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BSJS Balanced Fund Limited

Annual Report 1999

CONTENTS

COMPANY INFORMATION

Board of Directors :

Mr. M. W. Farooqui

Chairman

Mr. Abid Hussain Zuberi

Shaikh Mukhtar Ahmed

Mr. Ayaz-uI-Haque

Mr. Munaf Ibrahim

Mian Raza Mansha

Mr. M. Habib-ur-Rahman

Chief Executive

Company Secretary:

Saiyid Azher Alam

Investment Adviser:

ABAMCO Limited

Auditors:

Taseer Hadi Khalid & Co.

Chartered Accountants

Legal Adviser:

Aman Law Associates

Custodian:

Muslim Commercial Bank Limited

Bankers:

Askari Commercial Bank Limited

Bank Al-Habib Limited

Bolan Bank Limited

Credit Agricole Indosuez

Faysal Bank Limited

Metropolitan Bank Limited

Muslim Commercial Bank Limited

Registered Office:

1306-1307, Chapal Plaza

Hasrat Mohani Road

Karachi-74000, Pakistan

Tel: 2441311-3, Fax: 2425652

Share Department :

Uni Corporate & Financial Services

Westland Trade Centre

Opp: Flyover, Shaheed-e-Millat

Road, Karachi-75350, Pakistan

Tel: 4313205-6 Fax: 4313207

NOTICE OF MEETING

Notice is hereby given that the 5th Annual General Meeting of the

Company will be held at 11:30 a.m. on Saturday, October 9, 1999 at its

registered office 13th Floor, Chapal Plaza, Has rat Mohani Road,

Karachi, to transact the following business:

1. To confirm the Minutes of the Fourth Annual General Meeting

held on October 31, 1998.

2. To receive, consider and adopt the Audited Accounts of the

Company together with Directors' Report for the year ended

June 30, 1999.

3. To approve the payment of cash dividend @ Rs. 1.00 per

share of Rs. 10/- each for the year ended June 30, 1999.

4. To appoint Auditors and fix their remuneration for the year

1999-2000. The present Auditors Messrs. Taseer Hadi Khalid

& Co., Chartered Accountants retire and being eligible, offer

themselves for re-appointment.

5. To transact any other business with the permission of the

Chair.

It is further notified that the Share Transfer Books of the Company will

be closed from Wednesday, September 1, 1999 to Wednesday,

September 8, 1999 (both days inclusive) to determine the names of

members entitled to attend the Annual General Meeting and to

determine entitlement to cash dividend as declared by the Board of

Directors. Transfers received at Uni Corporate & Financial Services,

Westland Trade Centre, Opposite Flyover, Shaheed-e-Millat Road,

Karachi at the close of business on Tuesday, August 31, 1999 will be

treated in time for these entitlements.

By order of the Board

Saiyid Azher Alam

Karachi: July 31, 1999

Company Secretary

Notes:

1. A member entitled to attend and vote at the meeting is

entitled to appoint another member of the Company as

a proxy to attend, speak and vote on his/her behalf.

A corporation may appoint a person as proxy who is not

a member.

2. Forms of proxy to be valid must be received at the Company's

registered office duly stamped not later than 48 hours before

the meeting.

3. If a member appoints more than one proxy and/or deposits

more than one instruments of proxy with the Company, all

such instruments of proxy shall be rendered invalid.

4. The shareholders are advised to notify the share department

of any change of address to ensure prompt delivery of mail.

FINANCIAL HIGHLIGHTS

June 30,

August 8,

Year ended

1999

1998

1997

1995 to June

30, 1996

(Rupees in thousands from I to IV)

I. Operating income

18,897

16,258

25,054

9,340

II. Operating expenses

4,355

4,297

4,547

8,905

III. Profit/(loss)

15,067

11,961

19,694

(33)

IV. Dividend

15,000

12,000

19,500

V. Rate of dividend (%)

VI. NAV at year end (Rs.)

10.83

10.03

10.60

10.10

VII. Appreciation/

(depreciation) in NAV (%)

7.98

(5.38)

5.00

VIII. Total return (%)

17.95

2.62

18.00

IX. KSE 100 Index on

June 30

1,054.67

879.62

1,565

1,703

X. Appreciation/

(depreciation) in

KSE 100 Index (%)

19.90

(43.79)

(8.10)

(6.95)

DIRECTORS' REPORT

The Board of Directors of the BSJS Balanced Fund Limited (BBF)

presents the Fifth Annual Report on the working of the Company, which

is the fourth year of its operations, together with the Audited Accounts

for the year ended June 30, 1999.

1. OPERATING RESULTS

(I) Profit during the year

The Company earned a net profit of Rs. 15.067 million

(1998: Rs. 11.961 million), that translates into an earning per share of

Rs.1.00. Your directors recommend a cash dividend of 10% i.e. Rs. 1.00

per share (1998: 8% i.e. Rs. 0.80 per share). Rs. 15 million have been

appropriated as dividend, that works out to 99.6 percent of the profit for

the year. As over ninety percent of the net profit of the Company has

been appropriated for distribution as dividend to shareholders, there is

no liability for income tax under clause 102D part I of the Second

Schedule of the Income Tax Ordinance, 1979.

As reported last year, the income tax assessment of your Company for

the year ended June 30, 1996 (Assessment Year 1996-97) was not

finalized because of pending appeal with the Income Tax Appellate

Tribunal. As a prudent measure, full tax liability, as demanded by the

Deputy Commissioner of Income Tax amounting to Rs. 1.282 million

was provided in the Accounts. The appeal has now been decided and

there will be a tax refund instead of earlier assessed tax liability. To the

extent amount was appearing in the accounts as unpaid liability has

been added back and the remaining amount will be added back after

the refund is received.

II. Composition of Assets

On June 30, 1999, the composition of assets of your Company, at their

market values was as under:

June 30, 1999

June 30, 1998

Rs.

Percent

Rs.

Percent

million

Equity securities

90.965

71.132

Term finance certificates

31.000

6.326

Investment on mark-up basis

15.000

76.000

Receivable on sale of shares

40.000

6.961

Cash at banks in PLS accounts

0.865

16.725

Receivables against income

6.528

4.340

----------------------

184.36

100

181.48

100

During the year the return available in money market and on Bank

deposits, were not attractive. The combined income of your Company

from these sources declined by 26.92%, firstly due to decline in the

rate of return and secondly, because funds were shifted to other

avenues of income, yielding higher return. This decline was more than

offset by substantial increase in income from dividend and mark-up on

term finance certificates. The composition of assets of your Company

has undergone change and investment in term finance certificates and

equity securities have increased by 13% and 10% respectively.

(iii) The Company's performance relative to KSE Index:

The KSE 100 Index appreciated by 19.90% during the year ended

June 30, 1999. The net asset value (NAV) of the shares of your

Company was Rs. 10.03 on June 30, 1998 and it improved to

Rs. 10.83 on June 30, 1999. Together with dividend pay-out, this

reflects a return of 17.95%. BBF is a balanced fund and a portion of

investment is in fixed income securities and in money market

instruments which do not move with the KSE Index. All along our

strategy has been to achieve our long-term investment perspective of

reducing volatility and focusing on regular flow of income. During the

period of steep decline in KSE index, in the previous year, BBF had

firmly held ground.

Your Company will continue with the policy of remaining liquid and

invest in fixed income securities and in shares of companies with

dividend paying record and growth prospects, so as to ensure a

constant flow of income without erosion in the value of investment.

BBF is well positioned to enter the market when equities of companies

with a good track record are offering attractive valuations. This strategy

will hopefully allow BBF to provide security and profitability to the

shareholders without foregoing growth.

2. Y2K COMPLIANCE

The Investment Adviser has conducted a review of the existing computer

resources and related equipment to determine the current state of

readiness and to identify and prioritize the areas that need to be

addressed for millennium compliance. Our systems are Y2K compliant.

3. AUDITORS

Messrs. Taseer Hadi Khalid & Co., Chartered Accountants retire, and

being eligible, offer themselves for re-appointment.

4. SHARE HOLDERS

A statement showing pattern of share holding in the Company as at

June 30, 1999 is given on page 24 of this Report.

5. THANKS

The Board of Directors of the Company thanks the Securities and

Exchange Commission of Pakistan for their valuable support,

understanding and guidance.

(M. Habib-ur-Rahman)

Karachi: July 31, 1999

Chief Executive

AUDITORS' REPORT TO THE MEMBERS

We have audited the annexed Balance Sheet of BSJS Balanced Fund

Limited as at June 30, 1999 and the related Profit and Loss Account and

Statement of Changes in Financial Position together with the notes to

the accounts 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 and

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 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 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;

(iii) The business conducted, investments made and

expenditure incurred during the year were in accordance

with the objects of the Company;

the explanations given to us, the Balance Sheet and the Profit

and Loss Account and the Statement of Changes in the Financial

Position together with the notes forming part thereof give the

information required by the Companies Ordinance, 1984 and

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, 1999 and of

the profit and changes in the financial position for the year ended

on that date;

(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.

Taseer Hadi Khalid & Co.

Karachi: July 31, 1999

Chartered Accountants

Balance Sheet As at June 30, 1999

Note

1999

1998

ASSETS

Marketable securities

Equity securities

78,884,608

70,841,207

Term finance certificates

31,000,000

5,324,000

109,884,608

76,165,207

Other Assets

Advance against investment

1,000,000

Other investments

15,000,000

76,000,000

Trade debts - considered good

40,000,000

6,960,519

Advances and other receivables

6,528,542

4,340,290

Cash and bank balances

864,690

16,725,124

----------------------

62,393,232

105,025,933

----------------------

Total Assets

172,277,840

181,191,140

LIABILITIES

Current Liabilities

Current maturity of deferred

expenditure payable

1,184,115

Due to Investment Adviser

3,592,860

3,694,540

Dividend payable

3,263

1,386

Accounts payable and accrued

expenses

367,530

10,538,917

Proposed dividend

15,000,000

12,000,000

Provision for taxation

756,391

1,281,878

----------------------

20,904,159

28,700,836

Other Liabilities

Deferred expenditure payable

1,184,117

2,368,232

----------------------

Total Liabilities

22,088,276

31,069,068

----------------------

NET ASSETS

150,189,564

150,122,072

=============

SHAREHOLDERS EQUITY

Rupees

150,189,564

150,122,072

=============

These accounts should be read in conjunction with the attached

notes.

M. Habib-ur-Rahman

Munaf Ibrahim

Chief Executive

Director

Profit and Loss Account

For the year ended June 30, 1999

Note

1999

1998

Capital gain/(loss)

(10,449,760)

8,095,089

Dividend income

7,581,626

5,090,758

Mark-up on bank deposits

3,972,500

1,695,374

Profit on money market

transactions

3,675,904

8,770,858

Profit on term finance certificates

2,941,008

982,880

Other income

10,000

----------------------

7,731,278

24,634,959

Reversal/(Provision) for diminution

in value of marketable securities

on individual investment basis

11,165,619

'(8,376,850)

----------------------

18,896,897

16,258,109

Operating Expenses

Administrative

705,227

590,429

Financial

499,665

698,122

Remuneration to Investment

Adviser

4.1

3,150,000

3,008,283

----------------------

4,354,892

4,296,834

----------------------

Profit before taxation

14,542,005

11,961,275

Provision for taxation added back-

prior year

525,487

----------------------

Net profit for the year

Rupees

15,067,492

11,961,275

=============

These accounts should be read in conjunction with the attached notes.

M. Habib-ur-Rahman

Munaf Ibrahim

Chief Executive

Director

DISTRIBUTION STATEMENT

For the year ended June 30, 1999

1999

1998

Undistributed profit brought forward

122,072

160,797

Net profit for the year

15,067,492

11,961,275

Appropriation:

Final cash dividend @ 10%

(1998: 8%)

(15,000,000)

'(12,000,000)

----------------------

Undistributed profit carried forward

Rupees

189,564

122,072

=============

M. Habib-ur-Rahman

Munaf Ibrahim

Chief Executive

Director

STATEMENT OF MOVEMENT IN EQUITY AND RESERVES

For the year ended June 30, 1999

1999

1998

Net assets as at July 1,

1998 (1997)

Share capital

150,000,000

Accumulated profit

122,072

160,797

----------------------

Rupees

150,122,072

150,160,797

Undistributed income/

(distribution exceeding income) for

the year

67,492

(38,725)

Net assets as at June 30,

1999 (1998)

Share capital

150,000,000

Accumulated profit

189,564

122,072

----------------------

Rupees

150,189,564

150,122,072

=============

M. Habib-ur-Rahman

Munaf Ibrahim

Chief Executive

Director

STATEMENT OF CHANGES IN FINANCIAL POSITION

For the year ended June 30, 1999

1999

1998

CASH FLOWS FROM OPERATING

ACTIVITIES

Profit before taxation

14,542,005

11,961,275

Adjustments for:

(Reversal)/Provision for diminution in

value of marketable securities

(11,165,619)

8,376,850

Mark-up on deferred expenditure

442,860

686,257

Operating profit before working

----------------------

capital changes

3,819,246

21,024,382

(Increase)/decrease in current assets

Marketable securities

(22,553,782)

'(13,780,215)

Advance against investment

1,000,000

'(1,000,000)

Other investments

61,000,000

'(21,000,000)

Trade debts

(33,039,481)

40,183,310

Advances and other receivables

(2,078,251)

(2,509,107)

Increase/(decrease) in current

liabilities

Due to Investment Adviser

3,150,000

3,008,283

Accounts payable and accrued

expenses

(10,171,387)

9,266,453