ARIF HABIB SECURITIES LIMITED.

Annual Reports 2003

Contents

Company Information

Vision / Mission Statements

Eight Years at a Glance

Corporate Events

Notice of Annual General Meeting

Directors' Report

Statement of Shares Purchase &

Sale by Directors

Board Meetings Attendance Statement

Pattern of Shareholding

Statement of Compliance with the Code of

Corporate Governance

Auditors' Report on Corporate Governance

Auditors' Report to the Members

Balance Sheet

Profit and Loss Account

Cash Flow Statement

Statement of Changes in Equity

Notes to the Accounts

Board Of Directors

Mr. Arif Habib

Chairman and Chief Executive

Mr. Sirajuddin A. Cassim

Mr. Muhammad yousuf Ahmed.

Mr. Abdul Majid M. Siddique

Mr. Muhammad Rafiq Jangda

Mr. Samad A. Habib

Mr. Kashif A. Habib

Audit Committee

Mr. Sirajuddin A. Cassim

Chairman

Mr. Abdul Majid. Siddiq

Mr. Kashif Habib

Company Secretary

Mr. Haroon Usman

Chief Financial Officer

Mr. Muhammad Rafiq Jangda

Auditors

M/s. Khalid Majid Rahman Sarfaraz

Rahim Iqbal Rafiq

Chartered Accountants

Legal Advisors

M/s, Bawaney & Partners

Bankers

BankAl Habib Ltd.

BankAl Falah Ltd.

Faysal Bank Ltd.

Habib Bank A.G. Zurich

Habib Bank Ltd.

Metropolitan Bank Ltd.

Muslim Commercial Bank Ltd.

United Bank Ltd.

Registered Office

60-63, Karachi Stock Exchange Building

Stock Exchange Road, Karachi - 74000

Phones: 2415213-15

Fax No: 2416072-2429653

E-mail: ahsl@arifhabib.com.pk

Web: www.arifhabib.com.pk

Corporate Finance & Equities

Research Division

7th Floor Al-Sehat Center

Rafiqui Shaheed Road

Shahrah-e-Faisal

Karachi - 75350

Phone: 1 1 1 468 378

Fax No: 5219073

E-mail: corporate_finance@arifhabib.com.pk

E-mail: equities_research@arifhabib.com.pk

Vision

To be a leading

Financial Services Company

excelling in every aspect of its

business and in delivering its

obligations as a good corporate

citizen to all the stakeholders.

Mission

To be a significant participant

in developing Pakistan's

capital markets for it to

become the engine of

industrial and economic

growth and in integrating it

into the world markets.

Notice of Annual General Meeting

Notice is hereby given that the Ninth Annual General Meeting of Arif Habib Securities Limited will be

held at Regent Plaza Hotel Karachi on 27th September, 2003 at 1 1 :30 a.m. to transact the following

business:

A.  Ordinary Business

1 .    To confirm the minutes of the Eighth Annual General Meeting held on 28th September 2002.

2.    To receive, consider and adopt audited accounts of the Company for the year ended 30fh June

2003 together with the Directors' and Auditors' Reports thereon.

3.    To approve the following entitlement for the year ended 30fh June, 2003 as recommended by the

Board of Directors:

a)     Cash dividend at Rs. 1 0.00 per share i.e. 1 00% payable to shareholders on the Company's

books as on 27th September, 2003.

b)     One Bonus share for every three shares held i.e. 33.33% distributable to shareholders on the

Company's books as on 27th September, 2003.

4.    To appoint Auditors for the year ending 30th June 2004 and to fix their remuneration.   M/s.

Khalid Majid Rahman Sarfaraz Rahim Iqbal Rafiq, Chartered Accountants retire and being

eligible, offer themselves for reappointment.

B.  Special Business

5.       As recommended by the Board of Directors:

5.1     To approve the following resolution for the addition of the following object clause in the

Memorandum of Association:

"Resolved that an additional object clause be incorporated in the Memorandum of Association

to read 'To carry out any or all activities of a Non-banking finance company including but not

restricted to investment finance services, leasing, venture capital investment, discounting services,

investment advisory and asset management services and housing finance services'."

5.2    To approve the following resolution with regard to investment in associated undertakings:

"That the Company be and is hereby authorised to, subject to its Directors approval on case-

by-case basis, invest upto an additional one billion rupees in associated undertakings comprising

of Arif Habib Investment Management Limited (AHIM) or any of the funds or schemes the Company

itself or AHIM sets up. Further that the investment may be in the form of equity investment in

AHIM, loans to AHIM or guarantees in its favour for seeking loans from other entities. Additionally,

the Company may invest in any of the funds/schemes set up or sponsored by the Company itself

or by AHIM as the investment advisor or asset manager or the Company may underwrite such

issues. Further that the terms and conditions and maximum limits are approved as hereunder:

Entity to which the

Nature of

Terms and conditions

Additional

investment/exposure

investment

Maximum amount of

relates

investment/exposure

Arif Habib Investment Management Limited

Shares of AHIM

Full shareholder rights

Rs. 100,000,000

(AHIM)

Arif Habib Investment

Loan to AHIM

Loan- Repayable within five years at

Management Limited

or guarantee in

mark-up rate not less than the

favour of an

Company's   borrowing   cost.

entity lending

to AHIM.

Guarantee - For a period not

exceeding five years at a guarantee

commission of 0.5% per annum on

the outstanding amount.

Rs. 1 00,000,000

Mutual Funds/Unit

Investment in

Investment- Full Certificateholder or

Trusts of which the

certificates or

Unitholder rights but subject to any

Company itself or

units and/or

limitations on sponsors and/or core

AHIM is the investment

the

investors.

advisor   or   asset

Underwriting

Underwriting - At terms approved by

manager

thereof

the   Securities   &   Exchange

Commission of Pakistan or the stock

exchange/s in which such mutual

fund or unit trust is listed.

Rs. 1 ,000,000,000

Provided that the aggregate additional investment/exposure may not exceed one billion

rupees.

Further that all investments shall be subject to the overall conditions set out in section 208 of the Companies

Ordinance 1984."

5.3 To approve the following resolution with regard to sponsoring a Modaraba Management Company:

"Resolved that the Company be and is hereby authorised to sponsor a Modaraba Management

Company and invest upto Rs. 1 00,000,000 in ordinary and/or preference shares of such company".

6.       To consider any other business with the permission of the Chair.

BY order of the Board

Karachi                                                                                                               Haroon Usman

21    August, 2003                                                                                                            Company Secretary

Arif Habib Securities Ltd. Annual Report 2003"

Notes:

1 . A member entitled to attend and vote at the meeting shall be entitled to appoint other persons

as his / her proxy who shall have such rights, as respects attending, speaking and voting at the

meeting as are available to a member. Proxies in order to be effective must be received by the

Company at the Registered Office located at 60-63 Karachi Stock Exchange Building, Stock

Exchange Road, Karachi duly stamped and signed not later than 48 hours before the meeting.

A proxy need to be a member of the Company.

2.       The share transfer books of the company will remain closed from 20th September, 2003 to 27th

September, 2003 (both days inclusive). Transfers received in order at the company's registered

office by the close of business on 1 9th September, 2003 will be treated in time for the purpose

of Dividend / Bonus.

3.      CDC Account Holders will further have to follow the under mentioned guidelines as laid

down in Circular No 1 -Reference No 3(5-A) Misc/ARO/LES/96 dated 26 January 2000

issued by Securities & Exchange Commission of Pakistan.

A.    For attending the meeting:

(i) In case of individuals, the account holders or sub account holder and or the person whose

securities are in group account and their registration details are uploaded as per the Regulations,

shall authenticate his / her identity by showing his / her original National Identity Card (NIC) or

original passport at the time of attending the meeting.

(ii) In case of corporate entity, the Board of Directors' resolution / power of attorney with specimen

signature of the nominee shall be produced (unless it has been provided earlier) at the time of

the meeting.

B.    For Appointing proxies:-

(i) In case of individuals, the account holders or sub-account holders and or the person whose

securities are in group account and their registration detail are uploaded as per the regulations,

shall submit the proxy form as per the above requirement.

(ii) The proxy form shall be witnessed by two persons whose names, addresses and NIC Numbers

shall be mentioned on the form.