| Asian Stocks Fund Limited |
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| Annual
Report 1998 |
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| CONTENTS |
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|
| COMPANY
INFORMATION |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| DIRECTORS'
REPORT |
|
| PATTERN
OF HOLDING OF THE SHARES |
|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| INCOME
& EXPENDITURE ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| STATEMENT
OF INCOME & EXPENDITURE IN RELATION TO THE INVESTMENT COMPANY |
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|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Ismail Abdul Shakoor. |
|
| Mr.
Farooq Ismail. |
|
| Mr.
Shabbir Ismail. |
|
| Mr.
Jamil Ahmed Siddiqi. |
|
| Ms.
Farzana Ismail. |
|
| Mrs.
Rashida Riaz. |
|
| Mr.
Shakeel Hussain. |
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|
| CHIEF
EXECUTIVE |
|
| Mr.
Ismail Abdul Shakoor. |
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|
| COMPANY
SECRETARY |
|
| Mr.
Jamil Ahmed Siddiqi. |
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|
| MANAGEMENT
COMPANY |
|
| Asian
Capital Management (Pvt.) Limited. |
|
|
| BANKERS |
|
| Union
Bank Limited. |
|
| Muslim
Commercial Bank Limited. |
|
| National
Bank of Pakistan. |
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|
| AUDITORS |
|
| M.
Yousuf Adil Saleem & Co. |
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| Chartered
Accountants. |
|
|
| LEGAL
ADVISERS |
|
| Mohsin
Tayebaly & Co. |
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|
| REGISTERED
OFFICE |
|
| Room
No. A-4, 4th Floor, |
|
| Westland
Trade Centre, |
|
| Shaheed-e-Millat
Road, |
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| Karachi. |
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|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 4th Annual General Meeting of ASIAN STOCKS FUND
LIMITED will be held |
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| on
SATURDAY, 26th DECEMBER, 1998 at 3:00 P.M. at Raffia Chaudhry Memorial
Centre, Sidco Avenue Centre, 264, |
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| R.A.
Lines, Karachi, to transact the following business:- |
|
|
| 1.
To confirm the Minutes of the last Annual General Meeting of the Company held
on 26th December, 1997. |
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|
|
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| 2.
To receive, consider and adopt the audited accounts of the Company together
with the Directors' Reports |
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| thereon
for the period ended 30th June, 1998. |
|
|
| 3.
To appoint Auditors of the Company and to fix their remuneration. The present
Auditors M/s YOUSUf ADIL SALEEM |
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| &
COMPANY, CHARTERED ACCOUNTANTS, retire and being eligible, offer themselves
for re-appointment. |
|
|
| 4.
To elect seven Directors of the Company, as fixed by the Board of Directors
in accordance with provisions |
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| of
Section 178(1) of the Companies Ordinance, 1984 for a term of three years.
The following retiring Directors |
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| are
also eligible for re-election:- |
|
|
| 1.
Mr. Ismail Abdul Shakoor |
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| 2.
Mr. Farooq Ismail |
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| 3.
Mr. Shabbir Ismail |
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| 4.
Mr. Jamil Ahmed Siddiqi |
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| 5.
Mr. Shakeel Hussain |
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| 6.
Ms. Farzana Ismail |
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| 7.
Mrs. Rashida Riaz |
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|
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|
By Order of the Board |
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|
SECRETARY |
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| Karachi:
November 16, 1998. |
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| NOTES: |
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| 1.
A member entitled to attend and vote at the meeting may appoint a proxy to
attend and vote instead |
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| of
him/her at the meeting. Proxies must be deposited at the Company's Registered
Office not less |
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| than
48 hours before the time for holding the meeting. A proxy must be a Member. |
|
|
|
|
| 2.
Any member who seeks to contest election to the office of Director should
file with the Company, |
|
| not
later than 14 days before the date of meeting, a notice of his intention to
offer himself for election as Director in |
|
| term
of Section 178(3) of the Companies Ordinance, 1984. |
|
|
| 3.
The share transfer books of the Company shall remain closed from December 18,
1998 to December 26th, 1998 |
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| (both
days inclusive). |
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| 4.
Shareholders are advised to notify Shares Department, Asian Stocks Fund
Limited, Room No. A-4, 4th Floor, |
|
| Westland
Trade Centre, Shaheed-e-Millat Road, Karachi of any change in their address
to ensure prompt delivery of |
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| mail.
Any shares for transfers etc, should be lodged with the Shares Department,
Asian Stocks Fund Limited. |
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| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
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| The
Directors of Asian Stocks Fund Ltd. are pleased to present the Fourth Annual
Report of the Fund to the shareholders, |
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| for
the period ended June 30, 1998. |
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|
| The
year under review has been one of the worst years in the history of Karachi
Stock Exchange. On June 30, 1998 the KSE |
|
| 100-
share Index declined to 879.62 from 1565 on June 30, 1997 i.e. 43.79 per
cent. This has resulted in negative total |
|
| return
on portfolio of almost all the Mutual Funds, besides heavy fall in values of
shares in other sectors. |
|
| The
factors attributing to these worst crisis are |
|
|
| 1.
Government pressure on IPPs for reduction in tariff and some of the IPPs
being charged of corrupt practices. |
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| 2.
International sanctions imposed on Pakistan. |
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| 3.
Freeze on withdrawal of Dollars from Foreign Currency Accounts. |
|
|
| In
addition, the Federal Budget announced. on June 12, 1998 was also not very
encouraging from the share market |
|
| point
of view. |
|
|
| The
downward trend commencing in mid 1994 became worst during the year under
review against all expectations. As |
|
| a
result, the profitability of your Fund suffered seriously as will be seen
from the annexed accounts. |
|
|
| FUTURE
OUTLOOK
' |
|
| The
success of any capital market largely depends on the political stability and
pursuing of prudent economic and finan- |
|
| cial
policies by the government. Hence, improvement of the stock market will
depend on positive signs on political and |
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| economic
front as well as aid from external sources such as IMF, ADB, etc. Your
directors will continue following their |
|
| strategy
of prudent investment. We are confident that the reforms package being
considered by the IMF and other |
|
| institutions
will have a positive impact on the economic front as well as the capital
market. |
|
|
| THE
STATUS OF "THE YEAR 2000 COMPLIANCE OF COMPUTER SYSTEM" |
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| We
hope that the financial accounting system installed in our organization will
be ready for the year 2000 compliance in the |
|
| third
quarter 1999. The software will duly comply with the year 2000 requirements
and it will be integrated to process |
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| all
sorts of accounting and financial transactions in the year 2000. |
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|
| AUDITORS |
|
| The
present Auditors, M/s. M. Yousuf Adil Saleem & Co., Chartered
Accountants, are due for retirement and being |
|
| eligible,
offer themselves for reappointment for the financial year 1998-99. |
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|
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|
For and behalf of the Board. |
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|
|
|
|
|
|
Ismail A. Shakoor |
|
| Karachi,
14th November 1998. |
|
Chairman |
|
|
|
|
| PATTERN
OF SHAREHOLDING |
|
| As
At June 30, 1998 |
|
|
| Serial |
No. of |
Shareholding |
Total Shares |
|
|
| Number |
Shareholders |
From |
To |
Held |
|
|
| 1 |
1,989 |
101 |
500 |
994,500 |
|
|
| 2 |
70 |
501 |
1000 |
70,000 |
|
|
| 3 |
59 |
1001 |
5000 |
184,500 |
|
|
| 4 |
11 |
5001 |
10000 |
96,000 |
|
|
| 5 |
1 |
10001 |
15000 |
15,000 |
|
|
| 6 |
5 |
15001 |
20000 |
95,500 |
|
|
| 7 |
2 |
20001 |
25000 |
50,000 |
|
|
| 8 |
6 |
25001 |
30000 |
176,500 |
|
|
| 9 |
1 |
30001 |
35000 |
30,500 |
|
|
| 10 |
18 |
35001 |
40000 |
718,000 |
|
|
| 11 |
4 |
45001 |
50000 |
200,000 |
|
|
| 12 |
1 |
135001 |
140000 |
135,500 |
|
|
| 13 |
1 |
195001 |
200000 |
200,000 |
|
|
| 14 |
3 |
245001 |
250000 |
750,000 |
|
|
| 15 |
2 |
435001 |
440000 |
871,000 |
|
|
| 16 |
1 |
585001 |
590000 |
585,500 |
|
|
| 17 |
1 |
695001 |
700000 |
700,000 |
|
|
| 18 |
1 |
995001 |
1000000 |
1,000,000 |
|
|
| 19 |
1 |
1195001 |
1200000 |
1,200,000 |
|
|
| 20 |
1 |
1925001 |
1930000 |
1,927,500 |
|
|
|
---------- |
|
---------- |
|
|
|
2,178 |
|
10,000,000 |
|
|
|
========== |
|
========== |
|
|
| CATEGORIES
OF SHAREHOLDERS |
|
|
| Categories
of Shareholders |
Number |
Shares Held |
Percentage |
|
| Individuals |
|
2166 |
2,630,500 |
26.30 |
|
| Investment
Companies |
|
2 |
1,135,500 |
11.36 |
|
| Joint
Stock Companies |
|
4 |
4,713,000 |
47.13 |
|
| Financial
Institutions |
|
5 |
1,385,500 |
13.86 |
|
| Modaraba
Companies |
|
1 |
135,500 |
1.35 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
2178 |
10,000,000 |
100.00 |
|
|
|
|
========== |
========== |
========== |
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|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of ASIAN STOCKS FUND LIMITED as at
June 30, 1998 and the |
|
| related
income and expenditure account and statement of changes in financial position
(cash flow |
|
| statement)-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 informations 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, and Rule 16 of the Investment Companies and Investment Adviser'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 accordance with the
provisions of |
|
| Investment
Companies and Investment Adviser's Rule, 1971 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 investment policy of the Company and Investment Companies and |
|
| Investment
Adviser's Rule, 1971; and |
|
|
| (iv)
the company has not contravened the provisions of Rule 8 of the Investment
Companies and |
|
| Investment
Adviser's Rule, 1971; |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us, the |
|
| balance
sheet, income and expenditure account and the statement of changes in
financial position |
|
| (cash
flow statement) together with the notes forming part thereof, give the
information required by |
|
| the
Companies Ordinance, 1984 and Investment Companies and Investment Adviser's
Rule, 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, 1998 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. |
|
|
| Karachi-
14th November, 1998 |
|
M. YOUSUF ADIL SALEEM & CO., |
|
|
|
|
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET |
|
| As
At June 30, 1998 |
|
|
|
|
| SHARE
CAPITAL |
|
Note |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
| Authorised |
|
|
|
|
| 10,000,000
ordinary shares of Rs. 10/= each |
|
100,000,000 |
100,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
|
| 10,000,000
ordinary shares of Rs. 10/= each fully |
|
| paid
in cash |
|
100,000,000 |
100,000,000 |
|
|
|
|
| Accumulated
Loss |
|
|
(62,649,414) |
(24,088,114) |
|
|
|
|
---------- |
---------- |
|
|
|
|
37,350,586 |
75,911,886 |
|
|
|
|
|
|
| DEFERRED
EXPENDITURE PAYABLE |
|
3 |
1,147,701 |
1,957,841 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturity of deferred expenditure payable |
810,140 |
810,140 |
|
|
|
|
| Due
to Investment Adviser - an associated undertaking |
4 |
942,796 |
1,737,672 |
|
| Accounts
payable, accrued expenses and other liabilities |
30,000 |
25,000 |
|
| Taxation |
|
|
|
1,114,089 |
828,498 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
2,897,025 |
3,401,310 |
|
| CONTINGENCIES |
|
5 |
---------- |
---------- |
|
|
|
|
41,395,312 |
81,271,037 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| DEFERRED
EXPENDITURE |
|
6 |
1,147,701 |
1,957,841 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Marketable
securities |
|
7 |
23,945,877 |
60,680,654 |
|
|
|
|
|
|
|
| Accounts
receivable - Considered good |
|
- |
3,584,900 |
|
| Advance
income tax |
|
817,846 |
805,275 |
|
| Profit/dividend
receivable - Considered good |
|
48,019 |
250,941 |
|
| Bank
balances |
|
|
|
| In
current account |
|
46,862 |
64,232 |
|
| In
special deposits account |
|
15,389,007 |
13,927,194 |
|
|
|
---------- |
---------- |
|
|
|
40,247,611 |
79,313,196 |
|
|
|
---------- |
---------- |
|
|
|
41,395,312 |
81,271,037 |
|
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 10 form an integral part of these accounts. |
|
|
|
| INCOME
AND EXPENDITURE ACCOUNT |
|
| For
The Year Ended June 30, 1998 |
|
|
| Income |
|
Note |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Dividend |
|
|
4,728,578 |
3,237,622 |
|
| Return
on deposits and certificates |
|
125,704 |
660,139 |
|
| Loss
on dealing in securities |
|
9 |
(34,105,929) |
(4,502,990) |
|
|
|
|
---------- |
---------- |
|
|
|
|
(29,251,647) |
(605,229) |
|
|
|
|
| Operating
Expenses |
|
|
|
|
|
|
| Remuneration
to Investment Adviser |
|
(4.1) |
747,012 |
1,549,222 |
|
| Custodian
charges |
|
|
270,161 |
367,259 |
|
| Amortization
of deferred expenditure |
|
810,140 |
810,140 |
|
| Listing
fees |
|
|
92,500 |
92,500 |
|
| Audit fees |
|
|
|
30,000 |
25,000 |
|
| Financial
charges |
|
|
197,820 |
285,364 |
|
| Professional
charges |
|
|
- |
95,750 |
|
| Others |
|
|
|
7,328 |
5,578 |
|
|
|
|
|
---------- |
---------- |
|
|
|
(2,154,961) |
3,230,813 |
|
|
|
---------- |
---------- |
|
| Loss
for the year |
|
|
(31,406,608) |
(3,836,042) |
|
| (Provision)/Reversal for
diminution in |
|
| value of
marketable securities |
|
|
(6,869,100) |
(6,066,685) |
|
|
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
|
(38,275,708) |
(9,902,727) |
|
| Provision
for taxation |
|
|
|
| Prior year |
|
- |
366,498 |
|
| Current
year |
|
285,592 |
400,000 |
|
|
|
---------- |
---------- |
|
|
|
(285,592) |
(766,498) |
|
|
|
|
---------- |
---------- |
|
| Loss
for the year after taxation |
|
|
(38,561,300) |
(10,669,225) |
|
| Accumulated
loss brought forward |
|
|
(24,088,114) |
(13,418,889) |
|
|
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
|
(62,649,414) |
(24,088,114) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 10 form an integral part of these accounts. |
|
|
|
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| CASH
FLOW STATEMENT |
|
|
|
| For
The Year Ended June 30, 1998 |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
Rupees |
Rupees |
|
| A.
CASH FLOW FROM OPERATING ACTIVITIES |
|
|
| Loss
before taxation |
|
(38,275,708) |
(9,902,727) |
|
|
|
|
|
|
| ADJUSTMENT
FOR ITEMS NOT INVOLVING MOVEMENT OF FUNDS: |
|
| Amortization
of deferred expenditure |
|
810,140 |
810,140 |
|
| Provision
for diminution in value |
|
|
|
| of
marketable securities |
|
6,869,100 |
6,066,685 |
|
|
|
---------- |
---------- |
|
|
|
7,679,240 |
6,876,825 |
|
|
|
---------- |
---------- |
|
| Operating
loss before working capital changes |
|
(30,596,468) |
(3,025,902) |
|
|
|
|
| EFFECT
ON CASH FLOW DUE TO WORKING |
|
|
|
| CAPITAL
CHANGES |
|
|
|
| (Increase)/decrease
in current assets |
|
|
| Marketable
securities |
|
29,865,677 |
(9,884,604) |
|
| Accounts
receivable |
|
3,584,900 |
14,403,628 |
|
| Profit/Dividend
receivable |
|
202,922 |
7,941 |
|
|
|
---------- |
---------- |
|
| Increase/(decrease)
in current liabilities |
|
33,653,499 |
4,526,965 |
|
|
|
|
|
|
| Due
to Investment Adviser |
|
(794,876) |
(283,916) |
|
| Accounts
payable, accrued and other liabilities |
5,000 |
(33,463) |
|
|
|
---------- |
---------- |
|
|
|
|
|
(789,876) |
(317,379) |
|
|
|
|
|
---------- |
---------- |
|
| Cash
from (used in) operations |
|
|
2,267,155 |
1,183,684 |
|
| Taxes paid |
|
|
|
(12,572) |
(478,241) |
|
|
|
---------- |
---------- |
|
| Net
cash used in operating activities |
|
2,254,583 |
705,443 |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
|
| B.
CASH FLOW FROM FINANCING ACTIVITIES |
|
|
| Deferred
liability repaid |
|
|
(810,140) |
(810,140) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash used in financing activities |
|
(810,140) |
(810,140) |
|
|
|
---------- |
---------- |
|
| Net
(decrease)/increase in cash and cash equivalents |
1,444,443 |
(104,697) |
|
| Cash
and cash equivalents at the beginning of year |
13,991,426 |
14,096,123 |
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
15,435,869 |
13,991,426 |
|
|
|
========== |
========== |
|
|
|
|
|
CHIEF EXECUTIVE |
|
|
DIRECTOR |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| For
The Year Ended June 30, 1998 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| 1.1
The Company was incorporated on June 13, 1994, as a public company limited by
shares under |
|
| the
Companies Ordinance, 1984 and has been registered as an Investment Company
under the |
|
| Investment
Companies and Investment Adviser's Rule, 1971. The company is listed on |
|
| Karachi,
Lahore and Islamabad Stock Exchanges. |
|
|
|
|
| It
is a closed end mutual fund with an object to invest its assets in
securities. |
|
|
| 1.2
The fund has been approved by Corporate Law Authority under the Investment
Companies and |
|
| Investment
Adviser's Rule, 1971. |
|
|
| 1.3
Asian Capital Management (Pvt.) Limited are the approved Investment Adviser
and Union Bank |
|
| Limited
are 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
Deferred Expenditure |
|
| These
are amortized over a maximum period of five years from the year of deferment. |
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|
| 2.3
Taxation |
|
| The
charge for current taxation is based on taxable income at the current tax
rates after taking |
|
| into
account tax credits and rebates available, if any. |
|
|
|
|
| The
company accounts for deferred taxation arising on major timing differences,
if any, by using |
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| the
liability method. |
|
|
| 2.4
Marketable Securities |
|
| These
are valued at lower of moving average cost and market value on an aggregate
portfolio basis. |
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|
|
|
| 2.5
Revenue Recognition |
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| Sales
and purchases of securities are recorded on the date of the execution of
contract. Gains and |
|
| losses
on the sale of securities are accounted for in the year in which they arise. |
|
|
| Dividend
income is recognised at the time of closure of 'share transfer books' of the
company |
|
| declaring
dividend and is recorded after netting off Zakat. |
|
|
|
|
| Return
on bank deposits and certificates of investment is recognised on accrual
basis. |
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|
|
|
| 3.DEFERRED
EXPENDITURE PAYABLE |
|
|
1998 |
1997 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Opening
Balance |
|
|
|
2,767,981 |
3,578,121 |
|
| Paid
during the year |
|
|
|
(810,140) |
(810,140) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
1,957,841 |
2,767,981 |
|
|
|
|
| Less:
Payable within one year |
|
|
|
| shown
under current liabilities |
|
|
(810,140) |
(810,140) |
|
|
|
|
|
---------- |
---------- |
|
|
|
1,147,701 |
1,957,841 |
|
|
|
========== |
========== |
|
|
| The
expenditure incurred on the incorporation and floatation of the Company has |
|
| been
paid by Asian Capital Management (Pvt.) Limited, the Investment Adviser. |
|
| These
expenses are repayable over a period of five years in equal annual
installments. |
|
| It
is subject to interest at the rate of 10% per annum. |
|
|
| 4.
DUE TO INVESTMENT ADVISER - an associated undertaking |
|
|
| Two
percent of net assets (4.1) |
|
747,012 |
1,549,222 |
|
| Interest
payable on deferred expenditure |
|
195,784 |
276,798 |
|
|
|
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