| FIRST HABIB MODARABA |
|
|
|
|
|
|
|
|
| (ANNUAL
REPORT 1997) |
|
|
| CONTENTS |
|
|
| CORPORATE INFORMATION |
|
| DIRECTORS' REPORT |
|
| AUDITORS' REPORT |
|
| BALANCE SHEET |
|
| PROFIT AND LOSS ACCOUNT |
|
| STATEMENT OF CHANGES IN
FINANCIAL POSITION |
|
| NOTES TO THE ACCOUNTS |
|
| PATTERN OF CERTIFICATE HOLDINGS |
|
|
| CORPORATE
INFORMATION |
|
|
| Board
of Directors |
|
|
| Mr.
Wazir Husain Jafree |
|
| Mr.
Muhammad Shoaib |
|
| Mr.
F. H. Mukhi |
|
| Mr.
Abbas All Muhammad |
|
| Mr.
S. Shahanshah H. Rizvi |
|
| Mr.
Zia Shafi Khan |
|
|
| Auditors |
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
|
| Bankers |
|
| Habib
Bank AG Zurich |
|
| Metropolitan
Bank Limited |
|
| Bank
AI Habib Limited |
|
| Union
Bank Limited |
|
| Askari
Commercial Bank Limited |
|
| Soneri
Bank Limited |
|
| Schon
Bank Limited |
|
| Faysal]
Bank Limited |
|
|
| Registered
Office |
|
| 4th
Floor, Hirani Centre |
|
| 1.1.
Chundrigar Road, |
|
| Karachi. |
|
|
| Registrars |
|
| Noble
Computer Services (Pvt) Limited |
|
| 6th
Floor, Hirani Centre, |
|
| I.I.
Chundrigar Road, |
|
| Karachi. |
|
|
| REPORT
OF THE DIRECTORS |
|
| FOR
THE YEAR ENDED 30TH JUNE, 1997 |
|
| The
Board of Directors of the Management Company are pleased to present annual
report together with |
|
| audit
report for the year ended 30th June, 1997 |
|
|
| FINANCIAL
RESULTS |
|
|
(Rupees in 000's) |
|
|
|
Year ended |
Year ended |
|
|
June 30, |
June 30, |
|
|
1997 |
1996 |
|
|
| Total
Operating income |
|
232,160 |
167,401 |
|
| Total
Operating Expenses |
|
164,581 |
118,551 |
|
|
---------- |
---------- |
|
|
67,579 |
48,850 |
|
|
| Less:
Modaraba Company's |
|
| Management
Fee |
|
6,143 |
4,441 |
|
|
---------- |
---------- |
|
| Profit
for the year |
|
61,436 |
44,409 |
|
|
| Less:
Provision for Taxation |
Current Year |
1,500 |
|
|
Prior Year |
6,500 |
|
|
18,000 |
3,000 |
|
|
---------- |
---------- |
|
|
43,436 |
41,409 |
|
| Add:
Unappropriated Profit B/F |
|
12,755 |
17,428 |
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
56,191 |
58,837 |
|
|
| APPROPRIATION: |
|
|
---------- |
---------- |
|
| Cash
Dividend 10% (50 paisas per |
|
25,200 |
37,800 |
|
| certificate
of Rs. 5/- each) |
|
| (1996
cash dividend 15% i.e. 75 paisas |
|
| per
certificate of Rs. 5/- each) |
|
|
| Transfer
to statutory reserve |
|
8,687 |
8,282 |
|
| (@
20% of the profit as per |
|
| requirements
of State Bank of |
|
| Pakistan |
|
|
| Transfer
to General Reserve |
|
20,000 |
|
|
---------- |
---------- |
|
|
53,887 |
46,082 |
|
|
---------- |
---------- |
|
| Un-appropriated
Profit C/F |
|
2,304 |
12,755 |
|
|
========== |
========== |
|
|
| PROFIT
DISTRIBUTION: |
|
| The
Directors are pleased to declare 10% cash dividend i.e. Rs. 0.50 per
certificate of Rs. 5/- each. |
|
|
| REVIEW
OF OPERATION: |
|
| The
year under review is a mixture of economic initiatives and setback. First
half of fiscal year was faced |
|
| with
uncertainties because of the change in government and upcoming general
election in February, |
|
| 1997.
The industrial activity remained slow during the year. There was no marked
increase in export |
|
| and
inflation was on the rise. |
|
|
| However,
your Board is happy to report that the performance of the Modaraba in the
context of |
|
| overall
environment has been satisfactory and total balance sheet footing of the
Modaraba |
|
| increased
from Rs. 360.0 million to Rs. 476.0 million. |
|
|
| During
the year the Modaraba achieved sound growth in business volume and profit and
disbursed |
|
| lease
amount of Rs. 336.684 million as compared to Rs. 149.171 million of
corresponding period last |
|
| year.
The pre-tax profit from operation is Rs. 61.436 million as compared to Rs.
44.409 million of |
|
| previous
year. |
|
|
| The
recovery performance remain excellent during the period and total lease
rentals of Rs. 220.500 million |
|
| collected
as compared to Rs. 154.770 million last year. This all due to the cautious
and prudence |
|
| lending
policy adopted by your management since inception of the business which
continues to provide |
|
| adequate
protection to your Modaraba from any financial instability. |
|
|
| After
giving cash dividend of Rs. 25.200 million and transfer of Rs. 8.687 million
as a 20% mandatory reserve |
|
| a
sum of Rs. 20.00 million transfer to general reserve. The creating of such
reserves will strengthen the |
|
| financial
footing of the Modaraba and will also encourage to establish sound equity
base which in-turn will |
|
| facilitate
future growth of Modaraba. |
|
|
| FUTURE
PROSPECTS: |
|
|
| You
will be pleased to note that your Modaraba is steadily progressing on a path
consistent with its |
|
| clear
objectives and business principles which emphasis on long term stability,
sustainable growth, |
|
| sound
business strategy and development of human resources. Our objective is to
establish our Modaraba |
|
| on
a sound footing in financial sector. |
|
|
| The
problem of default is wide spread in the financial sector and overdue debt is
growing. However, |
|
| your
Modaraba is continuing with its strategy of prudence and judicious selection
of clients and sector. |
|
| By
the grace of God so far we have developed a quality lease portfolio. |
|
|
| In
order to enlarge business area we have successfully secured credit lines and
our effort is being |
|
| continued
to obtain further credit facilities from banks and financial institutions on
short and long term |
|
| basis. |
|
|
| In
Pakistan leasing still has vast potential for growth as less than 9% of the
capital investment in the |
|
| country
is being financed through lease financing. With the policies of present
Government using all |
|
| their
efforts to revitalize the economy, accelerating the pace of industrialization
in the country and |
|
| privatization
of public sector, we intend to play our role and make meaningful contribution
to National |
|
| Economy
and wish to expand our business in size and scope in prudent manner. |
|
|
| Acknowledgment: |
|
|
| We
grieve the recent passing away of Mr. Bakira]i Nasir our Chairman and Chief
Executive and |
|
| acknowledge
a debt of gratitude to him. He contributed his valued and dedicated services
for the |
|
| development
of Modaraba and was source of wisdom and inspiration to us. |
|
|
| Auditors: |
|
|
| The
present auditors M/s. Ford, Rhodes, Robson, Morrow have consented to their
reappointment for |
|
| the
year ending 30th June, 1998. The Directors have confirmed their appointment
subject to the required |
|
| official
approval. |
|
|
| In
conclusion, the Management of the Modaraba would like to convey their sincere
thanks Registrar of |
|
| Modaraba,
State Bank of Pakistan and all other statutory and regulatory bodies for
their constant guidance |
|
| and
assistance and also wish to place appreciation for our valued Client and
Certificate Holders for their |
|
| confidence
reposed in our Modaraba. |
|
|
| The
contribution of all our staff members is also noteworthy and management takes
pride in dedication |
|
| and
team work of its employee without which it would have not been possible to
achieve the present |
|
| results. |
|
|
|
| AUDITORS
REPORT TO THE CERTIFICATE HOLDERS |
|
| We
have audited the annexed Balance Sheet as at 30th June, 1997 and the related
Profit & Loss Account and |
|
| Statement
of Changes in Financial Position (Cash Flow Statement) together with the
notes to the accounts for |
|
| the
year then ended of First Habib Modaraba which are Modaraba Company's (Habib
Modaraba Management |
|
| 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 |
|
| Habib
Modaraba as required by the Modaraba Companies and Modaraba (Floatation 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 (FIoatation and Control ) Ordinance, 1980
and/Modaraba |
|
| Companies
and Modaraba Rules, 1981, and |
|
|
| (c)
In our opinion and 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 Statement of
Changes in Financial |
|
| Position
(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 30th June,
1997 |
|
| and
the profit and the changes in the financial position (cash flows) for the
year ended on that |
|
| date. |
|
|
| (ii)
we concur with the change in accounting policy as stated in note 3 |
|
|
| (iii)
zakat deductible at source if any, 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 |
|
|
| (iv)
the business conducted, investments made and expenditure incurred by
the/Modaraba are in |
|
| accordance
with the objects, terms and conditions for the Modaraba. |
|
|
| Karachi:
October 14, 1997 |
|
Ford, Rhodes, Robson,
Morrow |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT 30TH JUNE, 1997 |
|
|
|
June 30, |
June 30, |
|
|
|
1997 |
1996 |
|
| ASSETS |
|
Note |
Rupees |
Rupees |
|
|
|
|
---------- |
---------- |
|
| Tangible
fixed assets: (Lease out, at |
|
|
|
| cost
less accumulated depreciation) |
|
4 |
456,170,160 |
282,346,847 |
|
| Assets
in own use (at cost less depreciation) |
|
798,815 |
320,400 |
|
|
|
---------- |
---------- |
|
|
|
456,968,975 |
282,667,247 |
|
|
|
---------- |
---------- |
|
| Long
term advances to staff |
|
5 |
305,143 |
91,958 |
|
|
|
|
|
| Current
Assets |
|
|
|
|
| Short
term Morabaha finance |
|
6 |
- |
65,000,000 |
|
| Short
term investments |
|
|
---------- |
---------- |
|
| N.I.T.
Units |
|
7 |
1,123,400 |
1,407,100 |
|
| Shares
of listed companies |
|
8 |
15,476,792 |
5,574,483 |
|
|
|
---------- |
---------- |
|
|
|
16,600,192 |
6,981.58 |
|
|
|
|
|
| Advances,
prepayment and other receivables |
|
9 |
533,539 |
Z,429,320 |
|
| Lease
rentals receivable |
|
10 |
798,564 |
1,212,368 |
|
| Cash
and bank balances |
|
11 |
1,383.41 |
1,778,522 |
|
|
|
---------- |
---------- |
|
|
19,315,707 |
77,401,793 |
|
|
---------- |
---------- |
|
|
476,589,825 |
360,160,998 |
|
|
========== |
========== |
|
| CAPITAL,
RESERVES AND LIABILITIES |
|
| Modaraba
fund capital |
|
| Authorised |
|
| 60,000,000
(1996: 60,000,000) certificates |
|
| of
Rs. 5 each |
|
300,000,000 |
300,000,000 |
|
|
========== |
========== |
|
| issued,
subscribed and paid-up |
|
12 |
252,000,000 |
252,000,000 |
|
|
|
|
| Capital
reserve |
|
|
|
| Statutory
reserve |
|
|
27,014,339 |
18,327,140 |
|
| Revenue
reserve |
|
|
|
| General
reserve |
|
|
20,000,000 |
- |
|
| Unappropriated
profit |
|
|
2,303,789 |
12,754,991 |
|
|
|
---------- |
---------- |
|
| Certificate
holders' equity |
|
|
301,318,128 |
283,082,131 |
|
| Deferred
liabilities |
|
13 |
34,706,447 |
21,830,839 |
|
|
|
|
| Current
Liabilities |
|
|
---------- |
---------- |
|
| Finance
under musharika arrangements |
|
14 |
80,000,000 |
|
|
| Lessees
security deposits - current portion |
|
|
5,483,466 |
4,646,557 |
|
| Creditors
and accrued liabilities |
|
15 |
8,439,024 |
4,778,135 |
|
| Advance
lease rentals received |
|
|
4,911,122 |
1,952,699 |
|
| Provision
for taxation |
|
|
14,676,925 |
5,031,845 |
|
| Unclaimed
profit distribution |
|
|
1,854,713 |
1,038,792 |
|
| Proposed
profit distribution |
|
|
25,200,000 |
37,800,000 |
|
|
|
---------- |
---------- |
|
|
|
140,565,250 |
55,248,028 |
|
|
---------- |
---------- |
|
|
476,589,825 |
360,160,998 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report is annexed hereto. |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED 30TH JUNE, 1997 |
|
|
|
June 30, |
June 30, |
|
|
1997 |
1996 |
|
| INCOME |
|
Note |
Rupees |
Rupees |
|
|
|
|
|
|
|
|
| Lease
rentals |
|
|
220,500,823 |
154,770,284 |
|
| Morabaha
profit |
|
|
7,164,932 |
6,384,507 |
|
| Other
income |
|
16 |
4,494,261 |
6,246,114 |
|
|
|
---------- |
---------- |
|
|
|
232,160,016 |
167,400,905 |
|
|
|
---------- |
---------- |
|
| EXPENSES |
|
|
|
| Depreciation
on leased assets |
|
|
152,042,152 |
13,864,989 |
|
| Financial
charges |
|
17 |
5,933,427 |
194,910 |
|
| Other
expenses |
|
18 |
5,576,414 |
5,050,023 |
|
|
|
---------- |
---------- |
|
|
|
163,551,993 |
119,109,922 |
|
|
|
---------- |
---------- |
|
|
|
68,608,023 |
48,290.98 |
|
|
|
|
|
| Provision
for classified receivables no more required |
|
85.17 |
2,914,830 |
|
| Diminution
in value of investments written off |
|
(859,245) |
(2,356,137) |
|
|
|
---------- |
---------- |
|
|
|
67,833.95 |
48,849,676 |
|
| Effect
of change in accounting policy-prior year |
3 |
(254,351) |
- |
|
|
|
---------- |
---------- |
|
| Profit
before management fee |
|
|
67,579,597 |
48,849,676 |
|
|
|
|
|
| Modaraba
company's management fee |
|
|
6,143,600 |
4,440,880 |
|
|
|
---------- |
---------- |
|
| Net
profit before taxation |
|
|
61,435,997 |
44,408,796 |
|
|
|
|
| Less:
Taxation |
|
|
|
|
| Current |
|
|
11,500,000 |
7,000,000 |
|
| Prior
year's |
|
|
6,500,000 |
(4,000,000) |
|
|
|
---------- |
---------- |
|
|
|
18,000,000 |
3,000,000 |
|
|
|
---------- |
---------- |
|
|
|
43,435,997 |
41,408,796 |
|
| Unappropriated
profit brought forward |
|
|
12,754,991 |
17,427,955 |
|
|
|
---------- |
---------- |
|
|
|
56,190,988 |
58,836,751 |
|
| Appropriations: |
|
|
|
|
|
|
|
| Profit
distribution @ 10% (1996: 15%) |
|
|
25,200,000 |
37,800,000 |
|
| Transfer
to statutory reserve (20% of the profit) |
|
|
| as
per requirement of State Bank of Pakistan |
|
|
8,687,199 |
8,281,760 |
|
| Transfer
to general reserve |
|
|
20,000,000 |
- |
|
|
|
---------- |
---------- |
|
|
|
53,887,199 |
46,081,760 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
|
2,303,789 |
12,754,991 |
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
| The
auditors' report is annexed hereto. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED 30TH JUNE, 1997 |
|
|
|
June 30, |
June 30, |
|
|
1997 |
1996 |
|
|
Rupees |
Rupees |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Profit
before taxation |
|
61,435,997 |
44,408,796 |
|
| Adjustment
for: |
|
|
|
| Profit
on disposal of assets |
|
(414,927) |
(453,870) |
|
| Loss/(gain)
on sale of shares |
|
12,000 |
(112,081) |
|
| Depreciation
- Leased assets |
|
152,042,152 |
13,864,989 |
|
| -
Owned assets |
|
124,357 |
80,100 |
|
| Provision
for classified receivables |
|
(85,170) |
(2,914,830) |
|
| Provision
for gratuity |
|
151,640 |
252,775 |
|
| Diminution
in value of |
|
|
|
| Investments
written off |
|
859,245 |
2,356,137 |
|
| Effect
of Change in accounting policy |
|
254,351 |
- |
|
| Income
on PLS time deposit account |
|
(713,962) |
(4,032,203) |
|
| Dividend
income |
|
(1,005,523) |
(522,021) |
|
| Financial
charges on musharika |
|
5,910,616 |
78,889 |
|
| Gratuity
received |
|
65,055 |
- |
|
|
---------- |
---------- |
|
| Operating
profit before changes in operating assets |
|
218,635,831 |
153,106,681 |
|
| (Increase)/decrease
in operating assets |
|
|
|
| Short
term Morabaha finance |
|
65,000,000 |
(40,000,000) |
|
| Advances
and other receivables |
|
(1,409,128) |
(707,022) |
|
| Rentals
receivables |
|
498,974 |
7,727,704 |
|
| Lessees
security deposits - received |
|
20,007,994 |
9,480,947 |
|
| - refunded |
|
(6,512,172) |
(4,045,896) |
|
|
---------- |
---------- |
|
|
296,221,499 |
125,562,414 |
|
|
| Increase/(decrease)
in operating liability |
|
| Creditors
and accrued liabilities |
|
4,469,349 |
3,927,361 |
|
|
---------- |
---------- |
|
|
300,690,848 |
129,489,775 |
|
|
| Net
cash from operating activities before |
|
| financial
charges and income-tax |
|
|
| Income-tax
paid |
|
(6,393,169) |
(1,461,080) |
|
|
---------- |
---------- |
|
| Net
cash from operating activities (A) |
|
294,297,679 |
128,028,695 |
|
|
========== |
========== |
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
| Purchase
of own fixed assets |
|
(602,772) |
(400,500) |
|
| Purchase
of fixed assets given on lease |
|
(336,684,409) |
(49,171,166) |
|
| Proceeds
from disposal of leased assets |
|
11,233,871 |
9,156,910 |
|
| Long
term advances to staff |
|
(213,185) |
(91,958) |
|
| Purchase
of shares |
|
(10,949,705) |
(378) |
|
| Sale
of shares |
|
205,500 |
982,612 |
|
| Dividend
received |
|
1,005,523 |
522,021 |
|
| Profit
on time deposit account |
|
2,057,120 |
3,796,348 |
|
|
---------- |
---------- |
|
| Net
cash from investing activities (B) |
|
(333,948,057) |
(135,206,111) |
|
|
========== |
========== |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
|
| Dividend
paid |
|
(36,984,079) |
(24,752,792) |
|
| Finance
under Musharika arrangements |
|
80,000,000 |
- |
|
| Musharika
profit paid |
|
(3,760,653) |
(87,237) |
|
|
---------- |
---------- |
|
| Net
cash from financing activities (C) |
|
39,255,268 |
(24,940,029) |
|
|
========== |
========== |
|
| NET
DECREASE IN CASH AND CASH EQUIVALENTS (A+B+C) |
|
(395,110) |
(32,117,445) |
|
| CASH
AND CASH EQUIVALENTS AT THE BEGIN[NG OF THE YEAR |
|
778,522 |
33,895,967 |
|
|
---------- |
---------- |
|
| CASH
AND CASH EQUIVALENTS AT THE END OF THE YEAR |
|
1,383,412 |
1,778,522 |
|
|
========== |
========== |
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED 30TH JUNE, 1997 |
|
|
| 1.
STATUS AND NATURE OF BUSINESS |
|
|
| The
First Habib Modaraba is a perpetual, multi-purpose modaraba floated and
managed by Habib Modaraba |
|
| Management
Limited and is listed on the stock exchanges of Pakistan. The modaraba is
engaged in the business |
|
| of
leasing, morabaha financing and other related business, without involving the
element of riba (interest). |
|
|
| 2.
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Accounting convention: |
|
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
investments |
|
|
| Investments
are stated at lower of cost or market value calculated on individual basis. |
|
|
| Profit
or loss on sale of investment is accounted for in the year in which it
arises. |
|
|
| 2.3
Tangible fixed assets |
|
|
| (a) Fixed assets (leased out) |
|
|
| These
are stated at cost less accumulated depreciation. Depreciation is charged to
income |
|
| applying
the straight line method whereby cost less salvage value of the assets is
written off |
|
| over
its lease period. |
|
|
| Depreciation
on addition and disposals during the year is charged proportionately to the
period of |
|
| use. |
|
|
| Profit
or loss on disposal of assets is included in income currently. |
|
| Fixed
assets in own use |
|
