| Asset Investment Bank Limited |
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| CONTENTS |
|
|
| Company
Information |
|
| Notice
of Annual General Meeting |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
|
| COMPANY
INFORMATION |
|
|
| CHAIRMAN |
|
| S.
M. Abdullah |
|
|
| CHIEF
EXECUTIVE |
|
| Syed
Naveed H. Zaidi |
|
|
| DIRECTORS |
|
| Dr.
Khalid Iqbal |
|
| Mohammad
Ashiq Rehmani |
|
| Rana
M. Abu Obaida |
|
| Azhar
Tariq Khan |
|
| Sohail Ali |
|
| Shamim
I. Junejo |
|
|
| COMPANY
SECRETARY |
|
| Muhammad
Naeem Aslam |
|
|
| BANKERS |
|
| Habib
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| National
Development Finance Corporation |
|
| Habib
American Bank |
|
|
| AUDITORS |
|
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
|
| REGISTRAR |
|
| Noble
Computer Services (Pvt) Limited |
|
| 2nd
Floor, A1-Manzoor Building |
|
| Dr.
Ziauddin Ahmed Road, Karachi. |
|
| Phones:
(021) 2635511-14 |
|
|
| REGISTERED
OFFICE |
|
| l-B,
First Floor, Ali Plaza |
|
| Khayaban-e-Quaid-e-Azam |
|
| Blue
Area, Islamabad |
|
| ·
Phones: (051) 270621 - 270626 |
|
| Fax:
(051) 272506 |
|
|
| LIAISON
OFFICE |
|
| 9th
Floor, Lakson Square Building No. 1 |
|
| 265-R.A.
Lines, Karachi-74200 |
|
| Phones:
(021) 568.2027 - 5689580 - 5687412 - 5687419 |
|
| Fax:
(021) 5684259 |
|
| Telex:
20538 ASSET PK |
|
|
|
| NOTICE
OF ANNUAL GENERAL MEETING |
|
|
| Notice
is hereby given that the 7th Annual General Meeting of Asset Investment Bank
Limited |
|
| will
be held at l-B, First Floor, Ali Plaza, Khayaban-e-Quaid-e-Azam, Blue Area,
Islamabad on |
|
| Thursday,
December 30, 1999, at 10.00 a.m. to transact the following business: |
|
|
| ORDINARY
BUSINESS |
|
|
| 1)
To confirm the minutes of Extra Ordinary Annual General Meeting held on May
07, |
|
| 1999 |
|
|
| 2)
To receive, consider and adopt the audited accounts of the Company for the
year |
|
| ended
June 30, 1999 together with the Directors' and Auditors' Reports thereon. |
|
|
| 3)
To appoint Auditors for the next term and fix their remuneration. |
|
|
| The
present Auditors, M/S Ford, Rhodes, Robson, Morrow, Chartered Accountants |
|
| retire
and being eligible, offer themselves for re-appointment. |
|
|
| 4)
To transact any other business with the permission of the chair. |
|
|
| By
order of Board |
|
|
| Islamabad |
|
Muhammad Naeem Aslam |
|
| December
09, 1999 |
|
Company Secretary |
|
|
| NOTES: |
|
|
| 1.
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. |
|
|
| 2.
The members are requested to immediately notify the change in address, if
any. |
|
|
| 3.The
share transfer books of the Company will remain closed from December 24, 1999
to |
|
| December
30, 1999 both days inclusive. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
directors of Asset Investment Bank Limited are submitting the 7th Annual
Report of the |
|
| Bank
together with the audited accounts of the company for the year ended June 30,
1999. |
|
|
| FINANCIAL
REVIEW |
|
|
| Due
to adverse economic and capital market position of the country, coupled with
international |
|
| economic
sanctions due to nuclear tests and adverse policies of government on foreign
currency |
|
| deposit
accounts, resulted in skeptical attitude of local and foreign investors for
investments |
|
| and
their was substantial decline in the public savings due to heavy inflationary
pressure, which |
|
| resulted
in substantial decline in our foreign currency deposits, which was a secured
source of |
|
| income
for the Bank. |
|
|
| For
the year under review the bank had to take difficult steps to consolidate its
position thus |
|
| resulting
in a loss Rs. 14.131 million. Following are the major reasons: |
|
|
| 1.
We have settled a non-performing loan and sold the securities held by us and
utilized the |
|
| sale
proceeds for adjustment of the total liabilities. The Bank had to sustain a
loss of 14.56 |
|
| million,
which included a refund of Rs. 3.0 million, charged as commission to the
borrower, |
|
| for
arranging funds/credit facilities from other banks and DFIs, as we could not
arranged |
|
| the
required facility for them. |
|
|
| 2.
The Stock Market like the previous years remained under tremendous pressure
throughout |
|
| the
fiscal year1999 also, and therefore, Asset Bank, as recommended by our
auditors, had |
|
| to
make provision of 5.66 million for the diminution in value of our investment
portfolio, |
|
| doubtful
debt and receivables. |
|
|
| The
paragraph 1 of Auditors' Report/Observations in fact pertains to next fiscal
year's event, |
|
| which
will be reported in next year's accounts. The Bank has, however, recovered
its entire |
|
| amount
of investment i.e. principal amount of Rs. 20.0 million plus mark-up of Rs.
5.0 million |
|
| from
the borrower. |
|
|
| As
regard paragraph 2 of the Auditors' Report, the Bank's management held
various meetings |
|
| with
the top management of Muslim Commercial Bank Limited regarding the settlement
of |
|
| total
outstanding liabilities amounting to Rs. 67.86 million, which were maturing
in the year |
|
| 2003.
The MCB management in principle agreed to waive the accrued mark-up of Rs.
22.523 |
|
| million
provided we pay them the entire present and future installments in lump-sum
by March |
|
| 31,
1999. Accordingly Asset Investment Bank paid them a sum of Rs. 45.339 million
on March 31, |
|
| 1999. |
|
|
| FUTURE
OUTLOOK |
|
|
| The
depressed' economic conditions prevailing in the country for most part of the
year and |
|
| liquidity
crunch in the credit market made it very difficult to raise funds. However,
we are |
|
| confident
that our serious and vigorous efforts will yield fruitful results and we
would be able |
|
| to
raise substantial amount of funds during the current year. |
|
|
| Meanwhile,
our efforts to increase the capital of the Bank by setting up of a joint
venture with |
|
| financially
sound investors are in progress. We are at an advance stage of negotiations
with the |
|
| potential!
investors and we are confident that we should succeed not only in raising the
capital |
|
| of
the Bank but also to get long term credit lines. These measures will improve
the financial |
|
| position
of your Bank in due course. |
|
|
| ASSET
INVESTMENT BANK LIMITED |
|
|
| RECTIFICATION
OF COMPUTER SYSTEM REGARDING ADVENT OF NEXT CENTURY |
|
|
| Asset
Investment Bank Limited has made necessary changes in its MIS and the year
2000 prob- |
|
| lem
"The Millennium Bug" has been solved. |
|
|
| PATTERN
OF SHAREHOLDING |
|
|
| The
pattern of shareholding as at June 30, 1999 is annexed. |
|
|
| AUDITORS |
|
|
| The
present auditors, M/S Ford, Rhodes, Robson, Morrow, Chartered Accountants
retire, and |
|
| being
eligible, offer themselves for re-appointment. |
|
|
| ACKNOWLEDGMENT |
|
|
| Our
thanks are due to the State Bank of Pakistan and the Securities and Exchange
Commission |
|
| of
Pakistan for their support and guidance. We also extend appreciation to
depositors, clients |
|
| and
correspondents for their trust and support and for recognition of Bank's
services. |
|
|
| The
Board wishes to place on record its appreciation of the work and concerted
efforts of the |
|
| company
personnel. |
|
|
| We
seek Allah's guidance and His blessings in achieving our objectives. |
|
|
| On
Behalf of the Board |
|
|
| Islamabad |
|
S. M. Abdullah |
|
| December
02, 1999 |
|
Chairman |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed Balance Sheet of Asset Investment Bank Limited as at
June 30, |
|
| 1999
and the related Profit and Loss Account and the Statement of Changes in
Financial Position |
|
| (Cash
Flow Statement), 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: |
|
|
| 1.
As fully explained in Note 12.3.1 to the accounts, the company entered into a
settlement |
|
| agreement
with a borrower, subsequent to the Balance Sheet date, and that resulted in a |
|
| loss
of Rs. 19,996,349. No provision has been made for this loss in these
accounts. |
|
|
| 2.
The Company has recognised a gain of Rs. 22,521,941 on settlement of 16aris
taken from a |
|
| commercial
bank on the basis stated in Note 19 to the accounts. There is no documentary |
|
| basis
for recording of this income as the lender did not agree to this settlement
and has |
|
| filed
a case in the Sindh High Court for recovery of the outstanding amount,
subsequent to |
|
| the
Balance Sheet date. |
|
|
| 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 Com- |
|
| pany's
business; and |
|
|
| iii)
the business conducted, investments made and the expenditure incurred dur- |
|
| ing
the year were in accordance with the objects of the Company; |
|
|
| c) except for the effect on the financial
statements of the matters reported in paragraph |
|
| 1
and 2 above, 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 statement of |
|
| changes
in financial position, 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, 1999 and of the loss and the changes in financial position for the year
then |
|
| ended; |
|
|
| d)
in our opinion, zakat deductible at source, if any, under the Zakat and Ushr
Ordi- |
|
| nance,
1980 was deducted by the Company and deposited in the Central Zakat Fund |
|
| established
under section 7 of that Ordinance; and |
|
|
| e)
without qualifying our opinion we draw attention to Notes 12.2 and 12.4.1 to
the |
|
| accounts.
The uncertainties attached with the projects may cause delay in the |
|
| repayment
of rescheduled loans and mark-up thereon, and may impair the financial |
|
| position
of the Company. |
|
|
| Islamabad |
|
Ford, Rhodes, Robson,
Morrow |
|
| December
02, 1999 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT |
|
| JUNE 30, 1999 |
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
|
| SHARE
CAPITAL AND RESERVES |
|
|
| Authorised
capital- |
|
| 20,000,000
ordinary shares of Rs. 10/- each |
|
200,000,000 |
200,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital- |
|
| 10,000,000
ordinary shares of Rs. 10/- each |
|
| fully
paid in cash |
|
100,000,000 |
100,000,000 |
|
|
| Reserves |
|
| Capital
reserve - |
|
| Statutory
/ special reserve |
|
3 |
2,387,791 |
2,387,791 |
|
| Revenue
reserve - |
|
|
|
|
| Accumulated
loss |
|
|
(31,678,852) |
(17,547,358) |
|
|
|
---------- |
---------- |
|
|
|
(29,291,061) |
(15,159,567) |
|
|
|
---------- |
---------- |
|
|
|
70,708,939 |
84,840,433 |
|
| LONG
TERM FINANCES |
|
19 |
-- |
63,015,325 |
|
|
|
| LIABILITIES
AGAINST ASSETS SUBJECT |
|
| TO
FINANCE LEASE |
|
4 |
300,166 |
-- |
|
|
|
|
|
| LONG
TERM DEPOSITS |
|
5 |
29,400,820 |
13,050,530 |
|
| CURRENT
LIABILITIES |
· |
|
|
|
|
| Short
term deposits |
|
6 |
145,932,726 |
244,830,000 |
|
| Short
term finances |
|
7 |
61,897,300 |
59,128,046 |
|
| Creditors,
accrued and other liabilities |
|
8 |
52,011,922 |
31,496,787 |
|
|
|
---------- |
---------- |
|
|
|
|
259,841,948 |
335,454,833 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
9 |
-- |
-- |
|
|
---------- |
---------- |
|
|
360,251,873 |
496,361,121 |
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
10 |
7,148,108 |
7,998,510 |
|
| LONG
TERM INVESTMENTS |
|
11 |
77,911,664 |
81,679,614 |
|
| LONG
TERM LOANS |
|
12 |
111,203,827 |
125,456,107 |
|
| LONG
TERM PREPAYMENTS |
|
13 |
250,000 |
980,000 |
|
|
|
| CURRENT
ASSETS |
|
|
| Short
term investments |
|
14 |
25,000,000 |
7,000,000 |
|
| Loans
and advances |
|
15 |
34,620,516 |
120,111,600 |
|
| Income
accrued and receivables |
|
16 |
41,500,433 |
37,435,617 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
17 |
42,754,978 |
60,524,135 |
|
| Cash
and bank balances |
|
18 |
19,862,347 |
55,175,538 |
|
|
|
---------- |
---------- |
|
|
163,738,274 |
280,246,890 |
|
|
---------- |
---------- |
|
|
360,251,873 |
496,361,121 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report dated December 02,1999 is annexed hereto. |
|
|
| Rana
M. Abu Obaida |
|
Syed Naveed H. Zaidi |
|
| Director |
|
Chief Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
Note |
Rupees |
Rupees |
|
| INCOME |
|
|
| Income
from bank deposits |
|
7,301,958 |
8,935,514 |
|
| Income
from loans and advances |
|
25,964,188 |
43,412,110 |
|
| Income
from investments in |
|
|
|
| Government
securities |
|
2,450,362 |
731,280 |
|
| Commission
and fees |
|
2,589,780 |
2,626,636 |
|
| Remission
of loan |
|
19 |
22,521,341 |
-- |
|
| Dividend
income |
|
|
302,619 |
580,286 |
|
| Gain/(loss)
on sale of shares and certificates |
20 |
(6,000,000) |
6,150,202 |
|
| Gain
on sale of fixed assets |
|
10.10 |
104 |
77,419 |
|
| Profit/(loss)
on sale of property |
|
|
-- |
(6,000,000) |
|
| Other income |
|
21 |
2,004,272 |
-- |
|
|
---------- |
---------- |
|
|
57,134,624 |
56,513,447 |
|
| EXPENDITURE |
|
| Return
on deposits, borrowings |
|
| and
running finance |
|
37,871,995 |
56,248,910 |
|
| Loss
on settlement of loan, mark-up |
|
|
|
| and
commission |
|
22 |
14,560,841 |
-- |
|
| Administrative
and operating |
|
23 |
11,181,098 |
15,186,311 |
|
| Provision
for doubtful debts |
|
1,192,065 |
4,502,079 |
|
| Provision
for doubtful receivables |
|
700,773 |
-- |
|
| Provision
for diminution in value of |
|
|
|
| long
term investments |
|
3,767,950 |
1,968,803 |
|
|
---------- |
---------- |
|
|
69,274,722 |
77,906,103 |
|
|
---------- |
---------- |
|
| Loss
before taxation |
|
(12,140,098) |
(21,392,656) |
|
|
| .Provision
for taxation |
|
| - Current year |
|
200,000 |
300,000 |
|
| - prior year |
|
1,791,396 |
-- |
|
|
---------- |
---------- |
|
|
1,991,396 |
300,000 |
|
|
---------- |
---------- |
|
| Loss
after taxation |
|
(14,131,494) |
(21,692,656) |
|
| Profit/(loss)
brought forward |
|
(17,547,358) |
4,145,298 |
|
|
---------- |
---------- |
|
| Accumulated
loss carried forward |
|
(31,678,852) |
(17,547,358) |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts |
|
| The
auditors' report dated December 02, 1999 is annexed hereto. |
|
|
| Syed
Naveed H. Zaidi |
|
Rana M. Abu Obaida |
|
| Chief
Executive |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
| Return,
commission and other receipts |
|
38,310,560 |
55,705,540 |
|
| Return
on deposits, borrowings and running finance |
|
(37,871,995) |
(51,913,500) |
|
| Administrative
and operating expenses |
|
(9,918,042) |
(18,072,358) |
|
|
---------- |
---------- |
|
|
(9,479,477) |
(14,280,318) |
|
|
| .(Increase)
/ decrease in assets- |
|
| Loans
and advances |
|
90,813,745 |
(66,909,599) |
|
| Income
accrued and receivables |
|
(7,888,103) |
(5,602,677) |
|
| Advances,
deposits, prepayments and other receivables |
|
8,798,383 |
11,639,249 |
|
|
| Increase
/ (decrease) in liabilities- |
|
| Deposits |
|
(82,546,984) |
54,170,560 |
|
| Creditors,
accrued and other liabilities |
|
21,156,160 |
6,824,780 |
|
|
---------- |
---------- |
|
| Net
cash flow from operating activities before tax |
|
20,853,724 |
(14,158,005) |
|
| Income
tax paid |
|
(42,944) |
(2,805,023) |
|
|
---------- |
---------- |
|
| Net
cash generated from/ (used) in operating activities |
|
20,810,780 |
(16,963,028) |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Dividend
received |
|
302,619 |
580,286 |
|
| Purchase
of fixed assets |
|
(47,000) |
(135,560) |
|
| Proceeds
from sale of fixed assets and property |
|
180,000 |
(5,233,000) |
|
| Proceeds
from sale of investments |
|
-- |
23,955,085 |
|
| Purchase
of investments |
|
(18,000,000) |
(16,015,000) |
|
|
---------- |
---------- |
|
| Net
cash generated from/(used) investing activities |
|
(17,564,381) |
3,151,811 |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| ·
Short term finances |
|
(37,724,730) |
11,356,971 |
|
| Repayment
of. obligations under finance lease |
|
(834,860) |
(1,472,313) |
|
|
---------- |
---------- |
|
| Net
cash generated from/(used) in financing activities |
|
(38,559,590) |
9,884,658 |
|
|
---------- |
---------- |
|
| Net
decrease in cash and cash equivalents |
|
(35, 313,191) |
(3,926,559) |
|
| Cash
and cash equivalents at the beginning of the year |
|
55,175,538 |
59,102,097 |
|
|
---------- |
---------- |
|
| Cash
and cash balances at the end of the year |
|
19,862,347 |
55,175,538 |
|
|
========== |
========== |
|
|
|
|
| Syed
Naveed H. Zaidi |
|
Rana M.Abu Obaida |
|
| Chief
Executive |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
|
| Asset
Investment Bank Limited was incorporated in Pakistan on June 9, 1992 as a
public |
|
| limited
company and is listed on the Karachi, Lahore and Islamabad stock exchanges.
The |
|
| company
is principally engaged in the business of investment banking under the provi- |
|
| sions
of SRO 585(1)/87 dated July 13, 1987 issued by the Ministry of Finance,
Government |
|
| of Pakistan. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Tangible fixed assets and depreciation |
|
| Tangible
fixed assets are stated at cost less accumulated depreciation. Depreciation |
|
| on
all operating fixed assets is charged to income on reducing balance method at
the |
|
| rates
given in note 10. |
|
|
| Full
year's depreciation is provided in the year of purchase and no depreciation
is |
|
| charged
on assets deleted during the year. |
|
|
| Minor
renewals or replacements, maintenance, repair, gains or losses on disposal of |
|
| fixed
assets are included in income currently. Major renewals and replacements are |
|
| capitalised. |
|
|
| 2.3
Assets subject to finance lease |
|
|
| Assets
subject to finance lease are stated at the lower of present value of minimum |
|
| lease
payments under the lease agreements and fair value of the assets. The related |
|
| obligations
of the lease are accounted for as liabilities. |
|
|
| Assets
acquired under a finance lease are amortised over their useful lives on
reduc- |
|
| ing
balance method at the rates given in note 10. Amortisation of the leased
assets is |
|
| charged
to income. |
|
|
| 2.4 Employees retirement benefits |
|
|
| The
company operates a contributory provident fund for all its permanent employ- |
|
| ees
and contributions to the fund are made by the company and the employees in |
|
| accordance
with the fund rules. |
|
|
| 2.5 Taxation |
|
|
| Provision
for current taxation is based on taxable income at the current rate of |
|
| taxation
after considering all applicable tax credits, rebates and exemptions. The |
|
| company
accounts for deferred tax using the liability method on all major timing |
|
| differences. |
|
|
| 2.6
Investments |
|
|
| Long
term investments |
