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| FABM |
|
| FIRST ALLIED BANK MODARABA |
|
| Report
for the period January 1, 1995 to June 30, 1996 |
|
|
| Managed
by: |
|
| Allied
Management Services (Pvt.) Ltd. |
|
| A
WHOLLY OWNED SUBSIDIARY OF |
|
| ALLIED
BANK OF PAKISTAN LTD. |
|
|
| CORPORATE
INFORMATION |
|
|
| MODARABA
COMPANY |
|
| ALLIED
MANAGEMENT SERVICES (PRIVATE) LIMITED |
|
| A
WHOLLY OWNED SUBSIDIARY OF |
|
| ALLIED
BANK OF PAKISTAN LIMITED |
|
|
| BOARD
OF DIRECTORS |
|
| MR.
SHAUKAT A. KAZMI |
|
Chairman |
|
| MR.
RASHID M. CHAUDHRY |
|
Director |
|
| MR.
SYED JAUHAR HUSAIN |
|
Director |
|
| MR.
M. SALIM SHAIKH |
|
Director |
|
| MR.
I. A. USMANI |
|
Director |
|
| MR.
AKHTER ALI KHAN |
|
Director |
|
| MR.
TAHIR SAEED EFFENDI |
|
Chief Executive |
|
|
| COMPANY
SECRETARY |
|
| Mr.
Salman A. Qazalbash |
|
|
| AUDITORS |
|
| (1)
RAHIM IQBAL RAFIQ & CO. |
|
| Chartered
Accountants |
|
|
| (2)
SAEED KAMRAN PATEL & CO. |
|
| Chartered
Accountants |
|
|
| BANKERS
OF THE MODARABA |
|
| Allied
Bank of Pakistan Limited. |
|
|
| PRINCIPAL
PLACE OF BUSINESS |
|
| 17th
Floor, N.I.C. Building, Abbasi Shaheed Road, |
|
| Off:
Sharea Faisal, Karachi. |
|
| Tel:
5678212, 5670370-79 (10 Lines) Fax: 5660136 Telex: 21746 ABL CO PK. |
|
|
| SHARES
REGISTRAR |
|
| M/s
Unicorporate & Financial Services |
|
| 4th
Floor, Habib Square, Bank House No.2 |
|
| M.A.
Jinnah Road, Karachi. |
|
| Tel:
2426932, 2426927 Fax: 2423593 |
|
|
| CHAIRMAN'S
REVIEW |
|
| On
behalf of the Board of Directors of Allied Management Services (Private)
Limited, I take pleasure in presenting |
|
| the
3rd Annual Report of First Allied Bank Modaraba together with the Audited
Accounts for the period ended June |
|
| 30,
1996. In compliance of Finance Act 1995, the accounting year of Modaraba has
been changed from Calendar Year |
|
| to
Financial Year i.e. July - June instead of January - December. However, to
synchronize with the approval of |
|
| Registrar
Modaraba, this time the accounts have been compiled for 18 months i.e. from
January 1, '1995 to June 30, |
|
| 1996. |
|
|
| THE
MODARABA SECTOR |
|
| The
Financial Sector in general and Modarabas in particular have operated under
difficult conditions. Continous |
|
| bearish
trend in stock market, low business activities in Trade and Industry, heavy
taxation and over regulation of |
|
| Modaraba
despite financial deregulation, have adversely effected the performance of
the Modaraba Sector. |
|
| Consequently,
most of Modarabas are struggling to keep afloat and out of 52 quoted
Modarabas only two Modarabas |
|
| are
being quoted above par. |
|
|
| FINANCIAL
RESULTS |
|
| You
would be pleased to note that inspite of adverse business environment and
less than expected performance of the |
|
| sector
in terms of the profitability, your Modaraba is perhaps the only one, which
has achieved unprecedented growth |
|
| and
has maintained excellent performance record by successfully diversifying its
business activities and deploying |
|
| its
resources in various new avenues. |
|
|
| Financial
results for the period ended June 30, 1996 are summarised as under: |
|
|
|
(Rupees in 000's) |
|
|
June, 30 |
December,31 |
|
|
1996 |
1994 |
|
|
(18 months) |
(12 months) |
|
|
| profit
before Management Fee |
|
99,135 |
67,123 |
|
| Modaraba
Company's Management Fee |
|
991 |
671 |
|
|
----------- |
----------- |
|
| Profit
for the year |
|
98,144 |
66,452 |
|
| Unappropriated
profit brought forward |
|
748 |
109 |
|
|
----------- |
----------- |
|
|
98,892 |
66,561 |
|
|
=========== |
=========== |
|
|
| APPROPRIATIONS |
|
| Transfer
to Statutory Reserve |
|
19.78 |
13,312 |
|
| Cash
Dividend |
|
78,750 |
52,500 |
|
|
----------- |
----------- |
|
|
98,528 |
65,812 |
|
|
=========== |
=========== |
|
|
| Unappropriated
profit carried forward |
|
364 |
749 |
|
|
|
|
| Earning
per certificate before management fee |
|
Rs. 2.83 |
Rs. 1.92 |
|
|
| The
First Allied Bank Modaraba despite following a conservative policy of making
full provisions of Rs. 15,119,229 |
|
| on
account of diminution in the values of short term investments, unlike other
Modarabas who treat such investments |
|
| as
long term and are not making any provisions for the diminution in the value,
has earned a net profit of |
|
| Rs.
99,135,521 which is more than 32% over the last period. The Board has decided
to continue its policy of |
|
| charging
only a token Management Fee of 1% amounting to Rs. 991,355 with the desire to
pass on maximum |
|
| benefits
to the certificate holders. |
|
|
| CASH
DIVIDEND |
|
| From
the very inception, we have been committed to pass on maximum benefits to the
certificate holders. During the |
|
| first
two years the Modaraba distributed almost entire profit to the certificate
holders, in the shape of Bonus |
|
| Certificates
and cash dividend. Once again, the Board of Directors of the Management
Company feels great pleasure |
|
| in
declaring Cash Dividend of 22.50% i.e. Rs. 2.25 per certificate by
distributing over 95% of available income for |
|
| the
six months period ending June 30, 1995 and 12 months period ending June 30,
1996, which is a very high return |
|
| comparing
the performance of the whole Modaraba Sector. |
|
|
| FUTURE
STRATEGY |
|
| The
Modaraba had started its operation with a Paid up Fund of Rs. 300.00 Million.
By the end of June 30, 1996 the |
|
| equity
including Statutory Reserves has increased to Rs. 383.00 Million through the
issuance of Bonus Certificates |
|
| and
transfer to Statutory Reserve @ 20% of the annual profit, which has further
strengthened the equity base of the |
|
| Modaraba. |
|
|
| The
management has now decided to mobilize additional funds from other sources
like borrowing from financial |
|
| institutions
/ taping of funds by issuance of Certificate of Musharika. We have already
fulfilled all the pre-requisites |
| to
launch Certificate of Musharika (COM) of Rs. 100.00 Million. As soon as
approval of Corporate Law Authority |
|
| is
received, First Allied Bank Modaraba intends to start sale of Certificate of
Musharika through network of Allied |
|
| Bank
of Pakistan Limited. The additional funds would be utilized for diversifying
the First Allied Bank Modaraba's |
|
| activities
into new avenues resulting optimization of return. It would ultimately
increase return to certificate holders |
| who
will get higher profit on their Investment. |
|
|
| ACKNOWLEDGEMENTS |
|
| The
Board wishes to place on record its appreciation and gratefulness to the
certificate holders for their continued |
|
| confidence
in the Modaraba, the State Bank of Pakistan especially NBFI Department,
Corporate Law Authority, |
|
| Registrar
Modaraba Companies and Modarabas for the guidance provided by them from time
to time and to the staff |
|
| for
their dedication and hard work, without which these results would not have
been possible. |
|
|
| For
and on behalf of the Board |
|
| SHAUKAT
A. KAZMI |
|
| CHAIRMAN |
|
|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
|
|
| RAHIM
IQBAL RAFIQ & COMPANY |
|
| CHARTERED
ACCOUNTANTS |
|
| 15-
Banglore Town, |
|
| Sharea
Faisal, |
|
| Karachi. |
|
|
| SAEED
KAMRAN PATEL & COMPANY |
|
| CHARTERED
ACCOUNTANTS |
|
| 515
Clifton Centre, |
|
| Khayaban-e-Roomi,
Clifton, |
|
| Karachi. |
|
|
| We
have audited the annexed Balance Sheet as at June 30, 1996 and the related
Profit and Loss Account and Cash |
|
| Flow
Statement, together with the notes to the accounts for the period ended June
30, 1996 of First Allied Bank |
|
| Modaraba
which are Modaraba Company's (Allied Management Services (Private) Limited)
representation and we |
|
| state
that we have obtained all the information and explanations which we required
and after due verification |
|
| thereof,
we report that: |
|
|
| (a)
In our opinion, proper books of account have been kept by the Modaraba
Company in respect of First |
|
| Allied Bank Modaraba as required by the
Modaraba Companies and Modaraba (Flotation and Control) |
|
| Ordinance, 1980; and Modaraba Companies and
Modaraba Rules, 1981. |
|
|
| (b)
In our opinion, the Balance Sheet and the Profit and Loss Account have been
drawn up in conformity with |
|
| the Modaraba Companies and Modaraba
(Flotation and Control) Ordinance, 1980 and Modaraba |
|
| Companies and Modaraba Rules, 1981; and |
|
|
| (c)
In our opinion and to the best of our information and according to the
explanations given to us; |
|
|
| (i)
The Balance Sheet and the related Profit and Loss Account and the Cash Flow
Statement, which are in |
|
| agreement with the books of account,
exhibit respectively a true and fair view of the state of the |
|
| Modaraba's affairs as at June 30, 1996; and
the profit and the changes in financial position for the |
|
| period ended on that date; |
|
|
| (ii)
Zakat deductible at source under the Zakat and Ushr Ordinance, 1980 has been
deducted by the |
|
| Modaraba and deposited in the Central Zakat
Fund established under section 7 of that Ordinance; and |
|
|
| (iii)
The business conducted, investments made and expenditure incurred by the
Modaraba are in |
|
| accordance with the Objects, terms and
conditions of the Modaraba. |
|
|
| RAHIM
IQBAL RAFIQ & COMPANY |
|
| Chartered
Accountants |
|
|
| SAEED
KAMRAN PATEL & COMPANY |
|
| Chartered
Accountants |
|
|
| Karachi:
August 7, 1996. |
|
|
| FIRST
ALLIED BAHK MODARABA |
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1996 |
|
|
|
|
June 30, |
December 31, |
|
|
|
|
1996 |
1994 |
|
|
|
Note |
Rupees |
Rupees |
|
|
| CAPITAL
AND RESERVES |
|
|
|
| Authorised |
|
|
|
| 50,000,000
Modaraba |
|
| Certificates
of Rs. 10/- each |
|
|
500,000,000 |
500,000,000 |
|
|
|
|
|
|
|
| Issued,
subscribed and |
|
|
|
| paid up |
|
3 |
350,000,000 |
350,000,000 |
|
|
| Statutory
reserve |
|
4 |
33,090,673 |
13,312,134 |
|
|
| Unappropriated
profit |
|
|
364,161 |
748,534 |
|
|
----------- |
----------- |
|
|
|
383,454,834 |
364,060,668 |
|
|
|
| LONG
TERM SECURITY DEPOSIT |
|
7,148,580 |
- |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
| Security
deposits |
|
- |
5,457,800 |
|
| Creditors,
accrued and other |
|
|
|
| liabilities |
|
5 |
2,093,701 |
1,502,090 |
|
|
| Profit
distribution |
|
6 |
81,327,100 |
52,500,000 |
|
|
----------- |
----------- |
|
|
|
83,420,801 |
59,459,890 |
|
| CONTINGENCY |
|
7 |
|
|
|
|
----------- |
----------- |
|
|
474,024,215 |
423,520,558 |
|
|
=========== |
=========== |
|
|
|
|
|
June 30, |
December 31, |
|
|
|
|
1996 |
1994 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
| FIXED
ASSETS-TANGIBLE |
|
8 |
89,033 |
110,572 |
|
| DEFERRED
COSTS |
|
9 |
2,574,928 |
3,819,855 |
|
|
| NET
INVESTMENT IN LEASES |
|
52,604,539 |
- |
|
|
|
22,808,338 |
43,316,666 |
|
|
| LONG
TERM INVESTMENTS |
|
12 |
2,000,000 |
- |
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
| Current
portion of Long Term Assets |
|
13 |
49,590,039 |
28,350,000 |
|
|
|
|
|
14,446,810 |
32,027,038 |
|
| Trade
debts - secured |
|
2,040,556 |
- |
|
|
|
| Short
term investments |
|
14 |
53,894,034 |
52,962,263 |
|
| Short
term morabaha finance |
|
| -
secured |
|
85,759.000 |
34,284,804 |
|
|
| Short
term musharika finance |
|
| -
Secured |
|
85,759,000 |
165,200,000 |
|
|
|
|
| Accrued
profit |
|
15 |
4,114,186 |
6,393,341 |
|
|
|
|
| Advances,
prepayments and other |
|
| receivables |
|
|
|
16 |
3,947,338 |
544,320 |
|
| Cash
and bank balances |
|
17 |
1,855,414 |
56,511,699 |
|
|
----------- |
----------- |
|
|
393,947,377 |
376,273,465 |
|
|
|
----------- |
----------- |
|
|
474,024,215 |
423,520,558 |
|
|
=========== |
=========== |
|
|
| The
annexed notes form an integral part of these financial statements. |
|
|
| TAHIR
SAEED EFFENDI |
|
| CHIEF
EXECUTIVE |
|
|
| AKHTAR
ALl KHAN |
|
| DIRECTOR |
|
|
| RASHID
M.CHAUDHRY |
|
| DIRECTOR |
|
|
| FIRST
ALLIED BANK MODARABA |
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE EIGHTEEN MONTHS ENDED JUNE 30, 1996. |
|
|
|
Figures |
|
|
in Rupees |
|
|
Six Months |
Year |
|
Year |
|
|
Ended |
Ended |
|
Ended |
|
|
June 30, |
June 30, |
|
December 31, |
|
| Note |
|
1995 |
1996 |
Total |
1994 |
|
|
| PROFIT
ON |
|
| Lease |
|
-- |
10,142,231 |
10,142,231 |
-- |
|
| Morabaha |
|
4,432,276 |
16,082,167 |
20,514,443 |
3,516,419 |
|
| Musharika |
|
22,431,625 |
39,138,241 |
61,569,866 |
36,807,383 |
|
| Trading |
|
|
18 |
1,431,386 |
3,162,106 |
4,593,492 |
2,894,893 |
|
| Sale
of investments |
|
(1,616) |
489,100 |
487,484 |
14,745,436 |
|
|
|
28,293,671 |
69,013,845 |
97,307,516 |
57,964,131 |
|
| RETURN
ON BANK DEPOSIT ACCOUNT |
|
6,285,234 |
11,624,166 |
17,909,400 |
20,550,474 |
|
| OTHER
INCOME |
|
19 |
1,471,204 |
3,461,832 |
4,933,036 |
4,805,419 |
|
|
----------- |
----------- |
----------- |
----------- |
|
|
|
36,050,109 |
84,099,843 |
120,149,952 |
83,320,024 |
|
|
|
|
|
| EXPENDITURE |
|
| Operating
expanses |
|
20 |
1,588,182 |
4,247,301 |
5,835,483 |
3,421,957 |
|
| Bank
charges |
|
10,855 |
48,864 |
59,719 |
-- |
|
| Provision
for diminution in the |
|
| value
of investments |
|
15,772,821 |
(653.592) |
15,119,229 |
12,775,116 |
|
|
----------- |
----------- |
----------- |
----------- |
|
|
|
17,371,858 |
3,642,573 |
21,014,431 |
16,197,073 |
|
|
|
|
|
|
----------- |
----------- |
----------- |
----------- |
|
| OPERATING
PROFIT FOR THE PERIOD/YEAR |
|
18,678,251 |
80,457,270 |
99,135,521 |
67,122,951 |
|
|
| MODARABA
COMPANY'S MANAGEMENT FEE |
21 |
186,782 |
804,573 |
991,355 |
671,230 |
|
|
----------- |
----------- |
----------- |
----------- |
|
| PROFIT
FOR THE PERIOD/YEAR |
|
18,491,469 |
79,652,697 |
98,144,166 |
66,451,721 |
|
|
|
=========== |
=========== |
|
|
| Unappropriated
profit brought forward |
- |
- |
748,534 |
108,947 |
|
|
|
|
----------- |
----------- |
|
|
|
|
98,892,700 |
66,560,668 |
|
|
|
|
|
|
|
| APPROPRIATION |
|
|
|
| Transferred
to Statutory Reserve |
|
- |
- |
19,778,539 |
13,312,134 |
|
| Proposed
profit distribution |
|
- |
- |
- |
- |
|
|
|
|
| - Six months ended June 30, 1995 |
|
|
15,225,000 |
- |
|
| -
year ended June 30, 1996 |
|
|
63,525,000 |
52,500,000 |
|
|
|
|
----------- |
----------- |
|
|
|
78,750,000 |
52,500,000 |
|
|
|
|
|
|
|
----------- |
----------- |
|
| Unappropriated
profit carried forward |
- |
- |
364,161 |
748,534 |
|
|
|
|
=========== |
=========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
| FIRST
ALLIED BANK MODARABA |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE EIGHTEEN MONTHS ENDED JUNE 30, 1996. |
|
|
Eighteen |
|
|
|
|
|
months |
Year |
|
|
|
|
ended |
ended |
|
|
|
|
June 30, |
December 31, |
|
|
|
|
1996 |
1994 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Profit
for the period/year |
|
|
98,144,166 |
66,451,721 |
|
|
|
|
|
|
| Adjustment
for: |
|
|
| Amortization
of deferred costs |
|
1,909,927 |
1,273,285 |
|
| Depreciation |
|
|
42,744 |
27,083 |
|
| Diminution
in value of investments-Net |
|
13,806,876 |
12,775,116 |
|
|
|
|
----------- |
----------- |
|
|
|
|
|
15,759,547 |
14,075,484 |
|
|
| Operating
profit before working capital |
|
| changes |
|
|
|
113,903,713 |
80,527,205 |
|
|
|
|
| Changes
in working capital |
|
|
| (Increase)
/ decrease in current assets |
|
|
|
|
| Stock-in-
trade |
|
|
17,580,228 |
(32,027,038) |
|
| Trade
debts |
|
|
(2,040,556) |
-- |
|
| Short
term investments |
|
|
(l4,738,647) |
(60,873,595) |
|
| Short
term morabaha finance |
|
|
(51,474,196) |
(14,284,804) |
|
| Short
term musharika finance |
|
56,900,000 |
(69,200,000) |
|
| Accrued
profit |
|
|
(17,720,845) |
(693,919) |
|
| Advances,
prepayments and other |
|
| receivables |
|
|
(3,403,018) |
4,806,555 |
|
|
|
|
----------- |
----------- |
|
|
| (Increase)
in current assets |
|
(14,897,034) |
(172,272,801) |
|
|
|
|
| Increase
/ (decrease) in current |
|
| liabilities |
|
|
|
|
|
| Security
deposits refunded |
|
|
(5,457,800) |
5,457,800 |
|
| Creditors,
accrued and other liabilities |
|
591,611 |
921,001 |
|
|
|
|
----------- |
----------- |
|
|
|
| (Decreased)/Increase
in current liabilities |
|
(4,866,189) |
6,378,801 |
|
|
|
|
----------- |
----------- |
|
|
| Cash
generated/outflow from operations |
|
94,140,490 |
(85,366,795) |
|
|
| Dividend
paid |
|
|
|
(49,922,900) |
-- |
|
| Long
term security deposits received |
|
|
7,148,580 |
-- |
|
|
|
|
----------- |
----------- |
|
|
|
|
(42,774,320) |
-- |
|
|
|
| Net
cash from / used in operating |
|
|
----------- |
----------- |
|
|
| activities |
|
|
|
51,366,170 |
'(85,366,795) |
|
|
|
|
|
|
|
|
Eighteen |
|
|
|
months |
year |
|
|
|
ended |
ended |
|
|
|
June 30, |
December 31, |
|
|
|
1996 |
1994 |
|
|
|
Rupees |
Rupees |
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Purchase
of fixed assets |
|
(21,205) |
(132,615) |
|
| Long
term musharika finance |
|
16,724,997 |
(46,666,666) |
|
| Deferred
expenditure |
|
(665,000) |
-- |
|
| Long
term investments |
|
(2,000,000) |
-- |
|
| Assets
leased out |
|
|
(70,061,247) |
-- |
|
|
|
|
----------- |
----------- |
|
| Net
cash used in investing activities |
|
(56,022,455) |
(46,799,281) |
|
|
|
|
----------- |
----------- |
|
|
|
|
| Net
decrease in cash and bank balances |
|
(4,656,285) |
(132,166,076) |
|
|
|
|
| Cash
and bank balances at the beginning |
|
| of
the period/year |
|
|
56,511,699 |
188,677,775 |
|
|
|
|
----------- |
----------- |
|
| Cash
and bank balances at the end of |
|
| the
period/year |
|
|
51,855,414 |
56,511,699 |
|
|
|
|
=========== |
=========== |
|
|
| FIRST
ALLIED BANK MODARABA |
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE EIGHTEEN MONTHS ENDED JUNE 30, 1996. |
|
|
| 1.
MODARABA AND ITS OPERATION |
|
| First
Allied Bank Modaraba is a multipurpose, perpetual Modaraba formed under the
Modaraba |
|
| Companies
and Modaraba (floatation and control) Ordinance, 1980 and the rules framed
thereunder and is |
|
| managed
by the Allied Management Services (Private) Limited. The Modaraba is listed
on the Karachi, Lahore |
|
| and
Islamabad Stock Exchanges. |
|
|
| The
Modaraba is currently engaged in various Islamic mode of financing and
business, including leasing, |
|
| morabaha,
musharika arrangements, trading in listed securities and other commodities. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting Convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
Taxation |
|
| Modaraba's
income is not subject to tax for first three assessment years after
commencement of its business |
|
