| Altowfeek Investment Bank Limited |
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| Annual
Report 2000 |
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| CONTENTS |
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| Corporate
Information |
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| Notice
of Meeting |
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| Chairman's
Report |
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| Auditors'
Report to the Members |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Sources and Application of Funds |
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| (Cash
Flow Statement) |
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| Notes
to the Accounts |
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| Pattern
of Share holding |
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| CORPORATE
INFORMATION |
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| CHAIRMAN |
|
Mr. Khalid Mahmood
Bhaimia |
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|
- Nominee
AlBaraka Investment & Development Co, Jeddah |
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| VICE
CHAIRMAN |
Mr. Osman A. Suleiman |
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- Nominee
AlBaraka Investment & Development Co, Jeddah |
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| CHIEF
EXECUTIVE |
Mr. Khalid Majid |
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- Nominee
AlBaraka Investment & Development Co, Jeddah |
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| DIRECTORS |
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Mr. Yelcin Oner |
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- Nominee
AlBaraka Investment & Development Co, Jeddah |
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Mr. Iftikhar Soomro |
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- Nominee
AlBaraka Investment & Development Co, Jeddah |
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Mr. Firasat Ali |
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- Nominee National
Investment Trust |
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Dr. Omar Zuhair Hafiz |
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- Nominee Islamic
Development Bank, Jeddah |
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| COMPANY
SECRETARY |
Mr. Tariq Aleem |
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| AUDITORS |
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Sidat Hyder Qamar &
Co, Chartered Accountants. |
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| SHARE
REGISTRAR OFFICE |
63-Sharah-e-Quaid-e-Azam |
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|
Lahore. |
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| REGISTERED
OFFICE |
63-Shahrah-e-Quaid-e-Azam,
Lahore |
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| LEGAL
ADVISORS |
Salim & Baig
Advocates |
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| BRANCHES |
|
-63-
Shahrah-e-Quaid-e-Azam, Lahore. |
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|
-Lakhani Centre, I.I.
Chundrigar Road, Karachi. |
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| NOTICE
OF THE ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the 10th Annual General Meeting of AITowfeek
Investment Bank Limited will be |
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| held
at Avari Hotel, Shahrah-e-Quaid-e-Azam, Lahore on Monday 8th January, 2001 at
10.00 a.m. to transact |
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| the
following business: |
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| ORDINARY
BUSINESS |
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| 1)
To confirm the minutes of the last Extra-ordinary General Meeting of the
company held on June 05, 2000. |
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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, 2000 |
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| together
with the Directors' and Auditors' Reports thereon. |
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| 3)
To appoint the auditors for the next term and to fix their remuneration. The
present auditors M/s. SIDAT |
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| HYDER
QAMAR & CO. Chartered Accountants, retire and being eligible, offer
themselves for |
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| 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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| Lahore |
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|
TARIQ ALEEM |
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| December
17, 2000 |
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COMPANY SECRETARY |
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| NOTES |
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| (i)
A member entitled to attend and vote at this meeting is entitled to appoint a
proxy to attend the meeting |
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| and
vote for his / her. Form of Proxy is enclosed with the annual report. Proxies
in order to be effective, |
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| must
be received at the registered office of the Company, at least 48 hours before
the time of holding |
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| the meeting. |
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| (ii)
Account holders and sub-account holders, holding book entry securities of the
.Company in CDS of |
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| Central
Depository Co. of Pakistan Ltd., who wish to attend the Annual General
Meeting are requested |
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| to
please bring original National Identity Card with copy thereof duly attested
by their Bankers for |
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| identification
purpose. |
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| (iii)
The share transfer books of the Company will remain closed from January 01,
2001 to January 08 |
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| 2001
both days inclusive. |
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| (iv)
The members are requested to immediately notify the change in address, if
any. |
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| CHAIRMAN'S
REPORT |
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| In
the name of Allah, the most Gracious, the most Merciful |
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| Dear
Shareholders, |
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| I
am pleased to present our results for the fiscal year ending 30 June 2000. |
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| The
fiscal year was full of changes in the country with change of Government in
October 1999. However, there |
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| has
not been much positive development in the overall revival of the economy.
Foreign investment has |
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| evaporated,
IMF discussions are going on and on and HUBCO issue remains unresolved. GDP
grew by 4.8% |
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| but
mostly on back of agriculture sector with good cotton, wheat and rice crops
but poor sugar cane crop. On |
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| the
other hand-Rupee-$ volatility has increased with Rupee sliding below Rs. 60,
stock markets reflect wide |
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| swings
including a major crash, and Rupee rates after being brought down are rising
again. |
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| In
this volatile environment your Bank has done rather well showing: |
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| *
Operating profits of Rs. 29.435 million. |
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| *
Post tax profits of Rs. 27.202 million. |
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| *
Shareholders equity has gone up to Rs. 163 million. |
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| *
Bad debt recovery of Rs. 128 million in cash. |
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| *
No new credit provision during the year - reflecting adequacy of provision
made in this part. |
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| *
Capital Adequacy ratio of 13.9%. |
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| *
Administrative expenses are down by 38% as compared to previous fiscal year. |
|
| *
No. of employees are down to 28, from 32 of previous year. |
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| *
Managed to get a refund of 44 million from CBR - which was never due to the
Tax Department. |
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| *
Disinvested from Paramount Leasing Company. |
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| During
the year your Bank's Board had 2 Board changes: |
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|
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| *
Dr. Omar Zohair Hafiz, Head of Islamic Bank, Islamic Development Bank, Jeddah
joined |
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| replacing
Omar Abdullah Sejieny. Dr. Hafiz is no stranger since he was a Board Member
before. |
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|
|
|
| *
We lost Nasim Baig, as a result of his move from NIT. He was on our Board for |
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| 2
years. Mr. Firasat All has been appointed by NIT. |
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| On
your behalf we thank the departing Directors for their contribution during a
very difficult period for your Bank |
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| and
now look forward to the two new Directors to provide their insight into how
to go forward in this new |
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| Millennium. |
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| We
are not so optimistic about coming year. Current conditions do not provide a
basis for optimism. Bank's |
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| ability
to go after defaulting customers has not changed. The legal process remains
slow and very expensive. |
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| Without
clear political will to change the current legal / regulatory environment
banks will not be able to fully |
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| enforce
their rights against difficult commercial customers in quick time. |
|
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| Furthermore,
we see a very narrow niche for investment banking especially Islamic Banking.
we would not like |
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| to
extrapolate last year's results to current year since funding costs have
already gone up. this will obviously |
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| affect
your Bank's results in coming fiscal year. Moreover, credit recovery remains
an unknown due to legal |
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| process
and stock markets are volatile. |
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| Thus,
our strategy remains defensive for the next fiscal year. We would continue to
operate cautiously with |
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| focused
attention. The asset portfolio would continue to be structured to maintain
the investment risk at a |
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| manageable
level. Special emphasis would be placed on recovery of the portfolio. Prudent
Murabaha |
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| financing
and earning from the non-funded activities. Our ability to keep cost of funds
low is dictated by |
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| market forces. |
|
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| We
thank the staff for their continuing dedication. We also thank our customers
for continuing to direct their |
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| business
to our Bank - especially when good customers have a range of choices. |
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|
For and on behalf of the Board of Directors |
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|
Khalid Mohamood Bhaimia |
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|
Chairman |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed balance sheet of ALTOWFEEK
INVESTMENT BANK LIMITED as at 30 |
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| June
2000 and the related profit and loss account and statement of sources and
application of funds (cash |
|
| flow
statement), 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. |
|
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| It
is the responsibility of the Company's management to establish and maintain a
system of internal control |
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| and
prepare and present the above said statements in conformity with the approved
accounting standards |
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| and
the requirements of the Companies Ordinance, 1984. Our responsibility is to
express an opinion on |
|
| these
statements based on our audit. |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These standards |
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| require
that we plan and perform the audit to obtain reasonable assurance about
whether the above said |
|
| statements
are free of any material misstatement. An audit includes examining on a test
basis, evidence |
|
| supporting
the amounts and disclosures in the above said statements. An audit also
includes assessing the |
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| accounting
polices and significant estimates made by management, as well as, evaluating
the overall |
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| presentation
of the above said statements. We believe that our audit provides a reasonable
basis for our |
|
| opinion
and, after due verification, we report that: |
|
|
| a)
In our opinion, proper books of account have been kept by the Company as
required by the Companies |
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| Ordinance,
1984; |
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|
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| b)
in our opinion: |
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|
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| i)
the balance sheet and profit and loss account together with the notes thereon
have been drawn up |
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| in
conformity with the Companies Ordinance, 1984, and are in agreement with the
books of account |
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| and
are further in accordance with accounting policies consistently applied; |
|
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| ii)
the expenditure incurred during the year was for the purpose of the Company's
business; and |
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| iii)
the business conducted, investments made and the expenditure incurred during
the year were in |
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| 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 |
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| balance
sheet, profit and loss account and the statement of sources and application
of funds (cash flow |
|
| statement),
together with the notes forming part thereof conform with approved accounting
standards as |
|
| applicable
in Pakistan, and, give the information required by the Companies Ordinance,
1984 in the |
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| manner
so required and respectively give a true and fair view of the state of the
Company's affairs as at |
|
| 30
June, 2000 and of the profit and its changes in sources and application of
funds (cash flow), for the |
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| year
then ended; and |
|
|
| d)
in our opinion, Zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 (XVIII of 1980), |
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| was
deducted by the Company and deposited in the Central Zakat Fund established
under section 7 of |
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| that Ordinance. |
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| LAHORE: |
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|
SIDAT HYDER, QAMAR & CO. |
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| Dated:
084 2-2000 |
|
Chartered Accountants |
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| BALANCE
SHEET AS AT JUNE 30, 2000 |
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|
Rs. in '000' |
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|
|
Note |
2000 |
1999 |
|
| 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: |
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| 31,000,000
ordinary shares of Rs. 10/- each |
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| fully
paid up in cash |
|
310,000 |
310,000 |
|
|
|
|
| RESERVES |
|
|
|
| Statutory
reserve |
|
3 |
31,271 |
25,826 |
|
| Accumulated
Loss |
|
4 |
(177,557) |
(199,314) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(146,286) |
(173,488) |
|
|
|
|
------------------ |
------------------ |
|
| SHAREHOLDERS'
EQUITY |
|
|
163,714 |
136,512 |
|
|
|
|
|
| CUSTOMER
DEPOSITS - Due after one year |
5 |
-- |
306 |
|
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Customer
deposits - Due within one year |
5 |
1,091,966 |
1,878,871 |
|
| Creditors,
accrued and other liabilities |
6 |
87,083 |
67,103 |
|
| Unclaimed
dividend |
|
|
231 |
231 |
|
| Provision
for taxation |
|
|
2,500 |
1,200 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,181,780 |
1,947,405 |
|
| COMMITMENTS
AND CONTINGENT LIABILITIES |
7 |
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
1,345,494 |
2,084,223 |
|
|
|
========== |
========== |
|
| ASSETS |
|
|
| CURRENT
ASSETS |
|
| Cash
and bank balances |
|
8 |
217,477 |
243,014 |
|
|
| Advances,
prepayments |
|
|
|
| and
other receivables |
|
9 |
114,463 |
166,622 |
|
|
|
|
|
| Investments |
|
10 |
97,723 |
183,109 |
|
| Morabaha
finance |
|
11 |
583,559 |
1,257,391 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,013,222 |
1,850,136 |
|
| LONG
TERM MORABAHA FINANCE |
11 |
111,462 |
8,818 |
|
| LONG
TERM INVESTMENTS |
|
12 |
171,895 |
176,895 |
|
|
|
| LONG
TERM ADVANCES AND SECURITY |
|
| DEPOSITS |
|
13 |
3,435 |
1,822 |
|
| DEFERRED
TAX ASSET |
|
|
39,028 |
39,365 |
|
| TANGIBLE
FIXED ASSETS |
|
14 |
6,452 |
7,187 |
|
|
------------------ |
------------------ |
|
|
|
1,345,494 |
2,084,223 |
|
|
========== |
========== |
|
|
|
|
| Auditors'
Report to the members is annexed hereto. |
|
| The
annexed notes from 1 to 25 form an integral part of these accounts. |
|
|
|
|
|
|
|
CHAIRMAN / DIRECTOR |
|
CHIEF EXECUTIVE |
|
|
|
|
|
|
|
| PROFIT
,AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
Rs. in '000' |
|
|
|
Note |
2000 |
1999 |
|
|
| INCOME |
|
| Profit
on morabaha finance |
|
173,611 |
176,379 |
|
| Profit
on bank deposits |
|
8,609 |
26,509 |
|
| Non
fund based income |
|
1,454 |
2,641 |
|
| Dividend
income |
|
20,902 |
27,293 |
|
| Profit
from investments |
|
15,090 |
25,351 |
|
| Profit
on disposal of fixed assets |
|
93 |
1,572 |
|
| Other Income |
|
|
52 |
2,871 |
|
|
|
------------------ |
------------------ |
|
|
|
219,811 |
262,616 |
|
|
| EXPENDITURE |
|
| Cost of deposits |
|
|
|
162,982 |
298,710 |
|
| Administrative
& Operating expenses |
16 |
27,394 |
44,046 |
|
|
|
|
------------------ |
------------------ |
|
|
|
190,376 |
342,756 |
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT/(LOSS) BEFORE PROVISIONS |
29,435 |
(80,140) |
|
|
|
|
|
| PROVISIONS |
|
| Doubtful
morabaha financing |
|
|
1,022 |
(35,556) |
|
| Doubtful
receivables |
|
(418) |
(5,417) |
|
| Diminution
in the value of long term |
|
-- |
(1,780) |
|
| investments |
|
------------------ |
------------------ |
|
|
|
604 |
(42,753) |
|
|
|
|
------------------ |
------------------ |
|
|
| PROFIT/(LOSS)
BEFORE TAXATION |
|
30,039 |
(122,893) |
|
|
|
|
| TAXATION |
|
| Current tax |
|
(2,500) |
(3,900) |
|
| Deferred tax |
|
(337) |
7,978 |
|
|
|
------------------ |
------------------ |
|
|
|
(2,837) |
4,078 |
|
|
|
------------------ |
------------------ |
|
| PROFIT/(LOSS)
FOR THE YEAR AFTER TAXATION |
27,202 |
(118,815) |
|
|
|
|
| APPROPRIATIONS: |
|
| TRANSFERRED
TO STATUTORY RESERVE |
|
5,445 |
-- |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT/(LOSS)
AFTER APPROPRIATIONS |
|
21,757 |
(118,815) |
|
| ACCUMULATED
LOSS BROUGHT FORWARD |
|
(199,314) |
(80,499) |
|
|
|
|
------------------ |
------------------ |
|
| ACCUMULATED
LOSS CARRIED TO BALANCE SHEET |
(177,557) |
(199,314) |
|
|
|
|
========== |
========== |
|
| Earnings
per share - Basic and diluted |
22 |
0.88 |
(3.83) |
|
|
|
|
|
========== |
========== |
|
|
| The
annexed notes from 1 to 25 form an integral part of these accounts. |
|
|
|
CHAIRMAN / DIRECTOR |
|
|
CHIEF EXECUTIVE |
|
|
|
| STATEMENT
OF SOURCES AND APPLICATION OF FUNDS (CASH FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
Rs. in '000' |
|
|
|
2000 |
1999 |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit/(Loss)
before taxation |
|
30,039 |
(122,893) |
|
|
|
| Adjustments
for: |
|
| Gain
on investments |
|
(15,090) |
(25,351) |
|
| Gain
on disposal of fixed assets |
|
(93) |
(1,572) |
|
| Depreciation |
|
2,244 |
2,025 |
|
| Provisions |
|
(604) |
42,753 |
|
|
|
------------------ |
------------------ |
|
|
|
(13,543) |
17,855 |
|
| OPERATING
PROFIT/(LOSS) BEFORE CHANGES IN |
|
| OPERATING
ASSETS |
|
16,496 |
(105,038) |
|
| DECREASE
IN OPERATING ASSETS |
|
|
|
| Advances,
prepayments and other receivables |
|
7,611 |
94,467 |
|
| Morabaha
finance |
|
572,210 |
348,025 |
|
|
| INCREASE/(DECREASE)
IN OPERATING LIABILITIES |
|
| Customer
deposits |
|
|
(787,211) |
(669,290) |
|
| Creditors,
accrued and other liabilities |
|
19,980 |
(102,783) |
|
|
------------------ |
------------------ |
|
| NET
CASH FLOWS FROM OPERATING ACTIVITIES |
|
| BEFORE
INCOME TAX |
|
|
(170,914) |
(434,619) |
|
|
|
|
|
|
| Income
Tax refund/(paid) |
|
|
42,929 |
(37,176) |
|
|
|
|
------------------ |
------------------ |
|
| NET
CASH FLOWS FROM OPERATING ACTIVITIES |
(127,985) |
(471,795) |
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Proceeds
from sale of short term investments |
|
105,477 |
642,782 |
|
| Advances
and security deposits |
|
|
(1,613) |
6,375 |
|
| Purchase
of fixed assets |
|
|
(2,286) |
(637) |
|
| Sale
proceeds of fixed assets |
|
|
870 |
2,446 |
|
|
|
|
------------------ |
------------------ |
|
| NET
CASH FLOWS FROM INVESTING ACTIVITIES |
102,448 |
650,966 |
|
|
|
------------------ |
------------------ |
|
| NET
INCREASE/(DECREASE) IN CASH AND CASH |
|
| EQUIVALENTS |
|
|
(25,537) |
179,171 |
|
|
|
|
|
|
| CASH
AND CASH EQUIVALENTS AT THE BEGINNING |
|
|
| OF THE YEAR |
|
|
243,014 |
63,843 |
|
|
|
|
------------------ |
------------------ |
|
| CASH
AND CASH EQUIVALENTS AT END OF YEAR |
217,477 |
243,014 |
|
|
|
|
========== |
========== |
|
|
|
CHAIRMAN/DIRECTOR |
|
CHIEF EXECUTIVE |
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
| 1.
LEGAL STATUS AND PRINCIPAL ACTIVITIES |
|
| Altowfeek
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 |
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| 13
July 1987 issued by the Ministry of Finance and further in accordance with
the principles of |
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| Islamic Banking. |
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| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
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| 2.1
Accounting Convention |
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| These
accounts have been prepared under the historical cost convention modified by
adjustment |
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| of
exchange differences as referred to in note no. 2.6. |
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| 2.2
Tangible Fixed Assets and Depreciation |
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| Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
charged to income |
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| using
the straight line method over the expected useful lives of the assets. |
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| A
half year's depreciation is charged on additions made in the second half of
the year and |
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| deletions
in the first half, while a full year's depreciation is charged on assets
deleted during the |
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| second
half and additions during the first half of the year. |
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| Normal
repairs and maintenance and gains or losses on disposal of fixed assets are
taken to the |
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| Profit
and Loss Account. Major renewals and improvements are capitalised. |
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| 2.3 Investments |
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| Long
term quoted and unquoted investments are stated at cost. Provision for
diminution in value |
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| is
made only if considered other than temporary. |
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| Short
term quoted investments are carried at market value. |
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| Quoted
investments purchased under resale arrangements are included under short term |
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| investments
until resale. Profit and losses are recognised on a time proportion basis. |
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| 2.4
Provision for taxation |
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| Current |
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| Provision
for current taxation is based upon taxable income at current rates of
taxation and |
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| applicable
rules and regulations currently in force. |
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| Deferred. |
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| The
company accounts for deferred taxation using the liability method on major
timing differences |
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| 2.5
Revenue Recognition |
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| Return
on finance provided and placements with banks and financial institutions is
recognised |
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| on
a time proportion basis. |
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| Dividend
income is recognised if declared on or before the balance sheet date. |
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| Fees
and commissions are taken to income on an actual receipts basis except
guarantee |
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| commission
received in advance which is taken to income on a straight line basis over
the |
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| period
of guarantee. |
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| 2.6
Foreign Currencies Translation |
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| Assets
and liabilities in foreign currencies are translated into Pak rupees at
exchange rates |
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