| ASIAN STOCKS FUND LIMITED |
|
|
|
|
|
|
|
|
|
|
| ANNUAL
REPORT 1997 |
|
|
| CONTENTS |
|
|
| COMPANY
INFORMATION |
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| DIRECTORS'
REPORT |
|
|
| PATTERN
OF HOLDING OF THE SHARES |
|
| AUDITORS'
REPORT |
|
|
| BALANCE
SHEET |
|
|
| INCOME
& EXPENDITURE ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| STATEMENT
OF INCOME & EXPENDITURE IN RELATION TO THE |
|
| INVESTMENT
COMPANY |
|
|
|
|
| COMPANY
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Ismail Abdul Shakoor. |
|
| Mr.
Zaigham Mehmood Rizvi. |
|
| Mr.
Farooq Ismail. |
|
| Mr.
Shabbir Ismail. |
|
| Mr.
Jamil Ahmed Siddiqi. |
|
| Ms.
Farzana Ismail. |
|
| Mr.
Iqbal Sumar. |
|
|
| CHIEF
EXECUTIVE |
|
| Mr.
Ismail Abdul Shakoor. |
|
|
| COMPANY
SECRETARY |
|
| Mr.
Jamil Ahmed Siddiqi. |
|
|
| MANAGEMENT
COMPANY |
|
| Asian
Capital Management (Pvt.) Limited. |
|
|
| BANKERS |
|
| Union
Bank Limited. |
|
| Muslim
Commercial Bank Limited. |
|
| National
Bank of Pakistan. |
|
|
| AUDITORS |
|
| M/s.
Yousuf Adil & Co. |
|
| Chartered
Accountants. |
|
|
| LEGAL
ADVISERS |
|
| M/s.
Mohsin Tayebaly & Co. |
|
|
| REGISTERED
OFFICE |
|
| 302,
Clifton Centre, |
|
| Khayaban-e-Roomi, |
|
| Main
Clifton Road, |
|
| Karachi. |
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the Third Annual General Meeting of Asian Stocks Fund
Limited will be held |
|
| on
Friday, 26th December, 1997 at 3:00 p.m. at Raffia Chaodri Memorial Centre,
Sidco Avenue Centre, 264 |
|
| R.A.
Lines, Karachi, to transact the following business: |
|
|
| To
confirm the Minutes of the Second Annual General Meeting held on 24th
December, 1996. |
|
|
| To
receive, consider and adopt the Audited Accounts together with the Directors'
and Auditors' Reports for |
|
| the
period ended 30th June, 1997. |
|
|
| To
appoint Auditors of the Company and to fix their remuneration. The present
Auditors, Messrs Yousuf |
|
| Adil
& Co., Chartered Accountants, retire and being eligible, offer themselves
for re-appointment. |
|
|
| To
transact such other business as may beplaced before the meeting with the
permission of the Chair. |
|
|
| Notes: |
|
|
| 1.
A member entitled to attend and vote at the meeting may appoint a proxy to
attend and vote instead |
|
| of
him/her at the meeting. Proxies must be deposited at the Company's Registered
Office not less |
|
| than
48 hours before the time for holding the meeting. A proxy must be a member. |
|
|
|
|
| 2.
The Share Transfer Books of the Company will remain closed from 18th
December, 1997 to 25th |
|
| December,
1997 (Both days inclusive). |
|
|
|
|
| 3.
The shareholders are advised to notify Shares Department, Asian Stocks Fund
Limited, 302 Clifton |
|
| Centre,
Main Clifton Road, Karachi, of any change in their addresses to ensure prompt
delivery of |
|
| mail.
Any shares for transfer etc. should be lodged with the Shares Department,
Asian Stocks Fund |
|
| Limited. |
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|
|
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Board of Directors are pleased to present the Third Annual Report of the Fund
to the shareholders, for the |
|
| period
ended June 30, 1997. |
|
|
| The
year under review was full of many events. Political uncertainty during much
of the first half of the year |
|
| affected
the economy followed by Moody's negative report and IMF's strict
conditionalities for sanctioning loan |
|
| to
Pakistan. The change of Government through elections in February 1997
provided a major boost to stock |
|
| market
which proved to be short lived. Besides, many incentive packages announced by
the Government for the |
|
| development
of stock markets in general and the economy in particular could not result in
bringing the stock |
|
| markets
out of bearishness. |
|
|
| The
market remained depressed for most of the year - third year in a row. The KSE
100 share index ended lower |
|
| at
1565.73 on 30th June, 1997 as compared to 1703.06 as on June 30, 1996. The
market failed to show a definite |
|
| direction
and several rallies, rekindling hopes of revival, faltered. It has
consistently been on the path of decline. |
|
| It
will be interesting to note that the main trading activity remained
restricted to few selected companies shares. |
|
|
| The
drop in equity values has been wide spread. The long term downward trend,
commencing in mid 1994 is still |
|
| on.
Any rebound could only result from increase in corporate activity,
profitability, improvement in economy and |
|
| political
stability. |
|
|
| The
performance of Mutual Funds industry as a whole remained unsatisfactory owing
to the negative factors |
|
| prevalent
during the period under review. Due to this reason, the profitability of
Mutual Funds industry suffered |
|
| a
set back. The Mutual Funds were traded at substantial discounts to their Net
Asset Values. As a matter of fact, |
|
| there
was very little interest from the investors in this sector as well in other
sectors. |
|
|
| The
Management has made some changes in the portfolio of the Fund which it is
hoped will show good results |
|
| once
the stability in the stock market takes a positive turn. |
|
|
| FUTURE
OUTLOOK: |
|
| We
sincerely hope that Insha-Allah your Fund would be able to show good results
during the year 1997-98 |
|
| provided
there is sustained economic growth, political stability and improved
corporate earnings. |
|
|
| AUDITORS: |
|
| The
present auditors, M/s. M. Yousuf Adil & Co., Chartered Accountants, are
due for retirement and being |
|
| eligible,
offer themselves for reappointment for the financial year 1997-98. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| As
At June 30, 1997 |
|
|
| Serial |
No. of |
Share Holding |
Total Shares |
|
| Number |
Shareholders |
From |
To |
Held |
|
|
|
|
| 1 |
1,996 |
101 |
500 |
998,000 |
|
| 2 |
70 |
501 |
1000 |
70,000 |
|
| 3 |
57 |
1001 |
5000 |
181,500 |
|
| 4 |
11 |
5001 |
10000 |
96,000 |
|
| 5 |
1 |
10001 |
15000 |
15,000 |
|
| 6 |
5 |
15001 |
20000 |
95,500 |
|
| 7 |
2 |
20001 |
25000 |
50,000 |
|
| 8 |
7 |
25001 |
30000 |
206,500 |
|
| 9 |
18 |
35001 |
40000 |
718,000 |
|
| 10 |
4 |
45001 |
50000 |
200,000 |
|
| 11 |
1 |
135001 |
140000 |
135,500 |
|
| 12 |
1 |
195001 |
200000 |
200,000 |
|
| 13 |
3 |
245001 |
250000 |
750,000 |
|
| 14 |
2 |
435001 |
440000 |
871,000 |
|
| 15 |
1 |
585001 |
590000 |
585,500 |
|
| 16 |
1 |
695001 |
700000 |
700,000 |
|
| 17 |
1 |
995001 |
1000000 |
1,000,000 |
|
| 18 |
1 |
1195001 |
1200000 |
1,200,000 |
|
| 19 |
1 |
1925001 |
1930000 |
1,927,500 |
|
| ---------- |
---------- |
---------- |
---------- |
---------- |
|
|
2,183 |
|
10,000,000 |
|
| ========== |
========== |
========== |
========== |
========== |
|
|
|
| CATEGORIES
OF SHAREHOLDERS |
|
|
| Categories
of Shareholders |
Number |
Shares Held |
Percentage |
|
|
|
|
|
| Individuals |
|
2171 |
2,630,500 |
26.30 |
|
| Investment
Companies |
|
2 |
1,135,500 |
11.36 |
|
| Joint
Stock Companies |
|
4 |
4,713,000 |
47.13 |
|
| Financial
Institutions |
|
5 |
1,385,500 |
13.86 |
|
| Modaraba
Companies |
|
1 |
135,500 |
1.35 |
|
|
|
---------- |
---------- |
---------- |
|
|
|
2183 |
10,000,000 |
100.00 |
|
|
========== |
========== |
========== |
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Asian Stocks Fund Limited as at
June 30, 1997 and the |
|
| related
income and expenditure account and statement of changes in financial position
(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 informations and explanations which to
the best of our knowledge |
|
| and
belief were necessary for the purpose of the 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 Adviser's Rules,
1971; |
|
|
|
|
| (b)
in our opinion: |
|
|
| (i)
the balance sheet and expenditure account together with the notes thereon
have been drawn up |
|
| in
conformity with the Companies Ordinance, 1984, and are in accordance with the
provisions of |
|
| Investment
Companies and Investment Adviser' s Rule, 1971 and are in agreement with the
books |
|
| of
accounts and are further in accordance with accounting policies consistently
applied; |
|
|
| (ii)
the expenditure incurred during the year was for the purpose of the company's
business; |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the year were in |
|
| accordance
with the investment policy of the Company and Investment Companies and
Invest- |
|
| ment
Adviser's Rule, 1971; and |
|
|
| (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, income and expenditure 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 Adviser's
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, 1997 and of the loss 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, 1980. |
|
|
| BALANCE
SHEET |
|
| As
At June 30, 1997 |
|
|
| SHARE
CAPITAL |
|
Note |
1997 |
1996 |
|
|
|
|
Rupees |
Rupees |
|
| Authorised |
|
|
|
|
| 10,000,000
Ordinary shares of Rs. 10/- each |
|
100,000,000 |
100,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
|
| 10,000,000
Ordinary shares of Rs. 10/- each fully |
|
| paid
in cash |
|
100,000,000 |
100,000,000 |
|
|
|
|
| Accumulated
Loss |
|
|
(24,088,114) |
(13,418,889) |
|
|
|
|
---------- |
---------- |
|
|
|
|
75,911,886 |
86,581,111 |
|
|
|
|
| DEFERRED
EXPENDITURE PAYABLE |
|
3 |
1,957,841 |
2,767,981 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
---------- |
---------- |
|
| Current
maturity of deferred expenditure payable |
|
810,140 |
810,140 |
|
|
|
|
|
| Due
to Investment Adviser - an associated undertaking |
4 |
1,737,672 |
2,021,588 |
|
| Accounts
payable, accrued expenses and other liabilities |
5 |
25,000 |
58,463 |
|
| Taxation |
|
|
828,498 |
185,560 |
|
|
|
|
---------- |
---------- |
|
|
|
3,401,310 |
3,075,751 |
|
|
|
|
---------- |
---------- |
|
| Contingencies
|
6 |
81,271,037 |
92,424,843 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| DEFERRED
EXPENDITURE |
|
7 |
1,957,841 |
2,767,981 |
|
|
|
|
| CURRENT
ASSETS |
|
|
---------- |
---------- |
|
| Marketable
securities |
|
8 |
60,680,654 |
56,862,735 |
|
|
|
|
| Accounts
receivable- Considered good |
|
|
3,584,900 |
17,988,528 |
|
| Advance
income tax |
|
|
805,275 |
450,594 |
|
| Profit
/ dividend receivable - Considered good |
|
|
250,941 |
258,882 |
|
| Bank
balances: |
|
|
|
| In
current account |
|
64,232 |
5,641 |
|
| In
special deposits account |
|
13,927,194 |
14,090,482 |
|
|
|
---------- |
---------- |
|
|
|
79,313,196 |
89,656,862 |
|
|
|
---------- |
---------- |
|
|
|
81,271,037 |
92,424,843 |
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes from I to 10 form an integral part of these accounts. |
|
|
|
|
|
|
|
| INCOME
AND EXPENDITURE ACCOUNT |
|
| For
The Year Ended June 30, 1997 |
|
|
|
|
|
|
Note |
1997 |
1996 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Income |
|
|
|
| Dividend |
|
|
3,237,622 |
1,231,121 |
|
| Return
on deposits and certificates |
|
|
660,139 |
1,019,354 |
|
| Loss
on dealing in securities |
|
9 |
(4,502,990) |
(66,465) |
|
|
|
|
---------- |
---------- |
|
|
|
|
(605,229) |
2,184,010 |
|
|
|
|
| Expenditure |
|
|
|
|
|
|
| Remuneration
to Investment Adviser |
|
(4.1) |
1,549,222 |
1,766,961 |
|
| Custodian
charges |
|
|
367,259 |
503,017 |
|
| Amortization
of deferred expenditure |
|
810,140 |
810,140 |
|
| Listing
fees |
|
|
92,500 |
32,500 |
|
| Audit fees |
|
|
|
25,000 |
25,000 |
|
| Financial
charges |
|
|
285,364 |
376,200 |
|
| Professional
Charges |
|
|
95,750 |
- |
|
| Others |
|
|
|
5,578 |
3,500 |
|
|
|
|
|
---------- |
---------- |
|
|
|
3,230,813 |
3,517,318 |
|
|
|
---------- |
---------- |
|
| Loss
for the year |
|
|
(3,836,042) |
(1,333,308) |
|
|
|
|
| (Provision)
/ Reversal for diminution in value of marketable securities |
(6,066,685) |
1,067,368 |
|
|
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
|
(9,902,727) |
(265,940) |
|
|
|
|
| Provision
for taxation |
|
|
|
| Prior year |
|
|
|
366,498 |
- |
|
| Current
year |
|
400,000 |
(62,000) |
|
|
|
---------- |
---------- |
|
|
|
(766,498) |
(62,000) |
|
|
|
|
---------- |
---------- |
|
| Loss
for the year after taxation |
|
|
(10,669,225) |
(327,940) |
|
| Accumulated
loss brought forward |
|
|
(13,418,889) |
(13,090,949) |
|
|
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
|
(24,088,114) |
(13,418,889) |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 10 form an integral part of these accounts. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| CASH
FLOW STATEMENT |
|
| For
The Year Ended June 30, 1997 |
|
|
|
|
|
|
1997 |
1996 |
|
| A.
CASH FLOW FROM OPERATING ACTIVITIES |
|
Rupees |
Rupees |
|
|
|
|
| Loss
before taxation |
|
|
|
(9,902,727) |
(265,940) |
|
| ADJUSTMENT
FOR ITEMS NOT INVOLVING MOVEMENT OF FUNDS: |
|
|
| Amortization
of deferred expenditure |
|
810,410 |
810,140 |
|
| Provision
for diminution in value |
|
|
|
| of
marketable securities |
|
6,066,685 |
(1,067,368) |
|
|
|
---------- |
---------- |
|
|
|
6,876,825 |
(257,228) |
|
|
|
---------- |
---------- |
|
| Operating
loss before working capital changes |
|
(3,025,902) |
(523,168) |
|
|
|
|
| EFFECT
ON CASH FLOW DUE TO WORKING |
|
|
|
| CAPITAL
CHANGES |
|
|
|
| (Increase)
/ decrease in current assets |
|
|
| Marketable
securities |
|
(9,884,604) |
5,282,476 |
|
| Accounts
receivable |
|
14,403,628 |
(14,187,528) |
|
| Profit
/ Dividend receivable |
|
7,941 |
907,232 |
|
|
|
---------- |
---------- |
|
|
|
4,526,965 |
(7,997,820) |
|
|
|
|
| Increase
/ (decrease) in current liabilities |
|
|
|
|
|
| Due
to Investment Adviser |
|
|
(283,916) |
24,144 |
|
| Accounts
payable, accrued and other liabilities |
|
(33,463) |
(12,771,282) |
|
|
|
---------- |
---------- |
|
|
|
|
|
(317,379) |
(12,747,138) |
|
|
|
|
|
---------- |
---------- |
|
| Cash
from (used in) operations |
|
1,183,684 |
(21,268,126) |
|
| Taxes paid |
|
(478,241) |
(193,321) |
|
|
|
---------- |
---------- |
|
| Net
cash used in operating activities |
|
705,443 |
(21,461,447) |
|
|
|
|
|
---------- |
---------- |
|
| B.
CASH FLOW FROM FINANCING ACTIVITIES |
|
|
| Deferred
liability repaid |
|
(810,140) |
(472,582) |
|
|
|
---------- |
---------- |
|
| Net
cash (used in) financing activities |
|
(810,140) |
(472,582) |
|
|
|
---------- |
---------- |
|
| Net
(decrease)/increase in cash and cash equivalents |
|
(104,697) |
(21,934,029) |
|
| Cash
and cash equivalents at the beginning of year |
|
14,096,123 |
36,030,152 |
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
|
13,991,426 |
14,096,123 |
|
|
|
========== |
========== |
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| For
The Year Ended June 30, 1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| 1.1
The Company was incorporated on June 13, 1994, as a Public Company Limited by
shares under |
|
| the
Companies Ordinance, 1984 and has been registered as an Investment Company
under the |
|
| Investment
Companies and Investment Adviser's Rules, 1971. The company is listed on |
|
| Karachi,
Lahore and Islamabad Stock Exchanges. |
|
|
|
|
| It
is a closed end mutual fund with an object to invest its assets in
securities. |
|
|
| 1.2
The fund has been approved by Corporate Law Authority under the Investment
Companies and |
|
| Investment
Adviser's Rules, 1971. |
|
|
| 1.3
Asian Capital Management (Pvt.) Limited are the approved Investment Adviser
and Union Bank |
|
| Limited
are the approved custodian of the company. |
|
|
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
|
|
| 2.2
Deferred Expenditure |
|
| These
are amortized over a maximum period of five years from the year of deferment. |
|
|
|
| 2.3
Taxation |
|
| The
charge for current taxation is based on taxable income at the current tax
rates after taking |
|
| into
account tax credits and rebates available, if any. |
|
|
|
|
| The
company accounts for deferred taxation arising on major timing differences,
if any, by using |
|
| the
liability method. |
|
|
| 2.4
Marketable Securities |
|
| These
are valued at lower of moving average cost and market value on an aggregate
portfolio |
|
| basis. |
|
|
|
| 2.5
Revenue Recognition |
|
| Sales
and purchases of securities are recorded on the date of the execution of
contract. Gains and |
|
| losses
on the sale of securities are accounted for in the year in which they arise. |
|
|
| Dividend
income is recognised at the time of closure of share transfer books of the
company |
|
| declaring
dividend and is recorded after netting off Zakat. |
|
|
| Return
on bank deposits and certificates of investment is recognised on accrual
basis. |
|
|
| 3.
DEFERRED EXPENDITURE PAYABLE |
|
|
1997 |
1996 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Opening
Balance |
|
3,578,121 |
4,050,703 |
|
| Paid
during the year |
|
(810,140) |
(472,582) |
|
|
|
---------- |
---------- |
|
|
|
2,767,981 |
3,578,121 |
|
|
|
|
| Less:
Payable within one year |
|
|
|
| shown under
current liabilities |
(810,140) |
(810,140) |
|
|
|
---------- |
---------- |
|
|
|
|
1,957,841 |
2,767,981 |
|
|
|
========== |
========== |
|
|
|
|
|
| The
expenditure incurred on the incorporation and floatation of Asian Stocks Fund
Limited has |
|
| been
paid by the Asian Capital Management (Pvt.) Limited, the Investment Adviser. |
|
| These
expenses are repayable to Asian Capital Management (Pvt.) Limited over a
period of five |
|
| years
in equal annual installments. It is subject to interest at the rate of 10%
per annum. |
|
|
| 4.
DUE TO INVESTMENT ADVISER - an associated undertaking |
|
|
| Two
percent of net assets (4.1) |
|
|
1,549,222 |
1;766,961 |
|
| Interest
payable on deferred expenditure |
|
276,798 |
365,689 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
1,826,020 |
2,132,650 |
|
| Less:
Due from Investment Adviser |
|
|
(88,348) |
(111,062) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
1,737,672 |
2,021,588 |
|
|
|
|
|
========== |
========== |
|
|
| 4.1
The remuneration of the Investment Adviser is payable at the rate of 2% of
the net assets of the |
|
| company
for the first five years of the investment company's existence and thereafter
at the rate |
|
| of
1% of the net assets of the company in terms of clause 11 (a) of the
Investment Companies and |
|
| Investment
Adviser's Rules, 1971. The remuneration for the year has been determined as
under. |
|
|
|
|
|
|
1997 |
1996 |
|
| ASSETS |
|
|
