Investment Banks/Investment Companies: SECURITY INVESTMENT BANK LIMITED - Year Ended December 31, 2005 (Audited)
Security Investment Bank Limited (SIBL) was incorporated as an Investment Finance Company on May 23, 1991 in pursuance of the permission granted by the Federal Government.
The company was engaged in providing investment, finance and related banking services in line with the regulations of the SBP. SIBL is as a public limited company, and was listed on the stock exchanges of the country on January 06, 1992.
Since investment banks have been brought under the purview of the SECP, SIBL has been granted the license to carry out business of investment finance services as a Non-Banking Finance Company under section 282C of the Companies Ordinance, 1984 and the NBFC (Est. & Reg.) Rules, 2003 issued by the SECP (previously this was covered under SRO 585(1)/87 dated July 13, 1987, issued by the Ministry of Finance).
Presently SIBL is a small but apparently effective outfit. It has 30 employees as on December 31, 2005 (2004: 30 employees). JCR - VIS has given medium to long-term rating of SIBL at 'A' (Single A) and the short-term rating at 'A-1' (A one) with a stable outlook. SIBL has a wholly owned subsidiary, SIBL Exchange Company (Private) Limited, which was incorporated on December 16, 2004 and has its registered office at 6th Floor, Madina City Mall, Abdullah Haroon Road, Karachi, where as it has a branch at Ground Floor, Al-Rahim Tower, I.I. Chundrigar Road, Karachi.
The subsidiary company has commenced its operation from February 28, 2006. The Overview hereunder is that of SIBL alone, without consolidation with its subsidiary company. SIBL is active in money market activities such as making short-term investments in government securities, shares, lending, borrowing, placements, promissory notes, bankers acceptance and other money market instruments acting as a broker or acting on its own account. The company has an amount of Rs 87.5 million (2004: Rs 87.5 million) as at December 31, 2005, under its Cash Management Scheme, offered to its customers. These funds are invested in various alternatives depending on customer's authority and without any liability on the part of the company. Authorised capital of SIBL is Rs 500 million, comprising 50 million ordinary shares of Rs 10 each. As on December 31, 2005 the paid up capital is Rs 372.707 million, which has been contributed by 2,489 shareholders, of which 2,435 shareholders own 84% of the shares. Shareholders holding more than 10% or more voting interest are H.A.R with 4.72 million shares (13% of total) and Ms. Amina Bano with 5.29 million shares (14% of total). The rest of the shares are distributed among a number of corporate entities including banks and DFIs. Total assets of SIBL increased by 43% to Rs 2.456 billion on December 31, 2005 (2004: Rs 1.724 billion). Of the total, 79% comprise current assets (2004: 98%) while 21% have been classified as non-current assets (2004: 2%). During the year under review, there has been about 11 times increase in non-current assets. Main elements of increase include strategic investment of Rs 100 million in the subsidiary company and 376 million long term investment in the government securities.
The increase in total assets has been financed through borrowings and short term deposits. The current ratio has declined slightly; however, it is still above one. There are no long term debts. On December 31, 2005, SIBL had deployed more of its resources in short term Financing (Rs 171 million), Placements (Rs1,155 million) and Investments (Rs 289 million) as in the past. Together with Return on Securities, these three activities are main source of its earnings each year. SIBL's equity including Surplus on Revaluation of Investments on December 31, 2005 shows an increase of 15% to Rs 612 million (25% of Total Assets) as compared to Rs 531 million (31% of TA) as on December 31, 2004.
The increase is due to retention of profit in the business and bigger Surplus on Revaluation of Investments. During 2005, SIBL managed to earn gross income of Rs 189.282 million as compared to Rs 150.479 million for 2004, showing an increase of 26%. Major sources contributing towards this profitability were income on Financing and Placements which covered more than 50% of the income earned.
During 2005, SIBL maintained its revenue growth by making Rs 91.845 million operating profit, an increase of 10% over the profit earned during 2004. The increase was modest due to 87% increase in cost of deposits and borrowings over that of the last financial year. Return paid on Deposits and Borrowings this year was 40% of Total Income (2004: 27% of Total Income). The year 2005 was closed with After-tax Profit of Rs 70.6 million (2004: Rs 68 million). Despite higher total income during 2005, SIBL's net profitability was almost at the level of 2004 because of higher financial cost. ROE for the year is 12%, slightly lower than that of the previous year at 13%. SIBL maintained the stock dividend at 15% (2004: 15%) and proposed cash dividend at 10% (2004: Nil). Performance statistics are given below.
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Performance Statistics (Million Rupees)
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Performance Statistics (Audited) (Rs in 000)
Balance Sheet (As on December 31) 2004 2003
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Total current assets: 1,940,672 1,682,967
Total non current assets: 515,593 40,550
Total assets: 2,456,265 1,723,517
Total Current Liabilities: 1,839,919 1,188,338
Total capital employed: 616,346 535,179
Deferred Liabilities: 4,002 3,719
Net assets: 612,344 531,460
Share capital: 372,707 372,707
Reserves: 228,926 158,287
Equity: 601,633 530,994
Surplus on revalue, investment: 10,711 466
Total equity: 612,344 531,460
Total Liabilities & Equity: 2,456,265 1,723,517
Contin. & Commitments: 25,729 0
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Ratios: 2005 2,004
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Current Ratio: 1.05:1 1.42:1
Debt/Equity ratio: No Debt No Debt
Book Value Per Share-Rs: 16.43 14.26
Market Value/share (19-05-06)-Rs: 12.20 -
Price/Book Value - X: 0.74 -
Contin. & Com./Equity-Times: 0.04 0.00
Income Statement 2005 2004
Return in placements: 99,256 54,038
Return on securities: 53,642 59,425
Gain on sale-investments: 23,622 34,844
Profit on bank deposits: 11,176 537
Other income: 1,586 1,635
Total Income: 189,282 150,479
Financial & Admn. Exp.: 97,437 67,156
Operating profit: 91,845 83,323
Profit before Taxation: 91,845 83,323
Taxation: 21,207 15,293
Profit after taxation: 70,638 68,030
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Ratios: 2,005 2,004
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Stock Dividend: 15% 15%
Cash Dividend: 10% 0%
EPS (Y. end capital)- Rs: 1.90 1.83
Operating profit/Total income: 49% 55%
Pre-tax profit/Total income: 49% 55%
After tax profit/Total income: 37% 45%
Return on Equity: 12% 13%
ROA: 3% 4%
ROCE: 11% 13%
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Cash Flow Summary (Full Year) 2005 2004
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Net Cash flow- Operations: 367,920 -321,539
Net Cash Flow-Investing: 175,291 290,136
Net Cash Flow-Financing: 0 0
Change in net liquidity: 192,629 -31,403
Net liquidity at beginning: 65070 96473
Net liquidity at end: 257,699 65,070
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COMPANY INFORMATION: Chairman: Khursheed K. Marker; President & Chief Executive: Muhammad Saleem Rathod; Director: Muhammad Iqbal Kasbati; Company Secretary: Muhammad Amin Khatri; Auditors: Muniff Ziauddin & Co, Chartered Accountants; Tax Advisors: Anjum Asim Shahid Rahman, Chartered Accountants; Legal Advisors: 1- Bawaney & Partners, 2- Muhammad Tariq Qureshi; Registered Office: Flat No 4, 3rd Floor, Al-Baber Centre, Main Markaz, F-8, Islamabad; Karachi Office: 606, 6th Floor, Unitowers, I. I. Chundrigar Road, Karachi; Web Address: www.sibl.com.pk
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