FMTSF Half Year & 2nd Qurter - Faysal Asset Management … · Income from Margin Trading System...

(Un-Audited) (Audited)December 31, June 30,

2016 2016Note

Assets

Bank balances 4 41,080,477 65,181,326 Investments 5 19,941,780 4,896,067 Receivable against Margin Trading System (MTS) 252,392,559 104,040,922 Prepayments, deposits and other receivables 2,871,958 2,248,044 Preliminary expenses and floatation costs 918,115 1,026,474 Total assets 317,204,889 177,392,833

Liabilities

Payable to the Management Company 304,479 1,224,580 Remuneration payable to the Trustee 46,645 24,311 Accrued and other liabilities 6 597,322 520,645 Total liabilities 948,446 1,769,536

Net assets 316,256,443 175,623,297

Unit holders' fund (as per statement attached) 316,256,443 175,623,297

Commitments 7

Number of units in issue 3,070,763 1,754,389

Net assets value per unit 102.99 100.11

The annexed notes from 1 to 14 form an integral part of this condensed interim financial information.

_____________________ _____________ ______________Chief Executive Officer Director Director

(Management Company)For Faysal Asset Management Limited

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

--------- (Number of units) ---------

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

Half year ended Quarter endedDecember 31, December 31,

2016 2016Note

IncomeProfit earned on government securities 'at fair value through

profit or loss' - held-for-trading 558,869 230,744 Income from Margin Trading System (MTS) 7,972,830 3,503,062 Return on bank balances 1,605,824 698,229 Net loss on investments 'at fair value through profit or loss' - held-for-trading:

- Net capital loss on sale of investments (421) (170) - Net unrealised loss on revaluation of investments (1,157) (1,717)

(1,578) (1,887) Total income 10,135,945 4,430,148

ExpensesRemuneration of the Management Company 1,301,979 524,669 Sales tax on management fee 169,257 68,207

Remuneration of the Trustee 221,345 89,198 Sales tax on Trustee fee 28,775 11,596

Bank charges 14,844 2,457 Auditors' remuneration 205,762 154,898 SECP annual fee 97,063 39,352 Fees and subscription 143,876 65,095 Settlement charges and federal excise duty 1,250,382 528,410 Printing charges and other expenses 132,049 64,724 Reimbursement of expenses from the Management Company 8 (779,824) (433,178) Amortisation of preliminary expenses and floatation costs 108,359 54,180 Total expenses 2,893,867 1,169,608 Net income from operating activities 7,242,078 3,260,540

Element of income and capital gains included in prices of unitssold less those in units redeemed - net 1,762,404 108,573

Net income for the period before taxation 9,004,482 3,369,113

Taxation 9 - -

Net income for the period after taxation 9,004,482 3,369,113

Other comprehensive income for the period - -

Total comprehensive income for the period 9,004,482 3,369,113


___________________________________ _____________ ______________Chief Executive Officer Director Director

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


December 31,2016

Undistributed income brought forward 184,481 [includes unrealised loss on investments of Rs.154]

Final cash distribution for the year ended June 30, 2016 @ Rs.0.05per unit declared for distribution on July 04, 2016 (87,718)

Net income for the period after taxation 9,004,482

Undistributed income carried forward 9,101,245 [includes unrealised loss on investments of Rs.1,157]



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


December 31,2016

NoteCASH FLOWS FROM OPERATING ACTIVITIESNet income for the period before taxation 9,004,482

Adjustments for non-cash and other items:Net loss on investments 'at fair value through profit or loss'

- held-for-trading:- Net capital loss on sale of investments 421 - Net unrealised loss on revaluation of investments 1,157

Profit earned on government securities 'at fair value throughprofit or loss' - held-for-trading (558,869)

Income from Margin Trading System (MTS) (7,972,830) Return on bank balances (1,605,824) Amortisation of preliminary expenses and floatation costs 108,359 Element of income and capital gains included in prices of units

sold less those in units redeemed - net (1,762,404) (2,785,508)

Increase in assetsPrepayments, deposits and other receivables (15,419)

Decrease in liabilitiesPayable to the Management Company (920,101) Remuneration payable to the Trustee 22,334 Accrued and other liabilities 76,677

(821,090) (3,622,017)

Proceeds from sale / redemption of investments 24,428,299 Payments made against purchase of investment (39,475,590) Payments made against Margin Trading System (MTS) (148,351,637) Profits and returns received 9,529,028 Net cash used in operating activities (157,491,917)

CASH FLOWS FROM FINANCING ACTIVITIESAmounts received against issue of units 351,728,853 Payments made against redemption of units (218,250,067) Dividend paid (87,718) Net cash generated from financing activities 133,391,068

Net decrease in cash and cash equivalents during the period (24,100,849) Cash and cash equivalents at beginning of the period 65,181,326 Cash and cash equivalents at end of the period 4 41,080,477



(Management Company)

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

For Faysal Asset Management Limited

December 31,2016

Net assets value per unit at beginning of the period 100.11

Net assets value per unit at end of the period 102.99

Net assets at beginning of the period 175,623,297

Amount received on issue of units * 351,728,853

Amount paid on redemption of units ** (218,250,067) 133,478,786

Element of income and capital gains included in prices of units soldless those in units redeemed - net (1,762,404)

Final cash distribution for the year ended June 30, 2016 @ Rs.0.05per unit declared for distribution on July 04, 2016 (87,718)

Net capital loss on sale of investments (421) Net unrealised loss on revaluation of investments (1,157) Other net income for the period 9,006,060

Total comprehensive income for the period 9,004,482

Net assets at end of the period 316,256,443

* Number of units issued 3,467,992

** Number of units redeemed 2,151,618


_____________________ _____________ _____________Chief Executive Officer Director Director

For Faysal Asset Management Limited(Management Company)

--- (Rupees) ---

(Number of units)

1. LEGAL STATUS AND NATURE OF BUSINESS

JCR - VIS has awarded an "AM3++" asset manager rating to the Management Company as of May 04, 2016.

2. BASIS OF PREPARATION

2.1

2.2

2.3

2.4

3. SIGNIFICANT ACCOUNTING POLICIES, ESTIMATES AND FINANCIAL RISK MANAGEMENT POLICIES

The Fund is an open-ended income scheme and is listed on the Pakistan Stock Exchange Limited. Units areoffered for public subscription on a continuous basis and the units are transferable and can be redeemed bysurrendering them to the Fund. The Fund was launched on April 09, 2016.

The accounting policies, basis of accounting estimates applied and methods of computation adopted in thepreparation of this condensed interim financial information are consistent with those followed in the preparationof the financial statements of the Fund for the year ended June 30, 2016 except for the following amended IFRSand IFRIC interpretations which became effective during the period as mentioned in note 3.1 below:

The Fund is categorised as an "Income Scheme" as per the Circular No. 7 of 2009 issued by SECP.

This condensed interim financial information has been prepared in accordance with the requirements ofInternational Accounting Standard 34: ‘Interim Financial Reporting’, the Trust Deed, the NBFC Rules, Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations) anddirectives issued by SECP. In case where requirements differ, the requirements of the Trust Deed, theNBFC Rules, the NBFC Regulations or the directives issued by the SECP prevail.

This condensed interim financial information does not include all the information and disclosures requiredin the annual financial statements, and should be read in conjunction with the annual financial statementsof the Fund for the year ended June 30, 2016.

This condensed interim financial information is un-audited but subject to limited scope review by theauditors. Figures for the quarter ended December 31, 2016 as reported in this condensed interim financialinformation have not been subject to limited scope review by the external auditors.

This condensed interim financial information is presented in Pakistani Rupees which is the Fund'sfunctional and presentation currency.

The objective of the Fund is to provide competitive returns primarily through investment in Margin TradingSystem (MTS) market.

The Pakistan Credit Rating Agency Limited (PACRA) has assigned a "A+(f)" stability rating to Faysal MTS Fundas of December 27, 2016.

The Fund commenced its operations from April 09, 2016. Accordingly, there are no comparatives in condensedinterim income statement, distribution statement, cash flow statement and statement of movement in unitholders' fund.

Faysal MTS Fund (the Fund) has been established under the Non-Banking Finance Companies (Establishmentand Regulation), Rules 2003 (the NBFC Rules) and has been authorised as a unit trust scheme by theSecurities and Exchange Commission of Pakistan (SECP) on December 16, 2015. It has been constitutedunder a Trust Deed, dated November 17, 2015 between Faysal Asset Management Limited (the ManagementCompany), a company incorporated under the Companies Ordinance, 1984 and Central Depository Company ofPakistan Limited (CDC) as the Trustee, also a company incorporated under the Companies Ordinance, 1984.

3.1 New / Revised Standards, Interpretations and Amendments

Standard or Interpretation

IFRS 10 Consolidated Financial Statements, IFRS 12 Disclosure of Interests in Other Entities and IAS 27 Separate Financial Statements – Investment Entities: Applying the Consolidation Exception (Amendment)

IFRS 11 Joint Arrangements - Accounting for Acquisition of Interest in Joint Operation (Amendment)

IAS 1 – Presentation of Financial Statements - Disclosure Initiative (Amendment)

IAS 16 Property, Plant and Equipment and IAS 38 intangible assets - Clarification of Acceptable Method of Depreciation and Amortization (Amendment)

IAS 16 Property, Plant and Equipment and IAS 41 Agriculture - Agriculture: Bearer Plants (Amendment)

IAS 27 – Separate Financial Statements – Equity Method in Separate Financial Statements (Amendment)

Improvements to Accounting Standards Issued by the IASB in September 2014

IFRS 5 Non-current Assets Held for Sale and Discontinued Operations - Changes in methods of disposal

IFRS 7 Financial Instruments: Disclosures - Servicing contracts

IFRS 7 Financial Instruments: Disclosures - Applicability of the offsetting disclosures to condensed interim financial information

IAS 19 Employee Benefits - Discount rate: regional market issue

IAS 34 Interim Financial Reporting - Disclosure of information 'elsewhere in the interim financial report'

3.2


2016 2016Note

4. BANK BALANCES

Cash at bank - PLS savings accounts 4.1 41,080,477 65,181,326

4.1 These carry mark-up ranging between 3.75% and 6.45% (June 30, 2016: 4.00% and 6.45%) per annum.

5. INVESTMENTS

'At fair value through profit or loss' - held-for-tradingGovernment securities 5.1 19,941,780 4,896,067

The Fund has adopted the following standards and amendments to IFRSs which became effective for thecurrent period:

The adoption of the above standards, amendments and improvements to accounting standards did nothave any effect on the condensed interim financial information.

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

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, 2016.

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2016 2016Note

6. ACCRUED AND OTHER LIABILITIES

SECP annual fee payable 97,038 27,665 Accrued liabilities 434,046 426,742 Provision for indirect taxes and duties 6.1 66,238 66,238

597,322 520,645

6.1

7. COMMITMENTS

Margin Trading System (MTS) transactions entered into by theFund which have not been settled as at period / year end

Purchase transactions 24,554,739 35,433,449 Sale transactions 34,231,450 13,206,460

8. REIMBURSEMENT OF EXPENSES FROM THE MANAGEMENT COMPANY

9. TAXATION

The Fund's income is exempt from income tax as per clause (99) of part I of the Second Schedule to theIncome Tax Ordinance, 2001 subject to the condition that not less than 90% of the accounting income forthe year as reduced by capital gains whether realized or unrealized is distributed in cash amongst the unitholders. The Management Company intends to distribute not less than 90% of its annual accountingincome in cash, if any, to comply with the above clause at year end. Accordingly, no tax provision has beenmade in this condensed interim financial information for the half year ended December 31, 2016.

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

There is no change in the status of petition with Honorable Sind High Court as reported in note 13.2 tothe annual financial statements of the Fund for the year ended June 30, 2016.

Furthermore, the Federal Government vide Finance Act, 2016 has excluded Asset ManagementCompanies and other Non Banking Finance Companies from charge of Federal Excise Duty (FED) ontheir services.

In view of the pending decision and as a matter of abundant caution, the Management Company ofthe Fund has maintained a provision for FED in the books of accounts of the Fund with effect fromJune 13, 2013 to June 30, 2016 aggregating to Rs.0.07 million (June 30, 2016: Rs.0.07 million). Hadthe said provision of FED and related taxes not been recorded in the books of account of the Fund,the net assets value per unit of the Fund would have been higher by Rs.0.02 (0.02%) per unit as atDecember 31, 2016 (June 30, 2016: Rs.0.04 (0.04%) per unit).

SECP has introduced "expense ratio" vide amendments in NBFC Regulations dated November 25, 2015,whereby, the total expense ratio of an income scheme shall be capped at 2% of average daily net assetsvalue of the scheme. The regulation further states that for the purpose of expense ratio, expenses incurredin relation to any government levy on funds such as sales tax, federal excise duty, SECP fee, etc. shall beexcluded while calculating expense ratio. Furthermore, under NBFC Regulation 60(3)(s), wherein theManagement Company is allowed to charge their cost to Collective Investment Schemes (CIS) in respectof fees and expenses related to registrar services, accounting, operations and valuation services related tothat CIS, the maximum cost that can be charged in this regard is up to 0.1% of the average annual netassets of that CIS or actual, whichever is less. Accordingly, this represents the amount receivable from theManagement Company to maintain the expense ratio of the Fund within the prescribed limits. The totalexpense ratio of the Fund is 2.22% which includes 0.22% representing government levies and SECP fee.

10. TRANSACTIONS WITH CONNECTED PERSONS / RELATED PARTIES

10.1 Details of transactions with the related parties and balances with them at the period end are as follows:

(Un-Audited)December 31,

2016Transactions during the period --- (Rupees) ---

Faysal Asset Management Limited (Management Company)Remuneration of the Management Company 1,301,979 Sales tax on management fee 169,257 Reimbursement of expenses from the Management Company 779,824

Central Depository Company of Pakistan Limited - (Trustee of the Fund)Remuneration of the Trustee 221,345 Sales tax on Trustee fee 28,775 Settlement charges 261,766

Unit holder holding 10% or more units

Askari General Insurance Company LimitedIssue of 374 units 37,389


2016 2016Outstanding balances

Faysal Asset Management Limited (Management Company)Preliminary expenses and floatation costs payable - 1,075,354 Reimbursement of expenses receivable from the Management Company 779,824 720,694 Management fee payable 269,450 125,247 Sales tax payable on Management fee 35,029 17,535 Sales load payable - 6,444

Central Depository Company of Pakistan Limited - (Trustee of the Fund)Security deposit 100,000 100,000 Remuneration payable to the Trustee 41,279 21,325 Sales tax payable on Trustee fee 5,366 2,986

Unit holder holding 10% or more units

Askari General Insurance Company LimitedUnits in issue 997,420 (June 30, 2016: 997,046) units 102,724,286 99,814,275

11. FAIR VALUE OF FINANCIAL INSTRUMENTS

The following table shows financial instruments recognized at fair value, analysed between those whose fair value is based on:

Level 1: Quoted prices in active markets for identical assets or liabilities;

Level 2:

Level 3: Those with inputs for the asset or liability that are not based on observable market data (unobservable inputs).

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

Those involving inputs other than quoted prices included in Level 1 that are observable for the asset or liability,either directly (as prices) or indirectly (derived from prices); and

IFRS 13 establishes a single source of guidance under IFRS for all fair value measurements and disclosures about fair valuemeasurement where such measurements are required as permitted by other IFRSs. It defines fair value as the price thatwould be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at themeasurement date (i.e. an exit price). Adoption of IFRS 13 has not affected the condensed interim financial information.

Financial assets which are tradable in an open market are revalued at the market prices prevailing on the statement of assetsand liabilities date. The estimated fair value of all other financial assets and financial liabilities is considered not significantlydifferent from book value.

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Financial liabilitiesPayable to the Management Company - 269,450 269,450 Remuneration payable to the Trustee - 41,279 41,279 Accrued and other liabilities - 434,046 434,046

- 744,775 744,775

Financial liabilitiesPayable to the Management Company - 1,207,045 1,207,045 Remuneration payable to the Trustee - 21,325 21,325 Accrued and other liabilities - 426,742 426,742

- 1,655,112 1,655,112

12. SUBSEQUENT EVENT

13. GENERAL

Figures are rounded off to the nearest rupee.

During the period ended September 30, 2016, there were no transfers between level 1 and level 2 fair valuemeasurements, and no transfer into and out of level 3 fair value measurements.

December 31, 2016 (Un-Audited)

'At fair value through profit

and loss' - held-for-trading

Other financial liabilities Total

As a consequence of the 18th amendment to the Constitution of Pakistan, in May 2015 the Sindh Workers’Welfare Fund Act, 2014 (SWWF Act) had been passed by the Government of Sindh as a result of which everyindustrial establishment located in the Province of Sindh, the total income of which in any accounting year isnot less than Rs.0.5 million, is required to pay Sindh Workers’ Welfare Fund (SWWF) in respect of that year asum equal to two percent of such income. The matter was taken up by the MUFAP with the Sindh RevenueBoard (SRB) collectively on behalf of various asset management companies (including the ManagementCompany of the Fund) whereby it was contested that mutual funds should be excluded from the ambit of theSWWF Act 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 definition of financial institutions as perthe Financial Institution (Recovery of Finances) Ordinance, 2001 and were, hence, required to register and paySWWF under the SWWF Act. Thereafter, MUFAP has taken up the matter with the Sindh Finance Ministry tohave CISs / mutual funds excluded from the applicability of SWWF. However, as a matter of abundant caution,the Board of MUFAP and the members in the Extra Ordinary General Meeting held on January 11, 2017decided to record a provision of Sindh WWF from the date of enactment of Sindh WWF Act, 2014 (which wasMay 21, 2015) till January 12, 2017 and will continue to record such provision going forward. Had this provisionof Sindh WWF was recorded on December 31, 2016, the net assets value per unit of the Fund would havebeen lower by Rs.0.07 (0.07%) per unit.

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

June 30, 2016 (Audited)

'At fair value through profit

and loss' - held-for-trading

Other financial liabilities Total

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

14. DATE OF AUTHORISATION FOR ISSUE

_____________________ _____________ _____________Chief Executive Officer Director Director

For Faysal Asset Management Limited(Management Company)

This condensed interim financial information was authorised for issue on February 24,2017 by theBoard of Directors of the Management Company.

FMTSF Half Year & 2nd Qurter - Faysal Asset Management … · Income from Margin Trading System...

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