| Doha Bank Limited |
|
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|
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|
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| Annual
Report 2000 |
|
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| AUDITORS'
REPORT TO THE DIRECTORS |
|
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| We
have audited the annexed balance sheet of Pakistan Branches of Doha Bank as
at 31 December 2000 |
|
| and
the related profit and loss account and the cash flow statement, together
with the notes forming part |
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| thereof,
for the year then ended and we state that we have obtained all the
information and explanations |
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| which
to the best of our knowledge and belief were necessary for the purposes of
our audit and, after due ver- |
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| ification
thereof, found them satisfactory and, we report that: |
|
|
| a)
in our opinion, proper books of account have been kept by the Branches as
required by the Companies Ordinance, 1984; |
|
|
| b)
in our opinion: |
|
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| i)
the balance sheet and profit and loss account together with the notes thereon
have been drawn |
|
| up
in conformity with the Banking Companies Ordinance, 1962, and the Companies
Ordinance, |
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| 1984,
and are in agreement with the books of account and are further in accordance
with the |
|
| accounting
policies consistently applied except for the change in accounting policies as
referred |
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| to
in notes 3.2.2, 3.3 and 3.4 with which we concur; |
|
|
| ii)
the expenditure incurred during the year was for the purpose of the Branches'
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 Branches and the transactions of the Branches which
have |
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| come
to our notice have been within the powers of the Branches; |
|
|
| c)
in our opinion and to the best of our information and according to the
explanations given to us, the balance |
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| sheet,
profit and loss account and the cash flow statement together with the notes
forming part |
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| thereof
give the information required by the Banking Companies Ordinance, 1962 and
the Companies |
|
| Ordinance,
1984 in the manner so required and except for the financial effect of the
matter referred to |
|
| in
note 17.2 to the financial statements respectively give a true and fair view
of the state of the |
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| Branches'
affairs as at 31 December 2000 and its true balance of the loss and cash
flows for the year |
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| then
ended; and |
|
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| d)
in our opinion, zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was deducted by |
|
| the
Branches and deposited in the Central Zakat Fund established under Section 7
of that Ordinance. |
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|
Sd/- |
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|
Sidat Hyder Qamar & Co. |
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| KARACHI:
26 February 2001 |
|
CHARTERED ACCOUNTANTS |
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| BALANCE
SHEET AS AT DECEMBER 31, 2000 |
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|
2000 |
1999 |
|
|
Note |
Rupees in
'000 |
|
|
| ASSETS |
|
| Cash |
|
4 |
1,114,966 |
977,825 |
|
| Balances
with other banks |
|
5 |
34,080 |
21,924 |
|
| Money
at call and short notice |
|
|
-- |
50,000 |
|
| Investments |
|
6 |
19,770 |
9,770 |
|
| Advances
- net of provision |
|
7 |
1,354,949 |
1,641,537 |
|
| Operating
fixed assets |
|
8 |
6,159 |
7,574 |
|
| Other assets |
|
9 |
356,610 |
423,046 |
|
|
|
------------ |
------------ |
|
|
|
2,886,534 |
3,131,676 |
|
| LIABILITIES |
|
| Deposits
and other accounts |
|
10 |
1,021,534 |
2,337,754 |
|
| Borrowings
from other banks, agents etc. |
|
11 |
540,021 |
347,647 |
|
| Bills payable |
|
|
24,575 |
7,004 |
|
| Other
liabilities |
|
12 |
25,236 |
85,469 |
|
|
|
------------ |
------------ |
|
|
|
1,711,366 |
2,777,874 |
|
|
|
------------ |
------------ |
|
| NET ASSETS |
|
|
1,175,168 |
353,802 |
|
|
|
========== |
========== |
|
| REPRESENTED
BY: |
|
|
|
| Head
office account |
|
13 |
1,175,168 |
353,802 |
|
|
|
========== |
========== |
|
| MEMORANDUM
ITEMS |
|
|
|
|
| Bills
for collection |
|
14 |
309,876 |
357,972 |
|
| Acceptances,
endorsements and other obligations |
|
151,099 |
139,403 |
|
| Contingent
liabilities and commitments |
|
15 |
|
|
| The
annexed notes form an integral part of these accounts, |
|
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|
Sd/- |
|
Sd/- |
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|
CHIEF MANAGER/PRINCIPAL
OFFICER |
|
GENERAL MANAGER - PAKISTAN |
|
|
|
| PROFIT
AND LOSS ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 2000 |
|
|
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|
2000 |
1999 |
|
|
|
Note |
Rupees in
'000 |
|
| Mark-up
/ interest and discount and/or return earned |
|
| Less:
Cost/return on deposits, borrowings etc. |
|
147,353 |
190,660 |
|
|
312,943 |
307,874 |
|
|
------------ |
------------ |
|
|
(165,590) |
(117,214) |
|
|
| Fees,
commissions and brokerage |
|
5,615 |
10,622 |
|
| Other
operating income |
|
16 |
43,475 |
24,720 |
|
|
|
------------ |
------------ |
|
|
49,090 |
35,342 |
|
|
------------ |
------------ |
|
|
(116,500) |
(81,872) |
|
| Operating
expenses |
|
| Administration
expenses |
|
| Provision
against non-performing advances |
|
17 |
56,478 |
49,082 |
|
| Bad
debts written oft directly |
|
7.2 |
(20,319) |
1,458 |
|
| Loss
on revaluation of assets acquired in satisfaction |
7.3 |
30,310 |
1,247 |
|
| Of claim |
|
|
9.2 |
20,000 |
-- |
|
|
------------ |
------------ |
|
|
86,469 |
51,787 |
|
|
------------ |
------------ |
|
| Other income |
|
(202,969) |
(133,659) |
|
| Loss
before taxation |
|
18 |
4,972 |
4,332 |
|
|
|
------------ |
------------ |
|
| Taxation |
|
(197,997) |
(129,327) |
|
| Loss
after taxation |
|
19 |
11,865 |
-- |
|
|
------------ |
------------ |
|
|
(186,132) |
(129,327) |
|
| Loss
transferred to Head Office Account |
|
------------ |
------------ |
|
|
13.3 |
(186.132) |
(129,327) |
|
| These
accounts should be read with the annexed notes. |
|
========== |
========== |
|
|
|
Sd/- |
|
Sd/- |
|
|
CHIEF MANAGER/PRINCIPAL
OFFICER |
|
GENERAL MANAGER - PAKISTAN |
|
|
|
|
| CASH
FLOW STATEMENT FOR THE YEAR ENDED DECEMBER 31, 2000 |
|
|
|
2000 |
1999 |
|
|
|
|
Rupees in
'000 |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Loss
before taxation |
|
(197,997) |
(129,327) |
|
| Adjustment
for non-cash changes: |
|
|
|
| Depreciation |
|
3,316 |
3,049 |
|
| Provisions
against non-performing advances |
|
(20,319) |
1,458 |
|
| Loss
on revaluation of assets acquired in satisfaction of claim |
|
20,000 |
|
|
| Gain
on sale of fixed assets |
|
(44) |
(932) |
|
| Amortization
of deferred cost |
|
165 |
176 |
|
|
------------ |
------------ |
|
|
3,118 |
3,751 |
|
|
------------ |
------------ |
|
|
(194,879) |
(125,576) |
|
| Increase)/decrease
in operating assets |
|
| Government
securities |
|
(10,000) |
140,440 |
|
| Advances |
|
306,907 |
(150,328) |
|
| Other
assets (excluding advance tax) |
|
41,381 |
18,087 |
|
|
------------ |
------------ |
|
|
338,288 |
8,199 |
|
| Increase/(decrease)
in current liabilities |
|
| Deposits
and other accounts |
|
(1,316,220) |
459,865 |
|
| Bills payable |
|
17,571 |
965 |
|
| Other
liabilities |
|
(60,705) |
(6,673) |
|
|
------------ |
------------ |
|
|
(1,359,354) |
454,157 |
|
|
------------ |
------------ |
|
| Cash
flow before tax |
|
(1,215,945) |
336,780 |
|
| Income
tax refunded / (paid) |
|
17,227 |
(49,913) |
|
|
------------ |
------------ |
|
| Net
cash (outflow) / inflow from operating activities |
|
(1,198,718) |
286,867 |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Fixed
capital expenditure |
|
(1,982) |
(6,514) |
|
| Sales
proceeds of fixed assets |
|
125 |
986 |
|
|
------------ |
------------ |
|
| Net
cash used in investing activities |
|
(1,857) |
(5,528) |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Borrowings
from other banks, agents etc. |
|
292,374 |
(241,854) |
|
| Capital
injected during the year (inclusive of exchange revaluation) |
1,007,498 |
128,115 |
|
|
------------ |
------------ |
|
| Net
cash inflow/(outflow) from financing activities |
|
1,299,872 |
(113,739) |
|
|
------------ |
------------ |
|
| Increase
in cash and cash equivalents for the year |
|
99,297 |
167,600 |
|
| Cash
and cash equivalents at the beginning of the year |
|
1,049,749 |
882,149 |
|
|
------------ |
------------ |
|
| Cash
and cash equivalents at the end of the year |
|
1,149,046 |
1,049,749 |
|
|
========== |
========== |
|
| CASH
AND CASH EQUIVALENTS |
|
| Cash |
|
1,114,966 |
977,825 |
|
| Balances
with other banks |
|
34,080 |
21,924 |
|
| Money
at call and short notice |
|
-- |
50,000 |
|
|
------------ |
------------ |
|
|
1,149,046 |
1,049,749 |
|
|
========== |
========== |
|
|
|
|
|
|
Sd/- |
|
Sd/- |
|
|
CHIEF MANAGER/PRINCIPAL
OFFICER |
|
GENERAL MANAGER - PAKISTAN |
|
|
|
| NOTES
TO THE ACCOUNTS FOR THE YEAR ENDED DECEMBER 31, 2000 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
| 1.1
Doha Bank Limited (the Bank) was incorporated in the State of Qatar in 1979
as a Qatari shareholding |
|
| company
under Emirl Decree No. 51 of 1978. During the year, the name of the Bank has
been changed |
|
| to
"Doha Bank" which has been duly approved by the State Bank of
Pakistan. The Bank is engaged in |
|
| commercial
banking services and operates through its Head Office and branches
established in Qatar |
|
| The
United States of America and at Karachi and Lahore in Pakistan. |
|
|
| 1.2
The Branches have accumulated losses of Rs. 592 million as at 31 December
2000. The management |
|
| of
the Bank has taken certain measures to improve the Bank's operations in
Pakistan and has according- |
|
| ly
developed a restructuring plan, which includes the closure of loss sustaining
Lahore Branch, remittance |
|
| of
Rs. 318.381 million from head office and transfer of Rs. 601.945 million from
US$ deposit account of |
|
| head
office to "current account" of Branches to offset prior and current
year losses. The management is |
|
| of
the view that head office continuous support to Pakistan operations will
bring the Branches on a profitable |
|
| footings.
The above factors will cumulatively help improve the operations of the
Branches. |
|
|
| 1.3
As part of restructuring plan, during the year, the Board of Directors of the
Bank decided to close down |
|
| the
business of their Lahore Branch. Formal plan has been approved and approval
has also been sought |
|
| from
the State Bank of Pakistan. As at 31 December 2000, the carrying amount of
assets of Lahore |
|
| Branch
was Rs. 1,635.95 million and its liabilities were Rs. 636.100 million. During
the year Lahore |
|
| Branch
earned revenue of Rs. 120.089 million, incurred expenses of Rs. 196.066
million and incurred a |
|
| pre-tax
operating loss of Rs. 75.976 million. |
|
|
| 2.
BASIS OF PRESENTATION |
|
|
| These
financial statements have been prepared in accordance with requirements of
the State Bank of |
|
| Pakistan
(SBP) [under the powers conferred upon it under the Banking Companies
Ordinance, 1962] to |
|
| conform
with BPRD Circular No. 31 dated 13 August 1997, International Accounting
Standards as applic- |
|
| able
in Pakistan and specific approval from SBP vide its letter No.
BSD/RV-42/502-20/20728 dated 15 |
|
| December
2000. |
|
|
| 3.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
| 3.1
Accounting convention |
|
| These
financial statements are prepared under the historical cost convention. |
|
|
| 3.2
Staff retirement benefits |
|
| 3.2.1
The Bank operates an approved contributory provident fund scheme for all
permanent employees |
|
| Contributions
are made monthly in accordance with fund rules. |
|
|
| 3.2.2
Employees Accumulating Compensated Absences |
|
| Upto
the year 1999, it was the policy of the Bank to encash accumulated absences
of its employees |
|
| and
recognise the cost thereof in the books of account when actually paid. The
revised IAS 19 |
|
| on
employee benefits became applicable during the year which requires that an
enterprise should |
|
| recognise
the expected cost of accumulating compensated absences of its employees. |
|
| In
accordance with the requirements of revised IAS 19, the management has
decided to change its |
|
| accounting
policy and make provision for accumulated compensated absences to the said
extent. |
|
| The
estimated liability of the Bank in respect of these absences amounted to Rs.
0.831 million as |
|
| at
31 December 2000, which has been duly accounted for in the financial
statements. Had there |
|
| been
no change in accounting policy, the charge for the year would have been
reduced by Rs. |
|
| 0.831 million. |
|
|
| 3.3 Taxation |
|
| Current |
|
| Provision
for current taxation is based on the assessable income for the year after
taking into |
|
| account
tax credits available, if any. |
|
|
| Deferred |
|
| The
Bank accounts for deferred taxation using the liability method on all major
temporary difference. |
|
| Upto
last year, deferred tax debits were not incorporated in the accounts,
however, in order |
|
| to
comply with the requirements of the revised International Accounting Standard
(IAS) - 12 - |
|
| Income
Taxes, from current year the Bank has changed its policy and deferred tax
debits are now |
|
| being
accounted for (refer note 19.3). Had the accounting policy as described
above, not been |
|
| changed
the loss after taxation for the year would have been higher by Rs. 100
million. |
|
|
| 3.4
Investments |
|
| Commencing
from the current year, Investments in Government and other securities are
marked |
|
| to
market in accordance with BSD Circular No 20 dated 04 August 2000, except for
investment |
|
| acquired
under reverse repurchase transactions and Federal Investment Bonds. The
difference |
|
| between
the carrying value, representing cost adjusted for amortization of premium
and accretion |
|
| of
discount and the revalued amount is recognized in the surplus/deficit on
revaluation account, |
|
| until
realized on disposal. Profits and losses arising on disposals are taken to
income currently. |
|
|
| Previously
these investments were carded at cost less amortisation of premium and
accretion of |
|
| discount
where applicable. However, the value of Bank's investments has not been
changed and |
|
| surplus/deficit
has not been arised as a result of such change due to the reason explained in
note |
|
| 6.2. |
|
|
| The
Bank also enters into transactions of repo/reverse repo of securities at
contracted rates for |
|
| specific
periods of time. These are recorded as follows: |
|
|
| a)
In the case of sale under repurchase obligations, the securities are deleted
from the books at |
|
| cost
and the charges arising from the differential in sale and repurchase values
are accrued |
|
| on
a prorata basis and recorded as expense. Upon repurchase the securities are
reinstated |
|
| at
their respective original cost; and |
|
|
| b)
In the case of purchase under resale obligation, the securities are booked at
the contracted |
|
| purchase
price and the differential of the contracted purchase and resale price is
amortized |
|
| over
the period of their contract and recorded as mark-up / interest and discount
and / or |
|
| return earned. |
|
|
| 3.5 Advances |
|
|
| Loans
and advances are stated at their principal amounts, net of the provision for
loan losses. The |
|
| specific
provisions for possible loan losses have been made as considered necessary
after taking |
|
| into
consideration the realizable value of assets held by the Bank as security in
accordance with |
|
| the
Prudential Regulations of the State Bank of Pakistan. |
|
|
| 3.6
Operating fixed assets and depreciation |
|
| Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
computed over the |
|
| useful
lives of the related assets and charged to income applying the straight-line
method. Full |
|
| year's
depreciation is charged for assets purchased before 30 June and hail-year
depreciation is |
|
| charged
for assets purchased after 30 June while no depreciation is charged in the
year of disposals. |
|
| Gains
or losses on disposal of fixed assets are included in income currently.
Normal repairs and |
|
| maintenance
are charged to income as and when incurred. Major renewals and improvements
are |
|
| capitalised. |
|
|
| 3.7
Foreign currencies translation |
|
| Assets
and liabilities in foreign currency are translated into Pakistan rupees at
the relevant rate of exchange at the |
|
| balance
sheet or where appropriate at contractual rate. Foreign bills purchased and
forward exchange contract |
|
| other
than those relating to foreign currency deposits are valued at rate
applicable to the respective maturities of |
|
| relevant
foreign bills purchased and foreign exchange contracts. Exchange gains or
losses on translation are included |
|
| in
income currently. |
|
|
|
| 3.8
Revenue recognition |
|
| Mark-up
/return on advances and investments is recognized on an accrual basis, except
if recovery is |
|
| considered
doubtful. |
|
| Commission
is recognized on a receipt basis. |
|
|
|
|
2000 |
1999 |
|
|
|
Rupees in
'000 |
|
| 4. CASH |
|
|
| In hand: |
|
| -
Local currency |
|
18,883 |
25,561 |
|
| -
Foreign currencies |
|
15,430 |
17,357 |
|
| With
the State Bank of Pakistan in: |
|
| Special
deposit account |
|
| -
Capital deposited in foreign currency |
|
13 |
831,338 |
744,165 |
|
| -
Placement of foreign currency deposits |
|
202,833 |
77,843 |
|
| Current
account |
|
46,482 |
112,899 |
|
|
------------ |
------------ |
|
|
1,114,966 |
977,825 |
|
|
========== |
========== |
|
|
|
|
| 5.
BALANCES WITH OTHER BANKS |
|
| On
current account |
|
| - in Pakistan |
|
1,264 |
1,889 |
|
| -
outside Pakistan |
|
32,816 |
20,035 |
|
|
------------ |
------------ |
|
|
34,080 |
21,924 |
|
|
========== |
========== |
|
|
|
|
| 6.
INVESTMENTS - at cost |
|
| Federal
and Provincial Government Securities: |
|
| Investment
Securities - unquoted |
|
| -
Federal investment Bonds (FIBs) |
|
9,770 |
9,770 |
|
| Dealing
Securities - unquoted |
|
|
|
| -
Federal Investment Bonds |
|
10,000 |
-- |
|
|
------------ |
------------ |
|
|
19,770 |
9,770 |
|
|
========== |
========== |
|
|
|
|
| 6.1
Book value of unquoted investments amounted to Rs. 19.77 million (1999: Rs.
9.770 million). |
|
|
| 6.2
In the absence of availability of PKRV (Reuters page) rate for revaluation of
FIBs these have been |
|
| stated at cost. |
|
|
| 7. ADVANCES |
|
| Loans,
cash credits, overdrafts etc. |
|
| - In Pakistan |
|
1,503,949 |
1,800,431 |
|
| Bills
discounted and purchased |
|
| (excluding
Government Treasury Bills) |
|
| -
Payable in Pakistan |
|
6,954 |
5,997 |
|
| -
Payable outside Pakistan |
|
98,067 |
109,449 |
|
|
------------ |
------------ |
|
|
105,021 |
115,446 |
|
|
------------ |
------------ |
|
|
1,608,970 |
1,915,877 |
|
| Provision
for non-performing advances |
|
7.2 |
(254,021) |
(274,340) |
|
|
------------ |
------------ |
|
|
1,354,949 |
1,641,537 |
|
|
========== |
========== |
|
| Gross
advances include Rs. 984.202 million (1999: Rs. 510.499 million) which have
been placed on |
|
| non-performing
status. |
|
|
| 7.1
Particulars of Advances |
|
| In
local currency |
|
1,256,882 |
1,532,088 |
|
| In
foreign currencies |
|
98,067 |
109,449 |
|
|
------------ |
------------ |
|
|
1,354,949 |
1,641,537 |
|
|
========== |
========== |
|
| Debts
considered good in respect of which |
|
|
|
| the
Bank is fully secured |
|
1,345,718 |
1 ,504,570 |
|
| Debts
considered good for which the Bank holds no |
|
|
|
| other
security than the debtors' personal security |
|
2,079 |
27,531 |
|
| Debts
considered good secured by the personal |
|
| liabilities
of one or more parties in addition |
|
| to
the personal security of the debtors |
|
7,152 |
109,436 |
|
|
------------ |
------------ |
|
|
1,354,949 |
1,641,537 |
|
|
========== |
========== |
|
|
|
Balance out- |
|
Maximum total amount of |
|
|
standing |
|
advances including |
|
|
December 31, |
|
temporary advances granted |
|
|
2000 |
|
during the year |
|
| Debts
due by executives of the Bank or |
|
| any
of them either severally, or jointly with |
|
| any
other persons |
|
3,234 |
|
1,686 |
|
|
| 7.2
Particulars of provision against non-performing advances |
|
|
|
2000 |
1999 |
|
|
Rupees in
'000 |
|
| Specific
provisions |
|
| Opening
balance |
|
274,340 |
272,883 |
|
| Charge
for the year |
|
27,721 |
7,004 |
|
| Amount
written-off |
|
7.3 |
(7,316) |
-- |
|
| Reversal |
|
(151 ) |
(5,546) |
|
| Other
movements |
|
(40,573) |
-- |
|
|
------------- |
------------- |
|
|
(48,040) |
(5,546) |
|
|
------------- |
------------- |
|
|
(20,319) |
1,458 |
|
|
------------- |
------------- |
|
| Closing
balance |
|
254,021 |
274,340 |
|
|
========== |
========== |
|
| Provision
against |
|
| Advances
to banks |
|
-- |
-- |
|
| Advances
to others |
|
254,021 |
274,340 |
|
|
------------- |
------------- |
|
|
254,021 |
274,340 |
|
|
========== |
========== |
|
|
|
|
| 7.3
Amounts written-off during the year |
|
| In
terms of Sub-section (3) of Section 33A of the Banking Companies Ordinance,
1962 the statement in |
|
| respect
of written-off loans or any other financial relief of five hundred thousand
or above allowed to a |
|
| person(s)
during the year ended 31 December 2000 is given in Annexure-1. |
|
|
| 8.
OPERATING FIXED ASSETS |
|
|
|
COST |
DEPRECIATION |
Written down |
|
|
|
As at |
Additions/ |
As at |
Accumulated |
For the year/ |
Accumulated |
value as at |
Dep. |
|
|
|
01 January |
(deletions) |
31 December |
as at 01 |
(De |
