| Al Meezan Mutual Fund Limited |
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| Annual
Report 2001 |
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| CONTENTS |
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| Company
Information |
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| Notice
of Meeting |
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| Financial
Highlights |
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| Directors'
Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
& Loss Account |
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| Statement
of Changes in Equity |
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| Cash
Flow Statement |
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| Notes
to the Accounts |
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| Pattern
of Shareholding |
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| Statement
of Income & Expenditure in Relation |
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| to
the Investment Company |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
|
| Mr.
Irfan Siddiqui |
Chairman |
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| Mr.
Mohammad Shoaib |
Chief Executive |
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| Mr.
Istaqbal Mehdi |
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| Mr.
Arif-ul-Islam |
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| Mr.
Ather Medina |
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| Mr.
Shafiq A. Khan |
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| Ms.
Hina Akhlaq |
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| Mr.
Mazhar Sharif |
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| COMPANY
SECRETARY |
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| Mr.
Mazhar Sharif |
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| INVESTMENT
ADVISOR |
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| A1
Meezan Investment Management Limited |
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| Formerly
A1-Meezan Investment & Financial Services (Pvt.) Limited |
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| AUDITORS |
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| A.
F. Ferguson & Co. |
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| Chartered
Accountants |
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| CUSTODIAN |
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| Muslim
Commercial Bank Limited |
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| BANKERS |
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| Bank
AL Habib Limited |
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| Credit
Agricole Indosuez |
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| Faysal
Bank Limited |
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| Muslim
Commercial Bank Limited |
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| National
Bank of Pakistan |
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| REGISTERED
OFFICE |
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| 4th
Floor, Block "C", |
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| Finance
& Trade Centre, |
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| Shahrah-e-Faisal, |
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| Karachi 74400, |
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| Pakistan. |
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| REGISTRAR
& SHARES DEPARTMENT |
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| THK
Associates (Pvt.) Limited, |
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| Ground
Floor, Sheikh Sultan Trust Building No.2, |
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| Beamount
Road, Karachi 75530 |
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| Phone:
(9221) 5689021, 568.6658 |
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| Fax:
(9221) 568 5681 |
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the Sixth Annual General Meeting oral Meezan Mutual Fund
Limited |
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| will
be held on Wednesday, November 14, 2001 at 9:30 a.m., at 4th Floor, Block
"C", Finance & |
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| Trade
Centre, Shahrah-e-Faisal, Karachi to transact the following business: |
|
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| ORDINARY
BUSINESS: |
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|
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| 1.
To receive, consider, and adopt Audited Accounts of the Company together with
the Directors' |
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| and
Auditors' Report thereon for the year ended June 30, 2001. |
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| 2.
To consider and approve final cash dividend of 6.6% for the year ended June
30, 2001, as |
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| recommended
by the directors. |
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| 3.
To appoint Auditors of the Company and fix their remuneration for the year
ending June 30, |
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| 2002.
The present Auditors M/s. A.F. Ferguson & Co., Chartered Accountants,
retire and |
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| being
eligible, offer themselves for re-appointment. |
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| 4.
Any other business with the permission of the Chair. |
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|
By order of the Board. |
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| Karachi |
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|
MAZHAR SHARIF |
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| October
3, 2001 |
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|
Company Secretary |
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| Notes: |
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| 1.
The Share Transfer Books of the Company will remain closed from October 17,
2001 to |
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| October
23, 2001 (both days inclusive). Transfers received in order at the office of
our Share |
|
| Registrar
M/s. THK Associates (Private) Limited, Ground Floor, Sheikh Sultan Trust
Building |
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| No.
2, Beaumont Road, Karachi - 75530 by the close of business on October 16,
2001 will |
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| be
in time for the purpose of payment of final dividend to the transferees. |
|
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| 2.
No person shall be appointed a proxy who is not a member of the Company and
qualified to |
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| vote,
save that a Corporation or a Company being a member of the Company may
appoint |
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| as
proxy or as its representative under Section 162 of the Ordinance any person
though not |
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| a
member of the Company, and the person so appointed shall be entitled to
exercise the same |
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| powers
on behalf of the Corporation which he represents, as that Corporation could
exercise |
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| if
it was an individual member of the Company. Any such appointment shall be
authorized |
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| by
a resolution of Directors of that Company or Corporation. Proxies in order to
be effective, |
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| must
be received at the registered office of the Company not later than 48 hours
before the |
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| meeting. |
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| 3.
Every proxy shall be appointed in writing under the hand of the appointer or
by an agent duly |
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| authorized
under a Power of Attorney or if such appointer is a Company or Corporation
under |
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| the
common seal of the Company or Corporation or the hand of its Attorney who may
be the |
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| appointer. |
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| 4.
Shareholders, whose shares are deposited with Central Depository Company
(CDC), or their |
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| Proxies
are requested to bring with them their Original National Identity Card or
Passport |
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| along
with the Participant's I.D. number and their account number at the time of
attending |
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| the
Annual General Meeting for verification. |
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| 5.
Shareholders are requested to promptly notify any change in the mailing
address to our Share |
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| Registrar
M/s. THK Associates (Private) Limited. |
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| FINANCIAL
HIGHLIGHTS |
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| Year ended |
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2001 |
2000 |
1999 |
1998 |
1997 |
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|
(Rupees in thousands from 1 to 5) |
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|
|
| 1.
Investment Income |
36,104 |
64,203 |
(9,389) |
28,427 |
32,322 |
|
| 2.
Operating Expenses |
6,454 |
8,359 |
5,632 |
4,953 |
6,851 |
|
|
| 3.
Reversal/(provision) for diminution in |
|
|
|
| the
value of marketable securities |
(11,376) |
33,228 |
57,730 |
(90,518) |
4,766 |
|
|
| 4. Profit / (loss) |
|
18,273 |
89,072 |
42,709 |
(67,043) |
30,237 |
|
|
| 5. Dividend |
|
16,500 |
52,500 |
16,000 |
-- |
29,500 |
|
|
| 6.
Rate of dividend (%) |
6.60 |
21.00 |
6.40 |
-- |
11.80 |
|
| 7.
Net Asset Value (Rs.) |
9.84 |
10.55 |
8.22 |
7.24 |
10.00 |
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| 8.
Appreciation/(depreciation) in NAV (%) |
(6.73) |
28.35 |
13.54 |
(27.60) |
0.50 |
|
| 9.
Total return (%) |
(0.47) |
53.90 |
22.38 |
(27.60) |
12.36 |
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| 10.
KSE 100 Index |
1366.44 |
1520.74 |
1054.67 |
879.62 |
1565.73 |
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| 11.
Appreciation/(depreciation) in |
|
| KSE
100 Index (%) |
(10.15) |
44.19 |
19.90 |
(43.82) |
(8.08) |
|
| 12.
Outperformance / (underperformance) in |
|
| comparison
to KSE 100 Index (%) |
9.68 |
9.71 |
2.48 |
16.22 |
20.44 |
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|
| DIRECTORS'
REPORT |
|
|
| On
behalf of the Board of Directors, we present the Sixth Annual Report together
with the audited |
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| accounts
for the year ended June 30, 2001. |
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|
| Operations
Review |
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| The
financial year ended June 30, 2001 turned out to be an eventful but depressed
year for the stock |
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| market
in which KSE Index eroded by 10% i.e. from 1520.74 to 1366.44. KSE-100 Index
peaked |
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| at
1637.47 on July 24. The first half of the FY00-01 was fairly stable with a
nominal decline of 1%. |
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| Resumption
of IMF funding and resolution of Hubco tussle supported the Karachi market
that |
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| performed
well during the first six months of the FY 00-01 against its regional peers. |
|
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| The
positive to neutral mood of the market was not repeated in the second half of
FY 00-01 and |
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| Index
lost ground during the period by 9%. Aggressive foreign selling by Morgan
Stanley's Pakistan |
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| Investment
Fund (PIF) and other investors severely affected market trends. Increasing
interest rates |
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| also
kept institutions away from equities. SECP implemented measures like Capital
Adequacy, T+3, |
|
| restricting
blank selling, reconstitution of KSE Board of Directors and an independent
Managing |
|
| Director
of KSE. These measures will have a long-term positive impact on the working
of local |
|
| equities.
The water crisis had its toll on the country's economy and thus on market
sentiments as |
|
| overall
GDP initially targeted to grow at 4.5% posted a growth of only 2.6% during FY
01. |
|
|
| Operating
Results |
|
| The
company reported a profit of Rs. 18.27 million for the year ended June 30,
2001. The operating |
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| results
for the year are as follows: |
|
|
|
|
|
(Rupees) |
|
|
| Investment
Income |
|
36,104,545 |
|
| Operating
Expenses |
|
(6,454,427) |
|
|
|
|
------------------ |
|
| Subtotal |
|
|
29,650,118 |
|
| Provision
for diminution in the value of marketable securities |
(11,376,600) |
|
| Net
Profit for the Year |
|
18,273,518 |
|
|
|
|
========== |
|
| Proposed
Dividend Per Share (Rs.) |
|
0.66 |
|
|
|
|
========== |
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| Total Dividend |
|
|
16,500,000 |
|
|
|
|
========== |
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| During
the year, the company realized capital gains of Rs. 11.30 million, dividend
income of Rs.20.24 |
|
| million
and other income of Rs.4.56 million. The provision for diminution in the
value of marketable |
|
| securities
was Rs. 11.38 million. |
|
|
| Portfolio
Performance Relative to KSE-100 Index |
|
| Alhamdolillah,
the portfolio of the company once again managed to outperform the KSE-100
Index. |
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| It
was by all means a very significant achievement as it was the fifth
consecutive year that our |
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| portfolio
outperformed the benchmark index. |
|
|
| The
KSE-100 Index declined by 10.15% during the year ended June 30, 2001. On the
other hand, |
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| total
return on fund portfolio was (0.47)%. Thus the portfolio outperformed the
benchmark index |
|
| by
a substantial 968 basis points. The out performance has been an outcome of
prudent security |
|
| selection
and market timing. The company has so far completed five full years of
operations and |
|
| a
summary of relative portfolio performance is as follows: |
|
|
|
June 30, |
June 30, |
June 30, |
June 30, |
June 30, |
|
|
1997 |
1998 |
1999 |
2000 |
2001 |
|
|
|
|
| Net
Asset Value Per Share |
10.00 |
7.24 |
8.22 |
10.55 |
9.84 |
|
| Dividend Paid |
|
1.18 |
-- |
0.64 |
2.10 |
0.66 |
|
| Total
Return on Fund Portfolio (%) |
12.36 |
(27.60) |
22.38 |
53.90 |
(0.47) |
|
| KSE-100 Index |
|
1565.73 |
879.62 |
1054.67 |
1520.74 |
1366.44 |
|
| Return
on Index (%) |
(8.08) |
(43.82) |
19.90 |
44.19 |
(10.15) |
|
| Portfolio
outperformance (%) |
20.44 |
16.22 |
2.48 |
9.71 |
9.68 |
|
|
| Composition
of Assets |
|
| On
June 30, 2001 the composition of net assets of your company at market value
was as under: |
|
|
|
| The
top five holdings of the Company as on June 30, 2001 based on market values
were as follows: |
|
|
| Company |
|
|
Market Value |
Percentage of |
|
|
|
|
(Rs. in million) |
Net Assets |
|
|
| Pakistan
State Oil Limited |
|
|
32.5 |
13.2 |
|
| Hub
Power Company Limited |
|
27.2 |
11.1 |
|
| Pakistan
Telecommunication Co. Limited |
|
21.7 |
8.8 |
|
| Fauji
Fertilizer Company Limited |
|
20.9 |
8.5 |
|
| Lever
Brothers Pakistan Limited |
|
19.4 |
7.9 |
|
|
| Board
of Directors |
|
| Dr.
Amjad Waheed representing NIT resigned and was replaced by Mr. Ather Medina.
The Directors |
|
| wish
to place on record valuable services rendered to the Company by Dr. Amjad
Waheed and |
|
| welcome
the new Director. |
|
|
| Acknowledgement |
|
| We
offer our sincere gratitude to the Board of Directors for their continued
guidance and support. |
|
| We
also wish to place on record our appreciation for the auditors, shareholders,
Securities & |
|
| Exchange
Commission of Pakistan and investment adviser of the Company. |
|
|
|
Mohammad Shoaib, CFA |
|
Ather Medina |
|
|
Chief Executive |
|
Director |
|
|
| Karachi:
October 1, 2001 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet oral Meezan Mutual Fund Limited as at
June 30, 2001 |
|
| and
the related profit and loss account, statement of changes in equity 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 purposes 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 Investment
Companies and |
|
| Investment
Advisers Rules, 1971. Our responsibility is to express an 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 |
|
| a
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 rule 16 of the Investment Companies and Investment
Advisers |
|
| 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 in accordance with |
|
| the
provisions of the second schedule to the Investment Companies and Investment |
|
| Advisers
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; 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, statement of changes in equity
and cash flow |
|
| statement
together with the notes forming part thereof conform with approved accounting |
|
| standards
as applicable in Pakistan, and, give the information required by the
Companies |
|
| Ordinance,
1984 and the Investment Companies and Investment Advisers 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 June 30, 2001 and of the profit, its changes in equity and cash flows
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. |
|
|
|
|
|
|
A. F. FERGUSON & CO. |
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| Karachi:
October 2, 2001 |
|
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2001 |
|
|
|
Note |
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
|
|
| ASSETS |
|
| Long
Term Deposit |
|
|
300,000 |
300,000 |
|
|
|
| Current Assets |
|
|
|
| Marketable
securities |
|
3 |
233,607,251 |
212,612,202 |
|
| Accounts
receivable - unsecured and considered good |
734,758 |
3,103,303 |
|
| Other
receivables |
|
4 |
7,194,619 |
8,325,720 |
|
| Bank balances |
|
5 |
25,733,435 |
85,588,173 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
267,270,063 |
309,629,398 |
|
|
|
|
------------------ |
------------------ |
|
| TOTAL
ASSETS |
|
|
267,570,063 |
309,929,398 |
|
|
|
| LIABILITIES |
|
|
|
| Current
Liabilities |
|
|
|
| Current
maturity of a long term liability |
|
-- |
939,301 |
|
| Due
to the Investment Adviser-an associated undertaking |
6 |
4,919,553 |
6,526,299 |
|
| Creditors,
accrued expenses and other liabilities |
7 |
172,867 |
5,759,673 |
|
| Proposed
dividend |
|
|
16,500,000 |
52,500,000 |
|
|
|
|
------------------ |
------------------ |
|
| TOTAL
LIABILITIES |
|
|
21,592,420 |
65,725,273 |
|
|
|
|
------------------ |
------------------ |
|
| NET ASSETS |
|
245,977,643 |
244,204,125 |
|
|
========== |
========== |
|
|
| SHAREHOLDERS'
EQUITY |
|
| Authorised
and issued, subscribed and paid-up |
|
| share
capital 25,000,000 (2000: 25,000,000) |
|
| ordinary
shares of Rs. 10 each fully paid in cash |
|
250,000,000 |
250,000,000 |
|
| Accumulated
loss |
|
(4,022,357) |
(5,795,875) |
|
|
|
------------------ |
------------------ |
|
|
|
245,977,643 |
244,204,125 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammad Shoaib |
|
Ather Medina |
|
|
Chief Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
Note |
2001 |
2000 |
|
|
|
|
Rupees |
Rupees |
|
|
|
| INVESTMENT
INCOME |
|
| Capital gain |
|
8 |
11,298,420 |
45,083,895 |
|
| Dividend
income |
|
|
20,240,990 |
11,999,440 |
|
| Other income |
|
9 |
4,565,135 |
7,120,154 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
36,104,545 |
64,203,489 |
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative
expenses |
|
10 |
1,534,874 |
18,331,551 |
|
| Remuneration
to the Investment Adviser |
6 |
4,919,553 |
6,526,299 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
6,454,427 |
8,359,454 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
29,650,118 |
55,844,035 |
|
|
| Less:
Provision for diminution in the |
|
|
|
| value
of marketable securities |
|
11,376,600 |
-- |
|
| Add:
Reversal of provision for diminution in the |
|
|
|
| value
of marketable securities |
|
-- |
33,228,224 |
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
18,273,518 |
89,072,259 |
|
|
|
|
|
|
| PROVISION
FOR TAXATION |
|
|
|
| Current
- for a prior year |
|
|
-- |
(2,120,590) |
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION FOR THE YEAR |
|
18,273,518 |
91,192,849 |
|
|
|
========== |
========== |
|
|
|
|
| Basic
earnings per share |
|
16 |
0.73 |
3.65 |
|
|
|
|
========== |
========== |
|
| Dividend
per share |
|
|
0.66 |
2.10 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammad Shoaib |
|
Ather Medina |
|
|
Chief Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
Issued, |
Accumulated |
Total |
|
|
Subscribed |
loss |
|
|
|
and fully |
|
|
|
paid-up |
|
|
|
share capital |
|
|
|
|
(Rupees) |
|
|
|
| Balance
as at June 30, 1999 |
|
250,000,000 |
(44,488,724) |
205,511,276 |
|
| Net
loss for the year ended June 30, 2000 |
-- |
91,192,849 |
91,192,849 |
|
| Proposed
dividend (Rs.2.10 per share) |
-- |
(52,500,000) |
(52,500,000) |
|
|
|
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2000 |
|
250,000,000 |
(5,795,875) |
244,204,125 |
|
|
| Net
profit for the year ended June 30, 2001 |
-- |
18,273,518 |
18,273,518 |
|
| Proposed
dividend (Rs.0.66 per share) |
-- |
(16,500,000) |
(16,500,000) |
|
|
|
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2001 |
|
250,000,000 |
(4,022,357) |
245,977,643 |
|
|
|
========== |
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammad Shoaib |
|
Ather Medina |
|
|
Chief Executive |
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
Note |
2001 |
2000 |
|
|
|
|
Rupees |
Rupees |
|
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
18,273,518 |
89,072,259 |
|
|
| Adjustments
for: |
|
| Provision
for diminution in the value of marketable |
|
| securities |
|
|
11,376,600 |
-- |
|
| Reversal
of diminution in the value of marketable |
|
|
|
| securities |
|
|
-- |
(33,228,224) |
|
| Dividend
income |
|
|
(20,240,990) |
(11,999,440) |
|
| Financial
income |
|
|
(4,565,135) |
(7,045,154) |
|
| Dividends
received |
|
|
21,157,631 |
12,329,948 |
|
| Financial
income received |
|
|
4,933,692 |
8,157,808 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before changes in working capital |
|
30,935,316 |
57,287,197 |
|
|
| (Increase)
/ decrease in current assets |
|
|
| Marketable
securities |
|
(32,371,649) |
(11,471,196) |
|
| Accounts
receivable |
|
2,368,545 |
24,788,510 |
|
| Other
receivables |
|
(75,000) |
-- |
|
|
|
------------------ |
------------------ |
|
|
|
(30,078,104) |
13,317,314 |
|
|
| Increase
/ (decrease) in current liabilities |
|
| Due
to the Investment Adviser - an associated undertaking |
(1,606,746) |
2,416,073 |
|
| Creditors,
accrued expenses and other liabilities |
|
(1,188,863) |
(24,371,652) |
|
|
|
------------------ |
------------------ |
|
|
|
|
(2,795,609) |
(21,955,579) |
|
