| First International Investment Bank Limited |
|
|
|
|
|
| Annual
Report 1998 |
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|
|
|
| CONTENTS |
|
| Company
Information |
|
| Notice
of 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 |
|
|
| Board
of Directors |
Syed Babar Ali |
|
|
|
Chairman |
|
|
|
|
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|
Fakir Syed Aijazuddin |
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|
|
Managing Director &
Chief Executive |
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|
|
|
Pir Ali Gohar |
|
|
|
Mr. Tawfiq A. Husain |
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|
|
Mr. M. Rashid Zahir |
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|
|
Mr. Nasim Beg |
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|
|
Mr. S. Lachlan Hough |
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|
| Company
Secretary |
Syed Zia-ul-Hasan |
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|
|
| Auditors |
|
Messrs. Ford, Rhodes,
Robson, Morrow |
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|
|
Chartered Accountants |
|
|
|
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| Legal
Advisers |
Messrs. Orr, Dignam &
Co. |
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|
Advocates |
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|
|
|
|
|
Messrs. Mohsin Tayebaly
& Co. |
|
|
|
Advocates & Legal
Consultants |
|
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| Bankers |
|
American Express Bank
Ltd. |
|
|
|
Muslim Commercial Bank
Ltd. |
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|
|
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| Registrars |
|
Noble Computer Services
(Pvt.) Ltd. |
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|
Al-Manzoor Building, |
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|
Dr. Ziauddin Ahmad Road, |
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|
Karachi. |
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| Lahore |
|
2nd Floor |
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| Registered
Office |
Babar Ali Foundation
Building, |
|
|
|
308, Upper Mall, Lahore |
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|
|
Telephones: (042)
5753414-6, 5710597, |
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|
|
111-234-234 |
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|
Fax: (042) 5710598 /
111-567-567 |
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| Karachi
Office |
7th Floor, |
|
|
|
Shaheen Commercial
Complex, |
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|
|
Dr. Ziauddin Ahmad Road, |
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|
|
Karachi. |
|
|
|
Telephones: (021)
2639042-46, |
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|
111-234-234 |
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|
|
Fax: (021) 2630678 /
111-567-567 |
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|
| Islamabad
Office |
Mezzanine Floor, |
|
|
|
Razia Sharif Plaza, |
|
|
|
90, Blue Area, G/7,
Islamabad. |
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|
|
Telephones: (051)
275256-58, 111-234-234 |
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|
|
Fax: (051) 273861 /
111-567-567 |
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|
|
| NOTICE
OF THE EIGHTH ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the eighth Annual General Meeting of First International
Investment |
|
| Bank
Limited will be held at 10:00 a.m. on Friday, November 20, 1998 at the
Company's Registered |
|
| Office,
2nd Floor, Babar Ali Foundation Building, 308 Upper Mall, Lahore to transact
the following |
|
| business: |
|
|
| ORDINARY
BUSINESS: |
|
| 1.
To receive and consider the Accounts of the Company for the year ended June
30, 1998 |
|
| together
with the Directors' and Auditors' Reports thereon. |
|
| 2.
To declare a final dividend @7.5% for the year ended June 30, 1998. |
|
| 3.
To appoint auditors and to fix their remuneration. |
|
|
| SPECIAL
BUSINESS: |
|
| 4.
To consider and if thought fit, to approve the remuneration payable to the
Managing Director |
|
| and
Chief Executive. |
|
|
| 5.
To transact any other business with the permission of the Chair. |
|
|
| NOTES: |
|
| 1.
The share transfer books of the Company will remain closed from November 13,
1998 to |
|
| November
20, 1998 (both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at the meeting may appoint a proxy in
writing to attend |
|
| the
meeting and vote on a member's behalf. A Proxy need not be a member of the
Company. |
|
|
| 3.
Duly completed forms of proxy must be deposited with the Company Secretary at
the Head |
|
| Office
of the Company not later than 48 hours before the time appointed for the
meeting. A |
|
| member
shall not be entitled to appoint more than one proxy. If a member appoints
more than |
|
| one
proxy and more than one instrument of proxy are deposited by a member with
the |
|
| Company,
all such instruments of proxy shall be rendered invalid. |
|
|
| 4.
Shareholders are requested to notify any change in their address immediately. |
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|
|
| DIRECTORS'
REPORT |
|
|
| The
Board of Directors of First International Investment Bank Limited (Interbank)
has pleasure in |
|
| presenting
its Report and the Accounts for the twelve months ended June 30, 1998 to the
Eighth |
|
| Annual
General Meeting. |
|
|
| Your
Bank has been operating in a market which has witnessed considerable
volatility, the most |
|
| notable
feature of which was the decision of the Government of Pakistan on 28 May
1998 in regard |
|
| to
the maintenance and operation of Foreign Currency Accounts. Although a final
decision is still |
|
| awaited
regarding encashment/conversion of such deposits, most of the funds received
by your |
|
| Bank
under this scheme were long-term in nature and provided a hedging mechanism
for clients. |
|
|
| The
policy of your Bank is to remain prudent in its activities and to pursue any
new lines of business |
|
| which
will help diversify its operations. It is with this objective that your Bank
embarked upon leasing |
|
| operations
and more recently has initiated a Micro Credit Finance Scheme for milk
farmers. This |
|
| scheme
has been launched in collaboration with Nestle Milkpak and is proceeding as
planned. |
|
|
| Interbank's
pre-tax profit for the twelve months ended June 30, 1998 was Rs. 28.50
million. The |
|
| Bank's
after tax profit of Rs. 21.00 million was achieved through improved spreads
and diversification |
|
| of
Interbank's product range. |
|
|
| SUMMARY: |
|
|
|
|
|
Rs. million |
|
| After
tax the Bank made a profit of |
|
21.00 |
|
| Adding
thereto the unappropriated profit at |
|
| 1 July 1997 |
|
|
0.12 |
|
|
|
|
--------------- |
|
| makes
available for appropriation a sum of |
|
21.12 |
|
|
| from
which the Directors recommend |
|
| -
transfer to special reserve |
|
|
4.20 |
|
| - final dividend |
|
|
13.50 |
|
|
|
|
--------------- |
|
| and
propose to carry forward the balance of |
|
3.42 |
|
|
|
|
========== |
|
|
| After
consideration of the results for the twelve months ended June 30, 1998, the
Board of Directors |
|
| decided
to recommend a dividend at the rate of 7.5 percent of the paid up capital,
representing |
|
| Rs.
0.75 per ordinary share. |
|
|
| The
business focus of your Bank continues to be the exploration and development
of investment |
|
| banking
opportunities, especially the design and launching of innovative products and
new types of |
|
| financing
instruments. |
|
|
| The
Bank had initiated steps as far back as 1996 to make our computer-based
systems Year 2000 |
|
| compliant.
We are pleased to report that our investment banking and leasing systems are
already |
|
| Year
2000 compliant. The Operating Systems will also be Year 2000 compliant latest
by mid-1999. |
|
|
| Before
concluding, we would like to place on record the management's appreciation to
all its |
|
| employees
at all levels. They continue to support the endeavours of the Bank with zeal
and dedication. |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of FIRST INTERNATIONAL INVESTMENT BANK |
|
| LIMITED
as at June 30, 1998 and the related profit and loss account and statement of
changes in |
|
| financial
position (cash flow statement), together with the statement of accounting
policies and |
|
| 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 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 statement of accounting policies and
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, 1998 and of the profit and the changes in financial position
for the year |
|
| then
ended; and |
|
|
| (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. |
|
|
|
| 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
and paid-up-capital |
|
3 |
180,000,000 |
180,000,000 |
|
|
|
|
|
|
|
|
| Capital
reserves |
|
|
|
|
|
| Special reserve |
|
4 |
32,794,000 |
28,594,000 |
|
|
| Share premium |
|
|
70,000,000 |
70,000,000 |
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
102,794,000 |
98,594,000 |
|
|
| Revenue
reserves |
|
|
|
|
|
| General
reserve |
|
|
44,000,000 |
44,000,000 |
|
|
| Unappropriated
profit |
|
|
3,420,859 |
121,557 |
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
47,420,859 |
44,121,557 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
330,214,859 |
322,715,557 |
|
|
| DEFERRED
LIABILITIES |
|
|
|
|
|
|
|
|
|
|
| Provision
for gratuity |
|
|
1,372,502 |
485,786 |
|
|
| LONG
TERM BORROWING |
5 |
114,965,612 |
-- |
|
|
| LONG
TERM DEPOSITS |
|
6 |
1,606,029,513 |
1,470,322,665 |
|
|
| DEPOSITS
ON LEASE CONTRACTS |
7 |
7,299,185 |
2,680,285 |
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
|
|
|
| Deposits |
|
8 |
1,108,989,346 |
1,065,197,806 |
|
|
| Current
portion of long term borrowing |
5 |
17,687,017 |
-- |
|
|
| Accrued
expenses and other liabilities |
9 |
73,544,346 |
74,836,274 |
|
|
| Proposed
final dividend |
|
|
13,500,000 |
22,500,000 |
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
1,213,720,709 |
1,162,534,080 |
|
|
| CONTINGENCIES
AND COMMITMENTS |
10 |
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
3,273,602,380 |
2,958,738,373 |
|
|
|
|
========== |
========== |
|
|
|
| CURRENT
ASSETS |
|
|
|
| Cash
and bank balances |
|
11 |
33,442,269 |
31,659,243 |
|
|
| Trading
investments |
|
12 |
447,776,550 |
395,246,677 |
|
|
| Net
Investment in lease finance |
|
13 |
17,618,871 |
3,533,726 |
|
|
| Finance |
|
14 |
658,515,552 |
807,779,457 |
|
|
| Fund
placements with investment |
|
|
|
|
| banks/other
companies |
|
15 |
544,000,000 |
446,000,000 |
|
|
| Demand
promissory note |
|
16 |
20,000,000 |
-- |
|
|
| Bankers'
acceptances |
|
|
-- |
18,000,000 |
|
|
| Income
accrued or receivable |
|
|
99,851,795 |
84,985,274 |
|
|
| Other
receivables |
|
17 |
5,554,493 |
5,562,584 |
|
|
| Payments
less provision for taxation |
18 |
67,107,433 |
21,864,039 |
|
|
| Prepayments |
|
19 |
94,648,338 |
80,224,802 |
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
1,988,515,301 |
1,894,855,802 |
|
|
|
|
|
| LONG
TERM INVESTMENTS |
20 |
222,286,649 |
61,129,620 |
|
|
| NET
INVESTMENT IN LEASE FINANCE |
13 |
57,121,013 |
23,316,306 |
|
|
| LONG
TERM FINANCE |
|
21 |
913,009,461 |
887,320,530 |
|
|
| LONG
TERM DEMAND PROMISSORY NOTES |
22 |
78,000,000 |
78,000,000 |
|
|
| LONG
TERM DEPOSITS AND DEFERRED COSTS |
23 |
5,638,826 |
3,850,212 |
|
|
| TANGIBLE
FIXED ASSETS |
|
24 |
9,031,130 |
10,265,903 |
|
|
|
--------------- |
--------------- |
|
|
|
|
3,273,602,380 |
2,958,738,373 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
1998 |
1997 |
|
|
|
|
Note |
Rupees |
Rupees |
|
|
| INCOME |
|
|
|
|
|
|
| Income
from finance provided |
|
|
225,335,141 |
233,135,856 |
|
|
| Income
from bills receivable |
|
|
-- |
8,729,188 |
|
|
| Income
from investments |
|
25 |
70,016,277 |
64,036,727 |
|
|
| Income
from lease finance |
|
|
10,965,264 |
89,291 |
|
|
| Income
from demand promissory notes |
|
14,075,767 |
12,158,793 |
|
|
| Income
from bankers' acceptances |
|
612,779 |
605,550 |
|
|
| Income
from fund placements |
|
|
85,016,062 |
74,083,084 |
|
|
| Commissions
and fees |
|
|
2,877,289 |
3,037,442 |
|
|
| Other income |
|
26 |
8,729,153 |
1,036,243 |
|
|
|
--------------- |
--------------- |
|
|
|
|
417,627,732 |
396,912,174 |
|
|
| EXPENDITURE |
|
|
|
|
|
|
| Return
on deposits |
|
|
310,759,877 |
306,197,521 |
|
|
| Financial
charges |
|
27 |
17,084,216 |
4,186,701 |
|
|
| Administration
and operating expenses |
28 |
55,723,070 |
48,596,212 |
|
|
| Provision
for diminution in value of investments |
|
(1,614,188) |
1,499,172 |
|
|
| Provision
for potential lease losses |
|
242,677 |
121,007 |
|
|
| Provision
under SBP NBFIs Regulations against |
|
--------------- |
--------------- |
|
|
| finance debt |
|
|
6,932,778 |
(1,055,076) |
|
|
|
--------------- |
--------------- |
|
|
|
|
|
389,128,430 |
359,545,537 |
|
|
|
|
|
--------------- |
--------------- |
|
|
| Profit
before taxation |
|
|
28,499,302 |
37,366,637 |
|
|
| Taxation |
|
18 |
7,500,000 |
11,300,000 |
|
|
|
|
|
--------------- |
--------------- |
|
|
| Profit
after taxation |
|
|
20,999,302 |
26,066,637 |
|
|
| Unappropriated
profit brought forward |
|
121,557 |
1,854,920 |
|
|
|
|
|
--------------- |
--------------- |
|
|
| Available
for appropriation |
|
|
21,120,859 |
27,921,557 |
|
|
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
|
| Transfer
to special reserve |
|
4,200,000 |
5,300,000 |
|
|
| Proposed
final dividend @ 7.5% |
|
|
|
|
| (1997:
@ 12.5%) |
|
13,500,000 |
22,500,000 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
17,700,000 |
27,800,000 |
|
|
|
|
--------------- |
--------------- |
|
|
| Unappropriated
profit carried forward |
|
3,420,859 |
121,557 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
| Profit
before taxation |
|
28,499,302 |
37,366,637 |
|
|
| Adjustments
for: |
|
|
|
|
| Depreciation |
|
3,251,704 |
2,753,973 |
|
|
| Deferred costs |
|
1,320,466 |
337,113 |
|
|
| Gain
on disposal of fixed assets |
|
(34,292) |
(75) |
|
|
| Provision
for diminution in value of investments |
|
(1,614,188) |
1,499,172 |
|
|
| Provision
for doubtful debts |
|
6,932,778 |
(1,055,076) |
|
|
| Provision
for potential lease losses |
|
242,677 |
121,007 |
|
|
| Provision
for gratuity |
|
917,316 |
485,786 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
11,016,461 |
4,141,900 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
39,515,763 |
41,508,537 |
|
|
| (Increase)/decrease
in current assets: |
|
|
|
|
|
|
|
|
|
| Trading
investments |
|
(50,915,685) |
(17,293,411 ) |
|
|
| Finance |
|
142,331,127 |
(80,894,035) |
|
|
| Fund
placements |
|
(98,000,000) |
176,000,000 |
|
|
| Bills receivable |
|
-- |
50,997,835 |
|
|
| Demand
promissory note |
|
(20,000,000) |
-- |
|
|
| Bankers'
acceptance |
|
18,000,000 |
(18,000,000) |
|
|
| Income
accrued or receivable |
|
(14,866,521) |
(3,491,514) |
|
|
| Other
receivables |
|
763,091 |
5,734,307 |
|
|
| P repayments |
|
(14,423,536) |
(3,938,118) |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
(37,111,524) |
109,115,064 |
|
|
| (Decrease)/increase
in current liabilities: |
|
|
|
|
|
|
|
|
|
| Deposits |
|
43,791,540 |
5,713,228 |
|
|
| Accrued
expenses and other liabilities |
|
(8,558,986) |
8,070,692 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
35,232,554 |
13,783,920 |
|
|
|
|
--------------- |
--------------- |
|
|
| Increase
in long term finance |
|
(25,688,931) |
(92,204,917) |
|
|
| Increase
in long term deposits and deferred costs |
|
(3,109,080) |
(4,015,365) |
|
|
| Increase
in long term demand promissory notes |
|
-- |
(78,000,000) |
|
|
| Increase
in net investment in lease finance |
|
(48,132,529) |
(26,850,032) |
|
|
| Increase
in deposits on lease contracts |
|
4,618,900 |
2,680,285 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
(72,311,640) |
(198,390,029) |
|
|
| Net
cash from operating activities |
|
--------------- |
--------------- |
|
|
| before
income-tax and gratuity |
|
(34,674,847) |
(33,982,508) |
|
|
|
|
--------------- |
--------------- |
|
|
| Total
carried forward |
|
(34,674,847) |
(33,982,508) |
|
|
|
|
|
|
|
|
|
|
| Total
brought forward |
|
(34,674,847) |
(33,982,508) |
|
|
|
|
|
|
|
| Income-tax
paid |
|
(52,743,394) |
(30,025,091) |
|
|
| Gratuity paid |
|
{30,600) |
-- |
|
|
|
|
--------------- |
--------------- |
|
|
| Net
cash from operating activities |
|
(87,448,841) |
(64,007,599) |
|
|
|
|
|
|
|
| Cash
flows from investing activities: |
|
|
|
|
|
|
|
|
|
| Long
term investments |
|
(161,1 57,029) |
(11,200,000) |
|
|
| Acquisition
of fixed assets |
|
(2,737,639) |
(3,452,384) |
|
|
| Sale
proceeds of fixed assets |
|
-- |
300 |
|
|
|
|
--------------- |
--------------- |
|
|
| Net
cash used in investing activities |
|
(163,894,668) |
(14,652,084) |
|
|
|
|
|
|
|
| Cash
flows from financing activities: |
|
|
|
|
| Payment
of dividend |
|
(15,232,942) |
-- |
|
|
| Long
term borrowing - net |
|
132,652,629 |
-- |
|
|
| Long
term deposits |
|
135,706,848 |
80,775,000 |
|
|
|
|
--------------- |
--------------- |
|
|
| Net
cash from financing activities |
|
253,126,535 |
80,775,000 |
|
|
|
|
--------------- |
--------------- |
|
|
| Net
increase in cash |
|
1,783,026 |
2,115,317 |
|
|
| Cash
and bank balances at the beginning of the year |
|
31,659,243 |
29,543,926 |
|
|
|
|
--------------- |
--------------- |
|
|
| Cash
and bank balances at the end of the year |
|
33,442,269 |
31,659,243 |
|
|
|
|
========== |
========== |
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
| 1.
LEGAL STATUS AND OPERATIONS |
|
| First
International Investment Bank Limited (Interbank) is a public limited company
incorporated |
|
| in
Pakistan under the Companies Ordinance, 1984. Interbank is licensed to carry
out all |
|
| investment
finance activities described under SRO 585(1 )/87 dated July 13, 1987, issued
by |
|
| the
Ministry of Finance. Its shares are quoted on the Karachi and Lahore Stock
Exchanges. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
| The
accounts are prepared under the historical cost convention. |
|
|
| 2.2 Taxation |
|
| Provision
for current taxation is based on taxable income at the current rate after
taking |
|
| into
account applicable tax credits, rebates and exemptions. |
|
|
|
|
| Provision
for deferred taxation is made on all material timing differences expected to |
|
| reverse
in the foreseeable future, using the liability method. Also see note 18. |
|
|
| 2.3
Tangible fixed assets |
|
| These
are stated at cost less accumulated depreciation. Depreciation charge is
based |
|
| on
the straight line method whereby the cost of an asset is written off over its
estimated |
|
| useful
life without taking into account any residual value. Maintenance and normal |
|
| repairs
are charged to income as and when incurred. Major renewals and improvements |
|
| are
capitalised and the assets so replaced, if any, are retired. Gains and losses
on |
|
| disposal
of fixed assets are taken to Profit and Loss account. |
|
|
| 2.4
Investments |
|
| Long
term investments are valued at cost. |
|
|
|
|
| Short
term government securities are carried at their realisable values. |
|
