| FIRST CAPITAL MUTUAL FUND LIMITED |
|
|
|
|
|
|
|
|
|
|
| (Annual
Report 1995-96) |
|
|
|
| COMPANY
INFORMATION |
|
|
| Board
of Directors |
|
| Mr.
Salmaan Taseer, Chairman & CEO |
|
| Mr.
Khurshid Hadi |
|
| Mr.
Mian Jahangir Elahi |
|
| Mr.
Abdul Waheed Alavi |
|
| Mr.
Bashir A. Sheikh |
|
| Mr.
Humayun Nabi Jan |
|
| Mr.
Zahid Zia |
|
|
| Company
Secretary |
|
| Mr.
Zahid Zia |
|
|
|
|
| Investment
Committee |
|
| Mr.
Salmaan Taseer, Chief Executive |
|
| Dr.
Amjad Waheed, Chief Operating Officer |
|
|
|
| Auditors |
|
|
| Taseer
Hadi Khalid & Company |
|
| Chartered
Accountants |
|
|
| Lahore. |
|
|
|
|
| Registered
Office |
|
|
| 103-
C/II, Gulberg III, Lahore. |
|
|
|
|
| Custodian |
|
|
| Crescent
Investment Bank Ltd. |
|
| 45-Shahrah-e-Quaid-e-Azam,
Lahore. |
|
|
|
|
| Legal
Advisors |
|
| M/s
Chima & Ibrahim |
|
| Advocates |
|
|
| Lahore. |
|
|
|
| Investment
Advisers |
|
| First
Capital Investments (Pvt) Limited |
|
| 103-C/II,
Gulberg-III, Lahore. |
|
|
|
|
| Shares
Department |
|
| First
Capital Mutual Fund Ltd. |
|
| Ground
Floor, |
|
| Sh.
Sultan Trust Building No. 2 |
|
| Beaumont
Road, Karachi. |
|
|
|
|
|
|
| NOTICE
OF MEETING |
|
| Notice
is hereby given that 2nd Annual General Meeting of the shareholders of the |
|
| company
will be held on Sunday, January 12, 1997 at 10:00 a.m. at 103-C/II,
Gulberg-III, |
|
| Lahore
to transact the following business:- |
|
|
| 1.
To confirm the minutes of the First Annual General Meeting of the Members. |
|
|
| 2.
To receive, consider and adopt the annual audited accounts, of the company
together |
|
| with the auditors' and chairman's report
for the year ended June 30, 1996. |
|
|
| 3.
To appoint Auditors for the year ending June 30, 1997 and to fix their
remuneration. |
|
| The present auditors M/s Taseer Hadi Khalid
& Company, Chartered Accountants, |
|
| being eligible for appointment, offer
themselves for re-appointment. |
|
|
| 4.
To transact any other business with the permission of the chair. |
|
|
|
|
By the order of the Board |
|
|
Zahid Zia |
|
|
|
Company Secretary |
|
| Lahore,
December 19, 1996 |
|
|
| Notes: |
|
|
| 1.
The Share Transfer Books of the Company will remain closed from 12-01-1997 to |
|
| 19 -01-1997 (both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as |
|
| his/her proxy to attend and vote on his/her
behalf. Proxies, in order to be effective, |
|
| must be received by the Company at least 48
hours before the meeting. |
|
|
| 3.
Members are requested to notify any change in address immediately. |
|
|
|
| CHAIRMAN'S
REVIEW |
|
| I
am pleased to present the audited accounts of your company for the year ended
June |
|
| 30, 1996. |
|
|
| Portfolio
positions were predominantly built in July and August 1995 when the News- |
|
| MCB
all share composite index was at the 800 levels. Mainly due to poor economic |
|
| situation
of the country the News-MCB index declined to 550 by June 30, 1996, a drop |
|
| of
over 31%. The Fund portfolio during the same time period dropped 23% from Rs. |
|
| 145.3
million to 112.2 million- an 8% better performance relative to the market. |
|
|
| The
largest investment of the Fund are in the power sector (Rs. 44.5 m) and |
|
| chemical/fertilizer
sector (Rs. 17.5 m). We believe that these two sectors will |
|
| outperform
the market in due course. The market is expected to improve following |
|
| elections
and build-up of foreign exchange reserves position of the country in |
|
| February.
The fund is bound to benefit from this expected improvement. |
|
|
| The
net asset value of your share as of June 30, 1996 is about Rs.7 which is at a |
|
| significant
premium to the market price of Rs. 3.75 per share. The market price should |
|
| move
closer to the net asset value as our stock market matures. We feel that the
stock |
|
| market
package and the two textile packages recently announced by the government |
|
| will
have a positive impact on the stock market in the medium term. |
|
|
| For
and on behalf of the |
|
| Board
of Directors |
|
|
| SALMAAN
TASEER |
|
| Chairman
& Chief Executive |
|
|
|
|
KPMG |
Taseer Hadi Khalid &
Co. |
|
|
|
Chadered Accountants |
|
|
65/3, F.C.C. |
Telephone: (042) 5710084,
5753485 |
|
|
Syed Maratib Ali Road |
|
5754846 |
|
|
Gulberg - IV |
Fax |
(042) 5710085 |
|
|
Lahore - Pakistan |
Telex |
21515 THK PK Cable
Advisors |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have examined the annexed balance sheet of FIRST CAPITAL MUTUAL FUND |
|
| LIMITED
as at June 30, 1996 and the related income and expenditure account and |
|
| statement
of changes in financial position together with the notes to the accounts for
the |
|
| year
then ended. Our examination was made in accordance with the generally
accepted |
|
| auditing
standards and accordingly included such tests of the accounting records and
such |
|
| other
auditing procedures as were considered necessary in the circumstances and we
state |
|
| that
we have obtained all the information which to the best of our knowledge and
belief |
|
| were
necessary for the purpose of our audit and we report that: |
|
|
|
| a)
in our opinion, proper books of account have been kept by the Company as |
|
| required
by the Companies Ordinance, 1984 and Rule 16 of the Investment |
|
| Companies
and Investment Advisor's Rules, 1971. |
|
|
|
|
| b)
in our opinion: |
|
|
|
|
| i)
the balance sheet and income and expenditure account together with the |
|
| notes
thereon have been drawn up in conformity with the Companies |
|
| Ordinance,
1984 and are in agreement with the books of account and are |
|
| further
in accordance with accounting policies consistently applied; |
|
|
|
|
| ii)
the expenditure incurred during the period was for the purposes of the |
|
| Company's
business; |
|
|
|
|
|
| iii)
the business conducted, investments made and the expenditure incurred |
|
| during
the period were in accordance with the investment policy of the |
|
| Company
and Investment companies and Investment Adviser's Rules, |
|
| 1971; |
|
|
|
|
|
|
| iv)
the company has not contravened the provisions of Rule 8 of the |
|
| Investment
Companies and Investment Adviser's Rules, 1971; and |
|
|
|
|
| c)
in our opinion and to the best of our information and according to the |
|
| explanations
given to us, the balance sheet, the income and expenditure account, |
|
| and
the statement of changes in financial position together with the notes
forming |
|
| part
thereof give the information required by the Companies Ordinance, 1984 and |
|
| Investment
Companies and Investment Adviser's Rules, 1971 in the manner so |
|
| required
and respectively give a true and fair view Of the state of the Company's |
|
| affairs
as at June 30, 1996 and of the loss and changes in the financial position for |
|
| the
year then ended; |
|
|
|
|
|
| Without
qualifying our opinion, we state that presently, we are uncertain about the |
|
| applicability
and scope of the application of section 80D(i) of the Income Tax |
|
| Ordinance,
1979 to mutual funds. Thus, we are not in a position to determine the |
|
| liability
arising therefrom. |
|
|
|
|
| d)
in our opinion, no, zakat was deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980. |
|
|
|
|
|
|
Sd/- |
|
|
|
|
TASEER HADI KHALID &
CO. |
|
|
|
|
Chartered Accountants |
|
|
|
|
|
|
BALANCE SHEET AS AT JUNE
30, 1996 |
|
|
|
|
|
1996 |
1995 |
|
|
NOTE |
(RUPEES) |
(RUPEES) |
|
|
|
|
|
|
|
|
|
| DEFERRED
EXPENDITURE |
|
3 |
6,517,296 |
7,545,608 |
|
|
|
|
----------- |
----------- |
|
| CURRENT
ASSETS |
|
|
|
| Marketable
securities - (cost Rs. 145,341,488 ) |
4 |
112,185,106 1 |
55,936,500 |
|
| Accounts
receivables against trading of shares |
5 |
1,093,117 |
0 |
|
| Advances,
deposits, prepayments and other receivables |
6 |
222,653 |
30,410 |
|
| Cash
and Bank Balances |
|
7 |
5,816,383 |
87,816,204 |
|
|
|
|
119,317,259 |
143,783,114 |
|
|
| CURRENT
LIABILITIES |
|
|
| Current
Maturity of deferred expenditure payable |
|
1,659,377 |
1,509,122 |
|
| Due
to First Capital Investments (Private) Limited |
8 |
1,103,511 |
82,449 |
|
| Creditors
and other liabilities |
|
9 |
13,854,755 |
10,014,718 |
|
| Provision
for taxation |
|
|
54,923 |
2,967 |
|
|
|
|
16,672,566 |
11,609,256 |
|
|
|
|
----------- |
----------- |
|
| WORKING
CAPITAL |
|
|
102,644,693 |
132,173,858 |
|
| DEFERRED
EXPENSES PAYABLE |
|
10 |
(4,978,121) |
(6,036,486) |
|
|
|
|
----------- |
----------- |
|
| CAPITAL
EMPLOYED |
|
|
104,183,868 |
133,682,980 |
|
|
=========== |
=========== |
|
| REPRESENTED
BY: |
|
|
| SHARE
CAPITAL |
|
| Authorised: |
|
| 20,000,000
Ordinary Shares of Rs. 10/- each |
|
200,000,000 |
200,000,000 |
|
|
=========== |
=========== |
|
| Issued,
subscribed and paid up: |
|
| 15,000,000
Ordinary Shares of Rs. 10/- each fully |
|
150,000,000 |
150,000,000 |
|
| paid-up
in cash |
|
|
| ACCUMULATED
LOSS |
|
|
(45,816,132) |
(16,317,020) |
|
| CONTINGENCIES
& COMMITMENTS |
|
11 |
0 |
0 |
|
|
|
|
----------- |
----------- |
|
|
104,183,868 |
133,682,980 |
|
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these accounts |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS IS ANNEXED |
|
|
|
|
INCOME AND EXPENDITURE
ACCOUNT |
|
|
FOR THE YEAR ENDED JUNE
30, 1996 |
|
|
|
|
1996 |
1995 |
|
|
|
NOTE |
(RUPEES) |
(RUPEES) |
|
|
| INCOME |
|
|
| Dividend |
|
|
1,039,123 |
17,875 |
|
| (Loss)/Gain
on sale of marketable securities |
|
(10,584,031) |
414,736 |
|
| Markup
income |
|
|
2,281,804 |
733,378 |
|
| Other
income |
|
|
23,000 |
0 |
|
|
|
|
----------- |
----------- |
|
|
|
|
(7,240,104) |
1,165,989 |
|
|
| EXPENSES |
|
|
| Remuneration
to Investment Advisor |
|
12 |
2,126,201 |
0 |
|
| Custodian
Charges |
|
|
1,100,769 |
126,543 |
|
| Auditors'
remuneration |
|
| Audit fee |
|
|
|
50,000 |
75,000 |
|
| Out
of pocket expenses |
|
|
|
2,000 |
3,500 |
|
|
|
|
|
|
52,000 |
78,500 |
|
| Interest
on deferred expenditure |
|
|
701,816 |
83,449 |
|
| Amortization
of deferred expense |
|
|
1,629,323 |
0 |
|
| Zakat |
|
|
|
|
48,100 |
125 |
|
| Legal
& professional charges |
|
|
74,060 |
0 |
|
| Bank
charges |
|
|
|
127,787 |
367,116 |
|
| Miscellaneous |
|
|
|
14,923 |
0 |
|
|
|
|
|
|
5,874,979 |
655,733 |
|
|
|
|
|
|
----------- |
----------- |
|
|
|
|
|
|
(13,115,083) |
510,256 |
|
|
| Provision
for diminution in value of marketable securities |
(16,332,073) |
( 16,824,309) |
|
|
|
|
----------- |
----------- |
|
| NET
LOSS BEFORE TAXATION |
|
|
(29,447,156) |
(16,314,053) |
|
| Provision
for taxation |
|
|
-51,956 |
(2,967) |
|
|
|
|
----------- |
----------- |
|
|
|
|
(29,499,112) |
(16,317,020) |
|
| Loss
brought forward |
|
|
(16,317,020) |
0 |
|
|
|
----------- |
----------- |
|
| LOSS
AFTER TAXATION CARRIED FORWARD |
|
(45,816,132) |
(16,317,020) |
|
|
=========== |
=========== |
|
| The
annexed notes form an integral part of these accounts |
|
|
| AUDITORS'
REPORT TO THE MEMBERS IS ANNEXED |
|
|
|
|
|
STATEMENT OF CHANGES IN
FINANCIAL POSITION |
|
|
FOR THE YEAR ENDED JUNE
30, 1996 |
|
|
|
|
1996 |
1995 |
|
|
|
(RUPEES) |
(RUPEES) |
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Loss
after taxation |
|
|
(29,499,112) |
(16,317,020) |
|
| ADJUSTMENT
OF ITEMS NOT INVOLVING MOVEMENT |
|
| OF CASH |
|
|
| Amortization
of deferred cost |
|
1,629,323 |
0 |
|
| Provision
for diminution in value of shares |
|
16,332,073 |
16,824,309 |
|
| Provision
for taxation |
|
|
51,956 |
2,967 |
|
|
|
|
----------- |
----------- |
|
|
|
|
18,013,352 |
16,827,276 |
|
| CASH
FLOW FROM OPERATING ACTIVITIES BEFORE |
|
| ADJUSTMENTS
OF WORKING CAPITAL |
|
(11,485,760) |
510,256 |
|
|
| WORKING
CAPITAL CHANGES |
|
|
| (INCREASE)/DECREASE
IN CURRENT ASSETS |
|
|
| Marketable
securities |
|
|
(72,580,679)I |
(72,760,809 |
|
| Advances,
deposits, prepayments and other receivables |
|
(192,243)] |
(30,410) |
|
| Accounts
receivable |
|
|
-1,093,117 |
0 |
|
|
|
|
----------- |
----------- |
|
|
|
(73,866,039) |
(72,791,219) |
|
|
|
----------- |
----------- |
|
|
|
(85,351,799) |
(72,280,963) |
|
|
| INCREASE/(DECREASE)
IN CURRENT LIABILITIES |
|
|
| Due
to First Capital Investments (Private) Limited |
|
1,171,317 |
1,591,571 |
|
| Creditors
and other liabilities |
|
|
3,840,038 |
10,014,718 |
|
|
|
|
----------- |
----------- |
|
|
|
|
5,011,355 |
11,606,289 |
|
|
|
|
----------- |
----------- |
|
| NET
CASH USED IN OPERATING ACTIVITIES |
|
(80,340,444) |
(60,674,674) |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
| Issuance
of share capital |
|
|
0 |
150,000,000 |
|
| Deferred
cost payable to Fell |
|
|
(1,058,365) |
6,036,486 |
|
|
|
|
----------- |
----------- |
|
|
|
|
(1,058,365) |
156,036,486 |
|
|
|
|
----------- |
----------- |
|
|
|
|
(81,398,809) |
95,361,812 |
|
| NET
CASH (OUT)/IN FLOW FROM FINANCING ACTIVITIES |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Deferred
cost |
|
|
601,012 |
7,545,608 |
|
|
|
|
----------- |
----------- |
|
| NET
CASH INFLOW FROM INVESTING ACTIVITIES |
|
601,012 |
7,545,608 |
|
|
|
|
----------- |
----------- |
|
| NET
(DECREASE)/INCREASE 1N CASH AND CASH |
|
(81,999,821) |
87,816,204 |
|
| EQUIVALENTS |
|
|
|
|
| CASH
AND CASH EQUIVALENTS AT THE BEGINNING |
|
87,816,204 |
0 |
|
| OF THE YEAR |
|
|
|
|
|
|
|
----------- |
----------- |
|
| CASH
AND CASH EQUIVALENTS AT THE END OF THE YEAR |
|
5,816,383 |
87,816,204 |
|
|
=========== |
=========== |
|
|
|
|
NOTES TO THE ACCOUNTS |
|
|
FOR THE YEAR ENDED JUNE
30, 1996 |
|
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| 1.1
The Company was incorporated on January 8, 1995 as a public limited company |
|
| under
the Companies Ordinance, 1984 and commenced its operations on March |
|
| 14,
1995. It has been registered as an Investment Company under the |
|
| Investment
Companies and Investment Adviser's Rules, 1971. The Company is |
|
| listed
on Karachi and Lahore Stock Exchanges. The object of the company is to |
|
| carry
on the business of a close-end mutual fund and to invest its assets in |
|
| securities
which are listed or proposed to be listed on the stock Exchanges. |
|
|
|
|
| 1.2
The Company has entered into an agreement with an associated company, First |
|
| Capital
Investments (Pvt.) Limited to act as its "Investment Adviser".
Crescent |
|
| Investment
Bank is the approved custodian of the company. |
|
|
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
|
|
| 2.2
Marketable Securities |
|
|
| Listed: |
|
| These
are valued at lower of average cost and market value determined on |
|
| aggregate
portfolio basis. The provision required against marketable securities is |
|
| charged
to the Income currently. |
|
|
|
| Market
value has been taken from Karachi Stock Exchange quotations as on the |
|
| last
working day of the income year. |
|
|
| Pre-IPO's: |
|
| These
are for which application has been made but which have not been listed at |
|
| the
balance sheet date and are stated at lower of average cost and break-up value |
|
| determined
on the basis of latest available financial statements. |
|
|
| 2.3
Revenue recognition |
|
|
|
| i)
Dividend income is recognized at the time of closure of share transfer |
|
| books
of the company declaring dividend and is recorded net of Zakat. |
|
|
|
|
| ii)
Sale and purchase of. securities are recorded on the date of execution of |
|
| contract.
Capital Gain and Losses on sale of investments is taken to |
|
| income
of the period in which it arises. |
|
|
| iii)
Return on bank deposits and securities other than shares of the company |
|
| is
recognized on accrual basis. |
|
|
| 2.4
Deferred expenditure |
|
| These
will be amortized over a period of five years starting from financial year |
|
| 1995-96. |
|
|
|
|
|
| 2.5
Taxation |
|
| Provision
for current taxation is based on taxable income at current rates of |
|
| taxation
after taking into account tax credits and rebates available, if any. The |
|
| company
provides for deferred taxation on liability method for all major timing |
|
| differences.
However, net deferred tax debits are not recognized. |
|
|
| The
company has provided tax at 5% on the dividend income for the year. The |
|
| management
believe that the gross sale proceeds of the shares sold during the |
|
| period
do not constitute turnover as implied in section 80D(i) of the Income Tax |
|
| Ordinance,
1979. |
|
|
|
|
|
1996 |
1995 |
|
|
(RUPEES) |
(RUPEES) |
|
|
|
| 3.
DEFERRED EXPENDITURE |
|
|
| Public
Issue |
|
|
3,654,442 |
3,159,367 |
|
| Salaries,
wages and benefits |
|
528,758 |
528,758 |
|
| Telephone,
fax, etc. |
|
|
11,460 |
300 |
|
| Printing
and stationery |
|
|
142,310 |
142,310 |
|
| Traveling
and conveyance |
|
|
27,241 |
27,241 |
|
| Listing fee |
|
|
721,686 |
721,686 |
|
| Revenue
stamps |
|
|
118,800 |
118,800 |
|
| Advertisement |
|
|
2,579,888 |
2,485,111 |
|
| Entertainment |
|
|
6,434 |
6,434 |
|
| Legal
and professional |
|
|
336,810 |
336,810 |
|
| Office
expenses |
|
|
18,790 |
18,791 |
|
|
|
|
----------- |
----------- |
|
|
|
|
8,146,619 |
7,545,608 |
|
| Less:
Amortization |
|
|
(1,629,323) |
0 |
|
|
|
|
----------- |
----------- |
|
|
6,517,296 |
7,545,608 |
|
|
=========== |
=========== |
|
|
|
|
|
|
|
| 4. INVESTMENTS IN MARKETABLE
SECURITIES |
|
|
|
|
No. of |
Average |
Total Cost |
Market |
Market |
% of Inv. at cost |
% holding |
Co's |
Co's |
|
| Name
of Company |
|
Shares |
Rate |
|
Price |
Value |
in relation to: |
in rel. |
Paid up |
No. of |
|
|
|
|
|
Net |
Co's |
Co's |
Capital |
Shares |
|
|
|
|
Rs. per |
|
Rs. per |
|
Assets |
P. Capital |
Shares |
Rs. in |
|
|
|
|
|
Share |
Rupees |
Share |
Rupees |
|
|
MM |
MM |
|
|
|
|
|
|
| INVESTMENT
IN LISTED COMPANIES |
|
|
|
| Investment
companies/banks |
|
| Askari
Commercial Bank Limited |
100,000 |
37.82 |
3,782,000 |
32.00 |
3,200,000 |
3.17 |
0.005 |
0.001 |
817 |
82 |
|
| Bank
Commerce AI-Habib Limited |
1,500 |
38.20 |
57,300 |
31.00 |
46,500 |
0.05 |
0.000 |
0.000 |
300 |
30 |
|
| Bankers
Equity Limited |
|
33,500 |
20.45 |
685,102 |
ll.00 |
368,500 |
0.57 |
0.001 |
0.001 |
656 |
66 |
|
| Crescent
Masraf (Inv. Fin. Bank)Ltd. |
22,500 |
44.94 |
1,011,239 |
17.00 |
382,500 |
0.85 |
0.002 |
0.001 |
428 |
43 |
|
| Muslim
Commercial Bank Limited |
16,500 |
39.59 |
653,196 |
37.00 |
610,500 |
0.55 |
0.000 |
0.000 |
1,821 |
182 |
|
| Faysal
Bank Limited |
|
151,600 |
32.76 |
4,966,311 |
31.75 |
4,813,300 |
4.16 |
0.004 |
0.001 |
1,210 |
121 |
|
| BS
Jahangir Siddique & Co. Ltd |
17,125 |
42.82 |
733,331 |
30.00 |
513,750 |
0.61 |
0.007 |
0.002 |
100 |
10 |
|
| Orix
Investment Bank Limited |
10,000 |
12.63 |
126,300 |
12.50 |
125,000 |
0.11 |
0.001 |
0.001 |
200 |
20 |
|
| 1st
Capital Securities Corp Ltd. |
164,800 |
18.61 |
3,067,421 |
9.50 |
1,565,600 |
2.57 |
0.016 |
0.008 |
194 |
19 |
|
|
|
|
----------- |
|
----------- |
|
|
|
15,082,200 |
|
11,625,650 |
|
| Insurance
Companies |
|
| Adamjee
Insurance Co. Limited |
17,125 |
108.10 |
1,851,148 |
130.00 |
2,226,250 |
1.55 |
0.007 |
0.001 |
250 |
25 |
|
