| Security Stock Fund Limited |
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| Annual
Report 1999 |
|
|
| Contents |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors' Report |
|
| Pattern
of Holding of the Shares |
|
| Auditors' Report |
|
|
| Balance Sheet |
|
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Statement
of Income & Expenditure Of Investment Advisor in relation to The
Investment Company |
|
|
|
| Company
Information |
|
|
| Board
of Directors: |
Mr. Anis Wahab Zuberi
(Nominee NIT) |
|
|
Mr. Asim Iftikhar |
|
|
Mr. Farrukh H, Khan |
|
|
Mr. Iqbal Usman |
|
|
Mr. Imran Iqbal |
|
|
Mr. Mohammad Rashid Zahir |
|
|
Mr. Salim Rathod |
|
|
Mr. Shahid A. Khan |
|
|
Mr. Sikander Gulzar |
|
|
Mr. Zulfiqar Hussain |
|
|
| Chief Executive: |
|
Mr. Iqbal Usman |
|
|
|
| Company
Secretary: |
Mr, Anwar Zafar |
|
|
|
| Investment
Advisor: |
Security Fund Management
Limited |
|
|
|
| Auditors: |
|
M. Yusuf Adil Saleera
& Co. |
|
|
|
| Legal Advisor: |
|
Mohsin Tayebaley |
|
|
|
| Custodian: |
|
Muslim Commercial Bank
Ltd. |
|
|
|
| Registered
Office: |
220, 2nd Floor, Unit
Tower, |
|
|
|
I.I. Chundrigar Road, |
|
|
|
Karachi. |
|
|
|
Te1:2417770 Fax:2419296 |
|
|
|
| Shares
Department |
404 Trade Tower, |
|
|
Abdullah Haroon Road, |
|
|
Near Metropole Hotel,
Karachi |
|
|
Tel : 5687839 - 5685930 |
|
|
|
| Notice of 5th Annual General
Meeting |
|
|
| Notice
is hereby given that the fifth Annual General Meeting of the Security Stock
fund Limited will |
|
| be
held on Thursday, the 30th December, 1999, at 10:30 A.M. at the Best Western
Plaza Hotel, |
|
| Karachi,
to conduct following business. |
|
|
| I.
To confirm the minutes of the fourth annual General meeting held on 24th
December 1998 |
|
|
| 2.
To receive, consider and adopt Audited Accounts of the Company for the year
ended 30th June, 1999. |
|
|
| 3.
To appoint Auditors of the Company for the year ending 30th June, 2000. |
|
|
| 4.
To transact any other business that may be placed before the meeting. |
|
|
| By
order of the Board |
|
|
| ANWAR
ZARAR |
|
Karachi; |
|
| Company
Secretary |
|
November 30, 1999 |
|
|
| Notes: |
|
|
| The
share transfer books of the Company will remain closed from December 22, 1999
to |
|
| December
30, 1999 (both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at the meeting is entitled to appoint
another member of the |
|
| Company
as a Proxy to attend and vote on his/her behalf. Proxies in order to be
effective must |
|
| reach
the. registered office of the Company duly stamped not later than 48 hours
before the |
|
| meeting. |
|
|
|
| Directors'
Report |
|
|
| We
are pleased to present the results of your Fund's operations for the year
ended 30th June 1999. |
|
|
| The
Net Asset Value (NAV) of your fund increased from Rs. 8.06 to Rs. 10.06. The
fund |
|
| registered
increase in receipts on account of dividend by 18.8% and on return on TFC / |
|
| deposits
by 66.5%. Value of marketable securities also increased due to slightly
better |
|
| market
conditions and a reversal was made in the provision of diminution in market
value of |
|
| securities
by an amount of Rs. 13.6 million, |
|
|
| The
market closed at comparatively higher level than last year and has
subsequently risen even |
|
| more.
The KSE 100 index which was 879 at opening of current year was at 1054 on
30th June |
|
| 1999.
The further rise of 193 points at the time of this report shows the strength
of the market |
|
| after
facing a crisis like situation owing to external factors. But main issues
keeping the |
|
| investors
at bay are still present. This is however not an overriding concern anymore
since the |
|
| market
has tested the bottom and further erosion in equity values is not feared. We
are aiming at a |
|
| consistent
rate of return and hope to have a solid base from this year onward after
recouping |
|
| losses
incurred in the worst years for the market. The initial fall in the value of
the fund |
|
| subsequent
to the dismal market conditions since 1994 had been dramatic, affecting the |
|
| profitability
for past years. We believe that their is now hope that considering the
present level of |
|
| the
market a consistent performance may be shown in future. |
|
|
| Several
issues facing the mutual fund industry have been resolved. In the last
Finance Act |
|
| another
longstanding demand of exemption from withholding tax has also been granted.
It is |
|
| appreciable
that the strength and vitality of mutual fund sector is considered important
for |
|
| the
general health of the market. Certain issues facing the mutual fund industry
however still |
|
| linger,
even in case of taxation. The current exemption criteria of exempting income
if |
|
| ninety
percent is paid as dividend does not take into account carried forward
losses. This |
|
| produces
an absurd situation where in order to be eligible for exemption, unrealized
capital gain |
|
| also
needs to be distributed resulting in dividend payment out of the capital. |
|
|
| That
is the primary reason that the Board has decided, with reluctance, to pass
the dividend for |
|
| the
year. We considered it prudent that the carried forward losses be set off
against the |
|
| current
income for the strength of the balance sheet. We are however confident that
based on |
|
| this
healthy balance sheet we will be able to show consistent returns for our
investors from |
|
| next
year onward. As of writing of this report the fund has increased
substantially and has an NAV |
|
| of
Rs. 11.70 compared to Rs. 10.06 as shown in the accompanying balance sheet. |
|
|
| Board
of Directors |
|
| Election
of directors was held on 24th December |
|
| 1998,
and following directors were elected to the |
|
| Board; |
|
|
| 1.
Mr. Asim Iftikhar |
|
| 2.
Mr. Farrukh H. Khan |
|
| 3.
Mr. Iqbal Usman |
|
| 4.
Mr. Imran Iqbal |
|
| 5.
Mr. Muhammad Rashid Zahir |
|
| 6.
Mr. Razi-ur-Rehman (Nominee NIT) |
|
| 7.
Mr. Salim Rathod |
|
| 8.
Mr. Shahid Ahmed Khan |
|
| 9.
Mr. Sikander Gulzar |
|
| 10.
Mr. Zulfiqar Hussain |
|
|
| Subsequently
Mr. Razi-ur-Rehman Khan, nominee of NIT has resigned from the Board and |
|
| Mr.
Anis Wahab Zuberi has been nominated by the National Investment Trust in his
place. The |
|
| Board
has confirmed the appointment of Mr. Anis Wahab Zuberi and welcomes him on
board. |
|
|
| Earning
Per Share |
|
|
| The
earning per share (EPS) of your fund was Rs. 2.01 as of 30th June 1999
compared to Rs. (2o 15) as on 30th
June 1998. |
|
|
| Financial
Results |
|
|
|
Amount (Rs.) |
|
|
1999 |
|
| Profit for the year |
|
8,005,444 |
|
| Provision
for reversal in diminution |
|
|
|
|
|
|
| in
market value of securities |
|
13,610,855 |
|
| Profit
before taxation |
|
21,616,299 |
|
| Taxation |
|
(1,562,352) |
|
| Profit
after taxation |
|
20,053,947 |
|
| Loss
brought forward |
|
(19,392,919) |
|
| Profit
carried forward |
|
661,028 |
|
|
| Year
2000 Compliance |
|
|
| As
reported in last annual report to the members our computer systems are fully
Y2K compliant |
|
| after
having acquired all the necessary upgrades. |
|
|
| Auditors |
|
|
| M/s.
M. Yousuf Adil Saleem & Co., Chartered Accountants retire and being
eligible offer |
|
| themselves
for reappointment. |
|
|
| Pattern
of Shareholding |
|
|
| The
pattern of Shareholding of the company is attached. |
|
|
| For
and on behalf of the Board. |
|
|
| Karachi |
|
IQBAL USMAN |
|
| 30th
November 99 |
|
Chief Executive |
|
|
|
| Pattern
of Holding of the Shares held by the Shareholders |
|
|
| As
at June 30, 1999 |
|
|
| No. of Shares |
|
Share Holding |
|
Total Shares |
|
| Holders |
|
Held |
|
|
| 355 |
From |
1 |
to |
100 |
Shares |
35,500 |
|
| 14,323 |
From |
101 |
to |
500 |
Shares |
7,117,300 |
|
| 25 |
From |
501 |
to |
1,000 |
Shares |
24,600 |
|
| 29 |
From |
1,001 |
to |
5,000 |
Shares |
79,200 |
|
| 9 |
From |
5,001 |
to |
10,000 |
S hares |
81,200 |
|
| 1 |
From |
10,001 |
to |
15,000 |
Shares |
11,300 |
|
| 2 |
From |
40,001 |
to |
45,000 |
Shares |
84,000 |
|
| 1 |
From |
995,001 |
to |
1,000,000 |
Shares |
1,000,000 |
|
| 1 |
From |
1,565,001 |
to |
1,570,000 |
Shares |
1,566,900 |
|
| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| 14,746 |
|
10,000,000 |
|
| ========== |
========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
| Categories of |
|
|
Shares |
|
|
| Shareholders |
|
Number |
Held |
Percentage |
|
|
|
|
| INDIVIDUALS |
|
14,742 |
7,391,600 |
73.92% |
|
| INVESTMENT
COMPANIES |
|
2 |
41,500 |
0.42% |
|
| JOINT
STOCK COMPANIES |
|
1 |
1,000,000 |
10.00% |
|
| FINANCIAL
INSTITUTIONS |
|
1 |
1,566,900 |
15.67% |
|
|
---------- |
---------- |
---------- |
|
|
14,746 |
10,000,000 |
100.00 % |
|
|
========== |
========== |
========== |
|
|
|
|
| Auditors'
Report to the Members |
|
|
| We
have audited the annexed balance sheet of SECURITY STOCK FUND LIMITED as at
June 30, |
|
| 1999
and the related profit and loss account and statement of changes in financial
position (cash flow |
|
| statement)
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 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. |
|
|
| (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 Investment |
|
| Companies
and Investment Advisers Rule, 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, investment made and the expenditure incurred during
the year |
|
| were
in accordance with the objects of the Company. |
|
|
| ©
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 statement of changes in
financial position |
|
| (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 Rule, |
|
| 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 the changes in financial
position for |
|
| the
year then ended; and |
|
|
| (d)
in our opinion, no zakat was deductible at source under the Zakat and Ushr
Ordinance, 19800 |
|
|
|
M. Yousuf Adil Saleem
& Co. |
|
| Karachi:
30th November 1999 |
|
Chartered Accountants |
|
|
|
| Balance Sheet |
|
| As
at June 30, 1999 |
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
| ASSETS |
|
| Deferred
expenditure |
|
3 |
66,852 |
1,052,540 |
|
| Current Assets |
|
|
|
|
| Marketable
Securities |
|
4 |
101,647,066 |
78,761, ! 20 |
|
| Certificate
of Investments |
|
5 |
-- |
4,000,000 |
|
| Advance
income tax |
|
|
804,914 |
650,578 |
|
| Dividend
receivable |
|
|
400,000 |
1 ,028,250 |
|
| Bank balances |
|
6 |
9,219,466 |
4,353,703 |
|
|
--------- |
--------- |
|
|
|
112,071,446 |
88,793,651 |
|
|
--------- |
--------- |
|
| TOTAL
ASSETS |
|
112,138,298 |
89,846,191 |
|
|
|
|
|
|
| LIABILITIES |
|
| Current
Liabilities |
|
| Current
portion of deferred expenditure payable |
|
441,515 |
985,688 |
|
| Due
to investment adviser |
|
7 |
9,455,874 |
7,081,764 |
|
| Creditor
and accrued expenses |
|
8 |
142,459 |
78,143 |
|
| Provision
for taxation |
|
1,437,422 |
652,000 |
|
|
--------- |
--------- |
|
|
11,477,270 |
8,797,595 |
|
| Other Liabilities |
|
| Deferred
Expenditure Payable |
|
9 |
-- |
441,515 |
|
|
|
--------- |
--------- |
|
| TOTAL
LIABILITIES |
|
(11,477,270) |
(9,239,110) |
|
|
|
--------- |
--------- |
|
| NET ASSETS |
|
100,661,028 |
80,607,081 |
|
|
========== |
========== |
|
| SHAREHOLDERS
EQUITY |
|
10 |
100,661,028 |
80,607,081 |
|
|
========== |
========== |
|
| The
annexed notes from I to 19 form an integral part of these accounts |
|
|
| IQBAL USMAN |
|
FARRUKH H. KHAN |
|
| Chief Executive |
|
Director |
|
|
|
| Profit and Loss Account |
|
| For
the Year Ended June 30 1999 |
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
| INCOME |
|
|
| Capital
gain/(loss) on marketable securities |
|
11 |
44,808 |
(3,098,171) |
|
| Dividend
income - net of zakat |
|
|
5,770,855 |
4,856,097 |
|
| Return
on investment and bank deposits |
|
12 |
5,579,689 |
3,351,775 |
|
|
---------- |
---------- |
|
|
11,395,352 |
5,109,701 |
|
| OPERATING
EXPENSES |
|
|
| Remuneration
'to investment adviser |
|
7.1 |
2,013,221 |
1,612,142 |
|
| Custodian
charges |
|
184,588 |
172,146 |
|
| Amortization
of deferred expenditure |
|
985,688 |
985,688 |
|
| Audit fee |
|
30,000 |
30,000 |
|
| Interest
on deferred expenditure |
|
175,201 |
203,822 |
|
| Bank charges |
|
1,210 |
3,712 |
|
|
---------- |
---------- |
|
|
3,389,908 |
3,007,510 |
|
|
---------- |
---------- |
|
| Profit for the year |
|
8,005,444 |
2,102,191 |
|
|
| Reversal
/ (Provision) for diminution |
|
| In
value of marketable securities |
|
13,610,855 |
(23,061,458) |
|
|
---------- |
---------- |
|
| Profit
/ (Loss) before taxation |
|
21,616,299 |
(20,959,267) |
|
|
| Provision
for taxation |
|
| Current year |
|
(1,340,000) |
(652,000) |
|
| Prior year's |
|
(222,352) |
118,368 |
|
|
---------- |
---------- |
|
|
(1,562,352) |
(533,632) |
|
|
---------- |
---------- |
|
| Profit
/ (Loss) for the year after taxation |
|
20,053,947 |
(21,492,899) |
|
|
| Accumulated
(loss) / profit brought forward |
|
(19,392,919) |
2,099,980 |
|
|
---------- |
---------- |
|
| Accumulated
profit / (loss) carried forward |
|
661,028 |
( 19,392,919) |
|
|
========== |
========== |
|
| Earning per share |
|
15 |
2.01 |
(2.15) |
|
|
| The
annexed notes from I to 19 form an integral part of these accounts |
|
|
| IQBAL USMAN |
|
FARRUKH H. KHAN |
|
| Chief Executive |
|
Director |
|
|
|
| Statement of Changes in
Financial Position |
|
| (Cash
Flow Statement) |
|
| For
the year ended June 30, 1999 |
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
| A.
CASH FLOW FROM OPERATING ACTIVITIES |
|
|
| Profit
/ (Loss) before taxation |
|
21,616,299 |
(20,959,267) |
|
| Adjustment
for items not involving movement of funds |
|
|
|
| Amortization
of deferred expenditure |
|
985,688 |
985,688 |
|
| (Reversal)
/ provision for diminution |
|
|
|
| in
value of marketable securities |
|
(13,610,855) |
23,061,458 |
|
| Interest
on deferred expenditure |
|
175,201 |
203,822 |
|
|
---------- |
---------- |
|
|
(12,449,966) |
24,250,968 |
|
|
---------- |
---------- |
|
| Operating
profit before working capital changes |
|
9,166,333 |
3,291,701 |
|
|
| EFFECT
ON CASH FLOW DUE TO WORKING |
|
| CAPITAL
CHANGES |
|
|
| (Increase)/decrease
in current assets |
|
| Marketable
securities |
|
(9,275,091) |
( 10,028,632 |
|
| Certificates
of investment |
|
4,000,000 |
-- |
|
| Dividend
receivable |
|
628,250 |
(340,750) |
|
|
---------- |
---------- |
|
|
(4,646,841) |
(10,369,382) |
|
| Increase
in current liabilities |
|
|
|
| Due
to Investment Adviser |
|
2,013,221 |
1,612,142 |
|
| Creditor
and accrued expenses |
|
64,316 |
36,924 |
|
|
---------- |
---------- |
|
|
2,077,537 |
1,649,066 |
|
|
---------- |
---------- |
|
| Cash
generated from/(used in) operations |
|
6,597,029 |
(5,428,615) |
|
| Paid
to investment advisor |
|
(800,000) |
(1,226,976) |
|
| Income tax paid |
|
(931,266) |
(2,357,037) |
|
|
---------- |
---------- |
|
| Net
cash from/(used in) operating activities |
|
4,865,763 |
(9,012,628) |
|
|
---------- |
---------- |
|
| Net
increase/(decrease) in cash and cash equivalents |
|
4,865,763 |
(9,012,628) |
|
| Bank
balances at the beginning of the year |
|
4,353,703 |
13,366,331 |
|
|
---------- |
---------- |
|
| Bank
balances at the end of the year |
|
9,219,466 |
4,353,703 |
|
|
========== |
========== |
|
|
|
|
| IQBAL USMAN |
|
FARRUKH H. KHAN |
|
| Chief Executive |
|
Director |
|
|
|
| Notes to the Accounts |
|
| For
the Year Ended June 30, 1999 |
|
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| 1.1
The Company has been incorporated on January 29, 1994, as a public limited |
|
| company
under the Companies Ordinance, 1984 and is registered as an Investment |
|
| Company
under the Investment Companies and Investment Advisers Rules, 1971. |
|
| The
Company is listed on the Karachi, Lahore and Islamabad stock exchanges. The |
|
| object
of the company is to carry on the business of a dose-end mutual fund and to |
|
| invest
its assets in securities. |
