| ASSET INVESTMENT BANK LIMITED |
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| Annual
Report 1997 |
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| CONTENTS |
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| Company
Information |
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| Notice
of Annual General Meeting |
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| Directors'
Report |
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| Auditors'
Report |
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| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| CHAIRMAN |
|
| S.
M. Abdullah |
|
|
| CHIEF
EXECUTIVE |
|
| Syed
Naveed H. Zaidi |
|
|
| DIRECTORS |
|
| Dr.
Khahd Iqbal |
|
| Mohammad
Ashiq Rehmani |
|
| Rana
M. Abu Obaida |
|
| Azhar
Tariq Khan |
|
| Sohail
Ali |
|
| Shamim
Ahmed Junejo |
|
|
| COMPANY
SECRETARY |
|
| Ayyaz Ahmed |
|
|
| BANKERS |
|
| Habib
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| National
Development Finance Corporation |
|
| The
Bank of Khyber |
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| Habib
American Bank |
|
| AUDITORS |
|
| Ford,
Rhodes, Robson, Morrow |
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| Chartered
Accountants |
|
|
| REGISTRAR |
|
| Noble
Computer Services (Pvt) Limited |
|
| 2nd
Floor, A1-Manzoor Building |
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| Dr.
Ziauddin Ahmed Road, Karachi. |
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| Phones:
(021) 2635511-14 |
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|
| REGISTERED
OFFICE |
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| l-B,
First Floor, Ali Plaza |
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| Khayaban-e-Quaid-e-Azam |
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| Blue
Area, Islamabad |
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| Phones:
(051) 270621 - 270626 |
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| Fax:
(051) 272506 |
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|
|
| LIAISON
OFFICE |
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| 9th
Floor, Lakson Square Building No. 1 |
|
| 265-R.A.
Lines, Karachi-74200 |
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| Phones:
(021) 5682027 - 5689580 - 5687412 - 5687419 |
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| Fax:
(021) 5684259 |
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| Telex:
20538 ASSET PK |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 5th Annual General Meeting of Asset Investment Bank
Limited |
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| will
be held at l-B, First Floor, Ali Plaza, Khayaban-e-Quaid-e-Azam, Blue Area,
Islamabad on |
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| Monday,
December 29, 1997, at 11.00 a.m. to transact the following business: |
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| ORDINARY
BUSINESS |
|
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| 1)
To confirm the minutes of the Annual General Meeting held on December 30,
1996. |
|
|
| 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 auditors for the next term and fix their remuneration. |
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| The
present auditors, M/S Ford, Rhodes, Robson, Morrow, Chartered Accountants |
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| retire
and being eligible, offer themselves for re-appointment. |
|
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| 4)
To transact any other business with the permission of the chair. |
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|
By order of the Board |
|
|
| Islamabad |
|
Ayyaz Ahmed |
|
| December
05, 1997 |
|
Company Secretary |
|
|
| NOTES: |
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| 1.
A member entitled to attend and vote at this meeting is entitled to appoint a
proxy to |
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| attend
the meeting and vote for him/her. Form of Proxy is enclosed with the annual
re- |
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| port.
Proxies, in order to be effective, must be received at the registered office
of the Com- |
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| pany,
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 23,
1997 to |
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| December
29, 1997 both days inclusive. |
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|
|
| DIRECTORS'
REPORT |
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| The
directors of Asset Investment Bank Limited are pleased to present the fifth
annual accounts |
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| of
the Bank for the year ended June 30, 1997. |
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|
| FINANCIAL
INFORMATION |
|
|
| The
financial review of the banks' affairs as at June 30, 1997 and results of its
operations for the |
|
| year
then ended are summarized below: |
|
|
|
Year |
Eighteen |
|
|
ended |
months ended |
|
|
June 30 |
June 30 |
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
|
| Total income |
|
56,440,727 |
68,842,255 |
|
| Expenditure |
|
60,946,591 |
67,126,581 |
|
| Profit/(Loss)
before taxation |
|
(4,505,864) |
1,715,674 |
|
| Provision
for taxation (Net) |
|
900,000 |
(1,245,451) |
|
| Net
profit/(loss) after taxation |
|
(5,405,864) |
2,961,125 |
|
| Unappropriated
profit brought forward |
|
9,551,162 |
7,182,262 |
|
|
|
|
| APPROPRIATIONS |
|
|
|
|
|
|
| Transfer
to statutory/special reserve |
|
-- |
592,225 |
|
| Unappropriated
profit carried forward |
|
4,145,298 |
9,551,162 |
|
|
|
|
| Other
key financial items: |
|
|
| Total assets |
|
449,118,807 |
349,794,195 |
|
| Investment
in shares/certificates |
|
85,938,299 |
81,335,824 |
|
| Investment
in Government securities |
|
6,500,000 |
8,000,000 |
|
| Loans
and advances |
|
183,160,187 |
114,854,976 |
|
| Deposits |
|
203,709,970 |
108,516,651 |
|
|
| REVIEW
OF OPERATIONS |
|
| Asset
Investment Bank earned a total income of Rs. 56.44 million during the year
ended June 30, |
|
| 1997.
Out of the total income, 43.70%, was generated from profit/discount on loans
and ad- |
|
| vances.
Other sources include income from Government securities 0.91%, income from
fee and |
|
| commission
18.83%, income from bank deposits 20.59% and dividend income 1.76%. |
|
|
| Due
to various economic factors the year 1996-97 has seen a very deteriorating
socio-economic |
|
| situation
of the country. This also effected the capital market. The Stock market
remained in |
|
| uncertain
conditions and the investment activities were restricted. Therefore, we could
not pro- |
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| duce
the results which were desired. |
|
|
| The
auditors' observation in para (c) of their report has been explained in note
19 of notes to the |
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| accounts. |
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| RESOURCE
MOBILIZATION |
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| Despite
continued restrictions on the government corporations to place their funds
with nation- |
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| alized
banks only, and adverse market conditions our deposits have shown substantial
rise of |
|
|
| 87.7%
from the previous year. We managed to generate additional resources to the
tune of |
|
| Rs.
273.950 million in the shape of private placements under our Funds Management
Scheme. |
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|
| 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. Due to government's policy of
deregula- |
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| tion
and privatization, which encourages rapid industrialization, it is expected
that foreign in- |
|
| vestment
would flow into Pakistan. The recently announced Investment policy, in which
gov- |
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| ernment
has opened many non traditional sectors for foreign investment and introduced
a new |
|
| concept
of local and foreign joint ventures, is also likely to attract greater inflow
of long term |
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| investments.
This would result in augmentation of capital market. |
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|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding as at June 30, 1997 is annexed. |
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|
| AUDITORS |
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| 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 also extend appreciation to depositors, clients and
correspondents |
|
| for
their trust and support and for recognition of Banks' services. |
|
|
| The
Board would like to convey appreciation of the work and concerted efforts
made by all |
|
| members
of staff. |
|
|
|
On behalf of the Board |
|
|
| Islamabad |
|
S.M. Abdullah |
|
| December
01, 1997 |
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
| We
have audited the annexed balance sheet of Asset Investment Bank Limited as at
June 30, |
|
| 1997
and the related Profit and Loss Account and Statement of Changes in Financial
Position, |
|
| 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 the Com- |
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| pany's
business; and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred dur- |
|
| ing
the year were in accordance with the objects of the Company. |
|
|
| c)
as explained in note 19 to the accounts, the property acquired by the Company
through |
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| auction
carried out by the Banking Tribunal, Karachi in October 1996 has been sold |
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| under
an agreement of sale entered into on June 16, 1997 with an entity which was |
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| legally
incorporated on August 27, 1997. The Company has recognized a profit of Rs. |
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| 8.850
million on this transaction in the current year although the sale was not
com- |
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| pleted
upto June 30, 1997; |
|
|
| d)
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 respec- |
|
| tively give a true and fair view of the
state of the Company's affairs as at June 30, |
|
| 1997 and of the loss and changes in
financial position for the year then ended; |
|
|
| e)
in our opinion, zakat deductible at source, if any, under the Zakat and Ushr
Ordi- |
|
| nance,
1980 was deducted by the Company and deposited in the Central Zakat Fund |
|
| established
under section 7 of that Ordinance. |
|
|
| Islamabad |
|
Ford, Rhodes, Robson,
Morrow |
|
| December
01, 1997 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT June 30, 1997 |
|
|
|
|
June 30 |
June 30 |
|
|
|
1997 |
1996 |
|
|
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 |
|
3 |
2,387,791 |
2,387,791 |
|
| Revenue
reserve - |
|
| Unappropriated
profit |
|
4,145,298 |
9,551,162 |
|
|
---------- |
---------- |
|
|
6,533,089 |
11,938,953 |
|
|
---------- |
---------- |
|
|
106,533,089 |
111,938,953 |
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
| TO
FINANCE LEASE |
|
4 |
778,599 |
2,015,330 |
|
|
|
|
| LONG
TERM DEPOSITS |
|
5 |
14,137,095 |
10,000,000 |
|
| CURRENT
LIABILITIES |
|
|
|
| Deposits |
|
6 |
189,572,875 |
98,516,651 |
|
| Short
term finances |
|
7 |
104,484,856 |
89,822,351 |
|
| Creditors,
accrued and other liabilities |
8 |
33,612,293 |
37,500,910 |
|
|
|
327,670,024 |
225,839,912 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
9 |
-- |
-- |
|
|
---------- |
---------- |
|
|
449,118,807 |
349,794,195 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report dated December 01, 1997 is annexed hereto |
|
|
|
| TANGIBLE
FIXED ASSETS |
|
10 |
9,930,694 |
9,176,943 |
|
| LONG
TERM INVESTMENTS |
|
11 |
85,938,299 |
81,335,824 |
|
| LONG
TERM LOANS |
|
12 |
34,066,674 |
40,806,672 |
|
| LONG
TERM PREPAYMENTS |
|
|
|
|
| AND
DEFERRED COSTS |
|
13 |
1,821,201 |
3,050,341 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
| Short
term investments |
|
14 |
6,500,000 |
8,000,000 |
|
| Loans
and advances |
|
15 |
149,093,513 |
74,048,304 |
|
| Income
accrued and receivables |
|
16 |
31,832,940 |
18,134,072 |
|
| Advances,
deposits, prepayments and |
|
|
|
|
| other
receivables |
|
17 |
70,833,389 |
11,721,901 |
|
| Cash
and bank balances |
|
18 |
59,102,097 |
103,520,138 |
|
|
|
----------- |
----------- |
|
|
|
317,361,939 |
215,424,415 |
|
|
----------- |
----------- |
|
|
|
449,118,807 |
349,794,195 |
|
|
=========== |
=========== |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE, 30 1997 |
|
|
|
Year |
Eighteen |
|
|
ended |
months ended |
|
|
June 30, |
June 30, |
|
|
1997 |
1996 |
|
|
Note |
Rupees |
Rupees |
|
| INCOME |
|
|
| Income
from bank deposits |
|
|
11,619,458 |
16,870,650 |
|
| Income
from loans and advances |
|
|
24,664,571 |
38,230,308 |
|
| Income
from investments in |
|
|
|
| Government
securities |
|
|
511,025 |
3,496,467 |
|
| Commission
and fees |
|
|
10,625,632 |
10,969,683 |
|
| Dividend
income |
|
|
993,978 |
2,563,987 |
|
| Gain/(loss)
on sale of shares and certificates |
|
(1,353,470) |
(3,400,699) |
|
| Gain/(loss)
on sale of fixed assets |
|
10.1 |
150,868 |
108,880 |
|
| Profit
on sale of property |
|
19 |
8,850,000 |
-- |
|
| Other income |
|
|
378,665 |
2,979 |
|
|
|
----------- |
----------- |
|
|
|
56,440,727 |
68,842,255 |
|
| EXPENDITURE |
|
| Return
on deposits, borrowings |
|
| and
running finance |
|
36,807,788 |
45,983,690 |
|
| Administrative
and operating |
|
20 |
17,109,701 |
24,945,631 |
|
| Provision
for doubtful debts |
|
7,029,102 |
(3,802,740) |
|
|
60,946,591 |
67,126,581 |
|
|
----------- |
----------- |
|
| Profit/
(loss) before taxation |
|
(4,505,864) |
1,715,674 |
|
|
|
|
|
| Provision
for taxation |
|
|
- Current year |
|
900,000 |
495,602 |
|
|
- Prior year |
|
-- |
(1,741,053) |
|
|
----------- |
----------- |
|
|
900,000 |
(1,245,451) |
|
|
----------- |
----------- |
|
| Profit/(loss)
after taxation |
|
(5,405,864) |
2,961,125 |
|
| Profit
brought forward |
|
9,551,162 |
7,182,262 |
|
|
----------- |
----------- |
|
|
4,145,298 |
10,143,387 |
|
|
| APPROPRIATION |
|
| Transfer
to statutory/special reserve |
|
-- |
592,225 |
|
|
----------- |
----------- |
|
| Unappropriated
profit carried forward |
|
4,145,298 |
9,551,162 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts |
|
| The
auditors' report dated December 01, 1997 is annexed hereto. |
|
|
| Syed
Naveed H. Zaidi |
|
Rana M. Abu Obaida |
|
| Chief
Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1997 |
|
|
|
|
Year |
Eighteen |
|
|
ended |
months ended |
|
|
June 30, |
June 30, |
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Return,
commission and other receipts |
|
47,799,351 |
69,570,087 |
|
| Return
on deposits, borrowings and running finance |
|
(36,807,788) |
(45,983,690) |
|
| Administrative
and operating expenses |
|
(21,837,175) |
(20,925,312) |
|
| Provision
for doubtful debts |
|
(7,029,102) |
3,802,740 |
|
|
----------- |
----------- |
|
|
(17,874,714) |
6,463,825 |
|
|
| (Increase)/decrease
in assets |
|
| Loans
and advances |
|
(68,305,211) |
(73,978,017) |
|
| Income
accrued and receivables |
|
(13,698,868) |
12,424,915 |
|
| Advances,
deposits, prepayments and other receivables |
(58,361,488) |
(11,454,585) |
|
|
| Increase/(decrease)
in liabilities |
|
| Deposits |
|
95,193,319 |
18,836,032 |
|
| Creditors,
accrued and other liabilities |
|
4,460,334 |
(2,375,687) |
|
|
----------- |
----------- |
|
| Net
cash flow from operating activities before tax |
|
(58,586,628) |
(50,083,517 |
|
| Income
tax paid |
|
(1,404,043) |
(2,124,978 |
|
|
----------- |
----------- |
|
| Net
cash generated/(used) in operating activities |
|
(59,990,671) |
(52,208,495) |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Dividend
received |
|
993,978 |
2,563,987 |
|
| Purchase
of fixed assets |
|
(18,759,811) |
(595,887) |
|
| Proceeds
from sale of fixed assets and property |
|
25,310,000 |
450,000 |
|
| Proceeds
from sale of investments |
|
83,270,430 |
102,903,991 |
|
| Purchase
of investments |
|
(87,726,375) |
(126,148,083) |
|
| Net
cash generated/(used) in investing activities |
|
3,088,222 |
(20,825,992) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Short
term finances |
|
14,662,505 |
22,689,725 |
|
| Repayment
of obligation under finance lease |
|
(2,178,097) |
(3,403,080) |
|
|
----------- |
----------- |
|
| Net
cash generated/(used) in financing activities |
|
12,484,408 |
19,286,645 |
|
|
----------- |
----------- |
|
| Net
(decrease)/increase in cash and cash equivalents |
(44,418,041) |
(53,747,842) |
|
| Cash
and cash equivalents at the beginning of year |
|
103,520,138 |
157,267,980 |
|
|
|
|
----------- |
----------- |
|
| Cash
and cash equivalents at the end of year |
|
59,102,097 |
103,520,138 |
|
|
============ |
============ |
|
|
|
|
| Syed
Naveed H. Zaidi |
|
Rana M.Abu Obaida |
|
| Chief
Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
YEAR ENDED JUNE 30, 1997 |
|
|
| 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 provi- |
|
| sions
of SRO 585(1)/87 dated July 13, 1987 issued by the Ministry of Finance,
Government |
|
| of Pakistan. |
|
|
| 2. SIGNIFICANT ACCOUNTING
POLICIES |
|
|
| 2.1
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
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 10. |
|
|
| 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 of |
|
| fixed
assets are included in income currently. Major renewals and replacements are |
|
| capitalised. |
|
|
|
| 2.3 Assets subject to finance
lease |
|
|
| Assets
subject to finance lease are stated at the lower of present value of minimum |
|
| lease
payments under the lease agreements and fair value of the assets. The related |
|
| obligations
of the lease are accounted for as liabilities. |
|
|
| Assets
acquired under a finance lease are amortised over their useful lives on
reduc- |
|
| ing
balance method at the rates given in note 10. Amortisation of the leased
assets is |
|
| charged
to income. |
|
|
| 2.4 Employees retirement benefits |
|
|
| The
company operates a contributory provident fund for all its permanent employ- |
|
| ees
and contributions to the fund are made by the company and the employees in |
|
| accordance
with the fund rules. |
|
|
| 2.5
Deferred costs |
|
|
| These
are being amortised over a period of five years commencing from the financial |
|
| year
in which costs were incurred. |
|
|
| 2.6 Taxation |
|
|
| provision
for current taxation is based on taxable income at the current rate of |
|
| taxation
after considering all applicable tax credits, rebates and exemptions. The |
|
| company
accounts for deferred tax using the liability method on all major timing |
|
| differences. |
|
|
| 2.7
Investments |
|
|
| Long
term investments are stated at moving average cost of the respective
entities' |
|
| shares/certificates.
Provision is made if the diminution in the value of investment is |
|
| considered
permanent. |
|
|
| Short
term investments are stated at moving average cost of the respective
entities' |
|
| shares/certificates
less provision for diminution in market value. The provision for |
|
