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| AssetBank |
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| Annual
Report 1995-96 |
|
| ASSET
INVESTMENT BANK LIMITED |
|
|
| CONTENTS |
|
| Company
Information |
|
2 |
|
| Notice
of Annual General Meeting |
|
3 |
|
| Directors'
Report |
|
5 |
|
| Auditors'
Report |
|
7 |
|
| Balance
Sheet |
|
8 |
|
| Profit
& Loss Account |
|
10 |
|
| Statement
of Changes in Financial Position |
11 |
|
| Notes
to the Accounts |
|
12 |
|
| Pattern
of Shareholding |
|
28 |
|
|
| COMPANY
INFORMATION |
|
|
| CHAIRMAN |
|
| S.
M. Abdullah |
|
|
| CHIEF
EXECUTIVE |
|
| Mohammad
Saeed Butt |
|
|
| DIRECTORS |
|
| Dr.
Khalid Iqbal |
|
| Mohammad
Ashiq Rehmani |
|
| Rana
M. Abu Obaida |
|
| Syed
Naveed H. Zaidi |
|
| Azhar
Tariq Khan |
|
| Sohail
All |
|
| Shamim
Ahmed Junejo |
|
|
| COMPANY
SECRETARY |
|
| Mohammad
Asif |
|
|
| BANKERS |
|
| Habib
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| National
Development Finance Corporation |
|
| Habib
American Bank |
|
|
| AUDITORS |
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
|
| SHARE
REGISTRAR |
|
| Noble
Computer Services (Pvt) Limited |
|
| 2nd
Floor, A1-Manzoor Building |
|
| Dr.
Ziauddin Ahmed Road, Karachi. |
|
| Phones:
(021) 2635511-14 |
|
|
| REGISTERED
OFFICE |
|
| l-B,
First Floor, Ali Plaza |
|
| Khayaban-e-Quaid-e-Azam |
|
| Blue
Area, Islamabad |
|
| Phones:
(051) 822513 - 270621 - 270626 |
|
| Fax:
(051) 272506 |
|
|
| LIAISON
OFFICE |
|
| 9th
Floor, Lakson Square Building No. 1 |
|
| 265-R.A.
Lines, Karachi-74200 |
|
| Phones:
(021) 5682027 - 5689580 - 5687412 - 5687419 |
|
| Fax:
(021) 5684259 |
|
| Telex:
20538 ASSET PK |
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the 4th Annual General Meeting of Asset Investment Bank
Limited |
|
| will
be held at l-B, First Floor, Ali Plaza, Khayaban-e-Quaid-e-Azam, Blue Area,
Islamabad on |
|
| Monday,
December 30, 1996, at 3.00 p.m. to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
| 1)
To confirm the minutes of the Extra-ordinary General Meeting held on May 09, |
|
| 1996. |
|
|
| 2)
To receive, consider and adopt the audited accounts of the Company for the
period |
|
| ended
June 30, 1996 together with the Directors' and Auditors' Reports thereon. |
|
|
| 3)
To appoint auditors for the next term and fix their remuneration. |
|
|
| The
present auditors, M/S Ford, Rhodes, Robson, Morrow, Chartered Accountants |
|
| retire
and being eligible, offer themselves for re-appointment |
|
|
| SPECIAL
BUSINESS |
|
| 4)
To approve remuneration of the Chief Executive. Further, to authorize the
board of |
|
| directors
to revise remunerations of the Chief Executive, Chairman and whole |
|
| time
working directors of the company, as and when considered necessary. |
|
| A
statement under section 160 of the Companies Ordinance 1984 pertaining to
special |
|
| business
is being sent to the shareholders with a copy of the notice. |
|
|
|
|
| 5)
To transact any other business with the permission of the chair. |
|
|
| By
order of the Board |
|
|
| Mohmmad
Asif |
|
| Company
Secretary |
|
|
| Islamabad |
|
| December
03, 1996 |
|
|
| NOTES: |
|
| 1.
A member entitled to attend and vote at this meeting is entitled to appoint a
proxy to |
|
| attend
the meeting and vote for him/her. Form of Proxy is enclosed with the annual |
|
| report.
Proxies, in order to be effective, must be received at the registered office
of the |
|
| Company,
at least 48 hours before the time of holding the meeting. |
|
|
| 2.
The members are requested to immediately notify the change in address, if
any. |
|
|
| 3.
The share transfer books of the Company will remain closed from December 24,
1996 to |
|
| December
30, 1996 both days inclusive. |
|
|
| STATEMENT
U/S 160(1)(b) OF THE COMPANIES ORDINANCE, 1984 |
|
| The
members' approval is sought for the payment of remuneration and the provision
of certain |
|
| facilities
to the Chief Executive as per recommendations of the Board of Directors of
the |
|
| Company.
Further, members' approval is sought for authorizing the board of directors
to |
|
| revise
the remunerations of the Chief Executive, Chairman and whole time working
directors, |
|
| as
and when considered necessary. For this purpose, it is proposed that the
following resolution |
|
| be
passed. |
|
|
| "Resolved
that Mr. Mohammad Saeed Butt, Chief Executive shall be paid w.e.f. May 22,
1996 |
|
| the
gross remuneration of Rs. 75,000/- per month alongwith other benefits as per
his. service |
|
| contract. |
|
|
| Further
resolved that Board of Directors be and is hereby authorized to revise
remuneration |
|
| of
the Chief Executive, Chairman and whole time working directors of the company
from time |
|
| to
time in accordance with the company's rules and policies". |
|
|
| DIRECTORS'
REPORT |
|
| The
directors of Asset Investment Bank Limited are pleased to present the
accounts of the |
|
| Bank
for the eighteen months ended June 30, 1996. |
|
|
| FINANCIAL
INFORMATION |
|
| The
financial results of Asset Bank are summarized below: |
|
|
|
Eighteen |
Year |
|
|
months ended |
ended |
|
|
June 30 |
December 31 |
|
|
1996 |
1994 |
|
|
Rupees |
Rupees |
|
|
| Total
income |
|
68,842,255 |
70,286,860 |
|
| Expenditure |
|
67,126,581 |
63,516,207 |
|
| Profit
before extra-ordinary item |
|
1,715,674 |
6,770,653 |
|
| Extra-ordinary
item |
|
-- |
6,513,786 |
|
| Pre-tax
profit |
|
1,715,674 |
256,867 |
|
| Provision
for taxation (Net) |
|
(1,245,451) |
-- |
|
| Net
profit after tax |
|
2,961,125 |
256,867 |
|
| Unappropriated
profit brought forward |
|
7,182,262 |
6,976,769 |
|
|
| APPROPRIATIONS |
|
|
|
| Transfer
to statutory/special reserve |
|
592,225 |
51,374 |
|
| Unappropriated
profit carried forward |
|
9,551,162 |
7,182,262 |
|
|
| Other
key financial items: |
|
| Total
assets |
|
349,794,195 |
310,594,260 |
|
| Investment
in shares/certificates |
|
81,335,824 |
52,492,431 |
|
| Investment
in Government securities |
|
8,000,000 |
17,000,000 |
|
| Loans
and advances |
|
114,854,976 |
40,876,959 |
|
| Deposits |
|
108,516,651 |
89,680,619 |
|
|
| REVIEW
OF OPERATIONS |
|
| Asset
Investment Bank earned a total income of Rs. 68.84 million during the period
ended |
|
| June
30, 1996. Out of the total income, 55.53% was generated from profit/discount
on loans |
|
| and
advances. Other sources include income from Government securities 5.08%,
income from |
|
| bank
deposits 24.51% and dividend income 3.72% |
|
|
| Income
from non-fund based transactions (namely consultancy, guarantees and
underwritings) |
|
| in
the shape of commission and fees increased substantially to Rs. 10.97 million
(Rs. 1.98 million |
|
| in
1994) which comes to 15.94% of the total income. |
|
|
| The
auditors' observation in para (e) of their report has been explained in note
16.1 and 17.1' of |
|
| notes
to the accounts. |
|
|
| Our
results for the period ended 30th June, 1996 have not been as encouraging as
was forecasted |
|
| in
the 1994 report, due almost entirely to political and economic instability
and virtual collapse |
|
| of
stock exchange activity. |
|
|
| Further,
major factors responsible are interalia, as follows: |
|
|
| 1.
Continued restrictions on the Government corporations to place their funds
with |
|
| nationalized banks only; |
|
| 2.
Decline in general public savings due to heavy infiationery pressures; |
|
| 3.
Very discouraging stock exchange activities (The bank holds substantial
investments in |
|
| shares of various companies and the return
on investments in shares remained very |
|
| low); |
|
| 4.
Public companies were unable to declare handsome amount of dividends; |
|
| 5.
Restrictions on the investment banks to accept foreign currency deposits for
less than |
|
| two years maturity period (which was
subsequently relaxed to one year) and restrictions |
|
| by State Bank of Pakistan to mobilize
foreign currency deposits from residents. |
|
|
| However,
due to constrain of funds, special efforts were made to increase the income'
of |
|
| fees
and commission by procuring non-fund based transactions. As a result, the
income |
|
| from
fee and commission increased by five fold from Rs. 1.98 million in 1994 to
Rs. 10.97 |
|
| million
in 1996. |
|
| 6.
Booked losses in respect of sale of shares, whose diminution in market value
considered |
|
| permanent. |
|
|
| FUTURE
OUTLOOK |
|
| Investment
banks are performing an important economic activity. However, investment
banks |
|
| need
immediate attention of the policy makers for allowing them to enter into
wider range of |
|
| activities
without imposing unnecessary restrictions. The government's continuing policy
of |
|
| deregulation
and privatization could be viewed as positive sign in this direction. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding as at June 30, 1996 is annexed. |
|
|
| AUDITORS |
|
| The
present auditors M/S Ford, Rhodes, Robson, Morrow, Chartered Accountants
retire, and |
|
| being
eligible offer themselves for re-appointment. |
|
|
| ACKNOWLEDGMENT |
|
| Our
thanks are due to the State Bank of Pakistan and the Corporate Law Authority
for their |
|
| support
and guidance. We are also grateful to 'our valued clients for their
confidence in the |
|
| bank. |
|
|
| The
Board would like to place on record its appreciation of the dedication and
commitment of |
|
| bank's
staff of all levels. |
|
|
| On
behalf of the Board |
|
|
| S.M.
Abdullah |
|
| Chairman |
|
|
| Islamabad |
|
| November
27, 1996 |
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of Asset Investment Bank Limited as at
June 30, |
|
| 1996
and the related profit and loss account and statement of changes in financial
position, |
|
| together
with the notes forming part thereof, for the eighteen months 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 period was for the purpose of the |
|
| Company's business; and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred |
|
| during
the period 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, 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, 1996 and of the profit and changes in financial position for the period
then |
|
| ended; |
|
|
| d)
in our opinion, zakat deductible at source, if any, under the Zakat and Ushr |
|
| Ordinance, 1980 was deducted by the Company
and deposited in the Central Zakat |
|
| Fund established under section 7 of that
Ordinance; and |
|
|
| e)
without qualifying our opinion we draw attention to the contents of note 16.1
and |
|
| 17.1
of notes to the accounts which give reasons for not making provision against |
|
| loans
and mark-up thereon as required under the. prudential regulations of the |
|
| State
Bank of Pakistan. |
|
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
|
| Islamabad |
|
| November
27, 1996 |
|
|
| BALANCE
SHEET AS AT JUNE 3O, 1996 |
|
|
|
June 30 |
December 31 |
|
|
|
1996 |
1994 |
|
|
Note |
Rupees |
Rupees |
|
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorised
capital |
|
| 20,000,000
ordinary shares of Rs. 10/- each |
|
200,000,000 |
200,000,000 |
|
|
============ |
============ |
|
| Issued,
subscribed and paid-up capital |
|
| 10,000,000
ordinary shares of Rs. 10/- each |
|
| fully
paid in cash |
|
100,000,000 |
100,000,000 |
|
|
| Reserves |
|
| Capital
reserve - |
|
| Statutory/special
reserve. |
|
4 |
2,387,791 |
1,795,566 |
|
| Revenue
reserve - |
|
| Unappropriated
profit |
|
9,551,162 |
7,182,262 |
|
|
------------ |
------------ |
|
|
11,938,953 |
8,977,828 |
|
|
|
|
|
------------ |
------------ |
|
|
111,938,953 |
108,977,828 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
| TO
FINANCE LEASE |
|
5 |
2,015,330 |
1,895,747 |
|
|
| LONG
TERM DEPOSITS |
|
6 |
10,000,000 |
10,000,000 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
| Deposits |
|
7 |
98,516,651 |
79,680,619 |
|
| Short
term finances |
|
8 |
89,822,351 |
67,132,626 |
|
| Creditors,
accrued and other liabilities |
|
9 |
37,500,910 |
42,907,440 |
|
|
------------ |
------------ |
|
|
225,839,912 |
189,720,685 |
|
| CONTINGENCIES AND COMMITMENTS |
|
10 |
- |
- |
|
|
------------ |
------------ |
|
|
349,794,195 |
310,594,260 |
|
|
============ |
============ |
|
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report dated November 27, 1996 is annexed hereto |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
11 |
9,176,943 |
7,856,690 |
|
| LONG
TERM INVESTMENTS |
|
12 |
81,335,824 |
52,377,131 |
|
| LONG
TERM LOANS |
|
13 |
40,806,672 |
935,003 |
|
| LONG
TERM PREPAYMENTS |
|
| AND
DEFERRED COSTS |
|
14 |
3,050,341 |
1,773,897 |
|
|
|
| CURRENT
ASSETS |
|
| Short
term investments |
|
15 |
8,000,000 |
17,115,300 |
|
| Loans
and advances |
|
16 |
74,048,304 |
39,941,956 |
|
| Income
accrued and receivables |
|
17 |
18,134,072 |
30,558,987 |
|
| Advances,
deposits, prepayments and |
|
| other
receivables |
|
18 |
11,721,901 |
2,767,316 |
|
| Cash
and bank balances |
|
19 |
103,520,138 |
157,267,980 |
|
|
------------ |
------------ |
|
|
215,424,415 |
247,651,539 |
|
|
|
------------ |
------------ |
|
|
349,794,195 |
310,594,260 |
|
|
============ |
============ |
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE EIGHTEEN MONTHS ENDED JUNE, 30 1996 |
|
|
Eighteen |
Year |
|
|
months ended |
ended |
|
|
June 30, |
December 31, |
|
|
1996 |
1994 |
|
|
Note |
Rupees |
Rupees |
|
|
| INCOME |
|
| Income
from bank deposits |
|
28,420,809 |
16,870,650 |
|
| Income
from loans and advances |
|
21,941,377 |
38,230,308 |
|
| Income
from investments in |
|
|
|
| Government
securities |
|
11,138,038 |
3,496,467 |
|
| Commission
and fees |
|
1,987,529 |
10,972,662 |
|
| Dividend
income |
|
65,500 |
2,563,987 |
|
| Gain
(loss) on sale of shares and certificates |
|
6,733,607 |
(3,400,699) |
|
| Gain
on sale of fixed assets |
|
108,880 |
- |
|
|
------------ |
------------ |
|
|
68,842,255 |
70,286,860 |
|
|
|
|
| EXPENDITURE |
|
| Return
on deposits, borrowings |
|
| and
running finance |
|
45,983,690 |
41,111,907 |
|
| Administrative
and operating |
|
20 |
24,945,631 |
18,203,033 |
|
| Provision
for doubtful mark up |
|
(3,802,740) |
4,201,267 |
|
|
------------ |
------------ |
|
|
67,126,581 |
63,516,207 |
|
|
|
------------ |
------------ |
|
| Profit
before extra-ordinary item |
|
1,715,674 |
6,770,653 |
|
| Extra-ordinary
item |
|
-- |
6,513,786 |
|
|
------------ |
------------ |
|
| Profit
before taxation |
|
1,715,674 |
256,867 |
|
| Provision
for taxation |
|
| -
Current year |
|
495,602 |
-- |
|
| -
Prior year |
|
(1,741,053) |
-- |
|
|
------------ |
------------ |
|
|
(1,245,451) |
-- |
|
|
|
------------ |
------------ |
|
| Profit
after taxation |
|
2,961,125 |
256,867 |
|
| Profit
brought forward |
|
7,182,262 |
6,976,769 |
|
|
------------ |
------------ |
|
|
10,143,387 |
7,233,636 |
|
| APPROPRIATION |
|
| Transfer
to statutory/special reserve |
|
592,225 |
51,374 |
|
|
------------ |
------------ |
|
| Unappropriated
profit carried forward |
|
9,551,162 |
7,182,262 |
|
|
============ |
============ |
|
|
| The
annexed notes form an integral part of these accounts |
|
| The
auditors' report dated November 27, 1996 is annexed hereto. |
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE EIGHTEEN MONTHS ENDED JUNE 30, 1996 |
|
|
Eighteen |
Year |
|
|
months ended |
ended |
|
|
June 30, |
December 31, |
|
|
1996 |
1994 |
|
|
Rupees |
Rupees |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Return,
commission and other receipts |
|
69,570,087 |
63,487,753 |
|
| Return
on deposits, borrowings and running finance |
|
(45,983,690) |
(41,111,907) |
|
| Administrative
and operating expenses |
|
(20,925,312) |
(21,959,524) |
|
| Provision
for doubtful mark-up |
|
3,802,740 |
- |
|
|
------------ |
------------ |
|
|
6,463,825 |
416,322 |
|
|
| (Increase)/decrease
in assets |
|
| Loans
and advances |
|
(73,978,017) |
161,244,625 |
|
| Income
accrued and receivables |
|
12,424,915 |
(21,374,059) |
|
| Advances,
deposits, prepayments and other receivables |
|
(11,454,585) |
11,749,382 |
|
|
| Increase/(decrease)
in liabilities |
|
| Deposits |
|
18,836,032 |
(172,529,394) |
|
| Creditors,
accrued and other liabilities, |
|
(2,375,687) |
24,019,229 |
|
|
------------ |
------------ |
|
| Net
cash flow from operating activities before tax |
|
(50,083,517) |
3,526,105 |
|
| Income
tax paid |
|
(2,124,978) |
(3,552,082) |
|
|
------------ |
------------ |
|
| Net
cash generated / (used) in operating activities |
|
(52,208,495) |
(25,977) |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Dividend
received |
|
2,563,987 |
65,500 |
|
| Purchase
of fixed assets |
|
(595,887) |
(3,817,580) |
|
| Proceeds
from sale of fixed assets |
|
450,000 |
-- |
|
| Proceeds
from sale of investments |
|
102,903,991 |
60,946,266 |
|
| Purchase
of investments |
|
(126,148,083) |
(28,735,926) |
|
|
------------ |
------------ |
|
| Net
cash generated/(used) in investing activities |
|
(20,825,992) |
28,458,260 |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Short
term finances |
|
22,689,725 |
3,070,948 |
|
| Repayment
of obligation under finance lease |
|
(3,403,080) |
(1,540,496) |
|
|
------------ |
------------ |
|
| Net
cash generated/(used) in financing activities |
|
19,286,645 |
1,530,452 |
|
|
|
|
|
------------ |
------------ |
|
| Net
(decrease) /increase in cash and cash equivalents |
|
(53,747,842) |
29,962,735 |
|
| Cash
and cash equivalents at the beginning of year |
|
157,267,980 |
127,305,245 |
|
|
------------ |
------------ |
|
| Cash
and cash equivalents at the end of year |
|
103,520,138 |
157,267,980 |
|
|
============ |
============ |
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE EIGHTEEN MONTHS ENDED JUNE 30, 1996 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| Asset
Investment Bank Limited was incorporated in Pakistan on June 9, 1992 as a
public |
|
| limited
company and is listed on the Karachi, Lahore and Islamabad stock exchanges. |
|
| The
company is principally engaged in the business of investment banking under
the |
|
| provisions
of SRO 585(1)/87 dated July 13, 1987 issued by the Ministry of Finance, |
|
| Government
of Pakistan. |
|
|
| 2.
ACCOUNTING YEAR |
|
| The
Company has changed its accounting year from December 31 closing to June 30
and |
|
| hence
these accounts are prepared for eighteen months from January 1, 1995 to June
30, |
|
| 1996
in accordance with the permission granted to the Company by the Registrar of |
|
| Companies
u/s 233(2) of the Companies Ordinance, 1984. |
|
|
| 3.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 3.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 3.2
Tangible fixed assets and depreciation |
|
| Tangible
fixed assets are stated at cost less accumulated depreciation. Depreciation |
|
| on
all operating fixed assets is charged to income on reducing balance method at |
|
| the
rates given in note 11. |
|
|
| Full
year's depreciation is provided in the year of purchase and no depreciation
is |
|
| charged
on assets deleted during the year. |
|
|
| Minor
renewals or replacements, maintenance, repair, gains or losses on disposal |
|
