| Al-Mal Securities & Services Limited |
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| CONTENTS |
|
|
| COMPANY
INFORMATION |
|
| DIRECTORS'
REPORT |
|
| CHIEF
EXECUTIVE'S REVIEW |
|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| CHANGES
IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF SHAREHOLDING |
|
| NOTICE
OF MEETING |
|
|
|
| COMPANY
INFORMATION |
|
|
| Board
of Directors: |
|
|
|
| Mr.
S. Iradat Husain |
|
| Chairman |
|
|
|
| Mr.
Maqbool Hussain |
|
| Vice Chairman |
|
|
| Mr.
Ahmad H.I. Dada |
|
| Director |
|
|
| Mr.
Amanullah Suleman |
|
| Director |
|
|
|
| Mr.
Tariq Jamil Khan |
|
| Director |
|
|
| Mr.
Mohammad Shoaib |
|
| Director
(Nominee of PKIC) |
|
|
| Mr.
Rizwanullah Kherati |
|
| Director
(Nominee of PKIC) |
|
|
| Mr.
Mohammad Azeem Khan |
|
| Chief Executive |
|
|
| Management
Team: |
|
| Mr.
Mohammad Azeem |
|
| 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 |
|
|
| Auditors: |
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
| Finlay
House, I.I. Chundrigar Road, Karachi. |
|
|
| Registered
Office: |
|
| 10th
Floor, Progressive Square, Nursery |
|
| Sharea
Faisal, Karachi. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| Your
Directors take pleasure in submitting herewith their Report and Audited
Accounts |
|
| together
with Auditors' Report of the company for the year ended 30th June, 1999. |
|
|
|
|
1999 |
1998 |
|
|
|
Rupees |
'Rupees, |
|
|
|
|
| 1.
Operating Results: |
|
|
| Summarized
results, for the year under |
|
|
| report
are as under |
|
|
|
|
|
| *
Total operating income |
|
7,914,464 |
7,061,254 |
|
|
|
------------------ |
------------------ |
|
| *
Profit / (Loss) for the year- before tax |
|
2,019,326 |
(17,136,987) |
|
| *
Profit / (Loss) for the year- after tax |
|
1,969,125 |
(17,136,874) |
|
|
|
========== |
========== |
|
| *
Profit / (Loss) brought forward |
|
(22,202,079) |
(5,065,205) |
|
| *
Net Profit / (Loss) carried forward |
|
(20,232,954) |
(22,202,079) |
|
| *
Unappropriated Profit / (Loss) |
|
(20,232,954) |
(22,202,079) |
|
|
|
|
========== |
========== |
|
|
| 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 of the Company 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.
Acknowledgment: |
|
| The
Directors wish to place on record their appreciation and thanks to
shareholders and |
|
| customers
for their continued confidence in the Company, the Corporate Law Authority
and |
|
| 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 |
|
|
|
|
|
| October
11, 1999 |
|
SYED IRADAT HUSAIN |
|
| Karachi. |
|
|
Chairman |
|
|
|
|
|
|
|
| CHIEF
EXECUTIVE'S REVIEW |
|
|
| I
am pleased to present the Sixth Annual Report of AL-MAL SECURITIES &
SERVICES |
|
| LIMITED,
as public listed company, together with the Audited Accounts for the year
ended 30th |
|
| June,
1999. The Company went public in June, 1994 and is listed in all the three
Stock Exchanges |
|
| of
the country for the convenience of its shareholders. |
|
|
| Result
of the Operations: |
|
|
| The
capital market in the current financial year has remained subdued. It went
through a difficult |
|
| period
from June to December, 1998 primarily due to the severe pressures on the
domestic |
|
| economy.
The sanctions imposed after the nuclear test, the freezing of foreign
currency accounts, |
|
| the
dispute with Hubco and other independent power producers led the K.S.E.,
index to its all |
|
| time
low of 785.74 points on July 14, 1998. Subsequently, easing of sanctions and
settlements |
|
| with
IMF saw the KSE Index improving to 945.32 on 31st December, 1998 and to 1055
on 30th |
|
| June,
1999. The conditions have shown improvement intermittently in the capital
market bur |
|
| uncertainty
has prevailed all along during the fiscal year. Investors have been jittery
and on a |
|
| slight
note of discomfort they hays liquidated their positions. Moreover, the market
has worked |
|
| in
a narrow range of few blue-chip scrips but hope of a broad based recovery is
still a distant cry. |
|
|
| Under
the above circumstances, our efforts were focused to work cautiously and
concentrate on |
|
| fee
based brokerage business. During the year under review our brokerage income
has improved |
|
| from
Rs.5,239,699 to Rs.6,949,787. This is an improvement of about 32.63% over the
previous |
|
| year's
figures. We have developed a stable base of customers and are committed to
increase it |
|
| further
to enhance revenues on our core business. |
|
|
| Dividend
disclosures in the corporate sector showed a decline and this was due to poor
economic |
|
| conditions
of 1997-98. We believe, the corporate performance did improve in current
period and, |
|
| therefore,
we expect that in the fiscal year 1999-2000 our dividend income will also
improve. As |
|
| a
matter of strategy we are also focusing on short term trading and expect that
with cautious |
|
| and
prudent approach our revenue on capital gain will also improve during the
year 1999-2000. |
|
|
| Our
loss on disposal of fixed assets represent the write-off of our capital
expenditure in lease- |
|
| hold
improvements in previous office from where we shifted in February, 1999 to
new premises |
|
| with
better working environment and larger space to accommodate expansion. |
|
|
| Without
impairing efficiency, we have been able to keep a check on our expenses this
year as well. |
|
| As
a matter of fact our expenses have reduced from Rs.7.5 million to Rs.7.2
million notwithstanding |
|
| spiralling
inflation. Our improvement in revenues and a check on expenses has resulted
in the |
|
| operating
profit of the Company which has now passed through hurdles and Insha-Allah
soon you |
|
| will
see marked improvement in profitability in the coming years. |
|
|
| Y2K
Compliance: |
|
| As
per requirement of the Securities & Exchange Commission of Pakistan we
have achieved the |
|
| upgradation
of all the software systems and equipments installed in our office to cater
the |
|
| requirements
of the new millennium. These systems and equipments are replaced and modified |
|
| to
work before, during and after the year 9.000 transition. |
|
|
| Future
Outlook: |
|
| The
improvement of the capital market depends on the economic and political
stability and the |
|
| law
and order situation of the country. We also hope that the solution of the
dispute of Hubco |
|
| will
help in the improvement of the Stock Market. Should the economic and
political conditions |
|
| improve,
we will see the local and foreign investor's confidence returning to the
capital market |
|
| of Pakistan, |
|
|
| As
regards the establishment of forex trading activities some ground work for
the same has been |
|
| done
and we hope that in near future this department will be established,
INSHA-ALLAH. |
|
|
|
| October
11, 1999 |
|
M. AZEEM KHAN |
|
| Karachi. |
|
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of AL-MAL SECURITIES
AND SERVICES |
|
| LIMITED, as on June 30, 1999, the related Profit & Loss Account and
Statement of Changes in |
|
| Financial
Position (Cash Flow Statement) 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 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; |
|
|
|
|
|
| (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 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 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 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, 1999 and of the Profit and the Changes in Financial |
|
| position
(Cash Flow Statement) for the year then ended; and |
|
|
| (d)
in our opinion, no Zakat was deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980. |
|
|
|
|
|
|
|
| October
11, 1999 |
|
FORD, RHODES, ROBSON, MORROW |
|
| Karachi. |
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| 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
(1998: 5,000,000) ordinary shares |
|
|
| of
Rs 10 each fully paid in cash |
|
|
50,000,000 |
50,000,000 |
|
|
|
|
| Revenue
Revenue |
|
|
|
| Balance
on profit and loss account |
|
(20,232,954) |
(22,202,079) |
|
|
|
------------------ |
------------------ |
|
|
|
29,767,046 |
27,797,921 |
|
| DEFERRED
LIABILITIES |
|
|
| Provision
for gratuity |
|
1,168,200 |
304,200 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Creditors
and accrued liabilities |
|
3 |
8,549,110 |
334,772 |
|
|
|
|
| COMMITMENTS |
|
4 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
39,484,356 |
31,949,842 |
|
|
|
|
|
========== |
========== |
|
| TANGIBLE
FIXED ASSETS |
|
5 |
1,703,756 |
2,156,067 |
|
| ROOM
AND MEMBERSHIP CARD |
|
6 |
11,658,458 |
11,658,458 |
|
| LONG-TERM
INVESTMENTS |
|
7 |
3,955,690 |
3,468,611 |
|
|
|
|
|
| LONG-TERM
DEPOSITS AND |
|
|
| DEFERRED
COSTS |
|
|
243,500 |
633,550 |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Marketable
securities |
|
9 |
1,217,660 |
1,152,083 |
|
| Receivable
from customers |
|
10 |
3,570,767 |
4,250,429 |
|
| Advances,
prepayments and |
|
|
|
| other
receivables |
|
11 |
7,298,695 |
953,195 |
|
| Cash
at bank - current accounts |
|
|
9,835,830 |
7,677,449 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
21,922,952 |
14,033,156 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
39,484,356 |
31,949,842 |
|
|
|
|
|
========== |
========== |
|
|
| 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, 1999 |
|
|
|
|
|
Note |
1999 |
1998 |
|
|
|
Rupees |
Rupees |
|
|
|
|
| Brokerage
revenue |
|
|
6,949,787 |
5,239,699 |
|
| Income
from registrar services |
|
|
720,000 |
732,000 |
|
| Dividend
income |
|
12 |
236,207 |
357,365 |
|
| Gain
on sale of marketable and long-term |
|
|
|
|
| securities |
|
15 |
255,255 |
309,776 |
|
| Consultancy
income |
|
|
-- |
155,465 |
|
| Profit
/ (loss) on disposal of fixed assets |
|
5.1 |
(265,926) |
261,272 |
|
| Miscellaneous
income |
|
|
19,141 |
5,677 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
7,914,464 |
7,061,254 |
|
|
|
|
|
| Operating
expenses |
|
14 |
7,214,565 |
7,479,652 |
|
|
|
|
| Provision
/ (write-back) for diminution in |
|
|
| value
of investments |
|
|
|
|
|
|
| Long-term
investments |
|
7.1 |
(1,253,850) |
16,598,769 |
|
| Marketable
securities |
|
9.1 |
(65,577) |
119,820 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(1,319,427) |
16,718,589 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
5,895,138 |
24,198,241 |
|
|
|
|
------------------ |
------------------ |
|
| Profit/(loss)
before taxation |
|
|
2,019,326 |
(17,136,987) |
|
|
|
|
|
| Provision
for taxation |
|
|
|
| -- current |
|
|
(50,201) |
(51,387) |
|
| -- deferred |
|
|
-- |
51,500 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(50,201) |
113 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
/ (loss) after taxation |
|
1,969,125 |
(17,136,874) |
|
| Loss
brought forward |
|
(22,202,079) |
(5,065,205) |
|
|
|
------------------ |
------------------ |
|
| Loss
carried forward to the balance sheet |
|
(20,232,954) |
(22,202,079) |
|
|
|
========== |
========== |
|
| Earning
/ (loss) per share |
|
17 |
0.39 |
(3.43) |
|
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
M. Azeem Khan |
|
Maqbool Hussain |
|
|
Chief Executive |
|
Vice Chairman |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| For
the year ended June 30, 1999 |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Profit/(loss)
before taxation |
|
|
|
2,019,326 |
(17,136,987) |
|
|
|
|
|
|
|
| Adjustments
for: |
|
|
|
|
|
| Depreciation |
|
|
|
380,695 |
430,461 |
|
| Loss
/ (profit) on sale of long-term investments |
|
|
319,421 |
(274,651) |
|
| Loss
/ (profit) on sale of fixed assets |
|
|
265,926 |
(261,272) |
|
| Amortization
of deferred costs |
|
|
364,150 |
364,140 |
|
| Provision/(write-back)
for diminution in value |
|
|
|
|
| of investments |
|
|
(1,319,427) |
16,718,589 |
|
| Provision
for gratuity |
|
|
431,525 |
464,955 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
442,290 |
17,442,222 |
|
| Operating
profit / (loss) before working |
|
|
| capital changes |
|
|
|
|
2,461,616 |
305,235 |
|
|
|
|
|
|
|
| (Increase)
/ decrease in operating assets: |
|
|
| Marketable
securities |
|
|
-- |
1,500,480 |
|
| Receivable
from customers |
|
|
679,662 |
821,587 |
|
| Advances,
prepayments and other receivables |
|
|
|
|
| excluding
taxation |
|
|
(6,827,844) |
(102,604) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(5,648,182) |
1,719,463 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(3,186,566) |
2,024,698 |
|
| Increase
/ (Decrease) in operating liabilities: |
|
|
| Creditors
and accrued liabilities |
|
|
|
5,201,389 |
1,694,896 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
|
|
2,014,823 |
3,719,594 |
|
|
|
|
|
------------------ |
------------------ |
|
| Taxation paid |
|
|
|
|
(67,857) |
(58,974) |
|
| Gratuity paid |
|
|
|
|
(67,525) |
(383,406) |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
(135,382) |
(442,380) |
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow from operating activities |
|
1,879,441 |
3,277,214 |
|
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Capital
expenditure incurred |
|
(476,904) |
(486,234) |
|
| Long-term
deposits |
|
25,900 |
(180,700) |
|
| Long-term
investments |
|
-- |
(412,242) |
|
| Sale
process of fixed assets |
|
282,594 |
524,000 |
|
| Sale
proceeds of long-term-investments |
|
447,350 |
2,360,855 |
|
|
|
------------------ |
------------------ |
|
| Net
cash inflow from investing activities |
|
278,940 |
1,805,709 |
|
|
|
|
|
| NET
INCREASE IN CASH AND |
|
|
|
| CASH
EQUIVALENTS |
|
|
|
2,158,381 |
5,082,923 |
|
| CASH
AND CASH EQUIVALENTS AT |
|
|
| BEGINNING
OF THE YEAR |
|
|
|
7,677,449 |
2,594,526 |
|
| CASH
AND CASH EQUIVALENTS |
|
|
------------------ |
------------------ |
|
| AT
END OF THE YEAR |
|
|
|
9,835,830 |
7,677,449 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
M. Azeem Khan |
|
Maqbool Hussain |
|
|
Chief Executive |
|
Vice Chairman |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| For
the Year Ended June 30, 1999 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| A1-Mal
Securities and Services Limited is a public limited company, incorporated, 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 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 |
|
|
|
| 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 asset is written off
over |
|
|
| its
estimated useful life from the date the assets are put into use. The rates
used are |
|
|
| stated
in note 5 to the accounts. |
|
|
|
|
|
| Normal
repairs and maintenance costs are charged to profit and loss account as and |
|
|
| when
incurred. Major renewals and improvements are capitalised. |
|
|
|
| Profit
or loss on disposal of assets is included in income currently. |
|
|
| 2.4
Room and membership card |
|
|
|
| These
are stated at cost. Provisions are made for permanent diminution in value of |
|
| these
assets, if any. |
|
|
|
|
|
|
| 2.5
Deferred costs |
|
|
|
| Deferred
costs in connection with the public floatation of the company are being
written |
|
| off
over a period of five years. |
|
|
|
|
|
|
| 2.6
Long-term investments - quoted |
|
|
| These
are stated at cost. Provision for diminution in value of investments is made
if |
|
| considered
permanent. |
|
|
|
|
|
|
| 2.7
Marketable securities |
|
|
|
| These
are stated at moving average cost or market value determined on aggregate |
|
| basis,
whichever is lower. |
|
|
|
|
| 2.8 Taxation |
|
| Provision
for taxation is based on taxable income after taking into account available |
|
| tax
credits and rebates or the turnover u/s 80D of the Income Tax Ordinance, 1979 |
|
| whichever
is higher. |
|
|
|
| Deferred
taxation is provided on timing differences using the liability method
excluding |
|
| the
tax effects of those timing differences which are unlikely to reverse in the |
|
| foreseeable
future. Debit balance on deferred tax account is not set-up as an asset. |
|
|
| 2.9
Revenue recognition |
|
|
| (a)
Return on short-term investments and deposits with banks are recognized on |
|
| accrual basis. |
|
|
|
|
| (b)
Dividend income is recorded at the time of closure of share tr |
