| Safeway Mutual Fund Limited |
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| Annual
Report 2000 |
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| Company
Information |
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| Board
of Directors |
|
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| *
Mr. Khalil Ahmed |
Chairman |
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| *
Mr. Naseer Ahmed |
Chief Executive |
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| *
Mr. M. Ismail Mughal |
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| *
Mr. M. H Kausar |
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| *
Mr. K. G. Rabbani |
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| *
Mr. A. Fahim Khan |
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| *
Mrs. Shaheen Khalil |
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| Company
Secretary |
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| *
Mr. M. H. Kausar |
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| Auditors |
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| *
Ilyas Saeed & Company |
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| *
Chartered Accountants |
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| Investment
Advisers |
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| *
Safeway Fund Limited |
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|
| Registered
Office |
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| 101,
Safeway House, 28-E, |
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| Main
South Park Avenue, |
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| Phase-II
Extension, |
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| Defence
Housing Authority |
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| Karachi |
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| Phone
: 5803116- 18, 5387057 |
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| Fax : 5803115 |
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| Notice
of Annual General Meeting |
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| Notice
is hereby given that the 6th Annual General Meeting of the company will be
held on Saturday, December 23, |
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| 2000,
at 09:00 AM at the registered office, 101, Safeway House, 28-E, Main South
Park Avenue, Phase-II |
|
| Extension,
Defence Housing Authority Karachi, to transact the following: |
|
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| Agenda
of the Meeting: |
|
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| 1.
To confirm the minutes of the fifth Annual General Meeting held on December
24, 1999. |
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|
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| 2.
To receive, consider and adopt Audited Accounts and Balance Sheet together
with Directors' and |
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| Auditors'
report thereon for the year ended June 30, 2000. |
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|
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| 3.
To appoint Auditors and fix (heir remuneration for the next year. |
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|
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| 4.
To transact any other business as may be placed before the meeting with the
permission of the |
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| chairman. |
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|
By orders of the Board |
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| Karachi |
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|
M.H. Kausar |
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| November
20, 2000 |
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Company Secretary |
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| Note: |
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| 1.
The share transfer register books of the Mutual Fund will remain closed from
December 23, 2000 to |
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| December
29, 2000 (both days inclusive) and no transfer will be accepted for the
registration during this |
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| period. |
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|
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| 2.
A member entitled to attend, speak and vote at the meeting is entitled to
appoint a proxy to attend, |
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| speak
and vote for him/her. A proxy must be a member of the company. |
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|
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| 3.
An instrument of proxy and the power of attorney or other authority (if any)
under which it is signed or |
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| a
notiarially certified copy of such power of attorney in order to be valid
must be deposited with our |
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| registered
office at 101, Safeway House, 28-E, Main South Park Avenue, Phase-II
Extension, DHA, |
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| Karachi
not less than 48 hours before the meeting. |
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|
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| 4.
Members are requested to notify any change in their addresses immediately |
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| Directors'
Report to the Members |
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| Your
directors have pleasure in placing their report and audited accounts for the
year ended June 30, 2000. |
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| Your
mutual fund has shown satisfactory progress during this year by making an
operating profit of Rs. 3,058,088. |
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| After
making provision for diminution in the value of investments and writing off
50% of deferred expenditure, the fund |
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| has
earned a net operating profit of Rs. 2,488,966. This amounts to 33.4% return
on net assets value at the opening |
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| of this year. |
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| Your
directors appreciate the waiver of Rs. 549,156 by the investment advisers
since inception to date payable by the |
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| fund
on account of investment advisory fees and mark up on the due balances on
account of deferred expenditure |
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| incurred
by the investment advisers. This was a timely financial help and has
certainly improved the liquidity of your |
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| fund. |
|
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| As
mentioned in the last year's annual review, your investment advisers have
constituted an investment committee to |
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| constantly
monitor the investment portfolio and we are hopeful for better results in
future. |
|
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| We
would like to mention here that the investment advisers are waiting eagerly
to see the necessary steps taken by |
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| the
concerned authorities to discourage blank selling and excessive speculation
and should introduce measures to |
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| encourage
institutional investments. |
|
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| We
are thankful to the investment advisers for managing the fund in a most
economical manner by controlling, |
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| reducing
and waiver of operational costs. |
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| With
all these achievements, we are confident to see a bright future. |
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By and on behalf of the Board |
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|
Naseer Ahmed |
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| October 30, 2000 |
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|
Chief Executive |
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| Auditors'
Report to the Members |
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| We
have audited the annexed balance sheet of Safeway Mutual Fund Limited as at
30th June 2000, and the related |
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| profit
and loss account, cash flow statement and statement of changes in equity,
together with the notes forming part |
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| thereof,
for the year then ended and we state that we have obtained all the
information and explanations which, to the |
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| best
of our knowledge and belief, were necessary for the purpose of our audit. |
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| It
is the responsibility of the company's management to establish and maintain a
system of internal control, and |
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| prepare
and present the above said statements in conformity with the approved
accounting standards and the |
|
| requirements
of the Companies Ordinance, 1984. Our responsibility is to express an opinion
on these statements |
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| based
on our audit. |
|
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| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These standards require |
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| that
we plan and perform the audit to obtain reasonable assurance about whether
the above said statements are free |
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| of
any material misstatement. An audit includes assessing the accounting
policies and significant estimates made by |
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| the
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 account have been kept by the company as
required by the Companies |
|
| Ordinance,
1984 and the Investment Advisers Rules 1971. |
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|
|
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| b)
In our opinion: |
|
|
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| i)
The balance sheet and profit and loss account together with the notes thereon
have been drawn up |
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| in
conformity with the Companies Ordinance, 1984, and are in agreement with the
books of |
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| account
and are further in accordance with accounting policies consistently applied. |
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|
|
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| ii)
The expenditure incurred during the year was for the purpose of the company's
business; and |
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|
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| ii)
The business conducted, investments made and the expenditure incurred during
the year were in |
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| accordance
with the objects of the company and Investment Advisers Rules, 1971; |
|
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| iv)
The company has not contravened the provisions of Rule 8 of the Investment
Companies and |
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| Investment
Advisers Rule 1971; |
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|
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| c)
In our opinion and to the best of our information and according to the
explanations given to us, the balance |
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| sheet,
profit and loss account, cash flow statement, and statement of changes in
equity together with the |
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| notes
forming part thereof, give the information required by the Companies
Ordinance, 1984, in the manner |
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| so
required and respectively give a true and fair view of the state of the
Company's affairs as at 30th June, |
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| 2000,
and of the profit, its cash flow and changes in equity for the year then
ended. |
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| Karachi |
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|
Ilyas Saeed & Co. |
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| Dated 2-10-2000 |
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|
Chartered Accountants |
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| Balance
Sheet as on June 30, 2000 |
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|
Note |
2000 |
1999 |
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|
Rs. |
Rs. |
|
|
| PROPERTY
AND ASSETS |
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| Preliminary
expenses |
|
775,323 |
1,550,647 |
|
|
| Investments |
|
|
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| Quoted
shares in joint stock |
|
|
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| companies
at market value |
|
3 |
3,252,037 |
6,184,926 |
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|
|
|
|
|
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| Current
Assets: |
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| Sundry debtors |
|
|
6,396 |
40,904 |
|
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| Cash
and bank balance |
|
4 |
6,939,522 |
984,842 |
|
|
|
|
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|
------------------ |
------------------ |
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| Total
current assets |
|
6,945,918 |
1,025,746 |
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|
|
|
------------------ |
------------------ |
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| Total
Property and Assets |
|
10,973,278 |
8,761,319 |
|
|
========== |
========== |
|
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| CAPITAL
AND LIABILITIES |
|
| Authorized
share capital |
|
500,001,300 |
50,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up shares |
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| capital
in ordinary certificates of |
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| Rs. 10/= each |
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|
30,000,000 |
30,000,000 |
|
| Less:
Losses carried forward |
|
17 |
(19,595.945) |
(22,084,911) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
10,404,055 |
7,915,089 |
|
|
| Current
Liabilities: |
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| Trade
creditors and accruals |
|
5 |
202,840 |
32,859 |
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| Due
to investment adviser |
|
|
|
|
| an
associated company |
|
7 |
366,383 |
161,532 |
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| Due
to investment adviser |
|
|
|
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| for
public issue expense |
|
6 |
-- |
651,839 |
|
|
|
|
------------------ |
------------------ |
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| Total
Current Liabilities |
|
|
569,223 |
846,230 |
|
|
|
|
------------------ |
------------------ |
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| Total
Capital and Liabilities |
|
10,973,278 |
8,761,319 |
|
|
========== |
========== |
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| Net
assets value per share |
|
12 |
3.47 |
2.64 |
|
|
========== |
========== |
|
|
|
|
| Profit
& Loss Account |
|
|
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| for
the year ended June 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rs. |
Rs. |
|
|
| Capital
Gain / (Loss) |
|
9 |
2,360,882 |
(14,698,662) |
|
| Other income |
|
10 |
963,708 |
409,597 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
profit |
|
|
3,324,590 |
(14,289,065) |
|
|
|
|
|
| Operating
expenses: |
|
|
|
| Administrative
expenses |
|
11 |
58,421 |
62,227 |
|
| Remuneration
due to investment adviser |
7 |
208,081 |
161,532 |
|
|
|
|
------------------ |
------------------ |
|
| Total
Operating expenses |
|
|
266,502 |
223,759 |
|
|
|
| Net
Operating Profit / (Loss) |
|
|
3,058,088 |
(14,512,824) |
|
|
| Less:
Provision / (Reversal) of: |
|
| Diminution
in the value of securities |
13 |
(387,808) |
(14,349,992) |
|
| Amortization
of deferred expenditure |
|
775,324 |
-- |
|
| Previous
year adjustment |
|
|
(3,230) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
384,286 |
(14,349,992) |
|
|
|
|
------------------ |
------------------ |
|
| Net
operating profit before taxation |
|
2,673,802 |
(162,832) |
|
|
| Less: Taxes |
|
| Current
year taxes |
|
97,105 |
5,055 |
|
| Prior year taxes |
|
|
87,731 |
|
|
|
|
|
------------------ |
------------------ |
|
| Net
operating profit |
|
|
2,488,966 |
(167,887) |
|
|
|
|
========== |
========== |
|
|
| Accumulated
loss brought forward |
|
(22,084,911) |
(21,917,024) |
|
|
|
------------------ |
------------------ |
|
| Accumulated
loss carried forward |
|
(19,595,945) |
(22,084,911) |
|
|
========== |
========== |
|
|
|
|
| Earning
per share before |
|
------------------ |
------------------ |
|
| Exceptional
items |
|
14 |
1.14 |
(0.05) |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| Cash
Flow Statement |
|
| for
the year ended June 30, 2000 |
|
|
|
|
|
2000 |
1999 |
|
|
|
|
Rs. |
Rs. |
|
|
|
| Cash
flow from operating activities: |
|
| Profit
/ (Loss) after taxation |
|
2,488,966 |
(167,887) |
|
| Adjustments
of items not involving fund flow |
|
|
|
| Amortization
of deferred expenditure |
|
775,323 |
-- |
|
|
|
------------------ |
------------------ |
|
| Operating
profit before changes in working capital |
|
3,264,289 |
(167,887) |
|
|
| Changes
in working capital: |
|
|
| (Increase)
/ Decrease in current assets: |
|
| Investment
in marketable securities |
|
2,932,888 |
1,060,183 |
|
| Sundry debtors |
|
|
34,511 |
(8,432) |
|
|
|
|
|
|
|
| (Decrease)
/ Increase in current liabilities: |
|
|
|
| Trade
creditors and accruals |
|
|
169,981 |
143,550 |
|
| Due
to investment adviser an associated company |
|
204,851 |
(46,737 |
|
| Due
to investment adviser for public issue expense |
|
(651,839) |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Total
changes in working capital |
|
|
2,690,392 |
1,148,564 |
|
| Net
Cash (out) / in flow from operating activities |
|
5,954,681 |
980,677 |
|
|
| Bank
balance at the beginning of the year |
|
984,842 |
4,165 |
|
|
|
|
------------------ |
------------------ |
|
| Net
Balance at bank at the end of the year |
|
6,939,523 |
984,842 |
|
|
========== |
========== |
|
|
|
|
| Statement
of Changes in Equity |
|
| for
the year ended June 30, 2000 |
|
|
|
|
Issued, |
|
|
|
|
|
subscribed |
General |
Capital |
Accumulated |
|
|
|
|
and paid up |
reserve |
reserve |
profit / (loss) |
Total |
|
|
|
capital |
|
|
|
|
|
Rupees |
Rupees |
Rupees |
Rupees |
Rupees |
|
|
|
|
|
|
| Balance
at July 01, 1998 |
30,000,000 |
-- |
-- |
(21,917,024) |
8,082,976 |
|
| loss for the year |
|
|
|
(167,887) |
(167,887) |
|
| Transferred
during the year |
|
| Issuance
of bonus shares |
-- |
-- |
-- |
-- |
-- |
|
| Dividend |
|
-- |
-- |
-- |
-- |
-- |
|
| Balance
at June 30, 1999 |
30,000,000 |
-- |
-- |
(22,084,911) |
7,915,089 |
|
| Profit
for the year |
-- |
-- |
-- |
2,488,966 |
2,488,966 |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
|
|
30,000,000 |
-- |
-- |
(19,595,945) |
10,404,055 |
|
|
|
========== |
========== |
========== |
========== |
========== |
|
|
|
|
|
|
|
| Notes
to the Accounts |
|
| for
the year ended June 30, 2000 |
|
|
| 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 registered as an investment company under the Investment Advisers
Rule 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 approved by Securities and Exchange Commission of
Pakistan under the |
|
| Investment
Companies and Investment Advisers Rule 1971. |
|
|
|
| 2.
Significant Accounting Policies |
|
|
| 2.1
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 |
|
|
|
|
|
|
| *
Dividend Income is recognized at the time of closure of the share transfer
books of the company |
|
| declaring
the dividend. |
|
|
|
|
| *
Sales and Purchases of securities are recognized on the date of contract. |
|
|
|
|
| *
Capital gains on sale of investment are 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 amortized over a |
|
| maximum
period of five years from the period of earning profit. |
|
|
|
|
| 2.5 Taxation |
|
|
|
| Provision
for taxation is based on taxable income at the current rates. The company is
exempt from taxation |
|
| if
not less than ninety percent 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 Ordinance 1979. |
|
|
|
| 2.6
The company claimed exemption of profits under clause 116 of the 2nd schedule
to the Income Tax |
|
| Ordinance. |
|
|
|
|
|
|
| 2.7
Previous year's figures have been rearranged, wherever necessary, to
facilitate comparison. |
|
|
|
|
|
2000 |
1999 |
|
|
|
Rs. |
Rs. |
|
|
| 3.
Investment in quoted shares |
|
| At Cost |
|
|
3,734,738 |
7,055,435 |
|
| Less
Diminution in Value |
|
482,701 |
870,509 |
|
|
|
------------------ |
------------------ |
|
| At
Market Value |
|
3,252,037 |
6,184,926 |
|
|
|
|
========== |
========== |
|
| 4.
Cash and bank balance |
|
| Union Bank |
|
|
3,321,942 |
984,842 |
|
| Standard
Chartered Bank |
|
3,617,580 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
6,939,522 |
984,842 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| 5.
Trade creditors and accruals |
|
| Sundry
Creditors |
|
39,687 |
27,859 |
|
| Accrued
Expenses |
|
163,153 |
5,000 |
|
|
|
------------------ |
------------------ |
|
|
|
202,840 |
32,859 |
|
|
|
========== |
========== |
|
|
|
|
| 6.
Due To investment adviser |
|
-- |
651,839 |
|
|
========== |
========== |
|
|
|
|
| 7.
Management Fee |
|
| Safeway
Fund Limited |
|
| 2% of net assets |
|
208,081 |
158,302 |
|
| Previous
years dues |
|
158,302 |
-- |
|
|
|
------------------ |
------------------ |
|
| Total
due to investment adviser |
|
366,383 |
158,302 |
|
|
|
|
========== |
========== |
|
|
|
|
| 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 11(A) of the Investment Advisers Rules 1971 has
been determined as follows: |
|
|
| ASSETS |
|
| Preliminary
expenses |
|
775,323 |
1,550,647 |
|
| Long
term investments |
|
|
| Marketable
securities at market value |
|
3,252,037 |
6,184,926 |
|
| Sundry debtors |
|
|
6,396 |
40,904 |
|
| Cash
and bank balance |
|
6,939,522 |
984,842 |
|
|
|
------------------ |
------------------ |
|
| Total Assets |
|
|
10,973,278 |
8,761,319 |
|
|
|
|
| LIABILITIES |
|
| Deferred
expenditure payable |
|
-- |
651,839 |
|
| Trade
creditors and accruals |
|
202,840 |
32,859 |
|
| Due
to investment advisers |
|
366,383 |
161,532 |
|
|
|
------------------ |
------------------ |
|
| Total Liabilities |
|
|
569,223 |
846,230 |
|
|
|
------------------ |
------------------ |
|
| Net
Assets as per rule |
|
10,404,055 |
7,915,089 |
|
|
|
========== |
========== |
|
|
| 2%
of net assets |
|
208,081 |
161,532 |
|
| Last
years amount payable |
|
161,532 |
-- |
|
| Less:
prior year adjustment |
|
(3,230) |
(3,230) |
|
|
|
|
------------------ |
------------------ |
|
| Total
due to investment advisers |
|
366,383 |
158,302 |
|
|
|
========== |
========== |
|
|
| 8. Cost of Sales |
|
| Opening
stock at cost |
|
7,055,435 |
22,465,610 |
|
| Purchases
at cost |
|
88,008,000 |
48,327,749 |
|
| Less:
Closing stock at cost |
|
3,734,739 |
7,055,435 |
|
|
|
------------------ |
------------------ |
|
|
|
91,328,696 |
63,737,924 |
|
|
|
========== |
========== |
|
|
|
|
| 9.
Capital Gain / (Loss) |
|
| Sales |
|
93,689,578 |
49,039,262 |
|
| Less:
Cost of Sales |
|
91,328,696 |
63,737,924 |
|
|
|
------------------ |
------------------ |
|
|
|
2,360,882 |
(14,698,662) |
|
|
|
|
========== |
========== |
|
|
|
|
| 10.
Other income |
|
| Dividends |
|
696,874 |
359,039 |
|
| Bank Interest |
|
266,834 |
50,538 |
|
|
|
------------------ |
------------------ |
|
|
|
963,708 |
409,577 |
|
|
|
========== |
========== |
|
|
|
|
|
| 11.
Administrative Expenses |
|
| Bank charges |
|
2,970 |
325 |
|
| Custodian
charges |
|
13,888 |
33,995 |
|
| Audit fee |
|
5,000 |
5,000 |
|
| Miscellaneous |
|
36,563 |
22,907 |
|
|
