| Golden Arrow |
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| SELECTED
STOCKS FUND LIMITED |
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| ANNUAL
REPORT 1997 |
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| CONTENTS |
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|
| Board of Directors and
Company Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Pattern
of Shareholding |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Investment
Adviser's Profit and Loss |
|
| Accounts
in relation to Investment Company |
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| BOARD
OF DIRECTORS |
|
|
| Mr.
Said Ahmed |
|
Chairman |
|
| Mr.
Mohammad Basheer Janmohammed |
Director |
|
| Mr.
Ahmed Abdul Sattar |
|
Director |
|
| Mr.
Abdul Rasheed Janmohammed |
Director |
|
| Sheikh
Ejaz Ahmed |
|
Director |
|
| Mr.
Muhammad Hashim Khan |
Nominee Director of ICP |
|
| Malik
M. Parvez Akhtar |
|
Director |
|
| Mr.
Mohammad Ashraf Kothari |
Managing Director and
Chief Executive |
|
|
| INVESTMENT
ADVISER |
|
| Golden
Arrow Investment & Research (Private) Limited |
|
| 607,
Uni Tower, |
|
| I.I.
Chundrigar Road, |
|
| Karachi. |
|
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| CUSTODIAN |
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| National
Bank of Pakistan, |
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| I.I.
Chundrigar Road, Karachi. |
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|
| AUDITORS |
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| Taseer
Hadi Khalid & Co., |
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| Chartered
Accountants, |
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| First
Floor, Sheikh Sultan Trust Bldg. No. 2, |
|
| Beaumont
Road, |
|
| Karachi. |
|
|
| LEGAL
ADVISER |
|
| All
Daraz Siddiqui, |
|
| C/o.
Noorallah A. Manji, |
|
| 5th
Floor, Jubilee Insurance House, |
|
| I.I.
Chundrigar Road, Karachi. |
|
|
| REGISTERED
OFFICE |
|
| 607,
Uni Tower, |
|
| I.I.
Chundrigar Road, Karachi. |
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|
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| NOTICE
OF MEETING |
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| Notice
is hereby given that the Fourteenth Annual General Meeting of Golden Arrow
Selected Stocks |
|
| Fund
Limited will be held on Monday, 22nd December, 1997 at 12:00 noon at Hotel
Plaza International, |
|
| Karachi
to transact the following business:- |
|
|
| To
confirm the Minutes of the Annual General Meeting held on 24th December,
1996. |
|
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| To
receive, consider and adopt the Audited Accounts together with the Directors'
and Auditors' Report |
|
| for
the year ended 30th June, 1997. |
|
|
| -
To appoint Auditors of the Company and to fix their remuneration. The present
Auditors, Messrs Taseer |
|
| Hadi Khalid & Co., Chartered
Accountants, retire and being eligible, offer themselves for re-appointment. |
|
|
| -
To transact such other business as may be placed before the meeting with the
permission of the Chair. |
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| NOTES: |
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| 1.
A member entitled to attend and vote at the meeting may appoint a proxy to
attend and vote instead of |
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| 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. |
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|
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| 2.
The Share Transfer books of the Company will remain closed from 16th
December, 1997 to 22nd |
|
| December,
1997 (both days inclusive). |
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|
| 3.
The Shareholders are advised to notify M/s. THK Associates (Pvt) Ltd., Ground
Floor. Sheikh Sultan |
|
| Trust
Building No. 2, Beaumont Road, Karachi, shares registrar of the company, of
any change in their |
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| addresses
to ensure prompt delivery of mails. Any shares for transfers etc. should also
be lodged with |
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| the
shares registrar, M/s. THK Associates (Pvt) Ltd. |
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|
| DIRECTORS'
REPORT |
|
|
| MARKET
BEHAVIOUR |
|
| The
fiscal year of 1996-97 can best be described as a period of turmoil and
change. The first half of this |
|
| year
was marked by extreme tension on the political front as well as by the
structural weaknesses of the |
|
| economy
which were starkly exposed and became all too apparent. The huge balance of
payment deficit and |
|
| heavy
debt servicing of foreign debts led to periodic devaluation of the Rupee. A
precarious reserve of foreign |
|
| exchange,
falling low enough to cause default to look a distinctive possibility and a
continued tussle with |
|
| international
donor agencies particularly IMF over the stand-by loan facility further
compounded the position. |
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| Bad
debts mounted in the banking sector and industrial growth slowed down. The
budget and trade deficit |
|
| ballooned
during the period characterized by uncertainty and instability. |
|
|
| Capital
Markets of the country, in line with the economy, performed poorly. KSE-100
index plunged to its |
|
| lowest
level of 1332 during this period, losing almost four hundred points from
June, 96 closing. Although it |
|
| also
went as high as 1775 but such occasional boost in the market proved quite
short lived. Such mushroom |
|
| like
rallies further intensified the precarious condition of the market. The
federal budget of 96-97 gave a harsh |
|
| blow
to the already shattered confidence of investors. It was soon followed by the
mini-budget in October, |
|
| which
brought additional taxes worth Rs.40 billion. An appeal was made to the
Government in order to avert |
|
| the
crash, in the stock market, feared by many. Some remedial measures were taken
urgently but the |
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| fundamental
problems continued to prevail. Growing internal political troubles, violence
all across the country, |
|
| rampaging
corruption and complete lack of leadership, at last, culminated in
dissolution of assemblies and the |
|
| Government
at the centre and the provinces. Business community, hailed president's step
and responded |
|
| favourably.
But the buoyancy in the stock market proved to be quite short lived.
Particularly, because |
|
| international
rating agency of Moody down graded Pakistan due to failing economy. The
caretaker |
|
| government,
in its effort to bring some kind of stability in the economy of the country,
took various initiatives |
|
| and
announced relief packages to various industries including stock market and
Textile sector. Despite these |
|
| encouraging
factors, market on the whole, kept losing ground on stronger depressants.
Apart from occasional |
|
| genuine
buying in few selective issues, market at large suffered from prolonged
dullness, particularly in agro- |
|
| based
sectors and market behaviour became more volatile and erratic. Thus KSE-100
Index experienced a fall |
|
| of
almost 140 points, from 1703.28 of June, 96 to 1565.73 of June, 97. Against
this back drop, the |
|
| performance
of an investment portfolio such as ours, which largely depends on market
conditions supported |
|
| by
economic development, particularly sectors like textile and modarabas, could
only be expected to suffer. |
|
| However,
shareholders will find this year's results slightly better than the last. |
|
|
| OPERATIONAL
RESULTS |
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| The
Company's net income before tax for the year ending June 30, 1997 was Rs. 3.5
million as against |
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| the
loss of Rs. 12.4 million in the corresponding period. The directors have
regretfully passed over dividend |
|
| payment
for the year under report. There has been no material change in the net asset
value of your |
|
| company,
since the balance sheet date. |
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|
| FUTURE
OUTLOOK |
|
| Although
the newly elected Government has inherited the legacy of runaway inflation,
worsening |
|
| balance
of payment and crushing burden of foreign and local debt but with the renewal
of national spirit and |
|
| growing
optimism, the policies taken so far seem to be in the right direction. The
new government, in line with |
|
| their
commitments to economic revival, has announced quite a few comprehensive
reform packages for |
|
| various
industries and sectors according to the need and requirements. These packages
could prove to be |
|
| immensely
beneficial and advantageous, provided they are implemented sincerely and with
consistency. If the |
|
| reaction
of market participants, economists and businessmen are anything to go by,
Pakistan's ravaged |
|
| economy
seems to be on the path to recovery. The stock market too, reacted strongly
and there is a marked |
|
| improvement
in sentiments. With the induction of a new sense of direction and the
economy's progress to |
|
| consolidation,
as a first step, we believe that success can be attained with continued
diligent efforts. The |
|
| performance
of your company could only improve with revival in the country's economic
conditions. As activity |
|
| on
the economic front is picking up, let us hope that it will be reflected,
favourably in your company's portfolio. |
|
| The
outlook, therefore, appears to be hopeful. |
|
|
| ACKNOWLEDGMENTS |
|
|
| The
Directors would like to take this opportunity of thanking the Corporate Law
Authority and Ministry of |
|
| Finance
for their support to the Company. |
|
|
| The
Board also appreciate the devoted work done by the staff and officers of the
company. |
|
|
| PATTERN
OF SHAREHOLDING AS AT 30TH JUNE 1997 |
|
|
|
| No. of |
|
Having Shares |
Shares Held |
Percentage |
|
| Shareholders |
From |
To |
|
| 295 |
|
1 |
100 |
17,622 |
0.11 |
|
| 639 |
|
101 |
500 |
170,683 |
1.05 |
|
| 515 |
|
501 |
1000 |
413,940 |
2.55 |
|
| 1080 |
|
1001 |
5000 |
2,618.69 |
16.15 |
|
| 225 |
|
5001 |
10000 |
1,619,934 |
9.99 |
|
| 76 |
|
10001 |
15000 |
973,736 |
6.01 |
|
| 33 |
|
15001 |
20000 |
593,155 |
3.66 |
|
| 14 |
|
20001 |
25000 |
308,532 |
1.90 |
|
| 5 |
|
25001 |
30000 |
137,025 |
0.85 |
|
| 10 |
|
30001 |
35000 |
335,243 |
2.07 |
|
| 1 |
|
35001 |
40000 |
38,653 |
0.24 |
|
| 2 |
|
40001 |
45000 |
82,391 |
0.51 |
|
| 5 |
|
45001 |
55000 |
250,679 |
1.55 |
|
| 3 |
|
55001 |
60000 |
173,930 |
1.07 |
|
| 2 |
|
60001 |
65000 |
125,850 |
0.78 |
|
| 2 |
|
65001 |
75000 |
136,000 |
0.84 |
|
| 2 |
|
75001 |
80000 |
155,533 |
0.96 |
|
| 2 |
|
80001 |
90000 |
171,500 |
1.06 |
|
| 5 |
|
90001 |
105000 |
499,789 |
3.08 |
|
| 4 |
|
105001 |
180000 |
578,496 |
3.57 |
|
| 1 |
|
180001 |
190000 |
182,971 |
1.13 |
|
| 1 |
|
190001 |
215000 |
191,672 |
1.18 |
|
| 1 |
|
215001 |
240000 |
247,800 |
1.53 |
|
| 6 |
|
240001 |
580000 |
2,147,705 |
13.25 |
|
| 1 |
|
580001 |
1075000 |
587,732 |
3.63 |
|
| 1 |
|
1075001 |
1355000 |
1,306,740 |
8.06 |
|
| 1 |
|
1355001 |
2145000 |
2,144,000 |
13.22 |
|
| ---------- |
---------- |
---------- |
---------- |
---------- |
---------- |
|
| 2,932 |
|
16,210,000 |
100 |
|
| ========== |
========== |
========== |
========== |
========== |
========== |
|
|
|
|
|
| CATEGORIES
OF SHAREHOLDERS AS ON 30 JUNE 1997 |
|
|
|
| Particulars |
Shareholders |
Shareholding |
Percentage |
|
|
| Individuals |
2,888 |
8,217,725 |
50.69 |
|
| Insurance Companies |
4 |
94,999 |
0.59 |
|
| Joint Stock Companies |
24 |
4,409,108 |
27.20 |
|
| Financial Companies |
8 |
2,815,555 |
17.37 |
|
| Modaraba
Companies |
|
4 |
354,913 |
2.19 |
|
| Leasing Companies |
2 |
173,500 |
1.07 |
|
| Non-Resident |
1 |
2,000 |
0.01 |
|
| Others |
1 |
142,200 |
0.88 |
|
|
---------- |
---------- |
---------- |
|
|
|
2,932 |
16,210,000 |
100.00 |
|
|
|
========== |
========== |
========== |
|
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Golden Arrow Selected Stocks Fund
Limited as at 30 |
|
| June
1997 and the related Profit and Loss Account and Statement of Changes in
Financial Position 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 purpose 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 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 during the year incurred was for the purpose of the Company's
business; |
|
|
|
|
| (iii)
the business conducted, investments made and expenditure incurred during the
year 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' |
|
|
| (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 Statement of Changes in
Financial Position |
|
| 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 manners
so required and |
|
| respectively
give a true and fair view of the state of the Company's affairs as at 30 June
1997 and of the |
|
| profit
and changes in the financial position for the year ended on that date; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 1997 |
|
|
|
NOTE |
1997 |
1996 |
|
|
|
|
|
(Rupees '000) |
|
|
|
|
| CAPITAL
AND RESERVES |
|
|
|
|
|
|
| SHARE
CAPITAL |
|
|
|
| Authorised |
|
|
|
| 60,000,000
ordinary |
|
|
|
| shares
of Rs. 5/- each |
|
|
300,000 |
300,000 |
|
|
|
|
========== |
========== |
|
| Issued,
Subscribed and Paid-up |
|
|
| 16,210,000
Ordinary Shares of Rs. 5/- each |
|
3 |
81,050 |
81,050 |
|
| RESERVES |
|
|
| Share
premium |
|
|
6,700 |
6,700 |
|
| General
reserve |
|
500 |
500 |
|
| Accumulated
loss |
|
(21,303) |
(24,688) |
|
|
|
---------- |
---------- |
|
|
|
(14,103) |
(17,488) |
|
|
|
---------- |
---------- |
|
|
|
66,947 |
63,562 |
|
| Deferred
expenditure payable |
|
4 |
124 |
241 |
|
| CURRENT
LIABILITIES |
|
|
|
| Due
to shareholders on reduction of capital |
|
|
45 |
45 |
|
| Current
maturity of deferred expenditure payable |
4 |
116 |
193 |
|
| Creditors
and accrued expenses |
|
5 |
48 |
460 |
|
| Due
to investment adviser - an associated company |
6 |
694 |
679 |
|
| Unclaimed
dividend |
|
|
322 |
324 |
|
| Provision
for taxation |
|
7 |
150 |
97 |
|
|
|
|
---------- |
---------- |
|
|
|
|
1,375 |
1,798 |
|
|
|
|
---------- |
---------- |
|
|
|
|
68,446 |
65,601 |
|
|
|
|
========== |
========== |
|
|
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
|
|
|
|
|
| DEFERRED
EXPENDITURE |
|
8 |
272 |
470 |
|
| CURRENT
ASSETS |
|
|
|
|
|
|
| Marketable
securities |
|
|
|
---------- |
---------- |
|
| -
Equity Securities |
|
9 |
57,669 |
52,947 |
|
| -
Term Finance Certificates |
|
10 |
7,500 |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
65,169 |
52,947 |
|
| Trade
debts - unsecured |
|
|
| considered
good |
|
|
- |
429 |
|
|
|
|
| Advances,
prepayments and other |
|
|
| receivables |
|
11 |
733 |
217 |
|
|
|
|
| Bank
balances on current account |
|
|
2,272 |
11,538 |
|
|
|
|
---------- |
---------- |
|
|
|
|
68,174 |
65,131 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
68,446 |
65,601 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
|
| FOR
THE YEAR ENDED 30 JUNE 1997 |
|
|
|
|
|
|
NOTE |
1997 |
1996 |
|
|
|
|
(Rupees '000) |
|
|
|
|
|
|
| Sales
of marketable securities |
|
|
21,676 |
27,389 |
|
| Cost
of sales of marketable securities |
|
12 |
25,507 |
23,684 |
|
|
|
|
---------- |
---------- |
|
| (Loss)/gain
on sale of marketable securities |
|
|
(3,831) |
3,705 |
|
| Other
income |
|
13 |
4,826 |
1,563 |
|
|
|
|
---------- |
---------- |
|
|
|
|
995 |
5,268 |
|
|
|
|
| Reversal
of provision/(Provision) for diminution in |
|
| value
of marketable securities |
|
|
3,675 |
(16,578) |
|
|
|
|
---------- |
---------- |
|
|
|
|
4,670 |
(11,310) |
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative |
|
14 |
408 |
410 |
|
| Financial |
|
15 |
25 |
44 |
|
| Remuneration
to Investment Adviser |
|
6.1 |
670 |
636 |
|
|
|
|
---------- |
---------- |
|
|
|
1,103 |
1,090 |
|
|
|
|
|
| Profit
/ (Loss) for the year before taxation |
|
3,567 |
(12,400) |
|
|
|
---------- |
---------- |
|
| Taxation
- Current year |
|
150 |
50 |
|
| - Prior year |
|
|
32 |
45 |
|
|
|
|
---------- |
---------- |
|
|
|
|
182 |
95 |
|
|
|
|
---------- |
---------- |
|
| Profit
/ (Loss) for the year after taxation |
|
|
3,385 |
(12,495) |
|
| Accumulated
loss brought forward |
|
|
(24,688) |
(12,193) |
|
|
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
|
(21,303) |
(24,688) |
|
|
|
|
========== |
========== |
|
|
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED 30 JUNE 1997 |
|
|
|
|
|
|
|
|
1997 |
1996 |
|
|
|
|
|
(Rupees '000) |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
| Profit/(Loss)
before taxation |
|
3,567 |
(12,400) |
|
|
|
|
|
|
| Adjustment
for: |
|
|
|
|
|
| Amortisation
of deferred expenditure |
|
198 |
275 |
|
| (Reversal
of provision) / Provision for diminution in |
|
|
|
| value
of marketable securities |
|
(3,675) |
16,578 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
90 |
4,453 |
|
| Changes
in operating assets / liabilities: |
|
|
|
|
|
|
|
|
| (Increase)/decrease
in current assets |
|
|
|
| Marketable
securities |
|
(8,547) |
2,518 |
|
| Trade
debts |
|
429 |
(429) |
|
| Prepayments
& other receivable |
|
(510) |
746 |
|
|
|
|
|
| (decrease)/increase
in current liabilities |
|
|
|
| Creditors
and accrued expenses |
|
(412) |
(256) |
|
| Due
to Investment Adviser |
|
15 |
(145) |
|
|
|
---------- |
---------- |
|
|
|
(9,025) |
2,434 |
|
|
|
|
|
| Income
tax paid |
|
(135) |
(43) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash flow (used) in /from operating activities |
|
(9,070) |
6,844 |
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
|
| Deterred
expenditure paid |
|
(194) |
(193) |
|
| Dividend
paid |
|
(2) |
(1) |
|
|
|
---------- |
---------- |
|
| Net
cash flow (used) in financing activities |
|
(196) |
(194) |
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
|
|
|
| Refund
of reduced share capital |
|
|
|
- |
(2) |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
- |
(2) |
|
|
|
|
|
|
|
|
| Net
(decrease) /increase in bank balances |
|
|
(9,266) |
6,648 |
|
| Bank
balance at the beginning of the year |
|
|
11,538 |
4,890 |
|
|
|
|
|
---------- |
---------- |
|
| Bank
balance at the end of the year |
|
2,272 |
11,538 |
|
|
|
|
|
========== |
========== |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED 30 JUNE 1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| The
company was incorporated on 09 May 1983 as a public limited company under
Companies Act, |
|
| 1913
(now Companies Ordinance, 1984) and was registered as an Investment Company
under the |
|
| Investment
Companies and Investment Adviser's Rules, 1971 and is listed on Karachi and
Lahore Stock |
|
| Exchanges.
The Company has entered into an agreement with an associated company, Golden
Arrow |
|
| Investment
and Research (Private) Limited to act as its "Investment Adviser." |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
|
|
| 2.2
Marketable Securities |
|
| These
are valued at lower of average cost and market value on an aggregate
portfolio basis. |
|
| Market
value has been taken from Karachi Stock Exchange quotation sheets on the
balance sheet |
|
| date. |
|
|
|
| 2.3
Revenue Recognition |
|
| (i)
Dividend income is recorded at the time of the closure of share transfer
books of the |
|
| company
declaring the d |
