Islamabad February 23, 2022: First Dawood Investment Bank in a financial statements file today has said that as per new rules of NBF sector; ‘SECP’ has reduced minimum capital requirements to Rs. 100 million (for investment financial services and leasing licenses). Upon renewal of license, the Company will be eligible to restart business operations. The management is confident that renewal of the license may assist in induction of foreign or local partner.
Presently, the net equity stands at Rs.583.051 million which exceeding the MCR by Rs. 483.051 millions in case deferred tax asset or its portion is materialized. The Company expects recovery of approximately Rs.100 to 150 million in the next two financial years.
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During the period, recovery of Rs.55.498 million has been made against non−performing lease and advances portfolio and further recovery is also expected which will provide cash flow cushion within next two − three years. The management is attractive for equity participation/ merger along with an opportunity for the existing shareholders to inject additional equity. The main sponsors are committed to subscribe their portion of right issue. The management is confident that the Company will be able to resume its operations upon renewal of licenses and take advantage of deferred tax by writing new lease facilities.
Management is confident that it will manage to continue writing back provisions as a result of expected recoveries which will result in better cash flows. Administrative expenses have been curtailed and departments have been restructured and rationalized/ right sized to reduce the payroll cost and overhead expenses. The proposed reduction in financing cost through restructuring/ settlements with the lenders will assist in further reducing the losses and improving the equity.
The Company has successfully able to meet over many of its financial obligations through recoveries and settlements and has been able to settle majority of its liabilities and other commitments through its assets in last few years. It further plans to continue with the settlement of its remaining outstanding liabilities.
The Company is hopeful to restructure / settle the residual amount of liabilities in the near future.
The Company is meeting all of its expenses since the financial turmoil of 2008−09 without any external financial support or a bail−out package. Further, the Company has adequate liquid assets in the form of bank balances and short term investments to meet its obligations / expenses in the near future.
The Company is aggressively following−up with its non−performing portfolio for recovery of principal, mark−up and repossession of collaterals assets. In this respect, the management has realigned its strategy accordingly.
During the period, the Company made recoveries amounting Rs. 9.56 million which is below the expected recovery amount of Rs. 20 million. Major reason for the difference was slow litigation system in the country. The management is expecting to recover the amount either through auction of the collateralized assets or transfer of title of the collateralized asset through the Court order or out of court settlement.
FDIBL during the half year of the financial year 2021-22 has reported after-tax profit of Rs.50.209 million as compared to Rs. 3.305 million during corresponding period last year. The profit in current year is due to significant cash recovery. However, the net worth of your company has increased from Rs. 514.125 million to Rs. 583.052 million. The earning per share is 0.338 for the period under review.
Subsequent to half-year ended, FDIBL has received a letter from Mr. Dmitry Plotnikov, CEO / Director of ‘Light World of Czech Republic’, whereby he has conveyed his Offer (“Offer’) for subscribing ‘Right Shares’ by way of fresh equity injection up to a maximum of Euro 7.50 million (Euro Seven Million, Five Hundred Thousand Only). The above will be subject to all regulatory approvals and in accordance with provisions of the Companies Act, 2017, Securities Act, 2015, PSX Rule Book, the Listed Companies Regulations, 2017, SECP and State Bank of Pakistan approvals.
The Company earned a net profit (after tax) of Rs. 50.209 million during the period ended December 31, 2021, its accumulated losses reached to Rs. 1,415.865 million as at December 31, 2021 and its current assets are now exceeding its current liabilities by Rs. 30.891 million.
