December 21, 2011 ******************* Lecturer Department of Business Administration ****** University

Subject: An application for submitting an assignment on City Brokerage Ltd a sister consultancy organization of The City Bank Ltd

Dear Sir:

In accordance to your advice to us for preparing an assignment on Brokerage Business and its areas of business, we have selected the City Brokerage Ltd. To serve our purpose, we have followed standard methodology to extract out findings. We have applied sophisticated data analysis techniques to get consistent and sound output. As per the direction of you, we have tried out the best to highlight our findings through our findings from the annual report of 2010 and some part from primary enquiry. WE sincerely hope this report will fulfill the requirement suggested by under the course Portfolio. We will appreciate if you kindly spend some of your valuable time by calling on us for discussion in connection to the interpretation of this report.

Thank you. Sincerely yours,

Name of group members: Md. *********** ID-083**** Batch-** ************ ID-091***** Batch-** ****** Ahmmed ID-082***** Batch-**

MOTIVE OF SELECTING CITY BROKERAGE LTD:

As a student of Finance Banking and Insurance we must know about the current situation of share, stock and bond market. So that to have knowledge about share and stock price, also about risk related with the investment market, brokerage house can be a key domicile for me. For this motive we have decided to select this topic (City Brokerage Ltd.) for my assignment topic. After studying this brokerage we have learn many things about brokerage and its related works. This study also helps us to know about the objective of the Company (Brokerage House) for which it was incorporated are to carry on the business of stockbroker/stock dealers and other related business in connection with security dealing. Other objectives of the Company are to buy, sell, hold or otherwise acquire or invest the capital of the Company in shares, stocks, and fixed income securities, etc An individual or firm that charges a fee or commission for executing buy and sell orders submitted by an investor. The role of a firm when it acts as an agent for a customer and charges the customer a commission for its services.

OBJECTIVES OF STUDY:
The objective of the study is to analyze the relationship between brokerage business with share, stock and bond also with the individual investor. The specific objectives of this study is  What a brokerage business is?  Working areas of a brokerage business.  Relationship between brokerage services and Security and Exchange Commission.

METHODOLOGY:
This study is very important because every investor and individuals has right to know about the work areas where by they doing share, stock and bond business. And we group members are great full that we get you such a very good instructor in Portfolio Management. We also great full the City Bank officials Mr. S M Azgor Ali for his help to collect the information. We collect all data from Annual report of City Brokerage Ltd 2010. Internet (http//:city//brokerage.ldt.net.bd/) Some from Officials City Brokerage and the City Bank Ltd.

CITY BROKERAGE LTD.

1.

COMPANY AND ITS ACTIVITY:

1.1. STATUS OF COMPANY: City Brokerage Ltd (the company) was incorporated in Bangladesh on 31 March 2010 as a private limited company under the Company Act 1994 vide certificate of incorporation no. C-83616/10. It is a subsidiary company of The City Bank Limited, a banking company incorporated on 31 March 2010 but it started its operation from 15 November 2010. The registered office of the Company is situated at Jiban Bima Tower, 10 Dilkusha Commercial Area, Dhaka 1000. The company has four branches each located at Gulashan, Dhanmondi, Nikunja and Motijheel, Dhaka. City Brokerage limited has been set up to cater to the needs of the capital market needs of the institutional and individual clients. City Brokerage limited offers full- fledged international standard brokerage service for retail and institutional Clients and foreign clients. Having seats in both Dhaka and Chittagong Stock Exchange Limited, it is inevitable that City Brokerage limited became the trusted broker to most of the foreign, local institutional investors and high net worth clients investing in Bangladesh and abroad. City Brokerage limited is dedicated to providing a high level of professional and personalized services to its domestic and international clients. The company intends to offer high quality product and service at a competitive rate to all clients. It has proven reputation in serving customers by maintaining strong Compliance practices and extreme ethical standard.

1.2. NATURE OF BUSINESS: The main objective of the Company for which it was incorporated are to carry on the business of stockbroker/stock dealers and other related business in connection with security dealing. Other objectives of the Company are to buy, sell, hold or otherwise acquire or invest the capital of the Company in shares, stocks, and fixed income securities, etc.

1.3. CDBL SERVICES AS FULL SERVICE DEPOSITORY PARTICIPANT (DP) o Bo (Beneficial Owner) accounts opening and maintenance o Dematerialization and Re-materialization o Transfers and multiple accounts movement o Pledging, un-pledging and confiscation o Lending and borrowing o BO ISIN balances and master maintenance enquiry

1.4. BROKERAGE SERVICES o Brokerage service for Institutional Clients o Foreign Fund Managers o Insurance Companies o Banks and Financial Institution o Trust o Corporation o Brokerage Service for retail (Individual) Clients o Margin long facility at affordable interest rate o International and Domestic Placement of Securities Brokerage Services o Trade Execution Dhaka and Chittagong Stock Exchange Limited o Pre-IPO private placement opportunities through Merchant Banks o Appointment of dedicated and skilled sales representative o Opportunities for trading in different financial instruments

1.5. CUSTODIAL SERVICES o Safe Deeping of securities o We have an exclusive arrangement for clients to keep their shares in safe custody in our vault

1.6. RESEARCH & PUBLICATION o Daily price information Market Overview, Daily Fact Sheet o Monthly report Industry/Corporate research report

o Free access to our company research reports through our web-site o Sectors and Company research reports o Half yearly political and economic update

1.7. VALUE ADDED SERVICES o Daily portfolio services through email o Daily trade confirmation through SMS service o Web services for portfolio and report.

2. FEATURES OF CITY BROKERAGE: o International Standard Brokerage Operation o Corporate member of both Dhaka Stock Exchange Ltd. (DSE) and Chittagong Stock Exchange Ltd. (CSE) o Full service Depository Participant (DP) of Central Depository Bangladesh Limited (CDBL) o Provide Margin loan to its Clients. o Staffed with highly skilled professionals o Advanced IT infrastructure for efficient order processing o Strict adherence to international Compliance standards regulatory requirements and The City Bank Limited Code of Conduct o Exclusive Arrangement for safekeeping of all instruments in own vault o Regular reporting of portfolio and transaction status through sms, e-mail fax and website o The City Brokerage provides all CDBL related services which includes Dematerialization/re-materialization of script freeze/release of requests and suspension, pledge/un-pledge and confiscation etc. o Availability of market research reports and sector wise analysis o Facilities for opening brokerage and BO Account for Non Resident Bangladeshis (NRBs)

o The City Brokerage assists Foreign Institution/NRBsto set up Custodial and Cash account with local or foreign commercial bank. The company assists in all legal and regulatory affairs involved in the process.

3. SIGNIFICANT ACCOUNTING POLICY: 3.1. BASIS OF PREPARATION OF FINANCIAL STATEMENT: The financial statement of the company have been prepared in accordance with International Accounting Standard as adopted by the Institute of Chartered Accountants of Bangladesh as Bangladesh Accounting Standards (BAS), under historical cost convention on a going concern basis and the requirements of Companies Act 1994 and Securities and Exchange Rules 1987. 3.2. PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION: These are started at cost less accumulated depreciation. Depreciation is charged on the items of property, plant and equipments using straight-line method in accordance with BAS 16. Full months depreciation charged on additions irrespective of their acquisition and no depreciation is charged in the month of disposal. The rates of depreciation on various classes of property, plant and equipment are as under: Category of Assets Furniture and fixtures Office equipments Rate 10% 20%

3.3. CASH AND CASH EQUIVALENTS: Cash and cash equivalents includes cash in hand, bank balance, cheques awaiting for collection and fixed deposits which are held and are available for use by the Company without any restriction. 3.4. ACCRUAL: The expenses, irrespective of capital or revenue nature, accrued/ due but not paid have been provided in the books of account of the Company.

Figure In Tk. Year 2010 4. Property, plant & equipment cost: Less: Charge on depreciation during the period Net book value 5. Intangible Assets: Costs of software Less: Amortization Net book value 6. Membership Fees: Dhaka Stock Exchange Ltd (DSE) Chittagong Stock Exchange Ltd (CSE) Total 580,999,000 19,001,000 600,000,000 303,350 (15,168) 288,182 24,327,101 (656,573) 23,670,528

7. Investment in Securities: Investment Security 2,184,864

This represents investment made by the Company in purchase of 45,518 shares of RAK Ceramics Ltd under book building methods. The market value of the share is Taka 7,810,889 (value per share @ Taka 171.600) as on 31 December 2010. 8. Advance Tax: Advance payment of corporate income tax 71,184.176

The above amount represents income tax withheld from the transactions of traded securities @ 0.050% which is the final tax liability of the Company under section 82C of the IT ordinance 1964. 9. Accounts Receivable: Receivable from DSE CSE Clients (Portfolio maintenance & credit stock sell) Total 446,196,225 26,767,775 2,984,865,570 3,457,829,569

The above amount is receivable from 1,102 individual & institutional clients against margin loan for investing in securities through the Company.

10. Advance, deposits and prepayments: Advance to/against Office rents Employees Supplies Management expenses Deposits Total 16,427,928 1,074,490 1,390,000 7,000 7,000 18,896,418

11. CASH AND CASH EQUIVALENTS: Cash and cash equivalents consists of the bank balance with Principle Office of The City Bank Ltd, cheque deposited with bank for clearing and petty cash at head office and branches. Account-wise outstanding balance at 31 December 2010 is given below:

1101132314001 1101132310001 Added Cheques awaiting for collection Petty Cash Total

546,749,046 36,205,674 582,954,720 32,205,674 57,500 615,473,789

12. SHARE CAPITAL: Authorized capital 20,000,000 shares of Taka 100 each Issued subscribed and paid-up capital The City Bank Ltd 599,940,000 2000,000,000

5,999,400 shares of Taka 100 each fully paid-up individual 600 shares of Taka 100 each fully paid-up Total 60,000 600,000,000

13. SHORT TERM LOAN FROM THE CITY BANK LTD This loan was taken from The City Bank ltd in the form of overdraft where the overdraft facilities limit was Taka 550 crore for margin financing and prefunding support for foreign trade of foreign clients is bearing interest @12.50% per annum subject to revision by bank management from time to time. Subsequently, on 27.12.2010 the bank management has reduced the limit to Taka 275 crore.

14. PAYABLE TO THE CITY BANK LTD: Profit of brokerage division in 2009 Period from 1 Jan 2010 to 14 Nov 2010 Advance to vendors Expenses from 15 Nov 2010 t0 29 Dec 2010 Property, plant and equipment Intangible assets Advance, deposits and prepayments Advance to Central Depository Bangladesh Ltd Investment in shares Total 96,632,686 812,122,699 10,102,985 7,103,266 20,741,291 290,710 16,613,485 21,738,691 2,184,864 987,530,676

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15. ACCOUNTS PAYABLE: Accounts payable The City Bank Ltd. Guarantee fee 987,530,676 7, 17,500 30,499,813 9,372,744 Commission payable Total 17,270,137 1,021,361,058

16. Provision for Corporate Income Tax: Provision for corporate income tax is made on various sources of income following applicable tax rates on those incomes as computed below:

Sources of income Nature of income Brokerage Commission Business Income Net Interest Income Other Operating Income Total 8,266,284 183,563 67,488,779 Taka 59,038,932

Applicable tax rate % ***

Provision Taka 7,118,476

37.50 37.50

3,099,857 68,836 10,287,169

17. BROKERAGE COMMISSION FROM Dhaka Stock Exchange Chittagong Stock Exchange Total

2010 46,467,883 5,452,573 51,920,456

18. TOTAL ASSETS AND SHAREHOLDERS EQUITY AND LIABILITIES Total Assets and Shareholders Equity and Liabilities

2010 4,774,176,681

19. PROFIT AFTER TAX Tax

2010 20,987,797

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