Press Release

JCR-VIS Upgrades Entity Ratings of Adam Securities Limited

Karachi, March 30, 2018: JCR-VIS Credit Rating Company Ltd. (JCR-VIS) has upgraded entity ratings of Adam Securities Limited (ASL) to ‘BBB-/A-3’ (Triple B minus/A-Three) from ‘BB+/A-3’ (Double B Plus/A-Three). Outlook on the assigned ratings is ‘Stable’. Previous rating action was announced on October 31, 2017.

The assigned ratings to ASL derive strength from the company’s sizeable market share along with improvement in financial performance. However, ratings are constrained by the limited scope of corporate governance structure. In line with best practices regarding corporate governance, the company needs to develop and adhere to a comprehensive policy framework. ASL initiated its underwriting services in 2016. In addition to this, the company has acquired license for book running and is in the process of acquiring license for consultant to the issue.

During the ongoing year increase in short term investments was observed, nonetheless, market risk emanating from the same is limited as majority of the proprietary book is hedged by future contracts. There were five underwriting mandates undertaken during the year with minimal take up. ASL has remained compliant with its overall and per party underwriting limits during the period.

A twofold increase in equity brokerage income was witnessed during FY17 where growth in profitability being a function of higher market volumes and increased commission charged per share charged to clients. During HYFY18 market volumes substantially decreased resulting in drying out of the same, thereby affecting the HY18 revenues of brokerage firms, however; ASL managed a slight decrease in the topline owing to higher commission from individuals. Furthermore, efficiency indicator has showcased improvement on a timeline basis.

Equity base of the company was higher on the back of earnings retention and director’s loan. Leverage indicators are manageable owing to higher equity and limited borrowing. Ratings derive strength from the demonstrated financial support by sponsor which JCR-VIS expects to continue, if required.

For further information on this rating announcement, please contact the undersigned (Ext: 201) at 35311861-70 or fax to 35311872.

Javed Callea

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 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