| Escorts Investment Bank Limited |
|
|
|
|
|
|
|
|
|
| Annual
Report 2000 |
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|
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| CONTENTS |
|
|
| Company
Information |
|
| Notice
of Meeting |
|
| Directors'
Report |
|
| Auditors'
Report to the members |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Cash
Flow Statement |
|
| Statement
of Changes in equity |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| Board
of Directors |
|
| Mr.
Bashir Ahmed |
|
| Chairman |
|
| Mr.
Shafqat All Bokhari |
|
| Chief
Executive |
|
| Mr.
Zaigham Mahmood Rizvi |
|
| Nominee-Pak
Libya Holding Co (Pvt.) Ltd. |
|
| Miss.
Shazia Bashir |
|
| Mr.
Mutahir Ahmed |
|
| Mrs.
Darakhshan Bashir |
|
| Ms.
Maryam Bashir |
|
| Mr.
Bairam Qureshy |
|
| Mr.
Qaim Medhi |
|
| Mr.
Farrukh Ahmed Kamran |
|
|
| Company
Secretary |
|
| Farooq
Ahmed |
|
|
| Share
Registrars |
|
| Hameed
Majid Associates (Pvt) Ltd. |
|
| H.M.
House, 7-Bank Square, Lahore |
|
|
| Bankers |
|
|
|
| Gulf
Commercial Bank Limited |
|
| Union
Bank Limited |
|
| Habib
American Bank N.Y. |
|
| AI
Baraka Islamic Bank B.S.C (EC) |
|
|
| Head
Office and Lahore Branch |
|
|
| 4th
Floor, Escorts House, |
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| 26-Davis
Road, Lahore. |
|
|
| Legal
Advisor |
|
| Mandviwalla
& Zafar, |
|
| Advocates
and Legal Consultants |
|
|
| Auditors |
|
| Ebrahim
& Co. Chartered Accountants |
|
|
| Karachi
Branch |
|
| Suite
# 817, 8th Floor, |
|
| Progressive
Plaza, |
|
| Beaumont
Road, Karachi. |
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| NOTICE
OF ANNUAL GENERAL MEETING |
|
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| NOTICE
IS HEREBY GIVEN THAT the 5th Annual General Meeting of the shareholders of |
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| ESCORTS
INVESTMENT BANK LIMITED will be held on Friday the December 08, 2000 at 11:30 |
|
| A.M.
at the registered office of the company at Escorts House, 26- Davis Road,
Lahore to transact |
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| the
following business: |
|
|
| 1.
To confirm the minutes of 4th Annual General Meeting held on November 16,
1999. |
|
|
| 2.
To receive and adopt the Directors' and Auditors' Report and Audited Accounts
for the year ended |
|
| June 30, 2000. |
|
|
| 3.
To consider and if thought fit, approve a dividend payment @ 5%. |
|
|
| 4.
To appoint the Auditors and to fix their remuneration. The present Auditors
M/S. Ebrahim & Co., |
|
| Chartered
Accountants, retire and being eligible, offer themselves for re-appointment. |
|
|
|
By order of the Board |
|
|
| Lahore |
|
FAROOQ AHMED |
|
| November
16, 2000 |
|
COMPANY SECRETARY |
|
|
| NOTES |
|
|
| i.
A member entitled to attend and vote at this meeting is entitled to appoint a
proxy to attend |
|
| the
meeting and vote for him/her. Form of Proxy is enclosed with the annual
report. Proxies |
|
| in
order to be effective, must be received at the registered office of the
company, at least 48 |
|
| hours
before the time of holding the meeting. |
|
|
| ii.
The members are requested to immediately notify the change in address, if
any. |
|
|
| iii.
Account holders and sub-account holders book entry securities of the Company
in Central |
|
| Depository
System of Central Depository Company of Pakistan Limited are requested to |
|
| bring
Original I.D. Card or attested copy of I.D. Card for identification purposes. |
|
|
| iv.
The Members Register will remain closed from December 02, 2000 to December
08, 2000 |
|
| (both
days inclusive). Transfers received in order at the Registered Office by the
close of |
|
| business
hours on December 01 2000 will be treated in time for the entitlement of
dividend. |
|
|
|
| DIRECTORS'
REPORT TO THE MEMBERS OF THE COMPANY |
|
|
| On
behalf of the Board of Directors of Escorts Investment Bank Limited, I
welcome you to the 5th |
|
| Annual
General Meeting and present the Annual Report for the Financial Year ended
June 30, 2000.. |
|
|
| The
year 1999-2000 was yet another eventful and difficult year in the history of
the country. We saw |
|
| the
Paris and London Club lenders agree on a 3year debt rescheduling, suspension
of membership by |
|
| the
Commonwealth, Rescheduling of US. $ 610 million Government Bonds, the
historic judgment of |
|
| the
Supreme Court of Pakistan on elimination of Riba from the economy,
establishment of the |
|
| Corporate
and Industrial Reconstruction Commission (CIRC), Removal of capital controls
on forex |
|
| remittances
by the State Bank and last but not the least, survey for the documentation of
economy. |
|
|
| The
Karachi Stock Exchange index moved in line with the above stated events and
in May was hit |
|
| badly
by the crisis triggered due to default of certain brokers. All the three
exchanges remained closed |
|
| for
a few days, while the KSE 100 index after touching 1399 finally ended at
1520.7 on June 30, 2000. |
|
|
| FINANCIAL
RESULTS |
|
| The
bank earned a pre-tax profit of Rs. 12.050 million as against Rs. 21.330
million in the preceding |
|
| year.
The total balance sheet footing also declined to Rs. 735.970 million from Rs.
774.454 million. |
|
| Gross
income increased by Rs. 5.200 million to Rs. 94.585 million. |
|
|
| The
results are lower than expected, and can be attributed to the reduced
spreads. State Bank in order |
|
| to
reduce, the lending rates and enhance private lending, slashed the discount
rate, which resulted in |
|
| a
sharp decline in the lending rates. All possible steps were taken to curtail
the deposit costs. Inspite |
|
| of
all efforts, margins continue to shrink as it is becoming increasingly
difficult to market good quality |
|
| customers
at competitive rates. |
|
|
| FUTURE |
|
| Pakistan's
economy is facing multidimensional challenges which include restoring
investor confidence, |
|
| reinvigorating
growth, restoring macro economic stability, reducing poverty, improving
social indicators |
|
| and
governance. There are no quick solution to these challenges. |
|
|
| Pakistan's
overall economic performance during 1999-2000 offers grounds for optimism.
There are |
|
| signs
which suggest that the economy has begun to stage a modest turnaround. This
recovery is |
|
| supported
by a strong rebound in agriculture and a pick up in large scale manufacturing
(excluding |
|
| sugar
industry). A bumper cotton and wheat crops coupled with a good rice crop
supported the overall |
|
| growth
by contributing 5.5% as against 1.9% last year (if the last estimates of
wheat production are |
|
| taken
into consideration the overall growth rate goes to an impressive figure of
7.1%). The large scale |
|
| manufacturing
sector, (other than sugar industry) grew by 6.4% as against 3.5% last year. |
|
|
| One
of the major pillars of the Socio-economic reform agenda announced by the
present government |
|
| is
the revival of economy and restoration of investor confidence. As part of
these efforts, State Bank |
|
| slashed
the discount rate to 11% (currently 13% as of October 05, 2000), yields on
T-Bills |
|
| were
slashed, so was the rates on National Savings Schemes. This has resulted in a
sharp decline in |
|
| spreads,
with large commercial banks at a distinct advantage due to the presence of
current and low |
|
| cost,
and savings account deposits. Lately, the privatization process has also kick
started, this is also |
|
| expected
to improve investor confidence. |
|
|
| In
view of the changed scenario, development of fee based activities is expected
to gain momentum. |
|
| Also,
your bank for the first time in its history ventured into the capital market
business, the results |
|
| were
encouraging. This activity will be further developed. |
|
|
| DIRECTORS |
|
| During
the year, fresh elections of the directors were held. Syed Mahboob Hussain
retired and did not |
|
| offer
himself for re-election. In his place Mrs. Darakhshan Bashir was elected as
director of the |
|
| company.
Mr. Rasool Ahmed Kaleemi - nominee director of National Bank of Pakistan also
resigned |
|
| from
the board, no fresh nomination has been made in his place by National Bank of
Pakistan. The |
|
| Board
wishes to place on record an appreciation of the services rendered by the
outgoing directors. |
|
|
| YEAR
2000 COMPLIANCE |
|
| We
had reported in our last report that a revised system has been acquired which
can effectively deal |
|
| with
the millennium bug. It is a matter of great satisfaction to report that there
have been no glitches in |
|
| the
move to the new millennium. |
|
|
| PATTERN
OF SHARE HOLDING |
|
| Pattern
of shareholding of the company is enclosed. |
|
|
| AUDITORS |
|
| The
current auditors M/s. Ebrahim & Co., retire and being eligible, offer
themselves for re-appointment. |
|
|
| STAFF |
|
| Finally
the board wishes to thank the management and staff for their hard work and
dedication in |
|
| developing
the bank. We also appreciate the support of our valued clients and look
forward to a mutually |
|
| beneficial
relationship. |
|
|
| For
and On Behalf of the Board |
|
|
|
|
Shafqat Ali Bokhari |
|
| October
14, 2000 |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of ESCORTS INVESTMENT BANK LIMITED as
at June |
|
| 30,
2000 and the related profit and loss account, 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 |
|
| standards
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 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 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
except for the change as explained in note 2.5 with which we concur; |
|
|
| 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, 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, 2000 and of the profit, its cash flows and changes in equity
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. |
|
|
| Karachi |
|
EBRAHIM & COMPANY |
|
| October
14, 2000 |
|
CHARTERED ACCOUNTANTS |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
capital 50,000,000 shares of |
|
| Rs, 10 each |
|
500,000,000 |
500,000,000 |
|
|
=========== |
=========== |
|
| Issued,
subscribed and paid up capital |
|
3 |
200,000,000 |
200,000,000 |
|
|
| Statutory
reserve |
|
4 |
8,532,428 |
6,902,481 |
|
| Unappropriated
profit |
|
4,129,707 |
7,609,921 |
|
|
------------------- |
------------------- |
|
|
212,662,135 |
214,512,402 |
|
| LIABILITY
AGAINST ASSET |
|
| SUBJECT
TO FINANCE LEASE |
|
5 |
364,897 |
-- |
|
|
| CERTIFICATES
OF INVESTMENT |
|
6 |
53,224,919 |
61,049,919 |
|
|
| CURRENT
LIABILITIES |
|
|
| Current
portion of liability against assets |
|
| subject
to finance lease |
|
184,917 |
-- |
|
| Certificates
of Investment |
|
6 |
370,744,188 |
452,301,565 |
|
| Short
term loans |
|
7 |
58,000,000 |
-- |
|
| Accrued
and other liabilities |
|
8 |
13,093,461 |
12,796,705 |
|
| Provision
for taxation |
|
9 |
17,693,674 |
13,793,674 |
|
| Dividend |
|
10 |
10,001,375 |
20,000,000 |
|
|
|
----------- |
----------- |
|
|
469,717,615 |
498,891,944 |
|
|
| CONTINGENCIES
AND COMMITMENTS |
11 |
|
|
----------- |
----------- |
|
|
735,969,566 |
774,454,265 |
|
|
========== |
========== |
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
12 |
6,328,366 |
6,183,840 |
|
|
|
|
|
|
| INVESTMENTS |
|
13 |
114,156,023 |
79,255,659 |
|
|
|
|
|
|
| MORABAHA
FINANCING |
|
14 |
130,151 |
154,720 |
|
|
|
|
|
|
| DEPOSITS,
PREPAYMENTS AND |
|
|
|
|
| DEFERRED
COST |
|
15 |
3,088,029 |
6,157,944 |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
| Advances,
prepayments and other |
|
|
|
|
| receivables |
|
16 |
41,316,450 |
47,732,229 |
|
| Morabaha
financing |
|
17 |
99,217,523 |
104,042,718 |
|
| Investments |
|
18 |
409,462,969 |
411,355,115 |
|
| Cash
and bank balances |
|
19 |
62,270,055 |
119,572,040 |
|
|
|
----------- |
----------- |
|
|
612,266,997 |
682,702,102 |
|
|
----------- |
----------- |
|
|
735,969,566 |
774,454,265 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
|
2000 |
1999 |
|
| INCOME |
|
Note |
Rupees |
Rupees |
|
|
| Profit
on morabaha financing |
|
17,833,713 |
18,237,917 |
|
| Income
on investments and placements |
|
72,719,876 |
70,104,010 |
|
| Guarantee
commission |
|
117,000 |
101,890 |
|
| Fee income |
|
135,000 |
200,000 |
|
| Profit
on sale of investments |
|
20 |
3,766,289 |
368,499 |
|
| Other income |
|
21 |
12,809 |
373,137 |
|
|
|
----------- |
----------- |
|
|
|
94,584,687 |
89,385,453 |
|
| EXPENDITURE |
|
|
|
|
| Return
on Certificates of Investment |
|
|
58,869,846 |
48,226,755 |
|
| Administrative
and other operating expenses |
22 |
20,899,658 |
18,895,731 |
|
| Financial
charges |
|
23 |
315,450 |
933,428 |
|
|
|
----------- |
----------- |
|
|
80,084,954 |
68,055,914 |
|
|
|
|
| OPERATING
PROFIT BEFORE PROVISION |
|
----------- |
----------- |
|
| AND
TAXATION |
|
14,499,733 |
21,329,539 |
|
| General
provision against doubtful morabaha |
|
|
|
| financing |
|
2,450,000 |
-- |
|
|
----------- |
----------- |
|
| OPERATING
PROFIT BE FORE TAXATION |
|
12,049,733 |
21,329,539 |
|
|
| PROVISION
FOR TAXATION |
|
| Current |
|
3,900,000 |
7,000,000 |
|
|
----------- |
----------- |
|
| PROFIT
AFTER TAXATION |
|
8,149,733 |
14,329,539 |
|
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
7,609,921 |
16,146,290 |
|
|
|
----------- |
----------- |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
15,759,654 |
30,475,829 |
|
| APPROPRIATIONS |
|
| Transferred
to statutory reserve |
|
1,629,947 |
2,865,908 |
|
| Proposed
dividend - 5% (1999 : 10%) |
|
10,000,000 |
20,000,000 |
|
|
----------- |
----------- |
|
|
11,629,947 |
22,865,908 |
|
|
----------- |
----------- |
|
|
4,129,707 |
7,609,921 |
|
|
========== |
========== |
|
|
Re. |
Re. |
|
| EARNINGS
PER SHARE |
|
24 |
0.41 |
0.72 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
|
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
12,049,733 |
21,329,539 |
|
| Adjustments
for non cash charges |
|
|
|
| Depreciation |
|
1,312,614 |
1,335,636 |
|
| Provision
for doubtful debt |
|
2,450,000 |
-- |
|
| Gain
on sale of investment |
|
-- |
(368,499) |
|
| Amortization
of premium/discount on investment |
|
76,836 |
-- |
|
| Amortization
of deferred costs |
|
2,$18,308 |
2,518,308 |
|
| Gain
on sale of fixed assets |
|
-- |
(251,005) |
|
|
---------- |
---------- |
|
|
6,357,758 |
3,234,440 |
|
| Decrease/(Increase)
in operating assets |
|
|
|
| Advances,
deposits, prepayments and other |
|
|
|
| receivables |
|
8,635,494 |
(8,759,667) |
|
| Morabaha
financing |
|
2,399,764 |
33,030,755 |
|
| Short
term investments |
|
2,600,000 |
(103,500,000) |
|
|
---------- |
---------- |
|
|
13,635,258 |
(79,228,912) |
|
| (Decrease)/Increase
in operating liabilities |
|
| Certificates
of investment |
|
(89,382,377) |
203,824,400 |
|
| Short
term loans |
|
58,000,000 |
-- |
|
| Accrued
and other liabilities |
|
296,756 |
6,486,047 |
|
|
---------- |
---------- |
|
|
(31,085,621) |
210,310,447 |
|
|
---------- |
---------- |
|
|
957,128 |
155,645,514 |
|
| Income
tax paid |
|
(2,219,715) |
(23,248,940) |
|
|
---------- |
---------- |
|
| Net
cash flow from operating activities |
|
(1,262,587) |
132,396,574 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Addition
to fixed assets |
|
(782,140) |
(41,925) |
|
| Proceeds
from sale of fixed assets |
|
-- |
795,000 |
|
| Long
term investments |
|
(35,685,054) |
(30,494,912) |
|
| Deposits
and prepayments |
|
5,516,071 |
(815,507) |
|
|
---------- |
---------- |
|
| Net
cash flow from investing activities |
|
(35,915,587) |
(30,557,344) |
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Payment
of lease obligation under finance lease |
|
(125,186) |
(499,746) |
|
| Dividend
paid |
|
(19,998,625) |
-- |
|
|
---------- |
---------- |
|
|
(20,123,811 ) |
(499,746) |
|
|
---------- |
---------- |
|
| Net
(decrease)/increase in cash and cash equivalents |
|
(57,301,985) |
101,339,484 |
|
| Cash
and cash equivalents at the beginning of the year |
|
119,572,040 |
18,232,556 |
|
|
---------- |
---------- |
|
| Cash
and cash equivalents at the end of the year |
|
62,270,055 |
119,572,040 |
|
|
========== |
========== |
|
|
|
Chief Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
|
Share |
Statutory |
Unappropriated |
Total |
|
|
capital |
reserve |
profit |
|
|
|
Amounts in Rupees |
|
| Balance
as at June 30, 1998 |
|
200,000,000 |
4,036,573 |
16,146,290 |
220,182,863 |
|
| Net
profit for the year ended June 30, 1999 |
-- |
-- |
14,329,539 |
14,329,539 |
|
| Proposed
dividend |
|
-- |
-- |
(20,000,000) |
(20,000,000) |
|
| Transfer
to statutory reserve |
-- |
2,865,908 |
(2,865,908) |
-- |
|
|
----------- |
----------- |
----------- |
----------- |
|
| Balance
as at June 30, 1999 |
|
200,000,000 |
6,902,481 |
7,609,921 |
214,512,402 |
|
| Net
profit for the year ended June 30, 2000 |
-- |
-- |
8,149,733 |
8,149,733 |
|
| Proposed
dividend |
|
-- |
-- |
10,000,000) |
(10,000,000) |
|
| Transfer
to statutory reserve |
-- |
1,629,947 |
(1,629,947) |
-- |
|
|
----------- |
----------- |
----------- |
----------- |
|
| Balance
as at June 30, 2000 |
|
200,000,000 |
8,532,428 |
4,129,707 |
212,662,135 |
|
|
========== |
========== |
========== |
========== |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
