Press Release

JCR-VIS Reaffirms Entity Ratings of AKD Securities Limited

Karachi, January 19, 2018: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the entity ratings of AKD Securities Limited (AKDSL) at ‘A/A-2’ (Single A/A-Two). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on August 2, 2016.

Assigned ratings to AKDSL reflect the company’s position as one of the leading brokerage houses in the country with sizeable market share. Ratings also incorporate adequate financial profile and control infrastructure. Moreover, vacancies in the senior management team have been filled by experienced professionals.

Brokerage income has recorded sizeable growth during FY17 on the back of healthy increase in retail commission income. However, brokerage income from foreign clients and domestic institutions has remained stagnant over the last two years. Management plans to sign new partnerships and further increase breadth of research function to grow foreign & institutional business. In line with industry trend, brokerage income has witnessed a dip during 1HFY18 due to decline in market volumes.

Despite the decline in corporate advisory fees, growth in brokerage commissions resulted in higher revenues during FY17. Overall profitability was lower on account of higher provision against doubtful debts. With equity brokerage representing majority of topline, profitability remains dependent on market movements. To augment corporate advisory income two senior resources have been hired during 2017. Given the sizeable mandates in hand, management expects corporate advisory income to depict healthy growth in the ongoing year.

Overdue trade debts have witnessed a noticeable decline on the back of recoveries during FY17; however, the same continues to remain sizeable. Moreover, settlement of related party’ liabilities owed to National Bank of Pakistan have also been noted positively. The company’s sizeable investment in a long term exploration & production company (subsidiary) witnessed a noticeable decline in FY17 due to significant re-measurement adjustment during the period. Resultantly, equity base and loss absorption capacity has witnessed decline.

For further information on this rating announcement, please contact the undersigned (Ext: 207) at 021-35311861-70 or fax to 021-35311873.

Jamal Abbas Zaidi

Applicable rating criteria: Methodology - Securities Firms Rating (June 2017)

Information herein was obtained from sources believed to be accurate and reliable; however, VIS Credit Rating Company Limited VIS does not guarantee the accuracy, adequacy or completeness of any information and is not responsible for any errors or omissions or for the results obtained from the use of such information.VIS, the analysts involved in the rating process and members of its rating committee do not have any conflict of interest relating to the rating(s)/ranking(s) mentioned in this report.VIS is not an NRSRO and its credit ratings are not NRSRO credit ratings.VIS is paid a fee for most rating assignments. This rating/ranking is an opinion and is not a recommendation to buy or sell any securities. Copyright 2018 VIS Credit Rating Company Limited. All rights reserved. Contents may be used by news media with credit to VIS.

JCR-VIS Credit Rating Company Limited