popularlifefirstmutual fund trustee: bangladesh general...

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

Popular Life First Mutual Fund

Auditors' report and financial statementsfor the year ended 30 June 2013

S. F. AHMED & COChartered AccountantsHouse # 51 (3rd floor), Road # 9, Block # F, Banani, Dhaka 1213, BangladeshTelephones (880-2): PABX 987-1018 & 987-0619Emails:[email protected] (ij) [email protected]: www.sfahmedco.org

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

House # 51 (3rd Floor)Road # 9, Block # F, BananiDhaka 12l3, Bangladesh

Phones: (880-2) 987-1018 & 987-0619E-mails:(i)[email protected]

(ii) [email protected]

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), whichcomprise 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 significantaccounting policies and other explanatory notes.

Management's responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance withBangladesh Financial Reporting Standards / Bangladesh Accounting Standards and other applicable laws andregulations. This responsibility includes: designing, implementing and maintaining internal control relevant to thepreparation and fair presentation of financial statements that are free from material misstatements, whether due tofraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that arereasonable in the circumstances.

Auditors' responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with Bangladesh Standards on Auditing. Those standards require that we comply with relevant ethicalrequirements and plan and perform the audit to obtain a reasonable assurance whether the financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financialstatements. The procedures selected depend on the auditors' judgement, including the assessment of the risks ofmaterial misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, weconsider internal control relevant to the entity's preparation and fair presentation of the financial statements in order todesign audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion onthe effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accountingpolicies used and the reasonableness of accounting estimates made by management, as well as evaluating the overallpresentation of the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our auditopinion. .

OpinionIn 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 ofthe results of its operations and its cash flows for the year then ended and comply with the requirements ofBangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001, Trust Deed and otherapplicable 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 werenecessary 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 fromour 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.

~S. F. AHMED & COChartered Accountants

House # 51 (3rd floor), Road # 9, Block # FBanani. Dhaka 1213, BangladeshDated, 13 August 2013


Statement of Financial Position(Balance Sheet) at 30 June 2013

Assets

Marketable (listed) securities - at costNon-listed securities -at costCash and bank balancesPreliminary and issue expensesOther current assetsTotal Assets

Capital and Liabilities

CapitalRetained earnings/(losses)Market risk reserveCurrent liabilities and provisionsTotal Capital and Liabilities

Net asset value per Unit

At costAt market price

ISee annexed notes

S. F. AHMED & COChartered Accountants

Amounts in TakaAt At

30 June 2013 30 June 2012

34567

1,289,688,356355,515,844671,654,999

41,317,32124,301,014

1,269,762,97499,960,288

855,789,03847,011,581

7,472,8222,382,477,534 2,279,996,703

8 2,000,000,000 2,000,000,00058,553,632 (99,870,155)

2.6 317,665,993 368,407,0319 6,257,908 11,459,826

2,382,4 77 ,534 2,279,996,703

11.88 11.3410.29 9.50

For Popular Life First Mutual Fund

lI?thv~TrusteeBan ladesh General Insurance Com an Limited

Signed in terms of our report of even date annexed


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Statement of Comprehensive Income (Revenue Account)for the year ended 30 June 2013

Income

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


Amounts in TakaYear ended Year ended

30June2013 30 June 2012

10

21,702,1537,525,903

115,471,954

23,932,24210,636,205

112,938,197161,477

Expenditure

Amortisation of preliminary and issue expensesManagement feesTrustee feesCustodian feesAnnual listing feesCDBL charges

Bank chargesAudit feeOther operating expensesTotal ExpenditureProfit before provisionMarket risk reserveProfit during the year

Accumulated losses brought forwardAccumulated profit/(Iosses) carried forward

Earnings per unit for the year

144,700,0 I0 147,668,121

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2.5 5,654,601 5,674,8812.8 25,735,757 31,089,1822.9 2,275,283 1,961,5962.10 595,261 606,9602.11 2,200,000 2,200,000

54,318 956,30485,203 291,74157,500 57,500

359,339 457,10037,017,262 43,295,264

107,682,748 104,372,85750,741,038 (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~TrusteeBan ladesh General Insurance Com an Limited




Statement of Cash Flowsfor the year ended 30 June 2013

Cash flows from operating activities:

Dividend incomeInterest on bank deposits and bondsAnnual listing feeOther advance, deposit and receivableCurrent liabilities and provisionsOther operating expensesOther incomeNet cash from operating activities (A)

Cash flows from investing activities:

Value of listed securitiesNon-listed securitiesReceivable from sundry securitiesApplication for investment in sharesPreliminary and issue expensesNet cash used in investing activities (B)

Cash flows from financing activities:

Capital contributionNet 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)



30 June 2013 30 June 2012

20,969,761106,726,564

(2,200,000)(370,047)

(29,00 1,447)

96,124,831

(26,345,804)(285,555,556)

31,642,490

(280,258,870)

(184,134,039)855,789,038671,654,999

For Popular Life First Mutual Fund

25,542,092114,799,57\

(200,000)(1,334,279)

(36,429,698)457,102161,477

102,996,265

(205,645,286)(99,960,288)169,57\,966(94,754,050)

(6,750,000)(237,537,658)

(134,541,394)990,330,432855,789,038

,r/9thv4TrusteeBan ladesh General Insurance Com an Limited


.~S. F. AHMED & COChartered Accountants

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Popular Life First Mutual FundNotes 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 21April 2010 between Popular Life Insurance Company Limited as a 'Sponsor' and the Bangladesh GeneralInsurance Company Limited as a "Trustee". The Fund was registered under the Trust Act 1882 andsubsequently listed with the Bangladesh Securities and Exchange Commission (BSEC) on 29 April 20 I0 underthe Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001. The operationsof 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 wasincorporated as a private limited company under Companies Act 1994 on March 2008.

Popular Life First Mutual Fund is a close-end Mutual Fund of ten 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 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 withgenerally 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 theInstitute of Chartered Accountants of Bangladesh as Bangladesh Accounting Standards(BASs)/Bangladesh Financial Reporting Standards (BFRSs). The disclosures of information made inaccordance with the requirements of Trust Deed, Securities and Exchange Rules 1987, BangladeshSecurities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001 and other applicable Rulesand 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 StockExchanges on 19 October 2010 and started transactions accordingly. These financial statements areprepared and presented covering the period from 0 I July 2012 to 30 June 2013.

2.3 Investment

All purchases and sales of securities that require delivery within the time-frame established by regulationor market convention are recognised at the date of trading ie, the date on which the Fund commits topurchase or sell the investment.

Bonus entitlements, if any, are not accounted for as income rather included in the portfolio to reduce theaverage cost.

2.3.1 Valuation of investmentListed securities are valued at average closing quoted market prices prevailed as of 30 June 2013on an aggregate portfolio basis.

Investment is recorded in the Financial position at cost.

2.4 Taxation

The income of the Fund is exempted from Income Tax as per SRO No. 333-Actllncome Tax/2011 dated10 November 2011, under Section 44(4) clause (b) of Income Tax Ordinance, 1984; hence no provisionfor tax is required.

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2.5 Amortisation of preliminary and issue expenses

Preliminary and issue expenses represent expenditure incurred prior to commencement of operations andestablishment of the Fund. These costs are amortised within ten years' tenure after adjusting interestincome 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 onportfolio value of investment as on June 30, 2013 which comes to Taka 317,665,993, last year on June30,2012 total provision was Taka 368,407,032 . As the current year required provision is less than theearlier year of Taka 50,741,039, this has been transfered to revenue account as income. Details are innote 3.1

2.7 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 re-investment (bonus share) or both to its unit holders an amount which shall not be less than 70% of annualprofit 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 feeson weekly average net asset value (NA V) as per Rule 65 of Bangladesh Securities and ExchangeCommission (Mutual Fund) Bidhimala (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 remaining balance of the weeklyaverage NA V per annum.

2.9 Trustee fee

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

2.10 Custodian fee

BRAe Bank Limited is entitled to receive a safekeeping fee @ 0.07% on the balance of securitiescalculated on average month-end value per annum as a custodian.

2.11 Annual listing fee

Annual fee of Taka 2,000,000 (at the rate of 0.10% of the fund size) was also paid to BSEC as per Rules10 and II of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001.

2.12 Revenue recognition

Gains/losses arising on sale of investment are included in the Revenue Account on the date at which thetransaction takes place. Dividend and interest income are recognized as per BAS-18 and BangladeshSecurities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001.

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Notes to financial statements for the year ended 30 June 2013


Amounts in TakaI Balance Sheet I At At30 June 2013 30 June 2012

3. 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/categoryNumber of Amounts in Taka

shares Cost Market value DifferenceBank 5,223,198 221,173,450 130,818,072 (90,355,377)Cement 121,200 40,825,336 40,602,000 (223,336)Ceramic 36,469 1,670,741 1,903,682 232,941Corporate Bond 30,490 30,457,284 34,208,885 3,751,601Engineering 120,795 14,897,210 8,668,320 (6,228,890)Food and Allied 63,150 41,390,837 67,273,695 25,882,858Fuel and Power 2,070,138 200,636,042 139,326,601 (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 16,730,150 204,709,916 150,292,405 (54,417,511)NBFI 426,271 199,869,074 123,512,572 (76,356,502)Pharma 321,491 89,753,488 84,946,169 (4,807,319)Services and Real Estate 20,872 2,975,257 599,026 (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 1,289,688,356 972,022,363 (317,665,993)

4. Non listed security -at cost

SK. Akijuddin Ltd Short Term Bond 160,000,000Trust Bank Unsecured Suordinated Bond 90,000,000 90,000,000Renata Ltd Short Term Bond 70,000,000Farmers' Bank Ltd - shares 25,555,556Bank Asia Zero Coupon Bond 9,960,288 9,960,288

355,515,844 99,960,288

5. Cash and bank balances

Fixed deposits 140,512,827 20,000,000Short term deposits with:

Sponsor account-Southeast Bank Ltd (AlC-0083131 000002) 223,876,687The Premier Bank Ltd (AlC-1 0413600007) 158,580,263The Premier Bank Ltd (AlC-O 14913500008) 71,887,107 20 I,533, 180ONE Bank Ltd (A/C-O 123000000529) 58,132,419Eastern Bank Ltd (AlC-1O 11220 139919) 15,059,167 208,320,268BRAC Bank Ltd (AlC-150 110 1733958002) 3,266,220 2,594,278United Commercial Bank Ltd (AlC-0072 1320000288) 9,873 81,860,204The City Bank Ltd (AlC-31 0 117731800 I) 2,100 2,705AB Bank Ltd (AlC-4005-775828-430) 22 1,938Southeast Bank Ltd (Ne-OOnI3I 000006) 321,279,731Eastern Bank Ltd (NC-IO 11360242520) 20,101,655

IPa - BRAC Bank Ltd (AlC-150 1101733958003) 288,655 95,080Escrow account - BRAC Bank Ltd (AlC-150 110 173395800 I) 39,659

671,654,999 855,789,038

An amount of Taka 6,198,642 which was collected during subscription of units would require to be refunded to thesubscribers on demand which is deposited with the above-refund IPa account.

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Notes to financial statements for the year ended 30 June 2013

5.1 Bank accounts having nil balance

IPO-USD account-BRAC Bank Ltd (AlC-150 110 173395800 I)IPO-GBP account-BRAC Bank Ltd (AlC-150 II °1733958003)IPO-EURO account-BRAC Bank Ltd (AlC-150 II °1733958002)


Amounts in TakaAt At

30 June 2013 30 June 2012

The above foreign currency accounts were opened/maintained for collection/refund of share applicationmoney (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 300.57, GBP44.25 and EURO 51.02 respectively at 30 June 2013 against which reconciliation statements were prepared.

6. Preliminary and issue expenses

Opening balanceLess: Interest on escrow account

Less: Amortisation of preliminary and issue expensesClosing balance

7. Other current assets

Interest receivableReceivable from sale of marketable securitiesOther advance and depositsDividend receivableSecurity deposit

8. Capital

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

9. Current liabilities and provisions

Withholding income tax payableCustodian feesPreliminary expensesWithholding VAT payablePublication expensesManagement feesAudit feePayable to sundry securities

Revenue Account

10. Interest on Bank Deposits and Bonds

Interest onShort tenn depositsCorporate bondsFixed deposits

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47,011,58139,659

53,184,538498,076

46,971,9225,654,601

52,686,4625,674,881

41,317,321 47,011,581

11,886,6238,135,1432,607,6861,171,562

500,000

3,101,5741,194,4382,237,640

439,170500,000

24,301,014 7,472,822

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

2,829,5981,405,2501,285,387

493,277100,00097,97745,000

1,419

3,176,3881,278,4061,285,387

210,095100,000

45,0005,364,550

6,257,908 11,459,826


30 June 2013 30 June 2012

71,343,32329,011,85315,116,778

36,014,35812,174,88664,748,953

115,471,954 112,938,197



11. Others

11.1 These notes form an integral part of the annexed financial statements and accordingly are to be read inconjunction therewith.

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

11.3 Figures of previous year have been rearranged wherever considered necessary, to conform the current year'spresentation.

For Popular Life First Mutual Fund/i!L-.Asset ManagerRACE Management PCL Bangladesh General Insurance Company Limited

Dhaka, BangladeshDated, 13 August 2013

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