| First International 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 |
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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 |
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| Pattern
of Shareholding |
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| COMPANY
INFORMATION |
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| Board
of Directors |
Syed Babar Ali |
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Chairman |
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Fakir Syed Aijazuddin |
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Managing Director &
Chief Executive |
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|
Pir Ali Gohar |
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Mr. Tawfiq A. Husain |
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Mr. M. Rashid Zahir |
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Mr. Nasim Beg |
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Mr. S. Lachlan Hough |
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| Company
Secretary |
Syed Zia UI Hasan |
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| Auditors |
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Messrs. Ford, Rhodes,
Robson, Morrow |
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Chartered Accountants |
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| Legal Advisers |
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Messrs. Orr, Dignam &
Co. |
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Advocates |
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Messrs. Mohsin Tayebaly
& Co. |
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|
Advocates & Legal
Consultants |
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| Bankers |
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American Express Bank
Ltd. |
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Citi Bank N. A. |
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Muslim Commercial Bank
Ltd. |
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| Registrars |
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Noble Computer Services
(Pvt.) Ltd. |
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Al-Manzoor Building, |
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Dr. Ziauddin Ahmed Road, |
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Karachi. |
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| Lahore |
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2nd Floor |
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| Registered
Office |
Babar Ali Foundation
Building, |
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308, Upper Mall, |
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Lahore. |
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Telephones: (042)
5753414-6, 5710597, |
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111-234-234 |
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Fax: (042) 5710598 /
111-567-567 |
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| Karachi Office |
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7th Floor, |
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Shaheen Commercial
Complex, |
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Dr. Ziauddin Ahmed Road, |
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Karachi. |
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Telephones: (021)
2639042-46, |
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111-234-234 |
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Fax: (021) 2630678 /
111-567-567 |
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| Islamabad
Office |
Mezzanine Floor, |
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Razia Sharif Plaza, |
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90, Blue Area, G / 7, |
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Islamabad. |
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Telephones: (051)
275256-58, |
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111-234-234 |
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Fax: (051) 273861 /
111-567-567 |
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| NOTICE
OF NINTH ANNUAL GENERAL MEETING |
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| Notice
is hereby given that the Ninth Annual General Meeting of the shareholders
will be held at |
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| 10:00
a.m. on Wednesday, December 15, 1999 at the Company's Registered Office, 2nd
Floor, |
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| Babar
Ali Foundation Building, 308 Upper Mall, Lahore to transact the following
business: |
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| ORDINARY
BUSINESS: |
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| 1)
To receive and consider the Accounts of the Company for the financial year
ended June 30, 1999 |
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| together
with the Directors' and Auditors' Report. |
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| 2)
To appoint Auditors and to fix their remuneration. |
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| SPECIAL
BUSINESS |
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| 3)
To consider if thought fit, to approve the remuneration payable to the
Managing Director and |
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| Chief Executive. |
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| 4)
To transact any other business with the permission of the Chair. |
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|
SYED ZIA UL HASAN |
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| Date:
November 1, 1999 |
|
Company Secretary |
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| NOTES: |
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| 1)
The Share Transfer Books will remain closed from November 8, 1999 to November
15, 1999 |
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| (Both
days inclusive) in order to update the Register of the Shareholders for the |
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| purpose
of determining the names of shareholders for issuing notice of Annual General |
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| Meeting,
Annual Report and Accounts of the Company. The transfers received in order at |
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| the
Registrar Office by the close of the business hours on November 7, 1999 will
be |
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| treated
in time for the entitlement of the above |
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|
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| 2)
A member entitled to attend and vote at the Annual General Meeting is
entitled to appoint a |
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| proxy
in writing to attend the meeting and to vote on a member's behalf. A proxy
need not |
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| be
a member of the Company. |
|
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| 3)
Duly completed forms of proxy must be deposited with the Company's Secretary
not later |
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| than
48 hours before the time appointed for the meeting. |
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|
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| 4)
Account holders and sub-account holders holding book entry securities of the
company in |
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| the
Central Depository Company of Pakistan Limited, who wish to attend the Annual |
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| General
Meeting, are requested to bring original National Identify Cards with copy
thereof |
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| duly
attested by their Bankers for identification purpose. |
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| DIRECTORS'
REPORT |
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| The
Board of Directors of First International Investment Bank Limited (Interbank)
has pleasure in |
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| presenting
its Report and the Accounts for the twelve months ended 30 June 1999 to |
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| the
Ninth Annual General Meeting of its members. |
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| The
year under review witnessed a continuation of the economic downturn manifest
in the |
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| previous
year. The effect of this on the operations of Interbank has necessitated a
change in |
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| strategy,
both in the mobilisation of funds and the disposition of such funds.
Following the decision |
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| on
28 May 1998 by the Government of Pakistan to freeze foreign currency
accounts, your bank |
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| was
successful in negotiating an arrangement by which foreign currency deposits
held for the |
|
| specific
purpose of hedging against matched foreign currency obligations were allowed
to remain. |
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| As
on 30 June 1999, these foreign currency deposits amounted to an equivalent of
$36.391 |
|
| million. |
|
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| The
management of your bank, in its efforts to diversify its sources of
financing, succeeded in |
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| mobilising
rupee resources through direct fund raising and, to secure long term funding,
through |
|
| the
public flotation of Interbank's Term Finance Certificates which are 5 year
instruments, |
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| redeemable
in four equal installments after a grace period of one year and carrying an
expected |
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| profit
rate of 17.5% per annum. The first tranche offering of Rs. 300 million in
December 1998 was |
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| oversubscribed,
your bank receiving a total of Rs. 325.57 million, primarily from
institutional |
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| investors.
This can be interpreted as a measure of the confidence enjoyed by your bank
amongst |
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| its peers. |
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| During
the year, Interbank negotiated a reduction in its foreign currency facility
with the |
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| International
Finance Corporation (IFC) to the amount drawn down of $3.076 million, as
foreign |
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| exchange
cover was not available at an economical rate to justify such borrowings.
However, |
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| funds
already borrowed from IFC have been productively applied in leasing, micro
credit |
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| to
farmers, and other long term operations. |
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| Interbank
maintains a close and continuous scrutiny on the quality of its asset
portfolios. |
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| Full
provision in conformity with prudential regulations has been made for
financing which might |
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| be
irrecoverable, and a similar provision has been made for the diminution in
value of those long |
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| term
investments which have depreciated over the past four years. Even though this
unrealised |
|
| diminution
relates to preceding years and could more appropriately be set-off against
reserves |
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| accumulated
over previous years, Interbank was advised by its auditors to deduct this
provision |
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| of
Rs. 31.798 million from the profits of the current year. |
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| The
effect on the pre-tax profits for the year under review of Rs. 42.705 million
which, despite the |
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| highly
competitive market conditions in which your bank was operating, were an
improvement on |
|
| the
comparable profits of Rs. 28.499 million during the preceding year, was
therefore as follows: |
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|
Rs. (million) |
|
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| Profit
for the year before taxation and |
|
| provision
on long-term investments |
|
42.705 |
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| Provision
for diminution in value of |
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|
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| long-term
quoted investments |
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|
31.798 |
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|
------------------ |
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| Profit
for the year before taxation |
|
|
10.907 |
|
| Taxation
- current |
|
|
4.000 |
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|
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|
------------------ |
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| Profit
for the year after taxation |
|
|
6.907 |
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| Unappropriated
profit brought forward |
|
3.421 |
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|
------------------ |
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| Available
for appropriation |
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|
|
|
| Appropriations: |
|
|
10.328 |
|
|
|
|
| -
transfer to special reserve |
|
1.400 |
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| -
transfer to general reserve |
|
8.000 |
|
|
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|
------------------ |
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| Unappropriated
profit carried forward |
|
0.928 |
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|
========== |
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| The
efforts of the bank will be maintained in a direction consistent with prudent
and responsible |
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| fiscal
management. It will continue in its endeavour to improve its expertise, to
widen the range of |
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| products
and services it can offer its clients, and to utilise its financial and
intellectual capital more |
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| profitably. |
|
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| The
next fiscal year will overlap the millennium. Your bank is already not only
Y2K compliant but |
|
| has
improved its Operating Systems and facilities to equip it to meet the
challenges ahead. Your |
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| bank
has also been successful in obtaining a favourable decision from a full bench
of the Income |
|
| Tax
Tribunal confirming its claim, as a Non-Bank Financial Institution, to be
assessed at |
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| the
corporate rate rather than the higher rate applicable to scheduled banks. |
|
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| In
conclusion, your management would like to express its thanks to all the
employees of the bank |
|
| who
had worked exceptionally hard in difficult market conditions to improve the
bank's operations, |
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| to
enhance its visibility, and to expand its market base. Their achievements
during the current year |
|
| are
the pennants of which the bank can be justifiably proud. |
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|
For and on behalf of the Board |
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| Lahore: |
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F. S. AIJAZUDDIN |
|
| October 21, 1999 |
|
Chief Executive |
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| AUDITORS'
REPORT TO THE MEMBERS |
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| We
have audited the annexed balance sheet of FIRST
INTERNATIONAL INVESTMENT BANK |
|
| LIMITED as at June 30, 1999 and the related profit and loss account and
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: |
|
|
| (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 |
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| 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 company's |
|
| business; and |
|
|
| (iii)
the business conducted, investments made and the expenditure incurred during
the |
|
| year
were in accordance with 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 statement of changes in |
|
| financial
statement (cash flow statement), 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 profit and the changes in financial position (cash
flows) for |
|
| the
year then ended; and |
|
|
|
|
| (d)
in our opinion, zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was |
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| deducted
by the company and deposited in the Central Zakat Fund established under |
|
| section
7 of that Ordinance. |
|
|
| Karachi: |
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|
FORD, RHODES, ROBSON, MORROW |
|
| October 13, 1999 |
|
|
Chartered Accountants |
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|
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|
|
|
FINANCIAL INFORMATION |
|
|
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
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|
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|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
| ASSETS |
|
|
|
|
|
|
|
| NON-CURRENT
ASSETS |
|
|
|
| Tangible
fixed assets |
|
3 |
7,959,389 |
9,031,130 |
|
| Long-term
investments |
|
4 |
209,604,802 |
222,286,649 |
|
| Long-term
finance |
|
5 |
694,681,222 |
913,009,461 |
|
| Net
investment in lease finance |
|
6 |
190,420,472 |
57,121,013 |
|
| Long-term
demand promissory note |
|
7 |
78,000,000 |
78,000,000 |
|
| Long-term
deposits, prepayments and deferred costs |
8 |
8,393,993 |
5,638,826 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Prepayments
and other receivables |
|
9 |
263,953,896 |
250,414,855 |
|
| Bill receivable |
|
|
10 |
40,000,000 |
-- |
|
| Demand
promissory note |
|
|
-- |
20,000,000 |
|
| Fund
placements with investment banks / |
|
|
|
|
| other companies |
|
11 |
819,000,000 |
544,000,000 |
|
|
|
12 |
315,073,766 |
658,515,552 |
|
| Finance |
|
|
|
|
|
| Net
investment in lease finance |
|
6 |
59,711,326 |
17,618,871 |
|
| Trading
investments |
|
13 |
496,008,573 |
447,776,550 |
|
| Cash
and bank balances |
|
14 |
47,678,720 |
33,442,269 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
2,041,426,281 |
1,971,768,097 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
3,230,486,159 |
3,256,855,176 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
| EQUITY
AND LIABILITIES |
|
|
|
|
|
|
|
| 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 |
|
15 |
180,000,000 |
180,000,000 |
|
| Reserves |
|
16 |
157,122,036 |
150,214,859 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
337,122,036 |
330,214,859 |
|
|
|
|
|
|
| NON-CURRENT
LIABILITIES |
|
|
|
| Term
finance certificates |
|
17 |
301,702,522 |
-- |
|
| Long-term
borrowing |
|
18 |
108,624,239 |
114,965,612 |
|
| Deferred
liability - provision for gratuity |
|
|
2,241,997 |
1,372,502 |
|
| Long-term
deposits |
|
19 |
1,168,562,894 |
1,606,029,513 |
|
| Deposits
on lease contracts |
|
20 |
19,281,842 |
7,299,185 |
|
|
|
|
| CURRENT
LIABILITIES AND PROVISIONS |
|
|
|
|
| Current
portion of long-term liabilities |
|
21 |
491,748,584 |
253,980,667 |
|
| Short-term
deposits |
|
22 |
745,322,961 |
872,695,696 |
|
| Short-term
running finance |
|
|
23 |
-- |
-- |
|
| Accrued
expenses and other liabilities |
|
24 |
55,879,084 |
56,797,142 |
|
| Proposed
final dividend |
|
|
|
-- |
13,500,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,292,950,629 |
1,196,973,505 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
25 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
3,230,486,159 |
3,256,855,176 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
SYED BABAR ALl |
|
FAKIR S. AIJAZUDDIN |
|
|
Chairman |
|
Managing Director & Chief Executive |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
| INCOME |
|
|
|
|
|
|
| Income
from investments |
|
26 |
103,584,300 |
70,016,277 |
|
| Income
from finance provided |
|
|
191,711,071 |
225,335,141 |
|
| Income
from lease finance |
|
|
33,836,177 |
10,965,264 |
|
| Income
from bills receivable |
|
|
12,146,994 |
612,779 |
|
| Income
from demand promissory notes |
|
|
15,710,219 |
14,075,767 |
|
| Income
from fund placements |
|
|
114,561,983 |
85,016,062 |
|
| Commission
and fees |
|
|
3,672,254 |
2,941,820 |
|
| Other income |
|
27 |
12,447,225 |
8,664,622 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
487,670,223 |
417,627,732 |
|
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
|
|
| Financial
charges |
|
28 |
46,518,652 |
17,810,076 |
|
| Return
on deposits and related costs |
|
|
331,164,437 |
310,759,877 |
|
| Administration
and operating expenses |
|
29 |
60,721,903 |
54,997,210 |
|
| Reversal
of provision for diminution in value |
|
|
|
|
| of
trading investments |
|
|
(1,392,269) |
(1,614,188) |
|
| Provision
for potential lease losses |
|
|
1,019,594 |
242,677 |
|
| Provision
under SBP's NBFIs Regulations against |
|
|
|
| finance
provided |
|
|
6,932,778 |
6,932,778 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
444,965,095 |
389,128,430 |
|
| Profit
for the year before taxation and provision on |
|
|
------------------ |
------------------ |
|
| long-term
investments |
|
|
42,705,128 |
28,499,302 |
|
|
|
|
| Provision
for diminution in value of long-term quoted |
|
| investments |
|
|
31,797,951 |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Profit
for the year before taxation |
|
|
10,907,177 |
28,499,302 |
|
| Taxation
- current |
|
9.2 |
4,000,000 |
7,500,000 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
for the year after taxation |
|
6,907,177 |
20,999,302 |
|
| Unappropriated
profit brought forward |
|
3,420,859 |
121,557 |
|
| Available
for appropriation |
|
10,328,036 |
21,120,859 |
|
|
|
|
|
| APPROPRIATIONS |
|
|
| Transfer
to special reserve |
|
16.1 |
1,400,000 |
4,200,000 |
|
| Transfer
to general reserve |
|
|
8,000,000 |
-- |
|
| Proposed
final dividend Nil (1998: @ 7.5%) |
|
|
-- |
13,500,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
9,400,000 |
17,700,000 |
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
|
928,036 |
3,420,859 |
|
|
|
|
------------------ |
------------------ |
|
| Basic
earnings per share |
|
36 |
0.38 |
1.17 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
SYED BABAR ALI |
|
FAKIR S. AIJAZUDDIN |
|
|
Chairman |
|
Managing Director & Chief Executive |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
|
Rupees |
Rupees |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Profit
for the year before taxation |
|
|
10,907,177 |
28,499,302 |
|
| Adjustments
for: |
|
|
|
| Gain
on disposal of fixed assets |
|
|
(162,936) |
(34,292) |
|
| Exchange gain |
|
|
(3,697,862) |
(2,737,936) |
|
| Deferred costs |
|
|
1,787,157 |
1,320,466 |
|
| Depreciation |
|
|
3,362,250 |
3,251,704 |
|
| Provision
for gratuity |
|
|
869,495 |
917,316 |
|
| Reversal
of provision for diminution in value of trading |
|
|
|
| investments |
|
|
(1,392,269) |
(1,614,188) |
|
| Provision
for potential lease losses |
|
|
1,019,594 |
242,677 |
|
| Provision
against finance provided |
|
|
6,932,778 |
6,932,778 |
|
| Provision
for diminution in value of long-term quoted |
|
|
|
| investments |
|
|
31,797,951 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
40,516,158 |
8,278,525 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
51,423,335 |
36,777,827 |
|
|
|
|
|
|
|
| (Increase)/Decrease
in current assets: |
|
|
|
|
|
| Prepayments
and other receivables |
|
|
13,703,055 |
(28,526,966) |
|
| Bill receivable |
|
|
(40,000,000) |
18,000,000 |
|
| Demand
promissory note |
|
|
20,000,000 |
(20,000,000) |
|
| Fund
placements |
|
|
(275,000,000) |
(98,000,000) |
|
| Finance |
|
|
238,067,206 |
111,926,110 |
|
| Trading
investments |
|
|
(46,839,754) |
(50,915,685) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(90,069,493) |
(67,516,541) |
|
|
|
|
| (Decrease)/Increase
in current liabilities: |
|
|
| Deposits |
|
(127,372,735) |
57,739,193 |
|
| Accrued
expenses and other liabilities |
|
6,188,827 |
(8,558,986) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(121,183,908) |
49,180,207 |
|
|
|
|
| Decrease
in long-term finance |
|
316,770,041 |
4,716,086 |
|
| Increase
in net investment in lease finance |
|
(176,411,508) |
(48,132,529) |
|
| Increase
in long-term deposits, prepayments and |
|
