Golden Arrow Half Yearly 2011 - AKD Investment

Golden Arrow Selected Stocks Fund Limited - Quarterly Report March 2012

CONTENTSCompany Information

Mission & Vision Statement

Directors’ Report

Fund Manager’s Report

Condensed Interim Statement of Assets and Liabilities

Condensed Interim Income Statement

Condensed Interim Distribution Statement

Condensed Interim Cash Flow Statement

Condensed Interim Statement of Changes in Equity

Condensed Interim Statement of Movementin Equity and Reserves - per share

Notes to the Condensed Interim Financial Statements

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03

04

06

08

09

10

11

12

13

14


COMPANY INFORMATION

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Mr. Aurangzeb Ali Naqvi

Mr. Muhammad Yaqoob

Mr. Muhammad Munir AbdullahCHIEF FINANCIAL OFFICER

Mr. Aurangzeb Ali Naqvi (Chairman)

Mr. Muhammad Yaqoob (Secretary)

JCR-VIS: AM3- (AM Three Minus)


Mission Statement

Vision

To set a standard of investing in betterperforming and result oriented securities

by adopting best business practicesand ethics.

To be a leading investment Company infinanical industry with diversifying its

business activities by good assetallocation and generating better financial

results and yield to the stakeholders.

03


DIRECTORS’ REPORT

04

The Board of Directors of Golden Arrow Selected Stocks Fund Limited (GASSFL) is pleased to presentits report along with the respective Fund’s accounts for the nine months period ending March 31,2012.

Macro Perspective

The period July 2011 - Mar 2012 has seen a further entrenchment of economic trends, while inflationarypressures have continued to ease the fiscal position has gradually worsened on the back ofunprecedented government borrowing. CPI growth averaged a low of 10.65% YoY in the period,which makes it all the more likely that inflation in FY12 will remain below the Government of Pakistantarget of 12%. However, there are still quite a few inflationary threats on the horizon, amongst whichare the government’s ever growing appetite for credit, SBP’s liquidity injections for the purpose ofthe system’s financial stability and an imminent increase in energy prices.

As the country continues to struggle with a power crisis, which has already frustrated the industrialsector, hurting exports in the process and bound to eventually fuel inflation. This will impact pricesat home as well as hurt exports, which in turn means dampened foreign exchange earnings. At thesame time, it will limit the already limited foreign direct investment which is much needed for thecountry to create both economic activity and employment.

However, going into election year it is unlikely that the government with its coalition partners beable to implement material reforms while the lingering problem will further antagonize the currentcrisis. While the public sector enterprises continue to receive time to time government bailouts atechnical short term solution, which will again be replenished through borrowing and arbitrarytaxation measures. In fact, the government has already emphasized that the forthcoming budgetwould be “people friendly” causing more concern on the future economic outlook.

On the political front, the standoff between the executive and armed forces has somewhat shiftedpriorities away from the economy to the courts. Political stability is unlikely in the short-term has keydecisions regarding the implementation of the NRO verdict including reopening proceedings againstthe President in a Swiss based case and the Memo-Gate scandal where the former PakistanAmbassador has been accused of brokering US support on behalf of the President against animminent coup. Time to time meetings between the President and Prime Minister with the Chief ofArmy Staff has readily been seen as thawing of relations and probable stability. However, theserelations between the government and the army are increasingly based on mistrust – initially createdby the discovery of Osama bin Laden in Pakistan and later exacerbated by the Memogate scandal,which led to the prime minister accusing the military leadership of conspiring against his government.

On the external front, while Pakistan’s relations with its immediate neighbours, including India,continue to improve, there seems to be a shift in its relationship with the United States, its biggestally and source of external funds. More importantly improved relations here would come in the formof successfully concluding new rules of engagement with the US and the re-opening of NATO routes.

Overall, the internal security situation in Pakistan will remain uncertain with the military operationcontinuing in the tribal areas and the insurgency gaining ground in the Balochistan province. Whilethe US seeks to withdraw its troops entirely from Afghanistan, pressure is expected to remain onPakistan’s armed forces and the government to do more against alleged safe havens in the country.

Foreign exchange reserves have already declined by USD 1.74bn in the first nine months of the fiscalyear on the back of deficit in the current account and financial account’s inability to support it. In


05

Karachi: April 28, 2012

For and on behalf of the Board

Imran MotiwalaChief Execcutive Officer

the fourth quarter of FY12, the government was hoping to improve the external position through CSFreceipts, and one time receipts from privatization of publicly owned listed organizations. One offreceipts from mobile (3G) license auction is likely to get postponed till FY13. Nevertheless, reservesare expected to continue declining as the current account deficit is expected to reach 2.1% ofGDP by the end of FY12.

On the other hand, the fiscal position is not any better, and the central bank expects it to havealready deteriorated to 4.3% of GDP in the first nine months. Given that the government still has topay around USD 590m to the IMF, fiscal operations are usually worse in the last quarter of the fiscalyear, and that general elections are fast approaching, it is more than likely the fiscal deficit slip to5.8% of GDP.

Market Dynamics

The KSE-100 Index started the quarter at 11,348 and ended the quarter at 13,762, showing a positivereturn of 21%. However, for the current quarter starting January 1, 2012 announcement made bythe Finance Minister approving key proposals by the Securities and Exchange Commission of Pakistanto revamping the process of Capital Gains Tax was welcomed and cheered by stock investors.Better stock prices on much stronger volumes since the financial fiasco of 2008-09 in contrast to adead beat market for most of the preceding few years was indeed needed to revive investor interest.High for the quarter was 13,762 and low was 10,909- i.e. a range of 2,414points or about 26% betweenthe high & low.

Equity Market Review and Outlook

The Golden Arrow Selected Stocks Fund Limited outperformed KSE-100 Index by 12.45% in 9 MFY2012. Performance of the Fund is based on positive developments from Capital Gains Tax, politicalstability, people friendly budget, ease of relations between United States and Pakistan and improveties with India is expected to set the stage for a rally.


FUND MANAGER’S REPORT

06

Golden Arrow Selected Stocks Fund Limited (GASSFL) outperformed its bench mark, KSE-100 index,by 20.05% (3 months), where the Fund’s NAV appreciated by 41.32%, in the third quarter while theKSE-100 Index surged by 21.27% thus significantly outperforming the bench mark. For the first ninemonths the Golden Arrow Selected Stocks Fund’s NAV appreciated by 22.58% versus the KSE – 100return of 10.31% thus also outperforming in the first nine months. The diversified and value seekingoriented characteristics of the Fund have paid-off resulting in significant out performance in thethird quarter and fiscal year to date.

Economic Overview

The Economic outlook remains “fragile”, with domestic debt crossing Rs. 7.0 trillion mark, fiscal deficitat Rs. 532 bn for 1 HFY 12, budgetary borrowing from banks at PKR 914 bn, surge in the Trade deficitto USD 14.6 bn coupled with Government’s plan to borrow additional Rs. 1 trillion from the Commercialbanks to meet expenditure. Repayments to IMF till the year end of $510 million approximately; willfurther hamper the economy in both short and long term and squeeze liquidity. Energy and gasshortages continue to injure the manufacturing sector and hamper their efforts to increase theproduction and exports resulting in subdued investment in the manufacturing sector. Hike in domesticoil prices on a regular basis has created uncertainty among business circles and keeping CPI inflationin double digits at 10.79% for the first half of fiscal year 2012. Positives on the other hand includesupport from Iran to offer oil to Pakistan on concessionary terms along with barter arrangements.Tax collection (Rs. 1,122 bn) on the fiscal side increased by 28% YoY basis and has provided somerespite. With respect to IP gas pipeline project, sanctions imposed on Iran resulting in China to stopits support to Pakistan financially to complete IP gas project and later Russian Government’s assuranceto Pakistan with regards to assistance with the project have resulted in a delays. Governmentestimates raising $850 mn from the sale of 3G licenses (auction to be completed in the month ofMarch has been delayed), $800 mn from Etisalat over the sale of PTCL and a receipt of $800 mnfrom the Coalition Support Fund to finance its deficits.

We anticipate the Central Bank to keep the discount rate unchanged for the current fiscal, althoughthere has been a decline in CPI inflation which has remained below the discount rate, however CPIinflations persistence to remain in double digits and weakening of other economic numbers wouldrestrict the SBP to further decrease the discount rate.

Political update

Pakistan’s political situation remains volatile with the Memo gate scandal and the NRO cases comingto center stage. Unexpected developments in both cases including permission granted to leavethe country to former ambassador Haqqani and contempt charges against the PM for non complianceof the Supreme Court’s order to implement proceedings against NRO beneficiaries with particularreference to Swiss cases related to the President has further antagonized the situation of late.

In fact, it seems that the contempt proceedings against the PM are benchmarked to the President’s“head of state” immunity, which remains really the only argument for the government’s defensecouncil.

Tensions between the armed forces and the Government that were created due to the Memo Gatescandal seemed to ease subsequent to meetings between the Prime Minister, Chief of Army Staffand DG ISI.


07

On the international front relations continue to remain sour between Pakistan and US subsequentto an attack by the ISAF forces on a Pakistani check post bordering Afghanistan. NATO suppliesthough land routes still are not allowed. The issue has been discussed at length and subsequentlythe Parliament has agreed to the restoration and just allowed foods items to be transported in theinitial stage.

The political scenario is expected to remain volatile as the general elections near, the judiciary willprobably add to this as it is scheduled to announce its verdict on the NRO’s implementation in whilethe PM remains adamant on drafting to the Swiss courts to re-open cases against the President.

Fund Strategy and Outlook

The Fund continues to remain in equities with having an exposure of 93.43% of the Net Asset as ofMarch 31, 2012. Our view remains intact of strong market performance owing to broader basedundervaluation of the stock market.

Top five sector exposure as of June 30, 2011 and their nine months performance:

Fund continues to invest in growth stocks. Moving forward implementation of the revamped CapitalGains Tax regime, politically motivated “people friendly” budget, ease of relations between theUnited States and Pakistan and improved ties with India are expected to set the stage for a rally.

Sector Name % of NAV Return 9MFY12


CONDENSED INTERIM STATEMENT OF ASSETS AND LIABILITIES

08

AS AT MARCH 31, 2012

Imran MotiwalaChief Executive Officer

Aurangzeb Ali NaqviDirector

(Un-audited) (Audited)March 31, June 30,

2012 2011Note

ASSETS

Bank balances 29,148 10,047Receivable against sale of investments 50 60,205Investments 4 1,029,008 936,117Dividends and other receivables 18,658 3,832Security deposit 2,750 2,750Total assets 1,079,614 1,012,951

LIABILITIES

Payable against purchase of investments 14,837 32,427Payable to Management Company 1,927 2,161Accrued expenses and other liabilities 10,759 6,973Unclaimed dividend 11,316 8,322Total liabilities 38,839 49,883

NET ASSETS 1,040,775 963,068

SHARE HOLDER'S EQUITY

---------- (Rupees in '000) ----------

Authorised capital250,000,000 (June 30, 2011: 250,000,000)

Ordinary shares of Rs.5 each 1,250,000 1,250,000

Issued, subscribed and paid-up capital152,098,344 (June 30, 2011: 152,098,344)

Ordinary shares of Rs.5 each 760,492 760,492General reserve 500 500Undistributed income 277,134 195,843Unrealised appreciation on re-measurement of

investments classified as 'available-for-sale' - net 2,649 6,2331,040,775 963,068

NET ASSETS VALUE PER SHARE 6.84 6.33

CONTINGENCIES AND COMMITMENTS 5

The annexed notes from 1 to 13 form an integral part of these condensed interim financial statements.

------------ (Rupees) ------------


CONDENSED INTERIM INCOME STATEMENT (UNAUDITED)

09

FOR THE NINE MONTHS AND QUARTER ENDED MARCH 31, 2012



2012 2011 2012 2011Note

Income

Capital gain on sale of investments - net 34,238 86,157 31,553 52,443Dividend income 50,038 44,607 15,984 11,195Unrealised appreciation / (diminution) on re-measurement

of investments classified as 'financial assetsat fair value through profit or loss' - net 4.4 128,909 57,304 268,276 (53,245)

Income on term finance certificates 3,260 5,729 1,062 1,850Profit on bank deposits 1,027 804 188 296

Total income 217,472 317,063 12,539

Operating expenses

Remuneration of Management Company 12,644 14,807 4,282 4,866Sales tax on remuneration of Management Company 6 2,023 - 685 -Annual fee to Securities and Exchange Commission of Pakistan (SECP) 601 703 204 231Remuneration of custodian - Central Depository Company

of Pakistan Limited (CDC) 287 444 107 158Auditors' remuneration 236 249 68 82Legal and professional charges 7 11 - 4Annual listing fee 290 197 1 -Central depository system charges 179 112 29 20Fees and subscription 463 286 111 65Securities transaction cost 690 1,123 333 659Bank charges 6 5 2 1Directors' fee 36 50 - 20Printing and postage 676 723 - 108Advertisement 55 70 47 -Provision for Workers' Welfare Fund 7 3,914 3,517 3,914 127Total expenses 22,107 22,297 9,783 6,341

Income before taxation 195,365 307,280 6,198

Taxation 8 - - - -

Income after taxation 195,365 307,280 6,198

Other comprehensive (loss) / income for the period

Unrealised (diminution) / appreciation during the periodon re-measurement of investments classifiedas 'available-for-sale' - net (3,584) 144 (3,241) (2,531)

Total comprehensive income for the period 191,781 172,304 304,039 3,667

Earnings per share - basic and diluted 1.28 1.13 2.02 0.04


------------------- (Rupees) -------------------

--------------- (Rupees in '000) ---------------

March 31,Nine months ended Quarter ended

March 31,

194,601

172,304

172,304


CONDENSED INTERIM DISTRIBUTION STATEMENT (UNAUDITED)

10




2012 2011 2012 2011

Undistributed income brought forward 195,843 201,796 (30,146) 238,618

Net income after taxation for the period 195,365 172,304 307,280 6,198

Final dividend for the year endedJune 30, 2011 @ 15% (Re.0.75 per share)[June 30, 2010 @ 17% (Re.0.85 per share)] (114,074) (129,284) - -

Undistributed income carried forward 277,134 244,816 277,134 244,816


----------------------- (Rupees in '000) -----------------------

Nine months endedMarch 31,

Quarter endedMarch 31,


CONDENSED INTERIM CASH FLOW STATEMENT (UNAUDITED)

11




2012 2011 2012 2011

CASH FLOWS FROM OPERATING ACTIVITIES

Income before taxation 195,365 172,304 307,280 6,198

Adjustments for non-cash and other itemsUnrealised diminution / (appreciation) on

re-measurement of investments classified(128,909) (57,304) (268,276) 53,245

Remuneration to Management Company 12,644 14,807 4,282 4,866Dividend income (50,038) (44,607) (15,984) (11,195)Remuneration of custodian 287 444 107 158

29,349 85,644 27,409 53,272

(Increase) / decrease in assetsReceivable against sale of investments 60,155 91 (50) -Security deposit & Prepayment - (739) - (739)Dividends and other receivables (389) (2,264) (962) (1,158)

59,766 (2,912) (1,012) (1,897)

Increase / (decrease) in liabilitiesPayable against purchase of investments (17,590) 5,785 14,837 5,984Accrued expenses and other liabilities 3,799 3,305 3,894 (655)

(13,791) 9,090 18,731 5,329

Net cash generated from operations 75,324 91,822 45,128 56,704

Proceeds from sale / redemption of investments 218,570 303,091 74,949 146,382Payment against purchase of investments (186,136) (279,810) (103,721) (194,284)Remuneration paid to the Management Company (12,878) (14,595) (3,800) (5,000)Remuneration paid to custodian (300) (428) (102) (148)Dividend received 35,601 34,536 1,899 3,649Net cash generated from operating activities 130,181 134,616 14,353 7,303

CASH FLOWS FROM FINANCING ACTIVITIES

Dividends paid (111,080) (127,442) (4) (2,028)Net cash used in financing activities (111,080) (127,442) (4) (2,028)

Net increase in cash and cash equivalents 19,101 7,174 14,349 5,275Cash and cash equivalents at the beginning of the period 10,047 9,898 14,799 11,797

Cash and cash equivalents at the end of the period 29,148 17,072 29,148 17,072


----------------------- (Rupees in '000) -----------------------



as 'financial assets at fair value through profit or loss'


CONDENSED INTERIM STATEMENT OF CHANGES IN EQUITY (UNAUDITED)

12




Balance as at December 31, 2010 760,492 500 8,350 238,618 1,007,960

Income after taxation - - - 6,198 6,198Other comprehensive income - - (2,531) - (2,531)Total comprehensive income for the

quarter ended March 31, 2011 - - (2,531) 6,198 3,667

Balance as at March 31, 2011 760,492 500 5,819 244,816 1,011,627

Balance as at June 30, 2010 760,492 500 5,675 201,796 968,463

Income after taxation - - - 172,304 172,304Other comprehensive income - - 144 - 144Total comprehensive income for the

nine months period ended March 31, 2011 - - 144 172,304 172,448

Final dividend for the year endedJune 30, 2010 @ 17% (Re.0.85 per share) - - - (129,284) (129,284)


760,492 500 5,890 (30,146) 736,736

Income after taxation - - - 307,280 307,280Other comprehensive loss - - (3,241) - (3,241)Total comprehensive loss for the

quarter ended March 31, 2012 - - (3,241) 307,280 304,039


Balance as at June 30, 2011 760,492 500 6,233 195,843 963,068

Loss after taxation - - - 195,365 195,365Other comprehensive loss - - (3,584) - (3,584)Total comprehensive loss for the

nine months period ended March 31, 2012 - - (3,584) 195,365 191,781

Final dividend for the year endedJune 30, 2011 @ 15% (Re.0.75 per share) - - - (114,074) (114,074)


--------------------------------- (Rupees in '000) ---------------------------------

Sharecapital

Generalreserves

(Accumulated loss) /

undistributedincome Total

Unrealisedappreciation /(diminution) on

re-measurementof investmentsclassified asavailable-for

sale - net

Balance as at December 31, 2011



CONDENSED INTERIM STATEMENT OF MOVEMENT IN EQUITYAND RESERVES - PER SHARE (UNAUDITED)

13




2012 2011 2012 2011

Net assets value per share at the beginning of the period 6.33 6.37 4.84 6.63

Capital gain on sale of investments - net 0.23 0.57 0.21 0.35Dividend income 0.33 0.29 0.11 0.07Unrealised (diminution) / appreciation on

re-measurement of investments classified as'financial assets at fair value through profit or loss' 0.85 0.38 1.77 (0.35)

Income on term finance certificates 0.02 0.04 0.01 0.03Net income for the period 1.43 1.28 2.10 0.10

Operating expenses (0.15) (0.15) (0.07) (0.06)

Unrealised appreciation on re-measurementof investments classified as 'available-for-sale' (0.02) - (0.03) (0.02)

Final dividend for the year ended June 30, 2011 @ 15%(Re.0.75 per share) [June 30, 2010 @ 17% (Re.0.85 per share)] (0.75) (0.85) - -

Net assets value per share as at March 31 6.84 6.65 6.84 6.65


--------------------------- (Rupees) ---------------------------




NOTES TO THE CONDENSED INTERIM FINANCIAL STATEMENTS (UNAUDITED)

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1. STATUS AND NATURE OF BUSINESS

1.1 Golden Arrow Selected Stocks Fund Limited (the Company) was incorporated on May09, 1983 in Pakistan as a public limited company under the Companies Act, 1913 (nowCompanies Ordinance, 1984). The Company got registered as an investment companyon April 29, 2005 under the Non Banking Finance Companies (Establishment and Regulation)Rules, 2003 (the NBFC rules). The registered office of the Company is situated at 216 - 217,2nd floor, Continental Trade Centre, Block 8, Clifton, Karachi. The Company is listed onthe Karachi and Lahore Stock Exchanges. The Company is a closed-end mutual fund andits principal activity is to make investment in marketable securities.

1.2 The Company is being managed by AKD Investment Management Limited and CentralDepository Company of Pakistan Limited is the custodian of the Company.

1.3 JCR-VIS Credit Rating Company Limited has revised the management quality rating from'AM3' (AM Three) to 'AM3-' (AM Three Minus) of the Management Company and Companyperformance ranking of "MFR 4-Star" to the Company.

1.4 As per clause 65 of the Non-Banking Finance Companies and Notified Entities Regulations,2008, an Asset Management Company managing an Investment Company shall, fromthe expiry of every five years from November 21, 2007, hold within one month of suchperiod a meeting of the shareholders to seek the approval of the shareholders (by specialresolution) to convert the Investment Company into an Open End Scheme or wind up theInvestment Company.

The future operations of the Company are dependent on the above referred approvalfrom the shareholders of the Company. However, the management believes that thewinding up of the Company will not have any material impact on the carrying amountsof assets and liabilities for the reason that such values are not materially different from theexpected realizable / settlement amounts of the assets and liabilities of the Company.Accordingly, these financial statements have been prepared on a going concern basis.

2. STATEMENT OF COMPLIANCE

These condensed interim financial statements have been prepared in accordance withapproved accounting standards as applicable in Pakistan. Approved accounting standardscomprise of such International Financial Reporting Standards (IFRS) issued by the InternationalAccounting Standards Board as are notified under the Companies Ordinance, 1984, therequirements of the Companies Ordinance, 1984, the requirements of the Non-BankingFinance Companies (Establishment and Regulation) Rules, 2003 (the NBFC Rules), the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations)and directives issued by the Securities and Exchange Commission of Pakistan (SECP).Wherever the requirements of the Companies Ordinance, 1984, the NBFC Rules, the NBFCRegulations or directives issued by the SECP differ with the requirements of IFRS, therequirements of the Companies Ordinance, 1984, the NBFC Rules, the NBFC Regulationsor the directives issued by the SECP prevail.

The comparative statement of assets and liabilities presented in these condensed interimfinancial statements has been extracted from the audited financial statements of theinvestment company for the year ended June 30, 2011 whereas the comparative


15

condensed interim income statement, condensed interim distribution statement, condensedinterim cash flow statement, condensed interim statement of changes in equity andcondensed interim statement of movement in equity and reserves - per share have beenextracted from the financial statements for the nine months and quarter ended March31, 2011.

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The accounting policies adopted for the preparation of these condensed interim financialstatements are the same as those applied in the preparation of the annual publishedfinancial statements of the Company for the year ended June 30, 2011.

New and amended standards and interpretations

During the period, following amendments, interpretations and improvements to theaccounting standards became effective:

- IFRS 7 – Financial Instruments: Disclosures

- IAS 24 – Related Party Disclosure (Revised)

- IFRIC 14 – Prepayments of a Minimum Funding Requirement (Amendment)

In May 2010, International Accounting Standards Board (IASB) issued amendments tovarious standards primarily with a view to removing inconsistencies and clarifying wording.These improvements are listed below:

IFRS 7 – Financial Instrument Disclosures - Clarification of disclosures

IAS 1 – Presentation of Financial Statements - Clarification of statement of changes inequity

IAS 34 – Interim Financial Reporting - Significant events and transactions

IFRIC 13 – Customer Loyalty Programmes - Fair value of award credits

The adoption of the above standards, amendments / improvements and interpretationsdid not have any material effect on these condensed interim financial statements. Certainadditional disclosures have, however, been made in the condensed interim financialstatements.

(Unaudited) (Audited )March 31, June 30,

2012 2011Note

4. INVESTMENTS

Financial assets at fair value through profit or loss

- Quoted equity securities - held-for-trading 4.1 995,399 888,442

- Fixed income and other debt securities - designated4.2 20,346 29,880

- Derivative financial instrument - held-for-trading - 948

Available-for-sale

- Quoted equity securities 4.3 13,263 16,8471,029,008 936,117

-------- (Rupees in '000) --------

'at fair value through profit or loss' on initial recognition


16


17


18


19


20

5. CONTINGENCIES AND COMMITMENTS

There were no contingencies and commitments as at March 31, 2012 and June 30, 2011.

6. SALES TAX ON REMUNERATION OF MANAGEMENT COMPANY

During the current period, an amount of Rs.2.023 million was charged on account of salestax on management fee levied through Sindh Sales Tax on Services Act, 2011.

7. PROVISION FOR WORKERS' WELFARE FUND

The Finance Act, 2008 introduced an amendment to the Workers' Welfare Fund Ordinance,1971 (WWF Ordinance). As a result of this amendment it may be construed that all CollectiveInvestment Schemes / mutual funds (CISs) whose income exceeds Rs.0.5 million in a taxyear, have been brought within the scope of the WWF Ordinance, thus rendering themliable to pay contribution to WWF at the rate of two percent of their accounting or taxableincome, whichever is higher. In this regard, a constitutional petition has been filed bycertain CISs through their trustees in the Honorable High Court of Sindh (the Court),challenging the applicability of WWF to the CISs, which is pending adjudication. However,without prejudice to the above, the Management Company made a provision for WWFcontribution in the annual financial statements for the year ended June 30, 2010.

Subsequent to the year ended June 30, 2010, a clarification was issued by the Ministry ofLabour and Manpower (the Ministry) which stated that mutual funds are not liable tocontribute to WWF on the basis of their income. However, on December 14, 2010 the

(Un-audited) (Audited)March 31, June 30,

2011 2011Note

4.4 Unrealised diminution on re-measurement of investmentsclassified as 'at fair value through profit or loss' - net

Market value of securities 4.1 & 4.2 1,015,745 918,322Less: Carrying value of securities 4.1 & 4.2 886,836 928,781

128,909 (10,459)

4.5 Net unrealised appreciation on re-measurementof investments classified as 'available-for-sale' - net

Market value of securities 4.3 13,263 16,847Less: Carrying value of securities 4.3 10,614 10,614

2,649 6,233

4.6 Net unrealised appreciation in fair value of investmentsclassified as 'available-for-sale'

Market value of investments 13,263 16,847Less: Carrying value of investments (10,614) (10,614)

2,649 6,233Less: Net unrealised appreciation in fair value of

investments at the beginning of year (6,233) (5,675)(3,584) 558

--------- (Rupees in '000) ---------


21

Ministry filed its response against the Constitutional petition requesting the Court to dismissthe petition. According to the legal council who is handling the case, there is a contradictionbetween the aforementioned clarification issued by the Ministry and the response filedby the Ministry in Court.

During the current period, in August 2011, the Lahore High Court (LHC) has issued ajudgment in response to a petition in similar case whereby the amendments introducedin WWF Ordinance through Finance Acts, 2006 and 2008 are declared unconstitutionaland therefore struck down.

As the matter relating to levy of WWF is currently pending in the Court, the ManagementCompany, as a matter of abundant caution, has decided to retain the provision for WWFamounting to Rs.9.3 million (June 30, 2011: Rs.5.386 million) in these condensed interimfinancial statements.

8. TAXATION

The income of the Company is exempt from income tax under clause 99 of Part I of theSecond Schedule to the Income Tax Ordinance, 2001 subject to the condition that notless than 90 percent of its accounting income for that year, as reduced by capital gains,whether realised or unrealised, is distributed amongst the shareholders.

The Company is also exempt from the provisions of section 113 (minimum tax) under clause11 of part IV of the Second Schedule to the Income Tax Ordinance, 2001.

9. TRANSACTIONS WITH CONNECTED PERSONS / RELATED PARTIES

Connected persons include AKD Investment Management Limited, being the ManagementCompany, Central Depository Company of Pakistan Limited, being the custodian, AqeelKarim Dhedi Securities Investment (Private) Limited, AKD Securities Limited, other collectiveschemes managed by the Management Company, directors and officers of theManagement Company, directors of the Company and their connected persons.

The transactions with connected persons are in the normal course of business, at contractedrates. Details of transactions and balances with connected persons are as follows:

9.1 Transactions during the period

AKD Investment Management Limited - Management CompanyRemuneration to Management Company 12,644 14,807Cash dividend paid @ 15% i.e. Re.0.75 per shareCash dividend paid @ 15% i.e. Re.0.75 per share

(2010: 17% i.e. Re.0.85 per share) 20,637 22,071

2012 2011


-------- (Rupees in '000) --------


22

AKD Securities Limited - Group CompanySale of shares of various companies 30,951 148,884

Purchase of shares of various companies 40,653 36,395

Brokerage 142 341

Cash dividend paid @ 15% i.e. Re.0.75 per share(2010: 17% i.e. Re.0.85 per share) 9,227 850

Aqeel Karim Dhedhi Securities (Private) Limited - Staff Provident FundCash dividend paid @ 15% i.e. Re.0.75 per share

(2010: 17% i.e. Re.0.85 per share) 1,570 1,779

D.J.M. Securities (Private) Limited - Ex Major ShareholderCash dividend paid @ 15% i.e. Re.0.75 per share

(2010: 17% i.e. Re.0.85 per share) - 28,605

AKD Investment Management Limited - Staff Provident FundCash dividend paid @ 15% i.e. Re.0.75 per share

(2010: 17% i.e. Re.0.85 per share) 451 43

Key Management PersonnelCash dividend paid @ 15% i.e. Re.0.75 per share

(2010: 17% i.e. Re.0.85 per share) 50 55

Central Depository Company of Pakistan Limited - CustodianFee charged during the year (including transaction charges) 466 556

2012 2011


-------- (Rupees in '000) --------

9.2 Transactions outstanding at the period / year end

AKD Investment Management Limited - Management CompanyRemuneration payable 1,662 2,161Sales tax payable 266 -Shares in issue (number of shares: March 31, 2012: 27,515,395

June 30, 2011: 27,515,395) 137,577 137,577

Aqeel Karim Dhedhi Securities (Private) Limited - Staff Provident FundShares in issue (number of shares: March 31, 2012: 2,092,812

June 30, 2011: 2,092,812) 10,464 10,464

AKD Securities Limited - Group CompanyShares in issue (number of shares: March 31, 2012; 2,889

June 30, 2011: 12,302,889) 14 61,514Brokerage payable - 49Receivable against sale of securities - 32,508

(Un-audited) (Audited )March 31, June 30,

2012 2011-------- (Rupees in '000) --------


23

10. SEGMENT INFORMATION

Operating segments are reported in a manner consistent with the internal reporting usedby the chief operating decision-maker. The Investment Committee of the ManagementCompany has been identified as the chief operating decision-maker, which is responsiblefor allocating resources and assessing performance of the operating segments.

The Company has determined the operating segments based on the reports reviewedby the Investment Committee, which are used to make strategic decisions.

The Investment Committee is responsible for the Company’s entire portfolio and considersthe business to have a single operating segment. The Investment Committee’s assetallocation decisions are based on a single integrated investment strategy and theCompany’s performance is evaluated on an overall basis.

The Company trades in listed Pakistani equity securities with an objective to generatecapital growth.

The internal reporting provided to the Investment Committee for the Company’s assets,liabilities and performance is prepared on a consistent basis with the measurement andrecognition principles of approved accounting standards as applicable in Pakistan.

There were no changes in the reportable segments during the period.

The Company is domiciled in Pakistan. All of the Company’s income is from investmentsin entities incorporated in Pakistan.

The Company has a highly diversified portfolio of investments and no single investmentaccounts for more than 10% of the net assets of the Company.

11. CORRESPONDING FIGURES

Corresponding figures have been rearranged and reclassified, where necessary, for thepurposes of comparison. No significant rearrangements or reclassifications were made inthese condensed interim financial statements.

AKD Investment Management Limited - Staff Provident FundShares in issue (number of shares: March 31, 2012, 601,046

June 30, 2011: 601,046) 3,005 3,005

Key management personnelShares held by key management personnelShares in issue (number of shares: March 31, 2012, 66,675

June 30, 2011: 66,675) 333 333

Central Depository Company of Pakistan Limited - CustodianFee payable 41 71

(Un-audited) (Audited )March 31, June 30,

2012 2011-------- (Rupees in '000) --------


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12. DATE OF AUTHORISATION FOR ISSUE

These condensed interim financial statements were authorised for issue on April 28, 2012by the Board of Directors of the Company.

13. GENERAL

13.1 Figures have been rounded off to the nearest thousand rupees.

13.2 The bifurcation of undistributed income into realised and unrealised income at the beginningand end of the period as required by the NBFC Regulations has not been disclosed assuch bifurcation is not practicable.



Documents

Golden Arrow Half Yearly 2011 - AKD Investment