| Al-Mal Securities & Services Limited |
|
|
|
|
|
|
|
| Annual
Report 2001 |
|
|
| CONTENTS |
|
|
| Corporate
Information |
|
| Directors'
Report |
|
| Chief
Executive's Review |
|
| Auditors' Report |
|
|
| Balance Sheet |
|
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Statement
of Changes in Equity |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
| Notice
of Meeting |
|
|
|
| CORPORATE
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Syed Iradat Husain |
Chairman |
|
| Mr.
Maqbool Hussain |
Vice Chairman |
|
| Mr.
Mohammad Azeem Khan |
Chief Executive |
|
| Mr.
Ahmad H.I. Dada |
Director |
|
| Mr.
Amanullah Suleman |
Director |
|
| Mr.
Tariq Jamil Khan |
Director |
|
| Mr.
Mohammad Shoaib |
Director (Nominee of
PKIC) |
|
|
|
|
| MANAGEMENT
TEAM |
|
| Mr.
Mohammad Azeem Khan |
|
| Miss
Farhat Yasmin |
|
| Mr.
M. Ahsan Hashmi |
|
| Mr.
Ghous Baksh Malhan |
|
|
| COMPANY
SECRETARY |
|
| Mr. D. V. Karia |
|
|
|
|
|
| BANKERS |
|
| Muslim
Commercial Bank Limited |
|
| Askari
Commercial Bank Limited |
|
| Bank
Al-Habib Limited |
|
| ABN
Amro Bank |
|
|
| AUDITORS |
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants, |
|
| Finlay
House, I.I. Chundrigar Road, Karachi. |
|
|
| REGISTERED
OFFICE |
|
| 10th
Floor, Progressive Square, Nursery, |
|
| Sharea
Faisal, Karachi. |
|
|
|
| DIRECTOR'S
REPORT |
|
|
| The
directors have pleasure in submitting herewith their Report and Audited
Accounts together with Auditors |
|
| Report
of the Company for the year ended 30th June, 2001. |
|
|
| 1.
Operating Results |
|
| (Summarized
results for the year under report are as follows) |
|
|
|
|
|
(Rupees) |
|
|
|
2001 |
2000 |
|
|
| Total
operating income |
|
9,654,101 |
13,560,477 |
|
| Profit
for the year before tax |
|
676,743 |
6,934,928 |
|
| Net
Profit for the year after tax |
|
600,728 |
6,854,979 |
|
| Proposed
Dividend Nil (2000: 7.5%) |
|
-- |
(3,750,000) |
|
|
|
------------------ |
------------------ |
|
|
|
600,728 |
3,104,979 |
|
| Accumulated
Profit / (Loss) brought forward |
|
(17,127,975) |
(20,232,954) |
|
|
|
------------------ |
------------------ |
|
|
|
(16,527,247) |
(17,127,9751 |
|
|
|
========== |
========== |
|
| Earning
per share |
|
0.12 |
1.37 |
|
|
|
|
| 2.
Chief Executive's Review: |
|
|
|
| The
Chief Executive's Review deals with the business activities and operating
results of the Company |
|
| during
the year and future outlook. |
|
|
|
| The
directors endorse the contents of the report. |
|
|
| 3.
Pattern of share holding is attached. |
|
|
| 4. Auditors: |
|
| The
present auditors M/s Ford, Rhodes, Robson, Morrow, Chartered Accountants
retire and being |
|
| eligible
offer themselves for re-appointment. |
|
|
|
| 5.
Acknowledgement: |
|
|
|
| The
directors wish to place on record their appreciation and thanks to
shareholders and customers |
|
| for
their continued confidence in the Company, the Securities & Exchange
Commission of Pakistan |
|
| and
the Stock Exchanges for their guidance, and to all the members of the
management and staff for |
|
| their
dedication and hard work. |
|
|
|
|
|
|
|
On behalf of the Board |
|
|
|
|
|
|
|
|
|
S IRADAT HUSAIN |
|
| Karachi:
25th October, 2001 |
|
Chairman |
|
|
|
| CHIEF
EXECUTIVE'S REVIEW |
|
|
| I
am pleased to present the ninth Annual Report of Al-Mal Securities &
Services Limited, together with |
|
| Audited
Accounts for the year ended 30th June 2001. |
|
|
| Result
of the Operations |
|
| During
the current financial year the market has remained subdued and the index was
down from 1520 |
|
| to 1366 points. |
|
|
| During
the year the business in the market dropped and overall KSE volume of shares
business in the |
|
| year
2000-2001 dropped by 39% to 29 billion form 48 billion shares in 1999-2000.
T+3 settlement |
|
| system
was introduced during the financial year, which also created its impact in
the market. As a new |
|
| system
it did not attract the attention of investors and traders and resulted in a
drop in the volume of |
|
| business.
The general economic condition of the country, however, showed good signs for
future. The |
|
| value
of shares dropped but it could not attract buyers at their good value at the
bottom, because both |
|
| investors
and traders had suffered losses in the past, so they were very cautious to
re-enter the market |
|
| having
badly burnt their fingers. Foreign fund managers were also found as net
sellers in the market. |
|
|
| However,
in these difficult times your company managed to earn a gross operating
revenue of Rs. 9.654 |
|
| million
as compared to previous year's Rs. 13.327 million. The brokerage revenue was
the main sufferer. |
|
| It
dropped from Rs. 10.353 million to Rs. 6.656 million. There was also a drop
of approximately rupees |
|
| one
million in the capital gain. Dividend income more or less remained at
previous year's level. |
|
|
| Operating
expenses were kept in check and were Rs. 7.903 million as against Rs. 7.693
million in the |
|
| year
1999-2000. This year, however, a provision of Rs. 743,239/- had to be made
for doubtful recoveries |
|
| from
some customers. We were also asked by auditors to provide for compensated
absences as per |
|
| Securities
& Exchange Commission circular, therefore, an amount of Rs. 302,000/- was
provided. |
|
|
| Future Outlook |
|
| During
the first quarter of 2001-02 the market has dipped further and in the month
of September, after |
|
| the
disaster of 11th September the market was closed down for a week. The volume
of stock market |
|
| went
as low as approximately 15 million shares on a day in September. The market
has now started |
|
| improving.
Agreement on withdrawal of cases between Hub Power & Wapda and power
purchase |
|
| agreement
have been signed. Approval of the lenders to distribute interim dividend to
Hubco share |
|
| holders
has came through. This will help to boost the market in the long run. We also
hope that the |
|
| in-flow
of foreign funds after removal of sanctions will help to boost the economy in
general and the |
|
| stock
market in particular. It is too early to predict the future outlook, as to
what shape the things are |
|
| going
to take. Meanwhile, we have taken steps to reduce staff related expenses to a
minimum level. |
|
| We
are also planning to reduce expenses in occupancy and its related areas.
These steps will help |
|
|
| The
market in the last few days has risen substantially above its low level.
Foreign brokerage houses |
|
| are
coming up as net buyers in the market and this has raised the value of blue
chip shares. However |
|
| the
thrust is limited to few blue chip scrips and we hope that this will spill
over the other counters as |
|
| well
in future. We also hope that textile sector which is the backbone of the
stock market will show |
|
| improved
performance in view of relaxations in quota and tariff restrictions which is
being discussed |
|
| with
the European Countries and U.S.A. We hope that the situation will improve and
your company |
|
| will
be able to give a better performance during the current financial year,
Insha-Allah. |
|
|
|
|
|
M. Azeem Khan |
|
| Karachi:
25th October, 2001 |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of Al-Mal Securities and Services
Limited as at the June |
|
| 30,
2001 and the related profit and loss account, cash flow statement and
statement of changes in |
|
| equity
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. |
|
|
| It
is the responsibility of the company's management to establish and maintain a
system of internal |
|
| control,
and prepare and present the above said statements in conformity with the
approved accounting |
|
| standards
and the requirements of the Companies Ordinance, 1984. Our responsibility is
to express |
|
| an
opinion on these statements based on our audit. |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These |
|
| standards
require that we plan and perform the audit to obtain reasonable assurance
about whether |
|
| the
above said statements are free of any material misstatement. An audit
includes examining, on a |
|
| test
basis, evidence supporting the amounts and disclosures in the above said
statements. An audit also |
|
| includes
assessing the accounting policies and significant estimates made by
management, as well as, |
|
| evaluating
the overall presentation of the above said statements. We believe that our
audit provides a |
|
| reasonable
basis for our opinion and, after due verification, we report that- |
|
|
| (a)
in our opinion, proper books of accounts have been kept by the company as
required by the |
|
| Companies
Ordinance, 1984; |
|
|
|
|
|
|
| (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 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, investments made and the expenditure incurred during
the year |
|
| 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, cash flow statement and statement of
changes in equity |
|
| together
with the approved accounting standards as applicable in Pakistan, and, give
the information |
|
| required
by the Companies Ordinance, 1984, 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, 2001
and of the profit, |
|
| its
cash flow and changes in equity for the year then ended; and |
|
|
| (d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 (XVIII of |
|
| 1980),
was deducted by the company and deposited in the Central Zakat Fund
established under |
|
| section
7 of that Ordinance. |
|
|
|
|
|
|
|
|
|
FORD, RHODES, ROBSON, MORROW |
|
| Karachi:
25th October, 2001 |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2001 |
|
|
|
|
|
2001 |
2000 |
|
|
|
Note |
Rupees |
Rupees |
|
| ASSETS |
|
|
|
| NON-CURRENT
ASSETS |
|
|
|
| Tangible
fixed assets |
|
3 |
1,682,151 |
2,017,769 |
|
| Room
and membership card |
|
4 |
11,658,458 |
11,658,458 |
|
| Long
term investments |
|
5 |
4,373,857 |
4,549,531 |
|
| Long
term deposits |
|
6 |
555,900 |
336,500 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
18,270,366 |
18,562,258 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Short
term investments |
|
7 |
1,374,258 |
1,753,437 |
|
| Receivable
from customers |
|
8 |
6,577,337 |
10,972,711 |
|
| Advances,
deposits, prepayments and |
|
|
| other
receivables |
|
9 |
1,045,777 |
1,008,351 |
|
| Cash
and bank balances |
|
10 |
14,202,631 |
13,949,808 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
23,200,003 |
27,684,307 |
|
|
|
------------------ |
------------------ |
|
| TOTAL
ASSETS |
|
41,470,369 |
46,246,565 |
|
|
|
========== |
========== |
|
| EQUITY
AND LIABILITIES |
|
|
|
| CAPITAL
& RESERVES |
|
|
|
| Share capital |
|
|
| Authorised |
|
|
| 5,000,000
ordinary shares of Rs. 10/- each |
|
50,000,000 |
50,000,000 |
|
|
| Issued,
subscribed and paid-up |
|
|
|
|
|
| 5,000,000
(2000: 5,000,000) ordinary shares |
|
|
|
|
| or
Rs. 10/- each fully paid in cash |
|
|
50,000,000 |
50,000,000 |
|
|
| Accumulated
losses |
|
(16,527,247) |
(17,127,975) |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
33,472,753 |
32,872,025 |
|
|
| NON-CURRENT
LIABILITIES |
|
|
|
|
| Deferred
liability - staff gratuity |
|
1,969,950 |
1,744,850 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Creditors
and accrued liabilities |
|
11 |
5,808,180 |
7,879,690 |
|
|
| Proposed
dividend |
|
|
-- |
3,750,000 |
|
|
| Unclaimed
dividend |
|
|
219,486 |
-- |
|
|
|
------------------ |
------------------ |
|
|
|
6,027,666 |
11,629,690 |
|
| COMMITMENTS |
|
12 |
------------------ |
------------------ |
|
| TOTAL
EQUITY AND LIABILITIES |
|
41,470,369 |
46,246,565 |
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
M. Azeem Khan |
|
Maqbool Hussain |
|
|
Chief Executive |
|
Vice Chairman |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
|
| OPERATING
INCOME |
|
| Brokerage
income |
|
|
6,655,955 |
10,353,150 |
|
| Other
operating income |
|
13 |
1,153,065 |
1,182,659 |
|
| Capital
gain on investments |
|
14 |
711,659 |
1,735,039 |
|
| Other income |
|
15 |
1,133,422 |
56,687 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
9,654,101 |
13,327,535 |
|
| OPERATING
AND ADMINISTRATIVE EXPENSES |
16 |
(8,205,009) |
(7,693,456) |
|
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
1,449,092 |
5,634,079 |
|
| (PROVISION
MADE)/WRITTEN BACK |
17 |
(772,619) |
1,300,847 |
|
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
|
676,473 |
6,934,926 |
|
| Taxation |
|
|
18 |
(75,745) |
(79,947) |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
|
600,728 |
6,854,979 |
|
|
|
|
|
|
| APPROPRIATION |
|
| Proposed
cash dividend; Nil (2000: 7.5%) |
|
-- |
3,750,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
600,728 |
3,104,979 |
|
| Accumulated
losses brought forward |
|
(17,127,975) |
(20,232,954) |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
losses carried forward |
|
(16,527,247) |
(17,127,975) |
|
|
|
|
========== |
========== |
|
| Earnings
per share |
|
21 |
0.12 |
1.37 |
|
|
|
|
========== |
========== |
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
M. Azeem Khan |
|
Maqbool Hussain |
|
|
Chief Executive |
|
Vice Chairman |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
|
2001 |
2000 |
|
|
|
|
Rupees |
Rupees |
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
|
676,473 |
6,934,926 |
|
| Adjustments
for: |
|
|
|
|
| Depreciation |
|
|
|
399,797 |
411,009 |
|
| (Gain)/loss
on sale of long term investments |
|
-- |
(23,089) |
|
| (Gain)/loss
on sale of fixed assets |
|
|
(871,779) |
3,183 |
|
| Provision/(Writeback)
for diminution in value of investments |
29,380 |
(1,300,847) |
|
| Provision
for gratuity |
|
|
294,214 |
618,039 |
|
| Provision
for doubtful debts |
|
|
743,239 |
-- |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
594,851 |
(291,705) |
|
|
|
------------------ |
------------------ |
|
| Operating
profit before working capital changes |
|
1,271,324 |
6,643,221 |
|
|
|
|
|
| (Increase)/decrease
in operating assets: |
|
| Short
term investments |
|
|
525,473 |
(423,808) |
|
|
| Receivable
from customers |
|
|
3,652,135 |
(7,401,944) |
|
|
| Advances,
prepayments and other receivables |
|
|
|
|
| excluding
taxation |
|
23,285 |
6,398,064 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
4,200,893 |
(1,427,688) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
5,472,217 |
5,215,533 |
|
|
| Increase/(decrease)
in operating liabilities: |
|
| Creditors
and accrued liabilities |
|
|
(2,071,510) |
(669,420) |
|
| Unclaimed
dividend |
|
|
219,486 |
-- |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
(1,852,024) |
(669,420) |
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
|
3,620,193 |
4,546,113 |
|
|
|
------------------ |
------------------ |
|
| Taxes paid |
|
|
|
(136,456) |
(157,167) |
|
| Gratuity paid |
|
|
|
(69,114) |
(41,389) |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(205,570) |
(198,556) |
|
|
|
|
|
------------------ |
------------------ |
|
| Net
cash generated from operating activities |
|
3,414,623 |
4,347,557 |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Acquisition
of fixed assets |
|
(119,900) |
(740,555) |
|
| Long
term deposits |
|
(219,400) |
(123,500) |
|
| Sale
proceeds from disposal of fixed assets |
|
927,500 |
12,350 |
|
| Sale
proceeds from disposal of long term investments |
-- |
618,126 |
|
|
|
------------------ |
------------------ |
|
| Net
cash generated from/(used in) investing activities |
588,200 |
(233,579) |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Dividends paid |
|
(3,750,000) |
-- |
|
|
|
------------------ |
------------------ |
|
| Net
cash (used in) financing activities |
|
(3,750,000) |
-- |
|
| NET
INCREASE IN CASH AND CASH EQUIVALENTS |
252,823 |
4,113,978 |
|
|
|
|
|
|
| CASH
AND CASH EQUIVALENTS AT |
|
|
|
| BEGINNING
OF THE YEAR |
|
13,949,808 |
9,835,830 |
|
|
|
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
------------------ |
------------------ |
|
| AT
END OF THE YEAR - note10 |
|
14,202,631 |
13,949,808 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes from an integral part of these accounts. |
|
|
|
M. Azeem Khan |
|
Maqbool Hussain |
|
|
Chief Executive |
|
Vice Chairman |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
Issued |
Revenue |
Total |
|
|
subscribed |
reserve |
|
|
|
& paid-up |
upappropriated |
|
|
|
capital |
profit / (loss) |
|
|
|
|
|
|
|
Rupees |
|
|
|
| Balance
as at July 1, 1999 |
|
50,000,000 |
(20,232,954) |
29,767,046 |
|
| Net
profit for the year |
|
-- |
6,854,979 |
6,854,979 |
|
| Dividend
declared |
|
-- |
(3,750,000) |
(3,750,000) |
|
|
|
------------------ |
------------------ |
------------------ |
|
|
|
-- |
3,104,979 |
3,104,979 |
|
|
|
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2000 |
|
50,000,000 |
(17,127,975) |
32,872,025 |
|
| Net
profit for the year |
|
-- |
600,728 |
600,728 |
|
|
|
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2001 |
|
50,000,000 |
(16,527,247) |
33,472,753 |
|
|
========== |
========== |
========== |
|
|
|
M. Azeem Khan |
|
Maqbool Hussain |
|
|
Chief Executive |
|
Vice Chairman |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| Al-Mal
Securities and Services Limited is a public limited company, incorporated in
Pakistan on |
|
| 19th
May, 1992 under the Companies Ordinance, 1984. It is engaged in the business
of stock |
|
| brokerage,
investment counselling and registrar services. It is a Corporate Member of
the Karachi |
|
| Stock
Exchange (Guarantee) Limited. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
| 2.1
Accounting convention |
|
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Retirement benefits |
|
|
|
|
| Staff gratuity |
|
|
|
| The
company operates an unfunded gratuity scheme covering employees who have
completed |
|
| one
year of service with the company. Provision is made to cover obligations
under the |
|
| scheme. |
|
|
|
|
| 2.3
Tangible fixed assets |
|
| These
are stated at cost less accumulated depreciation. Depreciation is charged to
income |
|
| applying
the straight line method whereby the cost of an asset is written off over its
estimated |
|
| useful
life. In respect of additions and disposals during the year, depreciation is
charged |
|
| proportionately
for the period of use. The rates used are stated in note 3 to the accounts. |
|
|
| Normal
repairs and maintenance costs are charged to income as and when incurred.
Major |
|
| renewals
and improvements are capitalised. |
|
|
|
|
|
| Profit
or loss on disposal of assets, if any, is included in income currently. |
|
|
|
|
| 2.4
Room and membership card |
|
|
|
| These
are stated at cost. Provisions are made for any diminution in value which is
considered |
|
| other
than temporary. |
|
|
|
|
| 2.5
Long term investments - quoted |
|
|
| These
are stated at cost. Provision is made for decline other than temporary, if
any, in |
|
| value
of these investments. |
|
|
|
|
|
|
| 2.6
Short term investments - quoted |
|
| These
are stated at moving average cost and market value determined on an aggregate
basis, |
