| AL-MAL SECURITIES & SERVICES LIMITED |
|
|
|
|
|
|
|
|
| (ANNUAL
REPORT 1997) |
|
|
|
| C
0 N T E N T S |
|
| Company
Information |
|
| Directors'
Report |
|
| Chief
Executive's Review |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Changes
in Financial Position |
|
| Notes
to the Accounts |
|
| Notice
of Meeting |
|
|
|
|
| COMPANY
INFORMATION |
|
| Board
of Directors : |
|
|
| Mr.
S. Iradat Husain |
|
| Chairman |
|
|
| Mr.
Maqbool Hussain |
|
| Vice
Chairman & Chief Executive |
|
|
| Mr.
Ahmad H.I. Dada |
|
| Director |
|
|
| Mr.
Tariq Jamil Khan |
|
| Director |
|
|
| Mr.
Amanullah Suleman |
|
| Director |
|
|
| Mr.
Shahid Usman |
|
| Director
(Nominee of PKIC) |
|
|
| Mr.
Mohammad Shoaib |
|
| Director
(Nominee of PKIC) |
|
|
|
| Secretary: |
|
| Mr.
D. V. Karia |
|
|
|
| Bankers : |
|
| Muslim
Commercial Bank Limited |
|
|
|
| Auditors : |
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
| Finlay
House, I.I. Chundrigar Road Karachi. |
|
|
|
| Registered
Office : |
|
| 10th
Floor, Progressive Square, Nursery |
|
| Sharea
Faisal, Karachi. |
|
|
|
| DIRECTORS'
REPORT |
|
| Your
Directors take pleasure in submitting herewith their report and Audited
Accounts |
|
| together
with Auditors' Report of the Company for the year ended 30th June, 1997. |
|
|
| 1.
Operating Results: |
|
1997 |
1996 |
|
| Summarized
results, for the year under |
|
Rupees |
Rupees |
|
| report,
are as under; |
|
|
| ·
Total operating income |
|
5,382,942 |
6,544,172 |
|
|
========== |
========== |
|
| ·
Profit/(Loss) for the year-before tax |
|
(1,309,973) |
(2,092,015) |
|
|
---------- |
---------- |
|
| ·
Profit/(Loss) for the year-after tax |
|
(1,334,222) |
(2,358,813) |
|
|
---------- |
---------- |
|
| ·
Profit/(Loss) brought forward |
|
(3,730,983) |
(1,372,170) |
|
|
---------- |
---------- |
|
| ·
Net Profit/(Loss) carried forward |
|
(5,065,205) |
(3,730,983) |
|
|
========== |
========== |
|
| 2.
Chief Executive's Review: |
|
| The
Chief Executive's review deals with the business activities and operating
results of |
|
| the
Company during the year and future outlook. The Directors of the Company en- |
|
| dorse
the contents of the report. |
|
|
| 3.
Pattern of Shareholding: |
|
| The
Pattern of Shareholding is attached. |
|
|
| 4. Auditors: |
|
| The
present Auditors Messrs Ford, Rhodes, Robson, Morrow, Chartered Accountants
re- |
|
| tire
and being eligible offer themselves for re-appointment. |
|
|
| 5.
Acknowledgments: |
|
| The
Directors wish to place on record their appreciation and thanks to
shareholders |
|
| and
customers for their continued confidence in the Company, the Corporate Law |
|
| Authority
and Stock Exchanges for their guidance and to all the members of the man- |
|
| agement
and staff for their dedication and hard work. |
|
|
|
| CHIEF
EXECUTIVE'S REVIEW |
|
| I
present to you the 4th Annual Report as public listed company for the year
ended 30th June 1997. It |
|
| went
public in June 1994 and is listed at all the three Stock Exchanges of the
contrary for convenience |
|
| of
share holders. |
|
|
| Results
of Operations |
|
| The
company's operations in 1996-97 were generally at the same level in 1995-96
owing to weak economic |
|
| and
business tempo. Over a period of the last three years your company has
developed stable customer |
|
| base
and has acquired necessary experience, recourses and connections to tap
brokerage, underwriting |
|
| and
consultancy business but for political and economic constraints in the
country, which prevailed unfortunately |
|
| throughout
the year, sufficient business was not available in the market place. New'
issues were not |
|
| floated,
consultancy and underwriting business was not available and investors - both
local and foreign |
|
| remained
on the side lines awaiting upturn in the capital market. |
|
|
| The
new government of Muslim League enjoying heavy mandate was sworn into power
in February, 1997 |
|
| and
by the time it could bring forth fresh steam of activity in the bourses the
accounting year ended |
|
| June,
1997. By and large the entire economic activity in the capital market
remained unfavorable throughout |
|
| the
year, hence your company had to take some concrete steps to cut down expenses
at the appropriate |
|
| corners
without impairing operation efficiency as a result of which it was made
possible to reduce |
|
| operating
expenses from Rs. 7.5 million to Rs. 6.7 million notwithstanding spiraling
inflation. Thereby, the |
|
| after-tax
loss for the year was reduced to Rs. 1.334 million as compared with Rs. 2.359
million for the |
|
| previous
year. |
|
|
| Your
company right from inception has been careful in selecting its customers in
so far as brokerage |
|
| revenue
is concerned so that defaults do not take place for settlement of
transactions. With this prudent |
|
| approach
there is nothing significant or material to report for doubtful or write
offs. the management |
|
| intends
to pursue this policy for future as well. |
|
|
| Future
Outlook |
|
| The
first quarter of the current accounting year as planned, has been fruitful
for the company owing the |
|
| improvement
in stock market tempo, new strategies and macro-economic policies of the
government. |
|
| However,
the present disturbances will not be helpful for economic activities. Being
counter productive |
|
| for
capital markets it is becoming increasingly hard once again to paint a rosy
picture to the shareholders. |
|
|
| Our
success and performance will largely depend on the performance of economy and
socio-political |
|
| environment,
which when improved will improve industrial and financial sector performance
responding |
|
| positively
to the incentives offered by the government for capital formation. The
magnitude of Pakistani |
|
| capital
market has reached a size where the presence of large institutional and
foreign investors is |
|
| constantly
required to inspire confidence and quantitative growth with broad recovery.
This inturn will |
|
| depend
on the political and economic scenario in the coming months. Meanwhile, as a
matter of caution |
|
| your
management continues to keep strict control on expenses and at the same time
is increasing its |
|
| efficiency
to cope with automated trading and dealings with Central Depository Company. |
|
|
| I
sincerely express my thanks to the shareholders for their understanding of
the past and current difficult |
|
| situation,
clients and members of staff and their confidence and support. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of AL-MAL SECURITIES AND SERVICES |
|
| LIMITED
as on June 30, 1997, the related profit and loss account and statement of |
|
| changes
in financial position, together with the notes forming part thereof, for the |
|
| year
then ended and we state that we have obtained all the information and
explanations |
|
| which
to the best of our knowledge and belief were necessary for the purposes of |
|
| our
audit and after due verification thereof, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the Company as |
|
| required
by the Companies Ordinance, 1984; |
|
|
| (b)
in our opinion: |
|
|
| i)
the balance sheet and profit and loss 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 year was for the purpose of the company's |
|
| business;
and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred during |
|
| the year were in accordance with the
objects of the company; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations |
|
| given
to us, the balance sheet, profit and loss 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 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, 1997 and of the loss and the changes in financial position |
|
| for
the year then ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980. |
|
|
| 1st
December, 1997 |
|
FORD, RHODES, ROBSON,
MORROW |
|
| Karachi |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1997 |
|
|
|
| CAPITAL
AND RESERVES |
|
Note |
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
| Share
Capital |
|
|
| Authorised |
|
| 5,000,000
ordinary shares of |
|
| Rs.10 each |
|
50,000,000 |
50,000,000 |
|
| Issued,
subscribed and paid up |
|
========== |
========== |
|
| 5,000,000
(1996: 5,000,000) ordinary |
|
| shares
of Rs.10 each fully paid in cash |
|
50,000,000 |
50,000,000 |
|
|
| Revenue
reserve |
|
| Balance
on profit and loss account |
|
(5,065,205) |
(3,730,983) |
|
|
---------- |
---------- |
|
|
(44,934,795) |
46,269,017 |
|
|
| DEFERRED
LIABILITIES |
|
|
| Deferred taxation |
I |
|
51,500 |
74,500 |
|
| Provision
for gratuity |
|
722,651 |
582,700 |
|
|
---------- |
---------- |
|
|
774,151 |
657,200 |
|
| CURRENT
LIABILITIES |
|
|
| Creditors
and accrued liabilities |
|
3 |
1,652,g25 |
2,907,161 |
|
| Provision
for taxation |
|
2,386 |
49,223 |
|
|
---------- |
---------- |
|
|
1,655,211 |
2,956,384 |
|
|
| COMMITMENTS |
|
4 |
|
|
---------- |
---------- |
|
|
47,364,157 |
49,882,601 |
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
|
|
Note |
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
| Operating
fixed assets ( at cost |
|
| less
accumulated depreciation ) |
|
5 |
2,363,022 |
2,179,304 |
|
|
|
|
| ROOM
AND MEMBERSHIP CARD |
|
6 |
11,658,458 |
11,658,458 |
|
|
|
|
| LONG
TERM INVESTMENTS (market value |
|
7 |
21,741,372 |
22,215,735 |
|
| Rs.
6,667,288 - note 2.6) |
|
|
|
|
|
|
| LONG
TERM DEPOSITS AND DEFERRED COSTS |
|
8 |
816,990 |
1,181,880 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
---------- |
---------- |
|
| Marketable
securities |
|
9 |
2,772,383 |
2,540,066 |
|
| Receivable
from customers |
|
10 |
4,572,016 |
3,796,738 |
|
| Advances,
prepayments and other |
|
|
|
| receivables |
|
11 |
845,390 |
2,201,134 |
|
| Cash
and bank balances |
|
12 |
2,594,526 |
4,109,286 |
|
|
---------- |
---------- |
|
|
10,784,315 |
12,647,224 |
|
|
---------- |
---------- |
|
|
47,364,157 |
49,882,601 |
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report is annexed hereto. |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
|
| Brokerage
revenue |
|
3,735,600 |
4,149,873 |
|
| Income
from registrar services |
|
702,000 |
672,000 |
|
| Dividend
income |
|
13 |
485,298 |
333,307 |
|
| Gain
on sale of marketable and long term |
|
|
| securities |
|
14 |
62,925 |
547,061 |
|
| Underwriting
commission |
|
110,760 |
|
| Consultancy
income |
|
- |
371,200 |
|
| Income
on PLS deposits |
|
323 |
32,577 |
|
| Profit
on disposal of fixed assets |
|
348,761 |
260,150 |
|
| Miscellaneous
income |
|
48,035 |
67,244 |
|
|
---------- |
---------- |
|
|
5,382,942 |
6,544,172 |
|
|
---------- |
---------- |
|
| Operating
expenses |
|
15 |
6,721,319 |
7,474,745 |
|
| Provision
for diminution in value of |
|
|
|
|
| marketable
securities/(written back) |
|
|
(106,804) |
1,161,442 |
|
|
|
|
|
|
| Investment
written off |
|
16 |
78,400 |
- |
|
|
---------- |
---------- |
|
|
6,692,915 |
8,636,187 |
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
(1,309,973) |
(2,092,015) |
|
|
---------- |
---------- |
|
| Provision
for taxation |
|
| current |
|
(48,753) |
(49,223) |
|
| prior |
|
1,504 |
(207,075) |
|
| deferred |
|
23,000 |
(10,500) |
|
|
---------- |
---------- |
|
|
(24,249) |
(266,798) |
|
|
---------- |
---------- |
|
|
(1,334,222) |
(2,358,813) |
|
| Loss
brought forward |
|
(3,730,983) |
(1,372,170) |
|
|
---------- |
---------- |
|
|
(5,065,205) |
(3,730,983) |
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Loss
before taxation |
|
(1,309,973) |
(2,092,015) |
|
| Adjustment
for : |
|
---------- |
---------- |
|
| Depreciation |
|
368,542 |
293,910 |
|
| Profit
on sale of long term investments |
|
(73,137) |
(486,305) |
|
| Profit
on sale of fixed assets |
|
(348,761) |
(260,150) |
|
| Amortization
of deferred costs |
|
364,140 |
399,023 |
|
| Provision
for diminution in value of investments |
|
(106,804) |
1,161,442 |
|
| Provision
for gratuity |
|
240,950 |
275,663 |
|
| Investment
written off |
|
78,400 |
- |
|
|
---------- |
---------- |
|
|
523,330 |
1,383,583 |
|
| Operating
loss before working |
|
---------- |
---------- |
|
| Capital
changes |
|
(786,643) |
(708,432) |
|
| (Increase)/decrease
in operating assets |
|
| Marketable
securities |
|
(125,513) |
(1,324,213) |
|
| Receivable
from customers |
|
(775,278) |
(275,311)] |
|
| Advances,
prepayments and other receivables |
|
1,323,124 |
l (411,884)J |
|
|
---------- |
---------- |
|
|
422,333 |
(2,011,408) |
|
| Increase/(decrease)
in operating liabilities |
|
|
|
| Creditors
and accrued liabilities |
|
(1,254,336) |
228,157 |
|
|
---------- |
---------- |
|
|
(1,618,646) |
(2,491,683) |
|
|
---------- |
---------- |
|
| Taxes paid |
|
'(61,466) |
(218220) |
|
| Gratuity
paid |
|
(100,999) |
(79159) |
|
|
---------- |
---------- |
|
|
(162,435 |
(297,379) |
|
|
---------- |
---------- |
|
| Net
cash used in operating activities |
|
(1,781,111) |
(2,789,062) |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
| Capital
expenditure |
|
(744,999) |
(938,056) |
|
| Long
term deposits and deferred cost |
|
|
750 |
87,661 |
|
| Long
term investments |
|
(470,650) |
(4,148,985) |
|
| Sale
proceeds of fixed assets |
|
541,500 |
293,000 |
|
| Sale
proceeds of long term investments |
|
939,750 |
4,457,750 |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
266,351 |
(248,630) |
|
|
---------- |
---------- |
|
| NET
DECREASE IN CASH AND CASH EQUIVALENTS |
|
(1,514,760) |
(3,037,692) |
|
| CASH
AND CASH EQUIVALENTS AT |
|
|
|
| BEGINNING
OF THE YEAR |
|
4,109,286 |
7,146,978 |
|
|
| CASH
AND CASH EQUIVALENTS AT |
|
---------- |
---------- |
|
| END
OF THE YEAR |
|
2,594,526 |
4,109,286 |
|
|
========== |
========== |
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| A1-Mal
Securities and Services Limited is a public limited company, incorporated on |
|
| 19th
May, 1992 under the Companies Ordinance, 1984. It is engaged in the business |
|
| of
stock brokerage, investment counseling and registrar services. It is a
Corporate |
|
| Member
of the Karachi Stock Exchange (Guarantee) Limited. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
| These accounts have been prepared under the
historical cost convention. |
|
|
| 2.2
Retirement benefits |
|
| The
company operates an unfunded gratuity scheme covering employees who |
|
| have
completed one year of service with the Company. Provision is made to |
|
| cover
obligations under the scheme. |
|
|
| 2.3
Fixed assets |
|
| These
are stated at cost less accumulated depreciation. Depreciation is charged |
|
| to
income applying the straight line method whereby the cost of asset is written |
|
| off
over its estimated useful life from the date the assets are put into use. The |
|
| rates
used are stated in note 5 to the accounts. |
|
| Normal
repairs and maintenance costs are charged to profit and loss account a~ |
|
| and
when incurred. Major renewals and improvements are capitalised. |
|
| Profit/loss
on disposal of assets is included in income currently. |
|
|
| 2.4
Room and membership card |
|
| These
are stated at cost. Provisions are made for permanent diminution in value |
|
| of
these assets, if any. |
|
|
| 2.5
Deferred costs |
|
| Deferred
costs in connection with the incorporation, pre-operation and public
floatation |
|
| of
the company are being written off over a period of five years. |
|
|
| 2.6
Long term investments |
|
| These
are stated at cost. Provision for diminution in value of investments is made |
|
| if
considered permanent. |
|
|
| 2.7
Marketable Securities |
|
| These
are stated at moving average cost or market value determined on aggregate |
|
| basis,
whichever is lower. |
|
|
| 2.8 Taxation |
|
| Provision
for taxation is based on taxable income after taking into account available |
|
| tax
credits and rebates or the turnover u/s 80D of the Income Tax Ordinance, |
|
| 1979,
whichever is higher. The provision for deferred taxation is based on the |
|
| liability
method taking into account all significant timing differences. |
|
|
| 2.9
Revenue recognition |
|
| (a)
Return on short term investments and deposits with banks are recognised on |
|
| accrual
basis. |
|
|
| (b)
Dividend income is recorded at the time of closure of share transfer books of |
|
| the
modaraba/company declaring dividend. |
|
|
| (c)
Sales and purchases of securities are recognised on the date of contract.
Capital |
|
| gain
or loss on sale of marketable securities is taken to income in the period |
|
| in
which it arises. |
|
|
| (d)
Brokerage and other income is accrued as and when due. |
|
|
| 3.
CREDITORS, ACCRUED AND OTHER LIABILITIES |
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
|
| Due
to customers - Associated undertaking |
|
- |
1,885 |
|
|
others |
|
911,404 |
2,668,468 |
|
| Due
to Karachi Stock Exchange |
|
391,475 |
- |
|
| Accrued
liabilities |
|
349,946 |
236,808 |
|
|
---------- |
---------- |
|
|
1,652,825 |
2,907,161 |
|
| 4.
COMMITMENTS |
|
========== |
========== |
|
|
| 4.1
Commitment for acquiring office at the |
|
| new
Stock Exchange building |
|
590,000 |
590,000 |
|
|
========== |
========== |
|
|
|
|
| 4.2
Commitments for rentals under operating lease agreements in respect of
vehicles |
|
| and
computers are as follows: |
|
|
|
1997 |
1996 |
|
| Year |
|
Rupees |
Rupees |
|
|
|
|
|
| 1996-97 |
|
- |
90,960 |
|
| 1997-98 |
|
121,440 |
- |
|
| 1998-99 |
|
121,440 |
- |
|
| 1999-00 |
|
40,480 |
- |
|
|
283,360 |
90,960 |
|
| 5.
TANGIBLE FIXED ASSETS |
|
| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
COST |
|
DEPRECIATION |
|
Book |
Rate of |
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
|
Additions/ |
|
Balance |
value |
depre- |
| PARTICULARS |
|
As at |
(Deletions) |
As at |
Balance |
For the |
On |
as at |
as at |
ciation |
|
7/1/1996 |
during |
6/30/1997 |
as at |
year |
deletion |
Jun-30 |
Jun-30 |
per |
|
the year |
|
7/1/1996 |
|
1997 |
1997 |
annum |
|
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
% |
| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
| Leasehold |
|
194,724 |
|
|
| Improvements |
|
612,928 |
(13,500) |
794,152 |
210,361 |
61,293 |
(6,075) |
265,579 |
528,573 |
10 |
| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
166,500 |
714,433 |
151,683 |
66,919 |
(294) |
218,308 |
496,125 |
10 |
| Furniture
and Fixtures |
|
549,927 |
(1,994) |
|
|
|
|
|
