| Escorts Investment Bank Limited |
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| Annual
Report 1999 |
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| CONTENTS |
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| Company
Information |
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| Notice
of Meeting |
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| Directors'
Report |
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| Auditors'
Report to the members |
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| Balance Sheet |
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|
| Profit
& Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
|
| Pattern
of Shareholding |
|
|
| COMPANY
INFORMATION |
|
|
| Board
of Directors |
|
|
| Mr.
Bashir Ahmed |
|
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| Chairman |
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| Mr.
Shafqat Ali Bokhari |
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| Chief Executive |
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| Mr.
Zaigham Mahmood Rizvi |
|
| Nominee-Pak
Libya Holding Co (Pvt.) Ltd. |
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| Mr.
Rasool Ahmed Kaleemi |
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| Nominee-
National Bank of Pakistan |
|
| Miss.
Shazia Bashir |
|
| Mr.
Mutahir Ahmed |
|
| Mr.
Mahboob Husain |
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| Ms.
Maryam Bashir |
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| Mr.
Bairam Qureshy |
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| Mr. Qaim Mehdi |
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| Mr.
Farrukh Ahmed Kamran |
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| Company
Secretary |
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| Farooq Ahmed |
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| Share
Registrars |
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| Hameed
Majid Associates (Pvt) Ltd. |
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| H.M
House, 7-Bank Square, Lahore |
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| Bankers |
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| Gulf
Commercial Bank Limited |
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| Union
Bank Limited |
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| Habib
American Bank N.Y. |
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| Auditors |
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| Ebrahim
& Co. Chartered Accountants |
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| Legal Advisor |
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| Mandviwalla
& Zafar, |
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| Advocates
and Legal Consultants |
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| Registered
Office |
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| Escorts
House, 4th Floor |
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| 26-Davis
Road, Lahore |
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| NOTICE
OF ANNUAL GENERAL MEETING |
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| NOTICE
IS HEREBY GIVEN THAT the 4th Annual General Meeting of the shareholders of |
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| ESCORTS
INVESTMENT BANK LIMITED will be held on Tuesday the November 16, 1999 at
11:30 |
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| 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: |
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| 1.
To confirm the minutes of 3rd Annual General Meeting held on November 14,
1998. |
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|
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| 2.
To receive and adopt the Directors' and Auditors' Report and Audited Accounts
for the year |
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| ended
June 30, 1999. |
|
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| 3.
To consider and if thought fit, approve a dividend payment @ 10%. |
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|
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| 4.
To elect ten directors of the Company, as fixed by the Board of Directors of
the Company, for |
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| a
period of three years under section 178(1) of the Companies Ordinance, 1984
in place of |
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| the
retiring directors namely, (1) Mr. Bashir Ahmed,(2) Mr. Zaigham Mahmood
Rizvi, (3) Ms. |
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| Shazia
Bashir, (4) Ms. Maryam Bashir, (5) Mr. Shafqat Ali Bokhari, (6) Mr. Mutahir
Ahmed, (7) |
|
| Mr.
Farrukh Ahmed Kamran, (8) Mr. Bairam Qureshy, (9) Mr. Qaim Mehdi and, (10)
Syed |
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| Mahboob
Husain. Mr. R.A. Kaleemi being a nominee director of National Bank of
Pakistan is |
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| not
subject to re-election. |
|
|
| 5.
To appoint the Auditors and to fix their remuneration. The present Auditors
M/S Ebrahim & |
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| Co,
Chartered Accountants, retire and being eligible, offer themselves for
re-appointment. |
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| SPECIAL
BUSINESS |
|
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| 6.
To approve the remuneration of the Chief Executive and a full time working
director of the |
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| company.
Further, to authorize the Board of Directors to revise the remuneration of
the Chief |
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| Executive
and full time working director of the company. |
|
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| A
statement under section 160 of the Companies Ordinance, 1984 pertaining to
the special |
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| business
is being sent to the shareholders with a copy of the notice. |
|
|
| 7.
To transact any other business with the permission of the chair. |
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|
By order of the Board |
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| Lahore |
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|
FAROOQ AHMED |
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| October 26, 1999 |
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|
COMPANY SECRETARY |
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|
|
| NOTES |
|
|
| i.
A member entitled to attend and vote at this meeting is entitled to appoint a
proxy to attend |
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| the
meeting and vote for him/her. Form of Proxy is enclosed with the annual
report. Proxies |
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| in
order to be effective, must be received at the registered office of the
Company, at least 48 |
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| hours
before the time of holding the meeting. |
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|
|
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| 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. |
|
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| STATEMENT
U/S 160(1) (b) OF THE COMPANIES ORDINANCE, 1984 |
|
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| The
member's permission is sought for the payment of remuneration and the
provision of certain |
|
| other
utilities to the Chief Executive and a full time working director of the
company, as per bank's |
|
| service
rules. For the purpose the following resolution is proposed to be passed. |
|
|
| "Resolved
that, with effect from July 1999 the remuneration of the Chief Executive and
a full time |
|
| working
director are approved at Rs. 126,500/- per month and Rs. 77,000/- per month
respectively |
|
| along
with other benefits as per bank's service rules. |
|
|
| Further
resolved that the Board of Directors be and is hereby authorized to revise
the remuneration |
|
| of
the Chief Executive and the full time working director of the company from
time to time in |
|
| accordance
with the company's rules and policies". |
|
|
| 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 4th |
|
| Annual
General Meeting and present the annual report for the Financial Year ended
June 30,1999. |
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| The
year 1998-99 has been another difficult year in the economic history of the
country. Besides |
|
| East
Asian economic turmoil, the economy was subjected to economic sanctions
putting severe |
|
| pressure
on the balance of payments. This led to major regulatory changes during the
year. |
|
|
| In
order to maintain the forex reserves to a respectable level, the Government
suspended major |
|
| forex
payments. This resulted in erosion of investor's confidence, decline in the
stock markets, |
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| drying
up of the external official inflows, low level of remittances and private
capital inflows, and |
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| depreciation
of the rupee in the free market. This was followed by the introduction of a
dual |
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| exchange
rate system. |
|
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| The
Karachi Stock Exchange 100 index dropped to the level of 945 on December 31,
1998 and |
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| finally
closed at 1054 on June 30, 1999. Main reasons being the Government IPP
tussle, which |
|
| continues
till date, the East Asian crisis, nuclear blasts of May 1998 and massive off
loading of |
|
| existing
positions by foreign investors. |
|
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| FINANCIAL
RESULTS |
|
|
| The
bank earned a pretax profit of Rs. 21.330 million as against Rs. 20.336
million in the preceding |
|
| year,
while the total balance sheet footing showed an improvement of Rs. 231.14
million from Rs. |
|
| 543.314
million to Rs. 774.454 million. Gross income increased by 27.99% to Rs.
89.385 million |
|
| from
Rs. 69.833 million of last year. Successful efforts were made to control the
administrative and |
|
| operating
expenses at the previous year's level. |
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|
| The
results although lower than expected, can be attributed to the troubled
economic conditions |
|
| prevailing
in the country resulting in a slow down in the overall business activity. |
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|
| FUTURE |
|
|
| The
overall economic performance of the fiscal year showed some improvement. The
stock market |
|
| showed
some signs of recovery from the third quarter of fiscal 1998-99 and before
dipping back to |
|
| 1054
on June 30, 1999 touched the level of 1300. The rescheduling of debts by the
Paris and |
|
| London
Clubs and partial withdrawal of sanctions also impacted positively on the
stock markets. |
|
|
| The
Government forecasts also envisage positive trends to continue. Investment
Banking Sector is |
|
| at
a cross road where future strategies have to be carefully re-evaluated.
Emphasis will have to be |
|
| placed
on strict Asset Liability Management to avoid mismatch of positions, the
chances of which |
|
| have
increased many fold due to continuous withdrawal of the rupee counterpart of
converted |
|
| foreign
currency accounts. |
|
|
| In
view of the changing scenario, greater emphasis is now being placed on fee
based business, and |
|
| development
of capital market related activities. As part of these efforts, your bank for
the first time |
|
| participated
in the Pre-IPO of a large TFC issue of a Blue Chip company. This activity is
expected |
|
| to
gain momentum in the days to come. |
|
|
| DIRECTORS |
|
|
| During
the year Mrs. Zubeda Shirin resigned from the directorship of the company.
Ms. Maryam |
|
| Bashir
was co-opted in her place. The Board wishes to place on record an
appreciation of the |
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| services
rendered by Mrs. Zubeda Shirin. |
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|
| DIVIDEND |
|
|
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| Your
directors take pleasure in recommending a dividend at the rate of 10 percent
of the paid up |
|
| capital
of the company. |
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|
|
| YEAR
2000 COMPLIANCE |
|
|
| In
the last annual report, your directors had reported that the services of
experienced software |
|
| engineers
are at hand to prepare a revised system which can effectively deal with the
millennium |
|
| bug.
On behalf of the board of directors, it gives me pleasure in reporting to you
that the |
|
| assignment
has been completed. The revised system has been put into place and fully
tested |
|
| alongwith
the hardware in use. |
|
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| Based
on the tests performed, and certification by the software vendors, we can
safely say that your |
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| bank
is Year 2000 compliant. |
|
|
| PATTERN
OF SHAREHOLDING |
|
|
| Pattern
of shareholding of the company is enclosed. |
|
|
| AUDITORS |
|
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| The
current auditors M/S Ebrahim & Co., retire and offer themselves for
reappointment. |
|
|
| STAFF |
|
|
| Finally,
the board wishes to thank the Management and staff for their efforts and
dedication in |
|
| developing
the bank through this difficult year. We also appreciate the support of our
valued clients |
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| and
took forward to a mutually beneficial relationship. |
|
|
| For
and on behalf of the Board. |
|
|
|
| Shafqat
Ali Bokhari |
|
| Chief Executive |
|
|
| September
27, 1999 |
|
|
|
| AUDITORS'
REPORT TO THE MEMBERS |
|
|
| We
have audited the annexed balance sheet of ESCORTS INVESTMENT BANK LIMITED as
at |
|
| June
30, 1999 and the related profit and loss account and statement of changes in
financial position |
|
| 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 accounts have been kept by the Company as
required |
|
| by
the Companies Ordnance 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 accounts and are further in accordance with |
|
|
| accounting
policies consistently applied, except for the change in accounting |
|
|
| policy
as stated in Note: 10.3 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 and the statement of
changes in |
|
| financial
position together with the notes forming part thereof, give the information |
|
| required
by the Companies Ordnance, 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 profit and changes in financial position for the year then
ended' and |
|
|
| d)
in our opinion no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
|
|
|
| KARACHI |
|
|
EBRAHIM & COMPANY |
|
| DATED:
27 September, 1999 |
|
CHARTERED ACCOUNTANTS |
|
|
|
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
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 |
6,902,481 |
4,036,573 |
|
| Unappropriated
profit |
|
|
7,609,921 |
16,146,290 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
214,512,402 |
220,182,863 |
|
| CERTIFICATES
OF INVESTMENT |
|
5 |
61,049,919 |
18,274,130 |
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
| Current
portion of liability against assets |
|
|
|
| subject
to finance lease |
|
|
-- |
499,746 |
|
| Certificates
of Investment |
|
5 |
452,301,565 |
291,252,954 |
|
| Accrued
and other liabilities |
|
6 |
12,796,705 |
6,310,658 |
|
| Provision
for taxation |
|
7 |
13,793,674 |
6,793,674 |
|
| Proposed
dividend |
|
|
20,000,000 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
498,891,944 |
304,857,032 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
8 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
774,454,265 |
543,314,025 |
|
|
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
9 |
6,183,840 |
8,021,546 |
|
| INVESTMENTS |
|
10 |
79,255,659 |
20,117,638 |
|
| MORABAHA
FINANCING |
|
11 |
154,720 |
6,250,000 |
|
| DEPOSITS,
PREPAYMENTS AND DEFERRED COST |
12 |
6,157,944 |
7,860,745 |
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
13 |
47,732,229 |
15,723,622 |
|
| Morabaha
financing |
|
14 |
104,042,718 |
130,978,193 |
|
| Investments |
|
15 |
411,355,115 |
336,129,725 |
|
| Cash
and bank balances |
|
16 |
119,572,040 |
18,232,556 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
682,702,102 |
501,064,096 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
774,454,265 |
543,314,025 |
|
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| INCOME |
|
|
|
| Profit
on morabaha financing |
|
|
18,237,917 |
26,195,620 |
|
| Income
on investments and placements |
|
|
70,104,010 |
42,405,279 |
|
| Guarantee
commission |
|
|
101,890 |
193,744 |
|
| Fee income |
|
|
200,000 |
125,000 |
|
| Profit
on sale of investments |
|
17 |
368,499 |
778,850 |
|
| Other income |
|
|
18 |
373,137 |
134,945 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
89,385,453 |
69,833,438 |
|
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
|
|
|
|
| Return
on Certificates of Investment |
|
|
48,226,755 |
25,257,865 |
|
| Administrative
and other operating expenses |
|
19 |
18,895,731 |
18,634,370 |
|
| Financial
charges |
|
20 |
933,428 |
5,605,465 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
68,055,914 |
49,497,700 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
INCOME BEFORE TAXATION |
|
|
21,329,539 |
20,335,738 |
|
| PROVISION
FOR TAXATION |
|
|
|
|
|
|
|
|
| Current |
|
|
|
7,000,000 |
6,793,674 |
|
| Prior year |
|
|
|
-- |
138,445 |
|
| Deferred |
|
|
|
-- |
(38,420) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
7,000,000 |
6,893,699 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
|
|
14,329,539 |
13,442,039 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
|
16,146,290 |
5,392,659 |
|
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
|
30,475,829 |
18,834,698 |
|
|
|
|
|
|
|
| APPROPRIATIONS |
|
|
|
|
|
| Transferred
to statutory reserve |
|
|
|
2,865,908 |
2,688,408 |
|
| Proposed
dividend -- 10% (1998: Nil) |
|
|
20,000,000 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
|
22,865,908 |
2,688,408 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
|
7,609,921 |
16,146,290 |
|
|
|
|
|
|
========== |
========== |
|
| EARNINGS
PER SHARE |
|
|
|
Rs. 0.716 |
Rs. 0.672 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
|
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 |
|
|
|
| Profit
before taxation |
|
|
21,329,539 |
20,335,738 |
|
| Adjustments
for non cash charges |
|
|
|
|
|
|
| Depreciation |
|
|
1,335,636 |
1,773,619 |
|
| Gain
on sale of investments |
|
|
(368,499) |
-- |
|
| Amortization
of deferred costs |
|
|
|
2,518,308 |
2,518,308 |
|
| Gain
on sale of fixed assets |
|
|
|
(251,005) |
(18,160) |
|
|
|
------------------ |
------------------ |
|
|
|
3,234,440 |
4,273,767 |
|
|
|
|
|
| (Increase)/Decrease
in operating assets |
|
|
|
|
| Advances,
deposits, prepayments and other |
|
|
|
| Receivables |
|
|
|
|
(8,759,667) |
(2,156,206) |
|
| Morabaha
financing |
|
|
|
33,030,755 |
125,905,526 |
|
| Short
term investments |
|
|
|
(103,500,000) |
(33,956,477) |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(79,228,912) |
89,792,843 |
|
|
|
|
|
|
|
|
| Increase/(Decrease)
in operating liabilities |
|
|
|
| Certificates
of investment |
|
|
203,824,400 |
(114,272,443) |
|
| Accrued
and other liabilities |
|
|
6,486,047 |
1,810,799 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
210,310,447 |
( 112,461,644) |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
155,645,514 |
1 940,704 |
|
| Income tax paid |
|
|
|
(23,248,940) |
(5,117,157) |
|
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from operating activities |
|
|
132,396,574 |
(3,176,453) |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
| Addition
to fixed assets |
|
|
(41,925) |
(1,216,461) |
|
| Proceeds
from sale of fixed assets |
|
|
795,000 |
550,000 |
|
| Long
term investments |
|
|
(30,494,912) |
(2,607,853) |
|
| Deposits
and prepayments |
|
|
(815,507) |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash flow from investing activities |
|
|
(30,557,344) |
(3,274,314) |
|
|
|
|
|
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
|
|
|
| Payment
of lease obligation under finance lease |
|
|
(499,746) |
(611,231 ) |
|
|
|
|
------------------ |
------------------ |
|
| Net
increase/(decrease)in cash and cash equivalents |
|
101,339,484 |
(7,061,998) |
|
| Cash
and cash equivalents at the beginning of the year |
|
18,232,556 |
25,294,554 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
and cash equivalents at the end of the year |
|
|
119,572,040 |
18,232,556 |
|
|
|
|
========== |
========== |
|
|
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
|
| Escorts
Investment Bank Limited is a public limited company and its shares are quoted
on |
|
| Stock
Exchanges in Pakistan. The Company was incorporated in Pakistan on May 15,
1995 |
|
| and
started its commercial operation on October 16, 1996, working as an
investment bank |
|
| within
the purview of activities as described in SRO 585(I)87 dated July 13, 1987
issued by |
|
| Federal
Government. |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention |
|
|
