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| KASB
PREMIER FUND LIMITED |
|
| ANNUAL
REPORT 1995-96 |
|
|
|
| CONTENTS |
|
|
|
|
Page No. |
|
| COMPANY
INFORMATION |
|
2 |
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
3 |
|
| DIRECTORS'
REPORT |
|
5 |
|
| AUDITORS'
REPORT |
|
7 |
|
| BALANCE
SHEET |
|
8 |
|
| PROFIT
AND Loss ACCOUNT |
|
9 |
|
| CASH
FLOW STATEMENT |
|
10 |
|
| NOTES
TO THE ACCOUNTS |
|
11 |
|
| STATEMENT
OF INCOME AND EXPENDITURE |
|
| IN
RELATION TO THE INVESTMENT COMPANY |
20 |
|
| PATTERN
OF SHAREHOLDING |
|
21 |
|
|
| COMPANY
INFORMATION |
|
|
|
| Board
of Directors |
|
| Shaukat
Ali Kazmi, Chairman |
|
| Shafiq
Ahmed Khan |
|
| Ahmed
Kamran |
|
| Nasim
Akbar |
|
| Zahid
Q. Noorani, Chief Executive |
|
| Assim Jang |
|
|
| Raza Mirza |
|
|
|
| Company
Secretary |
|
| Qazi
Mazharul Haque |
|
|
| Investment
Adviser |
|
| Khadim
All Shah Bukhari & Co. Ltd. |
|
|
| Auditors |
|
|
| Taseer
Hadi Khalid & Co. |
|
|
| Legal
Advisor |
|
| Mohsin
Tayebaly & Co. |
|
|
| Custodian |
|
|
| Deutsche
Bank A.G. |
|
|
| Banker |
|
|
| Deutsche
Bank A.G. |
|
|
| Registered
Office |
|
| 6th
Floor, Trade Centre |
|
| I.I.
Chundrigar Road |
|
| Karachi
74200, Pakistan |
|
|
| Share
Department |
|
| Ground
Floor |
|
| Sheikh
Sultan Trust Building No. 2 |
|
| Beaumont
Road |
|
| Karachi
75530, Pakistan |
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the Second Annual General Meeting of KASB Premier Fund
Ltd. will be held on |
|
| Monday,
December 30, 1996 at 3:00 p.m. at the registered office of the Company, 6th
Floor, Trade Centre, |
|
| I.I.
Chundrigar Road, Karachi to transact the following business:- |
|
|
| Ordinary
Business: |
|
| 1.
To confirm the minutes of the First Annual General Meeting of the Company
held on |
|
| December
14, 1995. |
|
|
| 2.
To receive, consider and adopt the audited accounts of the Company together
with the Directors' and |
|
| the
Auditors' reports thereon for the period ended June 30, 1996. |
|
|
| 3.
To appoint auditors of the company for the year ending June 30, 1997 and to
fix their remuneration. |
|
| The
present auditors, Messrs Taseer Hadi Khalid & Co., Chartered Accountants,
retire and being |
|
| eligible,
offer themselves for reappointment. |
|
|
| Special
Business: |
|
| 4.
To consider and approve the proposal to amend Article 133 of the Company's
Articles of |
|
| Association
as recommended by the Board and if thought fit, to pass with or without
modification (s) |
|
| the
following Special Resolution : - |
|
|
| "Resolved
that Article 133 of the Company's Articles of Association be amended to
delete the |
|
| words
' two-third ' appearing in the second line after the words ' at least four
directors present in |
|
| person
or ' and to substitute those words with the words ' one - third ' ". |
|
|
| 5.
To transact any other business with the permission of the Chair. |
|
|
| A
statement under section 160 of the Companies Ordinance, 1984 setting up all
material facts concerning the |
|
| special
resolution contained in item 4 of the notice which will be considered for
adoption at the meeting is |
|
| annexed
to this notice of meeting being sent to members. |
|
|
| By
order of the Board |
|
|
| QAZI
MAZHARUL HAQUE |
|
| Company
Secretary |
|
|
|
| Notes: |
|
| 1.
The share transfer books of the company will remain closed from December 18,
1996 to December |
|
| 30,
1996 (both days inclusive) to determine the names of members entitled to
attend the meeting. |
|
|
| 2.
A member entitled to attend and vote at the meeting is entitled to appoint a
proxy to attend, speak and |
|
| vote
for him/her. A proxy must be a member of the Company. |
|
|
|
| 3.
In order to be valid, an instrument of proxy and the power of attorney or
other authority, if any, under |
|
| which
it is signed, or a notarially certified copy of such power of attorney, must
be deposited at the |
|
| registered
office of the Company, 6th Floor, Trade Centre, I.I. Chundrigar Road, Karachi
not less than |
|
| 48
hours before the time of the meeting. |
|
|
| 4.
Members are requested to notify any change in their registered addresses
immediately. |
|
|
| STATEMENT
UNDER SECTION 160 OF THE COMPANIES ORDINANCE, 1984. |
|
| This
statement is annexed to the notice of the Second Annual General Meeting of
KASB Premier Fund |
|
| Ltd.
to be held on December 30, 1996 at which certain special business is to be
transacted. The |
|
| special
business is to amend articles of association of the company. The purpose of
this statement is |
|
| to
set forth the material facts concerning such special business > |
|
|
|
| Item
4 of the Agenda |
|
| The
existing provisions of Article 133 of KASB Premier Fund Ltd.'s Articles of
Association |
|
| pertaining
to quorum for holding Board meetings are as follows :- |
|
|
| 133.
Quorum: The quorum of a meeting of the Directors shall be at least four
Directors present in |
|
| person or two-third of the total number of
Directors for the time being in office, whichever is |
|
| greater. If all the Directors, except one,
are disqualified from voting, the matter shall be referred |
|
| to and decided by the Members in a General
Meeting. |
|
|
|
| Since
the Board of Directors of KASB Premier Fund Ltd. consider the above
provisions to be in |
|
| variance
with the practice followed by companies generally where the minimum quorum
required for |
|
| holding
Board Meetings is only four Directors present in person or one third of the
total number of |
|
| Directors
for the time being in office, they have recommended an amendment of Article
133 so as to |
|
| substitute
the words 'two- third' in it by the words 'one- third' and the adoption by
the annual |
|
| general
meeting of the Special Resolution as reproduced at item 4 of the agenda. |
|
|
|
| None
of the Directors of the company are interested in this special business
except to the extent of |
|
| their
shareholding or shares held by their nominating institutions. |
|
|
|
| DIRECTORS'
REPORT TO THE SHAREHOLDERS |
|
| The
Directors have pleasure in submitting to the shareholders their annual report
together with the audited |
|
| financial
statements for the period ended June 30, 1996. |
|
|
| The
results for 1995-96 reflect the first year in operation of the fund. During
the period, the value of the fund |
|
| declined
by Rs. 38,968,995 or 9.74%. We ended the year with a Net Asset Value (NAV) of
Rs. 9.025 per share, |
|
| while
the shares of your fund are trading at a steep discount to NAV of 45.7%. |
|
|
| During
the period under review, a cycle of balance of payments crisis, political
instability and mini-budgets |
|
| made
for an unfriendly business environment. The number of new floatations were
two-thirds of the number |
|
| last
year. According to State Bank of Pakistan (SBP) Annual Report 1995-96, the
amount of capital as |
|
| proportion
of total private fixed investment raised through the KSE fell from 11.1% to
2.2% The number of |
|
| dividend
declaring companies fell from 66% to 48%. Average earnings of the top 40
market capitalised |
|
| companies
grew only by 17% in 1995-96, compared to 24% in the previous year. The
economic instability |
|
| forced
international credit rating agencies to downgrade Pakistan's sovereign rating
twice within a span of 17 |
|
| months.
This has proved to be a major disincentive for foreign investors and as a
result they have shied away |
|
| from
Pakistan's capital markets. |
|
|
| While
investors have focused on the effects of the economic uncertainty, a number
of more fundamental |
|
| problems
should not be ignored. The most important of these are the general liquidity
squeeze, and the |
|
| uncertainty
emanating from the political front. in the light of the continuation of tight
monetary policy |
|
| resulting
in a liquidity crunch, political uncertainty has proved to be a catalyst for
continued recession in the |
|
| stock
market. Uncertainty breeds speculation, and as a result, every step that the
market took upward it fell |
|
| back
two steps in view of the extremely short-term attitude of investors towards
the market. |
|
|
| The
market had pinned high hopes on the proposed privatisation of PTCL and other
state-owned utilities such |
|
| as
KESC, Sui Northern and Sui Southern etc. Delays in this regard have also
taken their toll on the market. |
|
| The
apparent lack of interest of international investors has further dampened
sentiments. |
|
|
| A
positive development is the formation of the Mutual Funds Association of
Pakistan (MUFAP). This new |
|
| forum
would help in popularising the role played by mutual funds in the development
of capital markets. It |
|
| would
also serve as a platform for the industry players to bring to the attention
of the Government, the |
|
| controversial
policy issues such as turnover tax, double taxation, and non-deductibility of
preliminary |
|
| expenses
and expenses to the issue which have served as a deterrent for investors to
set up more mutual funds |
|
| in
addition to unjustifiably undermining the profitability of the entire mutual
fund industry including your |
|
| fund.
The management of the fund, in addition to MUFAP, has also made extensive
efforts through other |
|
| forums
to bring these issues to the attention of relevant authorities. We expect
that our efforts would bear fruit |
|
| and
these anomalies would be removed soon. |
|
|
| The
expected introduction of Electronic Trading System and the Central Depository
are other factors which |
|
| would
help in increasing the transparency on the country's stock exchanges and
would be positively received |
|
| by
investors. |
|
|
|
| Outlook |
|
| The
medium to long term direction of the stock market depends on a host of
factors including political |
|
| stability
and easing of the severe liquidity crunch being faced by the major investing
institutions. In addition, |
|
| developments
on the privatisation front would also bode well for the stock market in the
longer-term as |
|
| foreign
direct investment picks up momentum. Moreover, agreement has also been
reached with the IMF on |
|
| disbursement
of the outstanding balance under the October 1995 Standby Arrangement. In the
light of these |
|
| factors,
we remain cautious over the market's expected performance over the remaining
of FY 1996-97 and |
|
| beyond. |
|
|
| Members
are requested to appoint auditors for 1996-97 and fix their remuneration. The
present auditors, |
|
| Taseer,
Hadi Khalid & Co., retire and offer themselves for reappointment. |
|
|
| The
Board of Directors wish to record their appreciation for the valuable
services rendered by the outgoing |
|
| members
of the Board Mr. Arif Ali Shah Bukhari and Mr. Shabbir Hamza Khandwala who
resigned during the |
|
| year.
The Board would like to extend a warm welcome to the new members, Mr. Assim
Jang and |
|
| Mr.
Raza Mirza. |
|
|
| The
pattern of shareholding as required by Section 236 of the Companies
Ordinance, 1984 is enclosed. |
|
|
| On
behalf of the Board of Directors |
|
|
| Taseer
Hadi Khalid & Co. |
|
| Chartered
Accountants |
|
|
|
| Telephone
5671761 - 3 5685847 - 9 |
|
| Fax 92 (21) 5685095 |
|
|
|
|
|
|
| First
Floor |
|
|
| Sheikh
Sultan Trust Building No. 2 |
|
| Beaumont
Road |
|
|
| Karachi
75530 Pakistan |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed Balance Sheet of KASB PREMIER FUND LIMITED as at |
|
| 30
June 1996 and the related Profit and Loss Account and Cash Flow Statement
together with |
|
| the
notes to the accounts for the period then ended Our examination has 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 purpose of our
audit and we |
|
| report
that: |
|
|
| (a)
in our opinion, proper books of account have been kept bv the Company as
required by |
|
| the
Companies Ordinance, 1984 and Rule 16 of the Investment Companies and |
|
| Investment
Adviser's 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 |
|
| Adviser's
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 v, as for the purpose of the Company's business: |
|
|
|
|
| (iii)
the business conducted, investments made and expenditure incurred during the |
|
| period
were in accordance with the investment policy of the company and |
|
| Investment
Companies and Investment Adviser's Rules, 1971; |
|
|
|
|
| (iv)
the company has not contravened the provisions of Rule 8 of the Investment |
|
| Companies
and Investment Adviser's 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 and the 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 Adviser's |
|
| 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 30 June 1996 and of the loss and cash flow for
the
'i:. |
| period
ended on that date ; |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, |
|
| 1980. |
|
|
|
|
|
| TASEER
HADI KHALID & CO. |
|
| CHARTERED
ACCOUNTANTS |
|
|
|
| Karachi:
28 November 1996 |
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1996 |
|
|
|
Note |
1996 |
1995 |
|
|
|
|
(Rupees in thousand) |
|
|
|
|
| SHARE
CAPITAL |
|
| Authorised
capital |
|
| 80,000,000
ordinary shares of Rs. 10 each |
|
800,000 |
800,000 |
|
|
|
|
=========== |
=========== |
|
|
| Issued,
subscribed and paid-up capital |
|
| 40,000,000
(1995:20,000,000) ordinary shares |
|
| of
Rs. 10 each issued as fully paid-up in cash |
400,000 |
200,000 |
|
| Advance
against share capital |
|
-- |
76,340 |
|
| Accumulated
loss |
|
|
(38,969) |
-- |
|
|
----------- |
----------- |
|
|
|
|
361,031 |
276,340 |
|
|
| DEFERRED
EXPENDITURE PAYABLE |
|
3 |
9,180 |
8,746 |
|
| CURRENT
LIABILITIES |
|
| Current
maturity of deferred expenditure payable |
3 |
3,060 |
2,187 |
|
| Due
to the Investment Adviser |
|
4 |
9,393 |
442 |
|
| Creditors
and accrued expenses |
|
5 |
1,531 |
25 |
|
|
----------- |
----------- |
|
|
|
|
13,984 |
2,654 |
|
|
|
|
|
|
|
----------- |
----------- |
|
|
|
|
384,195 |
287,740 |
|
|
|
|
=========== |
=========== |
|
|
|
|
| DEFERRED
EXPENDITURE |
|
6 |
5,951 |
3,051 |
|
| CURRENT
ASSETS |
|
|
| Marketable
securities - net |
|
7 |
327,612 |
-- |
|
| Trade
debts - unsecured - considered good |
|
39,887 |
-- |
|
| Advances
and other receivables |
|
8 |
3,665 |
1,324 |
|
| Taxation |
|
|
965 |
563 |
|
| Bank
balances - on deposit account |
|
6,115 |
282,802 |
|
|
----------- |
----------- |
|
|
|
|
378,244 |
284,689 |
|
|
|
|
|
|
|
----------- |
----------- |
|
|
|
|
384,195 |
287,740 |
|
|
|
|
=========== |
=========== |
|
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE PERIOD FROM JULY 11, 1995 TO JUNE 30, 1996 |
|
|
|
|
Period from |
|
|
|
July 11, 1995 |
|
|
|
Note |
to June 30, |
|
|
|
1996 |
|
|
|
(Rupees in thousand) |
|
|
| Income |
|
|
| Capital
gain on marketable securities |
|
9 |
33,582 |
|
| Dividend
income |
|
|
3,906 |
|
| Mark-up
on bank deposit |
|
6,431 |
|
| Profit
on term finance certificates |
|
2,160 |
|
|
|
----------- |
|
|
|
46,079 |
|
| Operating
Expenses |
|
|
|
|
|
|
|
| Administrative |
|
|
10 |
4,306 |
|
| Financial |
|
|
11 |
2,175 |
|
| Remuneration
to the Investment Adviser |
|
4 |
7,221 |
|
|
|
|
----------- |
|
|
|
|
13,702 |
|
|
|
|
|
|
|
|
|
----------- |
|
|
|
|
32,377 |
|
| Provision
for diminution in value of |
|
| marketable
securities |
|
|
7 |
(71,116) |
|
|
|
|
----------- |
|
| Loss
before taxation |
|
|
|
(38,739) |
|
|
|
|
|
|
|
| Taxation
- Current |
|
|
|
(230) |
|
|
|
|
|
----------- |
|
| Loss
for the period |
|
|
|
(38,969) |
|
|
=========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE PERIOD FROM JULY 11, 1995 TO JUNE 30, 1996 |
|
|
|
1996 |
1995 |
|
|
(Rupees in thousand) |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Loss
before taxation |
|
|
(38,739) |
- |
|
|
|
|
| Adjustments
for non-cash charges: |
|
| Amortisation
of deferred expenditure |
|
1,467 |
7,882 |
|
| Provision for
diminution in value of marketable |
|
|
| securities |
|
|
71,116 |
- |
|
| Mark-up
on deferred expenditure |
|
2,172 |
- |
|
|
|
|
----------- |
----------- |
|
|
|
|
74,755 |
7,882 |
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
| Profit
before working capital changes |
|
36,016 |
7,882 |
|
|
|
|
| Effects
on cash flow due to working capital changes: |
|
| (Increase)/decrease
in current assets: |
|
| Marketable
securities |
|
|
(398,728) |
-- |
|
| Trade
debts |
|
|
(39,887) |
-- |
|
| Advances
and other receivables |
|
(2,341) |
(1,324) |
|
|
|
|
----------- |
----------- |
|
|
|
|
(440,956) |
(1,324) |
|
|
| Increase/(decrease)
in current liabilities: |
|
| Due
to the Investment adviser |
|
|
7,221 |
442 |
|
| Creditors
and accrued expenses |
|
1,506 |
25 |
|
|
|
|
----------- |
----------- |
|
|
|
|
8,727 |
467 |
|
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
| Cash
(used in)/generated from operations |
|
(396,213) |
7,025 |
|
| Mark-up
paid |
|
|
(442) |
- |
|
|
| Income
tax paid |
|
|
(632) |
(563) |
|
|
|
|
----------- |
----------- |
|
| Net
cash (outflow)/inflow from operating activities |
(397,287) |
6,462 |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Share
capital |
|
|
123,660 |
276,340 |
|
| Deferred
expenditure paid |
|
|
(3,060) |
- |
|
|
|
|
----------- |
----------- |
|
| Net
cash inflow from financing activities |
|
120,600 |
276,340 |
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
| (Decrease)/increase
in cash and bank balances |
(276,687) |
282,802 |
|
| Cash
and cash equivalents at beginning of period |
282,802 |
-- |
|
|
|
|
----------- |
----------- |
|
| Cash
and cash equivalents at end of period |
|
6,115 |
282,802 |
|
|
=========== |
=========== |
|
|
| NOTES
TO AND FORMING PART OF THE ACCOUNTS |
|
| FOR
THE PERIOD FROM JULY 11, 1995 TO JUNE 30, 1996 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| KASB
Premier Fund Ltd. is a public limited company incorporated on December 11,
1994 under the |
|
| Companies
Ordinance, 1984 and has been registered with the Corporate Law Authority as
an Investment |
|
| Company
under the Investment Companies and Investment Adviser's Rules, 1971 to carry
on the business |
|
| of
a closed end investment company. The company has entered into an agreement
with Khadim All Shah |
|
| Bukhari
& Co. Ltd. to act as its "Investment Adviser". The company
commenced its business on |
|
| July
11, 1995 and is listed on all Stock Exchanges in Pakistan. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
Accounting convention |
|
| These accounts have been prepared under the
historical cost convention. |
|
|
|
| 2.2
Deferred expenditure |
|
| Expenditure
incurred on the incorporation and on the issue of shares of the company to
the public, |
|
| borne
by Investment Adviser, Khadim Ali Shah Bukhari & Co, Ltd., has been
deferred and is being |
|
| amortised
over a period of five years from the date of commencement of business. |
|
|
|
| 2.3
Marketable securities |
|
| Investments
in quoted securities are valued at lower of cost and market value. Cost is
determined on |
|
| moving
average basis and market value is determined on an aggregate portfolio basis.
The market |
|
| value
has been taken from Karachi Stock Exchange closing rate summary sheet on last
working day |
|
| of
the income period. |
|
|
| 2.4
Revenue recognition |
|
| (i)
Sales and purchases of securities are recognised on the date of contract.
Capital gains and |
|
| losses on sale of securities are taken to
income in the period in which it arises. |
|
|
| (ii)
Dividend income is recorded at the time of the closure of share transfer book
of the company |
|
| declaring the dividend. |
|
|
| (iii)
Income on term finance certificates is recorded on time proportion basis
taking into account |
|
| the principal outstanding and the yield
applicable. |
|
|
| 2.5
Taxation |
|
| The
charge for current taxation is based on taxable income at the current rate of
taxation. The |
|
| company
provides for deferred tax liability under the liability method but does not
account for deferred |
|
| tax
debits. |
|
|
| 3.
DEFERRED EXPENDITURE PAYABLE |
|
|
1996 |
1995 |
|
|
|
(Rupees in thousand) |
|
|
| Balance
as on July 01 |
|
|
10,933 |
-- |
|
|
|
|
| Add:
Expenditure incurred on |
|
| public
issue of shares |
|
4,367 |
10,933 |
|
|
|
|
----------- |
----------- |
|
|
|
|
15,300 |
10,933 |
|
|
|
|
| Less
: paid during the period |
|
3,060 |
- |
|
| Transferred
to current maturity |
|
3,060 |
2,187 |
|
|
|
|
----------- |
----------- |
|
|
|
6,120 |
2,187 |
|
|
|
|
|
|
|
|
|
----------- |
----------- |
|
|
|
9,180 |
8,746 |
|
|
=========== |
=========== |
|
|
| Expenditure
incurred on the incorporation and on the issue of shares of the company to
the public has |
|
| 1Seen
borne by Investment Adviser, Khadim All Shah Bukhari & Co. Ltd. These
expenses are |
|
| payable
to the Investment Adviser over a period of five years in equal annual
instalments as per |
|
| Investment
Companies and Investment Adviser's Rules, 1971. Mark-up is being charged at
the |
|
| prevailing
rate, ranging from 15% per annum to 17% per annum during the period. |
|
