| FIRST ALLIED BANK MODARABA |
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
|
|
| CONTENTS |
|
| CORPORATE
INFORMATION |
|
| CHAIRMAN'S
REVIEW |
|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
& LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF CERTIFICATE HOLDING |
|
|
| CORPORATE
INFORMATION |
|
|
|
| MODARABA
COMPANY |
|
| Allied
Management Services (Private) Limited. |
|
| A
wholly owned subsidiary of |
|
| Allied
Bank of Pakistan Limited. |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Rashid M. Chaudhry |
|
Chairman |
|
| Mr.
M. Salim Shaikh |
|
Director |
|
| Syed
Jauhar Husain |
|
Director |
|
| Mr.
I. A. Usmani |
|
Director |
|
| Mr.
Zahoor A. Siddiqui |
|
Director |
|
| Mr.
Akhter Ali Khan |
|
Director |
|
| Mr.
Tahir Saeed Effendi |
|
Chief Executive |
|
|
| COMPANY
SECRETARY |
|
| Mr.
Salman A. Qazalbash |
|
|
| AUDITORS |
|
| Rahim
Iqbal Rafiq & Company |
|
| Chartered
Accountants |
|
|
| Saeed
Kamran Patel & Company |
|
| Chartered
Accountants |
|
|
| BANKERS
TO 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:
5670340-5678212, 5674024-6 |
|
| Fax:
5674023 & 5660136 |
|
| E-mail:
fabm@digicom.net.pk |
|
|
| SHARES
REGISTRAR |
|
| Uni
Corporate & Financial Services, |
|
| 4th
Floor, Bank House No. 2, |
|
| Habib
Square, M.A. Jinnah Road, Karachi. |
|
| Tel:
2426927-2426932 Fax: 2423593 |
|
|
|
| CHAIRMAN'S
REVIEW |
|
|
| On
behalf of the Board of Directors of Allied Management Services (Private)
Limited, the |
|
| Managers
of First Allied Bank Modaraba, I take pleasure in presenting the 5th Annual
Report of |
|
| First
Allied Bank Modaraba together with the Audited Accounts for the year ended
June 30, 1998 |
|
| duly
approved in the meeting held at Karachi on August 29, 1998. |
|
|
| FINANCIAL
RESULTS |
|
|
| Financial
Results for the year ended June 30, 1998 are summarised as under: |
|
|
|
|
(Rupees in 000's) |
|
|
|
June, 30 |
June, 30 |
|
|
|
|
1998 |
1997 |
|
|
| Net
Profit before Management Fee |
74,879 |
74,593 |
|
|
| Less:
Modaraba Company's Management Fee |
741 |
746 |
|
|
| Profit
for the year |
|
74,138 |
73,847 |
|
|
| Less:
Provision for Taxation |
|
8,000 |
8,300 |
|
|
| Add:
Unappropriated Profit brought forward |
302 |
364 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
66,440 |
65,911 |
|
|
|
========== |
========== |
|
|
| APPROPRIATIONS |
|
|
|
|
|
|
| Transfer'
to statutory reserve |
|
13,288 |
13,109 |
|
|
| Cash Dividend |
|
52,500 |
52,500 |
|
|
| Unappropriated
Profit carried forward |
652 |
302 |
|
|
| Earning
per Certificate |
|
Rs.2.14 |
Rs.2.13 |
|
|
| Dividend
per certificate |
|
Rs.1.50 |
Rs.1.50 |
|
|
|
| OPERATIONS |
|
|
| Inspire
of the fact that performance of almost all sectors of the economy remained
sluggish, and |
|
| over
all the Modaraba Sector also remained depressed due to adverse business
environment, |
|
| your
modaraba has maintained the pace of operational growth in all spheres of
business activi- |
|
| ties
during the year under review. The progress achieved by your modaraba during
the year |
|
| ended
June 30, 1998 is summarised below: |
|
|
| INCREASE
IN VOLUME OF BUSINESS |
|
|
|
|
(Rupees in 000's) |
|
|
June, 30 |
June, 30 |
% |
|
|
|
1998 |
1997 |
Increase |
|
|
| Total Assets |
|
837,425 |
644,043 |
28 |
|
| Leasing |
|
215,329 |
134,704 |
59 |
|
| Musharika/Morabaha |
|
422,512 |
328,101 |
29 |
|
| Other
Assets' including Trading Stock, Investment etc. |
199,584 |
181,238 |
10 |
|
|
|
|
|
|
|
| INCREASE
IN INCOME |
|
|
|
|
(Rupees in 000's) |
|
|
|
June, 30 |
June, 30 |
% |
|
|
|
|
1998 |
1997 |
Increase |
|
|
|
|
| Total Income |
|
122,371 |
103,947 |
18 |
|
| Income
from Lease Financing |
|
30,201 |
25,373 |
19 |
|
| Income
from Musharika / Morabaha Financing |
|
79,242 |
68,921 |
15 |
|
| Equity
/ Shares Net of Provision |
|
(7,044) |
(7,518) |
6 |
|
| Trading |
|
3,367 |
2,057 |
64 |
|
| Others |
|
16,605 |
15,114 |
10 |
|
|
| Musharika/Morabaha
Financing continued to be the core business segment forming 51% Share |
|
| of
the total assets and contributed 65% to the total revenue generated during
the period under |
|
| review
posting an increase of 15% over the last year. The lease portfolio has also
registered a |
|
| growth
rate of 59% over the last year. Lease financing forms 26% share of the total
assets and |
|
| it
generated total revenue of Rs.30.96 Million which increased by 22% over the
last year. |
|
|
| The
base of lease portfolio has been widened during the year. We have also
started micro leas- |
|
| ing
to the private sector as a result of which we are able to accommodate small
borrowers, there- |
|
| by
increasing our clientele. Micro leasing facilities have been extended by your
modaraba to |
|
| salaried
class persons. Recovery position in respect of micro leasing is 100% which
encouraged |
|
| us
to allocate more funds to this sector. |
|
|
| During
the period, the Corporate results and announcements were generally
disappointing and |
|
| investment
in various companies exposed to high risk due to low business activities.
Hence, the |
|
| stock
market remained sluggish through out the period and index fell to a record
low. Since your |
|
| modaraba
has been pursuing a prudent policy of making full provision on account of
diminution |
|
| in
the value of stock exchange securities, therefore, the adverse impact of the
same has not |
|
| been
felt by your modaraba. |
|
|
| We
have been quite conscious to avoid over exposure to any particular sector or
asset. You |
|
| would
appreciate that maximum exposure in any one sector is 13% of the total
assets. Asset- |
|
| wise
classification also confirms our main objective to promote industrialization
by leasing out |
|
| plant
and machinery for productive purposes and to make Musharika Financing with
Financial |
|
| Institutions
which ultimately utilize such funds in making investment in different
industries. |
|
|
| CASH
DIVIDEND |
|
| The
Board takes great pleasure in declaring a Cash Dividend @ 15% i.e. Rs.1.50
per certificate |
|
| for
the year ending June 30, 1998. The management of First Allied Bank Modaraba
believes in |
|
| distribution
of almost entire profit to its certificate holders and as against its
entitlement of 10% |
|
| it
has retained only 1% of profit, as management fee. |
|
|
| CREDIT
RATING |
|
| As
a result of our maintaining continued payout ratio of 15% p.a. and sustained
growth in busi- |
|
| ness,
the Pakistan Credit Rating Agency (Private) Limited has also enhanced FABM
entity rat- |
|
| ing,
during the year. |
|
|
| FUTURE
STRATEGY |
|
| The
current downturn in economy is forcing the Corporate Sector to rethink their
strategies. As |
|
| a
nation, we are passing through economic crises and have to meet the
challenges of post - |
|
| explosion
sanctions. It can only be achieved through sincere and sustained efforts.
Under the |
|
| present
economic environment - both indigenous as well as international - the roll of
Financial |
|
| Institutions
has assumed greater importance and we at our level have chalked out future
strate- |
|
| gy
to maintain our profitability. For this purpose steps have already been taken
for further |
|
| resource
mobilization and its prudent and risk free investment in profitable avenues. |
|
|
| The
Finance Act, 1998 has also restored tax exemptions to the Modaraba sector
from the |
|
| Assessment
year 1999-2000 on the condition that 90% of the profit of the Modaraba in a
year is |
|
| distributed
to the certificate holders. It would be an additional advantage for our
certificate hold- |
|
| ers
as we would be able to pass on this benefit to them in future. |
|
|
| ACKNOWLEDGMENTS |
|
| The
Board wishes to place on record its appreciation and gratefulness to the
certificate holders |
|
| for
their continued confidence in the Modaraba, Corporate Law Authority,
Registrar Modaraba |
|
| Companies
and Modarabas, the State Bank of Pakistan for the guidance provided by them
from |
|
| time
to time and to the staff for their dedication and hard work, who made the
achievement of |
|
| these
results possible. |
|
|
|
|
For and on behalf of the Board |
|
|
| Karachi: |
|
|
RASHID M. CHAUDHRY |
|
| August
29, 1998. |
|
CHAIRMAN |
|
|
|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
|
|
| We
have audited the annexed Balance Sheet as at June 30, 1998 and the related
Profit and |
|
| Loss
Accounts and Cash Flow Statement, together with the notes to the accounts for
the year |
|
| ended
June 30, 1998 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,
1998; |
|
| and
the profit and the changes in financial position for the year 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 & CO. |
|
SAEED KAMRAN PATEL &
CO. |
|
| Chartered
Accountants |
|
|
Chartered Accountants |
|
|
| Karachi: |
|
| August
29, 1998. |
|
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 1998 |
|
|
|
|
1998 |
1997 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
|
| CAPITAL
AND RESERVES |
|
|
|
| Authorised |
|
|
|
| 50,000,000
(1997: 50,000,000) |
|
|
|
| Modaraba
certificates of Rs.10/- each |
|
500,000,000 |
500,000,000 |
|
|
|
|
|
========== |
========== |
|
|
| Issued,
subscribed and paidup |
|
3 |
350,000,000 |
350,000,000 |
|
|
| Statutory
reserve |
|
4 |
59,488,243 |
46,200,178 |
|
|
|
|
|
|
|
| Unappropriated
profit |
|
|
652,263 |
302,182 |
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
410,140,506 |
396,502,360 |
|
|
| LONG
TERM MUSHARIKA FINANCE |
5 |
270,000,000 |
130,000,000 |
|
|
|
|
|
|
|
|
| LONG
TERM SECURITY DEPOSIT |
|
26,640,948 |
16,783,552 |
|
|
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
|
--------------- |
--------------- |
|
|
| Short
term musharika finance |
|
6 |
33,000,000 |
23,000,000 |
|
|
| Security
deposit |
|
|
-- |
152,000 |
|
|
| Creditors,
accrued and other liabilities |
7 |
21,392,387 |
11,460,972 |
|
|
| Unclaimed
profit |
|
|
7,451,138 |
5,344,234 |
|
|
| Proposed
profit distribution |
|
|
52,500,000 |
52,500,000 |
|
|
| Taxation |
|
|
16,300,000 |
8,300,000 |
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
130,643,525 |
100,757,206 |
|
|
| COMMITMENT |
|
8 |
--------------- |
--------------- |
|
|
|
|
|
837,424,979 |
644,043,118 |
|
|
|
|
|
========== |
========== |
|
|
|
| FIXED
ASSETS - TANGIBLE |
9 |
219,050 |
126,229 |
|
|
|
|
|
|
|
|
| DEFERRED
COSTS |
|
10 |
955,416 |
1,550,810 |
|
|
|
|
|
|
|
|
| NET
INVESTMENT IN |
|
|
|
|
|
| LEASE
FINANCE |
|
11 |
172,576,687 |
101,065,309 |
|
|
|
|
|
|
|
|
| LONG
TERM MUSHARIKA |
|
|
|
|
| FINANCE |
|
12 |
81,1 70,571 |
43,512,501 |
|
|
|
|
|
|
|
|
| LONG
TERM INVESTMENT |
13 |
25,619,000 |
2,000,000 |
|
|
|
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
|
|
|
| Stock-in-trade |
|
|
17,875,367 |
40,768,537 |
|
|
| Trade
debts - secured |
|
|
11,415,256 |
4,138,696 |
|
|
| Current
portion of long term assets |
14 |
97,053,336 |
70,548,138 |
|
|
| Short
term morabaha finance - secured |
|
55,000,000 |
79,313,000 |
|
|
| Short
term musharika finance - secured |
|
232,039,806 |
167,991,600 |
|
|
| Short
term investments |
|
15 |
18,122,093 |
51,496,782 |
|
|
| Accrued profit |
|
16 |
54,886,870 |
43,258,571 |
|
|
| Advances,
prepayments and |
|
|
|
|
|
| other
receivables |
|
17 |
13,171,942 |
10,985,165 |
|
|
| Cash
and bank balances |
|
18 |
57,319,585 |
27,287,780 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
556,884,255 |
495,788,269 |
|
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
837,424,979 |
644,043,118 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1998. |
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
| INCOME |
|
19 |
116,748,634 |
90,208,525 |
|
|
|
|
|
|
| EXPENDITURE |
|
|
|
|
|
|
|
|
|
| Operating
expenses |
|
20 |
5,439,730 |
4,965,946 |
|
| Financial
charges |
|
|
38,439,175 |
24,179,301 |
|
| Adjustment
in Provision for diminution in the value |
|
|
|
| of
Short term investments |
|
|
775,822 |
(8,012,428) |
|
| Provision
for doubtful debts |
|
|
3,613,000 |
208,846 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
48,267,727 |
21,341,665 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
68,480,907 |
68,866,860 |
|
| OTHER
INCOME |
|
21 |
6,398,620 |
5,726,601 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
74,879,527 |
74,593,461 |
|
|
|
|
|
| MODARABA
COMPANY'S MANAGEMENT FEE |
22 |
741,381 |
745,935 |
|
|
|
|
--------------- |
--------------- |
|
| PROFIT
FOR THE YEAR/PERIOD BEFORE TAXATION |
|
74,138,146 |
73,847,526 |
|
|
|
|
|
| Provision
for taxation |
|
|
8,000,000 |
8,300,000 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
66,138,146 |
65,547,526 |
|
| Unappropriated
profit brought forward |
|
|
302,182 |
364,161 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
|
66,440,328 |
65,911,687 |
|
| APPROPRIATION |
|
|
|
|
|
|
|
|
| Transferred
to statutory reserves |
|
|
13,288,065 |
13,109,505 |
|
| Amount
of profit distribution |
|
|
|
| (1997
- Amount of profit distribution @15%) |
|
|
52,500,000 |
52,500,000 |
|
|
|
|
--------------- |
--------------- |
|
| Unappropriated
Profit carried forward |
|
|
652,263 |
302,182 |
|
|
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the annexed notes. |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1998. |
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
|
|
|
|
|
|
|
| Profit
for the year/period |
|
74,138,146 |
73,847,526 |
|
|
| Adjustment
for: |
|
|
|
|
| · |
|
|
|
|
| Amortization
of deferred cost |
|
636,644 |
1,273,284 |
|
|
| Depreciation |
|
80,460 |
45,804 |
|
|
| Diminution
in value of investments - net |
|
775,822 |
(8,012,428) |
|
|
| Provision
for doubtful dues |
|
3,613,000 |
208,846 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
5,105,926 |
(6,484,494) |
|
|
|
|
--------------- |
--------------- |
|
|
| Operating
Profit before working capital changes |
79,244,072 |
67,363,032 |
|
|
|
|
|
|
|
| CHANGES
IN WORKING CAPITAL |
|
|
|
|
| (INCREASE)/DECREASE
IN CURRENT ASSETS |
|
|
|
|
|
|
|
|
| Stock-in-trade |
|
22,893,170 |
(26,321,727) |
|
|
| Trade debts |
|
(7,276,560) |
(2,098,140) |
|
|
| Short
term morabaha finance |
|
24,313,000 |
6,446,000 |
|
|
| Short
term musharika finance |
|
(64,048,206) |
(59,691,600) |
|
|
| Short
term investments |
|
22,598,867 |
20,409,680 |
|
|
| Certificate
of investment |
|
10,000,000 |
(10,000,000) |
|
|
| Accrued profit |
|
(15,274,739 |
(19,304,791) |
|
|
| Advances,
prepayments and other receivable |
|
|
| (Increase)
in current asset |
|
(2,186,777 |
(7,052,827) |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
(8,981,245 |
(97,613,405) |
|
|
|
|
|
|
|
|
| INCREASE/(DECREASE)
IN CURRENT LIABILITIES |
|
|
|
| Security
deposits |
|
(152,000) |
152,000 |
|
|
| Creditors,
accrued and other liabilities |
|
9,931,415 |
9,367,271 |
|
|
| Increase/(Decrease)
in current liabilities |
|
--------------- |
--------------- |
|
|
|
|
9,779,415 |
9,519,271 |
|
|
|
|
--------------- |
--------------- |
|
|
| Cash
(outflow) / generated from operations |
|
80,042,242 |
(20,731,102) |
|
|
|
|
--------------- |
--------------- |
|
|
| Dividend paid |
|
(50,393,096) |
(75,982,866) |
|
|
| Long
term security deposits received |
|
9,857,396 |
9,634,972 |
|
|
|
|
--------------- |
--------------- |
|
|
|
|
(40,535,700) |
(66,347,894) |
|
|
|
|
--------------- |
--------------- |
|
|
| Net
cash (used in) / from operating activities |
|
39,506,542 |
(87,078,996) |
|
|
|
|
|
|
1998 |
1997 |
|
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
|
|
|
|
|
|
| Purchase
of fixed assets |
|
(173,281) |
(83,000) |
|
|
| Long
term musharika finance |
|
(54,675,363) |
(25,854,164) |
|
|
| Deferred
expenditure |
|
(41,250) |
(249,166) |
|
|
| Long
term investments |
|
(23,619,000) |
-- |
|
|
| Assets
leased out |
|
(80,965,843) |
(64,302,308) |
|
|
|
|
--------------- |
--------------- |
|
|
| Net
cash used in investing activities |
|
(159,474,737) |
(90,488,638) |
|
|
|
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
|
| Musharika
finance obtained |
|
150,000,000 |
153,000,000 |
|
|
|
|
--------------- |
--------------- |
|
|
| Net
cash from financing activities |
|
150,000,000 |
153,000,000 |
|
|
|
|
--------------- |
--------------- |
|
|
| Net
increase (decrease)in cash and bank balances |
30,031,805 |
(24,567,634) |
|
|
|
|
|
|
|
| Cash
and bank balances at the beginning |
|
|
|
|
| of the year |
|
27,287,780 |
51,855,414 |
|
|
|
|
--------------- |
--------------- |
|
|
| Cash
and bank balances at the end of year |
|
57,319,585 |
27,287,780 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
|
|
| NOTES
TO THE FINANCIAL STATEMENTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
| 1.
MODARABA AND ITS OPERATIONS |
|
| 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,
a company incorporated in Pakistan. The Modaraba is listed on the Karachi, |
|
| Lahore
and lslamabad Stock Exchanges. |
|
|
| The
Modaraba is currently engaged in various Islamic modes of financing and
business, |
|
| including
leasing, morabaha, musharika arrangements, trading in listed securities and |
|
| other
commodities. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
