| BSJS Balanced Fund Limited |
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| Annual
Report 2001 |
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| Contents |
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| Company
Information |
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| Directors'
Report |
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| Highlights |
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| Auditors'
Report to the Members |
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| Financial
Statements |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Cash
Flow Statement |
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| Distribution
Statement |
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| Statement
of Changes in Equity and Reserves |
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| Notes
to the Accounts |
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| Statement
of Income & Expenditure of Investment Adviser |
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| in
relation to Investment Company |
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| Pattern
of Shareholding |
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| Notice
of Meeting |
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| Company
Information |
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| Board
of Directors |
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| Chairman |
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Mr. M. W. Farooqui |
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| Directors |
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Mr. Abid Hussain Zuberi |
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Mr. Ayaz-ul-Haque |
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Mian Raza Mansha |
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Mr. Munaf Ibrahim |
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Shaikh Mukhtar Ahmed |
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| Chief Executive |
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Mr. M. Habib-ur-Rahman |
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| Company
Secretary |
Saiyid Azher Alam |
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| Investment
Adviser |
ABAMCO Limited |
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| Auditors |
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Taseer Hadi Khalid &
Co. |
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Chartered Accountants |
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| Legal Adviser |
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Aman Law Associates |
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| Custodian |
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Muslim Commercial Bank
Limited |
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| Bankers |
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Bank AL Habib Limited |
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Metropolitan Bank Limited |
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Muslim Commercial Bank
Limited |
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| Registered
Office |
1306-1307, Chapal Plaza, |
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Hasrat Mohani Road, |
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Karachi-74000, Pakistan. |
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Tel: (92-21) 2441311 - 14
Fax: (92-21) 2425652 |
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Email:
abamco@jahangirsiddiqui.com |
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| Share
Department |
Uni Corporate &
Financial Services |
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Westland Trade Centre,
Opposite Flyover, |
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Shaheed-e-Millat Road, |
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Karachi-75350, Pakistan. |
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Tel: (92-21) 4313205-06
Fax: (92-21) 4313207 |
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| Directors'
Report |
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| The
Board of Directors of BSJS Balanced Fund Limited (BBF), are pleased to
present the Annual Report |
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| of
the Company, along with the Audited Accounts for the year ended June 30, 200
I. |
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| I.
AMALGAMATION OF CONFIDENCE MUTUAL FUND LIMITED WITH BSJS BALANCED |
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| FUND
LIMITED |
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| As
stated in Half Yearly Report, the petition for merger of Confidence Mutual
Fund Limited (CMF) with |
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| your
Company was filed on January 3 I, 200 I, with the Honorable High Court of
Sindh, Karachi. The |
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| Extra-Ordinary
General Meetings of the shareholders of both the companies were held on March
24, |
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| 200
I, as per the direction given by the Honorable High Court, in which the
shareholders unanimous- |
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| ly
approved the Scheme of Merger. On April 26, 2001, the Honorable High Court
sanctioned the |
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| Scheme
of Arrangement of Amalgamation of both the companies. |
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| The
amalgamation has resulted in transfer to and vesting in BBF of the entire
undertaking of CME |
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| together
with all rights, liabilities and obligations, against the issuance of one
ordinary share of BBF of |
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| the
nominal value of Rs. 10 each for every one ordinary share of CMF of the
nominal value of Rs. I 0 |
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| each
to the shareholders of CME The shares were allotted on June 14, 2001, and the
CMF was dis- |
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| solved
on the same date without winding up. |
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| The
effective date of amalgamation is July I, 2000. The accounts for the year
ended June 30, 2001 are |
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| that
of the merged company. The corresponding figures for the preceding year ended
June 30, 2000, |
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| of
the two companies have also been merged. |
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| 2.
OPERATING RESULTS |
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| a)
Profit during the year |
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| The
Company has earned a net profit of Rs. 28.316 million (2000: Rs. 67.464
million), that translates |
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| into
an earning per share of Rs. 1.13 (2000: Rs. 2.70 per share). The Directors
have recommended a |
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| cash
dividend of 11% i.e. Rs. 1.10 per share (2000: BBF-31% i.e. Rs. 3. 10 per
share & CMF- 16% i.e. |
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| Rs.
1.60 per share). An amount of Rs. 27.50 million has been appropriated as
dividend (2000: Rs. 62.5 |
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| million),
which works out to a payout of 97.12% (2000:BBF-91.60% & CMF-95.79% ) for
the year. |
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| The
retained earnings of Rs. 8.284 million have been carried forward to the next
year. As over 90% |
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| of
the net profit for the year has been appropriated as dividend to the
shareholders, there is no lia- |
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| bility
for income tax under clause 102D of Part I of the Second Schedule of the
Income Tax Ordinance, 1979. |
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| The
decline in earnings during the year was primarily due to decline in income
from capital gains on |
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| sale
of marketable securities as the KSE Index declined by 10.17% during the year
and remained under |
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| bearish
spell through out the year. |
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| Directors'
Report |
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| b)
Composition of Assets |
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| On
June 30, 2001, the composition of assets of your Company at market value was
as under: |
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Rs. |
Percentage |
Rs. |
Percentage |
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in million |
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in million |
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| Equity
securities |
98.798 |
31.04 |
102.311 |
29.04 |
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| Term
finance certificates |
49.408 |
15.52 |
43.205 |
12.26 |
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| Receivables
on sale of shares |
163.087 |
51.23 |
101.706 |
28.87 |
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| Other
receivables |
4.033 |
1.27 |
5.196 |
1.48 |
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| Cash
& bank balances |
2.995 |
0.94 |
99.865 |
28.35 |
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------------------ |
------------------ |
------------------ |
------------------ |
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318.32 |
100 |
352.28 |
100 |
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========== |
========== |
========== |
========== |
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| 3.
MUTUAL FUND RATING |
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| BBF
has been assigned AA (f) rating by PACRA, which denotes fund's ability to
consistently outperform |
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| its
peers with strong capacity to respond to future opportunities or stress
situations. |
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| 4.
AUTHORIZED CAPITAL |
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| Your
directors have proposed to increase the authorized capital of the Company
from Rs. 250 million |
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| to
Rs. 500 million. |
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| 5. AUDITORS |
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| Messrs.
Taseer Hadi Khalid & Company, Chartered Accountants retire, and being
eligible, offer them- |
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| selves
for re-appointment. |
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| 6.
SHAREHOLDERS |
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| A
statement showing pattern of shareholding in the Company as on June 30, 2001
is given on page 22. |
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| 7.
ELECTION OF DIRECTORS |
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| Election
to constitute the new Board of Directors will be held as per the requirement
of the |
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| Companies
Ordinance, 1984, on October 20, 2001, as the term of existing Board will then
expire. |
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| 8. THANKS |
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| The
Board of Directors of the Company thanks the Securities and Exchange
Commission of Pakistan |
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| for
their valuable support, understanding and guidance. |
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For and on behalf of the Board |
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M. Habib-ur-Rahman |
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| Karachi:
July 28, 2001 |
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Chief Executive |
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| Auditors'
Report to the Members |
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| We
have audited the annexed balance sheet of BSJS Balanced
Fund Limited as at June 30, 2001 and |
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| the
related profit and loss account, cash flow statement, distribution statement
and the statement of |
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| changes
in equity and reserves, together with the notes forming part thereof, for the
year then ended |
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| and
we state that we have obtained all the information and explanations which, to
the best of our |
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| knowledge
and belief, were necessary for the purposes of our audit. |
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| It
is the responsibility of the Company's management to establish and maintain a
system of internal |
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| control,
and prepare and present the above said statements in conformity with the
approved account- |
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| ing
standards and the requirements of the Companies Ordinance, 1984 and the
Investment Companies |
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| and
Investment Advisers Rules, 1971. Our responsibility is to express an opinion
on these statements |
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| based
on our audit. |
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| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These |
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| standards
require that we plan and perform the audit to obtain reasonable assurance
about whether |
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| the
above said statements are free of any material misstatement. An audit
includes examining, on a test |
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| basis,
evidence supporting the amounts and disclosures in the above said statements.
An audit also |
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| includes
assessing the accounting policies and significant estimates made by
management, as well as, |
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| evaluating
the overall presentation of the above said statements. We believe that our
audit provides a |
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| reasonable
basis for our opinion and, after due verification, we report that: |
|
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| a)
in our opinion, proper books of account have been kept by the Company as
required by the |
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| Companies
Ordinance, 1984 and the Investment Companies and Investment Advisers Rules,
1971; |
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| b)
in our opinion: |
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|
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| c)
the balance sheet and profit and loss account together with the notes thereon
have been drawn |
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| up
in conformity with the Companies Ordinance, 1984 and the Investment Companies
and |
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| Investment
Advisers Rules, 1971, and are in agreement with the books of account and are
further |
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| in
accordance with accounting policies consistently applied; |
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| ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
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| iii)
the business conducted, investments made and the expenditure incurred during
the year were in |
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| accordance
with the objects of the Company; |
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| c)
in our opinion and to the best of our information and according to the
explanations given to us, |
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| the
balance sheet, profit and loss account, cash flow statement, distribution
statement and the state- |
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| ment
of changes in equity and reserves together with the notes forming part
thereof conform with |
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| approved
accounting standards as applicable in Pakistan, and, give the information
required by the |
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| Companies
Ordinance, 1984 and Investment Companies and Investment Advisers Rules, 1971,
in the |
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| manner
so required and respectively give a true and fair view of the state of the
Company's affairs as |
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| at
June 30, 2001 and of the profit, its cash flows and changes in equity for the
year then ended; and |
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| d)
in our opinion, zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was deduct- |
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| ed
by the Company and deposited in the Central Zakat Fund established under
section 7 of that |
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| Ordinance. |
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Taseer Hadi Khalid & Co. |
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| Karachi:
July 28, 2001 |
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Chartered Accountants |
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|
| Balance
Sheet as at June 30, 2001 |
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|
Note |
2001 |
2000 |
|
| Assets |
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|
Rupees |
Rupees |
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| Marketable
securities |
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| Equity
securities |
|
|
74,168,388 |
83,994,084 |
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| Term
finance certificates |
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|
47,913,907 |
41,069,188 |
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|
------------------ |
------------------ |
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|
8 |
122,082,295 |
125,063,272 |
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| Other assets |
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| Trade debts |
|
9 |
163,087,655 |
101,705,590 |
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| Advances
and other receivables |
|
10 |
4,033,159 |
5,196,111 |
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| Cash
and bank balances |
|
11 |
2,994,518 |
99,865,169 |
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|
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|
------------------ |
------------------ |
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|
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|
170,115,332 |
206,766,870 |
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|
------------------ |
------------------ |
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|
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|
292,197,627 |
331,830,142 |
|
|
| Liabilities |
|
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| Current
liabilities |
|
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|
| Current
maturity of deferred expenditure payable |
4 |
-- |
1,983,754 |
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| Due
to Investment Adviser |
|
5 |
5,730,128 |
9,173,648 |
|
| Dividend
payable |
|
|
178,260 |
34,273 |
|
| Accounts
payable and accrued expenses |
6 |
274,850 |
325,545 |
|
| Proposed
dividend |
|
7 |
27,500,000 |
62,500,000 |
|
| Provision
for taxation |
|
|
229,984 |
344,524 |
|
|
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|
------------------ |
------------------ |
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|
|
|
33,913,222 |
74,361,744 |
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|
------------------ |
------------------ |
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| Net assets |
|
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|
258,284,405 |
257,468,398 |
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|
|
========== |
========== |
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| Represented
by: |
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| Shareholders'
equity |
|
3 |
258,284,405 |
257,468,398 |
|
|
========== |
========== |
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| Contingencies
and commitments |
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|
Nil |
Nil |
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|
========== |
========== |
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| These
accounts should be read in conjunction with the attached notes. |
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|
M. Habib-ur-Rahman |
|
Munaf Ibrahim |
|
|
Chief Executive |
|
Director |
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|
|
| Profit
and Loss Account |
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| For
the year ended June 30, 2001 |
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|
Note |
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
| Operating
Income |
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| Capital gain |
|
12 |
8,425,984 |
49,324,972 |
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| Dividend
income |
|
13 |
8,567,924 |
8,419,520 |
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| Mark-up
on bank deposits |
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|
2,757,350 |
7,939,467 |
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| Profit
on money market transactions |
|
164,266 |
1,034,900 |
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| Profit
on term finance certificates |
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|
8,558,067 |
8,801,038 |
|
| Profit
on certificate of investments |
|
651,781 |
-- |
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| Other income |
|
|
-- |
75,000 |
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|
------------------ |
------------------ |
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|
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|
29,125,372 |
75,594,897 |
|
|
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|
| Reversal/(Provision)
for diminution in value of |
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| marketable
securities on individual investment basis |
10,555,413 |
4,498,837 |
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|
------------------ |
------------------ |
|
|
|
39,680,785 |
80,093,734 |
|
|
|
| Operating
Expenses |
|
| Administrative |
|
14 |
1,999,574 |
1,881,382 |
|
| Financial |
|
15 |
3,743,214 |
2,250,054 |
|
| Remuneration
to Investment Adviser |
5.1 |
5,689,709 |
8,814,180 |
|
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|
|
------------------ |
------------------ |
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|
|
|
11,432,497 |
12,945,616 |
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|
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|
------------------ |
------------------ |
|
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|
28,248,288 |
67,148,118 |
|
| Profit
before taxation |
|
|
|
|
| Taxation
- Prior year |
|
17 |
67,719 |
315,755 |
|
|
|
|
------------------ |
------------------ |
|
| Net
profit for the year |
|
|
28,316,007 |
67,463,873 |
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|
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|
========== |
========== |
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| Basic
earning per share |
|
20 |
1.13 |
2.70 |
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|
========== |
========== |
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| These
accounts should be read in conjunction with the attached notes. |
|
|
|
M. Habib-ur-Rahman |
|
Munaf Ibrahim |
|
|
Chief Executive |
|
Director |
|
|
|
| Cash
Flow Statement |
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| For
the year ended June 30, 2001 |
|
|
|
|
|
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
| Cash
flows from Operating Activities |
|
| Profit
before taxation |
|
|
28,248,287 |
67,148,118 |
|
| Adjustments
for: |
|
| Cumulative
effect of changes in accounting policy for |
|
| valuation
of investments-provision for diminution in |
|
| value
of marketable securities |
|
|
-- |
939,005 |
|
| (Reversal)/Provision
for diminution in value of |
|
|
|
| marketable
securities |
|
|
(10,555,413) |
(5,437,842) |
|
| Operating
profit before working capital changes |
|
17,692,874 |
62,649,281 |
|
|
| (Increase)/decrease
in current assets |
|
| Marketable
securities |
|
|
13,536,390 |
29,149,565 |
|
| Other
investments |
|
|
-- |
89,343,581 |
|
| Trade debts |
|
|
(61,382,065) |
(61,705,590) |
|
|
|
|
------------------ |
------------------ |
|
| Advances
and other receivables |
|
|
1,054,630 |
3,453,383 |
|
|
| Increase/(decrease)
in current liabilities |
|
| Accounts
payable and accrued expenses |
|
(50,695) |
(92,773) |
|
| Due
to Investment Adviser |
|
|
(3,443,520) |
3,488,483 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
|
(32,592,386) |
126,285,930 |
|
|
|
|
| Taxes
refund received |
|
|
61,502 |
3,909,795 |
|
| Deferred
expenditure paid |
|
|
(1,983,754) |
(1,983,754) |
|
| Dividend paid |
|
|
(62,356,013) |
(29,989,782) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from operating activities |
|
(96,870,651) |
98,222,189 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and bank balances at the beginning of the year |
99,865,169 |
1,642,980 |
|
|
|
|
========== |
========== |
|
| Cash
and bank balances at the end of the year |
|
2,994,518 |
99,865,169 |
|
|
|
|
========== |
========== |
|
|
|
M. Habib-ur-Rahman |
|
Munaf Ibrahim |
|
|
Chief Executive |
|
Director |
|
|
|
|
|
| Distribution
Statement |
|
| For
the year ended June 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
|
| Undistributed
profit as at July 1, 2000 (1999) |
|
7,468,398 |
2,504,525 |
|
| Net
Profit for the year |
|
|
28,316,007 |
67,463,873 |
|
|
| Appropriation: |
|
| Final
cash dividend @ 11% |
|
(27,500,000) |
(62,500,000) |
|
| (2000:
31% - BSJS Balanced Fund Limited |
|
| : 16% - Confidence Mutual Fund
Limited) |
|
|
------------------ |
------------------ |
|
| Undistributed
profit as at June 30, 2001 (2000) |
|
8,284,405 |
7,468,398 |
|
|
========== |
========== |
|
|
|
M. Habib-ur-Rahman |
|
Munaf Ibrahim |
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
| Statement
of Changes in Equity and Reserves |
|
| For
the year ended June 30, 2001 |
|
|
|
|
|
2001 |
2000 |
|
|
|
|
Rupees |
Rupees |
|
| Net
assets per share as at July 1, 2000 (1999) |
|
| Share capital |
|
|
10.00 |
10.00 |
|
| Accumulated
profit |
|
|
0.30 |
0.10 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
10.30 |
10.10 |
|
|
| Items
contributing to the increase/(decrease) in |
|
| net
asset value of the share: |
|
| Net
income for the year |
|
|
1.13 |
2.70 |
|
| Distribution |
|
|
(1.10) |
(2.50) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
0.03 |
0.20 |
|
|
| Net
assets per share as at June 30, 2001 (2000) |
|
| Share capital |
|
|
10.00 |
10.00 |
|
| Accumulated
profit |
|
|
0.33 |
0.30 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
10.33 |
10.30 |
|
|
========== |
========== |
|
|
|
M. Habib-ur-Rahman |
|
Munaf Ibrahim |
|
|
Chief Executive |
|
Director |
|
|
|
|
| Notes
to the Accounts |
|
| For
the year ended June 30, 2001 |
|
|
| I.
STATUS AND NATURE OF BUSINESS |
|
| The
Company was incorporated on March 26, 1994 as a public limited company under
the Companies |
|
| Ordinance,
1984 and was registered as an investment company under the Investment
Companies and |
|
| Investment
Advisers Rules, 1971 and is listed on the Karachi Stock Exchange. The Company
is a closed |
|
| end
mutual fund and its principal activit7 is to make investment in securities. |
|
|
| The
Company entered into an agreement with an associated company, ABAMCO Limited
to act as its |
|
| investment
adviser' and Muslim Commercial Bank Limited as its 'custodian'. |
|
|
| The
High Court of Sindh has sanctioned the scheme of arrangement for amalgamation
of the Company |
|
| with
Confidence Mutual Fund Limited (an investment company engaged in the business
of investment |
|
| in
securities) to take effect from July 1, 2000. Accordingly, these accounts
reflect the combined results |
|
| of
the amalgamated company. These accounts have been prepared on a pooling of
interest basis in |
|
| accordance
with International Accounting Standard No. 22 - 'Accounting for business
combinations'. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
| 2.1
Accounting convention |
|
| The
accounts of the Company are prepared under the historical cost convention. |
|
|
| 2.2
Statement of compliance |
|
| These
accounts have been prepared in accordance with accounting standards issued by
the |
|
| International
Accounting Standards Committee (IASC), interpretations issued by the Standing |
|
| Interpretations
Committee of the IASC as applicable in Pakistan and the requirements of the |
|
| Companies
Ordinance, 1984 and the Investment Companies and Investment Advisers Rules,
1971. |
|
|
| 2.3
Marketable securities |
|
| These
are valued at lower of average cost and middle market price ruling on the
balance sheet date |
|
| determined
on an individual investment basis. The provision, if any, required to bring
marketable |
|
| securities
to market value is charged to the profit and loss account. |
|
|
| Middle
market price means the average of the highest and the lowest quotation for
that day. |
|
|
| 2.4
Revenue recognition |
|
| Dividend
income is recorded at the time of the closure of share transfer books of the
company |
|
| declaring
the dividend. |
|
|
| Sale
and purchase of securities are recognized on the date of contract. Capital
gain/loss on sale of |
|
| investments
is taken to income of the year in which it arises. |
|
|
| Income
on Term Finance Certificates and Federal Investment Bonds is recorded on time
propor- |
|
| tion
basis taking into account the principal outstanding and the yield applicable. |
|
|
| Profit
on bank deposits is recorded on accrual basis. |
|
|
| 2.5 Taxation |
|
| The
Company is exempt from tax under clause 102D of Part I of the Second Schedule
of the |
|
| Income
Tax Ordinance, 1979, subject to the condition that not less than 90% of its
income of that |
|
| year
is distributed amongst its shareholders. |
|
|
| 2.6
Trade Debtors |
|
| These
are stated net of provision for doubtful debts. Full provision is made
against the debts con- |
|
| sidered
doubtful. |
|
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| 3.
SHAREHOLDERS EQUITY |
|
| Share Capital |
|
|
|
|
| BSJS
Balanced Fund Limited |
|
3.1 |
250,000,000 |
150,000,000 |
|
| Confidence
Mutual Fund Limited |
3.2 |
-- |
100,000,000 |
|
