| Al-Mal Securities & Services Limited |
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| CONTENTS |
|
|
| 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 |
|
|
| Mr.
Mohammad Azeem Khan |
|
| 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, 1998. |
|
|
|
|
| 1.
Operating Results: |
|
|
1998 |
1997 |
|
| Summarized
results, for the year under |
|
Rupees |
Rupees |
|
| report,
are as under; |
|
|
|
| *
Total operating income |
|
|
7,061,254 |
5,382,942 |
|
|
|
========== |
========== |
|
| *
Profit/(Loss) for the year-before tax |
|
(17,136,987) |
(1,309,973) |
|
|
|
========== |
========== |
|
| *
Profit/(Loss) for the year-after tax |
|
(17,136,874) |
(1,334,222) |
|
|
|
---------- |
---------- |
|
| *
Profit/(Loss) brought forward |
|
|
(5,065,205) |
(3,730,983) |
|
|
|
---------- |
---------- |
|
| *
Net Profit/(Loss) carried forward |
|
|
(22,202,079) |
(5,065,205) |
|
|
|
========== |
========== |
|
|
| 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
endorse |
|
| 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
retire |
|
| 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 management
and |
|
| staff
for their dedication and hard work. |
|
|
| On
behalf of the Board, |
|
|
| SYED
IRADAT HUSAIN |
|
27th November, 1998 |
|
| Chairman |
|
Karachi |
|
|
|
| CHIEF
EXECUTIVE'S REVIEW |
|
|
| I
present to you the 5th Annual Report of Al-Mal Securities & Services
Limited, as public listed company, |
|
| for
the year ended 30th June 1998. It went public in June 1994 and is listed at
the Karachi, Lahore and |
|
| Islamabad
Stock Exchanges for convenience of stock holders. |
|
|
| Result
of Operations: |
|
| By
and large the capital market environment continued to remained depressed
during the year 1997-98 |
|
| as
in the past three years. The stock market index further fell from 1566 on
30th June, 1997 to 880 on |
|
| 30th
June, 1998. There has been enormous pressure on the national economy during
the current year. |
|
| The
freezing of Foreign Currency Accounts, the sanctions imposed and IPP's
problem added miseries to |
|
| the
capital market environment. The fiscal deficit remained high, mounting
inflation, devaluation of currency, |
|
| law
and order situation and growing liquidity crunch was continuously causing
bearish trends in the |
|
| capital
market. Added to all these problems were the effects of the economic turmoil,
of Far Eastern |
|
| countries. |
|
|
| The
total revenue of your Company however, has shown a significant rise of Rs.
1.7 million which is |
|
| about
31% of the previous year. The main beneficiary has been the brokerage
services which has 'gone |
|
| up
by Rs. 1.5 million which reflecting growth of over 40% over the previous
year. Reflecting the g0neral |
|
| economic
situation in the country the dividend income has dipped, it went down by 26%.
Capital gain |
|
| amounted
to Rs. 309,776 as against Rs. 62,925 of the previous year. This was because
of short spates |
|
| in
the market where we disposed of our stocks at the available profits.
Consultancy income and profit |
|
| on
disposal of fixed assets alongwith miscellaneous income contributed
Rs.422,414. |
|
|
| A
strict check on operating expenses continued to be our operational policy.
The operative expenses |
|
| of
1998 rose by about 11% only where it could not be avoided due to inflationary
pressure. |
|
|
| Your
company was not making provision for diminution in value of long term
investments since the |
|
| beginning.
But in view of continuing erosion in values,. the Board of Directors felt
that in view of overall |
|
| economic
conditions prevailing in the country, the diminution in value is permanent
requiring necessary |
|
| provisions
this year. It is therefore, decided that in view of continued depression in
the capital market |
|
| the
long term investments should also be provided which ensure a healthy base for
the future operations. The |
|
| after
tax loss of Rs. 17.1 million-is the reflection of these provisions. |
|
|
| Future
Outlook: |
|
| The
Company has concentrated on development of a stable customer base and this
has resulted in the |
|
| increase
in revenue in brokerage income. The market is passing through a difficult
phase and we all |
|
| hope
that the stabilization is not faraway. We hope that with the removal of
international sanctions against |
|
| the
country, things are going to improve. The problem of IPP's it seems to .be
sorted out in near future. |
|
| All
these things should add towards a better future. We hope that the market is
now bottomed out and |
|
| there
should be a steady growth which in turn will bring in the investor's
confidence. |
|
|
| The
Company has however, set its mind on increase in sound brokerage business,
sale of existing port- |
|
| folio
on short spates where the Company can book some profit, and a strict check on
expenditure. |
|
|
| I
sincerely express my thanks to the share holders for their understanding of
the past and. current difficult |
|
| situation,
clients and members of staff for their confidence and support. |
|
|
| MOHAMMAD
AZEEM KHAN |
|
| Chief
Executive |
|
27th November, 1998 |
|
|
|
|
Karachi. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of AL-MAL SECURITIES AND SERVICES |
|
| LIMITED
as on June 30, 1998, the related profit and loss account and statement of |
|
| changes
in financial position (cash flow statement, 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 (cash flow statement, 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, 1998 and of the loss and the changes |
|
| in
financial position (cash flow statement for the year then ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980. |
|
|
| 27th
November, 1998 |
|
|
FORD, RHODES, ROBSON, MORROW |
|
| Karachi |
|
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
Note |
1998 |
1997 |
|
| CAPITAL
AND RESERVES |
|
|
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
(1997: 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 |
|
|
(22,202,079) |
(5,065,205) |
|
|
|
|
---------- |
---------- |
|
|
|
|
27,797,921 |
44,934,795 |
|
|
|
|
| DEFERRED
LIABILITIES |
|
|
|
| Deferred
taxation |
|
|
- |
51,500 |
|
| Provision
for gratuity |
|
|
804,200 |
722,651 |
|
|
|
|
---------- |
---------- |
|
|
|
|
804,200 |
774,151 |
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
| Creditors
and accrued liabilities |
|
3 |
3,347,721 |
1,652,825 |
|
| Provision
for taxation |
|
|
- |
2,386 |
|
|
|
|
---------- |
---------- |
|
|
|
|
3,347,721 |
1,655,211 |
|
|
|
|
|
| COMMITMENTS |
|
4 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
31,949,842 |
47,364,157 |
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
5 |
2,156,067 |
2,363,022 |
|
|
|
|
|
|
| ROOM
AND MEMBERSHIP CARD |
|
6 |
11,658,458 |
11,658,458 |
|
| LONG
TERM INVESTMENTS |
|
7 |
3,468,611 |
21,741,372 |
|
|
|
|
|
|
| LONG
TERM DEPOSITS AND DEFERRED COSTS |
8 |
633,550 |
816,990 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
| Marketable
securities |
|
9 |
1,152,083 |
2,772,383 |
|
| Receivable
from customers |
|
10 |
4,250,429 |
4,572,016 |
|
| Advances,
prepayments and other |
|
|
|
| receivables |
|
11 |
953,195 |
845,390 |
|
| Cash
at bank - current accounts |
|
|
7,677,449 |
2,594,526 |
|
|
|
|
---------- |
---------- |
|
|
|
|
14,033,156 |
10,784,315 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
31,949,842 |
47,364,157 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report is annexed hereto. |
|
|
|
|
|
| Chief
Executive |
|
Director |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
|
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| Brokerage
revenue |
|
|
5,239,699 |
3,735,600 |
|
| Income
from registrar services |
|
|
732,000 |
702,000 |
|
| Dividend
income |
|
12 |
357,365 |
485,298 |
|
| Gain
on sale of marketable and long term |
|
|
|
| securities |
|
13 |
309,776 |
62,925 |
|
| Consultancy
income |
|
|
155,465 |
- |
|
| Income
on PLS deposits |
|
|
- |
323 |
|
| Profit
on disposal of fixed assets |
|
5.1 |
261,272 |
348,761 |
|
| Miscellaneous
income |
|
|
5,677 |
48,035 |
|
|
|
|
---------- |
---------- |
|
|
|
|
7,061,254 |
5,382,942 |
|
|
|
|
---------- |
---------- |
|
| Operating
expenses |
|
14 |
7,479,652 |
6,721,319 |
|
|
|
|
|
|
| Provision
for diminution in value of investments: |
|
|
|
|
|
| Long-tempt
investment |
|
7 |
16,598,769 |
- |
|
| Marketable
securities |
|
9.1 |
119,820 |
(106,804) |
|
|
|
|
---------- |
---------- |
|
|
|
|
16,718,589 |
(106.804) |
|
|
|
|
---------- |
---------- |
|
| Investment
written off |
|
|
- |
78,400 |
|
|
|
24,198,241 |
6,692,915 |
|
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
(17,136,987) |
(1,309,973) |
|
|
|
|
| Provision
for taxation |
|
|
|
| - current |
|
|
(51,387) |
(48,753) |
|
| - prior |
|
|
- |
1,504 |
|
| - deferred |
|
|
51,500 |
23,000 |
|
|
|
---------- |
---------- |
|
|
|
113 |
(24,249) |
|
|
|
---------- |
---------- |
|
| Loss
after taxation |
|
|
(17,136,874) |
(1,334,222) |
|
|
|
|
| Loss
brought forward |
|
|
(5,065,205) |
(3,730,983) |
|
|
|
|
---------- |
---------- |
|
| Loss
carried forward to the balance sheet |
|
(22,202,079) |
(5,065,205) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| Chief
Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
Rupees |
Rupees |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Loss
before taxation |
|
|
(17,136,987) |
(1,309,973) |
|
| Adjustments
for: |
|
|
|
| Depreciation |
|
|
430,461 |
368,542 |
|
| Profit
on sale of long term investments |
|
(274,651) |
(73,137) |
|
| Profit
on sale of fixed assets |
|
(261,272) |
(348,761) |
|
| Amortization
of deferred costs |
|
364,140 |
364,140 |
|
| Provision
for diminution in value of investments |
16,718,589 |
(106,804) |
|
| Provision
for gratuity |
|
|
464,955 |
240,950 |
|
| Investment
written off |
|
|
- |
78,400 |
|
| Bad debts |
|
|
25,500 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
17,467,722 |
523,330 |
|
| Operating
loss before working |
|
---------- |
---------- |
|
| capital
changes |
|
|
330,735 |
(786,643) |
|
|
|
|
| (Increase)/decrease
in operating assets: |
|
|
| Marketable
securities |
|
|
|
1,500,480 |
(125,513) |
|
| Receivable
from customers |
|
|
296,087 |
(775,278) |
|
| Advances,
prepayments and other receivables |
|
(102,604) |
1,323,124 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
1,693,963 |
422,333 |
|
|
|
|
|
|
|
| Increase/(decrease)
in operating liabilities: |
|
|
|
|
|
| Creditors
and accrued liabilities |
|
1,694,896 |
(1,254,336) |
|
|
|
|
|
|
|
3,719,594 |
(1,618,646) |
|
|
|
---------- |
---------- |
|
| Taxes paid |
|
(58,974) |
(61,466) |
|
| Gratuity
paid |
|
(383,406) |
(100,999) |
|
|
|
---------- |
---------- |
|
|
|
(442,380) |
(162,465) |
|
|
|
---------- |
---------- |
|
| Net
cash inflow/(outflow) from operating activities |
3,277,214 |
(1,781,111) |
|
|
|
|
|
|
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
| Capital
expenditure incurred |
|
|
(486,234) |
(744,999) |
|
| Long
term deposits and deferred cost |
|
(180,700) |
750 |
|
| Long
term investments |
|
|
|
(412,242) |
(470,650) |
|
| Sale
proceeds of fixed assets |
|
|
524,000 |
541,500 |
|
| Sale
proceeds of long term investments |
|
2,360,885 |
939,750 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash inflow from investing activities |
|
1,805,709 |
266,351 |
|
|
|
|
|
|
|
| NET
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |
5,082,923 |
(1,514,760) |
|
| CASH
AND CASH EQUIVALENTS AT |
|
|
|
|
| BEGINNING
OF THE YEAR |
|
|
|
2,594,526 |
4,109,286 |
|
|
|
|
|
| CASH
AND CASH EQUIVALENTS AT |
|
|
---------- |
---------- |
|
| END
OF THE YEAR |
|
7,677,449 |
2,594,526 |
|
|
|
|
========== |
========== |
|
|
| Chief
Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| Al-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 counselling 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
Tangible 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
or 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 public floatation of the company are being |
|
| written
off over a period of five years. |
|
|
| 2.6
Long term investments - quoted |
|
|
|
| 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. |
|
|
|
|
|
|
| Deferred
taxation is provided on timing differences using the liability method |
|
| excluding
the tax effects of those timing differences which are unlikely to reverse |
|
| in
foreseeable future. Debit balance on deferred tax account is not set-up as an |
|
| asset. |
|
|
|
|
|
|
| 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 |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Due
to customers |
|
|
|
1,839,594 |
911,404 |
|
| Due
to Karachi Stock Exchange |
|
|
1,286,100 |
391,475 |
|
| Accrued
liabilities |
|
|
|
222,027 |
349,946 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
3,347,721 |
1,652,825 |
|
|
|
|
|
========== |
========== |
|
| 4.
COMMITMENTS |
|
|
|
|
|
|
|
|
|
| 4.1
Office at the new Karachi Stock |
|
|
|
| Exchange
building |
|
|
|
590,000 |
590,000 |
|
|
|
|
|
========== |
========== |
