Press Release

JCR-VIS Reaffirms Entity Ratings of Elixir Securities Pakistan (Private) Limited

Karachi, February 8th, 2019: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has reaffirmed the entity ratings of Elixir Securities Pakistan (Private) Limited (Elixir) at ‘BBB/A-3’ (Triple B /A-Three). Outlook on the assigned ratings is ‘Stable’. The previous rating action was announced on April 10, 2017.

The assigned ratings to Elixir reflect the management’s strategic shift in strategy with significant focus on corporate finance advisory while on the brokerage front, emphasis remains on the high margin institutional & foreign equities broking business. Ratings also incorporate cost control measures undertaken by the company which include rationalization of headcounts, consolidation of branches (Lahore and Islamabad branches were closed), the decision to not hold/maintain any client assets/custody and streamlining of organizational structure. Ratings are constrained by cyclical nature of the brokerage industry and weak profitability profile as evident from persistent trend in operating losses. Ratings remain dependent on improvement in financial profile through translation of revenues from signed corporate finance mandates.

Brokerage industry continues to be affected by economic cycles. Declining trend in trading volumes during FY18 and the ongoing year has impacted the topline of brokerage industry. Given the operating environment, players with efficient and variable cost structures focusing on high margin business and diversification in revenue streams are expected to fare better vis-à-vis peers.

Overall operating revenues witnessed a noticeable decline during CY18. Decline was primarily driven by brokerage revenues which reduced to around half of CY17 levels. Besides decline in volumes, reduction in scrip prices has translated into lower commission per share and hence lower brokerage revenues. In absolute terms, income from corporate finance segment remained around prior year level in CY18. Going forward, translation of sizeable signed mandates on the corporate finance advisory front is considered important for improvement in profitability profile. Capitalization indicators have also weakened on a timeline basis due to attrition in equity base. Liquidity buffer has declined but remains adequate.

For further information on this rating announcement, please contact the undersigned (Ext: 207) at 021-35311861-71 or fax to 021-35311872-3.

Jamal Abbas Zaidi

Applicable Rating Criteria: Methodology - Securities Firms Rating (May 2015)

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 2019 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