581,493,576

129,569,686

EXPENDITURE

11

6620578 388489230,212,870 27,124,251

1,859,638 1,219,030

674,263 457,035

2,200,000 100,000

34,500 34,500

521,9501,471,661 315,140

43,595,460 33,134,84886,384,147 96,434,838

86,384,147 96,434,838

219,592,968 194,096,550

(133,208,821 ) (97,661,712)(97,661,712)

(230,870,532) (97,661,712)

(0.67) (0.49)

Amortization of preliminary expensesManagement feesTrustee feesCustodian feesAnnual listing feesAudit feeLoss on sale of securitiesOther operating expensesTotal ExpenditureProfit before taxLess/Add : Tax expenses

Profit during the yearLess: Market risk reserveLess: Dividend equalisation reserve

Profit after provisionAccumulated losses brought forward

Accumulated losses carried forward

2.52.82.92.102.11

2.4

2.6

Earnings per unit for the year

ISee annexed notes


~.Asset Manager

RACE Management PCL

!I.;~~Trustee J

Bangladesh General Insurance Company Limited


~)I-louse 25, Rbatf-13A, Block D

Banani Dhaka 1213 Banaladesh

Dated, 13 August 2012

~S. F. AHMED & CO

Chartered Accountants

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Statement of Cash Flows for the year ended 30 June 2012

Cash Flows from Operating Activities:

Dividend incomeInterest on bank deposits and bondsOther incomeAnnual listing feesOther advance, deposit and receivablesCurrent liabilities and provisionsOther operating expensesNet Cash from Operating Activities (A)

Cash Flows from Investing Activities:

Value of listed securitiesFixed depositReceivable from sundry securitiesApplication for investment in sharesIssue 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 (0 = A+B+C)Opening cash and bank balances (E)Closing cash and bank balances (F = D+E)

Amounts in TakaYear ended Year ended

30 June 2012 30 June 2011

6,548,61570,539,116

28,719,12888,287,445

161,477(2,200,000) (200,000)1,655,184 (3,219,030)

(46,808,228) (29,248,027)(1,471,661) __ ----'-(_18_5'-,7_65~)68,343,345 44,234,909

(361,231,405) (932,362,1 15)650,000,00015,356,440

(93,518,520)(59,519,108)

(712,980,556)(1,133,023,858)

62,0 II ,429

186,134(90,000,000)

(389,033,842)

2,000,000,000

2,000,000,000911,211,051(320,690,497)

911,211,051590,520,554 911,211,051



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jI.(2~~TrusteeBangladesh General Insurance Company Limited


J

~S. F. AHMED & COChartered Accountants


otes to financial statements for the year ended 30 June 2012

IGeneral I1. Legal Status and Nature of Business

PHP First Mutual Fund (hereinafter called as "Fund") was established under a Trust Deed signed on20 May 2010 between PHP Power Generation Plant Limited as a 'Sponsor' and the Bangladesh GeneralInsurance Company Limited (BGIC) as a "Trustee". The Fund was registered under the Trust Act 1882and subsequently listed with the Securities and Exchange Commission (SEC) on 17 June 2010 underthe Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001. The operations ofthe Fund was commenced on 29 November 2010 by listing with Dhaka and Chittagong StockExchanges.

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 with anauthorised and paid-up capital of Taka 5 crore.

PHP First Mutual Fund is a close-end Mutual Fund often years' tenure. The objectives of the Fund areto provide regular dividend to the investors by investing the Fund both in capital and money marketinstruments. The Fund consists of 200,000,000 units of Taka 10 each. The units of the Fund aretransferable.

2. Significant Accounting Policies

2.1 Basis of Rreparation 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 (JASs)/International Financial Reporting Standards (IFRSs), applicable to the Fund sofar adopted by the Institute of Chartered Accountants of Bangladesh as Bangladesh AccountingStandards (BASs)/Bangladesh Financial Reporting Standards (BFRs). The disclosures ofinformation made in accordance with the requirements of Trust Deed, Securities and ExchangeRules 1987, Securities and Exchange Commission (Mutual Fund) Bidhirnala (Rules) 2001 andother applicable Rules and regulations.

2.2 Presentation of financial statements

The fund was registered on 20 May 2010 under the Trust Act, 1882 and subsequently on 29November 20 I 0 listed with Stock Exchanges and accordingly transactions started. The financialstatements are prepared and presented covering the period from 01 July 2011 to 30 June 2012.

2.3 Investment

All purchases and sales of securities that require delivery within the time-frame established byregulation or market convention are recognised at jhe date of trading i.e. 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. I Val uation of investment

Listed securities are valued at average closing quoted market prices prevailed as of 30 June2012 on an aggregate portfolio basis.

Investment is recorded in the Financial position at cost.

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Notes to financial statements for the year ended 30 June 2012

2.4 Taxation

The income of the Fund is exempted from Income Tax as per SRO o. 333-ActiIncome TaxJ20 I Idated 10 November 20 I I, under Section 44(4) clause (b) of Income Tax Ordinance, 1984; henceno provision for tax is required.

2.5 Amortization of reliminar ex enses

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

2.6 Market risk reserve

Investment has been valued on aggregated portfolio basis and provision is required to be made onportfolio value of investments as of30 June 2012 which comes to Taka 413,689,519. Details areinnote3.1.

2.7 Dividend Rolic

As per Rule 66 of Securities and Exchange Commission (Mutual Fund) Bidhirnala (Rules) 200 I,the Fund is required to distribute profit in the form of dividend to its unit holders an amountwhich shall not be less than 70% of annual profit during the year, net of 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) Bidhimala (Rules) 200 I 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 @ O.I 0% of the net asset value perannum, payable semi-annually in advance basis during the entire life of the Fund as per TrustDeed.

2. I 0 Custodian fee

Standard Chartered Bank Limited is entitled to receive a safekeeping fee @ O.I 0% on thebalance of securities calculated on average monthend value per annum as a custodian.

2.1 I Annual fee to SEC

Annual fee of Taka 2,000,000 (at the rate of O. IO%..()f the fund size) was also paid to SEC as perRules 10 and I I of Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules)2001.

2. I2 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) Bidhimala (Rules) 200 I.

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Amounts in TakaAt At

I Balance Sheet I 30June2012 30 June 2011

3. Marketable Securities - At Cost 1,425,172,508 1,042,395,976.- Equity shares (note 3.1)

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

I Sector/category Number of Amounts in Taka Ishares Cost I Market value I Difference I

Bank 4,869,420 266,715,579 147,732,150 (118,983,429)Cement 88,000 28,121,485 21,005,600 (7,115,885)Ceramic 4,840 783,255 322,828 (460,427)Travel & Tourism 87,400 6,555,000 6,555,000Engineering 125,770 16,125,879 9,599,998 (6,525,881)Food and Allied 42,500 27,115,559 25,517,000 (1,598,559)Fuel and Power 2,575,245 271,581,626 195,443,553 (76,138,074)Insurance 216,866 40,484,430 25,550,655 (14,933,774)Miscellaneous 40,350 25,734,563 18,067,005 (7,667,558)Mutual Fund 16,509,700 239,239,930 168,022,750 (71,217,180)

BFI 192,467 197,140,191 110,418,719 (86,721,472)Pharrna 412,243 127,955,518 128,268,569 313,051Services and Real Estate 13,699 1,728,292 567,643 (1,160,649)Tannery 256,400 81,964,398 71,308,640 (10,655,758)Telecornm un ication 343,400 77,624,461 70,877,600 (6,746,861)Textile 184,100 16,302,342 12,225,279 (4,077,063)

25,962,400 1,425,172,508 1,01 1,482,988 (413,689,519)

4. Corporate Bonds

BRAC Bank Bond 22,500,000 22,500,000Trust Bank Ltd Bond 90,000,000

I 12,500,000 22,500,000

5. Cash and Bank Balances

Fixed deposits 650,000,000Short term deposits with:

Sponsor account- BRAC Bank Ltd (A/C-150 II 0 173842700 I) 5,501,821 133,648,660Sponsor account- Eastern Bank Ltd (A/C-I 011220139908) 310,972,819 10,361,702Sponsor account- Dhaka Bank Ltd (A/C-020 1150000002t44) 2,804 110,899,435Sponsor account- EXIM Bank Ltd (A/C-00713 100188497) 142,896 5,801,254Sponsor account- AB Bank Ltd (A/C-4005779044430) 949,054Sponsor account- Premier Bank (A/C-O 14913500000002) 252,335,954Provisional investment account-

Eastern Bank Ltd (A/C-I 0 11360242531) 20, I0 1,655IPO-BDT account- BRAC Bank Ltd (A/C-1501101738427003) 5,766Escrow account- BRAC Bank Ltd (A/C-150 1101738427002) 507,784 500,000

590,520,554 911,211,051

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Amounts in Taka

5.1 Bank accountants having nil balanceAt

30 June 2012

fPO-USD account (A/C-150 120173842700 I)IPO-GBP account (A/C-1501201738427003)IPO-EURO account (A/C-150 120 1738427002)

At30June2011

The above foreign currency accounts were opened/maintained for collection/refund of share applicationmoney (unit capital) from non-resident Bangladeshis, book balance of those bank accounts appeared"nil" after issuance of refund warrants but as per bank statements their closing balances were USD-158.59 , GBP-45.80 and EURO-52.74 respectively at 30 June 2012, awaiting for clearance againstwhich reconciliation statements were prepared.

6. Preliminary and Issue Expenses

Opening balanceAdd: Addition during the year

62,376,120

Less: Interest income from escrow accountAmortization of prel iminary expenses

Closing balance

62,376,120186,134

6,620,57855,569,408

7. Other Current Assets

Receivable from sale of marketable securitiesDividend receivablesInterest receivablesOther receivable and advances

1,641,788163,600

2,507,3052,474,3906,787,083

8. Capital

200,000,000 units of Taka 10 each fully paid

81,720,42681,720,42615,459,4143,884,892

62,376,120

63,653,2451,371,540

10,554,8554,129,575

79,709,215

2,000,000,000 2,000,000,000

9. Current Liabilities and Provisions

Payable to sundry securitiesManagement feesCustodian feesAudit feesWithholding income tax payableWithholding VAT payablePrinting and publicationPreliminary expenses

./

1,131,29734,500

4,969,8011,092,043

100,000402,925

7,730,566

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559,0721,377,413457,03527,000

4,322,139458,078109,125

14,447,66221,757,524



IRevenue Account I Amounts in TakaYear ended30 June 2012

Year ended30 June 2011

.-10. Interest on Bank Deposits and Bonds

Interest onShort term depositsFixed depositsCorporate bonds

33,070,934 46,788,96437,329,841 33,665,5539,839,120 1,039,059------'----'--

80,239,895 ==8=1,=49=3=,5=76=

I I. Other Operating Expenses

Bank chargesOther expenses

1,471,661

34,666280,474

141,9781,329,683

315,140

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.

12.3 Figures of previous year have been rearranged wherever considered necessary, to conform thecurrent year's presentation.



1;2~LVTrusteeBangladesh General Insurance Company Limited

Dhaka, BangladeshDated, 13 August 2012

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