| Asset Investment Bank Limited |
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| Annual
Report 1997-98 |
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| CONTENTS |
|
|
| Company
Information |
|
| Notice
of Annual General Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
|
|
| COMPANY
INFORMATION |
|
|
| CHAIRMAN |
|
| S.
M. Abdullah |
|
|
| CHIEF
EXECUTIVE |
|
| Syed
Naveed H. Zaidi |
|
|
| DIRECTORS |
|
| Dr.
Khalid Iqbal |
|
| Mohammad
Ashiq Rehmani |
|
| Rana
M. Abu Obaida |
|
| Azhar
Tariq Khan |
|
| Sohail Ali |
|
| Shamim
I. Junejo |
|
|
| COMPANY
SECRETARY |
|
| Muhammad
Naeem Aslam |
|
|
| BANKERS |
|
| Habib
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| National
Development Finance Corporation |
|
| Habib
American Bank |
|
|
| AUDITORS |
|
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
|
| REGISTRAR |
|
| Noble
Computer Services (Pvt) Limited |
|
| 2nd
Floor, A1-Manzoor Building |
|
| Dr.
Ziauddin Ahmed Road, Karachi. |
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| Phones:
(021) 2635511-14 |
|
|
| REGISTERED
OFFICE |
|
| l-B,
First Floor, Ali Plaza |
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| Khayaban-e-Quaid-e-Azam |
|
| Blue
Area, Islamabad |
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| Phones:
(051) 270621 - 270626 |
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| Fax:
(051) 272506 |
|
|
| LIAISON
OFFICE |
|
| 9th
Floor, Lakson Square Building No. 1 |
|
| 265-R.A.
Lines, Karachi-74200 |
|
| 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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|
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| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 6th 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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| 7uesday,
December 29, 1998, at 1.00 p.m. to transact the following business: |
|
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| ORDINARY
BUSINESS |
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| 1)
To confirm the minutes of the 5th Annual General Meeting held on December 29,
1997 |
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|
|
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| 2)
To receive, consider and adopt the audited accounts of the Company for the
year |
|
| ended
June 30, 1998 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 |
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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 |
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|
Sd/- |
|
| Islamabad |
|
|
Muhammad Naeem Aslam |
|
| December
05, 1998 |
|
|
Company Secretary |
|
|
| NOTES: |
|
|
| 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 |
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| 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 23,
1998 to |
|
| December
29, 1998 both days inclusive. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
directors of Asset Investment Bank Limited are submitting the sixth annual
report of the |
|
| Bank
together with the audited accounts of the company for the year ended June 30,
1998. |
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|
|
|
| FINANCIAL
REVIEW |
|
|
|
|
|
|
| The
Financial review of the banks' affairs as at June 30,1998 and results of its
operations for the |
|
| year
then ended are summarized below: |
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| Total
income |
|
|
|
56,513,447 |
56,440,727 |
|
| Expenditure |
|
|
|
77,906,103 |
60,946,591 |
|
| Loss
before taxation |
|
|
|
(21,392,656) |
(4,505,864) |
|
| Provision
for taxation |
|
|
|
300,000 |
900,000 |
|
| Net
loss after taxation |
|
|
|
(21,692,656) |
(5,405,864) |
|
|
|
|
|
|
|
| Unappropriated
profit brought forward |
|
4,145,298 |
9,551,162 |
|
| Unappropriated
profit/(loss) carried forward |
|
(17,547,358) |
4,145,298 |
|
|
|
|
|
|
|
|
| Other
key financial items: |
|
|
|
|
| Total
assets |
|
|
|
496,361,121 |
449,678,802 |
|
| Long
Term Investment in shares/certificates (Net of |
|
| provision
for diminution in value) |
|
|
81,679,614 |
85,938,299 |
|
| Investment
in Government securities |
|
|
7,000,000 |
6,500,000 |
|
| Loans
and advances |
|
|
|
245,567,707 |
183,160,187 |
|
| Deposits |
|
|
|
257,880,530 |
203,709,970 |
|
|
| The
Bank has shown a loss of Rs. 17.5 million after adjustment of unappropriated
profit of |
|
| Rs.
4.14 million of the last year. Following are the major factors for such a
situation: |
|
|
| 1.
Economic turmoil faced by the country in general and the industry in
particular, the finan- |
|
| cial
sector has been hit the most. In view of this sever economic crunch is being
faced by |
|
| the
country. |
|
|
|
|
| 2.
As is well known, that the stock market over all has been showing continuous
decline and |
|
| its
performance is very dismal. It is generally believed that in view of the
fresh investment |
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| in
the country not forthcoming, it cannot be said with certainty that the
conditions will |
|
| improve
in the near future. Hence the Asset Bank, as recommended by our auditors had
to |
|
| make
substantial provisions for the diminution in the value of our investment
portfolio. |
|
|
| 3.
Substantial Provisions, as recommended by our auditors, had to be made for
doubtful |
|
| debts
this year. |
|
|
| 4.
Sale agreement of property signed in the previous year could not materialize
as the buyer |
|
| backed
out due to slump in the property market. However, a new agreement has been |
|
| signed
with Saudi Pak leasing Company Ltd., but at a lessor price resulting in the
previ- |
|
| ous
year's excess profit of Rs. 6.0 million having had to be reversed. |
|
|
| 5.
Commission earning from our non fund based activities viz-a-viz guarantees,
underwrit- |
|
| ing,
L/C's, etc. has decreased from Rs. 10.6 million to Rs. 2.6 million. |
|
|
| Despite
general slowdown in the economic activities and decline in the public savings
due to |
|
| heavy
inflationary pressures, our deposits have shown rise of 26.59% from the
previous year. |
|
| We
also managed to generate additional resources to the tune of Rs. 288.50
million in the shape |
|
| of
private placements under our Funds Management Scheme. |
|
|
| FUTURE
OUTLOOK |
|
| It
is hoped that economic sanctions on Pakistan would be removed, resulting in
greater inflow |
|
| of
investment in the country and that it is strongly expected for the economic
conditions to |
|
| improve
substantially. |
|
|
| Meanwhile
we are in the process of setting up of a joint venture with reliable parties
within and |
|
| outside
Pakistan so as to induct substantial funds not only in the shape of increase
in the equity |
|
| of
your Bank, but also to further improve the deposits. |
|
|
| These
measures are expected to improve the financial position of your bank in due
course. |
|
|
| RECTIFICATION
OF COMPUTER SYSTEM REGARDING ADVENT OF NEXT CENTURY |
|
| Asset
Investment Bank Limited has made necessary changes in its MIS and the year
2000 prob- |
|
| lem
"The Millennium Bug" has been solved. |
|
|
| PATTERN
OF SHAREHOLDING |
|
| The
pattern of shareholding as at June 30, 1998 is annexed. |
|
|
| AUDITORS |
|
| The
present auditors, M/S Ford, Rhodes, Robson, Morrow, Chartered Accountants
retire, and |
|
| being
eligible, offer themselves for re-appointment. |
|
|
| ACKNOWLEDGEMENT |
|
| Our
thanks are due to the State Bank of Pakistan and the Corporation 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 Bank's services. |
|
|
| The
Board would like to convey appreciation of the work and concerted efforts
done by all |
|
| members
of staff. |
|
|
| We
seek Allah's guidance and His blessings in achieving our objectives. |
|
|
|
On behalf of the Board |
|
|
|
|
|
Sd/- |
|
| Islamabad |
|
S.M. Abdullah |
|
| December
02, 1998 |
|
Chairman |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Asset Investment Bank Limited as at
June 30, |
|
| 1998
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- |
|
| 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)
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, |
|
| 1998
and of the loss and changes in financial position for the year then ended; |
|
|
|
|
|
|
| d)
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
02, 1998 |
|
|
|
Chartered Accountants |
|
|
|
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
|
|
1998 |
1997 |
|
|
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/(loss) |
|
|
(17,547,358) |
4,145,298 |
|
|
|
|
---------- |
---------- |
|
|
|
|
(15,159,567) |
6,533,089 |
|
|
|
|
---------- |
---------- |
|
|
|
|
84,840,433 |
106,533,089 |
|
| LONG
TERM FINANCES |
|
4 |
56,713,781 |
- |
|
|
|
|
|
|
|
|
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
|
|
| TO
FINANCE LEASE |
|
5 |
- |
1,103,010 |
|
|
|
|
|
|
| LONG
TERM DEPOSITS |
|
6 |
13,050,530 |
14,137,095 |
|
| CURRENT
LIABILITIES |
|
|
|
|
| Deposits |
|
7 |
244,830,000 |
189,572,875 |
|
| Short
term finances |
|
8 |
59,128,046 |
104,484,856 |
|
| Creditors,
accrued and other liabilities |
9 |
37,798,331 |
33,847,877 |
|
|
|
|
---------- |
---------- |
|
|
|
|
341,756,377 |
327,905,608 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
10 |
- |
- |
|
|
|
|
---------- |
---------- |
|
|
|
|
496,361,121 |
449,678,802 |
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
11 |
7,998,510 |
9,930,694 |
|
| LONG
TERM INVESTMENTS |
|
12 |
81,679,614 |
85,938,299 |
|
| LONG
TERM LOANS |
|
13 |
125,456,107 |
34,066,674 |
|
| LONG
TERM PREPAYMENTS |
|
|
|
| AND
DEFERRED COSTS |
|
14 |
980,000 |
1,821,201 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
| Short
term investments |
|
15 |
7,000,000 |
6,500,000 |
|
| Loans
and advances |
|
16 |
120,111,600 |
149,093,513 |
|
| Income
accrued and receivables |
|
17 |
37,435,617 |
31,832,940 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
18 |
60,524,135 |
71,393,384 |
|
| Cash
and bank balances |
|
19 |
55,175,538 |
59,102,097 |
|
|
|
|
---------- |
---------- |
|
|
|
|
280,246,890 |
317,921,934 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
496,361,121 |
449,678,802 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report dated December 02, 1998 is annexed hereto |
|
|
|
Sd/- |
|
Sd/- |
|
|
Syed Naveed H. Zaidi |
|
Rana M. Abu Obaida |
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE, 30 1998 |
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
Note |
Rupees |
Rupees |
|
| INCOME |
|
|
|
|
|
|
|
| Income
from bank deposits |
|
8,935,514 |
11,619,458 |
|
| Income
from loans and advances |
|
43,412,110 |
24,664,571 |
|
| Income
from investments in |
|
|
|
|
| Government
securities |
|
|
|
731,280 |
511,025 |
|
| Commission
and fees |
|
|
|
2,626,636 |
10,625,632 |
|
| Dividend
income |
|
|
|
580,286 |
993,978 |
|
| Gain/(loss)
on sale of shares and certificates |
|
6,150,202 |
(1,353,470) |
|
| Gain
on sale of fixed assets |
|
11.1 |
77,419 |
150,868 |
|
| Profit/(loss)
on sale of property |
|
20 |
(6,000,000) |
8,850,000 |
|
| Other
income |
|
|
|
- |
378,665 |
|
|
|
|
---------- |
---------- |
|
|
|
|
56,513,447 |
56,440,727 |
|
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
| Return
on deposits, borrowings |
|
|
| and
running finance |
|
|
56,248,910 |
37,686,992 |
|
| Administrative
and operating |
|
21 |
15,186,311 |
16,230,497 |
|
| Provision
for doubtful debts |
|
|
4,502,079 |
7,029,102 |
|
| Provision
for diminution in |
|
|
| value
of long term investments |
|
1,968,803 |
- |
|
|
|
---------- |
---------- |
|
|
|
77,906,103 |
60,946,591 |
|
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
(21,392,656) |
(4,505,864) |
|
| Provision
for taxation |
|
300,000 |
900,000 |
|
|
|
---------- |
---------- |
|
| Loss
after taxation |
|
(21,692,656) |
(5,405,864) |
|
| Unappropriated
profit brought forward |
|
4,145,298 |
9,551,162 |
|
|
|
|
|
|
---------- |
---------- |
|
| Unappropriated
profit/(loss) carried forward |
|
(17,547,358) |
4,145,298 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts |
|
| The
auditors' report dated December 02, 1998 is annexed hereto. |
|
|
|
Sd/- |
|
Sd/- |
|
|
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, 1998 |
|
|
|
|
|
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
| Return,
commission and other receipts |
|
55,705,540 |
47,799,351 |
|
| Return
on deposits, borrowings and running finance |
(56,248,910) |
(37,686,992) |
|
| Administrative
and operating expenses |
|
(13,736,948) |
(20,957,971) |
|
|
|
---------- |
---------- |
|
|
|
|
|
|
(14,280,318) |
(10,845,612) |
|
| (Increase)/decrease
in assets |
|
|
|
| Loans
and advances |
|
|
|
(66,909,599) |
(68,305,211) |
|
| Income
accrued and receivables |
|
|
(5,602,677) |
(13,698,868) |
|
| Advances,
deposits, prepayments and other receivables |
11,639,249 |
(58,361,488) |
|
|
|
|
|
|
|
| Increase
/ (decrease) in liabilities |
|
|
|
| Deposits |
|
|
|
54,170,560 |
95,193,319 |
|
| Creditors,
accrued and other liabilities |
|
6,824,780 |
(2,568,768) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash flow from operating activities before tax |
(14,158,005) |
(58,586,628) |
|
| Income
tax paid |
|
|
|
(2,805,023) |
(1,404,043) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash used in operating activities |
|
(16,963,028) |
(59,990,671) |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Dividend
received |
|
|
|
580,286 |
993,978 |
|
| Purchase
of fixed assets |
|
|
(135,560) |
(18,759,811) |
|
| Proceeds
from sale of fixed assets and property |
|
(5,233,000) |
25,310,000 |
|
| Proceeds
from sale of investments |
|
|
23,955,085 |
83,270,430 |
|
| Purchase
of investments |
|
|
|
(16,015,000) |
(87,726,375) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash generated in investing activities |
|
3,151,811 |
3,088,222 |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Short
term finances |
|
|
|
11,356,971 |
14,662,505 |
|
| Repayment
of obligation under finance lease |
|
(1,472,313) |
(2,178,097) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash generated in financing activities |
|
9,884,658 |
12,484,408 |
|
|
|
|
|
---------- |
---------- |
|
| Net
decrease in cash and cash equivalents |
|
(3,926,559) |
(44,418,041) |
|
| Cash
and cash equivalents at the beginning of year |
59,102,097 |
103,520,138 |
|
|
|
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of year |
|
55,175,538 |
59,102,097 |
|
|
|
========== |
========== |
|
|
|
|
|
Sd/- |
|
Sd/- |
|
|
Syed Naveed H. Zaidi |
|
Rana M. Abu Obaida |
|
|
Chief Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
YEAR ENDED JUNE 30, 1998 |
|
|
| 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 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 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 11. 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 |
