Auditor s Report to the shareholders of Prime Bank Securities Limited

Transcription

1 Auditor s Report to the shareholders of Prime Bank Securities Limited We have audited the accompanying financial statements of Prime Bank Securities Limited (PBSL) which comprise the financial position as at 31 December 2012 and the statement of comprehensive income, statement of changes in equity and statement of cash flows for the year then ended and a summary of significant accounting policies and other explanatory information disclosed in Notes 1-22 to the financial statements. Management s Responsibility for the Financial Statements Management of PBSL is responsible for the preparation and fair representation of these financial statements in accordance with Bangladesh Financial Reporting Standards (BFRSs), and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with Bangladesh Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain evidence about the amount and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risks assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion. Opinion In our opinion, financial statements which have been prepared in accordance with Bangladesh Financial Reporting Standards give a true and fair view of the state of affairs of the company as at 31 December 2012 and of its financial performance and cash flows for the year then ended in accordance with Bangladesh Financial Reporting Standards. 1

2 Emphasis of Matter Without qualifying our opinion we draw attention to note # 06 to the financial statements where the Company explains the measurement procedure of DSE and CSE memberships cost. Report on Other Legal and Regulatory Requirements We also report that: we have obtained all the material information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit and made due verification thereof; in our opinion, proper books of account as required by law have been kept by the Company so far as it appeared from our examination of those books; the Company s financial position and financial performance dealt with by the report are in agreement with the books of account; and the expenditure incurred was for the purposes of the Company s business. Dated, Dhaka 26 February 2013 ACNABIN Chartered Accountants 2

3 Prime Bank Securities Limited Statement of Financial Position As at 31 December 2012 Note Amount in Taka SOURCES OF FUNDS Share Capital 3 750,000, ,000,000 Retained Earnings 4 33,096,718 4,495,828 Shareholders equity 783,096, ,495,828 APPLICATION OF FUNDS Non-Current Assets (A) Fixed assets 5 7,492,430 9,326,599 Intangible assets 5 1,217, ,796 Membership at cost 6 664,000, ,000, ,710, ,142,395 Current Assets (B) Advances, deposits and prepayments 7 313, ,300 Advance income tax 8 19,568,538 8,143,350 Investment in securities 9 77,051,850 32,472,977 Accounts receivable 10 7,658,920 27,780,279 Loan to customers 404,029, ,021,110 Preliminary expenses ,121 1,228,243 Cash and cash equivalents ,740 4,803, ,427, ,680,692 Current Liabilities (C) Accounts payable 13 14,933,195 40,849,889 Secured overdraft ,278, ,253,198 Provision for diminution value of investment in shares 9 4,221, ,820 Provision for impairment of margin loan ,088 - Provision for Taxation 15 23,855,427 8,170,117 Deferred tax liabilities , ,885 Provision for expenses 16 2,506,181 1,399, ,041, ,327,258 Net current assets D=(B-C) 110,386,641 80,353,434 Total assets (A+D) 783,096, ,495,828 These financial statements should be read in conjunction with annexed notes 1 to 22. Chief Executive Officer Director Chairman Dated, Dhaka ACNABIN 26 February 2013 Chartered Accountants 3

4 Prime Bank Securities Limited Statement of Comprehensive income For the year ended 31 December 2012 Note Amount in Taka Operating Income Revenue from brokerage commission 17 52,419,765 20,187,773 Interest income 18 58,355,301 8,507,103 Capital gain from investment in shares 8,850,564 1,916,822 Dividend income 944, ,873 Other operating income , ,617 Total operating income (A) 121,429,712 31,049,188 Operating expenses 20 65,988,517 14,144,974 Direct expenses 21 7,341,905 2,583,564 Total operating expenses (B) 73,330,421 16,728,538 Operating profit before provision C=(A-B) 48,099,291 14,320,650 Less: Provision for diminution in value of investment in shares 9 3,232, ,820 Provision for impairment of margin loan ,088 - Total provision (D) 3,830, ,820 Operating profit before taxation E=(C-D) 44,269,225 13,331,830 Current tax 15 15,685,310 8,170,117 Deferred tax 15 (16,975) 665,885 Total provision for tax (F) 15,668,336 8,836,002 Net profit after tax [G=E-F] 28,600,890 4,495,828 Earnings per share These financial statements should be read in conjunction with annexed notes 1 to 22. Chief Executive Officer Director Chairman Dated, Dhaka ACNABIN 26 February 2013 Chartered Accountants 4

5 Prime Bank Securities Limited Statement of Changes in equity As at 31 December 2012 Particulars Share capital Retained earnings Total Balance as at January 01, ,000, ,000,000 Profit for the year ,495,828 4,495,828 Balance as at December 31, ,000,000 4,495, ,495,828 Balance as at January 01, ,000,000 4,495, ,495,828 Share capital Profit for the year ,600,890 28,600,890 Balance as at December 31, ,000,000 33,096, ,096,718 Chief Executive Officer Director Chairman Dated, Dhaka 26 February

6 Prime Bank Securities Limited Statement of Cash flow As at 31 December 2012 Note Amount in Taka A Cash flow from operating activities B C Net profit during the year 28,600,890 4,495,828 Add: Amount considered as non-cash items Depreciation & amortization charged 2,503,407 1,114,469 Write off of preliminary expenses 614, ,372 Dividend receipts (650,111) (60,367) Provision for diminuation in value of investment 3,232, ,820 Provision for negative equity under margin loan 597,088-6,297,484 2,674,294 Changes in working capital (Increase)/decrease in advances, deposits and prepayments (82,500) (231,300) (Increase)/decrease in advance income tax (11,425,188) (8,145,350) (Increase)/decrease in investments in securities (44,578,873) (22,739,059) (Increase)/decrease in accounts receivable 20,121,360 (27,780,279) (Increase)/decrease in loans to customers (211,008,590) (193,021,110) (Increase)/decrease in deferred tax (16,975) - Increase/(decrease) in current tax 15,685,310 8,836,002 Increase/(decrease) in expenses 1,106,830 1,399,350 Increase/(decrease) in accounts payable (25,916,694) 40,849,889 Increase/(decrease) in secured overdraft 217,025, ,253,198 (39,090,087) (65,578,659) Net cash used in operating activities (4,191,713) (58,408,537) Cash flow from investing activities Fixed assets acquisition (412,490) (10,387,589) Intangible assets acquition (658,600) (869,275) Net cash flows from investing activities (1,071,090) (11,256,864) Cash flows from financing activities Issue of share capital - - Dividend receipts 650,111 60,367 Dividend paid - - Net cash from financing activities 650,111 60,367 D Net cash increase / (decrease) (4,612,692) (69,605,034) E Cash and cash equivalents at the beginning of the year 4,803,433 74,408,467 F Cash and cash equivalents at the end of the year 190,741 4,803,433 Cash in hand 4,895 10,817 Cash at Bank 185,845 4,792, ,740 4,803, Chief Executive Officer Dated, Dhaka 26 February 2013 Director Chairman 6

7 1.1 Status of the Company 1.2 Nature of Business Prime Bank Securities Limited Notes to the Financial Statements as at and for the year ended 31 December 2012 The Prime Bank Securities Limited ("the Company") was incorporated as a private limited company in Bangladesh under Companies Act, 1994 vide certificate of incorporation no. C /10. It commenced its broker business with one extension office from May 18, 2011 under the license issued by Bangladesh Securities and Exchange Commission. Presently the company has 2 (two) offices including Head Office all over Bangladesh. The registered office of the company is located at people's Insurance Bhaban (11th floor) 36, Dilkusha Commercial Area, Dhaka The principal objectives of the Company are to act as a member of Dhaka Stock Exchange Ltd. and Chittagong Stock Exchange Ltd. to carry on the business of stock brokers / dealers in relation to shares and securities dealings and other services as mentioned in the Memorandum and Articles of Association of the Company. 1.3 Significant accounting policies and basis of preparation of financial statements Basis of accounting Statement of compliance These financial statements have been prepared under the historical cost convention on a going concern basis and in accordance with Bangladesh Financial Reporting Standards (BFRS), the Companies Act-1994, Securities and Exchange Rules-1987 and other laws and rules applicable in Bangladesh Components of Financial Statements The financial statements referred to here comprises: a) Statement of financial position b) Statement of comprehensive income c) Statement of change in equity d) Statement of cash flows and e) Notes to the financial statements Use of estimates and judgments The preparation of financial statements requires management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. It also requires disclosures of contingent assets and liabilities at the date of the financial statements. Actual results may differ from these estimates. Estimates and underlying assumptions are reviewed on an ongoing concern basis. Revisions to accounting estimates are recognized in the period in which the estimate is revised and in any future periods affected Statement of cash flows Statement of cash flows is prepared in accordance with the Bangladesh Accounting Standard-7 " Statement Cash Flows" and the cash flows from operating activities have been presented under indirect method. 1.4 Reporting period These financial statements cover one calendar year from 1 January to 31 December

8 1.5 Share capital Ordinary shares are classified as equity when there is no contractual obligation to transfer cash or other financial assets. 1.6 Property, plant and equipment All fixed assets are stated at cost less accumulated depreciation as per BAS-16 " Property, Plant and Equipment". The cost of acquisition of an asset comprises its purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use inclusive of inward freight, duties and non-refundable taxes. The Company recognizes in the carrying amount of an item of property, plant and equipment the cost of replacing part of such an item when that cost is incurred if it is probable that the future economic benefits embodied with the item will flow to the company and the cost of the item can be measured reliably. Expenditure incurred after the assets have been put into operation, such as repairs and maintenance is normally charged off as revenue expenditure in the period in which it is incurred. Depreciation is charged on the basis of straight line method on all fixed assets at the following rate: Category of assets Rate(%) Furniture and fixtures 20 Office equipment 25 Air conditioners 25 Computer and hardwares 25 Vehicle 20 For additions during the year, depreciation is charged for the remaining days of the year and for disposal depreciation is charged up to the date of disposal. On disposal of fixed assets, the cost and accumulated depreciation are eliminated from the fixed assets schedule and gain or loss on such disposal is reflected in the income statement, which is determined with reference to the net book value of the assets and net sale proceeds. 1.7 Intangible assets and amortization of intangible assets An intangible asset is recognized if it is probable that the future economic benefits that are attributable to the asset will flow to the entity and the cost of the assets can be measured reliably. Software represents the value of computer application software licensed for use of the Company other than those applied for the operating system of computers. Intangible assets are carried at their cost, less accumulated amortization and impairment loss, if any. Initial cost comprises license fees paid at the time of its acquisition and other directly attributable expenditures that are incurred in customizing the software for its intended use. Expenditure incurred for software is capitalized only when it enhances and extends the economic benefits of software beyond its original specification and life and such cost is recognized as capital improvement and added to the original cost of software. Software is amortized using the straight-line method over the estimated useful life of 5 (five) years commencing from the date of the acquisition available for use over the best estimates of its useful economic life. 8

9 1.8 Investment in Membership Investment in membership are stated at cost. The cost of acquisition of an membership comprises its purchase price and any directly attributable cost of bringing the asset to its working condition for its intended use inclusive of stamp duty and non-refundable taxes, etc. 1.9 Advance, deposits and prepayments - Advances are initially measured at cost. After initial recognition, advances are carried at cost less deductions, adjustments or charges to other account heads such as property, plant and equipment, inventory, etc. - Deposits are measured at payment value. - Prepayments are initially measured at cost. After initial recognition, prepayments are carried at cost less charges to Statement of Comprehensive Income Advance Income tax The amount of advance income tax are mainly deduction at sources by DSE & CSE on daily transaction of broker & dealer operation. Tax deduction on interest income and dividend income are also included here Investments in securities Investment in marketable and non-marketable ordinary shares has been shown at cost. Full provision for diminution in value of shares as on closing of the year on an aggregate portfolio basis has been made in the account Account receivables Receivables are recognized when there is a contractual right to receive cash or another financial asset from another entity Loans to customers Loans to customers are stated in the balance sheet on gross basis. Interest is calculated on a daily product basis but charged and accounted for on accrual basis. Interest on customer loans is realized quarterly Preliminary and pre-operating expenses These are recognized as an asset if it is probable that future economic benefits that are attributable to the asset will flow to the enterprise and cost of the asset can be measured reliably. These are amortized over 3 years from the year of their first utilization at the rate of Taka 631,372 per year Cash and cash equivalents Cash and cash equivalents include notes and coins on hand, unrestricted balances held with Banks and highly liquid financial assets which are subject to insignificant risk of changes in their fair value, and are used by the Company management for its short-term commitments Provision for taxation Provision for current income tax has been made in compliance with relevant provisions of Income Tax law. 9

10 1.17 Deferred taxation Deferred tax liabilities are the amount of income taxes payable in future periods in respect of taxable temporary differences. Deferred tax assets are the amount of income taxes recoverable in future periods in respect of deductible temporary differences. Deferred tax assets and liabilities are recognized for the future tax consequences of timing differences arising between the carrying values of assets, liabilities, income and expenditure and their respective tax bases. Deferred tax assets and liabilities are measured using tax rates and tax laws that have been enacted or substantially enacted at the balance sheet date. The impact on the account of changes in the deferred tax assets and liabilities has also been recognized in the profit and loss account as per BAS-12 "Income Taxes" Secured overdraft Borrowing fund include borrowings from Prime Bank Limited, which is stated in the statement of financial position at secured overdraft. Interest on secured overdraft is recognized in statement of comprehensive income Incentive bonus Prime Bank Securities Ltd. started a incentive bonus scheme for its employees. Maximum 10% of net profit after tax is given to the employees in every year as incentive bonus. This bonus amount is being distributed among the employees based on their performance. The bonus amount is paid annually, normally first quarter of every following year and the cost are accounted for the period to which it relates Provision for liabilities A provision is recognized in the balance sheet when the Company has a legal or constructive obligation as a result of a past event and it is probable that an outflow of economic benefit will be required to settle the obligations, in accordance with the BAS 37 "Provisions, Contingent Liabilities and Contingent Assets" Brokerage commission Brokerage commission is recognized as income when selling or buying order executed 1.22 Interest income on marginal loan Interest income on margin loan is recognized on accrual basis. Such income is calculated on daily margin loan balance of the respective customers. Income is recognized on monthly but realized quarterly Capital gain on sale of share Capital gain on investments in shares is recognized when it is realized Fees income Fees income arises on services provided by the Company are recognized on accrual basis Dividend income on shares Dividend income on shares is recognized when the shareholder's right to receive payment is established Interest paid and other expenses In terms of the provisions of BAS-1 "Presentation of Financial Statements" interest and other expenses are recognized on accrual basis Earnings per share Basic earnings per share has been calculated in accordance with BAS 33 "Earnings per Share" which has been shown on the face of the profit and loss account. This has been calculated by dividing the profit attributable to the ordinary shareholders by the weighted average number of ordinary shares outstanding during the year. 10

11 1.28 Events after the reporting period Where necessary, all the material events after the reporting period date have been considered and appropriate adjustment/disclosures have been made in the financial statements Directors' responsibility on financial statements The board of directors of the company is responsible for the preparation and presentation of these financial statements Related party transaction Related party transaction is a transfer of resources, services or obligation between related parties and here the related party transactions are the loan taken from Prime Bank Limited and the brokerage transactions done by the Company for Prime Bank Investment Ltd. as its client, within the financial period General a) These financial statements are presented in Taka, which is the Company's functional currency. Figures appearing in these financial statements have been rounded off to the nearest Taka. b) c) The expenses, irrespective of capital or revenue nature, accrued / due but not paid have been provided for in the books of the Company. Figures of previous year have been rearranged whenever necessary to conform to current years presentation. 11

12 3 Share capital Authorized capital Amount in Taka ordinary shares of Tk.10 each 1,500,000,000 1,500,000,000 Issued, subscribed and paid-up capital 75,000,000 ordinary shares of Taka 10 each issued and fully paid each 750,000, ,000,000 Shareholding position of the company is as under Number of shares Taka Prime Bank Limited 71,250, ,500,000 Prime Bank Investment Limited 3,750,000 37,500,000 75,000, ,000,000 4 Retained earnings Opening balance-broker 2,481,403 - Opening balance-dealer 2,014,425-4,495,828 Add: Net profit during the year 28,600,890 4,495,828 33,096,718 4,495,828 Less: Dividend - - Closing balance 33,096,718 4,495,828 5 Fixed assets less depreciation Office equipment 1,255,574 1,183,584 Vehicle 338,700 - Air conditioners 1,135,500 1,135,500 Computer & hardware 5,902,620 5,902,620 Furniture & fixtures 2,167,685 2,165,885 10,800,079 10,387,589 Depreciation Opening balance 1,060,990 - Add: Depreciation for ,246,659 1,060,990 Less: Depreciation for disposal - - Closing balance 3,307,649 1,060,990 7,492,430 9,326,599 Intangible assets Back office software-broker 1,111, ,000 Back office software-dealer 150, ,000 Web development 200,000 Anti virus software 66,875 54,275 1,527, ,275 Amortization Opening balance 53,479 - Add: Amortization during the year 256,748 53,479 Less: Amortization for disposal - - Closing balance 310,228 53,479 1,217, ,796 Details in annexure-a 6 Membership at cost This represents the amount paid for purchasing membership of Dhaka Stock Exchange Limited (DSE) and Chittagong Stock Exchange Limited (CSE) including stamp duty for transferring shares. Purchase of DSE membership 507,500, ,500,000 Purchase of CSE membership 156,500, ,500, ,000, ,000,000 We have measured DSE and CSE memberships at cost instead of fair value. As there is no active market for DSE and CSE memberships and the market price of the same fluctuates significantly over time, we shown the value at cost. 12

13 7 Advances, deposits and prepayments Amount in Taka Security deposit with CDBL 200, ,000 Security deposit with CSE 25,000 25,000 Advances for software maintenance fees 82,500 - Security deposit with T&T 6,300 6, , ,300 8 Advance income tax Opening balance 8,143,350 - Add: Tax deduction during the year: Advance income tax deducted by DSE on transaction-broker 11,026,941 7,791,466 Advance income tax deducted by DSE on transaction-dealer 197,994 32,894 Advance income tax deducted by CSE on transaction 23, ,300 Advance income tax deducted by Bank on deposits 9, ,409 Direct tax 26,767 - Advance income tax deducted by Bank on deposits-dealer 1, Advance income tax deducted on dividend 139,726 12,057 11,425,188 8,143,350 19,568,538 8,143,350 9 Investment in securities Cost Price The City Bank Ltd. 4,578,419 4,270,419 DESCO 10,721,200 - IFIC Bank Ltd. - 7,468,135 Jamuna Oil 14,105,710 Lafas Surma Cement 4,276,300 - Lankabangla Finance 8,763,100 - National Housing Finance and Investment Ltd. 4,602,900 - One Bank Ltd. 10,844,135 4,049,988 Phonix Finance and Investment Ltd. 6,546,850 6,070,050 Rupali Insurance Company Ltd. - 1,766,430 Square Pharmaceutical Ltd - 1,239,090 Unique Hotel 6,640,500 Uttara Bank Ltd. 5,972,735 - M.I. Cement Factory Ltd. - 3,608,809 MJL Bangladesh Ltd. - 4,000,056 Total Cost price (A) 77,051,850 32,472,977 Market Price (B) 55,942,860 31,484,157 Loss for diminution in value of investment in shares (C=A-B) 21,108, ,820 20% provision for unrealized loss arising out of year end (31/12/12) revaluation of shares purchased*(d=c X 20%) 4,221,798 - Less: Provision already kept in last year 988,820 - Net provision 3,232, ,820 Details in annexure-b *As per Press release# SEC/Mukhopatro/2011/696 dated 19 February 2013 of Bangladesh Securities and Exchange Commission, 20% provision has been made for unrealized loss arising out of year-end ( ) revaluation of shares purchased as dealer. 10 Accounts receivable Receivable from DSE 7,317,754 - Receivable from DSE-Dealer 46,766 - Receivable from PBIL - - Dividend receivable 294,400 48,506 Receivable from clients - 27,731,774 7,658,920 27,780,279 13

14 Amount in Taka 11 Preliminary expenses ` Opening balance 1,228,243 1,859,615 Add: expenses made during the year - - Less: Write-off in , , ,121 1,228, Cash and cash equivalent Cash in hand 4,895 10,817 Cash at Bank: One Bank Limited (SND)-DSE Broker 8,865 4,222,066 One Bank Limited (SND)-DSE Dealer 30,638 83,542 One Bank Limited (CD)-DSE Broker 102, ,801 Prime Bank Limited (CD)-Operation 5, ,858 Prime Bank Limited (CD)-DSE Broker 14,505 29,640 Prime Bank Limited (CD)-CSE Broker 23, ,845 4,792, ,740 4,803, Accounts payable Payable to DSE 57,192 29,028,119 Payable to CDBL 159,892 23,356 Payable to clients 9,519,781 10,907,860 Security deposits 283, ,554 Payable to PBIL 4,913,110-14,933,195 40,849, Secured Overdraft from Prime Bank Ltd, Motijeel Branch 352,278, ,253,198 The above loan, overdraft (general), was taken from Prime Bank Ltd, Motijheel Branch bearing 14.50% per annnum on quarterly basis vide reference no. Prime/MJ/CR/2011/33809 dated 04 September Provision for tax Current tax Opening balance 8,170,117 - Add: Provision for the during year 15,685,310 8,170,117 Less: Provision adjusted during the year - - Closing balance 23,855,427 8,170,117 Deferred tax Opening balance 665,885 - Add: Provision for the during year (16,975) 665,885 Less: Provision adjusted during the year - - Closing balance 648, ,885 24,504,337 8,836, Provision for impairment of margin loan Impaired margin loan as at 31st December ,985,439-20% provision for unrealized loss arising out of year end (31/12/12) revaluation of shares purchased*. 597,088 - *As per Press release# SEC/Mukhopatro/2011/696 dated 19 February 2013 of Bangladesh Securities and Exchange Commission, 20% provision has been made for unrealized loss arising out of year-end ( ) revaluation of shares purchased through margin loan. 14

15 16 Provision for expenses Amount in Taka Internet bill 265,000 33,000 Security and cleaning 63,250 52,000 Water bill 7,500 2,000 Telephone bill 25,000 28,000 Office rent 83, ,000 Electricity bill 55,000 60,000 Wasa bill 8,000 14,000 Salary-PF - 77,550 Salary arrear 395, ,000 Incentive bonus 1,459, ,000 Audit fee 69,000 41,800 Professional fees 69,000 - Fuel 7,000 16,000 Provision for negative equity 2,506,181 1,399,350 15

16 17 Revenue from brokerage commission Amount in Taka Commission from PBIL Dhaka Stock Exchange 18,463,381 14,813,162 Chittagong Stock Exchange 38, ,392 18,501,804 15,154,555 Commission from PBSL Dhaka Stock Exchange 33,845,483 4,992,670 Chittagong Stock Exchange 72,478 40,548 33,917,961 5,033,218 52,419,765 20,187, Interest income Interest income from margin loan 58,253,044 6,760,777 Interest on deposits 102,256 1,746,326 58,355,301 8,507, Other operating income BO opening charge 215, ,000 CDBL income 337, ,617 Pledge charge 13,500 - Annual maintenance fee 235,000 37,000 Others 59, , , Operating expenses Salary & allowances(a) 11,179,283 3,688,811 Festival bonus 977, ,400 Incentive bonus 1,430, ,000 Entertainment 475, ,466 Financial expenses (b) 42,469,849 3,609,724 Office rent 2,620,610 1,489,742 Utility bill ( C) 2,029,266 1,146,127 Repair & maintenance 6,990 6,840 Conveyance and traveling 44,510 13,250 Remuneration 18,975 26,700 Printing and stationery 202, ,017 Advertisement - 115,161 Director's fee - Audit fee 69,000 76,300 Legal fee - 17,300 Fees and renewal (d) 186, ,600 Professional fee 110,800 20,900 Depreciation (e) 2,503,407 1,114,469 Subscription & donation 9,700 4,700 Facilities expenses - 6,700 Training expenses - 3,000 Office maintenance 44,499 56,384 Security & cleaning 687, ,770 Newspaper & magazine 14,644 4,940 Internship allowances 14,400 21,600 Computer accessories 153,519 14,700 Vehicle expenses 126,198 - Website expenses - 2,000 Write off of preliminary expenses 614, ,372 65,988,517 14,144,974 16

17 Amount in Taka a Salaries & Allowances Basic salary 6,232,120 1,953,018 House rent 2,569, ,318 Conveyance allowance 424, ,500 Medical allowance 961, ,200 Leave fare assistance 454,633 - Provident fund 531,112 38,775 Others - 500,000 Technical allowance 6,500-11,179,283 3,688,811 b Financial Expenses - Bank charge & commission 45,183 47,457 Commission on Bank guarantee 806, ,070 Interest on loan 41,618,117 3,044,198 42,469,849 3,609,724 c Utilities Electricity bill 668, ,125 Telephone bill 263, ,032 Wasa bill 93, ,055 Water bill (Drinking) 37,761 15,323 Fuel-generator 67,017 26,261 Internet bill 899, ,332 2,029,266 1,146,127 d Fees & renewal SEC 24,000 54,000 DSE 36,500 - RJSC 8,985 10,700 CDBL 2,500 TWS installation fees 30,000 70,000 Entrance fees 4,200 20,400 Software maintenance fees 82, , ,600 e Depreciation & amortization Furniture & fixture 408, ,867 Computer & hardware 1,223, ,213 Office equipment 307, ,806 Air conditioner 283, ,104 Vehicles 23,538-2,246,659 1,060,990 Software 256,748 53,479 2,503,407 1,114, Direct expenses Howla 687, ,956 Laga 4,498,211 1,921,646 CDBL charge 2,146, ,973 Investor protection fund 10,086 3,989 7,341,905 2,583, Bank Guarantee As per trading rules of Dhaka Stock Exchange, Bank Guarantee is required for transactions (Buy) in a day exceeding Tk.5 crore. Prime Bank Securities Limited has received Bank Guarantee for Tk.15 core from Prime Bank Limited, Motijheel Branch, Dhaka. Documents related to the Bank Guarantee have been submitted to Dhaka Stock Exchange. 17

18 Prime Bank Securities Limited Schedule of depreciation As at December 31, 2012 Annexure-A Particulars Opening balance Cost Addition during the year Disposal during the year Total cost Rate Opening balance Depreciation Charged Disposal during the during the year year Total depreciation Total written down value Office equipment 1,183,584 71,990-1,255, , , , ,130 Air conditioners 1,135, ,135, , , , ,521 Vehicles - 338, , , , ,162 Computer & hardwares 5,902, ,902, ,213 1,223,078-1,812,291 4,090,329 Furniture & fixtures 2,165,885 1,800-2,167, , , ,397 1,564,288 10,387, ,490-10,800,079 1,060,990 2,246,659-3,307,649 7,492,430 Schedule of amortization As at December 31, 2012 Particulars Opening balance Cost Addition during the year Disposal during the year Total Cost Rate Opening balance Amortization Charged Disposal during the during the year year Total amortization Total written down value Software 869, ,600-1,527, , , ,228 1,217, , ,600-1,527,875 53, , ,228 1,217,647

19 Prime Bank Securities Limited Investment in securities As at December 31, 2012 Annexure-B Instrument Quantity Rate Total cost Market rate Market value Gain / loss The City Bank Ltd. 110, ,578, ,948,000 (1,630,419) DESCO 115, ,721, ,291,500 (2,429,700) Jamuna Oil 56, ,105, ,024,560 (4,081,150) Lafarge Surma Cement Ltd 100, ,276, ,290,000 (986,300) Lankabangla Finance Ltd. 100, ,763, ,900,000 (2,863,100) National Housing Finance and Investment Ltd. 60, ,602, ,244,000 (2,358,900) One Bank Ltd. 400, ,844, ,120,000 (1,724,135) Phonix Finance and Investment Ltd. 84, ,546, ,746,400 (2,800,450) Unique Hotel 52, ,640, ,562,400 (78,100) Uttara Bank Ltd. 100, ,972, ,810,000 (2,162,735) 77,051,850 55,936,860 (21,114,990)

20 Operating profit before charging Tax 48,099,291 Less: Items for separate consideration Prime Bank Securities Limited For the year ended 31 december 2012 Calculation of Income tax Dividend income 944,511 Capital gain 8,850,564 9,795,074 38,304,217 Add: Inadmisible items Entertainment 475,414 Write off-preliminary exp. 614,122 Accounting depreciation 2,503,407 Donation & subscription 9,700 3,602,643 41,906,860 Less: Admisible items as per tax law Subscription 9,700 Depreciation 2,458,142 2,467,842 Profit before charging entertainment expenses 39,439,018 Less: Entertainment on first Tk. 10 lac 40,000 on balance 768, ,780 Actual expenses 475, ,414 Total Income from Business or Profession 38,963,604 Add: Dividend income 944,511 Capital gain 8,850,564 Total income 48,758,679 Capital gain 8,850, ,056 Dividend income 944, ,902 Business income 38,963, ,611,352 15,685,310 Deferred tax assets for depreciation 45, ,975