| ALTOFEEK INVESTMENT BANK LIMITED |
|
|
|
|
|
|
| (Annual
Report 1997) |
|
|
| CONTENTS |
|
| Corporate
Information |
|
| Notice
of Meeting |
|
| Chairman's
Report |
|
| Pattern
of Share holding |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Statement
of Sources and Application of Funds |
|
| Notes
to the Accounts |
|
|
|
|
|
| CORPORATE
INFORMATION |
|
|
| CHAIRMAN |
|
| Mr.
Khalid Mahmood Bhaimia |
|
| -
Nominee AIBaraka Investment & Development Co, Jeddah |
|
|
| VICE
CHAIRMAN |
|
| Mr.
Osman A. Suleiman |
|
| - Nominee
AlBaraka Investment & Development Co, Jeddah |
|
|
| CHIEF
EXECUTIVE |
|
| Mr.
Faisal A. Jamall |
|
| - Nominee
AlBaraka Investment & Development Co, Jeddah |
|
|
| DIRECTORS |
|
| Mr.
Yelcin Oner |
|
| -
Nominee AIBaraka Investment & Development Co, Jeddah |
|
| Mr.
Iftikhar Soomro |
|
| -
Nominee AlBaraka Investment & Development Co, Jeddah |
|
| Mr.
Shahid Ghaffar |
|
| - Nominee National Investment
Trust |
|
| Dr.
Morteza Gharehbaghian |
|
| -
Nominee Islamic Development Bank, Jeddah |
|
|
| COMPANY
SECRETARY |
|
| Farooq
Ahmed |
|
|
| AUDITORS |
|
| Sidat
Hyder Qamar Maqbool & Co, Chartered Accountants. |
|
|
| SHARE
REGISTRARS |
|
| Software
(Pvt) Limited |
|
| 5/79
Usman Block, New Garden Town, Lahore |
|
|
| REGISTERED
OFFICE |
|
| 63-
Shahrah-e-Quaid-e-Azam, Lahore |
|
|
| LEGAL
ADVISORS |
|
| Salim
& Baig Advocates |
|
|
| BANKERS |
|
| AlBaraka
Islamic Investment Bank B.S.C.(E.C) |
|
| Allied
Bank of Pakistan Limited |
|
| Faisal
Bank Limited |
|
| Habib
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| National
Bank of Pakistan |
|
| Prime
Commercial Bank Limited |
|
| Union
Bank Limited |
|
| United
Bank Limited |
|
|
| BRANCHES |
|
| -63-
Shahrah-e-Quaid-e-Azam, Lahore. |
|
| -Lakhani
Centre, I.I. Chundrigar Road, Karachi. |
|
| -Hotel
East Inn Building, Sheikhupura Road, Faisalabad. |
|
| -6-A
Islamia Road, Peshawar Cantt. |
|
|
|
| NOTICE
OF THE ANNUAL GENERAL MEETING |
|
| Notice
is hereby given that the 7th Annual General Meeting of AlTowfeek Investment
Bank Limited will be |
|
| held
at Avari Hotel, Shahrah-e-Quaid-e-Azam, Lahore on Tuesday December 23,1997 at
3.00 P.M to transact |
|
| the
following business: |
|
|
| ORDINARY
BUSINESS |
|
| 1)
To confirm the minutes of the Extra Ordinary General Meeting of the company
held on April |
|
| 261,997.00 |
|
|
|
| 2)
To receive, consider and adopt the audited accounts of the Company for the
year ended June 30,1997 |
|
| together
with the Directors' and Auditors' Reports thereon. |
|
|
| 3)
To appoint the auditors for the next term and to fix their remuneration. |
|
|
| 4)
To consider and approve the issue of Right Shares, at par, at the rate of one
share for every two |
|
| shares
held. |
|
|
| 5.
To transact any other business with the permission of the chair. |
|
|
| NOTES |
|
| (i)
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. |
|
|
| (ii)
The members are requested to immediately notify the change in address, if
any. |
|
|
| (iii)
The share transfer books of the Company will remain closed from December 17,
1997 to December |
|
| 23,
1997 both days inclusive. |
|
|
|
| CHAIRMAN'S
REPORT |
|
| TO
THE SHAREHOLDERS |
|
|
| The
Directors of your Bank are pleased to present to you the financial results of
the Bank for the fiscal year |
|
| ended
30 June 1997. |
|
|
| Fiscal
1997 was a difficult year for our industry. Political uncertainty, poor
economy, rapidly depreciating |
|
| rupee,
extreme volatility in the stock markets, numerous changes in the banking laws
and banking sector |
|
| have
made life difficult for all of us. In many respects it was a continuation of
the previous fiscal year. |
|
|
| Our
results reflect this poor economic environment. The financial results of the
Bank as of 30 June, 1997 are |
|
| as
follows: |
|
|
|
(Rs' 000) |
|
| Profit
before provisions |
|
1,948 |
|
| Provisions |
|
(3l,164) |
|
|
---------- |
|
| (Loss)
before tax |
|
(29, 216) |
|
| Taxation |
|
6,365 |
|
|
---------- |
|
| After
tax (Loss) |
|
(22,851) |
|
|
========= |
|
|
|
|
| However,
this is a significant improvement over the first six months of the fiscal
year. Our December 1996 |
|
| results
showed an after tax loss of Rs. 49.8 Million. The reasons for this turnaround
in the second half of the |
|
| year were: |
|
|
| ·
In the last Annual Report we had advised you that there could be an upside
potential to our mark |
|
| to
market policy on our investment portfolio. During this period we were able to
realize both - |
|
| through
actual disinvestment and through reduced 'provisions'. As markets improve
further, |
|
| we
foresee further claw back of the provisions. |
|
| ·
Reduction in our operating expenses as a result of closure of Sialkot Branch,
of the incomplete |
|
| Islamabad
Office and of the in house brokerage business. |
|
| ·
Greater focus on recovery of doubtful morabaha portfolio. |
|
| ·
General overall focus on business. |
|
|
| During
the year we have further broadened our franchise. We have taken a substantial
interest in Paramount |
|
| Leasing
Ltd. This is part of our plan to be a financial conglomerate. We are the only
Group with a commercial |
|
| bank,
investment bank, brokerage and leasing company. In addition Dallah AlBaraka
Group continues to |
|
| support
these businesses from abroad i-e Saudi Arabia, Bahrain and the United
Kingdom. Our commitment |
|
| to
Islamic finance and banking is unequivocal. |
|
|
| Our
long term customer deposits have increased from Rs. 72.3 million to Rs. 509.1
million - a 6 fold |
|
| increase.
It is beneficial for your Bank to have long term funds and is also consistent
with the State Bank |
|
| emphasis
on such deposits. |
|
|
| Our
Morabaha portfolio has declined from Rs.2.06 billion to Rs. 1.76 billion - a
reduction of over 14%. This |
|
| is
as a result of our emphasis on risk-reward relationship, as well as
continuing emphasis on relationship |
|
| profitability
rather than deal profitability alone. This reduction has also facilitated in
our compliance of |
|
| capital
adequacy rule of 1: 10. |
|
|
| We
have a long way to go in restructuring and positioning your Bank as a premier
Islamic Investment Bank |
|
| in
the market place. We need: |
|
|
| ·
A new Chief Executive Officer (CEO) who could lead the bank. Since July 1997,
we have no |
|
| CEO.
In the interim, Mr. Faisal. A. Jamall - Assistant General Manager of our
Karachi Branch |
|
| is
acting as CEO. |
|
|
| ·
To increase our capital. Due to strict compliance with State Bank of Pakistan
(SBP) rules and |
|
| our
prudent policies, current net worth has been depleted. Furthermore, current
capital will not |
|
| allow
us to grow - since we are at I : 10 capital adequacy ratio, allowed by the
SBP. We are, |
|
| therefore,
proposing for your approval a capital injection of Rs. 155 million. We
recognize that |
|
| based
on our recent performance and current unstable market conditions, it is a
challenge to |
|
| raise
new capital but we are looking forward to your continuing commitment and
support to |
|
| your Bank. |
|
|
| ·
To introduce truly Islamic products both on asset and liability side. We have
begun this process |
|
| by
seeking guidance from Maulana Taqi Usmani, one of Dallah Albaraka Group's
International |
|
| Sharia
Advisors, as well as Mr. Yelcin Oner, your Director, who pioneered Islamic
Banking in |
|
| Turkey. |
|
|
| ·
To further change current practices, procedures and current business focus. |
|
|
| We
have had the following changes in the Board during the year: |
|
|
| .
Mr. S.M.Siddiqui, of National Investment Trust (NIT) was replaced by Mr.
Shahid Ghaffar as |
|
| the
new Director. |
|
|
| ·
Dr. Omar Zohair Hafez of Islamic Development Bank (IDB) was replaced by Dr.
Morteza |
|
| Gharehbaghian
as the new Director. |
|
| .
Mr. Salman All Shaikh resigned as the CEO/Director. In his place Mr. Faisal.
A.Jamall, acting |
|
| CEO,
has been co-opted as the new Director. |
|
|
| We
thank the departing Directors for their contributions and look forward to the
new Directors to lead your |
|
| Bank
and help achieve the objectives. |
|
|
| We
continue to foresee volatile and unstable markets. It is critical that we
remain conservative and prudent. |
|
| Furthermore,
we must learn from our past experiences and remain focused. |
|
|
| On
behalf of the Shareholders and the Board, we thank the staff for their
dedication and hard work put in |
|
| during
the year. We also thank State Bank of Pakistan for their guidance and are
most thankful to our |
|
| customers
for continuing to direct their business to your Bank. |
|
|
| We
look forward to your continuing support especially in increasing the capital,
at the next Annual General |
|
| Meeting. |
|
|
|
| PATTERN
OF SHARE HOLDING |
|
| AS
ON JUNE 30, 1997 |
|
|
|
|
NO. OF |
TOTAL |
|
| From |
TO |
SHAREHOLDERS |
SHARES HELD |
|
|
| 1 |
100 |
93 |
9,300 |
|
| 101 |
500 |
976 |
446,700 |
|
| 501 |
1000 |
1,268 |
1,240,200 |
|
| 1001 |
5000 |
487 |
1,214,300 |
|
| 5001 |
10000 |
67 |
531,300 |
|
| 10001 |
15000 |
15 |
198,500 |
|
| 15001 |
20000 |
11 |
197,700 |
|
| 20001 |
25000 |
14 |
335,800 |
|
| 25001 |
30000 |
5 |
135,200 |
|
| 30001 |
35000 |
2 |
64,100 |
|
| 35001 |
40000 |
2 |
80,000 |
|
| 40001 |
45000 |
1 |
40,400 |
|
| 45001 |
50000 |
3 |
147,800 |
|
| 85001 |
90000 |
1 |
86,100 |
|
| 120001 |
125000 |
1 |
120,800 |
|
| 125001 |
130000 |
2 |
257,800 |
|
| 145001 |
150000 |
1 |
150,000 |
|
| 180001 |
185000 |
1 |
185,000 |
|
| 215001 |
220000 |
1 |
216,600 |
|
| 245001 |
250000 |
1 |
250,000 |
|
| 315001 |
320000 |
1 |
318,300 |
|
| 1465001 |
1470000 |
1 |
1,466,900 |
|
| 1545001 |
1550000 |
1 |
1,550,000 |
|
| 3155001 |
3160000 |
1 |
3,157,200 |
|
| 8595001 |
8600000 |
1 |
18,600,000 |
|
|
---------- |
---------- |
|
|
2,957 |
31,000,000 |
|
|
========== |
========== |
|
|
| SHARE
HOLDERS |
|
NO. OF SHARE |
TOTAL |
|
|
HOLDERS |
SHARES HELD |
PERCENTAGE |
|
|
| 1.
Individuals |
|
2,905 |
4,530,000 |
14.62 |
|
| 2.
Financial Institutions |
4 |
59,200 |
0.19 |
|
| 3.
Public Limited Companies |
6 |
270,500 |
0.87 |
|
| 4.
Private Limited Companies |
6 |
270,900 |
0.87 |
|
| 5.
Banking/Investment Companies |
17 |
25,428,000 |
82.03 |
|
| 6.
Insurance Companies |
|
5 |
192,100 |
0.62 |
|
| 7.
Modarabas |
|
11 |
225,900 |
0.73 |
|
| 8.
Leasing Companies |
|
2 |
22,400 |
0.07 |
|
| 9.
Proprietor/Partnership |
1 |
1,000 |
0.00 |
|
|
---------- |
---------- |
---------- |
|
|
2,957 |
31,000,000 |
100.00 |
|
|
========== |
========== |
========== |
|
|
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of ALTOWFEEK INVESTMENT BANK LIMITED
as at 30 |
|
| June,
1997 and the related profit and loss account and statement of sources and
application of funds, 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 period 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 and the statement of sources and application
of funds, 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 and 30 June, 1997 and of the loss and the changes in sources and
application of funds, |
|
| for
the year then ended; |
|
|
| d)
in our opinion, zakat deductible at source 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. |
|
|
SIDAT HYDER QAMAR MAQBOOL
& CO. |
|
| Lahore:
November 29, 1997 |
|
Chartered Accountant |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1997 |
|
|
|
Rupees' 000 |
|
|
Note |
1997 |
1996 |
|
| SHARE
CAPITAL, RESERVES AND LIABILITIES |
|
| SHARE
CAPITAL |
|
|
| Authorised
capital: |
|
| 100,000,000
ordinary shares of Rs. 10/- each |
|
1,000,000 |
1,000,000 |
|
|
========= |
========= |
|
| Issued,
subscribed and paid-up capital: |
|
| 31,000,000
ordinary shares of Rs. 10/- each |
|
| fully
paid up in cash |
|
310,000 |
310,000 |
|
|
| RESERVES |
|
| Statutory
reserve |
|
4 |
25,826 |
25,826 |
|
| Accumulated
(Loss) |
|
(53,485) |
(30,634) |
|
|
---------- |
---------- |
|
|
(27,659) |
(4,808) |
|
|
|
|
| SHAREHOLDERS'
EQUITY |
|
282,341 |
305,192 |
|
|
| CUSTOMER
DEPOSITS- DUE AFTER ONE YEAR |
|
5 |
509,101 |
72,345 |
|
| CURRENT
LIABILITIES |
|
| Customer
deposits - due within one year |
5 |
1,866,402 |
2,474,212 |
|
| Accrued
and other liabilities |
|
6 |
173,420 |
147,233 |
|
| Unclaimed
dividend |
|
250 |
558 |
|
| Provision
for taxation |
|
2,000 |
12,000 |
|
|
---------- |
---------- |
|
|
2,042,072 |
2,634,003 |
|
| COMMITMENTS AND CONTINGENT
LIABILITIES |
7 |
---------- |
---------- |
|
|
2,833,514 |
3,011,540 |
|
|
========= |
========= |
|
| The
annexed notes form an integral part of these accounts |
|
|
| ASSETS |
|
| CURRENT
ASSETS |
|
| Cash
and bank balances |
|
8 |
148,054 |
331,124 |
|
| Short
term placements |
|
|
110,000 |
70,000 |
|
| Advances,
deposits, prepayments |
|
|
|
| and
other receivables |
|
9 |
209,117 |
230,698 |
|
| Investments |
|
10 |
387,129 |
280,426 |
|
| Morabaha
finance |
|
11 |
1,759,404 |
2,056,634 |
|
|
|
---------- |
---------- |
|
|
|
2,613,704 |
2,968,882 |
|
|
|
|
| LONG
TERM INVESTMENTS |
|
12 |
170,937 |
2,500 |
|
| LONG
TERM SECURITY DEPOSITS |
|
13 |
4,801 |
5,198 |
|
| DEFERRED
TAX ASSET |
|
|
31,387 |
23,022 |
|
| TANGIBLE
FIXED ASSETS |
|
14 |
12,685 |
11,938 |
|
|
|
---------- |
---------- |
|
|
2,833,514 |
3,011,540 |
|
|
========= |
========= |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
Rupees' 000 |
|
|
|
1997 |
1996 |
|
|
Note |
(12 months) |
(18 months) |
|
| INCOME |
|
|
| Profit
on morabaha finance |
|
306,804 |
469,898 |
|
| Profit
on bank deposits |
|
39,442 |
54,608 |
|
| Non
fund based income |
|
11,965 |
30,428 |
|
| Dividend
income |
|
14,920 |
9,206 |
|
| Profit/(Loss)
from investments |
|
15 |
14,796 |
(76,441) |
|
| Profit
on disposal of fixed assets |
|
16 |
348 |
285 |
|
|
---------- |
---------- |
|
|
388,275 |
487,984 |
|
| EXPENDITURE |
|
========= |
========= |
|
|
| Return
on deposits |
|
347,931 |
473,468 |
|
| Operating
expenses |
|
17 |
38,396 |
55,315 |
|
|
|
---------- |
---------- |
|
|
386,327 |
528,783 |
|
| OPERATING
PROFIT (LOSS)BEFORE PROVISIONS |
|
1,948 |
(40,799) |
|
|
| PROVISIONS |
|
| Doubtful
morabaha financing |
|
26,105 |
29,859 |
|
| Doubtful
receivables |
|
5,059 |
4,090 |
|
|
---------- |
---------- |
|
|
31,164 |
33,949 |
|
|
|
|
| LOSS
BEFORE TAXATION |
|
(29,216) |
(74,748) |
|
|
| TAXATION |
|
| Current |
|
(2,000) |
(12,000) |
|
| Deferred |
|
8,365 |
23,022 |
|
|
---------- |
---------- |
|
|
6,365 |
11,022 |
|
|
| (LOSS)
FOR THE YEAR / PERIOD AFTER TAX |
|
(22,851) |
(63,726) |
|
| (LOSS)/PROFIT
BROUGHT FORWARD |
|
(30,634) |
33,092 |
|
|
|
---------- |
---------- |
|
| ACCUMULATED
(LOSS) CARRIED FORWARD |
|
(53,485) |
(30,634) |
|
|
========= |
========= |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
|
|
| STATEMENT
OF SOURCES AND APPLICATION OF FUNDS |
|
| FOR
THE YEAR ENDED JUNE 30,1997 |
|
|
|
Rupees' 000 |
|
|
1997 |
1996 |
|
|
12 months |
18 months |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Loss
after taxation |
|
(22,851) |
(63,726) |
|
| Adjustments
for items not involving the movement of funds |
|
|
| (Gain)
on disposal of fixed assets |
|
(348) |
(285) |
|
| (Gain)
/ Loss on investments |
|
(14,796) |
76,441 |
|
| Provisions
for doubtful advances and receivables |
|
31,164 |
33,949 |
|
| Provisions
for deferred tax |
|
(8,365) |
(23,022) |
|
| Depreciation |
|
2,362 |
2,544 |
|
|
---------- |
---------- |
|
|
10,017 |
89,627 |
|
|
---------- |
---------- |
|
| FUNDS
(ABSORBED BY)/GENERATED FROM OPERATIONS |
|
(12,834) |
25,901 |
|
|
| WORKING
CAPITAL ADJUSTMENTS: |
|
| Decrease
in term finance |
|
2,711,251 |
9,447 |
|
| (Increase)/Decrease
in receivables, prepayments & deposits |
16,521 |
(82,570) |
|
| Increase
in accounts payable |
|
26,187 |
33,849 |
|
| Decrease
in current taxation |
|
(10,000) |
(8,536) |
|
| Increase/(Decrease)
in customer deposits |
|
(171,054) |
288,756 |
|
|
---------- |
---------- |
|
|
132,779 |
240,946 |
|
| Dividend
paid |
|
(308) |
(45,942) |
|
|
---------- |
---------- |
|
|
132,471 |
195,004 |
|
| NET
CASH FLOW FROM OPERATING ACTIVITIES |
|
119,637 |
220,905 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| (Increase)/Decrease
in security deposits |
|
397 |
(514) |
|
| Additions
to fixed assets |
|
(4,687) |
(6,056) |
|
| Sale
proceeds of fixed assets |
|
1,926 |
856 |
|
| (Increase)/Decrease
in long term investments |
|
(168,437) |
10,,134 |
|
| (Increase)
in short term investments |
|
(91,906) |
(80,720) |
|
|
---------- |
---------- |
|
| NET
CASH APPLIED ON INVESTING ACTIVITIES |
|
(262,707) |
(76,300) |
|
|
|
---------- |
---------- |
|
| NET
INCREASE/(DECREASE) IN CASH AND CASH EQU1VALENTIS |
(143,070) |
144,605 |
|
|
|
| CASH
AND CASH EQUIVALENTS AT BEGINNING OF YEAR |
|
401,124 |
256,519 |
|
|
|
---------- |
---------- |
|
| CASH
AND CASH EQUIVALENTS AT END OF YEAR |
|
258,054 |
401,124 |
|
|
========== |
========== |
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
| 1.
LEGAL STATUS AND PRINCIPAL ACTIVITIES |
|
|
| A1Towfeek
Investment Bank Limited is a Public Limited Company incorporated in Pakistan
under |
|
| the
Companies Ordinance, 1984. The Company is quoted on the Karachi, Lahore and
Islamabad |
|
| Stock
Exchanges. The Company has been registered as an "Investment Bank"
to carry on investment |
|
| finance
business in accordance with the objects and functions contained in SRO
585(1)/87 dated |
|
| July
13, 1987 and further in accordance with the principles of Islamic Banking. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
| 2.2
Tangible Fixed Assets and Depreciation |
|
|
| Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
charged to income |
|
| using
the straight line method over the expected useful lives of the assets. |
|
|
| A
half year's depreciation is charged on additions made in the second half of
the year and |
|
| deletions
in the first half, while a full year's depreciation is charged on assets
deleted during the |
|
| second
half of |
