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Popular Life First Mutual Fund. Auditors' report and financial statements for the year ended 30 June 2013

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Popular Life First Mutual Fund

Trustee: Bangladesh General Insurance Company Limited 42Dilkusha Commercial Area

Dhaka 1000

Popular Life First Mutual Fund Auditors' report and financial statements

for the year ended 30 June 2013

S. F.AHMED & CO Chartered Accountants

House #51 (3rd floor), Road #9, Block #F,Banani, Dhaka 1213, Bangladesh Telephones (880-2): PABX 987-1018 & 987-0619

Emails:ensfaco@citechco.net (ij) sfaco@sfahmedco.org Website: www.sfahmedco.org

(2)

S. F. AHMED

&

CO

Chartered Accountants

-- Established: 1958

Road #9, Block #F, Banani Dhaka 12l3, Bangladesh

E-mails:(i)sfaco@citechco.net (ii) sfaco@sfahmedco.org

Auditors' Report to the Trustee of Popular Life First Mutual Fund

We have audited the accompanying financial statements of Popular Life First Mutual Fund (the Fund), which comprise the statement of financial position (balance sheet) as at 30 June 2013, statement of comprehensive income (revenue account) and statement of cash flows for the year ended 30 June 2013, and a summary of significant accounting policies and other explanatory notes.

Management's responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements inaccordance with Bangladesh Financial Reporting Standards / Bangladesh Accounting Standards and other applicable laws and regulations. This responsibility includes: designing, implementing and maintaining internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatements, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that are reasonable in the circumstances.

Auditors' responsibility

Our responsibility is to express an opinion onthese financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with relevant ethical requirements and plan and perform the audit to obtain areasonable assurance whether the financial statements are free from material misstatement.

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

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

opinion. .

Opinion

In our opinion, the financial statements prepared in accordance with Bangladesh Financial Reporting Standards / Bangladesh Accounting Standards give a true and fair view ofthe state ofthe Fund's affairs as of 30 June 2013 and of the results of its operations and its cash flows for the year then ended and comply with the requirements of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001, Trust Deed and other applicable laws and regulations.

We also report that:

a. we have obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof;

b. in our opinion, proper books of account asrequired bylawhave been kept by the Fund so far as it appeared from our examination of those books;

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Popular LifeFirst Mutual Fund Statement of Financial Position (Balance Sheet) at 30 June 2013

Assets

Marketable (listed) securities -atcost Non-listed securities -atcost

Cash and bank balances Preliminary and issue expenses Other current assets

Total Assets

Capital and Liabilities Capital

Retained earnings/(losses) Marketrisk reserve

Current liabilities and provisions Total Capital and Liabilities Net asset value per Unit

At cost Atmarket price

I

See annexed notes

S. F. AHMED & CO

Chartered Accountants Amounts inTaka At At 30 June 2013 30June 2012 3 4 5 6 7 1,289,688,356 355,515,844 671,654,999 41,317,321 24,301,014 1,269,762,974 99,960,288 855,789,038 47,011,581 7,472,822 2,382,477,534 2,279,996,703 8 2,000,000,000 2,000,000,000 58,553,632 (99,870,155) 2.6 317,665,993 368,407,031 9 6,257,908 11,459,826 2,382,4 77,534 2,279,996,703 11.88 11.34 10.29 9.50

For Popular Life First Mutual Fund

lI?th

v

~

Trustee

Ban ladesh General Insurance Com an Limited Signed in terms ofour report of even date annexed

~

S.F.AHMED & CO Chartered Accountants

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--2--Popular Life First Mutual Fund

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

Income

Dividend from investment inshares Profit onsale ofinvestment Interest onbank deposits and bonds Other income Total Income Chartered Accountants Amounts inTaka Year ended Year ended 30June2013 30June 2012 10 21,702,153 7,525,903 115,471,954 23,932,242 10,636,205 112,938,197 161,477 Expenditure

Amortisation ofpreliminary and issue expenses Management fees

Trustee fees Custodian fees Annual listing fees CDBL charges Bank charges Audit fee

Other operating expenses TotalExpenditure Profit before provision Market risk reserve Profit during the year

Accumulated losses brought forward

Accumulated profit/(Iosses) carried forward

Earnings per unitfor the year

144,700,0 I0 147,668,121 2.5 5,654,601 5,674,881 2.8 25,735,757 31,089,182 2.9 2,275,283 1,961,596 2.10 595,261 606,960 2.11 2,200,000 2,200,000 54,318 956,304 85,203 291,741 57,500 57,500 359,339 457,100 37,017,262 43,295,264 107,682,748 104,372,857 50,741,038 (198,743,812) 158,423,787 (94,370,955) (99,870,155) (5,499,200) 58,553,632 (99,870,155) 0.79 (0.47)

IlChv~

Trustee

Ban ladesh General Insurance Com an Limited Signed in terms of our report of even date annexed

~

S. F.AHMED &CO Chartered Accountants

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Popular Life First Mutual Fund

Statement of Cash Flows for the year ended 30 June 2013

Cash flows from operating activities: Dividend income

Interest on bank deposits and bonds

Annual listing fee

Other advance, deposit and receivable

Current liabilities and provisions Other operating expenses Other income

Net cash from operating activities (A) Cash flows from investing activities: Value oflistedsecurities

Non-listed securities

Receivable from sundry securities

Application for investment in shares Preliminary and issue expenses

Net cash used in investing activities (B) Cash flows from financing activities:

Capital contribution

Net cash from financing activities (C) Net decrease incash (D=A+B+C) Opening cash and cash equivalents (E)

Closing cashand cash equivalents (F=D+E)

S. F. AHMED & CO

Chartered Accountants Amounts inTaka Year ended Year ended 30 June 2013 30 June 2012 20,969,761 106,726,564 (2,200,000) (370,047) (29,00 1,447) 96,124,831 (26,345,804) (285,555,556) 31,642,490 (280,258,870) (184,134,039) 855,789,038 671,654,999

For Popular Life First Mutual Fund

25,542,092 114,799,57\ (200,000) (1,334,279) (36,429,698) 457,102 161,477 102,996,265 (205,645,286) (99,960,288) 169,57\,966 (94,754,050) (6,750,000) (237,537,658) (134,541,394) 990,330,432 855,789,038

,r/9thv4

Trustee

Ban ladesh General Insurance Com an Limited Signed in terms ofour report ofeven date annexed

.

~

S.F.AHMED & CO Chartered Accountants

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--4--Popular LifeFirst Mutual Fund

Notesto financialstatements for theyear ended 30 June 2013

Chartered Accountants

IGeneral

I. Legalstatus and nature of business

Popular Life First Mutual Fund (hereinafter called as"Fund") was established under a Trust Deed signed on 21 April 2010 between Popular Life Insurance Company Limited as a 'Sponsor' and the Bangladesh General Insurance Company Limited as a "Trustee". The Fund was registered under the Trust Act 1882 and subsequently listed with the Bangladesh Securities and Exchange Commission (BSEC) on 29 April 20I0under the Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001. The operations of the Fund was commenced on 19 October 20 I 0 bylisting with Dhaka and Chittagong Stock Exchanges. As provided in Trust Deed, RACE Management PCL is the Fund Manager. RACE Management PCL was incorporated as aprivate limited company under Companies Act 1994 on March 2008.

Popular Life First Mutual Fund is a close-end Mutual Fund of ten years' tenure. The objectives ofthe Fund are to provide regular dividend to the investors by investing the Fund both in capital and money market instruments. The Fund consists of200,000,000 units ofTaka 10each. The units ofthe Fund are transferable. 2. Significant accounting policies

2.1 Basisof preparation of accounts

These financial statements have been prepared under historical cost convention in accordance with generally accepted accounting principles as laid down in the International Accounting Standards (IASs)/international Financial Reporting Standards (IFRSs), applicable tothe Fund so far adopted by the Institute of Chartered Accountants of Bangladesh as Bangladesh Accounting Standards (BASs)/Bangladesh Financial Reporting Standards (BFRSs). The disclosures of information made in accordance with the requirements of Trust Deed, Securities and Exchange Rules 1987, Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001 and other applicable Rules and regulations.

2.2 Presentation of financial statements

The fund was registered on 21 April 20I0 under the Trust Act 1882 and subsequently listed with Stock Exchanges on 19 October 2010 and started transactions accordingly. These financial statements are prepared and presented covering the period from 0 I July 2012 to 30 June 2013.

2.3 Investment

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

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

2.3.1 Valuation of investment

Listed securities are valued at average closing quoted market prices prevailed as of 30 June 2013 onanaggregate portfolio basis.

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S. F. AHMED & CO

Chartered Accountants

PopularLife First Mutual Fund

Notesto financial statements for theyear ended 30 June 2013

2.5 Amortisation of preliminary and issue expenses

Preliminary and issue expenses represent expenditure incurred prior to commencement of operations and establishment of the Fund. These costs are amortised within ten years' tenure after adjusting interest income from escrow accounts as per trust deed and Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 200I.

2.6 Market risk reserve

Investment has been valued on aggregated portfolio basis and prOVISIOn is required to be made on portfolio value of investment as on June 30, 2013 which comes to Taka 317,665,993, last year on June 30,2012 total provision was Taka 368,407,032 .As the current year required provision is less than the earlier year of Taka 50,741,039, this has been transfered to revenue account as income. Details are in note 3.1

2.7 Dividend policy

As per Rule 66 of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules)

2001 as amended, the Fund isrequired to distribute itsprofit in the form of dividend either incash or re-investment (bonus share) or both to itsunit holders an amount which shall not be less than 70% of annual profit during the year, net provisions.

2.8 Management fee

RACE Management PCL, the management company of the Fund isto be paid an annual management fees

on weekly average net asset value (NAV) as per Rule 65 of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001 and as per Trust Deed @ 2.50% up to 5 crores,

2.00% on next 20 crores, 1.50% on next 25 crores and 1.00% on next remaining balance of the weekly average NAV perannum.

2.9 Trustee fee

The Trustee is entitled to get an annual Trusteeship fee @ 0.10% of the net asset value per annum,

payable semi-annually inadvance basis during the entire life ofthe Fund asper Trust Deed.

2.10 Custodian fee

BRAe Bank Limited is entitled to receive a safekeeping fee @ 0.07% on the balance of securities

calculated onaverage month-end value perannum as a custodian.

2.11 Annual listing fee

Annual fee of Taka 2,000,000 (at the rate of 0.10% of the fund size) was also paid to BSEC asper Rules 10 and IIof Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001.

2.12 Revenue recognition

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

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6--Popular LifeFirst Mutual Fund

Notes tofinancial statements for the year ended 30 June 2013

Chartered Accountants

Amounts in Taka

I

Balance Sheet

I

At At

30 June 2013 30 June 2012

3. Marketable (listed) securities -at cost

Equityshares (note 3.1) 1,289,688,356 1,269,762,974 Sector-wise break upofinvestment inshares areasunder:

Sector/category Number of Amounts inTaka

shares Cost Market value Difference Bank 5,223,198 221,173,450 130,818,072 (90,355,377) Cement 121,200 40,825,336 40,602,000 (223,336) Ceramic 36,469 1,670,741 1,903,682 232,941 Corporate Bond 30,490 30,457,284 34,208,885 3,751,601 Engineering 120,795 14,897,210 8,668,320 (6,228,890) Food and Allied 63,150 41,390,837 67,273,695 25,882,858 Fuel and Power 2,070,138 200,636,042 139,326,601 (61,309,441 ) Insurance 248,718 41,232,825 24,598,845 (16,633,980) Miscellaneous 65,369 32,471,119 23,543,512 (8,927,607) Mutual Funds 16,730,150 204,709,916 150,292,405 (54,417,511) NBFI 426,271 199,869,074 123,512,572 (76,356,502) Pharma 321,491 89,753,488 84,946,169 (4,807,319) Services and RealEstate 20,872 2,975,257 599,026 (2,376,23 I) Tannery 78,500 38,034,178 30,002,650 (8,031,528) Telecommunication 370,180 82,239,258 67,151,540 (15,087,718) Textile 380,773 22,465,366 10,573,806 (11,891,560) Travel & Leisure 298,085 24,886,975 34,000,583 9,113,609

26,605,849 1,289,688,356 972,022,363 (317,665,993)

4. Nonlisted security -at cost

SK.Akijuddin Ltd Short Term Bond 160,000,000

Trust Bank Unsecured Suordinated Bond 90,000,000 90,000,000 Renata Ltd Short Term Bond 70,000,000

Farmers' Bank Ltd -shares 25,555,556

Bank Asia Zero Coupon Bond 9,960,288 9,960,288 355,515,844 99,960,288

5. Cash and bank balances

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

Sponsoraccou

nt-Southeast Bank Ltd(AlC-0083131 000002) 223,876,687 The Premier Bank Ltd (AlC-1 0413600007) 158,580,263

The Premier Bank Ltd(AlC-O 14913500008) 71,887,107 20I,533,180 ONE Bank Ltd (A/C-O 123000000529) 58,132,419

Eastern Bank Ltd(AlC-1O 11220139919) 15,059,167 208,320,268 BRAC Bank Ltd(AlC-150 1101733958002) 3,266,220 2,594,278 United Commercial Bank Ltd(AlC-0072 1320000288) 9,873 81,860,204 The CityBank Ltd (AlC-31 0117731800 I) 2,100 2,705

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Popular LifeFirst Mutual Fund

Notes to financial statements for the year ended 30 June 2013

5.1 Bank accounts having nil balance

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

°

1733958003) IPO-EURO account-BRAC Bank Ltd (AlC-150 II

°

1733958002)

S. F. AHMED & CO

Chartered Accountants

Amounts inTaka

At At

30 June 2013 30June 2012

The above foreign currency accounts were opened/maintained for collection/refund of share application money (unit capital) from non- resident Bangladeshis, book balances of those bank accounts become "nil"

after issuance of refund warrants but asper bank statements their closing balances are USD 300.57, GBP

44.25 andEURO 51.02 respectively at 30 June 2013 against which reconciliation statements were prepared.

6. Preliminary and issue expenses Opening balance

Less: Interest onescrow account

Less:Amortisation ofpreliminary and issue expenses Closing balance

7. Other current assets Interest receivable

Receivable fromsale of marketable securities Other advance anddeposits

Dividendreceivable Security deposit

8. Capital

200,000,000 units of Taka 10 each fullypaid-up 9. Current liabilities and provisions

Withholding income taxpayable Custodianfees

Preliminary expenses Withholding VAT payable Publication expenses Management fees Audit fee

Payable to sundry securities

Revenue Account

10. Interest on Bank Deposits and Bonds Intereston

Shorttenn deposits Corporate bonds Fixeddeposits --8 --47,011,581 39,659 53,184,538 498,076 46,971,922 5,654,601 52,686,462 5,674,881 41,317,321 47,011,581 11,886,623 8,135,143 2,607,686 1,171,562 500,000 3,101,574 1,194,438 2,237,640 439,170 500,000 24,301,014 7,472,822 2,000,000,000 2,000,000,000 2,829,598 1,405,250 1,285,387 493,277 100,000 97,977 45,000 1,419 3,176,388 1,278,406 1,285,387 210,095 100,000 45,000 5,364,550 6,257,908 11,459,826 Amounts inTaka Year ended Year ended 30 June 2013 30 June 2012 71,343,323 29,011,853 15,116,778 36,014,358 12,174,886 64,748,953 115,471,954 112,938,197

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Popular Life First Mutual Fund

Notesto financial statements for the year ended 30 June 2013

Chartered Accountants

11. Others

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

conjunction therewith.

11.2 Figures in these notes andannexed financial statements have been rounded offtothe nearest Taka.

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

For Popular Life First Mutual Fund

/i!L

-

.

Asset Manager

RACE Management PCL Bangladesh General Insurance Company Limited

Dhaka,Bangladesh

References

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