Block III, Clifton, Karachi. Fax: Ph: Head Office: Fax: UAN:

Transcription

1 Head Office: 8 th Floor Horizon Tower, Plot No. 2/6 Block III, Clifton, Karachi Pakistan UAN: Fax: Lahore Branch Office: Suite No.416, 4th Floor Siddiq Trade Centre, 72-Main Boulevard Gulberg, Lahore Ph: Fax: QUARTERLY REPORT SEPTEMBER 2012

2 TABLE OF CONTENTS Company Information...2 Directors' Report...3 Balance Sheet as at September 30, Profit and Loss Account for the Quarter ended September 30, Cash Flow Statement for the Quarter ended September 30, Statement of Changes In Equity for the Quarter ended September 30, Notes to the Financial Statements for the Quarter ended September 30, Quarterly Accounts

3 COMPANY INFORMATION Board of Directors Mr. Muhammad Najam Ali Chief Executive Officer, Executive Director Mrs. Hanna Khan Non-Executive Director Mr. Zulqarnain Mahmood Khan Non-Executive Director Mr. Muhammad Zubair Ellahi CFO, Company Secretary, Executive Director Mr. Faisal Ali Asghar Non-Executive/ Independent Director Mr. Shahrukh Ali Raza Mirza Non-Executive / Independent Director Miss Sana Quadri Executive Director Audit Committee Mr. Zulqarnain Mahmood Khan Member Mrs. Hanna Khan Member Mr. Faisal Ali Asghar Member Mr. Shahrukh Ali Raza Mirza Chairman (The Company Secretary is the Secretary of the Committee) Human Resource & Remuneration Committee Mr. Muhammad Najam Ali Member Mrs. Hanna Khan Member Mr. Zulqarnain Mahmood Khan Member Mr. Shahrukh Ali Raza Mirza Chairman (The Company Secretary is the Secretary of the Committee) CFO & Company Secretary Auditor Bankers Tax Advisors Legal Advisors Share Registrar Mr. Muhammad Zubair Ellahi KPMG TaseerHadi& Co., Chartered Accountants Sheikh Sultan Trust Building No. 2 Beaumont Road, Karachi Askari Bank Limited Bank Al Falah Limited Bank of Punjab Faysal Bank Limited Habib Metropolitan Bank Limited JS Bank Limited MCB Bank Limited Meezan Bank Limited NIB Bank Limited Standard Chartered Bank Limited Muniff Ziauddin Junaidy & Co. Chartered Accountants Business and Finance Centre, Office No. 909, 9th Floor, Opp. State Bank of Pakistan, I. I. Chundrigar Road Karachi Mohsin Tayebaly & Co. Barristers & Advocates 2nd Floor Dime Centre, BC-4 Block 9 KDA Scheme 5, Clifton, Karachi. Technology Trade (Pvt.) Ltd 241-C, Block-2, PECHS, Karachi Registered Office 8th Floor Horizon Tower, Plot No. 2/6 Block III, Clifton, Karachi Quarterly Accounts 2

4 DIRECTORS' REPORT Economic Review As per International Monetary Fund (IMF) latest projection, real GDP growth for Pakistan is estimated at 3.3% for FY13 (Regional Economic Outlook) as opposed to the previous forecast of 3.7%. However, Government officials have stated that Pakistan's economy is expected to grow at 4% this year. During the first quarter of FY13, the State Bank of Pakistan (SBP) lowered the policy discount rate to 10% at the back of a declining inflation rate which averaged at 9.2% This was mainly to encourage growth and boost private sector credit off take. Weak foreign exchange remained a challenge for the current government in the first quarter. Central bank reserves kept dwindling and fell to USD billion as on October 5th, Slow foreign investments and large external debt repayments made up for the bulk of the fall in reserves. Concurrently, this took its toll on the PKR exchange rate, with Pakistani Rupee depreciating to PKR 95.5/$. However, a shrinking external current account balance provided a breather with an increased growth in remittances as well as USD1.12 billion received as part of the Coalition Support Funds. Pakistan's trade deficit narrowed by nearly 10% in 3MFY13. Exports increased by US$253 million to US$6.2bn; an increase of 4.3%YoY whereas imports witnessed a decline of 2.4%YoY to US$10.9bn. Market Review (stock market and commodity market) Karachi Stock Exchange index (KSE) grew to an index level of 15,981 as compared to 14,857 over 3MFY13. This was primarily as a result of NATO supply lines reopening as well as strong performance from the cement and telecoms industry. Furthermore the equity market has given a bull run because of the two subsequent discount rate cuts (200bps).However, volumes are far lower, and are averaging around 110 million shares daily. Commodities market has been volatile in 1QFY13 due to the European debt crisis and the announcement of QE3 by the Fed US and the ECB. Gold rose to a new high of 1794 whereas WTI crude has been trading between $ for the past quarter. Performance Overview In response to the improving market conditions, the Brokerage Income for the quarter increased by 7% as compared to the quarter ended September 30, 2011.The overall revenue for the quarter has reduced by PKR 2.9 million. Corporate Finance deals are in pipeline revenue from which will be generated in the following quarter. The overall profit has reduced by 4.58% as compared to the quarter ended September 30, 2011, whereas the total assets have reduced by 8.5% as compared to the year ended June 30, The current ratio on the other hand, has increased to 3.3% from 2.63% The management believes that the improving capital market is the harbinger of economic stability and thereby Company's well being. The Company has obtained Money Market license from Financial Markets Association of Pakistan (FMAP) and is waiting for the accreditation from State Bank of Pakistan to commence its money market business. Further, the Company plans to commence Online trading by December 31, Quarterly Accounts 3

5 Appreciation and Acknowledgement We would like to thank our employees, our faithful clients, the ever relying shareholders and all our other business partners for their confidence in the Company and for their support. Lastly, we would like to thank the Securities and Exchange Commission of Pakistan (SECP), the State Bank of Pakistan (SBP) and the Karachi Stock Exchange Limited (KSE) for their efforts and their support On behalf of the Board of Directors MUHAMMAD NAJAM ALI CHAIRMAN/ CEO Date: October 24, 2012 Quarterly Accounts 4

6 FINANCIAL STATEMENTS Quarterly Accounts

7 Balance Sheet As at September 30, 2012 Note (Unaudited) 30 September 2012 (Audited) 30 June 2012 Assets Non-current assets Property, plant and equipment 4 12,960,237 14,071,656 Intangible assets 5 61,416,760 61,616,760 Long term deposits 3,101,450 3,101,450 Deferred tax asset 6 20,147,216 16,958,672 97,625,663 95,748,538 Current assets Securities held for trading 2,797,500 - Reverse repo against Marketable Securities - 39,750,000 Trade debts - considered good 7 26,461,033 11,387,428 Advances, deposits, prepayments and other receivables 32,326,586 45,120,996 Income Tax Refundable 6,210,807 5,820,228 Cash and bank balances 8 34,529,161 20,694, ,325, ,772,822 Total assets 199,950, ,521,360 EQUITY AND LIABILITIES Share capital and reserve Authorised capital 25,000,000 (30 June 2012; 25,000,000) ordinary shares of Rs. 10 each 250,000, ,000,000 Issued, subscribed and paid-up capital 20,000,000 (30 June 2012: 20,000,000) ordinary shares of Rs.10 each 200,000, ,000,000 Accumulated losses (33,645,627) (31,328,209) 166,354, ,671,791 Non-current liabilities Liabilities against assets subject to finance lease 2,970,397 3,225,475 Current liabilities Short term loan - unsecured - 30,000,000 Current portion of liabilities against assets subject to finance lease 954, ,663 Trade and other payables 9 29,671,583 15,709,431 30,625,980 46,624,094 Total equity and liabilities 199,950, ,521,360 The annexed notes 1 to 17 form an integral part of these condensed interim financial information Chief Executive Director Quarterly Accounts 6

8 Condensed Interim Profit and Loss Account For the quarter ended 30 September 2012 Note For the quarter ended 30 September 2012 (Unaudited For the quarter ended 30 September 2011 Operating revenue 10 7,809,232 10,678,080 Capital (loss) / gain on sale of investments 91, ,724 Unrealised diminution in the value of investments classified as 'at fair value through profit or loss' (39,888) - Operating expenses 11 (4,819,714) (4,421,152) Administrative expenses 12 (8,398,251) (8,629,198) Financial charges (1,364,099) (746,189) (6,720,805) (2,910,735) Other operating income 1,300, ,063 Net loss for the period before taxation (5,420,553) (2,076,672) Taxation 13 3,103,135 (351,994) Net loss after taxation (2,317,418) (2,428,666) Loss per share - basic and diluted (0.12) (0.24) The annexed notes 1 to 17 form an integral part of these condensed interim financial information Chief Executive Director Quarterly Accounts 7

9 Condensed Interim Cash Flow Statement For the quarter ended 30 September 2012 For the quarter ended 30 September 2012 (Unaudited For the quarter ended 30 September 2011 CASH FLOWS FROM OPERATING ACTIVITIES Loss for the period before taxation (5,420,553) (2,076,672) Adjustments for: - Depreciation 1,191,148 1,175,978 - Amortisation of intangible assets 200, ,980 - Unrealised dimunition in the value of investments 39, Markup income (1,300,252) (834,063) - Financial charges 1,364, ,189 1,494,883 1,288,084 Cash used in operating activities before working capital changes (3,925,670) (788,588) (Increase) / decrease in current assets Trade debts (15,073,605) (4,126,190) Investments (2,797,500) - Advances, deposits, prepayments and other receivables 13,194,410 (132,506) (4,676,695) (4,258,695) (Decrease) / increase in current liabilities Trade and other payables 13,962,152 (8,685,855) Mobilisation Advance - 250,000 Cash (used in) / generated from operations 5,359,787 (13,483,138) Financial charges paid (1,190,227) (746,189) Taxes paid (485,452) (887,706) Net cash (used in) / generated from operating activities 3,684,108 (15,117,033) CASH FLOWS FROM INVESTING ACTIVITIES Capital expenditure (80,080) (20,286) Proceeds from disposal of property, plant and equipment - - Maturity of Reverse Repo 39,750,000 - Short Term Loans 16,300,000 - Short Term Loans repaid (46,300,000) - Long term deposits - 163,650 Markup received 900, ,034 Net cash generated from investing activities 10,570, ,398 CASH FLOWS FROM FINANCING ACTIVITIES Long term loans - - Long term loans repaid - (2,275,000) Lease rentals paid (419,289) (398,854) Net cash used in financing activities (419,289) (2,673,854) Net (decrease) / increase in cash and cash equivalents during the period 13,834,991 (16,898,489) Cash and cash equivalents at the beginning of the period 20,694,170 26,165,907 Cash and cash equivalents at the end of the period 34,529,161 9,267,418 The annexed notes 1 to 17 form an integral part of these condensed interim financial information Chief Executive Director Quarterly Accounts 8

10 Condensed Interim Statement of Changes in Equity (Un-audited) For the quarter ended 30 September 2012 Issued, subscribed and paid up capital Accumulated losses Rupees Total Balance as at 1 July ,000,000 (2,475,479) 97,524,521 Total comprehensive loss for the year ended 30 June (15,125,313) (15,125,313) Balance as at 30 June ,000,000 (17,600,792) 82,399,208 Initial Public Offering of the Company Issue of 10,000,000 ordinary shares of Rs. 10 each 100,000, ,000,000 Transaction cost on issuance of shares - net - (5,923,126) (5,923,126) Total comprehensive loss for the year ended 30 June (7,804,291) (7,804,291) Balance as at 30 June ,000,000 (31,328,209) 168,671,791 Loss for the quarter ended 30 September (2,317,418) (2,317,418) Balance as at 30 September ,000,000 (33,645,627) 166,354,373 The annexed notes 1 to 17 form an integral part of these condensed interim financial information Chief Executive Director Quarterly Accounts 9

11 Notes to the Interim Financial Information For the quarter ended 30 September STATUS AND NATURE OF BUSINESS Next Capital Limited ("the Company") was incorporated as a public limited company in Pakistan on 14 December 2009 under Companies Ordinance, The Company is presently listed on the Karachi Stock Exchange (Guarantee) Limited. The Company has obtained corporate membership from Karachi Stock Exchange (Guarantee) Limited on 2 February The Company is principally engaged in brokerage of shares, stocks, securities, commodities and other financial instruments and consultancy services. Further, the Company is engaged in trading in equity and debt securities on its own account through ready, spot and forward counters of stock exchange. The registered office of the Company is situated at 8th floor, Horizon Tower, Block III Clifton, Karachi. 2. BASIS OF PRESENTATION These condensed interim financial statements of the Company for the quarter ended 30 September 2012 have been prepared in accordance with the requirements of the International Accounting Standard 34 "Interim Financial Reporting" and provisions and directives issued under the Companies Ordinance, In case where requirements differ, the provisions of directives issued under the Companies Ordinance, 1984 have been followed. These condensed interim financial statements are being submitted to the shareholders as required under section 245 of the Companies Ordinance, These condensed interim financial statements comprise of the balance sheet as at 30 September 2012 and profit and loss account, the cash flow statement and the statement of changes in equity for the quarter ended 30 September 2012 which have neither been subjected to audit nor review. The comparative balance sheet presented in these condensed interim financial statements as at 30 June 2012 has been extracted from the audited financial statements of the Company for the year ended 30 June 2012, whereas the comparative profit and loss account, the cash flow statements and the statement of changes in equity have been extracted from the unaudited financial statements for the quarter ended 30 September ACCOUNTING POLICIES AND ESTIMATES 3.1 Accounting policies The accounting policies and the method of computation adopted in the preparation of these condensed interim financial statements are the same as those applied in the preparation of the financial statements of the Company for the year ended 30 June Quarterly Accounts 10

12 3.2 Estimates The preparation of condensed interim financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expenses. Actual results may differ from these estimates. The significant judgments made by the management in applying the Company's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the financial statements for the year ended 30 June Note (Unaudited) (Audited) 30 September 30 June PROPERTY, PLANT AND EQUIPMENT Opening written down value 14,071,656 17,947,792 Additions during the period / year - at cost - Lease hold improvement - 342,500 - Furniture's and fixtures 15, Vehicles - Owned Vehicles - Leased - 2,113,000 - Computers and related accessories 65,000 26,336 80,080 2,481,836 Written down value of deletions during the period / year - (3,541,374) Depreciation / for the period / year (1,191,499) (4,587,285) (1,191,499) (8,128,659) Transfer from leased to owned vehicles during the period / year - 1,770,687 Closing written down value 12,960,237 14,071, INTANGIBLE ASSETS Membership card ,950,000 60,950,000 Software , ,760 61,416,760 61,616, This represents cost of Corporate Membership Card of the Karachi Stock Exchange (Guarantee) Limited and Pakistan Mercantile Exchange (formerly known as National Commodity Exchange Limited) amounting to Rs. 60 million and Rs 0.95 million with an indefinite useful life. Quarterly Accounts 11

13 5.2 Software This represents accounting software (Back connect) implemented. Net carrying value Opening net book value 666,760 1,466,760 Additions during the period - - Amortisation charge (200,000) (800,000) Closing net book value 466, , DEFERRED TAX ASSETS / (LIABILITIES) - NET Tax losses carried forward 27,369,370 19,751,664 Deferred tax on share issuance cost - 3,189,375 Taxable temporary differences arising on accelerated tax depreciation and amortisation (7,222,154) (5,982,367) 20,147,216 16,958, TRADE DEBTS - considered good Receivable from clients on account of: - Purchase of shares on behalf of clients 22,951,448 9,052,768 - Brokerage commission 2,485,110 1,818,465 - Consultancy fee 418, ,450 - Mark-up earned 606,025 97,745 26,461,033 11,387, CASH AND BANK BALANCES Balances with banks: - on saving accounts 23,688,357 12,042,547 - on current accounts 10,826,104 8,640,591 34,514,461 20,683,138 Cash in hand 14,700 11,032 34,529,161 20,694, TRADE AND OTHER PAYABLES (Unaudited) (Audited) 30 September 30 June Trade creditors 25,762,135 10,784,374 Payable to directors 30,000 30,000 Accrued expenses 101, ,558 Accrued commission to traders 561, ,328 Salaries payable 676, ,382 Auditor's remuneration 217, ,500 Tax deducted at source 991, ,419 Other payables 1,331,126 3,288,870 29,671,583 15,709,431 Quarterly Accounts 12

14 10. OPERATING REVENUE (Unaudited) quarter ended 30 September 30 September Brokerage income 6,108,453 5,690,846 Advisory / consultancy fee - 4,987,234 Mark-up earned 1,700,779-7,809,232 10,678, OPERATING EXPENSES Salaries, wages and other benefits 2,521,433 2,371,767 Commission to broker 1,825,181 1,441,332 Service and transaction charges 453, ,054 Fees and subscription 20,000-4,819,714 4,421, ADMINISTRATIVE EXPENSES Salaries, wages and other benefits 2,675,500 3,482,050 Telephone and communication charges 253, ,142 Rent expense 881, ,995 Utility charges 357, ,103 Vehicle running expenses 419, ,782 Depreciation 1,191,148 1,175,978 Amortisation of intangible 200, ,980 Legal and professional charges 847, ,534 Auditor's remuneration 75,000 80,000 Insurance 83, ,064 Printing, stationery and postage charges 76,095 33,659 Office supplies 27,970 20,600 Office repair and maintenance 435, ,157 Fees and subscription 236,260 16,980 Travelling and entertainment charges 49, ,157 Advertisement expenses 130,000 - Security expense 255, ,813 Miscellaneous expenses 201, ,204 8,398,251 8,629, This includes remuneration to Chief Executive Officer amounting to Rs.2,250,000 (2011: Rs. 2,250,000) Quarterly Accounts 13

15 13. TAXATION (Unaudited) quarter ended 30 September 30 September Current (85,409) (351,994) - Prior Deferred 3,188,544-3,103,135 (351,994) 13.1 The returns of income tax have been filed up to and including tax year 2011 (corresponding to financial year ended 30 June 2011). The Company has been selected for audit under the provisions of section 177 read with section 176 of the Income Tax Ordinance, 2001 in respect of tax year In this respect all the requisite documents and information has been submitted with the department and no further notice has yet been issued by the department intending to amend the return filed by the Company. In addition to above, order under section 161 and 205 of the Income Tax Ordinance 2001 has been passed by the Assistant Commissioner Inland Revenue in respect of monitoring of witholding of taxes for the tax year 2011 on account of short deduction of tax on payments made by the Company order as it preferred an appeal before the Commissioner Inland Revenue (Appeals) under section 127 of Income Tax Ordinance The case is pending for hearing. The company based on the advice from its tax consultant is confident of a favourable decision As the Company has incurred net tax losses during the year, therefore the Company has recognised minimum tax charge in accordance with section 113 of Income Tax Ordinance, REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES The aggregate amount charged in the financial statements for remuneration, including certain benefits to the chief executive, directors and executives of the Company is as follows: Chief Executive Directors Executives 30 September 30 September 30 September 30 September 30 September 30 September Managerial remuneration 1,500,000 1,500, , , , ,445 House rent allowance 600, , , , , ,577 Medical Fees for attending meetings 150, ,000 35,000 51,400 65,833 82,145 2,250,000 2,250, , , ,500 1,232,167 Quarterly Accounts 14

16 14.1 The Company provides the chief executive and certain executives with the Company maintained cars as per their terms of employment The Company with the approval of shareholders by way of special resolution in general meeting held on September 13, 2011 has entered into a Stock Option Agreement dated 7th October, 2011 with the Chief Executive (CEO), whereby the CEO has been granted Options to subscribe for the ordinary shares of the Company. Issuance of shares by the Company against exercise of the Options is, however, subject to the approval of the Securities & Exchange Commission of Pakistan (the Commission) under section 86 of Companies Ordinance, The number of share options granted are up to 2 million shares with consideration in cash having an exercise price of Rs. 10 per share. The exercise period is five years and six months after one year from the date of listing of the Company. However, the option is yet to be approved by the Securities and Exchange Commission of Pakistan (SECP). 15. TRANSACTIONS AND BALANCES WITH RELATED PARTIES Related parties comprise of associated companies, directors, key management personnel and close family members of the directors and key management personnel. Transactions with related parties are carried out at negotiated rates. Remuneration and benefits to executives of the Company are in accordance with the terms of their employment. The significant transactions and balances with related parties carried as at 30 September 2012 were as follows: (Unaudited) (Audited) 30 September 30 June Long Term Loan from M/s Marvell Construction Opening balance - 8,500,000 Repayments during the year (8,500,000) Interest accrued during the year - 986,349 Interest paid during the year - (986,349) Closing balance - - Long Term Loan from M/s Next Construction Opening balance - 2,275,000 Repayments during the year - (2,275,000) Interest accrued during the year - 19,970 Interest paid during the year - (19,970) Closing balance - - Short Term Loan from M/s Dalia Securities Opening balance 10,000,000 - Received during the year - 10,000,000 Repayments during the year (10,000,000) - Interest accrued during the year 268, ,288 Interest paid during the year (268,688) (123,288) Closing balance - 10,000,000 Quarterly Accounts 15

17 (Unaudited) (Audited) 30 September 30 June Short Term Loan from Directors Opening balance 26,441,667 - Received during the year (26,300,000) 10,000,000 Interest accrued during the year 920, ,667 Interest paid during the year (1,062,083) - Closing balance - 10,141,667 Key management personnel Remuneration to key management personnel is disclosed in note FINANCIAL INSTRUMENTS AND RELATED DISCLOSURES The Company's financial risk management objectives and policies are consistent with that disclosed in the financial statements as at and for the year ended 30 June DATE OF AUTHORISATION FOR ISSUE These condensed interim financial statements were authorised for issue by the Board of Directors of the Company in their meeting held on October 24, Chief Executive Director Quarterly Accounts 16