| Al Meezan 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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| 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 to the Investment Company |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
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| Mr.
Irfan Siddiqui |
Chairman |
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| Mr.
Mohammad Shoaib |
Chief Executive |
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| Mr.
Razi-ur-Rehman Khan |
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| Mr. Nasim Beg |
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| Syed
Mazher Iqbal |
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| Mr.
Anthony John Morgan |
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| Dr.
Amjad Waheed |
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| COMPANY
SECRETARY |
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| Mr. Farhan Talib |
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| INVESTMENT
ADVISOR |
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| 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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| .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 & SHARES DEPARTMENT |
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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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| NOTICE
OF MEETING |
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| Notice
is hereby given that the 4th Annual General Meeting of A1 Meezan Mutual Fund
Limited will be held |
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| on
Wednesday, December 29, 1999 at 8:30 a.m. at 4th Floor, Block "C",
Finance & Trade Centre, Shahrah-e- |
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| Faisal,
Karachi to transact the following business: |
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| ORDINARY
BUSINESS: |
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| 1.
To confirm the minutes of the 3rd Annual General Meeting held on December 26,
1998. |
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| 2.
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, 1999. |
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| 3.
To approve final cash dividend of 6.4% for the year ended June 30, 1999. |
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| 4.
To appoint Auditors of the Company and fix their remuneration for the year
ending June 30, |
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| 2000.
The present Auditors M/s. A.F. Ferguson & Co., Chartered Accountants,
retire and being |
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| eligible,
offer themselves for re-appointment. |
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| 5.
To elect Eight (08) Directors of A1 Meezan Mutual Fund Limited for a period
of three years |
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| commencing
from December 30, 1999 in accordance with the provisions of Section 178 of
the |
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| Companies
Ordinance, 1984. The names of retiring Directors are as under: |
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| i.
Mr. Irfan Siddiqui |
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ii. Mr. Mohammad Shoaib |
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| iii.
Mr. Razi-ur-Rehman Khan |
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iv. Mr.. Nasim Beg |
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| v.
Syed Mazher Iqbal |
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vi. Mr. Anthony John
Morgan |
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| vii.
Dr. Amjad Waheed |
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| The
Board of Directors has fixed the number of directors to be elected as Eight
(08). All retiring |
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| directors
shall be eligible to offer themselves for re-election. |
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| SPECIAL
BUSINESS: |
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| To
consider substitution of Article 84 of the Articles of Association and pass
the following special |
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| resolution: |
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| "Resolved
that a meeting of the Board for the time being at which a quorum is |
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| present
shall be competent to exercise all or any of the authorities, powers and |
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| discretions
by or under these Articles vested in or exercisable by the Board |
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| generally.
The quorum for a meeting of directors shall not be less than one-third |
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| or
four whichever is greater." |
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| 7.
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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|
FARHAN TALIB |
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| November
12, 1999 |
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Company Secretary |
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| Notes: |
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| 1.
Any person who seeks to contest an election to the office of director shall,
whether he is a retiring director |
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| or
otherwise, file with the Company at its Registered Office not later than
fourteen days before the day of |
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| meeting
at which elections are to be held, a notice of his intention to offer himself
for election as a |
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| director
along with written consent to act as a director on the prescribed Form - 28. |
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| 2.
The Share Transfer Books of the Company will remain closed from December 03 -
December 08, 1999 |
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| (both
days inclusive). |
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| 3.
No person shall be appointed a proxy who is not a member of the Company and
qualified to vote, save |
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| that
a corporation or a Company being a member of the Company may appoint as proxy
or as its |
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| representative
under Section 162 of the Ordinance any person though not a member of the
Company, and |
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| the
person so appointed shall be entitled to exercise the same powers on behalf
of the corporation which |
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| he
represents, as that corporation could exercise if it was an individual member
of the Company. Any |
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| such
appointment shall be authorized by a resolution of Directors of that Company
or corporation. |
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| 4.
Every proxy shall be appointed in writing under the hand of the appointer or
by an agent duly authorized |
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| under
a Power of Attorney or if such appointer is a Company or corporation under
the common seal of the |
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| Company
or corporation or the hand. of its Attorney who may be appointer. |
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| 5.
Shareholders whose shares are deposited with Central Depository System (CDS)
are requested to bring |
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| their
National Identity Card (NIC) along with their Account Number in Central
Depository System for |
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| verification. |
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| 6.
Shareholders are required to promptly notify the company of any change in the
mailing address. |
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| 7.
A statement under Section 160(1)(b) of the Companies Ordinance 1984 relating
to special business is |
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| being
sent to the members along with a copy of the notice. |
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| Statement
Under Section 160(1) (h) of Companies Ordinance, 1984. |
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| The
Article 84 of Articles of Association specifies the quorum for the meeting of
Directors is two. It is |
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| proposed
to delete the current Article 84 and substitute with a new Article 84 which
specifies the quorum for |
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| meeting
of Directors in accordance with Section 193(1) of the Companies Ordinance,
1984. |
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| FINANCIAL
HIGHLIGHTS |
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| Year ended |
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June 30, |
June 30, |
June 30, |
July 13, 1995 to |
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1999 |
1998 |
1997 |
June 30, 1996 |
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|
(Rupees in
thousands from 1 to 5) |
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| 1.
Investment Income |
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22,096 |
17,623 |
19,675 |
7,440 |
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| 2.
Operating Expenses |
|
5,632 |
4,953 |
6,851 |
5,130 |
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| 3.
Reversal/(provision) for |
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| diminution
in the value of |
|
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| marketable
securities net of |
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| capital
(loss)/gain |
|
26,244 |
(79,713) |
17,413 |
(1,985) |
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| 4. Profit / (loss) |
|
42,709 |
(67,043) |
30,237 |
325 |
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| 5. Dividend |
|
16,000 |
-- |
29,500 |
-- |
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| 6.
Rate of dividend (%) |
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6.40 |
-- |
11.80 |
-- |
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| 7.
Net Asset Value (Rs.) |
|
8.22 |
7.24 |
10.00 |
9.95 |
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| 8.
Appreciation/(depreciation) in NAV (%) |
13.54 |
(27.60) |
0.50 |
-- |
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| Total return (%) |
|
22.38 |
(27.60) |
12.36 |
-- |
|
| KSE 100 Index |
|
1,054.67 |
879.62 |
1,565.73 |
1,703.28 |
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| 11.
Appreciation / (depreciation) in |
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| KSE
100 Index (%) |
|
19.90 |
(43.82) |
(8.08) |
-- |
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| 12.
Outperformance / |
|
|
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| (underperformance)
in |
|
|
|
| comparison
to KSE 100 Index |
|
|
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| (%) |
|
2.48 |
16.22 |
20.44 |
-- |
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| DIRECTORS'
REPORT |
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| We
are pleased to present the Fourth Annual Report together with the audited
accounts for the year ended |
|
| June 30, 1999. |
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|
| State
of the Economy |
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| The
deteriorating economic and political conditions had resulted in substantial
decline in the stock market |
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| valuations
during the last year with KSE 100 index depicting a decline of 43.79% for the
year ended June 30, |
|
| 1998.
The economy managed to recover to some extent from the after effects of
uncertainty resulting from |
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| nuclear
testing and its economic repercussions, i.e. freezing of foreign currency
accounts, depleting foreign |
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| currency
reserves and delays' in repatriation of portfolio payments and commercial /
bilateral loans |
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| repayments.
The rescheduling of sovereign loans by the Paris Club and that of the
commercial loans by the |
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| London
Club has provided the much needed breathing space to the economy and the
future economic outlook |
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| is
dependent on the economic and structural reforms undertaken by the government
in this interim period. |
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| Operating
Results |
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| The
company posted a profit of Rs. 40.59 million for the year ended June 30, 1999
compared to a net loss of |
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| Rs.69.09
million in the corresponding period last year. The highlights of the
operating results for the year are |
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| as follows: |
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|
(Rupees) |
|
|
| Investment
Income |
|
22,096,261 |
|
| Operating
Expenses |
|
(5,632,021) |
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| Reversal/(provision)
for diminution in the value of |
|
|
|
| marketable
securities net of capital (loss)/gain |
|
26,244.76 |
|
|
|
|
------------------ |
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| Profit
Before Taxation |
|
42,709,002 |
|
| Provision
for Taxation |
|
(2,120,590) |
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|
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|
------------------ |
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| Net
Profit for the Year |
|
40,588,412 |
|
|
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|
========== |
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| Proposed
Dividend |
|
(16,000,000) |
|
|
|
|
========== |
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| During
the year, the company realized capital losses of Rs.31.5 million whereas
previous year's provision for |
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| diminution
in the value of marketable securities was reversed to the extent of Rs.57.7
million, as it was no |
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| longer
required. The dividend income for the year was Rs. 11.8 million and other
income was Rs.10.3 |
|
| million. |
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|
| Portfolio
Performance Relative to KSE-100 Index |
|
| Alhamdolillah,
the portfolio of the company once again managed to outperform the KSE-100
Index. It was by |
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| all
means a very significant achievement as it was the third consecutive year
that our portfolio outperformed |
|
| the
benchmark index. None of the other investment companies in the country has
managed to outperform the |
|
| benchmark
KSE-100 index every year for the last three years. |
|
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| The
KSE-100 Index appreciated by 19.90% during the year ended June 30, 1999. On
the other hand, total |
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| return
on fund portfolio was 22.38%. Thus the portfolio outperfomed the benchmark
index by a substantial |
|
| 248
basis points. It may be noted here that the company's exposure to the stocks
during the year has ranged |
|
| between
50% to 75% of the net assets, signifying a low risk strategy. Hence the out
performance has purely |
|
| been
an outcome of prudent security selection and excellent market timing. The
company has so far |
|
| completed
three full years of operations and a summary of relative portfolio
performance is as follows: |
|
|
|
|
June 30, 1997 |
June 30, 1998 |
June 30, 1999 |
|
|
|
|
|
| Net
Asset Value Per Share |
|
10.00 |
7.24 |
8.22 |
|
| Dividend Paid |
|
1.18 |
-- |
0.64 |
|
| Total
Return on Fund Portfolio (%) |
|
12.36 |
(27.60) |
22.38 |
|
| KSE- 100 Index |
|
1565.73 |
879.62 |
1054.67 |
|
| Return
on Index (%) |
|
(8.08) |
(43.82) |
19.90 |
|
| Portfolio
outperformance (%) |
|
20.44 |
16.22 |
2.48 |
|
|
| Composition
of Assets |
|
| On
June 30, 1999 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, 1999 based on market value
were as follows: |
|
|
| Pakistan
State Oil. |
|
Rs. 24.0 million |
|
| Engro
Chemicals Ltd. |
|
Rs. 22.5 million |
|
| Hub
Power Company Ltd. |
|
Rs. 19.4 million |
|
| Fauji
Fertilizer Co. Ltd. |
|
Rs. 16.7 million |
|
| Pakistan
Telecommunication Co. Ltd. |
Rs. 16.4 million |
|
|
| Future Outlook |
|
| The
Asian emerging markets in general had depicted a very dismal performance
during the previous fiscal |
|
| year.
However most of these markets with strong economies have recovered
substantially during the year |
|
| under
review due to domestic liquidity and fund inflows from Foreign Institutional
Investors (FIIs). In our |
|
| opinion,
an early resolution of IPP controversy and removal of approval requirements
for movement of |
|
| portfolio
investment flows is imminent for the restoration of investors' confidence in
the Pakistan's economy. |
|
|
| A
daunting task awaits the country's new team of economic managers. We feel
that swift and bold decisions |
|
| will
help to revive the economy and to restore investors' confidence. |
|
|
| Board
of Directors |
|
| Mr.
Wusooq Khaleeli representing NIT resigned and was replaced by Dr. Amjad
Waheed. Mr. Charles |
|
| Blackmore
and Mr. Andrew Douglas Eu representing Jardine Fleming Investment Management
International |
|
| Limited
also resigned and were replaced by Mr. Razi-ur-Rehman Khan and Mr. Anthony
John Morgan |
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| respectively.
The Directors wish to place on record valuable services rendered to the
Company by Mr. |
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| Wusooq
Khaleeli, Mr. Charles Blackmore and Mr. Andrew Douglas Eu and welcome the new
Directors. |
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| Year
2000 Compliance |
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| The
Investment Adviser has conducted a review of the existing computer resources
and related equipment to |
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| determine
the current state of readiness and to identify and prioritize the areas that
need to be addressed for |
|
| millennium
compliance. Our systems are now Year 2000 compliant. |
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|
| Acknowledgement |
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| 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, and
investment advisor of the |
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| Company. |
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|
|
Mohammad Shoaib |
|
Nasim Beg |
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|
Chief Executive |
|
Director |
|
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| Karachi:
November 11, 1999 |
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|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
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| We
have audited the annexed balance sheet of A1 Meezan Mutual Fund Limited as at
June 30, 1999 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 and, |
|
| after
due verification thereof, 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: |
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|
|
|
|
| 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 m agreement with the books of account and are further in
accordance |
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| with
accounting policies consistently applied: |
|
|
|
| (ii)
the expenditure incurred during the year was for the purposes of the
company's business: and |
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|
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year |
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| 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
the cash flow |
|
| statement
together with the notes forming part thereof, give the information required
by the |
|
| Companies
Ordinance, 1984 and the Investment Companies and 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, changes in equity and the cash flows for
the year then ended; and |
|
|
| d)
in our opinion no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
|
A. F. FERGUSON & CO. |
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| Karachi:
November 25, 1999 |
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
share capital |
|
|
|
| 25,000,000
ordinary shares of Rs. 10 each |
|
|
250,000,000 |
250,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up share capital |
|
|
|
|
| 25,000,000
ordinary shares of Rs. 10 each fully paid in cash |
|
250,000,000 |
250,000,000 |
|
| Accumulated
loss |
|
|
(44,488,724) |
(69,077,136) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
205,511,276 |
180,922,864 |
|
|
|
|
| LONG
TERM LIABILITY |
|
3 |
939,301 |
1,878,602 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Current
maturity of a long term liability |
|
3 |
939,301 |
939,300 |
|
| Due
to the Investment Adviser-an associated |
|
|
|
| undertaking |
|
4 |
4,110,226 |
3,028,457 |
|
| Creditors,
accrued expenses and other liabilities |
|
5 |
28,683,153 |
15,883,910 |
|
| Proposed
dividend |
|
|
16,000,000 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
49,732,680 |
19,851,667 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
256,183,257 |
202,653,133 |
|
|
|
|
========== |
========== |
|
|
|
|
| LONG
TERM DEPOSIT |
|
300,000 |
-- |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Marketable
securities |
|
6 |
167,912,782 |
105,662,574 |
|
| Accounts
receivable unsecured and considered good |
|
27,891,813 |
51,045,827 |
|
| Prepayment
and other receivables |
|
7 |
5,008,584 |
4,103,613 |
|
| Bank balances |
|
|
8 |
55,070,078 |
41,841,119 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
255,883,257 |
202,653,133 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
256,183,257 |
202,653,133 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammad Shoaib |
|
|
Nasim Beg |
|
|
Chief Executive |
|
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| INVESTMENT
INCOME |
|
|
|
| Dividend
income |
|
|
11,830,751 |
10,186,674 |
|
| Other income |
|
9 |
10,265,510 |
7,436,745 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
22,096,261 |
17,623,419 |
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative
expenses |
|
10 |
1,521,795 |
1,924,870 |
|
| Remuneration
to the Investment Adviser |
|
4 |
4,110,226 |
3,028,457 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
5,632,021 |
4,953,327 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
16,464,240 |
12,670,092 |
|
| Reversal
/ (provision) for diminution in the value of |
|
|
| marketable
securities net of capital (loss)/gain |
|
11 |
26,244,762 |
(79,713,722) |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
/ (LOSS) BEFORE TAXATION |
|
|
42,709,002 |
(67,043,630) |
|
|
|
|
|
| PROVISION
FOR TAXATION |
|
|
|
| Current |
- for the year |
|
2,120,590 |
1,890,652 |
|
|
- for a prior year |
|
-- |
163,340 |
|
|
|
------------------ |
------------------ |
|
|
|
2,120,590 |
2,053,992 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
/ (LOSS) AFTER TAXATION FOR THE YEAR |
|
40,588,412 |
(69,097,622) |
|
|
|
|
========== |
========== |
|
| Basic
earnings / (losses) per share |
|
17 |
1.62 |
(2.76) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammad Shoaib |
|
|
Nasim Beg |
|
|
Chief Executive |
|
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
SHARE |
UNAPPROPRIATED |
TOTAL |
NET ASSET |
|
|
CAPITAL |
PROFIT/ |
|
VALUE |
|
|
|
(ACCUMULATED |
|
PER SHARE |
|
|
|
Loss) |
|
|
|
|
|
|
|
|
Rupees |
|
|
|
|
| Balance
as at June 30, 1997 |
|
250,000,000 |
20,486 |
250,020,486 |
10.00 |
|
|
|
|
========== |
|
| Net
loss for the year ended |
|
|
| June 30, 1998 |
|
-- |
(69,097,622) |
(69,097,622) |
|
|
|
|
------------------ |
------------------ |
------------------ |
|
|
| Balance
as at June 30, 1998 |
|
250,000,000 |
(69,077,136) |
180,922,864 |
7.24 |
|
|
|
|
========== |
|
| Net
profit for the year ended |
|
|
| June 30, 1999 |
|
-- |
40,588,412 |
40,588,412 |
|
|
|
|
|
| Proposed
dividend (Re. 0.64 |
|
|
|
| per share) |
|
-- |
(16,000,000) |
(16,000,000) |
|
|
|
|
| Balance as at June 30, 1999 |
|
250,000,000 |
(44,488,724) |
205,511,276 |
8.22 |
|
|
|
========== |
========== |
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Mohammad Shoaib |
|
Nasim Beg |
|
|
Chief Executive |
|
Director |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Profit/(loss)
before taxation |
|
42,709,002 |
(67,043,630) |
|
|
|
|
| Adjustments
for: |
|
|
|
| (Reversal)
/ provision for diminution in the |
|
|
| value
of marketable securities |
|
|
(57,730,319) |
90,517,857 |
|
| Dividend
income |
|
|
(11,830,751) |
(10,186,674) |
|
| Financial income |
|
|
|
(10,210,510) |
(7,436,745) |
|
