| First UDL Modaraba |
|
|
|
|
|
|
|
|
| Annual
Report 1998 |
|
|
|
| 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 Certificates Holding |
|
|
|
| CORPORATE
INFORMATION |
|
|
| MODARABA
COMPANY |
|
| UDL
Modaraba Management (Private) Limited |
|
|
|
|
BOARD OF DIRECTORS |
|
| Abdul Malik |
|
Chairman |
|
| Khalid
Malik |
|
Chief Executive |
|
| Rashid
Abdulla |
|
Director |
|
| Tausif
Ahmed Hashmi |
|
Director |
|
| Farooq
Ahmad Bhatty |
|
Director |
|
|
- Nominee Crescent |
|
|
Investment Bank Limited |
|
|
|
|
| A. W. Rahi |
|
Managing Director |
|
|
| COMPANY
SECRETARY |
|
| Zubair
Razzak Palwala |
|
|
| AUDITORS |
|
| Sidat
Hyder Qamar Maqbool & Co. |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| Muslim
Commercial Bank Ltd. |
|
| Habib
Bank Limited. |
|
| Citibank
N. A. |
|
| ANZ
Grindlays Bank Ltd. |
|
| Security
Investment Bank Ltd. |
|
| Crescent
Investment Bank Ltd. |
|
| Orix
Investment Bank Pakistan Ltd. |
|
| A1-Faysal
Investment Bank Ltd. |
|
|
| REGISTRAR |
|
| Gangjees
Investment & Finance Consultants |
|
| 513
Clifton Centre, Khayaban-e-Roomi, |
|
| Kehkashan,
Block-5 Clifton, Karachi. |
|
|
| REGISTERED
OFFICE |
|
| N.I.C.
Building, 1st Floor, Abbasi Shaheed Road, |
|
| Off
Shahrah-e-Faisal, Karachi. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors of UDL Modaraba Management (Private) Limited have pleasure in
presenting the seventh annual report |
|
| of
First UDL Modaraba together with the audited accounts for the year ended June
30, 1998. |
|
|
| 1.
Operating Results |
|
|
|
|
| The
financial results of the Modaraba for the year under review are as follows: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Rupees |
|
|
|
|
('000') |
|
|
|
|
| -
Profit for the year after tax |
|
42,444 |
|
| -
Transferred to statutory reserves |
|
(8,489) |
|
|
|
|
---------- |
|
|
|
|
33,955 |
|
| -
Unappropriated loss brought forward |
|
(15,383) |
|
|
|
|
---------- |
|
| -
Unappropriated profit carried forward |
|
18,572 |
|
|
|
|
========== |
|
|
|
|
| 2.
Review of Operations |
|
|
| Alhamdulillah,
your Modaraba continued to make a progressive growth during the year under
review despite |
|
| adverse
economic conditions prevailing in the country and various unfavourable
factors faced by the sector, as |
|
| highlighted,
in the following paragraphs. |
|
|
| Pursuing
diversification plan, the Modaraba concentrated on "Leasing" as its
core business activity. An amount |
|
| of
Rs. 131.0 million was disbursed in writing new leases during the year under
review. Thus, the aggregate lease |
|
| portfolio
of the Modaraba has increased to Rs. 686.0 million at prime cost while its
written-down value amounted |
|
| to
Rs. 430.0 million at the close of the year. |
|
|
| Other
business activities of the Modaraba like musharikas and morabahas were
carried out at smaller scale. |
|
| Investment
in shares & securities which had already been reduced in the previous
years pursuant to diversification |
|
| plan
could not, however, be reduced further during the year due to volatile stock
market conditions. |
|
|
| Administrative
expenses of the Modaraba have been kept under strict control, rather reduced
wherever possible, |
|
| pursuant
to austerity plans. |
|
|
| As
a result of measures taken, you will be pleased to observe that your
Modaraba's profitability has significantly |
|
| improved.
A net profit of Rs. 42.4 million was earned during the year as against Rs.
25.3 million posted last |
|
| year,
after providing fully for all the expenses, diminution in the value of short
term investments, bad & doubtful |
|
| debts,
taxation and profit payable to International Finance Corporation (IFC) etc.
This compares very favourably |
|
| particularly
in view of the fact that a provision of Rs. 10.0 million has been made this
year towards diminution |
|
| in
the value of long term investments. Although the effect of the diminution in
the value of long term investments |
|
| in
not yet considered permanent, the provision, as above, has been made for
prudence sake. |
|
|
| 3.
Earning per Share |
|
| Earning
per modaraba certificate works out to be Rs. 1.60 this year as against Re.
0.96 in the preceding year. |
|
|
| 4.
Future Outlook |
|
| In
our last annual report, we explained in detail about the country's critical
economic conditions and the impact |
|
| thereof
on business climate in general and on modarabas in particular. It was,
however, hoped that structural |
|
| reforms
and drastic steps then taken by the government would bring about some respite
in the time to come. |
|
|
| However,
the hope of revival collapsed very soon owing to subsequent retrograding
developments following |
|
| the
Nuclear tests conducted by the Government of Pakistan. Foreign currency
controls and economic sanctions |
|
| by
the donor countries have resulted in slowing down the business and
contraction of economy. Political |
|
| uncertainty,
law and order situation and conflict between Government and Independent Power
Producers (IPPs) |
|
| have
added fuel to the fire in destabilizing the economy. |
|
|
| While
the negative factors enumerated above are further deteriorating business
conditions, there are certain |
|
| positive
developments too: |
|
|
| a)
Modarabas' long - standing and legitimate demand of tax exemption has been
restored except for trading |
|
| modarabas. |
|
|
| b)
The transfer pricing of leased assets has been resolved to be the residual
value as per the lease agreement |
|
| with
the lessee. |
|
|
| c)
Withholding tax on sale & lease back transactions has been waived. |
|
|
| d)
Profit sharing on musharika transactions to be treated as tax deductible. |
|
|
| The
above measures taken by the Government should have very positive impact on
the modaraba and leasing |
|
| business,
but are largely off-set by worsening economic conditions. The government,
particularly the Corporate |
|
| Law
Authority (CLA), has shown increasing indulgence in resolving remaining
issues and problems of the |
|
| modarabas.
Changes and modifications in the rules and regulations to smoothly monitor
the modarabas and |
|
| strengthening
their position in the market place are being finalised. The Modaraba
Association of Pakistan is |
|
| closely
working with CLA for the needful. We look forward to an improved performance
of the modaraba sector |
|
| once
the economic conditions improve at macro level. |
|
|
| In
the prevailing situation, the management of your Modaraba is fully conscious
of the challenges ahead. It will |
|
| endeavour
for the growth with diversification and consolidation with' a view to
maintaining the performance and |
|
| profitability
of your Modaraba. |
|
|
| 5.
Interim Dividend |
|
| Directors
are pleased to announce an interim distribution of profit @ 10% for the year
ending June 30, 1999. |
|
| This
interim distribution notwithstanding uncertain economic conditions is
recommended for balancing the |
|
| interests
of certificate-holders. |
|
|
| 6.
Millennium Bug |
|
| In
compliance with Corporate Law Authority's (CLA) requirements, we report that
all the necessary steps have |
|
| been
taken by the management of the Modaraba to counter the year 2000 problem
known as "Millennium Bug" |
|
| In
fact, the Modaraba is in the process of developing a new computerised system
of Accounting and Management |
|
| reporting. |
|
|
| 7. Auditors |
|
|
| The
present auditors, M/s. Sidat Hyder Qamar Maqbool & Co., Chartered
Accountants, are due for retirement, |
|
| and
being eligible, offer themselves for reappointment for the year 1998-99. |
|
|
| 8.
Acknowledgment |
|
| The
Directors wish to place on record their appreciation and thanks to
certificate holders for their continued |
|
| confidence
in the Modaraba, to the authorities for their guidance and to all the members
of management and |
|
| staff
for their dedication and hard work. |
|
|
|
|
On behalf of the Board |
|
|
|
|
|
|
|
|
|
Sd/ |
|
|
|
|
KHALID MALIK |
|
| Karachi:
October 30, 1998 |
|
Chief Executive |
|
|
|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
|
|
| We
have audited the annexed balance sheet as at 30 June 1998 and the related
profit and loss account and statement |
|
| of
changes in financial position, together with the notes to the accounts, for
the year ended 30 June 1998 of FIRST |
|
| UDL
MODARABA which are Modaraba company's [UDL Modaraba Management (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 keep by the Modaraba
company in respect of First UDL |
|
| 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 (Floatation 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 statement of
changes in financial position, |
|
| 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 30 June 1998; and the profit and the cash flows
for the year ended |
|
| on
that date; |
|
|
|
|
| ii)
no zakat was deductible at source under the Zakat and Ushr Ordinance, 1950:
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. |
|
|
| We
wish to emphasize that the Modaraba has pursued the currently prevailing
practice and form of documenting |
|
| Morabaha
and Musharika transactions. These documents, are in accord with the approval
of the Religious Board. The |
|
| execution
of such Morabaha and Musharika transactions need to be brought in greater
conformity with the spirit of such |
|
| documents. |
|
|
|
|
Sd/- |
|
|
|
|
SIDAT HYDER QAMAR MAQBOOL & CO. |
|
| Karachi:
October 30, 1998 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1998 |
|
|
|
|
|
1998 |
1997 |
|
|
|
Note |
Rupees |
Rupees |
|
| Capital
and Reserves |
|
|
|
| Capital |
|
|
|
|
| Authorised |
|
|
|
| 50,000,000
(1997: 50,000,000)Modaraba |
|
| Certificates
of Rs. 10/- each |
|
|
500,000,000 |
500,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
3 |
263,865,890 |
263,865,890 |
|
|
|
|
---------- |
---------- |
|
| Statutory
reserve |
|
4 |
36,146,414 |
27,657,487 |
|
| Accumulated
profit/(loss) |
|
|
18,572,465 |
(15,383,245) |
|
|
|
|
---------- |
---------- |
|
|
|
|
54,718,879 |
12,274,242 |
|
|
|
|
---------- |
---------- |
|
|
|
|
318,584,769 |
276,140,132 |
|
| Redeemable
capital - Secured |
|
5 |
343,300,000 |
362,906,737 |
|
| Morabaha
payable - Secured |
|
6 |
9,289,003 |
25,566,677 |
|
| Security
deposits |
|
|
73,541,528 |
57,288,606 |
|
|
|
|
| Current
Liabilities |
|
|
|
| Short-term
Morabaha payable |
|
7 |
15,303,289 |
15,240,412 |
|
|
| Current
portion of long-term Morabaha and Musharika |
|
|
|
|
|
| payable
- secured |
|
8 |
30,900,607 |
- |
|
|
| Creditors,
accrued and other liabilities |
9 |
46,753,329 |
39,945,899 |
|
|
| Due
to associated companies |
|
|
5,263,888 |
2,586,372 |
|
|
| Taxation |
|
|
|
|
- |
217,143 |
|
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
98,221,113 |
57,989,826 |
|
|
| Contingencies |
|
|
10 |
- |
- |
|
|
|
|
|
|
---------- |
---------- |
|
|
|
|
|
842,936,413 |
779,891,978 |
|
|
|
|
|
========== |
========== |
|
|
|
| Fixed
Assets - Tangible |
|
|
|
|
| Assets
in own use |
|
11 |
3,832,949 |
4,520,032 |
|
| Assets
leased out |
|
|
429,147,716 |
425,541,247 |
|
|
|
|
|
| Long-term
advances, deposits and deferred costs |
13 |
2,505,886 |
3,784,904 |
|
| Long-term
investments |
|
14 |
50,727,649 |
60,727,649 |
|
|
|
|
|
| Current
Assets |
|
|
|
|
| Short-term
investments |
|
15 |
6,023,300 |
8,007,050 |
|
| Trade debts |
|
16 |
91,754,168 |
84,377,843 |
|
| Musharika
and Morabaha receivables |
|
17 |
39,914,921 |
21,671,420 |
|
| Advances,
deposits, prepayments and other receivables |
18 |
21,649,688 |
23,098,126 |
|
| Cash
and bank balances |
|
19 |
197,380,136 |
148,163,707 |
|
|
|
|
---------- |
---------- |
|
|
|
|
356,722,213 |
285,318,146 |
|
|
|
|
---------- |
---------- |
|
|
|
|
842,936,413 |
779,891,978 |
|
|
|
|
========== |
========== |
|
|
|
|
| Auditors'
Report Annexed |
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
|
|
KHALID MALIK |
|
FAROOQ A. BHATTY |
|
A.W. RAHI |
|
|
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
|
UDL Modaraba Management |
|
UDL Modaraba Management |
|
UDL Modaraba Management |
|
|
|
|
(Private) Limited |
|
(Private) Limited |
|
(Private) Limited |
|
|
|
|
|
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
|
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
|
|
|
|
Note |
1998 |
1997 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| Revenue
from: |
|
|
|
|
|
| Leasing
operations |
|
20 |
206,624,284 |
160,428,466 |
|
| Morabahas |
|
|
|
|
- |
1,553,475 |
|
| Musharikas |
|
|
|
|
6,497,796 |
1,712,085 |
|
| Investments |
|
21 |
68,435,262 |
51,407,950 |
|
| Other
sources |
|
22 |
6,569,597 |
1,963,624 |
|
|
|
|
---------- |
---------- |
|
|
|
|
288,126,939 |
217,065,600 |
|
|
|
|
|
| Expenditure |
|
|
|
|
| Administrative
expenses |
|
23 |
14,645,394 |
16,400,488 |
|
| Amortization
on assets leased out |
|
12 |
123,714,797 |
86,115,949 |
|
| Financial
charges |
|
24 |
87,545,715 |
68,156,803 |
|
|
|
|
---------- |
---------- |
|
|
|
|
225,905,906 |
170,673,240 |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
62,221,033 |
46,392,360 |
|
| Provision
for: |
|
|
|
|
| Diminution
in the value of investments |
|
(12,011,932) |
(7,430,110) |
|
| Doubtful
debts |
|
|
- |
(10,000,000) |
|
|
|
|
---------- |
---------- |
|
|
|
|
|
(12,011,932) |
(17,430,110) |
|
|
|
|
---------- |
---------- |
|
|
|
|
50,209,101 |
28,962,250 |
|
| Modaraba
Company's management fee |
|
|
(4,564,464) |
(2,632,932) |
|
|
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
|
45,644,637 |
26,329,318 |
|
| Taxation |
|
|
(3,200,000) |
(1,000,000) |
|
|
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
|
42,444,637 |
25,329,318 |
|
| Transferred
to statutory reserve |
|
|
(8,488,927) |
(5,065,864) |
|
|
|
|
---------- |
---------- |
|
|
|
|
33,955,710 |
20,263,454 |
|
| Unappropriated
loss brought forward |
|
(15,383,245) |
(35,646,699) |
|
|
|
|
---------- |
---------- |
|
| Accumulated
profit/(loss) carried forward |
|
18,572,465 |
(15,383,245) |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
KHALID MALIK |
|
FAROOQ A. BHATTY |
|
A.W. RAHI |
|
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
UDL Modaraba Management |
|
UDL Modaraba Management |
|
UDL Modaraba Management |
|
|
|
(Private) Limited |
|
(Private) Limited |
|
(Private) Limited |
|
|
|
|
| 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
before taxation |
|
|
|
45,644,637 |
26,329,318 |
|
|
|
|
| Adjustment
of non cash items: |
|
|
|
| Depreciation
on own assets |
|
1,507,097 |
1,512,707 |
|
| Amortization
on: |
|
|
|
| - assets leased out |
|
123,714,797 |
86,115,949 |
|
| - deferred costs |
|
|
1,254,719 |
1,473,636 |
|
| (Gain)/1oss
on sale of fixed assets |
|
|
| - own assets |
|
|
(210,084) |
(226,062) |
|
| - assets leased out |
|
150,057 |
78,918 |
|
| Dividend
income |
|
|
(1,801,160) |
(1,705,394) |
|
|
|
---------- |
---------- |
|
|
|
170,260,063 |
113,579,072 |
|
|
|
|
| (Increase)/decrease
in operating assets |
|
|
| Trade debts |
|
(7,376,325) |
(9,728,198) |
|
| Musharika
receivables |
|
(18,243,501) |
(14,358,910) |
|
| Short-term
investments |
|
1,983,750 |
33,584,856 |
|
| Advances,
deposits, prepayments and other receivables |
|
(2,103,329) |
(499,755) |
|
|
|
---------- |
---------- |
|
|
|
(25,739,405) |
8,997,993 |
|
|
|
|
|
| Increase/(decrease)
in current liabilities |
|
|
| Short-term
Musharika and Morabaha |
|
62,875 |
(13,617,361) |
|
| Current
portion of long-term Morabaha and Musharika-secured |
30,900,607 |
- |
|
| Creditors,
accrued and other liabilities |
|
6,807,430 |
7,955,703 |
|
| Due
to associated companies |
|
2,677,516 |
(1,597,418) |
|
|
|
---------- |
---------- |
|
|
|
40,448,430 |
(7,259,076) |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash flow from operating activities |
|
184,969,088 |
115,317,989 |
|
| Income
tax paid |
|
- |
(1,922,142) |
|
|
|
---------- |
---------- |
|
| Net
cash flow from operating activities after tax |
|
184,969,088 |
113,395,847 |
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Purchase
of fixed assets |
|
|
|
| - own assets |
|
(1,428,498) |
(1,883,589) |
|
| - assets leased out |
|
(131,715,767) |
(203,222,468) |
|
| Venture
capital |
|
|
- |
2,700,000 |
|
| Long-term
deposits |
|
|
24,300 |
(124,097) |
|
| Long-term
investments |
|
|
10,000,000 |
82,391,553 |
|
| Proceeds
from sale of fixed assets |
|
|
|
| - own assets |
|
818,568 |
1,119,000 |
|
| - assets leased out |
|
4,244,444 |
660,000 |
|
| Dividend
received |
|
|
1,935,783 |
1,654,826 |
|
|
|
|
|
---------- |
---------- |
|
| Net
cash flow from investing activities |
|
(116,121,170) |
(116,704,775) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
|
| Redeemable
capital |
|
(19,606,737) |
53,600,000 |
|
| Proceeds/(repayment)
of Morabaha |
|
(16,277,674) |
- |
|
| Long-term
security deposits |
|
16,252,922 |
13,790,312 |
|
|
|
---------- |
---------- |
|
| Net
cash flow from financing activities |
|
(19,631,489) |
67,390,312 |
|
|
|
---------- |
---------- |
|
| Net
cash flow after financing activities |
|
49,216,429 |
64,081,384 |
|
| Cash
and bank at the beginning of the year |
|
148,163,707 |
84,082,323 |
|
|
|
|
|
---------- |
---------- |
|
| Cash
and bank at the end of the year |
|
197,380,136 |
148,163,707 |
|
|
|
|
|
========== |
========== |
|
|
|
KHALID MALIK |
|
FAROOQ A. BHATTY |
|
A.W. RAHI |
|
|
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
|
UDL Modaraba Management |
|
UDL Modaraba Management |
|
UDL Modaraba Management |
|
|
|
|
(Private) Limited |
|
(Private) Limited |
|
(Private) Limited |
|
|
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1998 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| First
UDL Modaraba was formed under the Modaraba Companies and Modaraba (Floatation
and Control) |
|
| Ordinance,
1980 and the Rules framed thereunder and is managed by UDL Modaraba
Management (Private) |
|
| Limited.
It is a perpetual, multipurpose and multidimensional Modaraba and is engaged
in providing finance on |
|
| Morabaha
and Musharika arrangements, leasing, commodity trading and trading in listed
and non-interest bearing |
|
| securities. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Overall valuation policy |
|
| These
accounts have been prepared on the basis of historical cost 'convention'. |
|
|
| 2.2
Staff retirement benefits |
|
| The
Modaraba operates approved Provident Fund Scheme covering all its employees
who are eligible |
|
| under
the scheme. Equal monthly contributions are made by the Modaraba and the
employees to the Fund. |
|
|
| 2.3
Fixed assets |
|
|
| 2.3.1
Assets in own use and depreciation |
|
| Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
charged to income applying |
|
| the
straight line method whereby the cost of an asset is written-off over its
estimated useful life. Full year's |
|
| depreciation
is charged on additions while no depreciation is charged on assets disposed
off during the |
|
| year. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Gains and
losses on disposal |
|
| of
fixed assets are included in income currently. |
