1 CHUNDRIGAR ROAD SAVINGS FUND CHUNDRIGAR ROAD SAVINGS FUND Management Company BMA Asset Management Company Limited 801 Unitower. 1.1. Chundrigar Road, Karachi-74000 Board of Directors of the Management Company Mr. Muhammad Iqbal Chairman Mr. Zouhair Abdul Khaliq Director Mr. Salim Khan Director Mr. Muddassar Malik Director Mr. Khaldoon Bin Latif Chief Executive Officer Audit Committee of the Management Company Mr. Zouhair Abdul Khaliq Chairman Mr. Muhammad Iqbal Member Mr. Muddassar Malik Member Human Resource and Remuneration Committee Mr. Salim Khan Chairman Mr. Muhammad Iqbal Member Mr. Muddassar Malik Member Management Team of the Management Company Mr. Farrukh Hussain Chief Investment Officer Mr. Faisal Ali Khan CFO & Company Secretary Trustee MCB Financial Services Limited Trustee Office 4th Floor, Pardasi House, M.T Khan Road, Karachi Bankers Summit Bank Limited Bank Islami Pakistan Limited JS Bank Limited Bank AI-Habib Limited Faysal Bank Limited MCB Bank Limited Bank Alfalah Limited Silk Bank Limited Habib Bank Limited Askari Bank Limited Zarai Taraqiati Bank Limited Distributors BMA Capital Management Limited Pyramid Financial Consultants (Pvt) Limited Topline Securities Limited Auditors Ernst & Young Ford Rhodes Sidat Hyder & Co. Chartered Accountants Progressive Plaza, Beaumont Plaza behind PIDC House, Karachi Legal Adviser KMS Law Associates 207, Beaumont Plaza behind PIDC House, Karachi Registrar Technology Trade (Pvt.) Limited Dagia House, 241 C, Block 2, PECHS Karachi Fund Stability Rating A+(f) Management Quality Rating AM3 FUND’S INFORMATION CONTENTS FUND'S INFORMATION MISSION STATEMENT REPORT OF THE DIRECTORS OF THE MANAGEMENT COMPANY CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES CONDENSED INTERIM INCOME STATEMENT CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDER'S FUND CONDENSED INTERIM CASH FLOW STATEMENT NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS Meezan Bank Limited Finca Micro Finance Bank Limited U Micro Finance Bank Limited Tameer Micro Finance Bank Limited Dubai Islamic Bank Pakistan Limited Icon Securities (Pvt) Ltd. Rabia Fida 1 2 3 7 8 9 10 11 12
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CHUNDRIGAR ROAD SAVINGS FUND CHUNDRIGAR ROAD SAVINGS FUND
Management CompanyBMA Asset Management Company Limited801 Unitower. 1.1. Chundrigar Road,Karachi-74000Board of Directors of the Management CompanyMr. Muhammad Iqbal ChairmanMr. Zouhair Abdul Khaliq DirectorMr. Salim Khan DirectorMr. Muddassar Malik DirectorMr. Khaldoon Bin Latif Chief Executive OfficerAudit Committee of the Management CompanyMr. Zouhair Abdul Khaliq ChairmanMr. Muhammad Iqbal MemberMr. Muddassar Malik MemberHuman Resource and Remuneration CommitteeMr. Salim Khan ChairmanMr. Muhammad Iqbal MemberMr. Muddassar Malik MemberManagement Team of the Management CompanyMr. Farrukh Hussain Chief Investment OfficerMr. Faisal Ali Khan CFO & Company SecretaryTrusteeMCB Financial Services LimitedTrustee Office 4th Floor, Pardasi House, M.T Khan Road, KarachiBankersSummit Bank LimitedBank Islami Pakistan LimitedJS Bank LimitedBank AI-Habib LimitedFaysal Bank LimitedMCB Bank LimitedBank Alfalah LimitedSilk Bank LimitedHabib Bank LimitedAskari Bank LimitedZarai Taraqiati Bank LimitedDistributorsBMA Capital Management LimitedPyramid Financial Consultants (Pvt) LimitedTopline Securities LimitedAuditorsErnst & Young Ford Rhodes Sidat Hyder & Co. Chartered AccountantsProgressive Plaza, Beaumont Plaza behind PIDC House, KarachiLegal AdviserKMS Law Associates207, Beaumont Plaza behind PIDC House, KarachiRegistrarTechnology Trade (Pvt.) LimitedDagia House, 241 C, Block 2, PECHS KarachiFund Stability RatingA+(f)Management Quality RatingAM3
FUND’S INFORMATION
CONTENTS
FUND'S INFORMATION
MISSION STATEMENT
REPORT OF THE DIRECTORS OF THE MANAGEMENT COMPANY
CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES
CONDENSED INTERIM INCOME STATEMENT
CONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME
CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDER'S FUND
CONDENSED INTERIM CASH FLOW STATEMENT
NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS
Meezan Bank LimitedFinca Micro Finance Bank LimitedU Micro Finance Bank LimitedTameer Micro Finance Bank LimitedDubai Islamic Bank Pakistan Limited
Icon Securities (Pvt) Ltd.Rabia Fida
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MISSION STATEMENT
The BMA Chundrigar Road Savings Fund seeks to provide its investors attractive riskadjusted income through investments in fixed income instruments having moderate levelof risk profile. The benchmark of the Fund is an average of one year KIBOR rateprevailing within the particular time period. The Fund will seek to maintain a rupee-weighted average maturity of investment portfolio of not more than 5 years.
VISION STATEMENT
BMA Asset Management seeks to establish itself as a leader within the asset managementindustry of Pakistan by following the principles of prudent investment practice andkeeping our fiduciary responsibility towards our investors as the core belief to ourinvestment philosophy.
The Board of Directors of BMA Asset Management Company Limited, the Management Company of BMAChundrigar Road Savings Fund (BCSF), is pleased to present its report and financial statements of the Fundfor the quarter ended September 30, 2017.
PROFILE
The launch announcement of the BMA Chundrigar Road Savings Fund ("BCSF") was made on 14 August, 2007,Pakistan's 60th year of independence and BCSF was formally launched on 23rd August of the same year. TheBCSF seeks to provide its investors with an attractive rate of return by investing in all fixed income and moneymarket instruments of low risk and medium term duration. The fund's aim is to maintain a rupee-weighted averagematurity for the investment portfolio of not more than 5 years. The benchmark of BCSF is one year KIBOR rateprevailing within the particular time period.
FUND'S FINANCIAL PERFORMANCE
During 1st quarter FY18, the unit price of the Fund increased from Rs. 8.24 on June 30, 2017 to Rs. 8.33 onSeptember 30, 2017, thus showing an annualized return of 4.20% as compared to its benchmark return of 6.46%.The performance of the Fund is net of management fee and all other expenses.
During 1st quarter FY18, BCSF earned Rs. 2.74 million from income from investments, bank balances, termdeposits with banks and other financial institutions and profit on Commercial papers. The Fund also incorporateda valuation loss of Rs. 1.15 million during the quarter. In addition, the Fund booked an element of net gain fromthe issue and redemption of units for Rs. 0.24 million which contributed towards the earning of the Fund.Total expenses of the period stood at Rs. 0.91 million comprising Trustee fee Rs. 0.13 million, SECP fee Rs.0.036 million and remuneration to the management company Rs. 0.30 million. During the period, the Fund alsorecorded liability of Sindh Workers Welfare Fund Rs. 0.037 million as per industry practice. As a result, netincome for the period was Rs. 1.83 million.
INVESTMENT STRATEGY
During the 1st quarter FY18, the Fund remained invested mostly in high yield bank deposits and term placementswith banks. Despite a well thought out strategy of Fund's deployment, valuation losses on tradable securitiesin the portfolio, both government & corporate, depressed the returns on the Fund. The Fund manager expectsthat valuation losses with recover going forward.
At the end of the quarter the major exposure stood at 81.83% cash and 4.87% term deposits. The otherinvestments were medium term PIBs (3.37%), TFCs (4.36%), Commercial papers (4.84%) and other assets0.73% of the total assets. The weighted average maturity of the BCSF stood at 183 days as on 30th Sep, 17.At the end of the 1st quarter 18, the net assets of the Fund were Rs. 205.21 million.
MACROECONOMIC OUTLOOK
Macroeconomic environment remained conducive to growth with no associated inflationary pressures duringthe first quarter of FY18. However, the external account imbalances remain a challenge that can impede economicgrowth.
In September, CPI inflation jumped 3.86% from its mark of 3.41% in Aug'17. This modest increase in inflationis mainly on account of accelerating food prices due to seasonal factors (Eid) coupled with higher fuel prices.Core inflation has moderately declined to 5.4% from 5.5% last month, depicting stability in prices of the basketexcluding food and fuel. We are of the view that average inflation will likely remain below FY18 target of 6% asevident by supply-demand factors. We expect the core inflation to remain downward sticky in the near-term dueto stable prices of food and fuel. We expect FY18 average CPI to clock in at 4.2%.
On the external front, Current account tripped further to a deficit of USD956mn in Sep'17 compared to USD550mnrecorded in the previous month, led by a much expected decline in remittances (down 34% MoM to USD1.3bn)from Eid season's high seen in Aug'17. Exports dipped by 17% MoM to USD1.7bn while imports also fell by 8%
REPORT OF THE DIRECTORS OF THE MANAGEMENT COMPANY
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MoM in Sep'17. However, we flag two key trends in 1Q, which if sustained could provide some relief to the currentaccount: (i) exports up 12% to USD5.67bn with textile exports up 8%YoY, and (ii) machinery import being stagnantin 1Q compared to last year which could reflect some slowdown in investment cycle.
Going forward, we expect the economic outlook to remain stable, however political noise is likely to remain inthe play till the upcoming general elections but the continuation of economic policies and the fate of CPEC arethe likely to provide much needed stability.
STRATEGY
In light of the above macroeconomic developments and Fund's classification, BCSF's strategy is expected tofocus on the following:
• Search for opportunities to invest in high quality liquid asset classes.• Take exposure in high yielding investments with minimum effect of asset quality.• Keep the overall duration of the fund at the manageable levels to absorb adverse knocks in case of interest
rate reversals and take advantage of new interest rate band.
ACKNOWLEDGEMENT
The Board is thankful to its valued investors, the Securities and Exchange Commission of Pakistan, the Trusteesof the Fund, MCB Financial Services Limited and the Registrar, Technology Trade (Pvt) Limited. The Directorsof the Management Company also acknowledge the efforts put in by the team of the Management Companyfor the meticulous management of the Fund.
For and on behalf of the Board
Karachi Khaldoon Bin LatifOctober 31, 2017 Chief Executive Officer
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CHUNDRIGAR ROAD SAVINGS FUNDCONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIESAS AT SEPTEMBER 30, 2017
For BMA Asset Management Company Limited(Management Company)
Chief Executive Officer Director
September 30, June 30,Note 2017 2017
(Un-Audited) (Audited)
4567
89
1011
12Number of units
----------(Rupees)----------
72,262,55736,734,970
505,7672,700,000
789,997112,993,291
2,490,97731,571
236,7201,601,092
48,445
4,408,805
108,584,486
108,584,486
13,169,971
Rupees8.24
167,924,60135,771,6081,854,8492,700,000
781,218209,032,276
2,730,56849,07636,129
1,001,669-
3,817,442
205,214,834
205,214,834
24,639,123
Rupees8.33
ASSETS
Bank balancesInvestmentsProfit receivableSecurity depositPrepayments and other receivablesTotal assets
LIABILITIES
Payable to BMA Asset Management Company Limited - Management CompanyFee Payable to the MCB Financial Services Limited - TrusteePayable to the Securities and Exchange Commission of PakistanAccrued expenses and other liabilitiesDividend Payable
Total liabilities
NET ASSETS
UNIT HOLDERS' FUNDS (AS PER STATEMENT ATTACHED)
CONTINGENCIES AND COMMITMENTS
NUMBER OF UNITS IN ISSSUE
NET ASSET VALUE PER UNIT
The annexed notes from 1 to 18 from an integral part of these condensed interim financial statements.
Chief Financial Officer
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CHUNDRIGAR ROAD SAVINGS FUNDCONDENSED INTERIM STATEMENT OF COMPREHENSIVE INCOME (UN-AUDITED)FOR THE QUARTER ENDED SEPTEMBER 30, 2017
CHUNDRIGAR ROAD SAVINGS FUND
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CONDENSED INTERIM INCOME STATEMENT (UN-AUDITED)FOR THE QUARTER ENDED SEPTEMBER 30, 2017
NoteSeptember 30,
2017September 30,
2016
INCOMECapital gain on sale of investments - net - 135,506Income from term finance certificates and sukuks 199,889 361,916Income from government securities and commercial paper 354,357 1,656,527Dividend Income - 59,000Profit on bank deposits 3,346,393 6,254,715Net unrealised (diminution) / appreciation on re-measurement of investments
classified as financial assets 'at fair value through profit or loss' (1,155,285) (193,722)Total income 2,745,355 8,273,942
EXPENSES
297,501 1,734,994Sindh Sales Tax on Management Company's remuneration 92,547 225,549Remuneration of MCB Financial Services Limited - Trustee 133,150 224,385Annual fee - Securities and Exchange Commission of Pakistan 36,129 88,050Auditors' remuneration 149,848 63,197Other expenses 204,503 211,083Total expenses 913,678 2,547,257
Net Income from operating activities 1,831,677 5,726,684
Element of (loss) / income and capital (losses) / gains included in pricesof units issued less those in units redeemed - (482,696)
Net income for the period before taxation 1,831,677 5,243,988
Taxation 13 - -
Net income for the period after taxation 1,831,677 5,243,988
Earnings per unit 14
Allocation of Net Income for the period:
Income already paid on units redeemed 236,666
Accounting Income available for distribution:Relating to Capital Gain /(loss) (1,155,285)Excluding Capital Gain/(loss) 2,750,296
1,595,011
The annexed notes from 1 to 18 from an integral part of these condensed interim financial statements.
----------(Rupees)----------
Remuneration of BMA Asset Management Company Limited -Management Company
Quarter ended
September 30,
2017
September 30,
2016
1,831,677 5,243,988
- -
1,831,677 5,243,988
----------(Rupees)----------
Quarter ended
Net income for the period after taxation
Other comprehensive income for the period
Total comprehensive income for the period
The annexed notes from 1 to 18 from an integral part of these condensed interim financial statements.
For BMA Asset Management Company Limited(Management Company)
Chief Executive Officer Director
For BMA Asset Management Company Limited(Management Company)
Chief Executive Officer Director
Chief Financial Officer
Chief Financial Officer
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For BMA Asset Management Company Limited(Management Company)
Chief Executive Officer Director
CONDENSED INTERIM STATEMENT OF MOVEMENT IN UNIT HOLDERS' FUND (UN-AUDITED)FOR THE QUARTER ENDED SEPTEMBER 30, 2017
Net assets at the beginning of the period {Rs. 8.24 per unit(June 30, 2016: Rs. 8.24 per unit)}
Issue of units
Redemption of units
Element of loss and capital losses included in pricesof units issued less those in units redeemed - net
Net unrealised (diminution) / appreciation on re-measurement of investmentsclassified as financial assets 'at fair value through profit or loss'
Capital gain on sale of investmentsOther income
Item resulting in increase/ (decrease) in net assets:Income already paid on units redeemed
Net assets at the end of the period {Rs. 8.33 per unit(September 30, 2016: Rs. 8.34 per unit)}
Undistributed loss brought forward comprising:Realised income / (loss)Unrealised (loss) / Income
Accounting Income available for distribution:Relating to Capital Gain /(loss)Excluding Capital Gain/(loss)
Undistributed loss carried forward comprising :Realised incomeUnrealised (loss) / income
The annexed notes from 1 to 18 from an integral part of these condensed interim financial statements.
Distribution Nil (2016: Nil)
13,169,971
28,198,664
(16,729,513)11,469,151
Distribution during the period:
(90,975,413)1,719,395
(89,256,018)
58,2165,185,7725,243,988
(83,818,308)(193,722)
(84,012,030)
Chief Financial Officer
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CHUNDRIGAR ROAD SAVINGS FUNDNOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTSFOR THE QUARTER ENDED SEPTEMBER 30, 2017 (Un-Audited)
1 LEGAL STATUS AND NATURE OF BUSINESS
BMA Chundrigar Road Savings Fund (the Fund) was established in Pakistan under a Trust Deed executedbetween BMA Asset Management Company Limited, as the Management Company and MCB FinancialServices Limited, as the Trustee. The Trust deed was executed and approved by the Securities andExchange Commission of Pakistan (SECP) in accordance with the Non-Banking Finance Companies(Establishment and Regulation) Rules, 2003 (NBFC Rules) on May 18, 2007.
The Management Company of the Fund is licensed to carry out Asset Management Services as a NonBanking Finance Company under the NBFC Rules through a certificate of registration issued by the SECPon December 07, 2007. The registered office of the Management company is situated at 801 Unitower,I.I. Chundrigar Road, Karachi. The Management Company is a member of the Mutual Funds Associationof Pakistan (MUFAP).
The Fund is an open-ended money market mutual fund listed on the Pakistan Stock Exchange. Units ofthe Fund are offered for public subscription on a continuous basis. The units are transferable and can beredeemed by surrendering these to the Fund. The Fund is categorized as an 'Aggressive Fixed IncomeScheme' as per the criteria laid down by SECP for categorization of Collective Investment Scheme (CISs).
The Fund seeks to provide its investors attractive income with concern for preservation of capital byinvesting in all fixed income and money market instruments of low risk and short duration to generateattractive rates of returns.
Pakistan Credit Rating Agency Limited has assigned a rating of A+(f) and AM3 to the Fund and ManagementCompany respectively.
Title to the assets of the Fund is held in the name of MCB Financial Services Limited as Trustee of theFund.
2 BASIS OF PREPARATION
2.1 Statement of Compliance
During the year, the Companies Act 2017 (the Act) has been promulgated , however, Securities andExchange Commission of Pakistan (SECP), vide its Circular no. 17 of 2017 dated July 20, 2017 communicatedCommission's decision that the companies whose financial year closes on or before June 30, 2017 shallprepare their financial statements in accordance with the provisions of the repealed Companies Ordinance,1984. The Commission in continuation of circuar no. 17, 2017 has issued circular no. 23 of 2017 wherebythe companies whose financial year closes on or before December 31, 2017 shall prepare their financialstatements in accordance with the repealed Companies Ordinance, 1984. Accordingly these financialstatements have been prepared in accordance with approved accounting standards as applicable inPakistan, the repealed Companies Ordinance, 1984, the NBFC Rules and NBFC Regulations and thedirectives issued by SECP. Approved accounting standards comprise of such International AccountingStandards (IASs) and International Financial Reporting Standards (IFRSs) as notified in the provisions ofCompanies Ordinance, 1984. Wherever the requirement of the Companies Ordinance, 1984, the NBFCRules and NBFC Regulations and the said directives differ with the requirement of these standards, therequirement of the repealed Companies Ordinance, 1984, the NBFC Rules and NBFC Regulations andthe said directives take precedents.
The disclosures made in this condensed interim financial Statements have, however, been limited basedon the requirements of the International Accounting Standard 34: ‘Interim Financial Reporting’. Thiscondensed interim financial information does not include all the information and disclosures required in afull set of financial statements and should be read in conjunction with the annual published financialstatement of the Fund for the year ended June 30, 2017.
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CONDENSED INTERIM CASH FLOW STATEMENT (UN-AUDITED)FOR THE QUARTER ENDED SEPTEMBER 30, 2017
For BMA Asset Management Company Limited(Management Company)
Chief Executive Officer Director
CASH FLOW FROM OPERATING ACTIVITIES
Net income for the period
Adjustments for:Mark-up/ interest income on investments and bank balancesCapital gain on sale of investments - netNet unrealised (diminution) / appreciation on re-measurement of investments
classified as 'at fair value through profit or loss' - netElement of (loss) / income and capital (losses) / gains included in prices
of units issued less those in units redeemed - net
Working capital changes
(Increase)/decrease in assetsInvestments- NetProfit receivableDeposit, prepayments and other receivables
Increase / (decrease) in liabilitiesPayable to the Management CompanyFee Payable to the MCB Financial Services Limited - TrusteePayable to the Securities and Exchange Commission of PakistanDividend payableAccrued expenses and other liabilities
Net cash generated from operating activities
CASH FLOWS FROM FINANCING ACTIVITIES
Receipts from issue of unitsPayments on redemption of unitsNet cash (used in) financing activities
Net (decrease) / increase in cash and cash equivalents
Cash and cash equivalents at beginning of the period
Cash and cash equivalents at end of the period
The annexed notes from 1 to 18 from an integral part of these condensed interim financial statements.
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In compliance with schedule V of the NBFC Regulations, the directors of the Management Company herebydeclare that this condensed interim financial information gives a true and fair view of the state of the Fund’saffairs as at September 30, 2017.
2.2 Standards, interpretations and amendments to published approved accounting standards, that are effectivein the current period:
The following standard is mandatory for the financial year beginning on or after July 01, 2016 and is relevantto the Fund:
IFRS 13 'Fair Value Measurement' establishes a single framework for measuring fair value and makingdisclosures about fair value measurements when such measurements are required or permitted by otherIFRS. It unifies the definition of fair value as the price that would be received to sell an asset or paid toransfer a liability in an orderly transaction between market participants at the measurement date. It replacesand expands the disclosure requirements about fair value measurements in other IFRSs, including IFRS7 'Financial Instruments: Disclosures'. Notwithstanding the above, the change had no significant impactson the measurements of the Fund's assets and liabilities.
There are certain new and amended standards and interpretations that are mandatory for the Fund'saccounting period beginning on or after July 1, 2016 but are considered not to be relevant or to have anysignificant effect on the Fund's operations and are, therefore, not disclosed in these financial statements.
2.3 Standards, interpretations and amendments to published approved accounting standards that are not yeteffective:
There are certain amendments to the existing published approved accounting standards, new interpretationsand certain new standards that are mandatory for accounting periods beginning on or after July 01, 2017but are considered not to be relevant or will not have any significant effect on the Fund's financial statementsand are, therefore, not disclosed in these financial statements.
3 SIGNIFICANT ACCOUNTING POLICIES
3.1 The accounting policies applied in the preparation of this condensed interim financial statements are thesame as those applied in the preparation of the annual published financial statements of the Fund for theyear ended June 30, 2017 except for the change in accounting policy as stated in note 3.2 below.
The preparation of this condensed interim financial statements in conformity with approved accountingstandards requires management to make estimates, assumptions and use judgments that affect theapplication of policies and reported amounts of assets and liabilities and income and expenses. Estimates,assumptions and judgments are continually evaluated and are based on historical experience and otherfactors, including reasonable expectations of future events. Revisions to accounting estimates are recognisedprospectively commencing from the period of revision.
The significant judgments made by management in applying the accounting policies and the key sourcesof estimation uncertainty were the same as those that were applied to the financial statements as at andfor the year ended June 30, 2017.
The financial risk management objectives and policies are consistent with those disclosed in the annualfinancial statements of the Fund for the year ended June 30, 2017.
3.2 The Securities and Exchange Commission of Pakistan through its SRO 756(1)2017 dated August 03,2017 has made certain amendments in the Non-Banking Finance Companies and Notified EntitiesRegulations, 2008 (the NBFC Regulations, 2008). The notification includes a definition and explanationrelating to "element of income" and excludes the element of income from the expression "accountingincome" as described in Regulation 63 (Amount distributable to unit holders) of the NBFC Regulations,2008. As per the notification, Element of Income represents the difference between net assets value perunit on the issuance or redemption date, as the case may be, of units and the net assets value per unit
at the beginning of the relevant accounting period. Further, the revised regulations also specify that elementof income is a transaction of capital nature and the receipt and payment of element of income shall betaken to unit holder's fund. However, to maintain the same ex dividend net assets value of all unitsoutstanding on the accounting date, net element of income contributed on issue of units lying in unit holdersfund will be refunded on units in the same proportion as dividend bears to accounting income availablefor distribution. Furthermore, the revised regulations also require certain additional disclosure with respectto income statement and statement of movement in unit holders fund, whereas disclosure with respect todistribution statement has been deleted in the revised regulations.
Previously, an equalization account called the element of income / (loss) and capital gains / (Losses)included in prices of units issued less those in units redeemed was created, in order to prevent the dilutionof per unit income and distribution of income already paid out on redemption. The element of income /(loss) and capital gains / (losses) included in prices of units issued less those in units redeemed to theextent it was represented by distributable income earned during the year was recognized in the incomestatement and the element of income / (loss) and capital gains / (losses) included in prices of units issuedless those in units redeemed represented by distributable income carried forward from prior period wasincluded in the distribution statement.
As required by IAS 8 - accounting policy, changes in accounting estimates and errors, a change inaccounting policy requires retrospective applications as if that policy had always been applied. Howeverthe management has applied the above changes in accounting policy prospectively from July 01, 2017as per clarification issued by the Mutual Funds Association of Pakistan and, accordingly, correspondingfigures have not been restated.
3.3 NET ASSETS VALUE PER UNIT
The net asset value per unit as disclosed in the Statement of Assets and Liabilities is calculated by dividingthe net assets of the Fund by the number of units in circulation at the period end.
4 BANK BALANCES
In savings accounts
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5 INVESTMENTS
Financial assets 'at fair value through profit or loss'Term finance certificates and sukuk certificates
Pakistan investment bonds
Loans and receivablesComercial PaperTerm deposit receipts
These accounts carry a rate of return ranging from 3.75% to 8.00 % per annum (2017: 3.75% to 8.00%per annum).
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5.1 Listed and Unlisted term finance certificates and sukuks
All term finance certificates and sukuk certificates have a face value of Rs 5,000 each, unless statedotherwise.
5.3 Commercial paper
This represents commercial paper issued by JS Global Capital Limited, carrying yield of 7.91% per annumand is due to mature on November 07, 2017. At September 30, 2017, commercial paper represented 4.83%(2016: Nil) of the total net assets of the Fund.
5.4 Term deposit receipts
This carries profit at the rate of 9.50% (June 30, 2017: 10.25%) per annum and is due to mature onJanuary 25, 2018. At Sept 30, 2017, TDR represented 4.87% (June 30, 2017: 9.21%) of the total netassets of the Fund.
5.1.1 Significant terms and conditions of term finance certificates and sukuk bonds outstanding at theperiod end are as follows:
Number ofcertificates
Face Value Rating
Silk Bank Limited (Issue date - August 10, 2017 2,000 5,000 6 months KIBOR + 1.85% A-
New Allied Electronics (Private) Limited (Issue date - May 15, 2007) 10,000 2,114 3 month KIBOR +2.75% NPA
New Allied Electronics (Private) Limited (Issue date - July 27, 2007) 16,000 293 3 month KIBOR +2.60% NPA
MaturityName of security Secured / unsecuredMark-up rate(Per annum)
August 10, 2025
May 15, 2011
July 25, 2012
Secured
Secured
Secured
5.2 Pakistan investment bonds - 'at fair value through profit or loss' - held for trading
As at July 1,2017
Purchasedduring the
period
Sold during theperiod
As at September30, 2017
CarryingValue Market value
Unrealisedappreciation /(diminution)
Market valueas a
percentage oftotal
investments
Market valueas a
percentageof net assets
March 26, 2015 05 years 3,050,000 - - 3,050,000 3,740,827 3,227,400 (513,427) 9.02% 1.57%July 17, 2014 10 years 3,050,000 - - 3,050,000 3,263,239 3,679,792 416,552 10.29% 1.79%
Total as at Sep 30, 2016 6,100,000 7,004,066 6,907,192 (96,875) 19.31% 3.37%
Total as at June 30, 2017 7,243,113 7,004,066 (239,047) 19.07% 6.45%
8.1 The Management Company has charged remuneration at the rate of 1.50% (2017: 1.50%) of averageannual net assets of the Fund.
8.1.1 Remuneration payable to Management Company - net
Remuneration payable to Management Company
Less: re-imbursement from the Management Company
Remuneration payable to Management Company - net
926,509 347,756
15 (719,403) (305,003)
207,106 42,753
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8.2 Sindh sales tax at the rate of 13% (2017: 13%) is payable on the remuneration of the ManagementCompany.
8.3 The Finance Act, 2013 enlarged the scope of Federal Excise Duty (FED) on financial services to includeAsset Management Companies (AMCs) with effect from June 13, 2013. As the asset management servicesrendered by the Management Company of the Fund were already subject to provincial sales tax on serviceslevied by the Sindh Revenue Board, which is being charged to the Fund, the Management Company wasof the view that further levy of FED was not justified.
On September 4, 2013, a Constitutional Petition was filed in the Honourable Sindh High Court (SHC) jointlyby various asset management companies, together with their representative Collective Investment Schemesthrough their trustees, challenging the levy of FED.
During the year ended June 30, 2017, the SHC passed an order whereby all notices, proceedings takenor pending, orders made, duty recovered or actions taken under the Federal Excise Act, 2005 in respectof the rendering or providing of services (to the extent as challenged in any relevant petition) were setaside. In response to this, the Deputy Commissioner Inland Revenue has filed a Civil Petition for leaveto appeal in the Supreme Court of Pakistan which is pending adjudication.
With effect from July 1, 2016, FED on services provided or rendered by non-banking financial institutionsdealing in services which are subject to provincial sales tax has been withdrawn by the Finance Act, 2016.
In view of the above, the Fund has discontinued making further provision in respect of FED on remunerationof the Management Company with effect from July 1, 2016. However, as a matter of abundant caution theprovision for FED made till June 30, 2017 amounting to Rs 2.403 million (2017: Rs 2.403 million) is beingretained in the financial statements of the Fund as the matter is pending before the Supreme Court ofPakistan. Had the provision for FED not been recorded in the financial statements of the Fund, the netasset value of the Fund as at September 30, 2017 would have been higher by Re 0.098 per unit (2017:Re 0.18 per unit).
9 FEE PAYABLE TO MCB FINANCIAL SERVICES LIMITED - TRUSTEE
Trustee fee
Sindh sales tax on trustee remuneration
Note September 30,
2017
June 30,
2017
43,430 27,946
5,646 3,625
49,076 31,571
----------------(Rupees)---------------
9.1
9.2
9.1 The Trustee is entitled to a monthly remuneration for services rendered to the Fund under the provisionsof the Trust Deed as per the tariff specified therein, based on the daily net assets of the Fund.
Based on the Trust Deed, the tariff structure applicable to the Fund as at September 30, 2017 is as follows
Tariff per annum
Rs. 0.5 million or 0.2% per annum of the Net
Assets, whichever is higher
Rs.0.5 million plus 0.15% per annum of the Net
Assets exceeding Rs. 250 million
Rs.0.875 million plus 0.08% per annum of the
Net Assets exceeding Rs. 500 million
Rs.1.275 million plus 0.08% per annum of the
Net Assets exceeding Rs. 2,000 million
Amount of funds under management (average NAV)
Exceeding Rs. 200 million to Rs. 250 million
Exceeding Rs. 250 million to Rs. 500 million
Exceeding Rs. 500 million to Rs. 1,000 million
Exceeding Rs. 1,000 million to Rs. 2,000 million
9.2 Sindh Sales Tax of 13% (June 30, 2017: 13%) is charged on Trustee fee with effect from July 01, 2017.
10.1 Under the provisions of the Non-Banking Finance Companies and Notified Entities Regulations, 2008,acollective investment scheme categorised as 'Aggressive Fixed Income Scheme' is required to pay asannual fee to the SECP, an amount equal to 0.075 percent of the average annual net assets of the scheme.The Fund has been classified as an Aggressive Fixed Income Scheme by the Management Company.
11 ACCRUED EXPENSES AND OTHER LIABILITIES
Provision against Sindh Workers' Welfare Fund (SWWF)
Auditors' remuneration payable
Printing expense payable
Withdoling tax payable
Other payable
September 30,2017
June 30,
2017
342,878 305,497
520,172 370,324
58,465 42,751
20,562 591,134
59,592 291,386
1,001,669 1,601,092
--------------(Rupees)--------------
11.1 Provision for Sindh Workers' Welfare Fund
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 whichevery industrial establishment located in the Province of Sindh, the total income of which in any accountingyear is not less than Rs 0.50 million, is required to pay Sindh Workers' Welfare Fund (SWWF) in respectof that year a sum equal to two percent of such income. The matter was taken up by the MUFAP withthe Sindh Revenue Board (SRB) collectively on behalf of various asset management companies andtheir CISs whereby it was contested that mutual funds should be excluded from the ambit of the SWWFAct as these were not industrial establishments but were pass through investment vehicles and did notemploy workers. The SRB held that mutual funds were included in the defination financial institutionsas per the Financial Institution (Recovery of Finances) Ordinance, 2001 and were, hence, required toregister and pay SWWF under the SWWF Act. Thereafter, MUFAP has taken up the matter with the SindhFinance Ministry to have CISs / mutual funds excluded from the applicability of SWWF. In view of theabove developments regarding the applicability of SWWF on CISs / mutual funds, MUFAP on January12, 2017 recommended all its members that as a matter of abundant caution the provision in respect ofSWWF should be made on a prudent basis with effect from the date of enactment of the Sindh WWFAct, 2014 (i.e. starting from May 21, 2015).
Had the provision for SWWF not been recorded in the financial statements of the Fund, the net assetvalue of the Fund as at September 30, 2017 would have been higher by Re 0.014 per unit.
CHUNDRIGAR ROAD SAVINGS FUND
19
12 CONTINGENCIES AND COMMITMENTS
There were no other contingencies and commitments outstanding as at September 30, 2017 and June30, 2017.
13 TAXATION
The income of the Fund is exempt from income tax under clause 99 of Part I of the Second Scheduleto the Income Tax Ordinance, 2001 subject to the condition that not less than ninety percent of itsaccounting income for the year, as reduced by capital gains, whether realised or unrealised, is distributedto the unit holders as cash dividend. Furthermore, regulation 63 of the NBFC Regulations, requires theFund to distribute 90% of the net accounting income other than capital gains to the unit holders. TheFund is also exempt from the provisions of section 113 (minimum tax) under clause 11A of Part IV of theSecond Schedule to the Income Tax Ordinance, 2001. The Management Company intends to distributeat least 90% of the net accounting income earned by the Fund during the year to the unit holders in themanner as explained above. Accordingly no provision for tax has been made in these financial statements
14 EARNING PER UNIT
Earnings per unit (EPU) for the period ended September 30, 2017 has not been disclosed as in theopinion of the management, determination of weighted average units for calculating EPU is not practicable.
15 TOTAL EXPENSE RATIO
In accordance with regulation 60 (5) of the ammended NBFC Regulations 2008 the Total Expense Ratio(excluding government levies) of a money market fund is to be capped at 2% of the daily average netassets of the fund during the period. The Total Expense Ratio of BMA Empress Cash Fund for the quarterended September 30,2017 is 2.37% which includes 0.37% representing government levy and SECP fee.
16 TRANSACTIONS WITH CONNECTED PERSONS
16.1 Related parties / Connected persons include BMA Asset Management Company Limited (the ManagementCompany), BMA Asset Management Company Limited Staff Provident Fund, BMA Empress Cash Fund,BMA Capital Management Limited (the holding company of the Management Company), BMA FinancialServices Limited and the Trustee, MCB Financial Services Limited. Transactions with connected personscan be summarised as follows:
16.2 Remuneration to the Management Company and the Trustee is determined in accordance with theprovisions of the NBFC Regulations and the Trust Deed.
16.3 Details of the transactions with connected persons are as follows:
20
CHUNDRIGAR ROAD SAVINGS FUND
September 30,
2017
June 30,
2017
207,106 42,753
120,447 45,209
2,403,015 2,403,015
43,430 27,946
5,646 3,625
----------(Rupees)----------Balances with related parties
BMA Asset Management Company Limited
Management Company's remuneration
Sindh Sales Tax on Management Company's remuneration
Federal Excise Duty on Management Company's remuneration
Balances with other related parties- Trustee
MCB Financial Services Limited - Trustee
Trustee Fee payable
Sindh sales tax payable on Trustee fee
(Units) (Rupees) (Units) (Rupees)
Units Held by:
Key Management Personnel of the Management Company
Associated CompaniesBMA Asset Management Company Limited
BMA Funds Limited
Unitholders with holding of 10% and above
BMA Capital Management Limited Staff Provident Fund
September 30, 2017 June 30, 2017
BMA Asset Management Company Limited Staff Provident Fund
BMA Gratuity Fund
Silk Bank Employees Provident Fund Trust
Bank Alfalah Ltd. Employees Provident Fund
3,057,704
100,005,355
10,016,456
-
-23
-
-
371,012
19,996,762
1,215,368
-
-2
-
-
884,287
14,692,050
10,111,984
1,700,695
22,254,588-
50,243,363
35,564,571
106,283
1,765,850
1,215,368
204,408
2,674,798-
6,038,793
4,274,537
Units issued to: (Units) (Rupees) (Units) (Rupees)
Directors and executives of the Management companyAssociated CompaniesBMA Asset Management Company Limited
BMA Funds Limited
BMA Asset Management Company Limited Staff Provident Fund
