| SAFEWAY MUTUAL FUND LTD. |
|
|
|
|
|
|
|
| 3rd
Annual Report |
|
| For
The Year Ended June 30,1997 |
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| MR.
KHALIL AHMED |
Chairman |
|
| MR.
NASEER AHMED |
Chief Executive |
|
| MR.
M. ISMAIL MUGHAL |
|
| MR.
M. H. KAUSAR |
|
| MR.
K. G. RABBANI |
|
| MR.
A. FAHIM KHAN |
|
| MRS.
SHAHEEN KHALIL |
|
|
| COMPANY
SECRETARY |
|
| MR.
M. H. KAUSAR |
|
|
| AUDITORS |
|
| MR.
SAEED SHEIKH & CO. |
|
| Chartered
Accountants |
|
|
| INVESTMENT
ADVISORS: |
|
| SAFEWAY
FUND LIMITED |
|
|
| REGISTERED
OFFICE: |
|
| Safeway
House |
|
| 20/21,
Amlani Town Home |
|
| Ch.
Khaliq uz Zaman Road, |
|
| Cliftan-8,
Karachi. |
|
| Telephone:
5872128-571684 |
|
| 5860590-5870920 |
|
| Fax:
5872129, |
|
|
| NOTICE
OF MEETING |
|
|
|
| Notice
is hereby given that the 3rd Annual General Meeting of |
|
| the
company will be held on Saturday 27th December. 1997 at |
|
| 3.00
P.M. at Safeway House 20/21 Amlani Town House CH. |
|
| Khaliq-uz-Zaman,
Road Karachi to transact the following |
|
| business :- |
|
|
| AGENDA
OF THE MEETING |
|
| 1.
To confirm the mutes of Second Annual General Meeting held on |
|
| 19th
December. 1996. |
|
|
| 2.
To receive, consider and adopt Audited Accounts and Balance |
|
| Sheet
together with Director and Auditors report thereon for the |
|
| year
ended 30th June 1997. |
|
|
| 3.
To appoint Auditors and fix their remuneration for the year and |
|
| The
present auditors who have changed their name as Ilyas Saeed & co. |
|
| retire
and being eligible offer themselves for reappointment. |
|
|
| 4.
To transact any other business as may be placed before the meeting |
|
| with
permission of the chairman. |
|
|
| DIRECTORS
REPORT |
|
|
|
| The
Directors are pleased to present the audited accounts for the |
|
| year
ending June 30th 1997. |
|
|
| The
period under review has been a very difficult for the stock |
|
| market.
The market showed severe bearish tendency during |
|
| the
period mainly due to political uncertainty and bad economic |
|
| coalitions. |
|
|
| The
market remained directionless which affected investors |
|
| confidence. |
|
|
| During
the period under review, your mutual fund made a net |
|
| loss
of Rs. 154,926 after adjusting all expenses. This is by no |
|
| means
a satisfactory result. With the new government in office, |
|
| the
Stock Exchange Index is improving and your directors are |
|
| confident
that the present year should be a profitable year for |
|
| the
Mutual Fund industry and therefore your Mutual Fund |
|
| should
show improved results. We are confident about the |
|
| future
of the mutual funds. |
|
|
| AUDITOR'S
REPORT TO THE MEMBERS |
|
|
|
| We
have audited the annexed Balance sheet of SAFEWAY MUTUAL |
|
| FUND
LIMITED as at 30th June 1997, and 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 |
|
| purpose
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 and the |
|
| Investment
Advisers Rules 1971. |
|
|
| b)
In our opinion; |
|
|
| i)
The balance sheet and profit and loss account together with the |
|
| notes
there on 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 purpose |
|
| of
the company's business; and |
|
|
| iii)
The business conducted, investments made and the expen |
|
| diture
incurred during the period were in accordance with the object |
|
| 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 affairs as at 30th June 1997, |
|
| and
of the Loss and changes in financial position for the year then |
|
| ended and, |
|
|
| d}
In our opinion Zakat deductible at source under the Zakat and Ushr |
|
| ordinance,
1980, was deducted by the company and deposited in the |
|
| central
Zakat fund established under section 7 of that ordinance. |
|
|
| Karachi:
dated 07-07-1997 |
Saeed Sheikh & Co. |
|
|
CHARTERED ACCOUNTANTS |
|
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 1997 |
|
|
|
|
1997 |
1996 |
|
|
|
|
|
Note |
Rs. |
Rs. |
|
|
| CAPITAL AND LIABILITIES |
|
|
| AUTHORISED
SHARE CAPITAL |
|
50,000,000 |
50,000,000 |
|
|
|
|
========== |
========== |
|
|
| Issued,
subscribed and paid up |
|
30,000,000 |
30,000,000 |
|
|
|
| share
capital in ordinary |
|
| certificates
of Rs. 10 each |
|
|
| Unappropriated
Profit balance |
|
(6,509,312) |
(6,921,599) |
|
|
|
|
23,490,688 |
23,078,401 |
|
|
| Due to Investment Adviser for |
(3) |
325,919 |
651,839 |
|
|
| the
public issue expenses |
|
|
| CURRENT
LIABILITIES |
|
|
| Trade creditors & Accruals |
(4) |
236,570 |
66,230 |
|
|
| Due to Investment Adviser for |
(5) |
|
1,601,233 |
|
|
|
| an
associated company |
|
|
|
|
| Due
to Investment Adviser |
(3) |
325,920 |
325,920 |
|
|
| the
public issue exp. |
|
|
---------- |
---------- |
|
| Total
current liabilities |
|
562,490 |
1,993,383 |
|
|
|
|
|
|
|
24,379,097 |
25,723,623 |
|
|
|
========== |
========== |
|
|
|
|
|
1997 |
1996 |
|
|
|
|
|
Note |
Rs. |
Rs. |
|
|
| PROPERTY
AND ASSETS |
|
|
|
|
| PRELIMINARY
EXPENSES |
|
898,808 |
- |
|
|
|
| INVESTMENTS |
|
| Quoted
shares in Joint Stock |
|
| Companies |
|
|
| LONG TERM |
|
(9) |
21,008,835 |
22,003,418 |
|
|
| SHORT TERM |
|
(10) |
882,705 |
2,659,210 |
|
|
|
|
---------- |
---------- |
|
|
|
|
21,891,539 |
24,662,628 |
|
|
| CURRENT
ASSETS |
|
|
| Sundry
Debtors |
|
690,372 |
19,400 |
|
|
| Cash
and Bank balance |
|
(11) |
246,539 |
63,836 |
|
|
| Deferred
Expenditure |
|
(3) |
651,839 |
977,759 |
|
|
|
|
|
---------- |
---------- |
|
| Total current assets |
|
1,588,750 |
1,060,995 |
|
|
|
---------- |
---------- |
|
|
|
24,379,097 |
25,723,623 |
|
|
|
========== |
========== |
|
|
|
|
| INCOME
AND EXPENDITURE ACCOUNT |
|
| FOR
THE ENDED 30TH JUNE, 1997 |
|
|
|
|
|
|
Note |
1997 |
1996 |
|
|
|
|
Rs. |
Rs. |
|
| SALES |
|
|
37,393,564 |
21,325,270 |
|
| COST
OF SALES |
|
12 |
37,660,894 |
23,962,689 |
|
| CAPITAL
GAIN (LOSS) |
|
|
(267,330) |
(2,637,419) |
|
| OTHER
INCOME |
|
14 |
646,315 |
161,729 |
|
| GROSS
INCOME (LOSS) |
|
|
378,985 |
(2,475,690) |
|
| LESS
OPERATING EXPENSES |
|
|
|
|
|
|
| ADMINISTRATIVE
EXPENSE |
|
15 |
238,727 |
254,806 |
|
| REMUNERATION
DUE TO INVESTMENT ADVISOR |
6.1 |
230,000 |
400,000 |
|
| INTEREST
ON PRELIMINARY AND PUBLIC ISSUE EXP. |
6.2 |
65,184 |
92,786 |
|
|
|
|
---------- |
---------- |
|
|
|
|
533,911 |
747,592 |
|
|
|
|
========== |
========== |
|
| NET
INCOME (LOSS) FOR THE YEAR |
|
|
(154,926) |
(3,223,282) |
|
|
|
|
========== |
========== |
|
| APPROPRIATION
OF ACCOUNT |
|
|
|
| OPENING
BALANCE (LOSS) |
|
|
(6,921,599) |
(6,527,346) |
|
| AMORTISATION
OF PUBLIC ISSUE EXPENSES |
|
{325,920) |
(311,444) |
|
| PROVISION
FOR DIMINUTION IN VALUE OF SECURITIES |
13 |
- |
3,080,283 |
|
| PRIOR
YEAR ADJUSTMENT(PRELIMINARY EXP.) |
|
898,808 |
78,180 |
|
| TAXATION |
|
|
(5,675) |
(17,990) |
|
|
|
|
---------- |
---------- |
|
| TOTAL
APPROPRIATION |
|
|
(6,354,386) |
(3,698,317) |
|
|
|
|
========== |
========== |
|
| UNAPPROPRIATED
PROFIT (LOSS) BALANCE) C/F |
|
(6,509,312) |
(6,921,599) |
|
|
|
|
========== |
========== |
|
| CHIEF EXECUTIVE |
DIRECTOR |
|
| These
accounts should be read in conjunction with the attached notes |
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED 30TH JUNE, 1997. |
|
|
| 1.
Status and Nature of Business |
|
|
| 1.1
The company was incorporated as a public limited company |
|
| in
May 1994 under the companies Ordinance 1984 and was regi- |
|
| stered
as an investment Company under the Investment |
|
| Companies
and Investment Advisers Rules 1971 and is listed on |
|
| Karachi
Stock Exchange. The company has entered into an |
|
| agreement
with an associated company Safeway Fund Limited to |
|
| act
as its Investment Adviser. The Company obtained certificate of |
|
| commencement
of business in July 1994. It is a closed end |
|
| Mutual
Fund and its objective is to invest its assets in securities. |
|
|
| 1.2
The Mutual Fund has been |
|
| Authority
under the investment Companies and Investment |
|
| Advisers
Rules 1971. |
|
|
| 2.
significant Accounting Policies |
|
| 2.12.1
Accounts convention |
|
| These
accounts have been prepared under the historical cost |
|
| convention. |
|
| 2.2
Marketable Securities: |
|
| The-company
has valued its investments at lower of |
|
| average
cost and market value on an aggregate portfolio |
|
| basis
Market value has been taken from Karachi Stock |
|
| Exchange
quotation sheets on the last working day of the |
|
| accounting
period. |
|
|
| 2.3
Revenue Recognition: |
|
| {i)
Dividend income is recorded at the time of closure of the share |
|
| transfer
books of the company declaring the dividend. |
|
| (ii)
Sales and purchases of securities are recognised on the date of |
|
| contract. |
|
| (iii)
Capital gains on sale of investment is taken to income of the |
|
| period
in which it arises. |
|
| 2.4
Deferred Expenditure |
|
| The
expenditure incurred on the incorporation and issue of shares is |
|
| deferred
and is to be amortised over a maximum period of five years |
|
| from
the year of deferment. |
|
|
| 2.5
Taxation: |
|
| Provision
for taxation is based on taxable income at the current rates. |
|
| The
company is exempt from taxation of not less than ninety per cent |
|
| of
its income of that year is distributed amongst the certificate holders |
|
| under
clause 56( 1 A) of the second schedule of the Income Tax Ordin- |
|
| ance 1979. |
|
|
| 2.6
Current investments being investment which are readily reali- |
|
| zable
and are intended to be held for not more than one year have |
|
| been
valued at lower of book value and market value determined |
|
| for
each investment individually. |
|
|
| Long
term investments being investment other than current |
|
| investments
are stated at book value. Book value is however |
|
| reduced
for each investment individually where the decline in value |
|
| is
other than temporary. |
|
|
|
|
|
|
|
1997 |
1996 |
|
| 3.
Deferred Expenditure Payable |
|
|
|
|
|
|
| Opening
balance |
|
|
|
977,759 |
1,239,203 |
|
| Further
payment |
|
|
|
- |
50,000 |
|
| Less
repaid during the year |
|
|
325,920 |
311,444 |
|
|
|
|
|
---------- |
---------- |
|
| Balance
due to the Investment Adviser |
|
651,839 |
977,759 |
|
| Less
transferred to current maturity |
|
325,920 |
325,920 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
325,919 |
651,839 |
|
|
|
========== |
========== |
|
|
|
|
|
| The
deferred expenditure is reimbursable to the Investment |
|
| Adviser
over a period of five years with a mark up of l0 % p. a. |
|
|
|
|
| 4.
Trade Creditors and Accruals |
|
|
231,570 |
54,230 |
|
| Sundry
creditors |
|
|
|
5,000 |
12,000 |
|
| Accrued
expenses |
|
|
|
---------- |
---------- |
|
|
|
|
|
236,570 |
66,230 |
|
|
|
========== |
========== |
|
| 5.
Due to Investment Adviser |
|
|
|
| on
Current Account basis |
|
|
- |
1,601,233 |
|
|
|
|
|
|
| 6.
Management Fee |
|
|
|
| Safeway
Fund Limited |
|
|
|
| 2
Per cent of net assets as per 8 |
|
469,813 |
461,568 |
|
| Less
waived by the investment adviser |
|
239,813 |
61,568 |
|
|
|
---------- |
---------- |
|
| Restricted
to |
|
230,000 |
400,000 |
|
|
|
|
| 7.
Interest on deferred liability |
|
|
|
| 10
% p. a. on deferred expenditure |
|
|
65,184 |
92,786 |
|
|
|
---------- |
---------- |
|
| Total Due |
|
|
|
295,184 |
492,786 |
|
|
|
========== |
========== |
|
|
|
|
|
| (8)
CALCULATION OF MANAGEMENT FEE |
|
|
|
|
|
|
| The
remuneration of the Investment Adviser at 2 % of the net |
|
|
|
| assets
of the company as at the end of its year of account in |
|
|
| terms
of clause 1l{a) of the Investment Companies and Investment |
|
|
| Advisers
Rules 1971 has been determined as follows: |
|
|
|
|
|
|
| ASSETS |
|
|
|
| Preliminary
Expenses |
|
|
|
898,808 |
- |
|
| Deferred
Expenditure |
|
|
|
651,839 |
977,759 |
|
| Long
term Investments |
|
|
|
21,008,834 |
22,003,418 |
|
| Marketable
Securities at market value |
|
882,705 |
2,659,210 |
|
| sundry
Debtors |
|
|
|
690,372 |
19,400 |
|
| Cash
and bank balances |
|
|
|
246,539 |
63,836 |
|
|
|
---------- |
---------- |
|
|
|
|
24,379,097 |
25,723,623 |
|
|
|
|
========== |
========== |
|
|
|
|
199733 |
199633 |
|
| LIABILITIES |
|
|
|
|
|
| Trade
Creditors and accruals |
|
|
236,570 |
66,230 |
|
| Due
to Investment adviser |
|
|
- |
1,601,233 |
|
| Deferred
expenditure payable |
|
|
651,839 |
977,759 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
888,409 |
2,645,222 |
|
|
|
|
|
|
| Net
assets as per rules |
|
|
|
23,490,688 |
23,078,401 |
|
| Remuneration
at 2% of net assets |
|
|
469,813 |
461,568 |
|
|
|
|
| (9)
LONG TERM INVESTMENT |
|
ANNEXURE I |
|
| (10)
SHORT TERM INVESTMENTS |
|
ANNEXURE II |
|
|
|
|
| (11)
Bank Balance |
|
|
|
|
|
|
| Amounts
held at banks |
|
|
|
| and
cash in hand |
|
|
|
246,539 |
63,836 |
|
|
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
Rs. |
Rs. |
|
|
|
|
| 12.
COST OF SALES |
|
|
|
|
|
|
| BALANCE |
|
25,258,004 |
-- |
|
| LESS
DIMINUTION |
|
3,595,376 |
-- |
|
|
|
---------- |
---------- |
|
| OPENING
STOCK AFTER DIMINUTION |
|
24,662,628 |
28,169,833 |
|
| PURCHASES |
|
34,889,804 |
24,050,860 |
|
| CLOSING
STOCK AT COST |
|
(21,891,539) |
(28,258,004) |
|
|
|
---------- |
---------- |
|
| COST
OF SALES |
|
37,660,894 |
(23,962,689) |
|
|
|
========== |
========== |
|
|
|
|
| 13.
PROVISION FOR DIMINUTION IN VALUE OF SECURITIES |
|
| BALANCE
BROUGHT FORWARD |
|
- |
6,675,659 |
|
| LESS
PROVISION REQUIRED ON SHORT INV. |
|
- |
3,595,376 |
|
|
|
---------- |
---------- |
|
| REVERSAL
OF PROVISION |
|
|
- |
3,080,283 |
|
|
|
========== |
========== |
|
|
|
|
| 14.
OTHER INCOME |
|
|
|
|
|
|
| DMDENDS |
|
620,946 |
59,445 |
|
| BANK
INTEREST |
|
46,162 |
107,359 |
|
| LESS ZAKAT |
|
(20,793) |
(5075) |
|
|
|
---------- |
---------- |
|
|
|
646,315 |
161,729 |
|
|
|
========== |
========== |
|
| 15.
ADMINISTRATIVE EXPENSES |
|
|
|
|
|
|
| CUSTODIAN
CHARGES & STOCK EXCHANGE FEE |
|
192,935 |
230,088 |
|
| AUDIT FEE |
|
5,000 |
5,000 |
|
| MISCELLANEOUS |
|
40,792 |
19,718 |
|
|
|
---------- |
---------- |
|
|
|
238,727 |
254,806 |
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
|
| SOURCES
AND APPLICATION OF FUNDS |
|
|
|
|
| For
the year from 1st July 1996 to 30th June 1997 |
|
|
|
|
|
|
|
|
1997 |
1996 |
|
|
|
Rs. |
Rs. |
|
| SOURCES
OF FUNDS |
|
|
|
|
| Reduction
in bank balance |
|
|
- |
1,995,510 |
|
| Decrease
in investments |
|
|
2,771,089 |
- |
|
| Other
items of working capital |
|
|
- |
1,567,197 |
|
|
|
---------- |
---------- |
|
| TOTAL
SOURCES |
|
|
2,771,089 |
3,562,707 |
|
|
|
========== |
========== |
|
| APPLICATION
OF FUNDS |
|
|
|
|
| Investments
in securities |
|
|
- |
3,168,454 |
|
| Amortisation
of Deferred Expenditure |
|
325,920 |
311,444 |
|
| Income Tax |
|
|
- |
17,990 |
|
| Capital
loss for the year after adjustments |
|
|
|
| off
provision for diminution in value etc. |
|
160,601 |
64,819 |
|
| Repayment
of Current Liabilities |
|
|
2,284,568 |
- |
|
|
|
---------- |
---------- |
|
| TOTAL
APPLICATION |
|
|
2,771,089 |
3,562,707 |
|
|
|
========== |
========== |
|
|
|
|
|
| 9
LONG TERM INVESTMENTS |
|
| AS
AT 30TH JUNE 1997. |
|
|
|
OP. BAL |
PURCHASES |
SALES |
C. BAL |
C. BAL |
|
|
|
|
COST |
|
|
|
|
RS. |
|
| ASIAN
LEASING |
|
68,195 |
- |
- |
68,195 |
1,833,559 |
|
| NAT.
DEVELOPMENT LEASING |
1,750 |
8,500 |
10,000 |
250 |
2,001 |
|
| PILCORP |
|
97,600 |
8,000 |
21,000 |
84,600 |
3,060,132 |
|
| STANDARD
CHARTERED |
|
14,500 |
3,000 |
16,500 |
1,000 |
38,239 |
|
| UNION
LEASING |
|
134,300 |
- |
- |
134,300 |
2,219,477 |
|
| AL-FAISAL
INVESTMENT BANK |
43,125 |
500 |
- |
43,625 |
1,545,738 |
|
| AL
TAUFIQ INVESTMENT |
|
5,000 |
- |
- |
5,000 |
141,000 |
|
| CRESCENT
INVEST. BANK |
|
77,400 |
- |
- |
77,400 |
2,079,011 |
|
| UNION BANK |
|
84,793 |
- |
- |
84,793 |
1,690,631 |
|
| ATLAS BANK |
|
6,200 |
775 |
- |
6,975 |
204,301 |
|
| INTER BANK. |
|
3,000 |
1,500 |
- |
4,500 |
105,900 |
|
| NISHAT TEK |
|
18,510 |
- |
- |
18,510 |
735,489 |
|
| ASKARI
GENERAL INSC |
|
20,000 |
- |
- |
20,000 |
564,050 |
|
| IBRAHIM
ENERGY' |
|
21,875 |
- |
- |
21,875 |
977,726 |
|
| SITARA
ENERGY |
|
35,000 |
39,500 |
48,500 |
26,000 |
606411 |
|
| D.G.
KHAN CEMENT |
|
1,000 |
31,050 |
32,050 |
- |
- |
|
| DANDOT
CEMENT |
|
10,000 |
- |
- |
10,000 |
403,300 |
|
| HUB POWER |
|
