LSE Ventures : Transmission of Annual report for the year ended June 30, 2023

Contents

Sr. No.	Item	Page No.
1	Vision and Mission Statement	3
2	Corporate Information	4
3	Chairman's Review	5
4	Directors' Report	6
5	Directors' Report Urdu	11
6	Pattern of Shareholding	16
7	Notice of 1st Annual General Meeting	20
8	Notice of 1st Annual General Meeting Urdu	24
9	Form of Proxy	27
10	E-Dividend Mandate Letter	28
11	Statement of Compliance	29
12	Auditors' Review Report to the Members	32
13	Auditors' Report to the Members	33
14	Standalone/Unconsolidated Financial Statements	37
15	Directors' Report on Consolidated Financial Statements	63
16	Auditors' Report to the Members on Consolidated	68
Financial Statements
17	Consolidated Financial Statements	71

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LSE VENTURES LIMITED

ANNUAL REPORT - 2023

Vision Statement

To become a leading player in accelerating the creation of new investable assets.

Mission Statement

To source and manage portfolio companies for optimal returns to our shareholders.

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LSE VENTURES LIMITED

ANNUAL REPORT - 2023

Company Information

Board of Directors

1.	Mr. Muhammad Iqbal	Chairman
2.	Mr. Aftab Ahmad Ch.	Chief Executive Officer
3.	Mr. Abid Latif Khan	Non-Executive Director
4.	Ms. Minahil Ali	Non-Executive Director
5.	Mr. Shahnawaz Mahmood	Independent Director
6.	Mr. Muhammad Tabassum Munir	Independent Director
7.	Mr. Yaser Manzoor	Independent Director
Audit Committee
1.	Mr. Shahnawaz Mahmood	Chairman
2.	Ms. Minahil Ali	Member
3.	Mr. Muhammad Tabassum Munir	Member
4.	Mr. Muhammad Usman	Secretary
Human Resource and Remuneration Committee
1.	Mr. Yaser Manzoor	Chairman
2.	Mr. Abid Latif Khan	Member
3.	Mr. Muhammad Tabassum Munir	Member
4.	Mr. Muhammad Usman	Secretary
Company Secretary	Mr. Muhammad Usman
Chief Financial Officer	Mr. Rashid Matin Khan
Auditors		Crowe Hussain Chaudhry & Co. Chartered
		Accountant
Legal Advisor	Allied Legal Services
Share Registrar	CDC Share Registrar Services Limited
		CDC House, 99-B, Block B, S.M.C.H.S., Main
		Shahrah-e-Faisal, Karachi
Registered Office	LSE Plaza, 19 - Khayaban-e-Aiwan-e-Iqbal,
		Lahore

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LSE VENTURES LIMITED

ANNUAL REPORT - 2023

Chairman's Review

Dear Shareholders,

We welcome you to the 1st Annual General Meeting of your Company for the year ended 30th June 2023. The year was market by a shrinking economy, with multiple sectors experiencing an overall decline. Your Company had no exception and similarly faced significant challenges due to the economic slowdown. In the face of these hurdles, we remained committed to adopting our strategies to navigate the changing market conditions successfully.

LSE Ventures Limited (LSEVL) is engaged in the business of investment management in portfolio companies, pre- IPO/startups/seed capital stage, Tier 1, Tier 2, Tier 3 ventures equity investments and treasury management. LSEVL also holds strategic investments in several companies, representing diversified sectors, such as capital market infrastructure companies, financial services, commodity exchange, credit rating agency, digital technology and growth enterprises, technology and hard-core infrastructure companies.

During the year, the Company acquired the listing status at Pakistan Stock Exchange Limited. We are actively seeking out strategic partnerships and collaborations to harness synergies and unlock new opportunities for mutual growth. These alliances will enable us to broaden our portfolio, penetrate untapped markets and enhance vibrant economic ecosystem of the country. Under the depressed economic environment, the Company successfully managed, enhanced the shareholders wealth through prudent investment decisions.

It is with heartfelt appreciation that I acknowledge the exceptional contributions of our remarkable Management team. Their unwavering dedication and commitment and tireless efforts have been the cornerstone of our resilience and accomplishments as the company was got listed within a shorter period of time.

The Board has diligently performed its duties and responsibilities and has effectively guided the Company in all its strategic affairs. The Board was essential in reviewing the management performance and focusing on significant risk areas. The Board recognizes that well-defined governance practices are critical in strengthening corporate responsibility and is dedicated to achieving excellence in corporate governance practices to conserve and sustain stakeholders' value. All Directors, including the Independent Directors, actively contributed to the Board's decision- making processes.

As Chairman of your Company, I remained firmly committed to ensuring that your Company complies with all relevant codes and regulations and that our management team continues to take decisions that will create value for you in the short, medium, and long term. The Board carried out its annual self-evaluation in line with best practices of corporate governance and found its performance to be satisfactory. The focus remained on business opportunities, risk management, and providing oversight to the management. The Company has an independent Internal Audit department that follows a risk-based audit methodology. Internal Audit reports are presented to the Board Audit Committee quarterly and areas for improvement are discussed and highlighted. Your Company is continuously exploring new avenues of investments for the benefit of all the stakeholders. As always, we are dedicated to ensuring the implementation of the best policies in favour of the Company.

On behalf of the Board, I wish to acknowledge all our employee's contributions to the Company's success. I also wish to thank our outgoing directors, shareholders, business partners, and other stakeholders for their confidence and support. The Board looks forward to next year with greater confidence in meeting the challenges ahead. We place our trust in Allah Almighty for His blessings in all our future endeavors.

Muhammad Iqbal

Chairman

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LSE VENTURES LIMITED

ANNUAL REPORT - 2023

Directors' Report

Dear Shareholders,

The Board of Directors of LSE Ventures Limited is pleased to present its report, together with the audited financial statements and Auditors' report thereon, for the year ended June 30th, 2023.

Economic Review

During the fiscal year 2022-23, Pakistan's economy confronted various challenges, including large trade deficit, high inflation, exorbitant discount rate, steep devaluation of Pakistani Rupee, exponential rise in public & foreign debt, depleting foreign reserves, devastating floods in various parts of the country and political uncertainty. The Government was able to get support from IMF and friendly countries, which has sustained macro-economic stability to some extent.

Rising cost of production, high power and fuel prices, rising financial cost, shortage of raw material due to strict restrictions on imports, increase in various taxes and duties have restricted the business activities and growth in all the sectors of the economy.

The KSE-100 index of Pakistan Stock Exchange (PSX) opened at 41,540.8 points on 1st July 2022 and closed at 41,452.6 points on 27th June 2023, declined by 0.21%. Market capitalization of the companies listed at PSX recorded at Rs. 6,956 billion on 30th June 2022 and closed at Rs 6,369 billion on 27th June 2023, reflecting a decline of 8.43%. The current situation calls for some drastic actions and measures from the Government to restore the confidence of the investors.

Listing at PSX

During the year under review, LSE Financial Services Limited (LSEFSL) was revitalized by virtue of the scheme of compromises, arrangement and reconstruction for demerger/split of LSEFSL (the "scheme"), with the approval of the Lahore High Court, Lahore, vide Order dated April 26th, 2023. Under the scheme, the non-NBFC business and strategic investments/assets of the former entity have been transferred to LSEVL and LSE Proptech Limited (LSEPL), both of which subsequently attained the listing status by virtue of reverse merger/amalgamation with Data Textile Mills Limited (DATM), under the scheme. DATM has been dissolved by the Order of the Court, without winding up.

As per scheme, the shares already issued to members of LSEFSL have been cancelled and in return, each shareholder of LSEFSL has been given shares of LSEVL as per swap ratio of 99.862:100 and shares of LSEPL as per swap ratio of 501.62:1000. The shareholders of DATM have been allotted 25 shares of LSEVL and LSEPL against every 1,000 shares of DATM. Moreover, LSEFSL has issued 10 million new shares to LSEVL and as such LSEFSL, with a paid-up capital of Rs. 100 million, has become a wholly owned subsidiary of LSEVL (the group parent company) and LSEPL has become an associated company. After demerger/splitting, LSEFSL continue to exist as NBFC and its present capital structure and investment are in full compliance with NBFC Rules and Regulations.

As per the scheme, all the strategic, long-term and short-term investments held by LSEFSL before demerger/splitting have been transferred to LSEVL. Likewise, the Land & Building, Property, Plant & Equipment (including investment properties) have been transferred to LSEPL.

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LSE VENTURES LIMITED

ANNUAL REPORT - 2023

LSEVL was listed on Pakistan Stock Exchange Limited (PSX) on June 27th, 2023, where its Company Code/Security Symbol is "LSEVL". It is quoted in the "Investment Banks/Investment Companies/Securities Companies" Sector in the Daily Quotation of PSX. The Company has a rich capital base with a paid-up capital of Rs. 1.795 billion and with a free float of 65%.

LSE's Ventures

LSEVL aims at providing financing to startup as well as emerging companies, that are believed to have exceptional long-term growth potential. It also offers technical or managerial expertise to the growth enterprises at various stages of their evolution. In addition to investment capital, LSEVL often provides business planning, due diligence and mentoring services to help companies to establish themselves, and provide networking services to help them find additional capital.

Strategic Investments of LSEVL

	Sr. No.	Company Name	Qty of Shares
	1	Pakistan Credit Rating Agency Limited (PACRA)	2,683,044
	2	Central Depository Company Limited (CDC)	35,000,000
	3	National Clearing Company Private Limited (NCCPL)	23,730,462
	4	Pakistan Mercantile Exchange Limited (PMEX)	2,272,727
	5	Digital Custodian Company Limited (DCCL)	5,221,973
	6	LSE Proptech Limited (LSEPL)	26,952,897
	7	LSE Financial Service Limited (LSEFSL)	10,000,000
	8	Pakistan Gasport Consortium Limited (PGPCL)	28,000,000
	9	Berlitz (International Learning Center)	400,000
	10	Reckitt & Benckiser Pakistan Limited	656
	11	RB Hygiene Home Pakistan Limited.	176
	12	First Dawood Investment Bank Ltd. (FDIBL)	3,026,500
Financial Performance
		Financial Highlights	2023
		Rs. in '000
	Revenue		313,516
	Operating expenditures	(75,236)
	Profit/ (Loss) before Taxation	238,280
	Taxation		(16,405)
	Net Profit for the period	221,875
	Earnings Per Share (EPS) - Basic	Rs. 1.24
	Earnings Per Share (EPS) - Diluted	Rs. 1.35

As per the approved scheme, the investments in the equity shares (including long term investments, investments in associated companies, short term investments) cash and bank balances, investment under margin trading system etc. have been transferred to LSEVL from LSEFSL from effective date i.e., 31stJuly 2022.

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LSE VENTURES LIMITED

ANNUAL REPORT - 2023

At the initial stage of establishment, the company has to face some teething problems and has to incur inevitable expenses and incorporate adjustments. As per the scheme and section 97(a) of ITO 2001 that the disposal of asset under a scheme of arrangement and reconstruction under Companies Act 2017 section 282L and 284 to 287 are tax neutral therefore, the tax deducted and deposited on the name of LSEFSL till sanctioned date i.e., 26th April 2023 have not been accounted for in LSEVL.

Proposed Final Cash Dividend

In view of profitable results of the Company, the directors have recommended a final cash dividend of Rs.

0.50 per share, i.e., @ 5%, for the year ended June 30th, 2023, for the approval of the shareholders in the AGM.

External Auditors

The present auditors, M/s. Crowe Hussain Chaudhury & Co., Chartered Accountants due to retire and being eligible, are offering themselves for reappointment, may be appointed as Auditors of your Company for another term at mutually agreed remuneration.

Internal Financial Control

The Company has completely outsourced its Internal Audit function to M/s. Kreston Hyder Bhimji & Co, Chartered Accountants. The Board has adequately ensured that the system of internal financial controls is sound in design and has been effectively implemented and monitored through outsourced Internal Auditors.

The financial statements, prepared by the management of your company, fairly present its state of affairs, the result of its operations, cash flows and changes in equity. Proper books of account have been maintained by your company. Appropriate accounting policies are consistently applied by your Company in the preparation of financial statements, and accounting estimates are based on reasonable and prudent judgment. International Accounting Standards, as applicable in Pakistan, have been followed in the preparation of these financial statements and any departure there from, if any, has been adequately disclosed. The system of Internal Control, being implemented in your Company is sound and has been effectively persisted throughout the year.

Corporate Social Responsibility & Environmental Management

The Company remained committed and engaged to undertake CSR and Environmental Management programs during the year. LSEVL focused its activities on education, health care and protection of environment programs. LSEVL endeavors to ensure that it qualifies as a responsible corporate citizen.

In compliance with section 227 of the Companies Act, 2017, the followings are hereby specifically disclosed:

a. The names of the persons who, at any time during the financial year, were directors of the Company:

b.

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LSE VENTURES LIMITED

ANNUAL REPORT - 2023

Sr. No.	Name of Director	Category
1	Mr. Muhammad Iqbal	Chairman/Non-Executive Director
2	Mr. Aftab Ahmad Ch.	Chief Executive Officer
3	Mr. Amir Zia*	Non-Executive Director
4	Ms. Minahil Ali	Non-Executive Director
5	Mr. Ammar ul Haq**	Non-Executive Director
6	Mr. Abid Latif Khan***	Non-Executive Director
7	Mr. Shahnawaz Mahmood	Independent Director
8	Mr. M. Tabassum Munir	Independent Director
9	Mr. Yaser Manzoor****	Independent Director

1. • Mr. Amir Zia resigned on 17-01-2023
   • Mr. Ammar ul Haq resigned on 02-05-2023
   • Mr. Abid Latif Khan was appointed on 02-05-2023
   • Mr. Yaser Manzoor was appointed on 17-01-2023
2. The principal line of business of the Company is to invest in shares, bonds, stocks, units of mutual funds or any other securities or its related instruments, or otherwise in all types of real assets and in such manner as may from time to time be determined by the Company and to hold, or sale such real assets, shares, bonds, stocks, units of mutual funds or any other securities or its related instruments, subject to the compliance with applicable law.
   This business is exposed to serval threats such as credit risk, liquidity risk, operational risk, market risk and regulatory risk, economic uncertainty etc. Furthermore, venture capital is a high-risk,high-reward type of investment, and there is no guarantee of success.
   Risk Management policies and procedures adopted by the Company enable it to proactively manage uncertainty and changes in internal and external environment to limit negative impacts and capitalize on opportunities. The profitability of the Company is also influenced by the overall economic, geo-political conditions of the country, policies of the Government and the performance of associated companies as well as the capital markets.

1. At present the Chief Executive Officer is being paid the salary and such other benefits as approved by the Board under the Articles of Association and as per HR Manual of the Company. No other director is being paid any extra remuneration by the Company, except the meeting fee for attending the Board and Committee meetings. The relevant figures have been disclosed in the financial statements.

In compliance with the Regulation No. 34(2) of the with Listed Companies (Code of Corporate Governance) Regulations, 2019, the following information is provided: -

1. The total number of directors are seven (7) as per the following: -

1. Male: 6
2. Female: 1

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LSE VENTURES LIMITED

ANNUAL REPORT - 2023

2. The composition of the Board is as follows: -

i.	Independent directors:	Mr. M. Tabassum Munir
		Mr. Shahnawaz Mahmood
		Mr. Yaser Manzoor
ii.	Non-Executive directors:	Mr. Muhammad Iqbal
		Mr. Abid Latif Khan
		Ms. Minahil Ali
iii.	Executive director:	Mr. Aftab Ahmad Chaudhry
iv.	Female director:	Ms. Minahil Ali

3. Board Committees

During the year, the Board constituted following committees to assist the Board and provide recommendations on relevant functions:

Audit Committee:
1.	Mr. Shahnawaz Mahmood:	Chairman
2.	Mr. M. Tabassum Munir:	Member
3.	Ms. Minahil Ali:	Member
Human Resource and Remuneration Committee:
1.	Mr. Yaser Manzoor:	Chairman
2.	Mr. Abid Latif Khan:	Member
3.	Mr. M. Tabassum Munir:	Member

With respect to the statement of compliance with Listed Companies (Code of Corporate Governance) Regulations, 2019, attached to this report, we are to explain that since the Company was listed at Pakistan Stock Exchange Limited in the month of June 2023, therefore the applicable and relevant requirements of Regulations 3, 6, 7, 8, 32 and 36 were complied with and the compliance of Regulations 27 and 33 can be verified in the subsequent period

Future Outlook

The Company is very vigilantly monitoring its investments in associates and other strategic investments and will always endeavor for their optimization through prudent investment decision. However, the present socio-economic environment and investment climate is quite challenging.

Aftab Ahmad Chaudhry
Chief Executive Officer	Director
Date: October 6, 2023

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LSE VENTURES LIMITED

ANNUAL REPORT - 2023