LAKSON INCOME FUND Annual Report 2017
LAKSON INCOME FUND
LAKSON INCOME FUND
CONTENTS Vision & Mission Statement
1
Fund's Information
2
Report of the Directors of the Management Company
4
Report of the Directors of the Management Company (In Urdu)
9
Report of the Fund Manager
16
Trustee Report to the Unit Holders
20
Statement of Compliance with the Code of Corporate Governance
21
Review Report to the Unit Holders on Statement of Compliance with the Best Practices of the Code of Corporate Governance
24
Independent Auditors' Report to the Unit Holders
25
Statement of Assets and Liabilities
27
Income Statement
28
Statement of Comprehensive Income
29
Distribution Statement
30
Statement of Movement in Unit Holders' Fund
31
Cash Flow Statement
32
Notes to the Financial Statements
33
Performance Table
68
LAKSON INCOME FUND
Vision To be a top quartile provider of investment solutions to both individuals and institutions. Through the success of our clients and employees we seek to build sustainable and long-term shareholder value, and to be an employer of choice in the asset management industry.
Mission To deliver superior performance as measured by market share parameters, high-quality service and a portfolio of innovative yet tailored products across a range of investment disciplines and distribution channels. To provide a fulfilling, stimulating and supportive environment for our employees that fosters their personal growth and facilitates our productivity as a team.
1
LAKSON INCOME FUND
Funds Information Management Company
Lakson Investments Limited Head Office Lakson Square, Building No.2, Sarwar Shaheed Road, Karachi-74200, Pakistan. Phone: (9221) 3569.8000 Fax: (9221) 3568.1653 Web site: www.li.com.pk E-mail:
[email protected] Lakson Investments Limited (Regulated by the DFSA as a Representative Office) Level 15, Gate Building DIFC, P.O. Box 507054 Dubai, U.A.E. Phone: +971.4 401.9284 Fax: +971.4 401.9578
Board of Directors of the Management Company
Chief Financial Officer & Company Secretary of the Management Company Audit Committee Human Resource and Remuneration Committee
Mr. Iqbal Ali Lakhani - Chairman Mr. Babar Ali Lakhani - Chief Executive Officer Mr. A. Aziz H. Ebrahim Mr. Mahomed J. Jaffer Mr. Amin Mohammed Lakhani Mr. Jacques John Visser Mr. Daniel Scott Smaller Mr. Zahid Zakiuddin
Ms. Maimoona Raffat Mr. Zahid Zakiuddin - Chairman Mr. A. Aziz H. Ebrahim Mr. Iqbal Ali Lakhani Mr. Iqbal Ali Lakhani - Chairman Mr. Babar Ali Lakhani Mr. Daniel Scott Smaller
Trustee
Central Depository Company of Pakistan Limited CDC House, 99-B, Block-B, S.M.C.H.S, Main Shahra-e-Faisal, Karachi, Pakistan.
Auditors
BDO Ebrahim & Co. Chartered Accountants 2nd Floor, Block C, Lakson Square, Building No. 1, Sarwar Shaheed Road, Karachi - 74200.
2
LAKSON INCOME FUND Bankers to the Fund
AlBaraka Bank Pakistan limited Allied Bank Limited Askari Bank Limited Bank Al-Falah Limited Dubai Islamic Bank Pakistan Limited Faysal Bank Limited Habib Bank Limited Habib Metropolitan Bank Limited JS Bank Limited National Bank of Pakistan NIB Bank Limited Sindh Bank Limited Soneri Bank Limited Tameer Microfinance Bank Limited United Bank Limited NRSP Microfinance Bank Limited Mobilink Microfinance Bank Limited
Legal Adviser
Fazleghani Advocates F-72/I, Block 8, KDA-5, Kehkashan, Clifton, Karachi, Pakistan.
Registrar
Lakson Investments Limited Lakson Square, Building No.2, Sarwar Shaheed Road, Karachi-74200, Pakistan
Distributors
Adam Securities Amir Noorani BMA Financial Elixir Securities (Pvt.) Limited Ismail Iqbal Securities Metro Securities Pvt. Limited Pearl Securities Pvt. Limited Rabia Fida Topline Securities (Pvt.) Limited Vector Capital (Pvt.) Limited
Rating by PACRA
A+(f) : Fund Stability Rating AM2+ : Asset Manager Rating
3
LAKSON INCOME FUND
REPORT OF THE DIRECTORS OF THE MANAGEMENT COMPANY FOR THE YEAR ENDED JUNE 30, 2017 The Board of Directors of Lakson Investments Limited, the Management Company of the Lakson Income Fund ("LIF") is pleased to submit its report together with Audited Financial Statements for the year ended June 30, 2017 Fund Objective The investment objective of the Scheme is to provide competitive total returns through investment in a diversified portfolio of fixed income securities. The Scheme shall invest in various fixed income securities with a mix of short term, medium term, and longer term maturities depending on the assessment by the Management Company of interest rate trends and prospective returns. Fund Profile LIF is an open end income fund which invests in Investment-grade Debt Securities, Government Securities, Certificate of Investments, Clean Placements, Term Deposit Receipts, and other fixed income instruments. The overall duration of the portfolio is kept below 4 years while at least 25% of Net Assets are kept in the form of cash or Treasury Bills of maximum 90 days maturity. LIF is managed through a team-driven, top-down process utilizing active sector rotation, duration and yield curve management. Economic conditions are constantly monitored to forecast interest rate changes. The added value for LIF comes from identifying opportunities to shift investments between various maturities and between different instruments. LIF is allowed to borrow up to 15% of Net Assets to meet redemptions however LIF did not utilize this facility during the period under review. Fund Performance The LIF yielded 6.92% in FY17 compared to 8.57% in FY16. The Benchmark of the LIF, average daily rate of 6 month KIBOR, yielded 6.00% in FY17 compared to 7.16% in FY16. The LIF outperformed the Benchmark by 92bps. Asset allocation was split between placements (26%), corporate debt (9%), MTS (2%), spread transactions (6%) and cash (50%) while WAM was maintained on the lower end at 166 days. The LIF grew by 24.32% in FY17 to PKR 3,624 mn from PKR 2,915 mn at the start of the year. The Fund paid out PKR 7.45/unit in dividend in line with its policy of distributing over 90% of the annual income to unit holders. The LIF has squared its longer tenor exposure as market yields started to rebound on the back of rising interest rates possibilities. In an environment where interest rates seem to have bottomed out and the risk/return profile of taking yield curve risk is unfavorable the Fund will focus on building exposure towards MTS, Spread transactions, quality TFCs/Sukuks and high yielding bank placements. Earnings Per Unit (EPU) EPU is not being disclosed as we feel determination of weighted average units for calculating EPU is not practicable for open end funds Income Distribution The Chief Executive Officer under the authority from Board of Directors of the Management Company during the year declared the interim payout of PKR 7.4452 per unit (7.4452% of face value of PKR 100/-) amounting to PKR 38.521 million distribution in cash for the year ended June 30, 2017. Fund and Asset Manager Rating The Pakistan Credit Rating Agency Limited ('PACRA') has upgraded the asset manager rating of the Management Company to AM2+ from AM2. The PACRA has maintained the Fund Stability Rating of LIF at "A+(f)". Corporate Governance The Fund is listed on the Pakistan Stock Exchange Limited; therefore, the Management Company is required to comply with the requirements of the Code of Corporate Governance for listed companies. 1. The financial statements prepared by the Management Company present fairly the state of affairs of the Fund, the results of its operations, cash flows and movement in unit holders' fund.
4
LAKSON INCOME FUND 2. Proper books of accounts of the Fund have been maintained. 3. Appropriate accounting policies have been consistently applied in the preparation of financial statements and accounting estimates are based on reasonable and prudent judgment. 4. Relevant International Financial Reporting Standards, as applicable in Pakistan, provisions of NonBanking Finance Companies (Establishment and Regulation) Rules, 2003, Non-Banking Finance Companies and Notified Entities Regulations, 2008 ('NBFC Regulations), directives issued by the Securities & Exchange Commission of Pakistan and requirements of the constitutive documents of the Fund have been followed in the preparation of financial statements and any departure there from has been adequately disclosed. 5. The system of internal control is sound in design and has been effectively implemented and monitored. 6. There are no significant doubts upon the Fund's ability to continue as a going concern. 7. There has been no material departure from the best practices of Corporate Governance, as detailed in the listing regulations. 8. Key financial data as required by the Code of Corporate Governance has been summarized in this Annual Report. 9. Outstanding statutory payments on account of taxes, duties, levies and charges have been fully disclosed in the Financial Statements. 10. The statement as to the value of investments of provident fund is not applicable in the case of the Fund as such expenses are borne by the Management Company. 11. Meetings of the Board of Directors of the Management Company are held at least once in every quarter. During the year under review four meetings were held. Attendance of the Directors in these meetings is as follows:
Meetings S.No.
Name
Designation
Total
Attended Leave Granted
1
Mr. Iqbal Ali Lakhani
Chairman
4
3
1
2
Mr. Babar Ali Lakhani
Chief Executive
4
4
-
3
Mr. A. Aziz H. Ebrahim
Director
4
4
-
4
Mr. Mahomed J. Jaffer
Director
4
4
-
5
Mr. Amin Mohammed Lakhani
Director
4
2
2
6
Mr. Daniel Scott Smaller
Director
4
4
-
7
Mr. Zahid Zakiuddin
Director
4
4
-
8
Mr. Jacques John Visser
Director
4
3
1
12. Meetings of the Audit Committee of the Management Company are held at least once in every quarter. During the year under review four meetings were held. Attendance of the Directors in these meetings is as follows:
5
LAKSON INCOME FUND S.No.
Name
Designation
Total
Meetings Attended Leave Granted
1
Mr. Zahid Zakiuddin
Chairman
4
4
-
2
Mr. A. Aziz H. Ebrahim
Member
4
4
-
3
Mr. Iqbal Ali Lakhani
Member
4
3
1
13. During the year, one meeting of the Human Resource and Remuneration Committee comprising of Mr. Iqbal Ali Lakhani - Chairman, Mr. Babar Ali Lakhani - Member and Mr. Daniel Scott Smaller - Member was held, all the three members of the Committee attended the meeting. 14. The pattern of unit holding is given in note No. 25.1 of the Financial Statements. 15. During the year under review trades in the Units of the Fund were carried out by the Directors, the Chief Executive Officer, the Executives and including their spouses and minor children are as under: S.No.
Name
1
Babar Ali Lakhani
2
Amin Mohammed Lakhani
Designation Chief Executive Officer Director
Investment
Redemption
(Number of Units) 1,351.9608
-
209,526.4716
-
External Auditor The existing auditors M/s. BDO Ebrahim & Co., Chartered Accountants being eligible have given their consent for reappointment as auditors for the year ending June 30, 2018. The Board of Directors, on the recommendations of the Audit Committee, has reappointed M/s. BDO Ebrahim & Co., Chartered Accountants for the year ending June 30, 2018. Economy review CPI inflation clocked in at 4.16% in FY17, compared to 2.86% in the same period last year. The CPI inflation however remained well under the policy rate, keeping real interest rates positive and allowed the central bank to maintain its policy rate at 5.75% throughout the period under review. The low interest rate environment supported private sector credit expansion which recorded 18% YoY growth. On the trade front, imports surged to USD 53.03 bn in FY17 up 18.67% YoY as compared to USD 44.69 bn in FY16 on account of higher import of machinery (up 37.27% YoY) and petroleum products (up 30.25% YoY). On the other hand, exports failed to mark any recovery, falling 1.63% YoY in FY17 to USD 20.45 bn. Due to expanding trade deficit, up 36.3% in FY17 to USD 32.6 bn, and slowdown in remittances (down 3.08% YoY to USD 19.3 bn in FY17) particularly from Gulf countries, U.K. and USA, the current account deficit has deteriorated to USD 12.1 bn in FY17 from USD 4.9 bn in the same period last year. Due to a widening current account and external debt servicing (USD 4.8 bn for 11MFY17), FX reserves depleted to USD 21.37 bn in FY17, falling by some 8.1% YoY. PKR's stability against the USD however, remained intact during the period, despite USD gaining further strength against major emerging market currencies. During 9MFY17, fiscal deficit swelled to 3.9% of GDP on account of less than expected tax revenues along with higher development & security related expenditures against the annual target of 3.8% of GDP forcing the government to revise the budget deficit target to 4.1% of GDP. Cumulatively in 10MFY17, tax collection increased by only 8% to PKR 2,518.7 bn as compared to PKR 2,332.1 bn in SPLY.
6
LAKSON INCOME FUND Fixed Income Market Review Headline interest rates remained unchanged at 5.75%/6.25% across FY17 as inflation remained benign at 4.2% YoY even as growth activity accelerated, with LSM up 5.5% YoY (11MFY17) and credit to private sector rising by 18% YoY. However, burgeoning risks on the external front appear to now be weighing on monetary policy; in Nov'16, 4 out of 10 MPC members voted for a 25bps cut but in the May'17 MPS, all committee members unanimously voted to keep interest rates unchanged. In its last communication in Jul'17, the SBP has pointed towards strong likelihood of continued growth momentum, contained inflation (FY18F: 4.5%-5.5%) and challenges on the external front (FY17 Current Account deficit rose to USD 12.1 bn or about 4% of GDP), while again keeping interest rates unchanged. MPC Committee Voting Pattern MPS Date
25bps cut
No change
Total
Jul'16
2
8
10
Sep'16
2
8
10
Nov'16
4
6
10
Jan'17
3
6
9
Mar'17
2
6
8
May'17
-
10
10
The government was a heavy borrower from the SBP in FY17 while not tapping commercial banks for financing. This allowed banks space and incentive to lend to the private sector, which was further supported by rising demand and soft interest rates. This growth is broad-based with trade financing and working capital lending also rising up to join the already-visible uptick in long-term fixed investment loans. This is in line with the SBP's outlook that overall growth momentum in the economy will likely be maintained. That said, with Pakistan entering an election year, it is possible that GoP borrowing requirements lift especially if populist decision making takes over. M2 growth clocked in at 13.7% YoY for FY17, at the same pace of growth witnessed in FY16. After the marked shift into PIBs a few years ago, GoP preference is again tilting towards shorter-term T Bills. From a 36% share in Jun'16, PIBs constituted less than 29% of GoP's total domestic debt by Apr'17. This differential has been almost entirely filled up by T Bills which are cheaper for the GoP; in FY17, the 12M T Bill yield averaged 5.96% vs. average yield for 3YR PIB of 6.36% (10YR bond was more than 8%). In FY17, the government raised PKR 9.1 tn through the T-Bills and PKR 894 bn through PIBs. In 4Q, as government focus continued to shift from PIBs to T-Bills with money raised through PIBs decelerated to PKR 115 bn during the quarter compared to PKR 646 bn raised in 1Q. This follows change in thinking in GoP's debt strategy following the IMF program. Date
T-Bills
PIB
6M
3M
12M
3YR
5YR
10 YR
30-Sep-16
5.86%
5.90%
5.91%
6.19%
6.69%
7.80%
30-Dec-16
5.96%
5.98%
5.95%
6.19%
6.69%
7.80%
31-Mar-17
5.97%
5.99%
5.99%
6.40%
6.89%
7.94%
30-Jun-17
5.99%
6.01%
6.04%
6.40%
6.90%
7.94%
Future Outlook Progress on CPEC-related projects and rebound in agriculture is expected to take GDP growth to 5.7% in FY18, from 5.3% in FY17. Interest rates appear to have bottomed, and could see some uptick in line with the expected increase in CPI inflation. Widening of twin deficits remains a key concern, where
7
LAKSON INCOME FUND we believe that the long-pending devaluation of the PKR can stimulate falling exports. Likewise, timely disbursements related to the government's exports incentive package could help to generate some much needed foreign exchange. On the import front, curtailments of unnecessary items as well as stable oil prices are a key to keep the trade deficit in check. On the fiscal front, active and honest revenue mobilization will be crucial to meet the government's fiscal deficit target of 4.1% of GDP for FY18. Acknowledgment The Board is thankful to its valued investors, the Securities & Exchange Commission of Pakistan, the State Bank of Pakistan, the Trustee of the Fund - Central Depository Company of Pakistan Limited and the management of the Pakistan Stock Exchange Limited for their continued cooperation and support. The Directors of the Management Company also acknowledge the efforts put in by the team of the Management Company for the growth and the prudent management of the Fund.
For and on behalf of the Board
Director
Chief Executive Officer
Dated: August 25, 2017 Karachi
8
LAKSON INCOME FUND
9
LAKSON INCOME FUND
10
LAKSON INCOME FUND
11
LAKSON INCOME FUND
12
LAKSON INCOME FUND
13
LAKSON INCOME FUND
14
LAKSON INCOME FUND
15
LAKSON INCOME FUND
REPORT OF THE FUND MANAGER FOR THE YEAR ENDED JUNE 30, 2017 Fund Facts Open-End Income Fund 3,264 100.676 Forward Day CDC Pakistan Limited BDO Ebrahim & Co. 1.50% 1.50% None November 13, 2009 Average daily rate of 6M KIBOR (Ask) Dealing Days Mon - Fri Cut-Off Time 04:00 PM (Mon-Fri) Fund Rating 'A+' by PACRA Asset Manager Rating AM2+
Asset Allocation
Fund Type Category Net Assets (PKR Mil.) NAV (30.06.2017) Pricing Mechanism Trustee Auditor Management Fee Front End Load Back End Load Launch Date Benchmark
Morningstar FY17 - YTD June-17 2 Months 3 Months 6 Months 12 Months CY17 - YTD Simple Annualized FY17 - YTD June-17 2 Months 3 Months 6 Months 12 Months CY17 - YTD 3 Years 5 Years Since Inception
LIF
Benchmark
6.92% 19.28% 12.14% 10.10% 8.29% 6.92% 8.29%
6.00% 6.20% 6.31% 6.29% 6.24% 6.00% 6.24%
LIF
Benchmark
6.92% 17.76% 11.57% 9.74% 8.13% 6.92% 8.13% 10.22% 11.16% 14.13%
6.00% 6.15% 6.15% 6.15% 6.14% 6.00% 6.14% 9.72% 10.54% 11.92%
Others 5%
Placements with Banks & DFIs 26%
Tbills TFCs 3% MTS 6% 2% Sukuk Spread 3% Transactions 6%
Cash 50%
Credit Split
A5%
Unrated Govt. 0.45% Securities 3% AA+ 9% AAA 3% AA 1%
Unrated 8%
A 27% AA41%
Investment Committee
Babar Ali Lakhani Kashif Mustafa Mustafa O. Pasha, CFA Syed Saifullah Kazmi Sana Abdullah, CFA Hassan Bin Nasir Junaid Arshad, ACCA Tayyaba Azeem
Chairman
Fund Objective The investment objective of the Lakson Income Fund ("LIF") is to provide competitive total return through investment in a diversified portfolio of fixed income securities. Investments will be made in a variegated mix of short term, medium term and longer term maturities depending on the assessment by the Investment Team of interest rate trends and prospective returns.
Investment Strategy The LIF focused on constructing a liquid, diverse and high credit quality portfolio in accordance with its investment objective. Exposure in T-Bills, PIBs, placements, TFCs/Sukuks, MTS and spread transactions was managed based on a relative yield analysis and interest rate outlook. The LIF maintained an average exposure of 52% in cash and 23% in placements in order to maintain liquidity and benefit from the competitive rates on offer. During the period under review, the LIF built exposure to MTS
16
LAKSON INCOME FUND and Spread Transactions where the cumulative average exposure to both asset classes was 7%. Average TFC/Sukuk exposure in FY17 was increased to 11.4%. By the end of FY17 LIF had reduced the Weighted Average Maturity ("WAM") of its portfolio to 166 days and completely exited it PIB positions in order to reduce NAV volatility and interest rate risk.
Fund Profile LIF is an open end income fund which invests in Investment-grade Debt Securities, Government Securities, Certificate of Investments, Clean Placements, Term Deposit Receipts, and other fixed income instruments. The overall duration of the portfolio is kept below 4 years while at least 25% of Net Assets are kept in the form of cash or Treasury Bills of maximum 90 days maturity. LIF is managed through a team-driven, top-down process utilizing active sector rotation, duration and yield curve management. Economic conditions are constantly monitored to forecast interest rate changes. The added value for LIF comes from identifying opportunities to shift investments between various maturities and between different instruments. LIF is allowed to borrow up to 15% of Net Assets to meet redemptions however LIF did not utilize this facility during the period under review.
Fixed Income Market Review Headline interest rates remained unchanged at 5.75%/6.25% across FY17 as inflation remained benign at 4.2%YoY even as growth activities accelerated, with LSM up 5.5%YoY (11MFY17) and credit to private sector rising by 18%YoY. However, burgeoning risks on the external front appear to now be weighing on monetary policy; in Nov'16, 4 out of 10 MPC members voted for a 25bps cut but in the May'17 MPS, all committee members unanimously voted to keep interest rates unchanged. In its last communication in Jul'17, the SBP has pointed towards strong likelihood of continued growth momentum, contained inflation (FY18F: 4.5%-5.5%) and challenges on the external front (FY17 Current Account deficit rose to US$12.1bn or about 4% of GDP), while again keeping interest rates unchanged. MPC Committee Voting Pattern MPS Date
25bps cut
No change
Total
Jul'16
2
8
10
Sep'16
2
8
10
Nov'16
4
6
10 9
Jan'17
3
6
Mar'17
2
6
8
May'17
-
10
10
The government was a heavy borrower from the SBP in FY17 while not tapping commercial banks for financing. The consequent space to focus on the private sector, alongside rising demand and soft interest rates, enabled private sector credit to lift by a healthy 18%YoY in FY17. This growth is broadbased with trade financing and working capital lending also rising up to join the already-visible uptick in long-term fixed investment loans. This is in line with the SBP's outlook that overall growth momentum in the economy will likely be maintained. That said, with Pakistan entering an election year, it is possible that GoP borrowing requirements lift especially if populist decision making takes over. M2 growth clocked in at 13.7%YoY for FY17, at the same pace of growth witnessed in FY16. After the marked shift into PIBs a few years ago, GoP preference is again tilting towards shorter-term T Bills. From a 36% share in Jun'16, PIBs constituted less than 29% of GoP's total domestic debt by Apr'17. This differential has been almost entirely filled up by T Bills which are cheaper for the GoP; in FY17, the 12m T Bill yield averaged 5.96% vs. average yield for 3Yr PIB of 6.36% (10Yr bond was more than 8%). In FY17, the government raised PKR 9.1 trillion through the T-Bills and PKR 894bn through PIBs. In 4Q, as government focus continued to shift from PIBs to T-Bills with money raised through PIBs decelerated to PKR 115 bn during the quarter compared to PKR 646bn raised in 1Q. This follows change in thinking in GoP's debt strategy following the IMF program.
17
LAKSON INCOME FUND Date
T-Bills
PIB
6M
3M
12M
3YR
5YR
10 YR
30-Sep-16
5.86%
5.90%
5.91%
6.19%
6.69%
7.80%
30-Dec-16
5.96%
5.98%
5.95%
6.19%
6.69%
7.80%
31-Mar-17
5.97%
5.99%
5.99%
6.40%
6.89%
7.94%
30-Jun-17
5.99%
6.01%
6.04%
6.40%
6.90%
7.94%
Sustained economic growth will be dependent on structural reforms and the implementation of the China Pakistan Economic Corridor (CPEC). The discount rate is likely to stay low in the coming year giving further impetus to the economy. The textile sector which accounts for a significant portion of the country's exports is likely to suffer from Brexit and a falling Euro and Pound.
Fund Performance The LIF yielded 6.92% in FY17 compared to 8.57% in FY16. The Benchmark of the LIF, average daily rate of 6 month KIBOR, yielded 6.00% in FY17 compared to 7.16% in FY16. The LIF outperformed the Benchmark by 92bps. Asset allocation was split between placements (26%), corporate debt (9%), MTS (2%), spread transactions (6%) and cash (50%) while WAM was maintained on the lower end at 166 days. The LIF grew by 24.32% in FY17 to PKR 3,624 mn from PKR 2,915 mn at the start of the year. The Fund paid out PKR 7.45/unit in dividend in line with its policy of distributing over 90% of the annual income to unit holders. The LIF has squared its longer tenor exposure as market yields started to rebound on the back of rising interest rates possibilities. In an environment where interest rates seem to have bottomed out and the risk/return profile of taking yield curve risk is unfavorable the Fund will focus on building exposure towards MTS, Spread transactions, quality TFCs/Sukuks and high yielding bank placements. Performance Table Net Assets - Beginning (PKR Mil.) Net Assets - Ending (PKR Mil.) Highest Offer Price (PKR) Lowest Offer Price (PKR) Highest Redemption Price (PKR) Lowest Redemption Price (PKR) Beginning NAV - Ex-Div. (PKR) Interim Distributions (PKR) Final Distribution (PKR) Ending NAV - Ex-Div. (PKR) Return Net Income (PKR Mil.)
Distributions 1st Interim Distribution NAV before Distribution NAV after Distribution Distribution Date 2nd Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
FY17 2,915 3,624 108.5328 102.0811 106.9288 100.5725 101.1380 7.4452 100.4407 6.92% 30.00
FY16 2,568 2,915 110.9122 102.3574 109.2731 100.8447 100.8777 8.3922 101.1380 8.57% 128.00
FY17 FY16 PKR per Unit 7.4452 107.8859 100.4407 22-Jun-17 -
LIF vs. Benchmark 107 106 105 104 103 102 101 100 Jun-16
Sep-16 LIF
2.4863 109.2731 106.7868 21-Jun-16
Dec-16
Mar-17
Jun-17
Benchmark
5.9059 106.8884 100.9825 29-Jun-16
Future Outlook Progress on CPEC-related projects and rebound in agriculture sector growth is expected to take GDP growth to 5.7% in FY18, from 5.3% in FY17. Interest rate appear to have bottomed, and could see some uptick in line with the expected increase in CPI inflation. Widening of twin deficit remains key concern, where we believe that the long-pending devaluation of the local currency can add stimulus
18
LAKSON INCOME FUND to the falling exports. Likewise, timely disbursements related to exports incentive package announced by the government can also bode well for the falling exports. On the import front, curtailment of unnecessary items as well as stable (read low) oil prices are a key to keep the trade deficit in check. On the fiscal front, active and honest revenue mobilization will be crucial to meet the government's fiscal deficit target of 4.1% of GDP for FY18. The LIF have squared its longer tenor exposure as market yields started to rebound on the back of rising interest rates possibilities. In an environment where interest rates seem to have bottomed out and the risk/return profile of taking yield curve risk is unfavorable the Fund will focus on building exposure towards MTS, Spread transactions, quality TFCs/Sukuks and high yielding bank placements.
Circumstances Materially Affecting Interests of Unit Holders During the period under review, the Fund Stability Rating of the LIF was maintained by PACRA at 'A+(f)' which denotes a fund with stable performance generally in line with its peers with adequate capacity to respond to future opportunities or stress situations. PACRA upgraded the Asset manager Rating of Lakson Investments to 'AM2+' during FY17. Any change in interest rates would affect the market values of tradable instruments present in the LIF's portfolio. Any change in counterparty credit ratings can materially affect the interests of unit holders. Such changes could impact the NAV and credit split of the LIF. As of June 30th, 2017 the LIF has maintained provisions against Sindh Workers' Welfare Fund's liability to the tune of PKR 4.60 million. If the same were not made the NAV per unit of the LIF would be higher by PKR 0.1279. If the LIF would not have made the SWWF provisions during FY17, the year to date annualized return of the LIF for FY17 would be higher by 0.13%. For details investors are advised to read the Note 14.1 of the latest Financial Statements of the LIF.
Other Disclosures Lakson Investments Limited or any of its delegates did not receive any soft commission from its broker(s) or dealer(s). There was no unit split undertaken during the year. As of June 30, 2017 the LIF does not employ leverage.
Breakdown of Unit Holding by Size Units Range
No. of Clients
Units Held
3 4 3 0 8 12 1 5 6 8 1
244 1,389 2,370 46,822 236,682 83,197 1,351,833 4,333,081 19,999,681 9,943,076
51
35,998,375
1 - 100 101 - 500 501 - 1,000 1,001 - 5,000 5,001 - 10,000 10,001 - 50,000 50,001 - 100,000 100,001 - 500,000 500,001 - 1,000,000 1,000,001 - 5,000,000 5,000,001 - above
19
LAKSON INCOME FUND
20
LAKSON INCOME FUND
STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE FOR THE YEAR ENDED JUNE 30, 2017 This statement is being presented to comply with the Code of Corporate Governance ('the Code') contained in Regulation No 5.19.24 of listing regulations of Pakistan Stock Exchange Limited where Lakson Income Fund ('the Fund') is listed. The purpose of the Code is to establish a framework of good governance, whereby a listed entity is managed in compliance with the best practices of corporate governance. Lakson Investments Limited ('Management Company'), an un-listed public company, which manages the affairs of the Fund, has applied principles contained in the Code in the following manner. 1. The Management Company encourages representation of independent non-executive directors onits Board of Directors. At present the Board includes: Category
Names
Independent Directors
1. 2. 3. 4.
Mr. Daniel Scott Smaller Mr. Mahomed J. Jaffer Mr. Zahid Zakiuddin Mr. Jacques John Visser
Executive Director
1.
Mr. Babar Ali Lakhani
Non-Executive Directors
1. 2. 3.
Mr. Iqbal Ali Lakhani - Chairman Mr. A. Aziz H. Ebrahim Mr. Amin Mohammed Lakhani
The Independent Directors meet the criteria of independence under clause 5.19.1(b) of the Code. 2. The Directors of the Management Company have confirmed that none of them is serving as a director on more than seven listed companies, including the Management Company. 3. All the resident Directors of the Management Company are registered as taxpayers and none of them has defaulted in payment of any loan to a banking company, a DFI or an NBFI or, being a broker of a stock exchange, has been declared as a defaulter by that stock exchange. 4. During the period no casual vacancy occurred on the Board of the Management Company. 5. The Management Company has prepared a "Code of Conduct" and has ensured that appropriate steps have been taken to disseminate it throughout the Management Company along with its supporting policies and procedures. 6. The Board has developed a vision / mission statement, overall corporate strategy and significant policies for the Fund. A complete record of particulars of significant policies along with the dates on which they were approved or amended has been maintained. 7. All the powers of the Board have been duly exercised and decisions on material transactions, including appointment and determination of remuneration and terms and conditions of employment of the Chief Executive Officer ('CEO') have been taken by the Board.
21
LAKSON INCOME FUND 8. The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purpose and the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, were circulated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated. 9. The Directors are conversant of the relevant laws applicable to the Management Company, its policies and provisions of memorandum and articles of association and are aware of their duties and responsibilities. The directors of the Company having 14 years of education and 15 years of experience on the board of a listed company are exempted from the requirement of director's training program. All the board members except one director qualify for exemption under this provision of the CCG or having completed all parts of the program offered by the Pakistan Institute of Corporate Governance and duly certified. 10. The new appointment of Chief Financial Officer and Company Secretary was made during the year and is duly approved by the Board of Directors including her terms of employment. The Company has designated one of its employees as 'Coordinator/Head of Internal Audit' to act as coordinator between the firm providing internal audit services and the Audit Committee. 11. The Directors' Report of the Fund for this year has been prepared in compliance with the requirements of the Code and fully describes the salient matters required to be disclosed. 12. The financial statements of the Fund were duly endorsed by Chief Executive Officer and Chief Financial Officer before approval of the Board. 13. The Directors, Chief Executive Officer and Executives do not hold any interest in the units of the Fund other than those disclosed in the Annual Report. 14. The Management Company has complied with all the corporate and financial reporting requirements of the Code with respect to the Fund. 15. The Board has formed an Audit Committee. It comprises of three members, all of whom are NonExecutive Directors of the Management Company and the Chairman of the Committee is an Independent Director. 16. The meetings of the Audit Committee were held at least once every quarter and prior to approval of interim and final results of the Fund. The terms of reference of the Committee have been formed and advised to the Committee for compliance. 17. The Board of the Management Company has formed a Human Resource and Remuneration Committee. It comprises of three members, of whom two are Non-Executive Directors and the Chairman of the Committee is a Non-Executive Director. 18. The Board has outsourced the internal audit function to M/s. Grant Thornton Anjum Rahman, Chartered Accountants who are considered suitably qualified and experienced for the purpose and are conversant with the policies and procedures of the Fund. 19. The statutory auditors of the Fund have confirmed that they have been given a satisfactory rating under the quality control review program of the Institute of Chartered Accountants of Pakistan ('ICAP'), that they or any of the partners of the firm, their spouses and minor children do not hold units of the Fund and that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code of ethics as adopted by the ICAP. 20. The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordance with the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.
22
LAKSON INCOME FUND 21. The 'Closed Period', prior to the announcement of interim / final results, and business decisions, which may materially affect the market price of Fund's securities, was determined and intimated to directors, employees and stock exchange. 22. Material / price sensitive information has been disseminated among all market participants at once through stock exchange. 23. The company has complied with the requirements relating to maintenance of register of persons having access to inside information by designated senior management officer in a timely manner and maintained proper record including basis for inclusion or exclusion of names of persons from the said list. 24. We confirm that all other applicable material principles enshrined in the Code have been complied with.
For and on behalf of the Board
Director
Chief Executive Officer
Dated: August 25, 2017
23
LAKSON INCOME FUND
24
LAKSON INCOME FUND
25
LAKSON INCOME FUND
26
LAKSON INCOME FUND
Statement of Assets and Liabilities As at 30 June 2017 2017
Note
ASSETS Bank balances Investments Receivable from Margin Trading System Loans and receivables Mark-up receivable Deposits, prepayments and other receivables TOTAL ASSETS
(Rupees)
2016
5 6 7 8 9 10
2,265,077,568 786,186,718 63,070,755 707,857,534 27,097,050 75,370,082 3,924,659,707
2,217,723,810 445,808,013 13,042,035 270,000,000 17,892,200 4,210,651 2,968,676,709
11 12
23,883,864 380,129
23,443,396 353,858
13 14
2,560,322 35,580,863 236,784,730 1,293,408 3,107 300,486,423 3,624,173,284
2,776,753 27,098,984 53,672,991 2,915,003,718
3,624,173,284
2,915,003,718
LIABILITIES Payable to the Management Company Remuneration payable to the Trustee Annual fee payable to Securities and Exchange Commission of Pakistan Accrued expenses and other liabilities Payable against purchase of investments Payable against redemption of units Dividend payable TOTAL LIABILITIES NET ASSETS UNIT HOLDERS' FUND (as per statement of movement in unit holders' fund) CONTINGENCIES AND COMMITMENTS
15 (Number of units)
Number of units in issue
16
35,998,375
28,822,042
(Rupees) Net assets value per unit
100.6760
101.1380
The annexed notes from 1 to 27 form an integral part of these financial statements.
For Lakson Investments Limited (Management Company)
Chief Executive Officer
Chief Financial Officer
27
Director
LAKSON INCOME FUND
Income Statement For the year ended 30 June 2017 2017
Note
INCOME
Mark-up income 17 Income from Margin Trading System (Loss) / gain on sale of held for trading investments - net Unrealised appreciation in the fair value of 6.1, 6.2, 6.3, investments classified as 'held for trading' - net 6.4 & 6.5 Reversal of Workers' Welfare Fund 14.1
267,850,643 1,585,725
(1,718,466)
96,320,678
829,434 11,784,214 273,193,373
5,409,237 371,166,283
11.1
51,206,425
55,535,048
11.2
6,656,835
9,018,892
11.3 12
4,238,082
8,885,608 4,553,439
2,560,321 261,409 662,374 76,183 315,370 3,118,931 3,990,011 73,085,941 200,107,432
2,776,752 254,525 360,713 45,401 358,142 791,072 82,579,592 288,586,691
(169,436,920) (613,410) 30,057,102 30,057,102
(160,356,802) 128,229,889 128,229,889
13 18
14.1
Net income from operating activities Element of loss and capital losses included in the prices of units issued less those in units redeemed - net Sindh Workers' Welfare Fund for current year Net income for the year before taxation Taxation Net income for the year after taxation
2016
243,766,360 18,531,831
EXPENSES Remuneration to the Management Company Sales tax on remuneration to the Management Company Federal Excise Duty on remuneration to Management Company Remuneration to the Trustee Annual fee to the Securities and Exchange Commission of Pakistan Auditors' remuneration Fees and subscription Printing charges Brokerage expenses Bank and settlement charges Sindh Workers' Welfare Fund for prior years
(Rupees)
14.1 20
The annexed notes from 1 to 27 form an integral part of these financial statements.
For Lakson Investments Limited (Management Company)
Chief Executive Officer
Chief Financial Officer
28
Director
LAKSON INCOME FUND
Statement of Comprehensive Income For the year ended 30 June 2017 2017 Net income for the year after taxation
(Rupees)
30,057,102
Other comprehensive income
2016
128,229,889
-
Total comprehensive income for the year
30,057,102
128,229,889
The annexed notes from 1 to 27 form an integral part of these financial statements.
For Lakson Investments Limited (Management Company)
Chief Executive Officer
Chief Financial Officer
29
Director
LAKSON INCOME FUND
Distribution Statement For the year ended 30 June 2017 Note Undistributed income at the beginning of the year - realised Undistributed income at the beginning of the year - unrealised Undistributed income at the beginning of the year Less: Interim distribution Cash distribution Issue of bonus units
19
Total comprehensive income for the year Undistributed income at the end of the year Undistributed income at the end of the year - realised Undistributed income at the end of the year -unrealised Undistributed income at the end of the year
2017
(Rupees)
2016
27,390,308
21,053,635
5,409,237
1,294,460
32,799,545
22,348,095
(38,520,836) (38,520,836) 30,057,102 24,335,811
(34,414,920) (83,363,519) (117,778,439) 128,229,889 32,799,545
23,506,377
27,390,308
829,434 24,335,811
5,409,237 32,799,545
The annexed notes from 1 to 27 form an integral part of these financial statements.
For Lakson Investments Limited (Management Company)
Chief Executive Officer
Chief Financial Officer
30
Director
LAKSON INCOME FUND
Statement of Movement in Unit Holders' Fund For the year ended 30 June 2017 2017
Note Net assets at the beginning of the year Cash received on issue of 74,700,973 units (2016: 64,738,889 units) Cash paid on redemption of 67,524,640 units (2016: 62,118,879 units)
(Rupees)
2016
2,915,003,718
2,568,389,163
7,720,120,385
6,744,470,819
(7,171,924,005) 548,196,380
(6,647,859,859) 96,610,960
169,436,920
160,356,802
829,434
5,409,237
(1,718,466) 30,946,134 30,057,102
96,320,678 26,499,974 128,229,889
(38,520,836) (38,520,836)
(34,414,920) (83,363,519) (117,778,439)
(8,463,734)
10,451,450
3,624,173,284
79,195,343 2,915,003,718
Net assets value per unit at the beginning of the year
101.1380
100.8777
Net assets value per unit at the end of the year
100.6760
101.1380
Element of loss and capital losses included in prices of units issued less those of units redeemed - net Unrealised appreciation in the fair value of investments classified as 'held for trading' - net (Loss) / gain on sale of held for trading investments - net Other income Less: Interim distribution Cash distribution Bonus unit
19
Net (loss) / income for the year less distribution Issue of nil (2016: 741,621) bonus units as interim distribution net of tax Net assets as at the end of the year
The annexed notes from 1 to 27 form an integral part of these financial statements.
For Lakson Investments Limited (Management Company)
Chief Executive Officer
Chief Financial Officer
31
Director
LAKSON INCOME FUND
Cash Flow Statement For the year ended 30 June 2017 2017 CASH FLOWS FROM OPERATING ACTIVITIES Net income for the year before taxation
Increase / (decrease) in liabilities Payable to the Management Company Payable to the Trustee Annual fee payable to Securities and Exchange Commission of Pakistan Accrued expenses and other liabilities Payable against purchase of investments Payable against redemption of units Dividend payable Net cash (used in) / generated from operating activities CASH FLOWS FROM FINANCING ACTIVITIES Cash received from issue of units Cash paid on redemption of units Cash dividend paid Net cash generated from financing activities Net increase in cash and cash equivalents Cash and cash equivalents at the beginning of the year Cash and cash equivalents at the end of the year
2016
30,057,102
128,229,889
(829,434)
(5,409,237)
169,436,920 198,664,588
160,356,802 283,177,454
(339,549,271) (437,857,534) (50,028,720) (9,204,850) (71,159,431) (907,799,806)
1,111,279,892 (270,000,000) (13,042,035) 42,642,241 (3,349,307) 867,530,791
440,468 26,271
11,378,440 108,283
(216,431) 8,481,879 236,784,730 1,293,408 3,107 246,813,432
1,453,717 15,002,997 27,943,437
(462,321,786)
1,178,651,682
7,720,120,385 (7,171,924,005) (38,520,836) 509,675,544 47,353,758
6,740,302,643 (6,647,859,859) (34,414,920) 58,027,864 1,236,679,546
2,217,723,810 2,265,077,568
981,044,264 2,217,723,810
Adjustments for non-cash charges and other items: Unrealised appreciation in the fair value of investments classified as 'held for trading' - net Element of loss and capital losses included in prices of units issued less those of units redeemed - net (Increase) / decrease in assets Investments - net Loans and receivables Receivable against Margin Trading System Mark-up receivable Deposits, prepayments and other receivables
(Rupees)
The annexed notes from 1 to 27 form an integral part of these financial statements.
For Lakson Investments Limited (Management Company) Chief Executive Officer
Chief Financial Officer
32
Director
LAKSON INCOME FUND
Notes to the Financial Statements For the year ended 30 June 2017 1
LEGAL STATUS AND NATURE OF BUSINESS Lakson Income Fund (the "Fund") was established under the Trust Deed executed on August 18, 2009 between the Lakson Investments Limited as its Management Company and the Central Depository Company of Pakistan Limited (CDC) as its Trustee. The Fund has been registered as a Notified Entity on September 18, 2009 by the Securities and Exchange Commission of Pakistan (SECP) in accordance with the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (NBFC Regulations). The Management Company of the Fund has been licensed by SECP to undertake Asset Management and Investment Advisory Services as a Non-Banking Finance Company under the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 (NBFC Rules). The registered office of the Management Company is located at 14-Ali Block, New Garden Town, Lahore. The Fund is an open end mutual fund and is listed on Pakistan Stock Exchange Limited. Units are offered for public subscription on a continuous basis. The units are transferable and can be redeemed by surrendering them to the Fund. The Fund is categorised as "Income Scheme" as per the Circular 07 of 2009 issued by Securities and Exchange Commission of Pakistan (SECP) and it primarily invests in Government securities, certificates of investment, certificates of deposits, term deposit receipts, commercial papers, reverse repo, preference shares, spread transactions and corporate debt securities, etc. subject to the guidelines issued by SECP from time to time. Title to the assets of the Fund is held in the name of Central Depository Company of Pakistan Limited as Trustee of the Fund. The Pakistan Credit Rating Agency Limited (PACRA) has maintained A+(f) (Fund Stability Rating) to the Fund and pursuant to the updated Asset Manager Rating Methodology and Rating Scale, the Pakistan Credit Rating Agency Limited (PACRA) has upgraded asset manager rating of the Company to the new scale i.e. AM2+ (stable outlook), on May 15, 2017 (2016: AM2 as on June 08, 2016).
2
BASIS OF PREPARATION
2.1
Statement of compliance These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board as are notified under the repealed Companies Ordinance, 1984, provisions of and directives issued under the repealed Companies Ordinance, 1984, requirements of Trust Deed, requirements of Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 and Non-Banking Finance Companies and Notified Entities Regulations, 2008. In case, the requirements differ, the provisions and directive of repealed Companies Ordinance, 1984, the requirements of Trust deed, Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003, and Non-Banking Finance Companies and Notified Entities Regulations, 2008 shall prevail. During the year, the Companies Act, 2017 was promulgated and enacted on May 30, 2017. However, SECP has notified through Circular No. 17 dated July 20, 2017 that companies whose financial year closes on or before June 30, 2017 shall prepare their financial statements in accordance with the provisions of the repealed Companies Ordinance, 1984 (the Ordinance), hence these financial statements have been prepared in accordance with the Ordinance.
33
LAKSON INCOME FUND 2.2
Basis of measurement These financial statements have been prepared under the historical cost convention, except that investments are stated at fair values. These financial statements have been prepared by following accrual basis of accounting except for cash flow information.
2.3
Functional and presentation currency These financial statements are prepared in Pakistani Rupees, which is presentation and functional currency of the Fund.
2.4
Use of estimates and judgments The preparation of financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires the management to make judgments, estimates and assumptions that affect the application of policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Judgments made by management in the application of approved accounting standards, as applicable in Pakistan, that have significant effect on the financial statements and estimates with a significant risk of material judgment in the next year are as follows: Classification and valuation of investments For details please refer notes 4.1 and 23 to these financial statements. Impairment of investment A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. This objective evidence of impairment of fixed income securities is determined in accordance with provisioning criteria for non performing exposures as per the requirements Circular No. 33 of 2012 dated October 24, 2012. Element of income / (loss) and capital gains / (losses) included in the prices of units issued less those in units redeemed - net For details please refer note 4.10 to these financial statements. Provision for taxation For details please refer notes 4.8 and 20 to these financial statements. Workers' Welfare Fund For details please refer note 14.1 to these financial statements.
34
LAKSON INCOME FUND Other assets Judgment is involved in assessing the realisability of other assets balances. 3
NEW STANDARDS, INTERPRETATIONS AND AMENDMENTS TO PUBLISHED APPROVED ACCOUNTING STANDARDS
3.1
Amendments that are effective in current year but not relevant to the Fund The Fund has adopted the amendments to the following approved accounting standards as applicable in Pakistan which became effective during the year from the dates mentioned below against the respective standard:
IFRS 10
IFRS 11
Consolidated Financial Statements - Amendments regarding application of the consolidation exception
Effective date (annual periods beginning on or after) January 1, 2016
Joint Arrangements - Amendments regarding the accounting for acquisitions of an interest in a joint operation
January 1, 2016
Disclosure of Interests in Other Entities Amendments regarding the application of the consolidation exception
January 1, 2016
IAS 1
Presentation of F inancial Statements Amendments resulting from the disclosure initiative
January 1, 2016
IAS 16
Property, Plant and Equipment - Amendments regarding the clarification of acceptable methods of depreciation and amortisation and amendments bringing bearer plants into the scope of IAS 16
January 1, 2016
Separate Financial Statements (as amended in 2011) - Amendments reinstating the equity method as an accounting option for investments in in subsidiaries, joint ventures and associates in an entity's separate financial statements.
January 1, 2016
Investments in Associates and Joint Ventures Amendments regarding the application of the consolidation exception
January 1, 2016
Intangible Assets - Amendments regarding the clarification of acceptable methods of depreciation and amortisation
January 1, 2016
Agriculture - Amendments bringing bearer plants into the scope of IAS 16
January 1, 2016
IFRS 12
IAS 27
IAS 28
IAS 38
IAS 41
Other than the amendments to standards mentioned above, there are certain annual improvements made to IFRS that became effective during the year:
35
LAKSON INCOME FUND Annual Improvements to IFRSs (2012 2014) Cycle: IFRS 5 IFRS 7 IAS 19 IAS 34 3.2
Non-current Assets Held for Sale and Discontinued Operations Financial Instruments: Disclosures Employee Benefits Interim Financial Reporting
Amendments not yet effective The following amendments and interpretations with respect to the approved accounting standards as applicable in Pakistan would be effective from the dates mentioned below against the respective standard or interpretation: Effective date (annual periods beginning on or after) IFRS 2
Share-based Payment - Amendments to clarify the classification and measurement of share-based payment transactions
January 01, 2018
IFRS 4
Insurance Contracts - Amendments regarding the interaction of IFRS 4 and IFRS 9
January 01, 2018
IFRS 10
Consolidated Financial Statements - Amendments regarding the sale or contribution of assets between an investor and its associate or joint venture
Deferred indefinitely
IAS 7
Statement of Cash Flows - Amendments resulting from the disclosure initiative
IAS 12
Income Taxes - Amendments regarding the recognition of deferred tax assets for unrealised losses
IAS 28
IAS 40
January 01, 2017 January 01, 2017
Investments in Associates and Joint Ventures Amendments regarding the sale or contribution of assets between an investor and its associate or joint venture
Deferred indefinitely
Investment Property - Amendments to clarify transfers or property to, or from, investment property
January 01, 2018
The Annual Improvements to IFRSs that are effective for annual periods beginning on or after January 01, 2017 are as follows: Annual Improvements to IFRSs (2014 2016) Cycle:) IFRS 12 IAS 28
Disclosure of Interests in Other Entities Investments in Associates and Joint Ventures
36
January 01, 2017 January 01, 2018
LAKSON INCOME FUND 3.3
Standards or interpretations not yet effective The following new standards and interpretations have been issued by the International Accounting Standards Board (IASB), which have not been adopted locally by the Securities and Exchange Commission of Pakistan: IFRS 1 IFRS 9 IFRS 14 IFRS 15 IFRS 16
First Time Adoption of International Financial Reporting Standards Financial Instruments Regulatory Deferral Accounts Revenue from Contracts with Customers Leases
The effects of IFRS 9 - Financial Instruments are still being assessed, as this new standard may have a significant effect on the Funds future financial statements. The Fund expects that the adoption of the other amendments and interpretations of the standards will not have any material impact and therefore will not affect the Fund's financial statements in the period of initial application. 4
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES The principal accounting policies adopted in the preparation of these financial statements are set out below:
4.1
Investments
4.1.1
All investments are initially recognised at cost, being the fair value of the consideration given including the transaction cost associated with the investment, except in case of held for trading investments, in which case the transaction costs are charged to the income statement.
4.1.2
The Fund classifies its investments in the following categories: a) Financial assets at fair value through profit or loss This category has two sub-categories, namely; financial instruments classified as held for trading, and those designated at fair value through profit or loss upon initial recognition: i) Investments which are acquired principally for the purposes of generating profit from short term fluctuation in price or are part of the portfolio in which there is recent actual pattern of short term profit taking are classified as held for trading. ii) Investments designated at fair value through profit or loss upon initial recognition include those group of financial assets which are managed and their performance evaluated on a fair value basis, in accordance with the documented investment strategy. After initial recognition, above investments are remeasured at fair value determined with reference to the period-end quoted rates. Gains or losses on re-measurement and sale of these investments are recognised in income statement. b) Available for sale Investments which do not fall under the above categories and which may be sold in response to the need for liquidity or changes in market rates are classified as availablefor-sale. After initial recognition, investments classified as available-for-sale are remeasured at fair value, determined with reference to the year-end quoted rates. Gains or losses
37
LAKSON INCOME FUND on remeasurement of these investments are recognised in the unit holders' funds through other comprehensive income until the investment is sold, collected or otherwise disposedoff, or until the investment is determined to be impaired, at which time the cumulative gain or loss previously reported in unit holders' funds is included in income. 4.1.3
Basis of valuation of investments Fair value of the investments in Government Securities comprising Treasury Bills and Pakistan Investment Bonds are determined by reference to the quotations obtained from the PKRV rate notified by the Mutual Fund Association of Pakistan (MUFAP) as of the period end. The fair value of term finance certificates is determined on the basis of rates notified by the Mutual Funds Association of Pakistan (MUFAP) as at the period end. All regular way purchases and sales of investments are recognised on the trade date i.e. the date the Fund commits to purchase / sell the investments. Income accrued on Market Treasury Bills are included in the carrying value of investments.
4.2
Receivable against Margin Trading System (MTS) Securities purchased under Margin Trading System are entered into contracted rates for specified rates for specified period of time. Amount paid under these agreements are recognised as receivable in respect of MTS. Cash releases are adjusted against the receivable as reduction in the amount of receivable. The maximum maturity of a MTS contract is 60 days out of which 25% exposure will be automatically released at expiry of every 15th day from the date of contract.
4.3
Securities under resale / repurchase agreements Transactions of purchase under resale (reverse-repo) of marketable and government securities are entered into at contracted rates for specified periods of time. Securities purchased with a corresponding commitment to resell at a specified future date (reverserepos) are not recognised in the statement of assets and liabilities. Amounts paid under these agreements are included in receivable in respect of reverse repurchase transactions. The difference between purchase and resale price is treated as income from reverse repurchase transactions and accrued over the life of the reverse-repo agreement.
4.4
Formation cost This represents expenses incurred on the formation of the Fund. As permitted in the NonBanking Finance Companies and Notified Entities Regulations, 2008, these expenses are being amortised to the income statement over a period of five years i.e. effective from November 14, 2009.
4.5
Unit holders' fund Unit holders' fund representing the units issued by the Fund, is carried at the redemption amount representing the investors' right to a residual interest in the Fund's assets.
4.6
Issue and redemption of units Units are allocated at the offer price prevalent on the day on which applications for the purchase of units are received (however units are issued on realisation of cheques). The offer price represents the net assets value of units at end of the day plus the allowable sales load (if any).
38
LAKSON INCOME FUND Units are redeemed at the redemption price prevalent on the day on which the applications for the redemption of units are received. The redemption price represents the net assets value at end of the day. 4.7
Net assets value per unit The net assets value per unit disclosed in the statement of assets and liabilities is calculated by dividing the net assets of the Fund by the number of units in issue at the year end.
4.8
Taxation The Fund is exempt from taxation on income under clause 99 of Part I to the Second Schedule of the Income Tax Ordinance, 2001, subject to the condition that not less than 90 percent of its income excluding realised and unrealised capital gain for the year is distributed amongst the unit holders.
4.9
Revenue recognition - Gains / (losses) arising on sale of investments are included in the income on the date at which the transaction takes place. - Unrealised gains / (losses) arising on revaluation of investments classified as held for trading are included in the income statement in the period in which they arise. - Interest income on Government Securities, reverse repurchase arrangements, margin trading system, certificates of investment, certificates of deposits, term deposit receipts, commercial paper, placements, bank deposits and investment in other debt securities are recognised in the income statement at rate of return implicit in the instrument on a time proportionate basis.
4.10
Element of income / (loss) and capital gains / (losses) included in the prices of units issued less those in units redeemed To prevent the dilution of per unit income and distribution of income already paid out on redemption, as dividend, an equalisation account called "element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed" is created. The "element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed" account is credited / debited with the amount representing net income and capital gains accounted for in the last announced net assets value and included in the sale proceeds of units. Upon redemption of units, the element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed account is debited with the amount representing net income and capital gains accounted for in the last announced net assets value and included in the redemption price. The net "element of income / (loss) and capital gains / (losses) included in prices of units issued less those in units redeemed" during an accounting year is recognised in the income statement.
4.11
Financial instruments Financial assets and financial liabilities are recognised at the time when the Fund becomes a party to the contractual provisions of the instrument. Financial assets are derecognised when the Fund looses control of the contractual rights that comprises that financial assets. Financial liabilities are derecognised when they are extinguished, that is, when the obligation specified in the contract is discharged, cancelled or expired. Any gain or loss on derecognition of the financial assets and financial liabilities is taken to income currently.
39
LAKSON INCOME FUND Subsequent to initial recognition, all financial assets and financial liabilities are measured at fair value. The particular recognition method adopted for measurement of financial liabilities investments subsequent to initial recognition is disclosed in the individual policy statement associated with each item. 4.12
Offsetting of financial assets and financial liabilities Financial assets and financial liabilities are offset and the net amount reported in the statement of assets and liabilities when there is a legally enforceable right to set off the recognised amount and the Fund intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously.
4.13
Impairment A financial asset is assessed at each balance sheet date to determine whether there is any objective evidence that it is impaired. A financial assets is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of the asset. Provision for diminution in the value of debt securities is made as per the requirements of Circular No. 33 of 2012 dated October 24, 2012 (which is essentially the same as contained in Circular No. 1 of 2009 previously issued by the SECP) and based on management's assessment made in line with its provisioning policy approved by the Board of Directors of the Management Company pursuant to the requirements of the SECP's above referred circular. In case of impairment of other available-for-sale investments, the cumulative loss that has been recognised directly in statement of comprehensive income is taken to the income statement. Other individually significant financial assets are tested for impairment on an individual basis. The remaining financial assets are assessed collectively in groups that share similar credit risk characteristics. All impairment losses are recognised in income statement.
4.14
Derecognition Financial assets are derecognised when the rights to receive cash flows from the financial assets have expired, have been realised or have been transferred and the Fund has transferred substantially all risks and rewards of ownership. A financial liability is derecognised when the obligation under the liability is discharged or cancelled or expired.
4.15
Derivatives Derivative instruments are initially recognised at fair value and subsequent to initial measurement each derivative instrument is remeasured to its fair value and the resultant gain or loss is recognised in the income statement.
4.16
Provisions A provision is recognised in the balance sheet when the Fund has a present legal or constructive obligation as result of past event and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount of the obligation.
40
LAKSON INCOME FUND 4.17
Cash and cash equivalents Cash and cash equivalent comprise of bank balances including term deposits with banks (that are readily convertible to known amount of cash) are subject to an insignificant risk of significant changes of values and have maturities of less than three months from the date of acquisition.
4.18
Cash and bank balances Cash and bank balances are carried at nominal value, except the foreign currency account balances which are translated into rupees at the rates of exchange approximating those prevailing at the balance sheet date.
4.19
Dividend (including bonus units) Dividend (including bonus units) declared subsequent to the balance sheet date are recorded in the period in which they are approved.
4.20
Transactions with related parties / connected persons Transactions with related parties / connected persons are based at arm's length at normal commercial rates on the same terms and conditions as applicable to third party transactions. Remuneration to the Management Company and the Trustee is determined in accordance with the provision of NBFC Rules, NBFC Regulations and the Trust Deed respectively.
4.21
Other assets Other assets are stated at cost less impairment losses, if any.
5
BANK BALANCES
Note
Cash at bank in : Local currency In profit and loss sharing accounts In current accounts Term Deposit Receipts
5.1 5.2
2017
(Rupees)
1,965,062,203 15,365 300,000,000 2,265,077,568
2016
1,917,706,334 17,476 300,000,000 2,217,723,810
5.1
These represents profit and loss account maintained with banks carrying profit rates ranging from 3.75% to 6.70% (2016: 4.0% to 8%) per annum.
5.2
This carries profit rate ranging from 6.75% to 6.90% (June 30, 2016: 7.15%) per annum, maturing from July 14, 2017 to September 28, 2017.
41
LAKSON INCOME FUND
6
2017
Note
INVESTMENTS
At fair value through profit or loss - held for trading Government Securities Market Treasury Bills 6.1 Pakistan Investment Bonds 6.2 Term Finance Certificates - Listed 6.3 Term Finance Certificates - Unlisted 6.4 Sukuk Certificates- Listed 6.5 Spread transaction Listed Equity Securities 6.7 Derivative financial instrument 6.8 Pre IPO Subscription 6.9 6.1
(Rupees)
2016
99,575,000 141,649,221 106,837,252 121,953,960
48,424,200 57,854,974 140,998,791 156,737,688 41,792,360
232,868,190 3,303,095 80,000,000 786,186,718
445,808,013
Market Treasury Bills -----------------Number of treasury bills----------------Number of Number of Disposed/ Acquired holdings at holdings at the during the matured the end of beginning of during the year the year the year year Note
Balance as at June 30, 2017 Market Market value as a value as a Unrealized Market value appreciation / percentage percentage of total (diminution) of net assets ----------------------- Rupees ------------------------- of the fund investments
6.1.1
99,579,393
Carrying value
Treasury Bills - 3 months (face value of Rs. 100,000 each) Treasury Bills - 12 months (face value of Rs. 100,000 each)
500
1,566
566
500
1,000
1,000 -
99,575,000
-
Total as at June 30, 2017 Total as at June 30, 2016
99,579,393 48,390,659
99,575,000 48,424,200
(4,393) (4,393) 33,541
2.75% 2.75% 1.66%
12.67% 12.67% 10.86%
6.1.1
This represents investments in 12 month Government Market Treasury Bills carrying effective yield at a rate of 5.980% (June 30, 2016: 6.174%) per annum and having maturity on July 20, 2017 to August 03, 2017. The face value of Market Treasury Bills is Rs.100 million (June 30, 2016: Rs. 50 million). Market Treasury Bills having face value of Rs. 25 million are pledged with National Clearing Company of Pakistan.
6.2
Pakistan Investment Bonds ------------Number of Pakistan Investment Bonds-----------Number of Number of Disposed/ Acquired holdings at holdings at the during the matured the end of beginning of during the year the year the year year Note
5 years Pakistan Investment Bond (face value of Rs. 100,000 each) 10 years Pakistan Investment Bond (face value of Rs. 100,000 each)
125
500
625
-
-
-
-
-
-
391
500
891
-
-
-
-
-
-
Total as at June 30, 2017 Total as at June 30, 2016
6.3
Balance as at June 30, 2017 Market Market value as a value as a Unrealized Market value appreciation / percentage percentage of total (diminution) of net assets ----------------------- Rupees ------------------------- of the fund investments Carrying value
53,918,122
57,854,974
3,936,852
1.98%
12.98%
Term Finance Certificates - listed Name of Security Note Commercial Banks Bank Alfalah Limited - V (face value of Rs. 5,000 each) 6.3.1 HBL Tier-II TFCs 10 years (face value of Rs. 100,000 each) 6.3.2
------------Number of term finance certificates-----------Number of Disposed / Number of Acquired holdings at matured holdings at during the beginning of during the the end of year the year year the year
Balance as at June 30, 2017
Market value Market value Face value as Unrealized as percentage as percentage percentage of appreciation of net assets of total size of the of the Fund investment issue ----------------------(Rupees)---------------------Carrying Value
Market value
12,950
-
-
12,950
65,961,641
66,491,796
530,155
1.83%
8.46%
750
-
-
750
74,981,250
75,157,425
176,175
2.07%
9.56%
0.75%
140,942,891 139,769,283
141,649,221 140,998,791
706,330 1,229,508
3.91% 4.84%
18.02% 31.63%
2.05% 2.05%
Total as at June 30, 2017 Total as at June 30, 2016
42
1.30%
LAKSON INCOME FUND 6.3.1
These represent listed term finance certificates and carry a rate of mark-up equal to the base rate of 6 months Karachi Interbank Offer Rate (KIBOR) per annum plus margin of 1.25% receivable semi-annually in arrears with no floor or cap and will mature in February 2021. The principal repayment for all the units shall be Rs. 12,950 per six months, except in case of the last six monthly installment, where it shall be Rs. 64.556 million. These term finance certificates are unsecured. The rating of the instrument is AA-.
6.3.2
These represent listed term finance certificates and carry a rate of mark-up equal to the base rate of 6 months Karachi Inter Bank Offer Rate (KIBOR) per annum plus margin of 0.50% .These term finance certificates are unsecured and the rating of the instrument is AAA.
6.4
Term Finance Certificates - Unlisted
Name of Security Note
------------Number of term finance certificates-----------Number of Disposed / Number of Acquired holdings at matured holdings at during the beginning of during the the end of year the year year the year
Microfinance Bank NRSP Microfinance Bank PPTFC (face value of Rs. 5,000 each)
6.4.1
20,000
-
-
20,000
Commercial Bank Askari Bank Limited - IV 10 years privately placed (face value of Rs. 1,000,000 each)
6.4.2
56
-
-
56
Balance as at June 30, 2017 Carrying Value
Market value
----------------------(Rupees)----------------------
50,000,000
Total as at June 30, 2017 Total as at June 30, 2016
Unrealized diminution
50,122,300
Market value Market value Investments as percentage as percentage as percentage of net assets of total of size of of the Fund investment the issue
122,300
1.38%
6.38%
3.33%
56,640,018
56,714,952
74,934
1.56%
7.21%
5.60%
106,640,018 156,322,192
106,837,252 156,737,688
197,234 415,496
2.95% 5.38%
13.59% 35.16%
8.93% 8.93%
6.4.1
This represent unlisted term finance certificates and carry rate of mark-up equal to the base rate of 3 months Karachi Inter Bank Offer Rate (KIBOR) per annum plus margin of 2.35% receivable quarterly in arrears with no floor or cap and will mature in June 30, 2018. The principal amount shall be redeemable at Rs. 12.5 million on 08 equal quarterly installments. These term finance certificates are secured . The rating of the instrument is A.
6.4.2
These represent unlisted term finance certificates and carry a rate of mark-up equal to the base rate of 6 months Karachi Inter Bank Offer Rate (KIBOR) per annum (plus margin of 1.75% for the first five periods and 2.20% for the remaining period) receivable semi-annually in arrears with no floor or cap and will mature in December 2021. The principal shall be redeemed by Rs. 200 per six months in the first 96 months and the balance shall be redeemed in four equal semi annually installments. These term finance certificates are unsecured. The rating of the instrument is AA-.
6.5
Sukuk Certificates- Listed Name of Security Note
K-Electric- Sukuk Certificates 5 Years (face value of Rs. 5,000 each)
6.5.1
Pak Elektron Limited - Sukuk Certificates (face value of Rs. 1,000,000 each) 6.5.2
------------Number of sukuk certificates-----------Number of Disposed / Number of Acquired holdings at matured holdings at during the beginning of during the the end of year the year year the year
8,000 -
-
-
8,000
80
-
80
Total as at June 30, 2017 Total as at June 30, 2016
Balance as at June 30, 2017
Market value Market value Investments Unrealized as percentage as percentage as percentage appreciation of net assets of total of size of of the Fund investment the issue ----------------------(Rupees)---------------------Carrying Value
Market value
41,792,360
41,393,480
(398,880)
80,000,000
80,560,480
560,480
2.22%
10.25%
7.46%
121,792,360 41,998,520
121,953,960 41,792,360
161,600 (206,160)
3.37% 1.43%
15.51% 9.37%
8.13% 0.67%
1.14%
5.27%
0.67%
6.5.1
These represent Sukuk certificates having a face value of Rs. 5,000 each and carry a rate of profit equal to the base rate of 3 months of Karachi Inter Bank Offer Rate (KIBOR) plus margin of 2.75%. These Sukuk certificates will mature on March 2019. The rating of the instrument is AA.
6.5.2
These represent sukuk certificates having a face value of Rs. 1,000,000 each and carry rate of profit equal to the base rate of 3 months of Karachi Inter Bank Offer Rate (KIBOR) plus margin of 2.50%. These sukuk certificates will mature on November 25, 2017. The rating of the instrument is A+.
6.6
The term "listed" indicated in note 6.3 and 6.5 refer to listing in the stock exchange. However, their rates are quoted by MUFAP.
43
44 55,000
-
55,000
7,500 -
11,000
-
250,000
299,000
85,000
200,000
60,000
200,000
48,500 -
555,500
Market value
-
83,017,250
33,233,350
10,928,500
28,680,000
23,448,500
24,389,990
10,258,617
-
232,868,190
-
81,477,500
32,985,680
10,870,650
28,138,000
23,241,000
23,486,000
10,338,260 -
22,331,100
-
(3,534,432)
-
(1,539,750)
(247,670)
(57,850)
(542,000)
(207,500)
(903,990)
79,643 -
(115,315)
-
29.62%
-
10.36%
4.20%
1.38%
3.58%
2.96%
2.99%
1.31% -
2.84%
-
6.43%
-
2.25%
0.91%
0.30%
0.78%
0.64%
0.65%
0.29% -
0.62%
-
0.22%
-
0.05%
0.06%
0.02%
0.00%
0.02%
0.02%
0.01% -
0.03%
Par value of shares held as a percentage of total paid up capital of the investee company
----------------- (%) ----------------
Market value Unrealised as percentage Market value as percentage gain / (loss) of total of net assets investments
----------------- (Rupees) ---------------22,446,415
-
-
Oil and Gas Attock Refinery Limited
7,500 250,000
-
155,500
-
-
34,000 -
5,000 39,500
-
Total as at June 30, 2016
-
310,000
-
-
-
-
-
-
236,402,622
-
Fertilizers Engro Fertilizer Limited Engro Corporation Limited
240,500
200,000
60,000
34,000 200,000
53,500 39,500
555,500
Carrying value
Total as at June 30, 2017
-
Cable and Electrical Goods Pak Elektron Limited
-
Oil and Gas Marketing Companies Pakistan State Oil Company Limited
Engineering International Steels Limited
-
Power Generation & Distribution K Electric Limited The Hub Power Company Limited
-
-
Cement D.G. Khan Cement Limited Fauji Cement Company Limited
Oil and Gas Exploration Companies Oil & Gas Development Company Limited
-
Commercial Banks Bank Alfalah Limited
Bonus shares / Number of letter of right Disposed Number of Acquired holdings at received during the holdings at the during the the end of the during the year beginning of year year year the year ------------------------ Number of Shares ------------------------
Listed Equity Securities (Spread Transactions) Shares of listed companies - fully paid up ordinary shares of Rs. 10 each unless stated otherwise
Sectors / Companies
6.7
LAKSON INCOME FUND
LAKSON INCOME FUND 6.8
This represent the unrealized gain on remeasurement of future contracts recognised as derivative financial instrument.
6.9
Pre IPO Subscription This represents application money for subscription of TFC (pre-IPO) of Silk Bank Limited having an aggregate face value of Rs 80 million, having tenure of 8 years and carries markup of 6 month KIBOR + 1.85%.
7
RECEIVABLE AGAINST MARGIN TRADING SYSTEM This represents the amount receivable against Margin Trading System and carries average rate of 8.75% (2016: 8.93%) and are matured at the option of finance subject to maximum period of 60 days.
8
LOANS AND RECEIVABLES This represents term deposit receipts which carries profit rate ranging from 6.80% to 11.49% (June 30, 2016: 11%) maturing from July 25, 2017 to May 30, 2018. 2017
9
2016
MARK-UP RECEIVABLE Considered good Mark-up / return receivable on : Term Deposit Receipts Profit and loss sharing bank balances Term Finance Certificates Government securities - Pakistan Investment Bonds Sukuk certificates Margin Trading System
10
(Rupees)
5,861,099 15,891,887 3,642,400
2,780,137 9,444,670 3,778,216
816,087 885,577 27,097,050
1,600,699 116,252 172,226 17,892,200
100,000 2,750,000 2,850,000
100,000 250,000 350,000
120,911
137,057
63,014 183,925
63,014 200,071
7,637,054 35,800,000 28,899,103 72,336,157 75,370,082
3,660,580 3,660,580 4,210,651
DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES Deposits Central Depository Company of Pakistan Limited National Clearing Company of Pakistan Limited Prepayments Credit rating fee National Clearing Company of Pakistan Limited - annual fee Receivables Against Margin Trading System NCCPL Margin - Ready Market NCCPL Margin - Future Market
45
LAKSON INCOME FUND Note 11
2017
(Rupees)
2016
PAYABLE TO THE MANAGEMENT COMPANY Remuneration payable to the Management Company Sindh Sales Tax on remuneration to Management Company Federal Excise Duty on remuneration to Management Company
11.1
4,724,340
4,296,522
11.2
2,982,449
2,969,799
11.3
16,177,075 23,883,864
16,177,075 23,443,396
11.1
The Management Company is entitled to remuneration for services rendered to the Fund under the provisions of the Non-Banking Finance Companies and Notified Entities Regulations, 2008, of an amount not exceeding 1.5% per annum of the average daily net assets of the Fund. Currently, the remuneration of the Management Company has been charged at the rate of 1.5% of the average daily net assets of the Fund. The remuneration is paid to the Management Company monthly in arrears.
11.2
The Sindh Provincial Government has levied Sindh Sales Tax at the rate of 13% (till June 30, 2016: 14%) on Management Company's remuneration. Above liability includes Rs. 2,368,285 (June 30, 2016: Rs. 2,368,285) accrued on Federal Excise Duty (FED) charged on the management remuneration as more fully explained in note 11.3 below. Had the provision relating to FED not been made, Net Asset Value per unit of the Fund as at June 30, 2017 would have been higher by Re. 0.0658 (June 30, 2016: Re. 0.0822) per unit.
11.3
The amount is being held for payment to asset management company for onward payment to Federal Board of Revenue on the basis of a stay order of the Honorable High Court of Sindh dated September 04, 2013. The stay order was granted as a result of a petition filed by asset management companies from the platform of MUFAP against the amendment in Finance Act, 2013 which levied FED on the fees received by asset management companies from funds under management. As the asset management services rendered by the Management Company of the Fund is already subject to provincial sales tax on services levied by the Sindh Revenue Board, which is being charged to the Fund, the Management Company is of the view that further levy of FED is not justified. The Sindh High Court in its decision dated July 16, 2016 maintained the previous order passed against other constitutional petition whereby levy of FED has been declared to be Ultra Vires to the Constitution. On September 23, 2016, the Federal Government has filed an appeal against the said SHC order in the Honorable Supreme Court of Pakistan (SCP) and thus the previous balance of FED has not been reversed. Therefore, as a matter of prudence and abundant caution, without prejudice to the above, the Management Company has made a provision with effect from June 13, 2013, aggregating to Rs. 16.177 million (June 30, 2016: Rs. 16.177 million). Had the provision on FED not been made, Net Asset Value per unit of the Fund as at June 30, 2017 would have been higher by Re. 0.45 (June 30, 2016: Re. 0.56). Further, the Federal Government vide Finance Act 2016 has excluded asset management companies and other non-banking finance companies from levy of FED on their services. Accordingly, no provision for FED is made from July 01, 2016 onwards.
12
REMUNERATION PAYABLE TO THE TRUSTEE The Trustee is entitled to a monthly remuneration for services rendered to the Fund under the provision of Trust Deed.
46
LAKSON INCOME FUND Net assets up to Rs. 1 billion 0.17% per annum of the daily average net assets of the Fund. Net assets ranging between Rs. 1 billion to Rs. 5 billion Rs. 1.70 million plus 0.085% per annum of the daily average net assets of the Fund exceeding Rs. 1 billion. Exceeding Rs. 5 billion Rs. 5.1 million plus 0.07% per annum of the daily average net assets of the Fund exceeding Rs. 5 billion. 13
ANNUAL FEE PAYABLE TO THE SECURITIES AND EXCHANGE COMMISSION OF PAKISTAN This represents annual fee payable to Securities and Exchange Commission of Pakistan (SECP) in accordance with Regulation 62 of the Non-Banking Finance Companies and Notified Entities Regulations, 2008, whereby the Fund is required to pay annual fee to SECP at the rate of 0.075% of the average daily net assets of the Fund. 2017
14
ACCRUED EXPENSES AND OTHER LIABILITIES Auditors' remuneration Payable to Workers' Welfare Fund Payable to Sindh Workers' Welfare Fund Brokerage payable NCCPL payable Printing and stationery payable Withholding tax payable Withholding tax on dividend payable CGT payable Others
14.1
14.1 14.1
(Rupees)
159,635 4,603,421 35,054 18,975 20,552 62,759 3,902,489 26,654,199 123,779 35,580,863
2016
155,825 11,784,214 77,334 19,998 20,000 47,165 14,966,413 28,035 27,098,984
The Finance Act, 2008 had introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance) as a result of which it was construed that all Collective Investment Schemes (CISs) / mutual funds whose income exceeded Rs 0.5 million in a tax year were brought within the scope of the WWF Ordinance, thus rendering them liable to pay contribution to WWF at the rate of two percent of their accounting or taxable income, whichever was higher. In light of this, the Mutual Funds Association of Pakistan (MUFAP) filed a constitutional petition in the Honorable Sindh High Court challenging the applicability of WWF on CISs which is pending adjudication. Similar cases were disposed of by the Peshawar and the Lahore High Courts in which these amendments were declared unlawful and unconstitutional. However, these decisions were challenged in the Supreme Court of Pakistan. Subsequently, the Finance Act, 2015 introduced an amendment under which CISs / mutual funds have been excluded from the definition of industrial establishment subject to WWF under the WWF Ordinance. Consequently, mutual funds are not subject to this levy after the introduction of this amendment which is applicable from Tax Year 2016. Accordingly, no further provision in respect of WWF was made with effect from July 1, 2015.
47
LAKSON INCOME FUND On November 10, 2016 the Supreme Court of Pakistan had passed a judgment declaring the amendments made in the Finance Acts 2006 and 2008 pertaining to WWF as illegal citing that WWF was not in the nature of tax and could, therefore, not have been introduced through money bills. Accordingly, the aforesaid amendments have been struck down by the Supreme Court of Pakistan. The Federal Board of Revenue has filed a petition in the Supreme Court of Pakistan against the said judgment, which is pending hearing. While the petitions filed by the CISs on the matter are still pending before the Sindh High Court, the Mutual Funds Association of Pakistan (MUFAP) (collectively on behalf of the asset management companies and their CISs) has taken legal and tax opinions on the impact of the Supreme Court of Pakistan judgement on the CISs petition before the Sindh High Court. Both legal and tax advisors consulted were of the view that the judgment has removed the very basis on which the demands were raised against the CISs. Therefore, there was no longer any liability against the CISs under the WWF Ordinance and that all cases pending in the Sindh High Court or lower appellate forums will now be disposed of in light of the earlier judgement of the Supreme Court of Pakistan. Furthermore, as a consequence of the 18th amendment to the Constitution of Pakistan, in May 2015 the Sindh Workers Welfare Fund Act, 2014 (SWWF Act) had been passed by the Government of Sindh as a result of which every industrial establishment located in the Province of Sindh, the total income of which in any accounting year is not less than Rs. 0.50 million, is required to pay Sindh Workers Welfare Fund (SWWF) in respect of that year a sum equal to two percent of such income. The matter was taken up by the MUFAP with the Sindh Revenue Board (SRB) collectively on behalf of various asset management companies (including the Management Company of the Fund) whereby it was contested that mutual funds should be excluded from the ambit of the SWWF Act as these were not industrial establishments but were pass through investment vehicles and did not employ workers. The SRB held that mutual funds were included in the definition of financial institutions as per the Financial Institution (Recovery of Finances) Ordinance, 2001 and were, hence, required to register and pay SWWF under the SWWF Act. Thereafter, MUFAP has taken up the matter with the Sindh Finance Ministry to have CISs / mutual funds excluded from the applicability of SWWF. In view of the above developments regarding the applicability of WWF and SWWF on CISs / mutual funds. MUFAP has recommended the following to all its members on January 12, 2017: - based on legal opinion, the entire provision against WWF held by the CISs till June 30, 2015, to be reversed on January 12, 2017; and - the provision in respect of SWWF should be made on a prudent basis with effect from the date of enactment of the SWWF Act, 2014 (i.e. starting from May 21, 2015) on January 12, 2017. However, the management considered it prudent to provide for SWWF from the time it becomes applicable under law (i.e. w.e.f. July 01, 2014). Accordingly, the provision for SWWF is being made on a daily basis going forward. The above decisions were communicated to the SECP and the Pakistan Stock Exchange Limited on January 12, 2017 and the SECP vide its letter dated February 1, 2017 has advised MUFAP that the adjustments relating to the above should be prospective and supported by adequate disclosures in the financial statements of the CISs/ mutual funds. Accordingly, the Fund has recorded these adjustments in its books on January 12, 2017. Provision for SWWF as of June 30, 2017 amounted to Rs 4.603 million. Had the provision not been made the net assets value per unit of the Fund as at June 30, 2017 would have been higher by Re 0.1279 per unit.
48
LAKSON INCOME FUND 15
CONTINGENCIES AND COMMITMENTS
15.1
Contingencies There were no contingencies as at June 30, 2017 and 2016.
15.2
Commitments 2017 Margin trading system transactions entered into by the Fund in respect of which release transactions have not been settled Sale of future stock contracts
16
(Rupees)
2016
9,512,814
-
237,926,185
-
2017 2016 (Number of units)
NUMBER OF UNITS IN ISSUE Total units in issue at beginning of the year Sales during the year Bonus units issued during the year Redemption during the year Total units in issue at the end of the year
28,822,042 74,700,973 (67,524,640) 35,998,375
25,460,411 64,738,889 741,621 (62,118,879) 28,822,042
Face value of the unit is Rs. 100 each. 2017 17
MARK-UP INCOME Mark-up / return on financial assets comprises of: Certificate of investments Term deposits receipts with banks Profit and loss sharing account Market Treasury Bills Pakistan Investment Bonds Term finance certificates Sukuk certificates
18
(Rupees)
2016
4,786,849 63,142,185 134,096,812 2,507,624 8,991,783 20,891,430 9,349,677 243,766,360
6,805,505 48,085,787 98,842,170 15,639,251 78,152,452 16,596,557 3,728,921 267,850,643
116,760 81,000
105,000 75,000
26,250 15,750 21,649 261,409
26,250 15,750 32,525 254,525
AUDITORS' REMUNERATION Annual audit fee Fee for review of half yearly financial statements Fee for review of statement of compliance with the best practices of Code of Corporate Governance Other services Out of pocket expenses
49
LAKSON INCOME FUND 19
INTERIM DISTRIBUTIONS DURING THE YEAR -------------- For the year ended June 30, 2017 -------------Date of distributions June 22, 2017
Distribution Rs. per unit 7.4452
No. of Bonus Units Issued -
Bonus Cash ----------- (Rupees) -----------
38,520,836 38,520,836
-------------- For the year ended June 30, 2016 -------------Date of distributions June 21, 2016 June 29, 2016
20
Distribution Rs. per unit 2.4863 5.9059
No. of Bonus Units Issued 741,621 741,621
Bonus Cash ----------- (Rupees) ----------83,363,519 83,363,519
34,414,920 34,414,920
TAXATION The Fund is exempt from taxation under clause 99 of the Part I of the Second Schedule of the Income Tax Ordinance, 2001, subject to the condition that not less than 90% of its accounting income for the year as reduced by capital gains whether realised or unrealised is distributed amongst the unit holders, provided that for the purpose of determining distribution of not less than 90% of its accounting income for the year, the income distributed through bonus units shall not be taken into account. Furthermore, as per regulation 63 of the Non-Banking Finance Companies and Notified Entities Regulations, 2008, the Fund is required to distribute 90% of the net accounting income other than capital gains to the unit holders. The Fund is also exempt from the provisions of section 113 (minimum tax) under clause 11A of Part IV of the Second Schedule to the Income Tax Ordinance, 2001. The management has distributed at least 90% of the income earned during the year by the Fund to the unit holders. The Fund has received an order dated March 27, 2014 under section 122(1) of Income Tax Ordinance, 2001, whereby the Federal Board of Revenue has raised a demand of Rs. 49.545 million (including Workers' Welfare Fund liability of Rs. 2.729 million). This demand has been on the basis of their view that distribution of bonus units should not be included in the calculation of 90% of the declared profit required to claim exemption from tax. Accordingly, they are of the view that since minimum required dividend of 90% of the relevant profit has not been distributed, the Fund is liable to tax as mentioned above. The Management Company has filed an appeal before the CIR (Appeals) on the said issue which has been decided in favour of the Fund. During the year, the Department challenged the order passed by CIR (Appeals) in the Appellate Tribunal, Inland Revenue, Karachi and the same has been decided in the favour of the Fund.
21
TRANSACTIONS AND BALANCES WITH RELATED PARTIES / CONNECTED PERSONS Related parties include Lakson Investments Limited being the Management Company, Central Depository Company of Pakistan Limited (CDC) being the Trustee, SIZA Services (Private) Limited being the holding company of the Management Company, associated companies of the Management Company, key management personnel, other funds being managed by the Management Company and unit holders holding more than 10% in the units of the Funds as at the balance sheet.
50
LAKSON INCOME FUND Remuneration to the Management Company and the Trustee is determined in accordance with the provisions of NBFC Regulations and the Trust Deed respectively. Other transactions are in normal course of business, at contracted rates and terms determined in accordance with the market rates. Transactions and balances with related parties other than those disclosed elsewhere are as follows: 2017 21.1
(Rupees)
2016
Balance as at year end Lakson Investments Limited Management Company Remuneration payable Sindh Sales Tax and Federal Excise Duty on Remuneration to Management Company
11.1
4,724,340
4,296,522
11.2 & 11.3 19,159,524
19,146,874
380,129 100,000
353,858 100,000
Central Depository Company of Pakistan Limited - Trustee Remuneration payable Security deposit
51
SIZA Commodities (Private) Limited
52
more than 10% of outstanding units
-
4,047
748,507
*6,719,648
-
Lakson Power Limited
7,247,587
143,712
18,577,896
20,459
1,706,354
1,309,309
2,253,382
210,878
1,249,449
-
-
-
-
-
-
-
-
-
-
-
-
-
-
3,111,829
4,047
450,241
3,576,138
224,216
12,589,812
22,456
1,706,354
671,782
1,193,600
-
1,055,182
Units Units issued Reinvestment redeemed during the in units during during the year the year year
*13,627,831
-
Sybrid Private Limited
Others - Connected Person due to holding
-
80,504
3,954,992
SIZA Services Private Limited
Hasanali & Gulbano Lakhani Foundation
Colgate Palmolive (Pakistan) Limited
22,457
-
Premier Fashions (Private) Limited
Alan (Private) Limited
-
SIZA (Private) Limited
Management Company
Associated companies / undertakings of the
909,416 3,160,993
Directors, Chief Executive and their spouse and minors
Number of Units as at July 01, 2016
-
-
-
298,266
3,671,449
-
9,943,076
20,460
-
637,526.96
1,059,782
3,371,871
1,103,683
Number of units as at June 30, 2017
2,057,641
177,300,000
133,117,681
231,584,927
21,180,777
126,000,000
*679,611,759
*1,378,291,595
-
-
-
-
8,142,014
-
-
-
432,690
77,500,000
745,805,084
15,266,394
399,999,981 1,900,000,000
1,999,208
-
-
-
319,696,510
91,976,515
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
418,617,610
-
432,565
48,141,955
382,386,647
23,431,487
1,344,580,800
2,385,697
181,868,012
71,756,120
127,039,479
-
112,829,368
-
-
-
-
30,028,246
369,626,789
-
1,001,029,089
2,059,794
-
64,183,665
106,694,615
339,466,528
111,114,360
Balance as at Units Balance Units issued Reinvestment June 30, 2017 as at July 01, during the in units during redeemed (Investment at during the 2016 year the year current NAV) year
Year ended June 30, 2017 -------------------------------- Rupees ------------------------------------------------------- Number of Units ------------------------
Lakson Investments Limited - Management Company
21.2 Unit Holders' Fund
LAKSON INCOME FUND
53 877,763 1,574,507 7,934,926 1,056,559
Premier Fashions (Private) Limited
SIZA Commodities (Private) Limited
Colgate Palmolive (Pakistan) Limited
Hasanali & Gulbano Lakhani Foundation 3,654,915
92,399
18,858,610
288,453
-
-
1,645,153
-
3,092,607
909,415
-
-
163,482
-
-
-
-
-
68,382
18,966
Units issued Bonus units during the issued during year the year
* Holding reduced to below 10% due to divestment of Unit holder (s) / investment from other Unit holders.
more than 10% outstanding units*
3,064,733
337,499
SIZA Services (Private) Limited
Others - Connected Person due to holding
447,440 743,899
Century Insurance Company Limited
3,073,811
1,180,270
SIZA (Private) Limited
Management Company
Associated companies / undertakings of the
their spouse and minors
Directors, Chief Executive and
Management Company
Lakson Investments Limited -
Number of Units as at July 01, 2015
-
1,068,454
23,002,026
1,862,961
877,763
337,499
2,389,053
447,440
3,073,807
1,199,235
Units redeemed during the year
6,719,648
80,504
3,954,992
-
-
-
-
-
3,160,993
909,416
Number of units as at June 30, 2016
309,163,185
106,583,244
-
7,302,298
2,025,270
30,000,000
-
-
386,509,476
9,343,500
200,119,414
94,985,833
36,254,219
-
47,103,407
322,439,735
127,633,652
-
-
-
107,865,143
679,611,759
8,142,014
399,999,981
-
-
-
-
-
319,696,510
91,976,515
Units redeemed Balance as at during the June 30, 2016 year
17,457,762 2,466,899,163
-
-
-
175,000,000 258,729,138
-
324,428,852
91,976,386
800,457,052 2,000,000,036
158,832,684
88,546,737
34,046,163
75,042,849
45,136,729
310,078,532
119,062,844
Balance Units issued Bonus units as at July 01, during the issued during 2015 year the year
Year ended June 30, 2016 -------------------------------- Rupees ------------------------------------------------------- Number of Units ------------------------
LAKSON INCOME FUND
LAKSON INCOME FUND 21.3
Note
Transactions during the year
Lakson Investments Limited - Management Company of the Fund Remuneration to the Management Company Sindh Sales Tax and Federal Excise Duty on remuneration to Management Company 11.1 Central Depository Company of Pakistan Limited- Trustee of the Fund Remuneration to the Trustee Settlement charges Directors, Chief Executives and their spouse and minors Dividend paid 22
12
2017
(Rupees)
2016
51,206,425
55,535,048
6,656,835
17,904,500
4,238,082 509,780
4,553,439 49,582
-
18,662,502
FINANCIAL RISK MANAGEMENT Introduction and overview The Fund has exposure to following risks from its use of financial instruments: -
Credit risk Liquidity risk Market risk Operational risk
This disclosure presents information about the Funds exposure to each of the above risks, the Fund's objectives, policies and processes for measuring and managing risk, and the Funds management of capital. Risk management framework The Funds objective in managing risk is the creation and protection of unit holders value. Risk is inherent in the Funds activities, but it is managed through monitoring and controlling activities which are primarily set up based on limits established by the Management Company, Fund's constitutive documents and the regulations and directives of the SECP. These limits reflect the business strategy and market environment of the Fund as well as the level of the risk that Fund is willing to accept. The Board of Directors of the Management Company supervises the overall risk management approach within the Fund. 22.1
Credit risk Credit risk is the risk that a counterparty to a financial instrument will fail to discharge an obligation or commitment that it has entered into with the Fund, resulting in a financial loss to the Fund. At the year-end it arises principally from debt securities held, bank balances and mark-up / return receivable, etc. Management of credit risk The Fund's policy is to enter into financial contracts in accordance with the investment guidelines approved by the Investment Committee, its Trust Deed, the requirements of NBFC rules and regulations and guidelines given by SECP from time to time.
54
LAKSON INCOME FUND Credit risk is managed and controlled by the management company of the Fund in the following manner: - Where the investment committee makes an investment decision, the credit rating and credit worthiness of the issuer is taken into account along with the financial background so as to minimise the risk of default. - Analysing credit ratings and obtaining adequate collaterals wherever appropriate / relevant. - The risk of counterparty exposure due to failed trades causing a loss to the Fund is mitigated by a periodic review of the credit ratings and financial statements on a regular basis. - Cash is held only with reputable banks with minimum long term credit rating of A+. Exposure to credit risk In summary, compared to the maximum amount included in Statement of Assets and Liabilities, the maximum exposure to credit risk at year end was as follows:
Bank balances including profit receivables Investments including profit receivables Margin Trading System including profit receivables Loans and receivables including profit receivables Deposits and other receivables
June 30, 2017 Statement Maximum of Assets and exposure Liabilities Note ----------- (Rupees) -----------
June 30, 2016 Statement Maximum of Assets and exposure Liabilities ----------- (Rupees) -----------
5 2,280,954,090 2,280,954,090 2,227,151,004 2,227,151,004 6
790,645,205
691,070,205
451,303,180
343,423,307
7
63,956,332
63,956,332
13,214,261
13,214,261
8
713,718,633
713,718,633
272,780,137
272,780,137
10
2,850,000 2,850,000 4,010,580 4,010,580 3,852,124,260 3,752,549,260 2,968,459,162 2,860,579,289
Difference in the balances as per the Statement of Assets and Liabilities and maximum exposure in investments is due to the fact that investments [including mark-up thereon nil (2016: Rs. 1.601 million)] of Rs. 99.575 million (2016: Rs. 107.880 million) relates to investments in Government Securities which are not considered to carry credit risk. Past due / impaired assets None of the financial assets of the Fund are past due or impaired as at year end. Credit ratings and Collaterals Credit risk arising on debt securities is mitigated by investing primarily in investment-grade rated instruments. In case of debt securities the minimum rating of the instrument has to be A- while the entity's rating has to be BBB+. Further credit risk arising from bank balances is mitigated through deposits held with banks which are rated BBB+ or above. The Fund
55
LAKSON INCOME FUND is required to follow the guidelines / restrictions imposed in its offering document and the SECP in respect of the minimum ratings prior to any investment. Details of the credit ratings of investments in debt securities (other than Government securities) and bank balances including term deposits receipts as at year end are as follows:
Ratings
June 30, 2017 June 30, 2016 Debt securities Bank balances Debt securities Bank balances (including profit (including profit (including profit (including profit due) % of balance due) % of balance due) % of balance due) % of balance (Instrument rating) (Entitys rating) (Instrument rating) (Entitys rating)
AAA AA+ AA AAA+ AA Total
18.77 10.34 30.78 20.12 19.98 100.00
1.63 18.15 0.02 57.34 0.00 22.85 100.00
31.32 17.45 51.24 100.00
6.31 2.27 26.13 0.01 65.27 0.01 100.00
Above ratings are assigned by PACRA and JCR-VIS (as of June 30, 2017). The investments in debt securities and bank balances are unsecured. Concentration of credit risk Concentration of credit risk exists when changes in economic or industry factors affect groups of counterparties whose aggregate credit exposure is significant in relation to the Funds total credit exposure. Around 2.81% (2016: 4.05%) of the Fund's financial assets are in Government securities which are not exposed to the credit risk, while the remaining portfolio of financial assets is broadly diversified and transactions are entered into with diverse credit-worthy counterparties thereby mitigating any significant concentrations of credit risk. Details of Fund's concentration of credit risk of financial instruments by industrial distribution are as follows: June 30, 2017 (Rupees) Commercial banks 3,251,283,911 Microfinance Banks 50,122,300 Electricity 41,393,480 Miscellaneous 80,560,480 Central Depository Company of Pakistan Limited 100,000 National Clearing Company of Pakistan Limited 2,750,000 3,426,210,171
June 30, 2016
(%)
(Rupees)
(%)
94.89 1.46 1.21 2.35
2,685,442,815 100,000,000 41,792,360 -
94.97 3.54 1.48 -
0.00
100,000
0.00
0.08 100
250,000 2,827,585,175
0.01 100
Settlement risk The Funds activities may give rise to risk at the time of settlement of transactions. Settlement risk is the risk of loss due to the failure of an entity to honour its obligations to deliver cash, securities or other assets as contractually agreed.
56
LAKSON INCOME FUND For the vast majority of transactions the Fund mitigates this risk by conducting settlements through a broker to ensure that a trade is settled only when both parties have fulfilled their contractual settlement obligations. 22.2
Liquidity risk Liquidity risk is the risk that the Fund will encounter difficulty in meeting obligations arising from its financial liabilities that are settled by delivering cash or another financial asset, or that such obligations will have to be settled in a manner disadvantageous to the Fund. The Fund is exposed to cash redemptions of its units on a regular basis. Units are redeemable at the holder's option based on the Funds net asset value per unit at the time of redemption calculated in accordance with the Funds constitutive document and guidelines laid down by Securities and Exchange Commission of Pakistan (SECP). Management of liquidity risk The Fund's policy is to manage this risk by investing majority of its assets in investments that are traded in an active market and can be readily disposed. The Fund invests primarily in marketable debt securities and other financial instruments, which under normal market conditions are readily convertible to cash. As a result, the Fund may be able to liquidate quickly its investments in these instruments at an amount close to their fair value to meet its liquidity requirement. The Fund has the ability to borrow, with prior approval of trustee, for meeting redemption requests. The maximum amount available to the Fund from borrowings is limited to the extent of 15% of total assets at the time of borrowing with repayment with in 90 days of such borrowings. No such borrowings were made during the year. In order to manage the Fund's overall liquidity, the Fund also has the option to withhold daily redemption requests in excess of ten percent of the units in issue and such requests would be treated as redemption requests qualifying for being processed on the next business day. Such procedure would continue until the outstanding redemption requests come down to a level below ten percent of the units then in issue. However, during the year no such option was exercised or considered necessary. Maturity analysis for financial liabilities The table below analyses the Fund's financial liabilities into relevant maturity groupings based on the remaining period at the balance sheet date to the contractual maturity date and represents the undiscounted cash flows. June 30, 2017
Non-derivative liabilities Payable to the Management Company Remuneration payable to the Trustee Accrued expenses and other liabilities Payable against purchase of investments Payable against redemption of units Dividend payable Unit holders' fund*
Less than 3 to 12 Total months 3 months ------------ (Rupees) ------------
4,724,340
-
4,724,340
380,129
-
380,129
357,995
-
357,995
236,784,730 1,293,408 3,107 243,543,709 3,624,173,284
-
236,784,730 1,293,408 3,107 243,543,709 3,624,173,284
57
LAKSON INCOME FUND June 30, 2016 Less than 3 to 12 Total months 3 months ------------ (Rupees) ------------
Non-derivative liabilities Payable to the Management Company Remuneration payable to the Trustee Accrued expenses and other liabilities Unit holders' fund*
7,266,321
-
7,266,321
353,858
-
353,858
301,192 7,921,371
-
301,192 7,921,371
2,915,003,718
2,915,003,718
* Payable on demand. Above financial liabilities do not carry any mark-up. 22.3
Market risk Market risk is the risk that changes in market prices, such as interest rates, equity prices, foreign exchange rates and credit spreads (not relating to changes in the obligors / issuers credit standing) will effect the Funds income or the fair value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Management of market risks The Management Company manages market risk by monitoring exposure on marketable securities by following the internal risk management policies and investment guidelines approved by the Investment Committee and regulations laid down by the Securities and Exchange Commission of Pakistan. The maximum risk resulting from financial instruments equals their fair values. Market risk comprise of three types of risk: interest rate risk, currency risk and other price risk.
22.3.1
Interest rate risk
22.3.1.1
Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. Currently the Funds interest rate exposure arises on investment in Government securities, debt securities, term deposit receipts with banks and bank balances in profit and loss sharing account. Currently majority of the Fund's investment carry fixed interest rates, except for certain debt securities. The Management Company monitors the interest rate environment on a regular basis and may change the mix of its portfolio to enhance the earning potential of the Fund subject to the above defined guidelines. Other risk management procedures are the same as those mentioned in the credit risk management.
58
LAKSON INCOME FUND 22.3.1.2
Details of the interest rate profile of the Fund's interest bearing financial assets were as follows: Fixed rate instruments Financial assets Investments in Government Market Treasury Bills Investments in Government Pakistan Investment Bonds Loans and receivables Bank balances Receivable from Margin Trading System
2017
Note 6.1
(Rupees)
2016
99,575,000
48,424,200
6.2 8 5.1 & 5.2
707,857,534 2,265,062,203
57,854,974 270,000,000 2,217,706,334
7
63,070,755 3,135,565,492
13,042,035 2,607,027,543
248,486,473 121,953,960 370,440,433
297,736,479 41,792,360 339,528,839
Variable rate instruments Financial assets Investment in Term Finance Certificates 6.3 & 6.4 Investment in Sukuk certificates 6.6
None of the financial liabilities carry any interest rate.
Fair value sensitivity analysis for fixed rate instruments Interest bearing Government securities of Rs. 99.575 million (June 2016: Rs. 106.279 million) are held by the Fund at fair value through profit or loss (held for trading) and exposes the Fund to the fair value risk. In case of 100 basis points increase / decrease in yield rates of the above Government Securities during the year, the net assets of the Fund would have been lower / higher by Rs. 0.995 (2016: Rs. 1.063) million with corresponding effect on net income for the year. Other balances are not carried at fair value through profit and loss. Therefore a change in interest rate during the year would not effect the income statement and unit holder's fund. Cash flow sensitivity analysis for variable rate instruments A change of 100 basis points in interest rates at the year end, unit holder fund would have increased / (decreased) by Rs. 3.704 (2016: Rs. 3.395) million. The analysis assumes that all other variables remain constant. 22.3.1.3
A summary of the Funds interest rate gap position, categorised by the earlier of contractual re-pricing or maturity date is as follows:
59
LAKSON INCOME FUND mark-up/ profit (%)
Less than one month
3.75 to 6.70 5.98 to 8.90
2,265,062,203 -
8.75 6.80 to 11.49
140,000,000 2,405,062,203
4.5 to 7.40 8.75 to 15.00
2,217,706,334 -
8.93 11.00
2,217,706,334
June 30, 2017 Financial assets Bank balances Investments Receivable from Margin Trading System Loans and receivables Total assets
One to three months
More than More than Total three months one year and upto an exceed one year -------------------------------------------------- (Rupees) --------------------------------------------------63,070,755 277857534 340,928,289
180,135,480
289,879,953
2,265,062,203 470,015,433
290,000,000 470,135,480
289,879,953
63,070,755 707,857,534 3,506,005,925
48,424,200
397,383,813
2,217,706,334 445,808,013
270,000,000 318,424,200
397,383,813
13,042,035 270,000,000 2,946,556,382
June 30, 2016 Financial assets Bank balances Investments Receivable from Margin Trading System Loans and receivables Total assets
13,042,035 13,042,035
None of the Fund's financial liability is exposed to interest rate risk.
22.3.2
Currency risk Currency risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in foreign exchange rates. The Fund, at present, is not exposed to currency risk as all transactions are carried out in Pak Rupees.
22.3.3
Other price risk Other price risk is the risk that the fair value of financial instrument will fluctuate as a result of change in market prices (other than those arising from interest rate risk or currency risk), whether caused by factors specific to an individual investment, its issuer or factors affecting all instruments traded in the market. The Fund is expecting minimal price fluctuation on its investment in debt securities (i.e. Government securities and listed term finance certificates) for change in factors other than those arising from interest rate or currency risk.
22.4
Operational risks Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technology and infrastructure supporting the Funds operations either internally within the Fund or externally at the Funds service providers, and from external factors other than credit, market and liquidity risks such as those arising from legal and regulatory requirements and generally accepted standards of investment management behaviour. Operational risks arise from all of the Funds activities. The Funds objective is to manage operational risk so as to balance limiting of financial losses and damage to its reputation with achieving its investment objective of generating returns for investors. The primary responsibility for the development and implementation of controls over operational risk rests with the Board of Directors of the Management Company. This responsibility encompasses the controls in the following areas: - requirements for appropriate segregation of duties between various functions, roles and responsibilities; - requirements for the reconciliation and monitoring of transactions; - compliance with regulatory and other legal requirements; - documentation of controls and procedures;
60
LAKSON INCOME FUND - requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risks identified; - ethical and business standards; - risk mitigation, including insurance where this is effective. 22.5
Unit Holders' Fund risk management Management's objective when managing unit holders' funds is to safeguard the Fund's ability to continue as a going concern so that it can continue to provide optimum returns to its unit holders' and to ensure reasonable safety of unit holders' funds. The Fund manages its investment portfolio and other assets by monitoring return on net assets and makes adjustments to it in the light of changes in markets' conditions. The capital structure depends on the issuance and redemption of units and with effect from July 1, 2013 the Fund is subject to maintain minimum fund size of Rs. 100 million at all times.
22.6
Financial instruments by category ------------------ As at June 30, 2017 -----------------Loans and Financial assets Available Total receivables at fair value for sale through profit or loss ------------------- Rupees -------------------
Assets Bank balances 2,972,935,102 Investments Receivable from Margin Trading System 63,070,755 Loans and receivables 707,857,534 Mark-up receivable 27,097,050 Deposits and other receivables 75,186,157 3,846,146,598
786,186,718 786,186,718
-
2,972,935,102 786,186,718
-
63,070,755 707,857,534 27,097,050
-
75,186,157 4,632,333,316
------------------ As at June 30, 2017 ------------------
Liabilities Payable to the Management Company Remuneration payable to the Trustee Accrued expenses and other liabilities Payable against purchase of investments Payable against redemption of units Dividend payable
61
Liabilities at Financial Total fair value liabilities at through profit amortized or loss cost ------------------- Rupees -------------------
-
4,724,340 380,129 357,995 236,784,730 1,293,408 3,107 243,543,709
4,724,340 380,129 357,995 236,784,730 1,293,408 3,107 243,543,709
LAKSON INCOME FUND ------------------ As at June 30, 2016 -----------------Loans and Financial assets Available Total receivables at fair value for sale through profit or loss ------------------- Rupees -------------------
Assets Bank balances 2,217,723,810 Investments Receivable from Margin Trading System 13,042,035 Loans and receivables 270,000,000 Mark-up receivable 17,892,200 Deposits and other receivables 4,010,580 2,522,668,625
445,808,013 445,808,013
-
2,217,723,810 445,808,013
-
13,042,035 270,000,000 17,892,200
-
4,010,580 2,968,476,638
------------------ As at June 30, 2016 ------------------
Liabilities Payable to the Management Company Remuneration payable to the Trustee Accrued expenses and other liabilities
23
Liabilities at Financial Total fair value liabilities at through profit amortized or loss cost ------------------- Rupees -------------------
-
7,266,321 353,858 301,192 7,921,371
7,266,321 353,858 301,192 7,921,371
TOTAL EXPENSE RATIO (TER) As per the SECP circular vide direction no. 23 dated July 20, 2016 and as referred in Regulations 60(5) of the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the "Regulations"), Total Expense Ratio (TER) calculated inclusive of Sindh Sales Tax and SECP fee is 2.04% as of June 30, 2017 and this includes 0.31% representing Sindh Sales tax and SECP fee.
24
FAIR VALUE OF FINANCIAL INSTRUMENTS Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. The Funds accounting policy on fair value measurements of the investments is discussed in note 4.1 to these financial statements. Underlying the definition of fair value is the presumption that the Asset Management Company is a going concern without any intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. The fair value of financial assets and liabilities traded in active markets i.e. listed equity shares are based on the quoted market prices at the close of trading on the period end date. The quoted market prices used for financial assets held by the company is current bid price. A financial instrument is regarded as quoted in an active market if quoted prices are readily and regularly available from an exchange, dealer, broker, industry group, pricing service, or regulatory agency, and those prices represent actual and regularly occurring market transactions on an arms length basis.
62
LAKSON INCOME FUND IFRS 13, 'Fair Value Measurements' requires the Fund to classify fair value measurements using a fair value hierarchy that reflects the significance of the inputs used in making the measurements. The fair value hierarchy has the following levels: - Quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1); - Inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (level 2); and - Inputs for the assets or liability that are not based on observable market data (that is, unobservable inputs) (level 3). The following table shows the carrying amounts and fair values of financial assets and financial liabilities, including their levels in the fair value hierarchy. June 30, 2017 Carrying amount Fair value through profit and loss
Loans and receivables
Fair Value
Other financial liabilities
Total
Level 1
Level 2
Level 3
Total
------------------------------------------------ (Rupees in 000) -----------------------------------------------On-balance sheet financial instruments Financial assets measured at fair value Government Securities Listed Equity Securities Debt Securities Financial assets not measured at fair value Bank balances Receivable from Margin Trading System Loans and receivables Mark-up receivable Deposits and other receivables
6 6 6
99,575,000 236,171,285 453,743,528 789,489,813
-
-
99,575,000 236,171,285 453,743,528 789,489,813
236,171,285 236,171,285
99,575,000 453,743,528 553,318,528
-
99,575,000 236,171,285 453,743,528 789,489,813
-
2,265,077,568 63,070,755 707,857,534 27,097,050 75,186,157 3,138,289,064
-
-
-
-
4,724,340 380,129 357,995 236,784,730 1,293,408 3,107 243,543,709
-
-
-
-
24.1 -
Financial liabilities not measured at fair value Payable to the Management Company Remuneration payable to the Trustee Accrued expenses and other liabilities Payable against purchase of investments Payable against redemption of units
2,265,077,568 63,070,755 707,857,534 27,097,050 75,186,157 3,138,289,064
-
-
4,724,340 380,129 357,995 236,784,730 1,293,408 3,107 243,543,709
June 30, 2016 Carrying amount Fair value through profit and loss
Loans and receivables
Fair Value
Other financial liabilities
Total
Level 1
Level 2
Level 3
Total
------------------------------------------------ (Rupees in 000) -----------------------------------------------On-balance sheet financial instruments Financial assets measured at fair value Government Securities Debt Securities Financial assets not measured at fair value Bank balances Receivable from Margin Trading System Loans and receivables Mark-up receivable Deposits and other receivables Financial liabilities not measured at fair value Payable to the Management Company Remuneration payable to the Trustee Accrued expenses and other liabilities
24.1
6 6
106,279,174 339,528,839 445,808,013
-
-
106,279,174 339,528,839 445,808,013
-
106,279,174 339,528,839.00 445,808,013
-
106,279,174 339,528,839 445,808,013
-
2,217,723,810 13,042,035 270,000,000 17,892,200 4,010,580 2,522,668,625
-
-
-
-
7,266,321 353,858 301,192 7,921,371
-
-
-
-
24.1 -
2,217,723,810 13,042,035 270,000,000 17,892,200 4,010,580 2,522,668,625 -
7,266,321 353,858 301,192 7,921,371
The Fund has not disclosed the fair values for these financial assets and financial liabilities, as these are either short term in nature or reprice periodically. Therefore, their carrying amounts are reasonable approximation of fair value.
63
LAKSON INCOME FUND Valuation techniques For level 2 investments at fair value through profit or loss - held for trading in respect of debt securities, the Fund uses the closing market price as per MUFAP and in respect of Pakistan Investment Bonds and Market Treasury Bills the Fund uses rates derived from PKRV rates at reporting date per certificates multiplied by the number of certificates held. Transfers during the year During the year ended June 30, 2017, there were no transfers between level 1 and level 2 fair value measurements, and no transfers into and out of level 3 financial instruments. 25
SUPPLEMENTARY NON FINANCIAL INFORMATION The information regarding unit holding pattern, top brokers, members of the Investment Committee, Fund manager, meetings of the Board of Directors of the management company and rating of the Fund and the management company are as follows:
25.1
Unit holding pattern of the Fund ----------------------- June 30, 2017 -----------------------
Category Individuals Associated Companies and Directors Insurance Companies Banks/DFI NBFC Retirement Funds Others
No. of Investors
Investment % of total amount net assets ----------------------- (Rupees) ----------------------27 8 4 1 2 4 5 51
41,281,283 1,913,089,253 52,279,173 52,218,900 195,580,471 195,434,540 1,174,289,664 3,624,173,284
1.14 52.79 1.44 1.44 5.40 5.39 32.40 100.00
----------------------- June 30, 2016 -----------------------
No. of Investors
Investment % of total amount net assets ----------------------- (Rupees) -----------------------
Individuals Associated Companies and Directors Insurance Companies NBFC Retirement Funds Public Limited Companies
30 7 2 1 1 6 47
64
23,882,455 903,019,690 176,198,351 50,000,000 65,249,464 1,696,653,758 2,915,003,718
0.82 30.98 6.04 1.72 2.24 58.20 100.00
LAKSON INCOME FUND 25.2
Top ten brokers by percentage of commission paid Broker Name (Percentage %) 2017 2016 Alfalah Securities (Private) Limited Invest Capital Markets Limited JS Global Capital Limited Invest & Finance Securities Limited Vector Capital (Private) Limited Magenta Capital (Private) Limited Optimus Markets (Private) Limited First Capital Securities Corporation Limited BMA Capital Management Limited
25.3
80.87 3.09 16.04 100.00
41.03 24.24 11.64 9.59 6.47 5.31 1.62 0.10 100.00
Particulars of the Investment Committee and Fund manager Following are the members of the investment committee of the Fund: - Mr. Babar Ali Lakhani (Chairman Investment Committee) - Mr. Kashif Mustafa - Mr. Mustafa O. Pasha - Mr. Syed Saifullah Kazmi - Ms. Sana Abdullah, CFA - Mr. Hassan Bin Nasir (Fund Manager) - Ms. Tayyaba Azeem - Mr. Junaid Arshad Mr. Babar Ali Lakhani - Chief Executive Officer Mr. Lakhani has over 17 years of investment and portfolio management experience in domestic and international equity and fixed income markets. Mr. Lakhani most recently served as the Chief Investment Officer of Century Insurance Company Limited, a Public Limited Company listed on the Pakistan Stock Exchange Limited. He was an Investment Associate at High Street Advisors and a Research Analyst at Credit Suisse Equity Group (formerly Credit Suisse First Boston). Mr. Lakhani brings extensive investment experience, globally practiced portfolio management discipline, and a comprehensive understanding of the global asset management industry to Lakson Investment Limited. Mr. Lakhani received his BA in Finance from Bentley College, and his MBA from Brandeis University. Mr. Lakhani is a member of the Global Association of Risk Professionals (GARP), the Society of Financial Service Professionals and the Young Presidents' Organization (YPO). Mr. Lakhani is a member of the Alumni Trustee Committee of Brandeis University and is the schools representative in Pakistan. Mr. Kashif Mustafa- Executive Director & COO Mr. Mustafa has more than nine years of experience working in the financial markets of Pakistan with local and international brokerage houses, and leading Asset Management Companies. Mr. Mustafas experience includes; Financial Analysis, Equity Research, Investment Advisory and Business Development. Before Lakson Investment Limited, Mr. Mustafa worked for Askari Investments and Crosby Securities Pakistan Limited as Vice President and Head
65
LAKSON INCOME FUND of Sales & Business Development respectively. He frequently appears on the media and has been featured on Express, Business Plus, CNBC, GEO, PTV, Aaj TV, Sindh TV & KTN. Mr. Mustafa did his graduation in Mathematics and Masters in Economics. Mr. Mustafa O. Pasha, CFA Head of Investment Mr. Pasha has over nine years of experience in the asset management and investment advisory industry. He did his Bachelors in Economics from McGill University (Montreal, Canada) in 2006 and obtained his CFA charter in 2012. At Lakson Investments Limited he is responsible for driving out performance of all fixed income portfolios against their respective benchmarks by formulating the investment outlook and implementing strategy through asset allocation. As a member of the Investment Committee he is a key member of the team that develops and executes the investment strategy for both fixed income and equity portfolios. He was previously associated with BMA where he initially served as a fixed income analyst and later became the in house economist for the entire BMA group. Between 2009 - 2012 he supervised fixed income / money market investments across all mutual funds and institutional / HNW accounts advised by BMA. Mr. Syed Saifullah Kazmi Head of Equities Mr. Saifullah has over nine years of experience and currently holds positions of Head of Equities Investments in Lakson Investments Limited. He is a qualified Finance major from Kingston University. He has experience in Emerging and Frontier Financial Markets, with focus in Pakistan, Strong Fixed Income background, with investment strategy and trading experience in instruments including, Government Securities, Corporate Bonds, Banking Products and Islamic Sukkuks. He is also managing the following funds: 1. Lakson Equity Fund 2. Lakson Tactical Fund 3. Lakson Islamic Tactical Fund ( Formerly: Lakson Asset Allocation Emerging Markets Fund) Ms. Sana Abdullah, CFA Head of Research Ms. Sana Abdullah has over nine years of experience in the asset management and brokerage industry, focusing on equity research and advisory. She did her Masters in Business Administration from Iqra University in 2003, and obtained her CFA charter in 2015. At Lakson Investments Limited she is responsible for driving the equity research function, formulating the fundamental investment outlook and generating investment ideas to generate alpha. As a member of the Investment Committee, she is a key member of the investments team that develops and executes the investment strategy for Lakson Investments' mutual funds and discretionary portfolios. Ms. Sana Abdullah was previously associated with Tundra Fonder, a Swedish asset manager having investments in frontier markets where she was heading the research function and was responsible for the Pakistan research desk. Before joining Tundra, she worked with broker/deals including Global Securities, IGI Finex Securities and Elixir Securities where she has also headed and supervised research teams. Mr. Hassan Bin Nasir VP - Fixed Income Mr. Bin Nasir has over eight years of experience and currently holds positions of Vice President Fixed Income in Lakson Investments Limited. He completed his Masters in Business Administration in Finance major from Bahria University, Pakistan. He has immense experience in managing portfolios across Collective Investment Schemes, Separate Managed Accounts with Strong Fixed Income background, investment strategy and trading experience
66
LAKSON INCOME FUND in instruments including, Government Securities, Corporate Debt Securities, Banking Products and Shariah Compliant Corporate Debt Securities. He is also managing the following funds. 1. Lakson Money Market Fund 2. Lakson Asset Allocation Developed Market Fund Ms. Tayyaba Azeem Assistant Portfolio Manager Ms. Tayyaba Azeem is currently working as an assistant portfolio manager and risk manager at Lakson Investments. She has done her MBA in Finance from Brandeis University (U.S.A.) and graduated with distinction (summa cum laude) on a Fulbright Scholarship. She has also worked in the fields of marketing, research and non-profits. She has over nine years of work experience. Mr. Junaid Arshad Manager Compliance Mr. Junaid Arshad an ACCA member, having over 6 years of experience in the asset management industry and currently holds the position of Manager Compliance. He possess sound Knowledge of financial management, tax regulations, financial procedures, and NBFC Rules and Regulations. He was actively involved in system development and implementation during his stay at different organizations. He was previously associated with JS Investments and Alfalah Investments as a finance professional. 25.4
Directors meeting attendance 2017
Name of directors Mr. Iqbal Ali Lakhani Mr. Babar Ali Lakhani Mr. A. Aziz H. Ebrahim Mr. Mahomed J. Jaffer Mr. Jacques John Vesser Mr. Daniel Scott Smaller Mr. Zahid Zakiuddin Mr. Amin Mohammed Lakhani
25.5
Fourty One 8/26/16
Fourty Two 21/10/16
X T T T T T T X
T T T T T T T T
Fourty Three Fourty Fourth 28/02/17 05/25/17
T T T T X T T X
T T T T T T T T
Meeting Attended
3 4 4 4 3 4 4 2
4 4 4 4 4 4 4 4
Rating of the Fund and the management company PACRA Rating
Management Quality Rating
Stability Rating
AM2+ -
A+ (f)
Lakson Investments Limited (Management Company) Lakson Income Fund 26
Meeting eligible to attend
DATE OF AUTHORIZATION FOR ISSUE These financial statements were authorized for issue by Board of Directors of the Management Company on August 25, 2017.
27
GENERAL Figures have been rounded off to the nearest rupee.
For Lakson Investments Limited (Management Company) Chief Executive Officer
Chief Financial Officer
67
Director
LAKSON INCOME FUND Performance Table
FY17
FY16
FY15
FY14
FY13
FY12
Net Assets - Beginning (PKR Mil.)
2,915
2,568
1,075
1,626
1,414
1,006
Net Assets - Ending (PKR Mil.)
3,624
2,915
2,568
1,075
1,626
1,414
Net Asset value per share
100.6760
101.1380
100.8777
100.1715
101.1528
101.3505
Selling Price for units
102.1862
102.6551
102.3909
101.6740
102.6701
102.8708
Repurchase Price for units
100.6760
101.1380
100.8777
100.1715
101.1528
101.3505
Highest Offer Price (PKR)
108.5328
110.9122
115.8602
103.5345
102.9285
103.1214 101.7560
Lowest Offer Price (PKR)
102.0811
102.3574
101.6940
101.5246
101.8786
Highest Redemption Price (PKR)
106.9288
109.2731
114.1479
102.0044
101.4073
101.5974
Lowest Redemption Price (PKR)
100.5725
100.8447
100.1911
100.0242
100.3730
100.2522
Beginning NAV - Ex-Div. (PKR)
101.1380
101.0092
100.2138
100.2450
100.4114
100.1626
7.4452
8.3922
13.4601
8.7339
Interim Distributions (PKR) Final Distribution (PKR) Ending NAV - Ex-Div. (PKR) Return
-
-
-
-
8.141
9.8767
0.9078
0.9391
100.4407
100.9825
100.6878
100.0379
100.2450
100.4114
6.92%
8.57%
14.17%
8.38%
9.21%
11.57%
Net Income (PKR Mil.)
30
128
70
92
154
136
Total Distribution
39
118
49
109
153
129
Accumulated Capital Growth
24
33
23
2
19
19
166
282
1361
706
410
452
WAM (Days)
Average Annual return of the Fund One Year
6.92%
8.57%
14.17%
8.38%
9.21%
11.57%
Two year
8.04%
11.97%
11.87%
9.18%
10.93%
12.20%
Three year
10.84%
11.44%
11.39%
10.69%
11.96%
12.61%
Since inception
14.27%
14.39%
14.20%
12.45%
12.52%
12.61%
68
LAKSON INCOME FUND Distributions
FY17
FY16
FY15
FY14
FY13
7.4452 107.8859 100.4407 22-Jun-17
2.4863 109.2731 106.7868 21-Jun-16
13.4601 114.1479 100.6878 25-Jun-15
0.6211 100.8483 100.2272 31-Jul-13
0.8020 101.2785 100.4765 30-Jul-12
0.8598 101.0231 100.1633 01-Aug-11
0.4346 100.6501 100.2155 30-Aug-13
0.8529 101.4073 100.5544 31-Aug-12
0.9563 101.2159 100.2596 29-Aug-11
3rd Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
0.409 100.742 100.333 27-Sep-13
0.7863 101.1528 100.3665 26-Sep-12
0.9471 101.2614 100.3143 28-Sep-11
4th Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
0.5296 100.8757 100.3461 25-Oct-13
0.7687 101.1528 100.4953 24-Oct-12
1.0151 101.5974 100.5823 28-Oct-11
5th Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
0.6000 100.9728 100.3728 28-Nov-13
0.8767 101.1986 100.3219 28-Nov-12
0.9459 101.4258 100.4799 28-Nov-11
6th Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
0.6548 101.0391 100.3843 27-Dec-13
0.7121 101.1128 100.4007 27-Dec-12
0.9403 101.2696 100.3293 30-Dec-11
7th Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
0.8893 101.6005 100.7112 29-Jan-14
0.7813 101.1274 100.3461 29-Jan-13
0.9115 101.2411 100.3296 31-Jan-12
8th Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
0.6001 101.2054 100.6053 26-Feb-14
0.6347 100.9680 100.3333 28-Feb-13
0.7405 101.0058 100.2653 27-Feb-12
9th Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
0.6033 102.0044 101.4011 27-Mar-14
0.5741 100.9368 100.3627 27-Mar-13
0.8401 101.1024 100.2623 29-Mar-12
10th Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
0.6774 101.8617 101.1843 24-Apr-14
0.7141 101.0602 100.3461 29-Apr-13
0.8178 101.0764 100.2586 27-Apr-12
11th Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
1.0675 101.707 100.6395 29-May-14
0.6381 101.1125 100.4744 29-May-13
0.9023 101.2068 100.3045 30-May-12
12th Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
1.1072 101.1451 100.0379 25-Jun-14 0.9078 101.1528 100.2450 08-Jul-13
0.9391 101.3505 100.4114 05-Jul-12
1st Interim Distribution NAV before Distribution NAV after Distribution Distribution Date 2nd Interim Distribution NAV before Distribution NAV after Distribution Distribution Date
5.9059 106.8884 100.9825 29-Jun-16
Final Distribution NAV before Distribution NAV after Distribution Distribution Date
Nil Nil Nil Nil
Nil Nil Nil Nil
FY12
Disclaimer Past performance is not necessarily indicative of future performance and unit prices and investment returns may go down, as well as up.
69
Lakson Investments Limited Lakson Square, Building No. 2, Sarwar Shaheed Road, Karachi-74200, Pakistan T +92.21 3569.8000 F +92.21 3568.1653
Lakson Investments Limited
(Regulated by the DFSA as a Representative Office)
Level 15, Gate Building DIFC, P.O. Box 507054 Dubai, U.A.E. T +971.4 401.9284 F +971.4 401.9578
