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AB Bank First Mutual FundTrustee: Bangladesh General Insurance Company Limited42 Dilkusha Commercial AreaDhaka 1000

AB Bank First Mutual Fund

Auditors' report and financial statementsfor the year ended 30 June 2013

S. F. AHMED & COChartered AccountantsHouse # 51 (3rd floor), Road # 9 , Block # F, Banani, Dhaka 1213, BangladeshTelephones (880-2): PABX 987-1018 & 987-0619Emails:(i)[email protected] (ii) [email protected]: www.sfahmedco.org

S. F. AHMED & COChartered Accountants- Established: J 958

House # 51 (3rd Floor)Road # 9, Block # F, BananiDhaka 1213, Bangladesh

Phones: (880-2) 987-1018 & 987-0619E-mails:(i)[email protected]

(ii) [email protected]

Auditors' Report to the Trustee of AB Bank First Mutual Fund

We have audited the accompanying financial statements of AB Bank First Mutual Fund (the Fund), which comprisethe statement of financial position (balance sheet) as at 30 June 2013, statement of comprehensive income (revenueaccount) and statement of cash flows for the year ended 30 June 2013, and a summary of significant accountingpolicies and other explanatory notes.

Management's responsibility for the financial statementsManagement is responsible for the preparation and fair presentation of these financial statements in accordance withBangladesh Financial Reporting Standards / Bangladesh Accounting Standards and other applicable laws andregulations. This responsibility includes: designing, implementing and maintaining internal control relevant to thepreparation and fair presentation of financial statements that are free from material misstatements, whether due tofraud or error; selecting and applying appropriate accounting policies; and making accounting estimates that arereasonable in the circumstances.

Auditors' responsibilityOur responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit inaccordance with Bangladesh Standards on Auditing. Those standards require that we comply with relevant ethicalrequirements and plan and perform the audit to obtain a reasonable assurance whether the financial statements are freefrom material misstatement.

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

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a ba~is for our auditopinion.

OpinionIn our opinion, the financial statements prepared in accordance with Bangladesh Financial Reporting Standards /Bangladesh Accounting Standards give a true and fair view of the state of the Fund's affairs as of 30 June 2013 and ofthe results of its operations and its cash flows for the year then ended and comply with the requirements ofBangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 200 I, Trust Deed and otherapplicable 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 werenecessary for the purposes of our audit and made due verification thereof;

b. in our opinion, proper books of account as required by law have been kept by the Fund so far as it appeared fromour examination of those books;

c. the statement of financial position (balance sheet) and statement of comprehensive income (revenue account)dealt with by the report are in agreement with the books of account and returns;

d. the investment was made as per Rule 56 of Bangladesh Securities and Exchange Commission (Mutual Fund)Bidhimala (Rules) 200 I; and

e. the expenditure incurred and payments made were for the purpose of the Fund's business.

House # 51 (3rd floor), Road # 9, Block # FBanani, Dhaka 1213, BangladeshDated, 13 August 2013

S. F. AHMED & COChartered Accountants

S. F. AHMED & COChartered AccountantsAB Bank First Mutual Fund

Statement of Financial Position(Balance Sheet) at 30 June 2013

Amounts in TakaAt At

30 June 2013 30 June 2012Assets

Marketable (listed) securities - at costNon-listed securities -at costCash and bank balancesPreliminary and issue expensesOther current assetsTotal Assets

34567

559,584,434351,862,488705,991,04442,326,92562,692,387

347,073,741137,973,598

1,041,804,36747,325,312

2,851,0211,577,028,0391,722,457,278

Capital and Liabilities

CapitalRetained earningsDividend equalisation reserveMarket risk reserveCurrent liabilities and provisionsTotal Capital and Liabilities

8 1,500,000,000 1,500,000,000158,514,689 8,719,07860,000,000 60,000,000

2.6 3,022,5789 3,942,589 5,286,383

1,722,457,278 1,577,028,039

11.46 10.4811.77 10.46

Net Asset Value per Unit

At CostAt Market

ISee annexed notes

For AB Bank First Mutual Fund

L~Asset ManagerRACE Management PCL

I, ~·ctcwdlvTrusteeBangladesh General Insurance Company Limited

Signed in terms of our report of even date annexed


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


Amounts in TakaYear ended Year ended

30June201330June2012

Income

Dividend from investment in sharesProfit on sale of investmentInterest on bank deposits and bondsOther incomeTotal Income

10

15,852,60251,609,473

110,894,766

178,356,841

Expenditure

Amortisationof preliminary and issue expensesManagement feesTrustee feesCDSL chargeCustodian feesAnnual listing feesAudit feeOther operating expensesTotal ExpenditureProfit before provisionMarket risk reserveProfit during the yearAccumulated profit brought forwardLess: Dividend equalisation reserveAccumulated profit carried forward

4,929,58822,556,606

1,585,08796,819

299,7021,600,000

51,750464,255

2.52.82.9

2.102.11

1 I31,583,808

146,773,0333,022,5782.6

149,795,6118,719,078

158,514,689

Earnings per unit for the year 1.00

See annexed notes Il...---_

!5L.For AS Bank First Mutual Fund

415,7501,773,693

95,383,34831,814

97,604,605

2,082,90922,134,517

1,437,075486

12,662

51,750143,550

25,862,94971,741,656(3,022,578)68,719,078

60,000,0008,719,078

0.46

1'7'~~TrusteeBan ladesh General Insurance Com any Limited



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AB Bank First Mutual Fund S. F. AHMED & COChartered Accountants

Statement of Cash Flowsfor the year ended 30 June 2013

Amounts in TakaYear ended Year ended

30 June 2013 30 June 2012

Cash flows from operating activities:

Dividend incomeInterest on bank deposits and bondsOther incomeOther advance deposit and receivableOperating expensesNet cash from operating activities (A)

13,315,09088,778,680

415,75093,173,738

31,813(641,409)

( 18,493,658)74,486,234

(1,652,904 )(28,054,032)72,386,834

Cash flows from investing activities:

Value of listed securitiesPreliminary and issue expensesNon-listed securitiesNet cash used in investing activities (B)

(194,311,267) (345,300,048)(49,408,221 )

(137,973,598)(532,681,867)

(213,888,890)(408,200,157)

Cash flows from financing activities:

Capital contribution

Net cash from financing activities (C)Net increase/(decrease) in cash (D = A+B+C)Opening cash and cash equivalents (E)Closing cash and cash equivalents (F = D+E)

1,500,000,000

1,500,000,000(335,813,323) 1,041,804,367

1,041,804,367705,991,044 1,041,804,367

For AB Bank First Mutual Fund

~. j}~dt-VAsset Manager £ustee

-----,~~:;F~.·~I1C~E:..::M~a~n~a~g(em~en~t2:P~C::!L=---2:B~a~n~glla~d;::es~h~GeneralInsurance Com an Limited

tYb\~~~,,~jJHouse ~d floor), Road # 9, Block # FBanani, Dhaka 1213, BangladeshDated, 13 August 2013


~S. F. AHMED & COChartered Accountants

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AB Bank First Mutual FundNotes to financial statements for the year ended 30 June 2013


IGeneral

1. Legal status and nature of business

AB Bank First Mutual Fund (hereinafter called as "Fund") was established under a Trust Deed signed on 04 July2011 between AB Bank 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 BangladeshSecurities and Exchange Commission (BSEC) on 21 July 20 II under the Bangladesh Securities and ExchangeCommission (Mutual Fund) Bidhimala (Rules) 2001. The operations of the Fund was commenced on 29 January2012 by listing with Dhaka and Chittagong Stock Exchanges.

As provided in Trust Deed, RACE Management PCL is the Fund Manager. RACE Management PCL wasincorporated as a private limited company under Companies Act 1994 on March 2008.

AB Bank First Mutual Fund is a close-end Mutual Fund of ten years' tenure. The objectives of the Fund are toprovide regular dividend to the investors by investing the Fund both in capital and money market instruments.The Fund consists of 150,000,000 units of Taka 10 each. The units of the Fund are transferable.

2. Significant accounting policies

2.1 Basis of preparation of accounts

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

2.2 Presentation of financial statements

The Fund was registered on 04 July 20 II under the Trust Act, 1882 and subsequently on 29 January2012 listed with Stock Exchanges and accordingly transactions started. The financial statements areprepared and presented covering the period from 01 July 2012 to 30 June 2013.

2.3 Investment

All purchases and sales of securities that require delivery within the time-frame established by regulationor market convention are recognised at the date of trading ie, the date on which the Fund commits topurchase or sell the investment.

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

2.3.1 Valuation of investmentListed securities are valued at average closing quoted market prices prevailed as of 30 June 2013on an aggregate portfolio basis.

Investment is recorded in the Financial position at cost.

2.4 Taxation

The income of the Fund is exempted from Income Tax as per SRO No. 333-Actllncome Tax/20 11 dated10 November 20 II, under Section 44(4) clause (b) of Income Tax Ordinance, 1984; hence no provisionfor tax is required.

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AB Bank First Mutual FundNotes to financial statements for the year end 30 June 2013


2.5 Amortisation of preliminary and issue expensesPreliminary and issue expenses represent expenditure incurred prior to commencement of operations andestablishment of the Fund. These costs are amortised within ten years' tenure after adjusting interestincome from escrow accounts as per trust deed and Securities and Exchange Commission (Mutual Fund)Bidhimala (Rules) 2001.

2.6 Market risk reserve

Investment has been valued on aggregated portfolio basis and no provision is required to be made onportfolio value of investment as on June 30, 2013, last year on June 30, 2012 total provision was Taka3,022,578 which has been transfered to revenue account as income.

2.7 Dividend policy

As per Rule 66 of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules)2001 as amended, the Fund is required to distribute its profit in the form of dividend either in cash or re-investment (bonus share) or both to its unit holders an amount which shall not be less than 70% of annualprofit during the year, net provisions.

2.8 Management fee

RACE Management PCL, the management company of the Fund is to be paid an annual management feeson weekly average net asset value (NA V) as per Rule 65 of Bangladesh Securities and ExchangeCommission (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 weeklyaverage NA V per annum.

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 in advance basis during the entire life of the Fund as per Trust Deed.

2.10 Custodian fee

BRAC Bank Limited is entitled to receive a safekeeping fee @ 0.07% on the ba!ance of securitiescalculated on average monthend value oer annum as a custodian.

2.11 Annual listing fee

Annual fee of Taka 1,500,000 (at the rate of 0.10% of the fund size) was also paid to BSEC as per Rules10 and 11 of Bangladesh Securities and Exchange Commission (Mutual Fund) Bidhimala (Rules) 2001.

2.12 Revenue recognition

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

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AB Bank First Mutual Fundotes to financial statements for the year ended 30 June 2013


Amounts in TakaBalance Sheet I At At

30 June 2013 30 June 20123. Marketable (listed) securities - at cost

Equity shares (note 3.1)

3.1 Sector-wise break up of investment in shares are as follows:

559,584,434 347,073,741

Sector/categoryNumber of Amounts in Taka

shares Cost Market value Difference

Bank 5,294,783 173,938,000 127,667,051 (46,270,949)Corporate Bond 2,230 2,029,570 2,088,395 58,825Food and Allied 34,500 20,715,495 36,752,850 16,037,355Fuel and Power 11,550 855,785 949,410 93,625Insurance 116,435 33,094,538 37,198,361 4,103,823Mutual Funds 5,502,000 55,082,055 55,516,850 434,795NBFI 33,522 662,500 918,503 256,003Pharma 318,082 95,727,410 105,143,590 9,416,180Telecommunication 682,930 99,657,794 135,050,838 35,393,044Textile 28,000 1,111,527 702,800 (408,727)Travel & Leisure 922,365 76,709,758 105,241,847 28,532,088

12,946,397 559,584,434 607,230,494 47,646,060

4. Non listed security -at cost

Renata Ltd Short Term BondTrust Bank Unsecured Subordinated BondFarmers' Bank Ltd - sharesBank Asia Zero Coupon Bond

150,000,000100,000,000 100,000,00063,888,89037,973,598 37,973,598

351,862,488 137,973,598

250,000,000

199,428,712159,791,08054,460,91722,124,057 536,947,62514,712,594 375,463,969

994,158 30,977,29824,105 23,743

321 42,68631,711,312

240,459 4,790,6864,214,640 11,592,393

50,254,655705,991,044 1,041,804,367

5. Cash and bank balances

Fixed deposit receiptsShort term deposits with:

Sponsor account-Southeast Bank Ltd (AiC 0083 13 1000 I)The Premier Bank Ltd (AiC 3005)ONE Bank Ltd (AiC 0123000573)AS Bank Ltd (AlC-4005-776830-430)Eastern Bank Ltd - 856EXIM Bank Ltd (AiC 00113100462655)BRAC Bank Ltd - (AiC 1503202216121001)EXIM Bank Ltd -276Southeast Bank Ltd (AiC 0072-13100000005)

Escrow account- AS Bank Ltd (AlC-4005-776832-430)IPO-BDT account- AS Bank Ltd (AlC-4005-776833-430)Provisional investment account-Eastern Bank Ltd (AiC 1011360242484)

5.1 Bank accounts having nil balance

IPO-GBP-AS Bank Ltd (AlC-4005-776839-026)IPO-USD-AS Bank Ltd (AlC-4005-776834-040)IPO-EURO-AS Bank Ltd (AlC-4005-776836-021)

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Notes to financial statements for the year ended 30 June 2013


Amounts in TakaAt At

30 June 2013 30 June 20126. Preliminary and Issue Expenses

Total preliminary and issue expensesLess: Interest on escrow account

47,325,312 69,902,18168,799 20,493,960

47,256,513 49,408,2214,929,588 2,082,909

42,326,925 47,325,312

24,394,497 2,209,6112,294,314 641,4102,537,513

33,466,06462,692,387 2,851,021

Less: Amortisation of preliminary and issue expenses

7. Other Current Assets

Interest receivablesOther advance and depositsDividend ReceivableReceivable from Security

8. Capital

150,000,000 units of Taka 10 each fully paid-up 1,500,000,000 1,500,000,000

9. Current liabilities and provisions

Withholding income tax payableWithholding VAT payableCustodian feesPublication expensesManagement feesPayable to sundry securitiesAudit fee

2,604,875792,552231,108100,00087,15586,39940,500

316,709743,798

12,661100,000

4,042,33330,38240,500

3,942,589 5,286,383

IRevenue Account I10. Interest on bank deposits and bonds

Interest onShort term depositsFixed depositsCorporate bonds

64,114,709 80,980,31123,461,589 6,035,45723,318,468 8,367,580I 10,894,766 ----::9:75,738::-::3:-':,3:-:4-;:""8

11. Other operating expenses

Bank chargesOther expenses

43,050100,500

104,417359,838464,255 143,550

12. Others

12.1 These notes form an integral part of the annexed financial statements and accordingly are to be read inconjunction therewith.

12.2 Figures in these notes and annexed financial statements have been rounded off to the nearest Taka.

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

IIL .FOrABBankFirstMj~I;~~

~anager Trustee,Uy

RACE Management PCL Bangladesh General Insurance Company LimitedDhaka, BangladeshDated, 13August 2013

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