| First Capital Securities Limited |
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| Annual
Report 1998 |
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| CONTENTS |
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| Financial
Statements of First Capital Securities Corporation Limited |
|
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| *
Company Information |
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| *
Notice of Annual General Meeting |
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| *
Chairmans' Review |
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| *
Directors' Report |
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| *
Auditors' Report |
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| *
Annual Accounts |
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| *
Pattern of Shareholding |
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| *
Statement under Section 237 of Companies Ordinance 1984 |
|
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| Financial
Statements of First Capital Investments (Pvt.) Limited |
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| *
Directors' Report |
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| *
Auditors' Report |
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| *
Annual Accounts |
|
|
| Financial
Statements of WorldCALL Limited |
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| *
Directors' Report |
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| *
Auditors' Report |
|
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| *
Annual Accounts |
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| FINANCIAL
STATEMENTS |
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| FOR
THE YEAR ENDED |
|
| 30
JUNE 1998 |
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| COMPANY
INFORMATION |
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| Board
of Directors |
Mr. Salmaan Taseer |
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|
Chairman & CEO |
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|
Mr. Tim Kilpatrick |
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|
Mr. Mumtaz H. Syed |
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|
Mr. Mohsin Mehdi |
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|
Mr. Badar-ud-Din |
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|
Mr. Bashir A. Sheikh |
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|
Mr. Roger Sharp |
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|
Mr. Shaan Taseer |
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| Company
Secretary |
Mr. Mehtab Saeed Siddiqui |
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| Auditors |
|
Ford, Rhodes, Robson,
Morrow |
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|
Chartered Accountants |
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|
Lahore |
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| Legal
Advisor |
Chima & Ibrahim |
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|
Advocates |
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|
Lahore |
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| Bankers |
|
ANZ Grindlays Bank |
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|
Standard Chartered Bank |
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|
Muslim Commercial Bank
Limited |
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|
Crescent Investment Bank
Limited |
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| Shares
Department |
First Capital Securities
Corp. Ltd |
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|
Ground Floor, |
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|
Sh. Sultan Trust Building
No. 2 |
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|
Beaumont Road, |
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Karachi |
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| Registered
Office |
103 C-II Gulberg III |
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Lahore. |
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Tel.: (9242) 5757591-4 |
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Fax: (9242) 5757590 |
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UAN: (9242) 111-111-004 |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| Notice
is hereby given that 5th Annual General Meeting of First Capital Securities
Corporation Limited will |
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| be
held at 103-C/II Gulberg-III, Lahore, on Sunday February 14, 1999 at 11:00
a.m. for transacting the |
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| following
business: |
|
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| 1.
To confirm the minutes of the last Extra Ordinary General Meeting held on May
12, 1998; |
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|
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| 2.
To receive, consider and adopt the financial statement of the company for the
year ended |
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| June
30, 1998 together with the Directors' and Auditors' report thereon; |
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|
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| 3.
To appoint auditors for the year ending June 30, 1999 and fix their
remuneration. The retiring auditors |
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| M/s
Ford Rhodes, Robson, Morrow, Chartered Accountants, being eligible, offer
themselves for re- |
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| appointment; |
|
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| 4.
To approve the following dividend as recommended by the Directors of the
Company: |
|
|
| a)
Cash dividend @ 10% (Re. 1/- per share) |
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| b)
One bonus share for every eight shares held i.e. 12.5% |
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| 5.
To transact any other business with the permission of the Chairman. |
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|
BY ORDER OF THE BOARD |
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| Lahore:
January 23, 1999 |
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(MEHTAB SAEED SIDDIQUI) |
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|
Company Secretary |
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| Notes: |
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| 1.
Share Transfer Books of the Company will remain closed from February 13, 1999
to February 22, |
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| 1999
(both days inclusive). |
|
|
| 2.
A member entitled to attend and vote at this meeting may appoint another
member as his/her proxy to |
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| attend
and vote on his/her behalf. Proxies in order to be effective must be received
by the company not |
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| less
than 48 hours before the meeting. |
|
|
| 3.
Members are requested to notify any change in address immediately. |
|
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| 4.
Bonus shares recommended by the Directors are not entitled for Cash Dividend. |
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| CHAIRMANS'
REVIEW |
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| It
gives me great pleasure to present to you the Audited Accounts of First
Capital Securities Corporation |
|
| Limited.
During the year under review, FCSC successfully managed to maintain its
prominent position |
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| within
the financial services industry. |
|
|
| Adverse
economic conditions prevalent in recent years further aggravated owing to
economic sanctions |
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| imposed
as a consequence of Pakistan detonating its nuclear devices in response to
India, the Government |
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| of
Pakistan-IPP controversy and a host of other political and economic factors.
The result was an extreme |
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| negative
pressure on the economic condition of the country and already falling stock
market values. |
|
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| The
privatization program of the Government of Pakistan also remained on the back
burner with no |
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| possible
hopes of activity in the near future. |
|
|
| Despite
such an adverse economic scenario, FCSC managed to win a number of corporate
finance advisory |
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| mandates
in the infrastructure sector. FCSC advised Frontier Works Organization (FWO),
Pakistan Army |
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| on
acquisition of 25 year BOT concessions for 335 km M2 or the Lahore-Islamabad
Motorway and 1,700 |
|
| km
N5 Highway - popularly known as GT Road from the National Highway Authority.
FCSC also |
|
| successfully
advised a FWO/Fauji Foundation led consortium on competitive bidding of 136
km M9 or the |
|
| Karachi
- Hyderabad Motorway. |
|
|
| FCSC
remains committed to the privatisation program of the Government and
continues to be a leading |
|
| participant.
FCSC jointly with ABN AMRO Asia Corporate Finance, Hong Kong and The Portland
Group, |
|
| UK
participated in the competitive tendering for providing financial advisory
services to the Privatisation |
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| Commission
in respect of concessioning out of Civil Aviation Authority controlled
airports to the private |
|
| sector.
The outcome of the tender is still awaited. |
|
|
| FCSC
money market or the inter-bank brokerage operations have seen a steady
growth. Overall brokerage |
|
| commissions
increased by 28% over the last financial year. The growth was a result of
focussed efforts to |
|
| increase
the number of institutional clients. |
|
|
| The
equity brokerage operations under First Capital ABN AMRO Equities (FCAAE) was
completely |
|
| revamped
and despite a severe bear market, the brokerage commissions increased by 90%
on a year-on-year |
|
| basis.
The sales team successfully managed to enhance its efforts to generate more
revenues from domestic |
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| institutional
and high net-worth retail investors. FCAAE was rated as the No 1 brokerage
house in Pakistan |
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| by
"Asia Money" Magazine for its Order Execution capability and No 2
in Specialist Research categories. |
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| Additionally,
a poll of American and Asian Fund Managers' conducted by Reuters' also placed
FCAAE as |
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| the
No. 1 brokerage house in Pakistan. |
|
|
| FCSC
telecommunication business under WorldCALL Limited has demonstrated a
phenomenal success in |
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| Pakistan
and now is the highest revenue earner in the industry. |
|
|
| WorldCALL
was also awarded an Operations & Maintenance license by Pakistan
Telecommunication |
|
| Company
Limited (PTCL) for launching international prepaid calling card services in
Pakistan. |
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| Additionally,
WorldCALL is also one of the two companies that have been short listed by
PTCL for the |
|
| award
of Operations & Maintenance license for setting up 60,000 payphones using
state-of-the-art wireless |
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| local
loop technology. WorldCALL is also exploring possibilities for setting up
businesses for providing |
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| Internet
and data communication services with the intention of becoming one of the
largest |
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| telecommunication
services providers in Pakistan. |
|
|
| In
May 1998, the company acquired 19% equity of PACE (Pakistan) Limited with
management control. |
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| Your
directors took steps in all directions and are confident to make it a rich
source of revenue for the |
|
| company
in long run. |
|
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| I
am confident that during the next financial year we will not only meet but
also exceed the targets set out |
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| for
respective business areas and especially in the area of the
telecommunications. |
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|
| Finally,
I would like to appreciate the efforts and hard work put in by all concerned
to enable us to perform |
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| so well. |
|
|
|
Salmaan Taseer |
|
Lahore |
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|
Chairman & Chief Executive |
|
January 22, 1999 |
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|
|
| DIRECTOR'S
REPORT |
|
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| The
Board of Directors has pleasure to present theft Fifth annual Report together
with Audited Accounts of |
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| the
Company for the year ended June 30, 1998. |
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|
| 1997-98
AN OVERVIEW |
|
|
| The
overall business environment during the financial year 1997-98 continued to
remain unpretentious. |
|
| Although,
the year began with good signs of recovery, however many events on the
national and |
|
| international
level impacted the overall economic performance of the country. Domestic
political and |
|
| constitutional
crisis further deepened the economic recession and the last quarter of the
year saw another |
|
| major
blow to our limited recovery, it was nuclear detonation by Pakistan on May
28, 1998. |
|
|
| Among
other side effects on economy, the nuclear blast resulted into two major bad
lucks for the country, |
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| foreign
investors who were very shy to invest in capital market even at the beginning
of year, almost totally |
|
| pull
their hands from investing any more even in blue chip companies. Thanks to
our Capital Market |
|
| selective
buying and selling, we are able to reverse Provision for diminution in value
of investments by Rs. |
|
| 3,321,539
and earning a capital Gain of Rs. 10,611,094. The other side effect was
freezing of US Dollar |
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| deposits
at Rs. 46/- per dollar. This decision also effected your companies' financial
position as a material |
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| portion
of our extra cash was in form of US Dollars. Still we were able to earn a
profit of Rs 25,244,620 as |
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| gain
on foreign currency translation. |
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|
| FUTURE
OUTLOOK |
|
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| After
successful negotiations with international agencies and lifting of sanctions,
we hope that present |
|
| pressure
on economy would release to some extent. Though future performance of your
company largely |
|
| depends
upon revival of overall economy, still we believe that your company's
investment in Telecom |
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| Sector
in previous years with proposed expansion in 1999 for Pre-paid Calling
Services, Internet Services |
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| and
Wireless Local Lope projects would contribute material revenue to the company
during 1999. |
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| Moreover,
Money Market operations with grant of licence for FX market would bring
additional revenue |
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| for
the company. Once activity in Capital Market becomes more diversified and
stable, the company's |
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| investment
portfolio would add further gains. Plans are also being made to diversify
Corporate Advisory |
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| services
by making substantial investment in people. We are confident that with more
focus on Advisory |
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| services,
especially for Telecom Sector, advisory fee would be a major contributor
towards future earnings. |
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|
| FINANCIAL
PERFORMANCE |
|
|
| Despite
poor market conditions, side effects of nuclear explosion on company's
foreign currency deposits |
|
| and
material resource investment in Long Term Investments, your company's results
are quite encouraging. |
|
| The
company has earned a net profit after taxation of Rs. 23,154,116. Summary of
financial results of the |
|
| company
and comparison with last year is given on next page. |
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|
|
| INCOME
STATEMENT (Financial Year 1997-98) |
|
|
|
|
1998 |
1997 |
Change |
|
|
|
(Rs. in million) |
(%) |
|
|
|
|
|
|
| Operating
Revenue |
|
35.100 |
77.37 |
(54.630) |
|
| Operating
expenses |
|
34.863 |
24.76 |
40.804 |
|
|
|
---------- |
---------- |
|
|
|
|
Operating Profit |
|
237 |
52.61 |
350.485 |
|
| Other
Revenue |
|
|
41.284 |
12.48 |
230.801 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
|
41.521 |
65.09 |
(36.209) |
|
| Financial
Expenses |
|
|
21.441 |
8.29 |
158.637 |
|
|
|
|
|
---------- |
---------- |
|
|
|
|
Net Operating Profit |
|
20.081 |
56.80 |
(64.65) |
|
| Provision
for diminution in the value of investment |
|
3.321 |
(0.34) |
(1076.760) |
|
|
|
---------- |
---------- |
|
|
|
|
Net profit before
taxation |
|
23.402 |
56.45 |
(58.540) |
|
| Taxation |
|
|
|
|
248 |
8.27 |
2998.790 |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
Profit after taxation |
|
23.154 |
48.18 |
(51.940) |
|
| Gain
on disposal of discontinued operation |
|
- |
29.34 |
- |
|
|
|
---------- |
---------- |
|
|
|
|
23.154 |
77.52 |
(70.130) |
|
| Un-appropriated
profit brought forward |
|
54.261 |
25.24 |
114.980 |
|
|
|
---------- |
---------- |
|
|
|
|
77.415 |
102.76 |
(24.660) |
|
|
|
Appropriations |
|
|
|
| Proposed
final dividend |
|
21.340 |
29.10 |
(26.670) |
|
| Transfer
to reserve for issue of bonus shares |
|
26.675 |
19.40 |
37.500 |
|
|
|
---------- |
---------- |
|
|
|
|
48.015 |
48.50 |
|
|
|
|
---------- |
---------- |
|
|
| Un-appropriated
profit carried forward |
|
29.400 |
54.26 |
(45.820) |
|
|
| APPROPRIATIONS |
|
|
| The
Directors are pleased to announce that in continuance of the past policy the
Board of Directors has |
|
| recommended
a 10% Cash Dividend and 12.5% Bonus shares (one share for every 8 shares
held). These |
|
| bonus
shares are not entitled for cash dividend. |
|
|
| BOARD
OF DIRECTORS |
|
|
| Elections
for second Board of Directors were held in September 1997. The following
changes have |
|
| occurred
in Board since then: |
|
|
| 1.
Mr. Badar-ud-Din appointed in place of Ms. Sara Taseer (who resigned in
September 1997) |
|
| 2.
Mr. Mumtaz H. Syed was appointed in place of Mr. Zahid Zia (Who resigned in
December 1998) |
|
|
| PATTERN
OF SHAREHOLDING |
|
|
| The
pattern of Shareholding is attached with the Report. |
|
|
| AUDITORS |
|
|
| The
present auditors M/S Ford, Rhodes, Robson, Morrow Chartered Accountants
retire and being eligible, |
|
| offer
themselves for re-appointment. |
|
|
| YEAR
2000 COMPLIANCE |
|
|
| Your
company is well aware of Year 2000 problem and after making needful
arrangements, we believe that |
|
| millennium
bug is not going to affect our accounting software. |
|
|
|
Salmaan Taseer |
|
Lahore |
|
|
Chairman & Chief Executive |
|
January 22, 1999 |
|
|
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of First Capital Securities
Corporation Limited as at June |
|
| 30,
1998 and the related Profit and Loss Account and Statement of Sources and
Application of Funds, |
|
| 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 |
|
| 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 Sources
and |
|
| Application
of Funds, together with the 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 source and application of funds 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. |
|
|
| Lahore |
|
|
FORD, RHODES, ROBSON, MORROW |
|
| January
22, 1999 |
|
|
Chartered Accountants |
|
|
|
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
NOTE |
1998 |
1997 |
|
|
|
|
(RUPEES) |
(RUPEES) |
|
| ASSETS |
|
|
|
|
|
|
|
| TANGIBLE
FIXED ASSETS-at Cost |
|
|
| less
accumulated depreciation |
|
4 |
15,433,114 |
8,803,558 |
|
| LONG
TERM INVESTMENTS |
|
5 |
146,483,007 |
115,854,370 |
|
| DEFERRED
COST |
|
6 |
1,170,681 |
2,341,361 |
|
| LONG
TERM DEPOSITS |
|
7 |
1,427,961 |
633,203 |
|
|
|
|
---------- |
---------- |
|
|
|
|
164,514,763 |
127,632,492 |
|
| CURRENT
ASSETS |
|
|
| Short
term investments less provision |
8 |
44,729,465 |
35,315,296 |
|
| Accounts
receivable |
|
9 |
71,349,314 |
74,187,329 |
|
| Advances,
deposits, prepayments and other receivables |
10 |
17,205,672 |
15,994,684 |
|
| Cash
and bank balances |
|
11 |
103,697,750 |
286,863,914 |
|
|
|
|
---------- |
---------- |
|
|
|
|
236,982,201 |
412,361,223 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
| Accounts
payable |
|
12 |
172,545 |
6,507,341 |
|
| Creditors,
accrued and other liabilities |
13 |
12,724,486 |
10,095,791 |
|
| Short
term running finance |
|
14 |
20,005,000 |
149,290,982 |
|
| Current
maturity of liability against finance lease |
|
2,524,461 |
1,317,796 |
|
| Dividend
payable |
|
15 |
36,904,873 |
40,778,197 |
|
| Provision
for taxation |
|
|
1,078,424 |
8,150,000 |
|
|
|
|
---------- |
---------- |
|
|
|
|
73,409,789 |
216,140,107 |
|
|
|
|
---------- |
---------- |
|
| WORKING
CAPITAL |
|
|
163,572,412 |
196,221,116 |
|
|
|
|
---------- |
---------- |
|
| CAPITAL
EMPLOYED |
|
|
328,087,175 |
323,853,608 |
|
|
|
|
|
========== |
========== |
|
| REPRESENTED
BY |
|
|
|
|
|
|
| SHAREHOLDERS'
EQUITY |
|
|
|
| Share
capital |
|
16 |
213,400,000 |
194,000,000 |
|
| Share
premium |
|
|
54,500,000 |
54,500,000 |
|
| Reserve
for issue of bonus shares |
|
|
26,675,000 |
19,400,000 |
|
| Unappropriated
profit |
|
|
29,400,580 |
54,261,464 |
|
|
|
|
---------- |
---------- |
|
|
|
|
323,975,580 |
322,161,464 |
|
| OBLIGATION
UNDER FINANCE LEASE |
|
17 |
4,111,595 |
1,692,144 |
|
| CONTINGENCIES
& COMMITMENTS |
|
18 |
- |
- |
|
|
|
|
|
---------- |
---------- |
|
| CAPITAL
EMPLOYED |
|
|
328,087,175 |
323,853,608 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
| Auditors'
report is annexed hereto. |
|
|
|
Chairman & Chief Executive Officer |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
NOTE |
1998 |
1997 |
|
|
|
(RUPEES) |
(RUPEES) |
|
|
|
|
| OPERATING
REVENUE |
|
|
|
| Fee
for financial advisory services |
|
|
11,750,000 |
8,500,000 |
|
| Underwriting
and take-up commission |
|
|
- |
383,500 |
|
| Dividend
income |
|
|
6,380,991 |
1,795,517 |
|
| Money
market income |
|
19 |
6,358,388 |
4,975,213 |
|
| Capital
gain - net |
|
|
10,611,094 |
60,308,635 |
|
|
|
|
---------- |
---------- |
|
|
|
|
35,100,473 |
75,962,865 |
|
| Discontinued
Operations |
|
20 |
- |
1,405,364 |
|
|
|
|
---------- |
---------- |
|
|
|
|
35,100,473 |
77,368,229 |
|
| OPERATING
EXPENSES |
|
21 |
34,863,088 |
24,758,793 |
|
|
|
|
---------- |
---------- |
|
| OPERATING
PROFIT |
|
|
237,385 |
52,609,436 |
|
|
|
|
|
|
|
| OTHER
INCOME |
|
|
|
| Mark
up income |
|
22 |
15,952,493 |
6,633,723 |
|
| Gain
on currency translation |
|
|
25,244,620 |
5,765,036 |
|
| Gain/(loss)
on sale of fixed assets |
|
|
4,680 |
(22,840) |
|
| Others |
|
|
82,263 |
104,543 |
|
|
|
|
---------- |
---------- |
|
|
|
|
41,284,056 |
12,480,462 |
|
|
|
|
---------- |
---------- |
|
|
|
|
41,521,441 |
65,089,898 |
|
| FINANCIAL
EXPENSES |
|
23 |
21,441,268 |
8,294,100 |
|
|
|
|
---------- |
---------- |
|
| NET
PROFIT FOR THE YEAR |
|
|
20,080,173 |
56,795,798 |
|
| Provision
for diminution in the value of short-term investments |
3,321,539 |
(342,032) |
|
|
|
|
---------- |
---------- |
|
| NET
PROFIT BEFORE TAXATION |
|
|
23,401,712 |
56,453,766 |
|
|
|
|
|
| TAXATION |
|
|
|
| Current
- for the year |
|
|
90,542 |
8,150,000 |
|
| Prior year |
|
|
|
157,054 |
124,924 |
|
|
|
|
---------- |
---------- |
|
|
|
|
247,596 |
8,274,924 |
|
|
|
|
---------- |
---------- |
|
| PROFIT
AFTER TAXATION |
|
|
23,154,116 |
48,178,842 |
|
|
|
|
|
---------- |
---------- |
|
| Gain
on disposal of discontinued operations |
24 |
- |
29,338,386 |
|
|
|
|
---------- |
---------- |
|
|
|
|
23,154,116 |
77,517,228 |
|
| Unappropriated
profit brought forward |
|
54,261,464 |
25,244,236 |
|
|
|
|
---------- |
---------- |
|
|
|
|
77,415,580 |
102,761,464 |
|
| APPROPRIATIONS |
|
|
|
| Proposed
final cash dividend @10 % (1997: @15%) |
|
(21,340,000) |
(29,100,000) |
|
| Transfer
to reserve for issue of bonus shares @ 12.5 % (1997: 10%) |
(26,675,000) |
(19,400,000) |
|
|
|
|
