| First Capital Mutual Fund Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| Company
information |
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| Notice
of meeting |
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| Directors'
report to the shareholders |
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| Auditors'
report to the members |
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| Balance
sheet |
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| Profit
and loss account |
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| Cash
flow statement |
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| Notes
to the accounts |
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| Statement
of income & expenditure |
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| Pattern
of shareholding |
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| COMPANY
INFORMATION |
|
|
| Board
of Directors |
|
Mr. Salmaan Taseer |
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|
Chairman |
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|
Mr. Mumtaz H Syed |
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|
Chief Executive |
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|
Mr. Aamer Nasim Chishti |
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|
Mr. Mohammed Ashraf Ali |
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|
Mr. Sadiq Y. Yalmaz |
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|
Mr. Shaan Taseer |
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|
Mr. Muhammed Shuaib |
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| Company
Secretary |
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Mr. Sardar Ali Wattoo |
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| Investment
Committee |
|
Mr. Salmaan Taseer
Chairman |
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|
Mr. Mumtaz H Syed |
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|
Mr. Sardar Ali Wattoo |
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| Auditors |
|
Messrs. Taseer Hadi
Khalid & Co. |
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|
Chartered Accountants |
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| Legal
Advisors |
|
Chima & Ibrahim |
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|
Advocates, Lahore |
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| Custodian |
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Crescent Investment Bank
Limited |
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| Registered
Office |
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103 C II, Gulberg III |
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Lahore, Pakistan |
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Tel: (042) 5757591-4 |
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Fax: (042) 5757590 |
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| Investment
Advisors |
|
First Capital Investments
(Pvt.) Limited |
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|
103 C II, Gulberg Ill,
Lahore. |
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| Share
Department |
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First Capital Mutual Fund
Limited |
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|
Ground Floor |
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|
Sheikh Sultan Trust
Building No. 2 |
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Beaumont Road |
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Karachi |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 5th Annual General Meeting of the shareholders of
the Company will be held on March 1 |
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| 2000
at 10:00 a.m. at the Registered Office of the Company, 103 C II, Gulberg III,
Lahore to transact the following |
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| business:- |
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| 1.
To confirm the minutes of the 4~hAnnual General Meeting of the Members. |
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| 2.
To receive, consider and adopt the annual audited accounts of the Company
together with the Auditors' and |
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| Directors'
reports for the year ended June 30, 1999. |
|
|
| 3.
To appoint Auditors' for the year ending June 30, 2000 and to fix their
remuneration. The present auditors M/s |
|
| Taseer
Hadi Khalid & Company, Chartered Accountants, being eligible, offer
themselves for re-appointment. |
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| Special
Business |
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| 4.
To consider, and if deemed fit, pass the following resolution as a Special
Resolution with or without amendments |
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| that,
the Chief Executive be and is hereby authorized to undertake and liquidate on
behalf of the company and in |
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| accordance
with the provisions of section 208 of the Companies Ordinance, 1984: |
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| an
investment in Pre-Initial Public Offering of World CALL Payphones Limited up
to Rs. 15 million for |
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| purchase
of 1,000,000 shares at the price of Rs. 15/- per share inclusive of the
premium of Rs. 5/- per share. |
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|
| 5.
To transact any other business of the Company with the permission of the
Chair. |
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|
By the Order of the Board |
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| Lahore: |
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SARDAR ALI WATTOO |
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| February
08, 2000 |
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(Company Secretary) |
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| NOTES: |
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| The
share transfer books of the Company will remain closed from March 1~t, to
March 8th, 2000 (both days |
|
| inclusive). |
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| A
member entitled to vote at the meeting may appoint another member as his/her
proxy to attend the meeting and |
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| vote
on his/her behalf. Proxies in order to be effective, must be received by the
Company at least 48 hours before the |
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| meeting. |
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| Members
are requested to notify any change in address immediately. |
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| STATEMENT
U/S 208 OF THE COMPANIES ORDINANCE, 1984: |
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| World
CALL Payphones Limited |
|
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| The
Company was incorporated on December 14th, 1995. The principal activity of
the Company is the operation and |
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| maintenance
of a public payphones network, which are installed at various
shops/commercial outlets. The company has |
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| applied
to the Securities and Exchange Commission of Pakistan and Karachi/Lahore
Stock Exchanges for their |
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| approval
to list the company's shares on Karachi/Lahore Stock Exchanges. |
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| STATEMENT
UNDER SECTION 160(1)(b) OF THE COMPANIES ORDINANCE, 1984 |
|
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| This
statement sets out the material facts pertaining to the special business to
be transacted at the 5th Annual General |
|
| Meeting
of the Company. The following resolution is proposed to be passed (with or
without modification as a Special |
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| Resolution
under Section 208 of the Companies Ordinance, 1984: |
|
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| "RESOLVED
THAT Mr. Mumtaz H Syed, the Chief Executive of the Company, be and is hereby
authorized to make |
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| investment
in the Pre-Initial Public Offering in the WORLD CALL Payphones Limited and to
liquidate such investment on |
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| behalf
of the Company from time to time as may be deemed fit. |
|
|
| This
Authority shall remain in force until revoked by the shareholders." |
|
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| "RESOLVED
FURTHER THAT the Chief Executive of the Company be and is hereby authorized
to take all necessary |
|
| steps
(as may be necessary to invest/dis-invest the above-mentioned investments)
and fulfill all legal, corporate and |
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| procedural
formalities in connection therewith." |
|
|
| The
Company is fully authorized by its Memorandum of Association to make such
investment. The investment would |
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| be
made and dis-invested at such times, as the Chief Executive may think
appropriate on behalf of the Company. The |
|
| directors
of the Company have no interest in the Company except that they are
shareholders/common directors. The |
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| following
are the material facts about the proposed Special Resolution: |
|
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| Name
of investee company |
|
WORLD CALL Payphones
Limited |
|
|
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| Nature,
amount and extent |
|
Investment in the
Pre-Initial Public Offering of |
|
|
|
the share capital of the
company upto |
|
|
|
Rs.15,000,000 (1,000,000
ordinary shares of |
|
|
|
Rs. 10/- each offered at
a premium of Rs.5/- per |
|
|
|
share). |
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| Price
at which shares would be purchased |
At Rs. 15/- for each
share inclusive of the |
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|
premium of Rs.5/- per
share |
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| Period
for which investment would be made |
As a portfolio
investment. |
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| Purpose
of Investment |
|
To earn dividends and
gains and other benefits |
|
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|
through World CALL's
special position and skills |
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|
in Telecommunication
Sector. |
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| Benefits
likely to accrue to the company |
|
The company shall be a
large scale Card |
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| and
the shareholders from the proposed |
|
Payphone Operator and
FCMF expects to yield |
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| investments. |
|
substantial capital
gains/dividends on the above |
|
|
investment. |
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|
| Directors'
Report to the Shareholders |
|
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| The
Board of Directors are pleased to present the audited financial statements
for the year ended June 30, 1999. |
|
|
| 1998-99
Review |
|
|
| During
the year under review adverse economic conditions prevalent in recent years
further aggravated due to a host of |
|
| reasons.
The impact of the economic sanctions imposed as a consequence of Pakistan
detonating its nuclear devices in |
|
| response
to India, the lingering Government of Pakistan-IPP controversy and other
political and economic factors kept |
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| investors
away from the stock market. The result was the continuation of the depressed
and at times falling even stock |
|
| market. |
|
|
| However,
the Investment Advisers of FCMF adopted an aggressive strategy and offloaded
part of its investment |
|
| portfolio
that was not expected to perform well due to weakened business fundamentals
and due to adverse economic |
|
| conditions
prevailing in Pakistan. This resulted in a much higher realized loss in
1998-99 as compared to the last fiscal |
|
| year.
But the brighter side is the reversal of past provisioning to account for
diminution in the value of the Fund's |
|
| investments
that increased the profit before tax to Rs 6,263,026 from a loss of Rs.
27,447,353 in the last fiscal year. |
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|
| Financial |
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
| Capital
gain on sale of marketable securities |
|
(37,942,431) |
1,859,201 |
|
| Dividend
income |
|
2,369,013 |
3,916,485 |
|
| Mark-up
on bank deposits |
|
883,345 |
2,060,950 |
|
| Provision
for diminution in value of securities |
|
-- |
(29,999,854) |
|
| Excess
provision written back |
|
45,471,641 |
-- |
|
| Net
profit / (loss) for the period |
|
6,130,521 |
(27,643,176) |
|
| Accumulated
loss brought forward |
|
(72,232,730) |
(44,589,554) |
|
| Accumulated
loss carried forward |
|
(66,102,210) |
(72,232,730) |
|
|
| Future
Outlook |
|
|
| The
Directors are hopeful of a continued improvement in the financial performance
of the Fund because of a renewed |
|
| domestic
as well as foreign investors interest in Pakistan's stock market. The reason
for increased investor's interest, |
|
| amongst
others, is the commitment given by the present government to initiate a
number of economic reforms. These |
|
| include
revival of the privatization plan with government assets within oil & gas
sector to be offered to strategic |
|
| investors.
The market index has arisen to 1,750 - 1,800 levels and is expected to move
higher in the later half of the |
|
| current
fiscal year. A number of companies are also planning their public offers to
capitalize on building the investors |
|
| appetite.
The increasing stock market value has made the First Capital Mutual Fund well
positioned to capitalize on such |
|
| new
investment opportunities. |
|
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| Dividend |
|
|
| The
Directors do not recommend payment of a dividend due to the accumulated
losses of the Company. |
|
|
| Board
of Directors |
|
|
| During
the year, the Director and Chief Executive Mr. Zahid Zia resigned. Mr. Mumtaz
H Syed was appointed as |
|
| Director
and Chief Executive in his place. Later, election of directors took place in
the Company's annual general |
|
| meeting
held on February 154, 1999. Mr. Sadiq Y. Yalmaz, Mr. Muhammad Shuaib and Mr.
Mehtab Saeed were elected |
|
| to
the Board in place of Mr. Jamil Raza Syed, Mr. Akbar Naqi Zaidi and Mr.
Humayun Nabi Jan. Later Mr. Mehtab Saeed |
|
| and
Mr. Bashir A. Sheikh also resigned and they were replaced by Mr. Aamer Nasim
Chishti and Mr. Mohammad Ashraf |
|
| Ali. |
|
|
| Pattern
of Shareholding |
|
|
| The
pattern of shareholding is annexed to this report. |
|
|
| Auditors |
|
|
| The
present auditors Messrs. Taseer Hadi Khalid & Co., Chartered Accountants,
retire and being eligible offer |
|
| themselves
for re-appointment. |
|
|
| For
and on behalf of the Board |
|
|
| Mumtaz
H Syed |
|
| Chief
Executive |
|
Lahore, February 8, 2000. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of FIRST CAPITAL MUTUAL FUND LIMITED
as at June 30, 1999 and |
|
| the
related profit and loss account and cash flow statement together with the
notes to the accounts for the year then |
|
| ended.
Our examination was made in accordance with the generally accepted auditing
standards and accordingly |
|
| included
such tests of the accounting records and such other auditing procedures as
were considered necessary in the |
|
| circumstances
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 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 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 |
|
| 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 purposes of the
Company's business; |
|
|
| iii)
the business conducted, investments made and the expenditure incurred during
the year were in |
|
| accordance
with the investment policy of the Company and investment companies and
Investment |
|
| Advisers
Rules, 1971; |
|
|
| iv)
the company has not contravened the provisions of Rule 8 of the Investment
Companies and |
|
| Investment
Advisers Rules, 1971; and |
|
|
| 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 cash flow statement 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 loss and cash flow for the year ended
on that date; |
|
|
| d)
in our opinion, no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| February
8, 2000 |
|
TASEER HADI KHALID & CO. |
|
| LAHORE |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
(Rupees) |
(Rupees) |
|
|
| SHARE
CAPITAL |
|
|
| Authorised
capital: |
|
| 20,000,000
ordinary shares of Rs. 10/- each |
|
200,000,000 |
200,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital: |
|
| 15,000,000
ordinary shares of Rs. 10/- each issued as fully |
|
| paid in cash |
|
150,000,000 |
150,000,000 |
|
|
| Accumulated
loss |
|
(66,102,210) |
(72,232,731) |
|
|
----------- |
----------- |
|
|
83,897,790 |
77,767,269 |
|
|
|
|
| DEFERRED
EXPENDITURE PAYABLE |
|
|
-- |
1,659,372 |
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
|
| Current
maturity of deferred expenditure payable |
3 |
1,659,372 |
1,659,372 |
|
| Due
to investment adviser |
|
4 |
2,036,214 |
1,932,792 |
|
| Creditors
and other liabilities |
|
5 |
171,372 |
463,943 |
|
| Provision
for taxation |
|
|
61,332 |
170,961 |
|
|
|
----------- |
----------- |
|
|
|
3,928,290 |
4,227,068 |
|
|
|
----------- |
----------- |
|
|
|
87,826,080 |
83,653,709 |
|
|
|
========== |
========== |
|
| DEFERRED
EXPENDITURE |
|
6 |
1,629,325 |
3,258,650 |
|
|
|
|
|
| CURRENT
ASSETS |
|
| Marketable
securities - Net |
|
7 |
79,405,351 |
47,944,922 |
|
| Trade
debts - Unsecured (considered good) |
8 |
4,500,000 |
12,336,698 |
|
| Dividends
receivable |
|
|
227,896 |
661,667 |
|
| Cash
and bank balances |
|
9 |
2,063,508 |
19,451,773 |
|
|
|
----------- |
----------- |
|
|
|
86,196,755 |
80,395,060 |
|
| CONTINGENCIES
AND COMMITMENTS |
10 |
-- |
-- |
|
|
----------- |
----------- |
|
|
87,826,080 |
83,653,710 |
|
|
========== |
========== |
|
| These
accounts should be read in conjunction with the annexed notes. |
|
|
| LAHORE |
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
(Rupees) |
(Rupees) |
|
|
| INCOME |
|
|
| (Loss)
/ Profit on sale of marketable securities |
11 |
(37,942,431) |
1,859,201 |
|
| Dividend |
|
|
2,369,013 |
3,916,485 |
|
| Mark-up
on bank deposits |
|
|
883,345 |
2,060,950 |
|
|
|
----------- |
----------- |
|
|
|
(34,690,073) |
7,836,636 |
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
|
|
|
|
|
| Administrative |
|
12 |
2,224,239 |
2,277,247 |
|
| Financial |
|
13 |
575,623 |
1,419,801 |
|
| Remuneration
of the Investment Adviser |
|
14 |
1,718,680 |
1,587,087 |
|
|
|
----------- |
----------- |
|
|
|
4,518,542 |
5,284,135 |
|
|
|
----------- |
----------- |
|
|
|
(39,208,615) |
2,552,501 |
|
|
|
----------- |
----------- |
|
| Provision
for diminution in value of marketable securities |
-- |
(29,999,854) |
|
| Excess
provision for diminution in value of marketable |
|
|
| securities
written back |
|
7.1.1 |
45,471,641 |
-- |
|
|
|
----------- |
----------- |
|
| PROFIT
/ (LOSS) BEFORE TAXATION |
|
|
6,263,026 |
(27,447,353) |
|
| Provision
for taxation |
|
|
(132,505) |
(195,824) |
|
|
|
----------- |
----------- |
|
| PROFIT
/ (LOSS) AFTER TAXATION |
|
|
6,130,521 |
(27,643,177) |
|
| Accumulated
loss brought forward |
|
|
(72,232,731) |
(44,589,554) |
|
|
|
----------- |
----------- |
|
| ACCUMULATED
LOSS CARRIED FORWARD |
|
(66,102,210) |
(72,232,731) |
|
|
|
========== |
========== |
|
| EARNING
PER SHARE |
|
16 |
0.41 |
(1.84) |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
| LAHORE |
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
1999 |
1998 |
|
|
(Rupees) |
(Rupees) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
/ (Loss) after taxation |
|
6,130,521 |
(27,643,176) |
|
| ADJUSTMENT
OF ITEMS NOT INVOLVING |
|
|
|
| MOVEMENT
OF CASH |
|
|
|
| Amortization
of deferred cost |
|
1,629,325 |
1,629,323 |
|
| Excess
provision for diminution in value of marketable |
|
|
|
| securities
written back |
|
(45,471,641) |
0 |
|
| Provision
for diminution in value of marketable securities |
0 |
29,999,854 |
|
| Provision
for taxation |
|
132,505 |
195,824 |
|
|
---------- |
---------- |
|
|
(43,709,811) |
31,825,001 |
|
|
---------- |
---------- |
|
| CASH
FLOW FROM OPERATING ACTIVITIES BEFORE |
|
|
| ADJUSTMENT
OF WORKING CAPITAL CHANGES |
|
(37,579,290) |
4,181,825 |
|
|
|
|
|
| WORKING
CAPITAL CHANGES |
|
|
|
|
|
|
|
| (INCREASE)/DECREASE
IN CURRENT ASSETS |
|
|
|
| Marketable
securities |
|
14,011,212 I I |
18,782,636 |
|
| Advances,
deposits, prepayments and other receivables |
433,771 |
1,496,040 |
|
| Accounts
receivable |
|
7,836,698 |
(9,821,156) |
|
|
---------- |
---------- |
|
|
22,281,681 |
10,457,520 |
|
|
---------- |
---------- |
|
|
( 15,297,609) |
14,639,345 |
|
|
---------- |
---------- |
|
| INCREASE/(DECREASE)
IN CURRENT LIABILITIES |
|
|
|
| Due
to investment adviser |
|
(796,304) |
10,342,211 |
|
| Creditors
and other liabilities |
|
(292,571) |
(2,497,290) |
|
|
---------- |
---------- |
|
|
(189,149) |
(3,293,594) |
|
|
---------- |
---------- |
|
| NET
CASH IN/(OUT) FLOW FROM OPERATING ACTIVITIES |
(15,486,758) |
11,345,751 |
|
| Taxes paid |
|
(242,135) |
(246,994) |
|
|
---------- |
---------- |
|
|
(15,728,893) |
11,098,757 |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Deferred
cost paid to investment adviser |
|
(1,659,372) |
(1,659,377) |
|
| NET
CASH OUT FLOW FROM FINANCING ACTIVITIES |
(1,659,372) |
(1,659,377) |
|
|
| NET
INCREASE/(DECREASE) IN CASH AND CASH |
|
| EQUIVALENTS |
|
(17,388,265) |
9,439,380 |
|
| CASH
AND CASH EQUIVALENTS AT THE BEGINNING |
|
| OF
THE YEAR |
|
19,451,773 |
10,012,393 |
|
| CASH
AND CASH EQUIVALENTS AT THE END |
|
---------- |
---------- |
|
| OF
THE YEAR |
|
2,063,508 |
l 9,451,773 |
|
|
========== |
========== |
|
|
|
|
| LAHORE |
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY AND RESERVES |
|
| FOR
THE YEAR ENDED 30 JUNE 1999 |
|
|
|
|
Share |
Accumulated |
|
|
|
Capital |
Profit |
Total |
|
|
| Balance
as at 30 June 1997 |
|
150,000,000 |
(44,589,554) |
105,410,446 |
|
|
|
|
| Net
profit for the year |
|
-- |
(27,643,177) |
(27,643,177) |
|
| Issue
of bonus shares |
|
-- |
-- |
-- |
|
| Dividends |
|
-- |
-- |
-- |
|
|
----------- |
----------- |
----------- |
|
|
-- |
(27,643,177) |
(27,643,177) |
|
|
----------- |
----------- |
----------- |
|
| Balance
as at 30 June 1998. |
|
150,000,000 |
(72,232,731) |
77,767,269 |
|
|
|
|
| Net
profit for the year |
|
-- |
6,130,521 |
6,130,521 |
|
| Issue
of bonus shares |
|
-- |
-- |
-- |
|
| Dividends |
|
-- |
-- |
-- |
|
|
----------- |
----------- |
----------- |
|
|
-- |
6,130,521 |
6,130,521 |
|
|
----------- |
----------- |
----------- |
|
| Balance
as at 30 June 1999 |
|
150,000,000 |
(66,102,210) |
83,897,790 |
|
|
========== |
========== |
========== |
|
|
|
|
| These
accounts should be read in conjunction with the annexed notes. |
|
|
| LAHORE |
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| 1.1
The Company was incorporated on January 8, 1995 as a public limited company
under the |
|
