| Arif Habib Securities Limited |
|
|
|
|
|
|
|
| Annual
Report 2001 |
|
|
|
|
| TABLE
OF CONTENTS |
|
|
|
| Company
Information |
|
| Six
years at a glance |
|
| Notice
of AGM |
|
| Directors'
Report |
|
| Auditors'
Report to the Members |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Cash
Flow Statement |
|
| Statement
of Changes in Equity |
|
| Notes
to the Financial Statements |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| Board
of Directors |
|
| Mr.
Arif Habib |
|
Chairman and Chief
Executive |
|
| Mr.
Majeed Dawood |
|
| Mr.
Muhammad Yousuf |
|
| Mr.
Abdul Majid M Siddiq |
|
| Mr.
Muhammad Rafiq Jangda |
|
| Mr.
Abdus Samad A. Habib |
|
| Mrs.
Zetun Arif |
|
|
| Company
Secretary |
|
| Mr.
Abdus Samad A. Habib |
|
| (MBA) |
|
|
| Auditors |
|
| M/s
Rahim Iqbal Rafiq and Company |
|
| Chartered
Accountants |
|
|
| Legal
Advisors |
|
| M/s
Bawany & Partners |
|
|
| Bankers |
|
| Muslim
Commercial Bank Ltd. |
|
| Habib
Bank Ltd. |
|
| Metropolitan
t3ank Limited |
|
|
| Registered
Office |
|
| 60-63,
Karachi Stock Exchange Building, |
|
| Stock
Exchange Road, Karachi. |
|
| Phones:
2415213 - 15 |
|
| Fax
No: 2429653 - 2416072 |
|
|
|
| SIX
YEARS AT A GLANCE |
|
|
| Financial
Highlights |
|
| Rs
in millions |
|
| Income
statement |
FY01 |
FY00 |
FY99 |
FY98 |
FY97 |
FY96 |
|
| Revenues |
|
180.11 |
268.48 |
61.82 |
31.56 |
15.84 |
0.44 |
|
| Expenses |
|
38.81 |
41.09 |
15.22 |
6.22 |
2.18 |
1.11 |
|
| Profit
before tax |
140.87 |
230.69 |
54.65 |
15.93 |
15.18 |
6.63 |
|
| Profit
after tax |
132.56 |
228.47 |
53.08 |
14.89 |
14.93 |
6.63 |
|
|
| Rs
in millions |
|
| Balance
sheet |
FY01 |
FY00 |
FY99 |
FY98 |
FY97 |
FY96 |
|
| Paid
up capital |
50.00 |
50.00 |
50.00 |
40.00 |
40.00 |
20.00 |
|
| Shareholders
equity |
494.65 |
387.09 |
163.63 |
72.04 |
58.35 |
24.63 |
|
| Liabilities |
|
571.47 |
113.97 |
105.32 |
1.49 |
0.84 |
0.56 |
|
| Total assets |
|
1091.12 |
501.06 |
268.94 |
73.54 |
57.60 |
25.18 |
|
|
| Ratios |
|
FY01 |
FY00 |
FY99 |
FY98 |
FY97 |
FY96 |
|
| Earning
per share (Rs.) |
26.51 |
45.69 |
10.62 |
3.72 |
3.73 |
3.31 |
|
| Break-up
value (Rs.) |
98.93 |
77.42 |
32.73 |
18.01 |
14.59 |
12.31 |
|
| Return
on Equity (%) |
30.07 |
82.97 |
45.05 |
22.84 |
35.98 |
44.88 |
|
|
| Payout |
|
| Cash
dividend |
50% |
10% |
3% |
3% |
3% |
10% |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the Seventh Annual General Meeting of Arif Habib
Securities Limited will |
|
| be
held at 11:00 a.m on 29 September 2001 at 7th Floor A1-Sehat Centre, Regent
Plaza Hotel, Rafiqui |
|
| Shaheed
Road/Shahrah-e-Faisal, Karachi, to transact the following business: |
|
|
| 1.
To confirm the minutes of the Sixth Annual General Meeting held on Friday 30
December 2000. |
|
|
| 2.
To receive and adopt the audited accounts of the Company for the year ended
30 June 2001 |
|
| together
with the Directors' and Auditors' Reports thereon. |
|
|
| 3.
To approve 50% cash dividend as recommended by the Board of Directors. |
|
|
| 4.
To appoint Auditors for the year 2001 and to fix their remuneration. Rahim
Iqbal Rafiq & Company, |
|
| Chartered
Accountants, being eligible offer themselves for reappointment. |
|
|
| 5.
To elect Directors of the Company in accordance with Section 178 (1) of the
Companies Ordinance, |
|
| 1984.
The number of Directors to be elected has been fixed at seven by the Board oŁ
Directors. |
|
|
| Pursuant
to section 178 (2) (b), (3) of the Companies Ordinance, 1984, name of the
retiring |
|
| Directors
are as under and are eligible to file their nomination for re-election as
Directors: |
|
|
| Mr.
Arif Habib |
|
| Mr.
Majid Dawood |
|
| Mr.
Muhammad Yousuf |
|
| Mr.
Abdul Majeed M. Siddique |
|
| Mr.
Muhammad Rafiq Jangda |
|
| Mr.
Abdus Samad A. Habib |
|
| Mrs.
Zetun Arif |
|
|
| 4.
To consider any other business of the Company with the permission oŁ the
chair. |
|
|
|
Abdus Samad A. Habib |
|
|
Company Secretary |
|
| Notes: |
|
|
| 1.
Any person who seeks to contest to the office of director shall, whether he
is a retiring director |
|
| or
otherwise, file with the company, not later than fourteen days before the
date of meeting, a |
|
| notice
of his/her intention to offer himself/herself for election as a director. |
|
|
| 2.
A member entitled to attend and vote at this meeting is entitled to appoint a
proxy to attend and |
|
| vote
on his/her behalf. A proxy must be a member of the Company. Proxy forms in
order to be |
|
| effective
must be received at the Registered Office of the Company located at 60-63
Karachi |
|
| Stock
Exchange Building, Stock Exchange Road, Karachi duly stamped and signed not
less than |
|
| 48
hours before the meeting. |
|
|
| 3.
CDC shareholders desiring to attend the meeting are requested to bring their
original National |
|
| Identity
Card, Account and Participant's ID number and their account number at the
time of |
|
| attending
the Annual General Meeting in order to facilitate identification of the
respective |
|
| shareholders. |
|
|
| 4.
The share transfer books of the Company will remain closed from Friday 21
September 2001 to |
|
| Saturday
29 September 2001 (both days inclusive). The Shares Department of the Company
is |
|
| located
at 60-63 Karachi Stock Exchange Building, Stock Exchange Road, Karachi. |
|
|
| 5.
Members are requested to promptly communicate to the Company any change in
their address. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| Dear
Shareholders, |
|
| On
behalf of' the Board of Directors, it is my pleasure to present the 7th
annual report of the Company |
|
| for
the year ended on 30th June 2001 together with audited accounts of the
Company and auditors' |
|
| report
thereon. |
|
|
| The
Company has now become a listed entity with effect from the year under
review. Twenty five |
|
| percent
of the paid up capital was offered to general public by an existing
shareholder at a premium |
|
| of
Rs. 70 per share for a total amount of Rs. 100 Million. Subscriptions for Rs.
434,640,000 were |
|
| received,
which amounted to an over-subscription of 4.3 times of the offer. |
|
|
| Being
a committed responsible corporate citizen, the Company has announced its
audited financial |
|
| results
within one month of the close of its financial year and proposes to hold its
Annual General |
|
| Meeting
within three months of the financial year-end. |
|
|
| FINANCIAL
RESULTS |
|
| By
the grace of Allah, despite difficult market conditions during the year under
review, your Company |
|
| has
earned an after tax profit of Rs. 132,560,071 recording an earning per share
of Rs. 26.51. Last year's |
|
| earning
per share was Rs. 45.69 with an after tax profit of Rs. 228,466,044. The
Board of Directors is |
|
| pleased
to recommend a Cash dividend of 50% i.e. Rs. 5 per share for its
shareholders. |
|
|
| The
summary of financial results and its appropriations are as follow: |
|
|
Rupees |
|
| Profit
before taxation |
|
140,870,004 |
|
| Provision
for taxation |
|
8,309,933 |
|
|
---------- |
|
| Profit
after taxation |
|
132,560,071 |
|
| Unappropriated
profit brought forward |
|
307,091,417 |
|
|
---------- |
|
|
439,651,488 |
|
| APPROPRIATIONS |
|
|
|
| Transferred
to general reserve |
|
400,000,000 |
|
| Cash
dividend @ 50% (2000 @ 10%) |
|
25,000,000 |
|
|
---------- |
|
| Unappropriated
profit carried forward |
|
14,651,488 |
|
| Earning
per share- Basic and Diluted |
|
26.51 |
|
|
| MARKET
REVIEW |
|
| The
stock market remained under bearish spell during most part of the year under
review. The KSE- |
|
| 100
Index declined by 10.15% on yoy basis to 1,366 from 1,520.73. Average daily
turnover of shares |
|
| at
Karachi Stock Exchange has also declined by 56.10% from 184.59 million shares
to 118.25 million |
|
| shares.
This is first time during last ten years that KSE witnessed a negative growth
in daily turnover. |
|
| The
brokerage rates and carry over charges have also declined due to intense
competition. Fortunately, |
|
| dividend
distribution by the listed companies improved impressively. An amount of Rs.
29.61 billion |
|
| was
distributed as dividend by listed companies as compared to Rs.24.10 billion
in the previous year. |
|
| Your
Company benefited from these improved dividends and recorded a remarkable
growth in dividend |
|
| income
whereas capital gains and brokerage income were less that last year. |
|
|
| The
economic performance of the Country was mixed under the difficult global
environment due to oil |
|
| price
hike and signs of slowdown in developed economies. The Country faced a
drought like situation |
|
| affecting
agricultural production. Though budgeted targets of revenue collection and
exports were missed |
|
| yet,
a reasonable growth in these areas was achieved. The investment sentiment has
been very weak |
|
| mainly
because of the continuously declining trend in the value of the Pakistan
Rupee Viz. Vis US |
|
| Dollar.
During the year under review the Rupee depreciated by 23.13%, offering a
minimum return of |
|
| 27%
in rupee terms thus driving away most of the rupee liquidity to dollar
investments. This is probably |
|
| a
major reason that foreign portfolio investors are withdrawing from our
market. Even the resumption |
|
| of
the IMF programme and the resolution of the Hubco dispute could not create
any positive impact |
|
| on
investor confidence. |
|
|
|
| FUTURE
OUTLOOK |
|
| The
financial year 2001-02 has started on a very weak note. The KSE-100 Index has
already declined |
|
| by
8% during first 30 trading days of current financial year. The average daily
turnover is also on lower |
|
| side.
Business sentiment still is weak. The stock market is passing through a
transition phase from the |
|
| traditional
system of 5 days trading period to T+3 continuous net settlement system and
the introduction |
|
| of
futures trading. It will take some time for the market participants to adjust
themselves to the new |
|
| system
particularly in view of lack of co-ordination amongst the Regulators, Stock
Exchanges management |
|
| and
market participants for smooth implementation of these reforms. |
|
|
| Dividend
payout by listed Companies is likely to decline due to two adverse changes
brought in by the |
|
| government
through the last budget, firstly, the levy of tax on bonus shares and
secondly, the reduction |
|
| in
the bench mark for compulsory distribution of cash dividend to avoid tax on
reserves from 40% of |
|
| the
current year's profits to 50% of the paid up capital or 40% of profits
whichever is less. |
|
|
| Investors
would like to see the IMF approval of PRGF programme for Pakistan. Though the
government |
|
| has
resolved to support the market by injecting liquidity into Stock Market
through government financial |
|
| institutions
and has announced a number of development projects to kick start the economy
and industry |
|
| but
business confidence is likely to return only if the value of Pakistan Rupee
stabilises. |
|
|
| Your
Company has acquired 40% shares of Arif Habib Investment Management Ltd.
(AHIM), an |
|
| associated
company for Rs. 16 Million out of an approved amount of Rs. 50 Million. AHIM
is in process |
|
| of
launching open-end mutual funds and is unlikely to give any return to its
sponsors for the next couple |
|
| of
years as due to introduction of new IAS 38 recommending whole of
pre-operating expenses to be |
|
| charged
to profit and loss account. |
|
|
| In
view of factors mentioned above, the current year looks difficult. The
management seeks Allah's |
|
| blessings
and pledges to work hard to achieve reasonable returns for the Company and
its shareholders. |
|
|
| Auditors |
|
| The
retiring auditors M/s. Rahim, Iqbal, Rafiq & Company, Chartered
Accountants, have offered |
|
| themselves
for reappointment. The Board recommends their reappointment. A resolution
proposing the |
|
| re-appointment
of Rahim, Iqbal, Rafiq & Company as auditor of the Company will be
submitted to the |
|
| forthcoming
Annual General Meeting. |
|
|
| Pattern
of Shareholding |
|
| The
pattern of Shareholding as required by the Companies Ordinance, 1984 is
enclosed. |
|
|
| Acknowledgment |
|
| We
thank our clients for their continuing confidence and patronage. We are
grateful to our shareholders |
|
| for
their trust reposed in us particularly to all those who subscribed to our
public offer. We record our |
|
| gratitude
to the Securities & Exchange Commission of Pakistan and the management of
Karachi, Lahore |
|
| and
Islamabad Stock Exchanges for their support and guidance. We acknowledge and
appreciate hard |
|
| work
put in by the employees of the Company during the year. |
|
|
|
On behalf of the Board of Directors |
|
|
|
|
| Karachi |
|
ARIF HABIB |
|
| August
15,2001 |
|
Chairman & Chief Executive |
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of ARIF HABIB SECURITIES LIMITED as at
June 30, |
|
| 2001;
profit and loss account, statement of changes in financial position (cash
flow statement) and |
|
| statement
of changes in equity 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. |
|
|
| It
is the responsibility of the Company's management to establish and maintain a
system of internal |
|
| control,
and prepare and present the above said statements in conformity with the
approved accounting |
|
| standard
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
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 accounting policies and significant estimates made by
management, as well as, |
|
| evaluating
the overall 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 accounts have been kept by the Company as
required by the |
|
| Companies
Ordinance, 1984; |
|
|
| b)
in our opinion - |
|
|
| i)
the balance sheet 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 the 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, investment 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) and statement of changes in equity 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 manner so required and respectively
give a |
|
| true
and fair view of the state of the Company's affairs as at June 30, 2001: and |
|
|
| d)
in our opinion, Zakat deductible under the Zakat and Ushr Ordinance, 1980,
was deducted by the |
|
| Company
and deposited in Central Zakat Fund established under section 7 of that
ordinance. |
|
|
| Karachi · |
|
RAHIM IQBAL RAFIQ & COMPANY |
|
| Dated
· 30 July 2001 |
|
Chartered Accountants |
|
|
|
|
| BALANCE
SHEET AS AT 30 JUNE 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| SHARE
CAPITAL AND RESERVES |
|
| Authorised
Capital |
|
| 25,000,000
Ordinary shares of |
|
| Rs. 10/- each |
|
250,000,000 |
250,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
| 5,000,000
Ordinary shares of Rs. 10/- each |
3 |
50,000,000 |
50,000,000 |
|
| Share
premium reserve |
|
|
30,000,000 |
30,000,000 |
|
| General
reserve |
|
|
400,000,000 |
-- |
|
| Unappropriated
profit |
|
|
14,651,488 |
307,091,417 |
|
|
|
---------- |
---------- |
|
|
|
494,651,488 |
387,091,417 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
| Short
term running finance |
|
4 |
557,789,690 |
57,307,352 |
|
| Due
to Director-interest free |
|
|
-- |
39,610,312 |
|
| Creditors,
accrued & other liabilities |
|
5 |
6,455,043 |
12,330,000 |
|
| Taxation |
|
6 |
7,220,529 |
2,225,133 |
|
| Proposed
dividend |
|
|
25,000,000 |
2,500,000 |
|
|
|
---------- |
---------- |
|
|
|
596,465,262 |
113,972,797 |
|
|
|
|
|
| COMMITMENTS |
|
7 |
---------- |
---------- |
|
|
1,091,116,750 |
501,064,214 |
|
|
========== |
========== |
|
|
| OPERATING
FIXED ASSETS |
|
8 |
3,213,284 |
3,218,297 |
|
|
| STOCK
EXCHANGE - MEMBERSHIPS |
|
| AND
LICENCES |
|
9 |
48,000,000 |
40,000,000 |
|
|
| INVESTMENT
IN ASSOCIATED |
|
|
| UNDERTAKING |
|
10 |
16,000,000 |
-- |
|
|
|
|
|
| LONG
TERM DEPOSITS |
|
11 |
740,000 |
1,178,000 |
|
|
| CURRENT
ASSETS |
|
| Investment
in marketable securities |
|
12 |
386,479,629 |
293,630,975 |
|
| Trade debts |
|
13 |
9,401,516 |
8,964,409 |
|
| Sale
proceeds receivables |
|
14 |
605,125,060 |
100,188,636 |
|
| Advances,
deposits, prepayments & |
|
|
|
| other
receivables |
|
15 |
6,073,773 |
8,176,697 |
|
|
|
|
| Cash
& bank balances |
|
16 |
16,083,488 |
45,707,200 |
|
|
|
---------- |
---------- |
|
|
1,023,163,466 |
456,667,917 |
|
|
---------- |
---------- |
|
|
1,091,116,750 |
501,064,214 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
|
Arif Habib |
|
Rafiq Jangda |
|
|
Chief Executive |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30 JUNE 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| Operating
revenue |
|
17 |
121,070,563 |
50,510,015 |
|
|
| Operating
expenses |
|
18 |
13,022,501 |
15,490,232 |
|
| Financial
charges |
|
19 |
25,632,390 |
25,600,020 |
|
|
|
---------- |
---------- |
|
|
(38,654,891 ) |
(41,090,252) |
|
|
---------- |
---------- |
|
| Operating
profit |
|
82,415,672 |
9,419,763 |
|
|
59,039,411 |
217,630,279 |
|
| Capital
gain on investment |
|
99 |
339,442 |
|
| Other
Income |
|
| Other
Charges |
|
20 |
(158,693) |
-- |
|
| (Provision)/Reversal
for diminution |
|
| in
value of investment |
|
(426,485) |
3,297,925 |
|
|
---------- |
---------- |
|
|
58,454,332 |
221,267,646 |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
140,870,004 |
230,687,409 |
|
|
| Provision
for taxation |
|
(5,800,000) |
(2,225,133) |
|
| Current |
|
(2,509,933) |
3,768 |
|
|
---------- |
---------- |
|
| Prior |
|
(8,309,933) |
(2,221,365) |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
132,560,071 |
228,466,044 |
|
| Un-appropriated
profit brought forward |
|
307,091,417 |
83,625,373 |
|
|
---------- |
---------- |
|
|
439,651,488 |
312,091,417 |
|
|
| APPROPRIATIONS |
|
| Transferred
to general reserve |
|
(400,000,000) |
-- |
|
|
-- |
(2,500,000) |
|
| Interim
dividend (2000: @ 5%) |
|
(25,000,000) |
(2,500,000) |
|
|
---------- |
---------- |
|
| Final
dividend @ 50% (2000: 5%) |
|
(425,000,000) |
(5,000,000) |
|
|
---------- |
---------- |
|
| Un-appropriated
profit carried forward |
|
14,651,488 |
307,091,417 |
|
|
========== |
========== |
|
| Earnings
per share-Basic and Diluted |
|
23 |
26.51 |
45.69 |
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the annexed notes. |
|
|
|
Arif Habib |
|
Rafiq Jangda |
|
|
Chief Executive |
|
Director |
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED 30 JUNE 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
140,870,004 |
230,687,409 |
|
| Adjustment
for : |
|
|
|
| Depreciation |
|
808,510 |
856,739 |
|
| Amortization
of deferred cost |
|
-- |
170,267 |
|
| Loss
on sale of fixed assets |
|
158,693 |
-- |
|
| Financial
Charges |
|
25,632,390 |
8,451,585 |
|
| Dividend
Income |
|
(88,720,555) |
(8,659,007) |
|
|
----------- |
----------- |
|
|
(62,120,962) |
819,584 |
|
|
----------- |
----------- |
|
| Operating
Profit before working capital changes |
|
78,749,042 |
231,506,993 |
|
|
| Changes
in working capital |
|
| (Increase)/Decrease
in current assets |
|
| Advances,
deposits and other |
|
| receivables |
|
4,737,040 |
(4,997,728) |
|
| Trade debts |
|
(437,107) |
(6,840,280) |
|
| Increase/(Decrease)
in current liabilities |
|
|
|
| Due
to director |
|
(39,610,312) |
-- |
|
| Creditors,accrued
and other liabilities |
|
(5,874,957) |
11,875,921 |
|
|
----------- |
----------- |
|
|
(41,185,336) |
37,913 |
|
|
----------- |
----------- |
|
| Cash
(used)/generated in operating activities |
|
37,563,706 |
231,544,906 |
|
| Income
tax paid |
|
(4,086,617) |
(3,485,371 ) |
|
| Financial
Charges paid |
|
(25,632,390) |
(8,451,585) |
|
|
----------- |
----------- |
|
| Net
cash generated from operating activities |
|
7,844,699 |
219,607,950 |
|
|
----------- |
----------- |
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditure |
|
(8,974,690) |
(489,935) |
|
| Proceeds
from sale of fixed assets |
|
12,500 |
-- |
|
| Dividend
received |
|
86,858,519 |
11,785,632 |
|
| Investment
in associated undertaking |
