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Dominion Stock Fund Limited
Annual Report 2000
CONTENTS
COMPANY INFORMATION
NOTICE OF MEETING
DIRECTOR'S REPORT
AUDITOR'S REPORT
BALANCE SHEET
PROFIT AND LOSS ACCOUNT
STATEMENT OF DISTRIBUTION AND MOVEMENT IN RESERVES
CASH FLOW STATEMENT
NOTES TO THE ACCOUNTS
STATEMENT OF INCOME & EXPENDITURE OF INVESTMENT ADVISER
PATTERN OF SHARE HOLDING
Company Information
Board of Directors:
Mr. Farrukh Saleem Chairman & Chief Executive
Mr. Mir Nejib-ur-Rehman Director
Mr. M.H. Hamdani Director
Mr. Khalid Pervaiz Director
Mr. Fuad Rasul Director
Mr. Wajahat Rasul Khan Director
Mr. Rehan Shaukat Director
Corporate Secretary:
Mr. Mir Nejib Rehman
Investment Adviser
Dominion Financial Services (Pvt) Ltd.
27- Beverly Center, Mezzanine Floor,
Jinnah Avenue, Blue Area,
Islamabad.
Auditors:
Taseer Hadi Khalid & Co,
6th Floor, State Life Building,
Jinnah Avenue, Blue Area,
Islamabad.
Legal Adviser:
Azim Attorneys At Law,
44-E Office Tower,
Blue Area,
Islamabad.
Custodian:
Prime Commercial Bank Ltd.,
Blue Area,
Islamabad.
Registrar:
Dominion Financial Services (Pvt) Ltd.,
27- Beverly Center, Mezzanine Floor,
Jinnah Avenue, Blue Area,
Islamabad.
Registered Office:
27- Beverly Center, Mezzanine Floor,
Jinnah Avenue, Blue Area,
Islamabad.
NOTICE OF ANNUAL MEETING
Notice is hereby given that the 7th Annual General Meeting of DOMINION STOCK FUND LIMITED
will be held on Saturday the 30th of December 2000 at 11.00 a.m., at 27-Beverly Center Jinnah Avenue
Islamabad to transact the following business.
1. To confirm the Minutes of the previous Annual General Meeting.
2. To receive, consider and adopt the audited Accounts of Dominion Stock Fund Limited.
together with the Directors' and Auditors' reports for the year ended 30 June, 2000.
3. To appoint Auditors for the year 2000-2001 and to fix their remuneration.
4. To transact such other ordinary business as may be placed before the meeting with the
permission of the Chairman.
BY ORDER OF THE BOARD
Islamabad, November 27, 2000. SECRETARY
Notes:
i. The Share transfer books of the company shall remain closed from December 22, 2000,
to December 30, 2000. (both days inclusive).
ii. A member entitled to vote at this meeting is entitled to appoint another member as proxy.
Proxies in order to be the effective must be received by the Registered Office of the Company at
27- Beverly Center, Jinnah Avenue, Islamabad not less then 48 hours before the meeting and must
be duly stamped, signed and witnessed.
iii. Shareholders are requested to promptly notify the company of any change in their address.
DIRECTORS' REPORT
The Directors' are pleased to present the Annual Report for the year 1999-2000. This happens to
be the second year since incorporation that the Company actually managed to avoid a loss.
The current year is going to stand out as the year that exposed Karachi Stock Exchangers (KSE)
vulnerability to manipulation. As of July '99 the market, as represented by the KSE-100 Index, just prior to
the Iftikhar Shafi-Nisar Danka duo's manipulation, stood at 1,252 points. In October, the KSE-100 Index
did drop to 1,189 points but then the manipulation set in that took the market to over 2,000 points by
March 2000. During the period that was overwhelmed by manipulation was also characterized by high
volumes and a high degree of vulnerability.
The market did manage to hold on to its own during August' 99 but then from there on it was all
downhill. Finally, the KSE-100 ended the fiscal year at 1,555 points.
The Net Asset Value (NAV) per share of Dominion Stock Fund Limited during the period also
fluctuated from a low of Rs.3.59 to 4.69. To be certain, the wide variation in the Index is not reflected in
our NAV. The principal reason behind that is our decision to keep away from a wildly gyrating market
while maintaining a high cash reserve.
We want to thank our shareholders for being patient and the board members for their assistance
and guidance all through the year.
The present auditors M/s Taseer Hadi Khalid & Co., Chartered Accountants, retire and offer
themselves for re-appointment.
We must continue to pray to the Almighty Allah to have His blessings on our company.
Islamabad, November 27, 2000. Farrukh Saleem
AUDITOR'S REPORT TO THE MEMBERS
We have audited the annexed balance sheet of Dominion Stock Fund Limited ("the Company") as at 30
June 2000 and the related profit and loss account and 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 purpose of our audit. It
is the responsibility of the Company's management to establish and maintain a system of internal control,
and prepare and present the above said statements in conformity with the approved accounting standards
and the requirements of the Companies Ordinance, 1984 and the Investment Companies and Investment
Adviser's Rules, 1971. Our responsibility is to express a~ opinion on these statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These
standards require that we plan and perform the audit to obtain reasonable assurance about whether the
above said statements are free of any material misstatement. An audit includes examining, on test basis,
evidence supporting the amounts and disclosures in the above said statements. An audit also includes
assessing the accounting policies and significant estimates made by management, as well as, evaluating the
overall presentation of the above said statements. We believe that our audit provides a reasonable basis for
our opinion and, after due verification, we report that-
(a) in our opinion , proper books of accounts have been kept by the Company as required by the
Companies Ordinance, 1984 and the Investment Companies and Investment Adviser's Rules, 1971;
(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 the Investment Companies and
Investment Adviser's Rules, 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;
(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 cash flow statement, together with the notes forming part
thereof conform with the approved accounting standards as applicable in Pakistan, and 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 30 June 2000 and of the Profit for the year then ended; and
(d) in our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980.
TASEER HADI KHALID & CO.
ISLAMABAD: November 27, 2000. CHARTERED ACCOUNTANTS
BALANCE SHEET AS AT 30 JUNE 2000
2000 1999
NOTE (Rupees) (Rupees)
ASSETS
Marketable securities - at market value
(Cost Rs. 17,415,336)
(1999: Rs. 10,369,840) 3 13,813,050 8,180,937
OTHER ASSETS
Accounts receivable 4 798,408 842,365
Bank balances 5 4,019,820 9,399,580
------------------ ------------------
4,818,228 10,241,945
------------------ ------------------
18,631,278 18,422,882
CURRENT LIABILITIES
Due to investment adviser-
an associated company 6 152,517 49,101
Accounts payable 7 73,148 85,138
Provision for taxation 2,014,000 1,524,000
------------------ ------------------
2,239,665 1,658,239
------------------ ------------------
NET ASSETS 16,391,613 16,764,643
========== ==========
SHAREHOLDERS' EQUITY
SHARE CAPITAL 8 50,000,000 50,000,000
ACCUMULATED LOSS (33,608,387) (33,235,357)
------------------ ------------------
16,391,613 16,764,643
========== ==========
The report of the auditors is set out on pages 1 and 2.
The annexed notes form an integral part of these accounts.
These accounts were approved by the Board of directors on 27 Nov 2000.
ISLAMABAD CHIEF EXECUTIVE DIRECTOR
PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED 30 JUNE 2000
2000 1999
NOTE (Rupees) (Rupees)
SALES 55,993,346 39,894,328
LESS: COST OF SALES 9 55,974,418 58,960,840
------------------ ------------------
CAPITAL PROFIT/(LOSS) 18,928 (19,066,512)
OTHER INCOME 10 2,237,146 1,288,833
------------------ ------------------
GROSS PROFIT / (LOSS) 2,256,074 (17,777,679)
OPERATING EXPENSES
Administrative 11 325,624 829,166
Financial 236,180 142,609
Remuneration of investment
adviser 6.1 163,916 335,292
------------------ ------------------
(725,720) (1,307,067)
------------------ ------------------
1,530,354 (19,084,746)
PROVISION FOR DIMINUTION IN VALUE (1,413,384) --
OF MARKETABLE SECURITIES
EXCESS OF PROVISION FOR DIMINUTION
IN VALUE OF MARKETABLE SECURITIES
WRITTEN BACK -- 19,918,774
------------------ ------------------
PROFIT BEFORE TAXATION 116,970 834,028
PROVISION FOR TAXATION (490,000) (230,000)
------------------ ------------------
(LOSS)/PROFIT FOR THE YEAR (373,030) 604,028
========== ==========
The annexed notes form an integral part of these accounts.
ISLAMABAD CHIEF EXECUTIVE DIRECTOR
DISTRIBUTION STATEMENT FOR
THE YEAR ENDED 30 JUNE 2000
2000 1999
(Rupees) (Rupees)
ACCUMULATED LOSS BROUGHT
FORWARD (33,235,357) (33,839,385)
(LOSS)/PROFIT FOR THE YEAR (373,030) 604,028
ACCUMULATED LOSS CARRIED ------------------ ------------------
FORWARD (33,608,387) (33,235,357)
========== ==========
STATEMENT OF MOVEMENT IN EQUITY AND RESERVES
FOR THE YEAR ENDED 30 JUNE 2000
NET ASSETS PER SHARE AS AT 01 JULY 3.35 3.23
------------------ ------------------
GAIN/(LOSS) ON SALE OF MARKETABLE
SECURITIES 0.01 (3.81)
(PROVISION)/REVERSAL FOR DIMINUTION
IN VALUE OF MARKETABLE SECURITIES (0.28) 3.98
NET INCOME/(LOSS) FOR THE YEAR
EXCLUDING CAPITAL GAIN/(LOSS) 0.20 (0.05)
------------------ ------------------
(LOSS)/PROFIT FOR THE YEAR -
PER SHARE (0.07) 0.12
------------------ ------------------
NET ASSETS PER SHARE AS AT 30 JUNE 3.28 3.35
========== ==========
ISLAMABAD CHIEF EXECUTIVE DIRECTOR
CASH FLOW STATEMENT FOR THE
YEAR ENDED 30 JUNE 2000
2000 1999
(Rupees) (Rupees)
Profit before taxation 116,970 834,028
CASH FLOW FROM OPERATING ACTIVITIES
Adjustment for:
Amortisation of deferred costs -- 515,025
Provision/(reversal) for diminution in value of
marketable securities 1,413,384 (19,918,774)
------------------ ------------------
1,413,384 (19,403,749)
------------------ ------------------
Operating profit / (loss) before
working capital changes 1,530,354 (18,569,721)
(Increase) / decrease in:
Marketable Securities (7,045,497) 26,050,381
Account Receivable 43,957 (11,488)
------------------ ------------------
(7,001,540) 26,038,893
------------------ ------------------
Increase/(decrease) in current liabilities (5,471,186) 7,469,172
Due to Investment Advisor 103,416 (26,708)
Accounts Payable (11,990) (20,318)
------------------ ------------------
91,426 (47,026)
------------------ ------------------
Net Cash (used in)/from operating activities (5,379,760) 7,422,146
========== ==========
CASH FLOW FROM FINANCING ACTIVITIES
Deferred expenditure paid -- (515,025)
------------------ ------------------
-- (515,025)
========== ==========
NET (DECREASE) / INCREASE IN CASH
AND CASH EQUIVALENTS (5,379,760) 6,907,121
9,399,580 2,492,459
CASH AND CASH EQUIVALENTS AT THE ------------------ ------------------
END OF THE YEAR 4,019,820 9,399,580
========== ==========
NOTES TO THE ACCOUNTS
FOR THE YEAR ENDED 30 JUNE 2000
1. STATUS AND NATURE OF BUSINESS
Dominion Stock Fund Limited ("the company") was incorporated on 5 May, 1994 as a public limited
company under the Companies Ordinance, 1984 and was registered as an Investment Company under the
Investment Companies and Investment Advisers Rules. 1971 to carry out the business of a closed end
investment company. The company has entered into an agreement with an associated company, Dominion
Financial Services (Private) Limited to act as its investment adviser. The company is listed on the Karachi
Stock Exchange.
2. ACCOUNTING POLICIES
The significant accounting policies are summarized below:
2.1 Accounting convention
These accounts have been prepared under the historical cost convention.
2.2 Basis of preparation
These accounts have been prepared in accordance with Accounting Standards. issued by the International
Accounting Standards Committee ("IASC"), interpretations issued by the Standing Interpretations
Committee ("SIC") of the IASC and the requirements of the Investment Companies and Investment
Adviser's Rules, 1971.
2.3 Marketable Securities
The company has valued its investments at the lower of average cost and middle market price
ruling on the balance sheet date determined on an aggregate portfolio basis.
2.4 Taxation
The charge for taxation is based on income arising out of interest on PLS bank accounts and
divided income at the current rates of taxation.
2.5 Revenue recognition
Dividend income is recorded at the time of the closure of share transfer books of the company
declaring the dividend and is shown net of zakat.
Sales and purchase of securities are recognized on the date of contract. Capital gain on sale of
investment is taken to income of the period in which it arises.
3. MARKETABLE SECURITIES
NAME OF COMPANIES NUMBER OF SHARES/CERTIFICATES BALANCE AS AT JUNE 30, 2000 PERCENTAGE IN RELATION TO
Balance at Purchase Bonus Sales No. of shares/ At Cost At market At market Own net Paid-up capital Total cost
July 1, 1999 Shares certificates price per price assets of Investee of
share (with cost of company investment
investment) (with face value
of investment)
(Rupees)
BANKS & INVESTMENT Cos
Bankers Equity Ltd  300 -- -- -- 300 3,300 2.10 630 0.02 0.00 0.02
Bank of Punjab Ltd 10,477 75,000 -- 85,000 477 13,584 13.03 6,215 0.08 0.01 0.08
Faysal Commercial Bank Ltd 20,800 -- -- 15,000 5,800 75,902 9.23 53,534 0.45 0.00 0.44
Askari Commercial Bank Ltd 10,744 195,000 -- 180,000 25,744 443,374 13.88 357,327 2.63 0.00 2.55
PICIC 250 -- -- -- 250 2,000 12.75 3188 0.01 0.00 0.01
Muslim Commercial Bank Ltd 20,000 220,000 -- 175,000 65,000 2,148,506 31.13 2,023,450 12.73 0.00 12.34
Crescent Investment Bank Ltd -- 70,000 -- -- 70,000 1,762,450 14.73 1,031,100 10.44 0.00 10.12
INSURANCE COMPANIES
Shaheen Insurance Co. Ltd. 37,000 -- -- 37,000 -- -- -- -- -- -- --
EFU Life Insurance Co -- 60,000 -- 60,000 -- -- -- -- -- -- --
Adamjee Insurance Co -- 14,500 -- 14,500 -- -- -- -- -- -- --
SYNTHETIC & RAYON
Dewan Salman Fibre Ltd. 195 25,000 2,008 25,000 2,203 68,889 28.08 61,860 0.41 0.00 0.40
Rupali Polyester Ltd. 105 -- -- -- 105 4,620 27.00 2,835 0.03 0.00 0.03
Gatron Industries Ltd. 1,760 -- -- -- 1,760 68,400 16.95 29,832 0.41 0.00 0.39
Dhan Fibres Company Ltd. -- 150,000 -- 150,000 -- -- -- -- -- -- --
Ibrahim Fibres Company Ltd -- 210,000 -- 100,000 100,000 1,916,810 14.45 1,445,000 11.36 0.00 11.01
FUEL & ENERGY
Pakistan Refinery Ltd 1,433 -- -- -- 1,433 89,218 25.50 36,542 0.53 0.01 0.51
Pakistan State Oil Co Ltd. 268 20,000 1,119 11,000 10,387 1,834,882 163.10 1,694,120 10.87 0.00 10.54
Shell Pakistan Ltd 187 -- -- -- 187 28,666 267.63 50,047 0.17 0.00 0.16
FUEL & ENERGY
Sui Northern Gas Pipelines Ltd. 7,109 205,000 2,292 153,000 61,401 1,328,657 16.10 988,556 7.87 0.00 7.63
Sui Southern Gas company Ltd 25 20,000 6 -- 20,031 433,425 16.38 328,108 2.57 0.00 2.49
Karachi Electric Supply Corporation 23,320 183,000 -- 206,000 320 4,085 9.53 3,050 0.02 0.00 0.02
Kohinoor Energy Ltd 47,406 -- -- 47,000 406 6,393 12.50 5,075 0.04 0.00 0.04
Kohinoor Genertec Ltd 400 -- -- -- 400 3,800 7.60 3,040 0.02 0.00 0.02
Southern Electric Power Ltd. 50,000 -- -- 50,000 -- -- -- -- -- -- --