| First Crescent Modaraba |
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| Annual
Report 2000 |
|
|
|
| Contents |
|
|
| Corporate
& Investors' Information |
|
| Directors'
Report and Chief Executive's Review |
|
| Auditors'
Report to the Certificate Holders |
|
| Balance Sheet |
|
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Holding of Certificates |
|
| Notice
of Annual Review Meeting |
|
|
|
| Corporate
Information |
|
|
| IRFAN
A. IMTIAZl |
|
LEGAL ADVISORS |
|
| Chairman |
|
|
Hassan and Hassan
Advocates |
|
|
|
|
| MAHMOOD
AHMED |
|
PRINCIPAL OFFICE |
|
| Chief Executive |
|
|
45-
Shahrah-e-Quaid-e-Azam, Lahore |
|
|
|
|
Phones: (042) 7238336-7 |
|
|
|
|
Fax: 92-42-7230504 |
|
| DIRECTORS |
|
|
Telex: 44445 BANK PK |
|
| (In
alphabetical order) |
|
|
|
|
|
|
REGISTERED OFFICE |
|
| Muhammad
Awais Qureshi |
|
2nd Floor, 131-A, E/1 |
|
| Rashid Ahmed |
|
|
Main Boulevard, Gulberg
III, |
|
| Zaheer
A. Shaikh |
|
Lahore. Pakistan |
|
|
|
|
Tel: 92-42-5712036,
5710759 |
|
|
|
|
Fax: 92-42-5712446 |
|
|
|
|
|
| CORPORATE
SECRETARY |
|
| Tariq Aleem |
|
|
|
| AUDITORS |
|
| Riaz
Ahmad and Company |
|
| Chartered
Accountants |
|
|
| Investors'
Information |
|
|
| STOCK
EXCHANGE LISTING |
|
SHAHID LATIF DAR |
|
| First
Crescent Modaraba is listed |
|
TEL: (042) 7238331,
7238336-7 |
|
| on
the Karachi, Lahore and Islamabad |
FAX: (042) 7230504 |
|
| Stock Exchange |
|
|
|
| Daily
quotes on the Crescent Modaraba Certifications |
CERTIFICATE HOLDERS
INFORMATION |
|
| can
be obtained from leading newspapers, |
Inquires concerning lost
stock |
|
| listed
under "Modaraba Companies" |
certificates, dividend
payments, |
|
|
|
|
change of address,
verification of transfer deeds |
|
| PUBLIC
INFORMATION |
|
and certificates transfer
should be directed to: |
|
| Financial
analysts, stock brokers, |
|
| interested
investors and financial media |
FIRST CRESCENT MODARABA |
|
| desiring
information about |
|
2nd Floor, 131-A, E/1 |
|
| FIRST
CRESCENT MODARABA |
Main Boulevard, Gulberg
III, Lahore. Pakistan |
|
| should
contact the following individual |
Tel: 92-42-5712036,
5710759 |
|
| In
corporate Investor Relations: |
|
Fax: 92-42-5712446 |
|
|
|
|
| Directors'
Report & Chief Executive's review |
|
|
| It
is a great pleasure to present to you the Ninth Annual Report of First
Crescent Modaraba (FCM), |
|
| which
covers the ninth full year of operations of the Modaraba. Before the review
of operating results of |
|
| the
Modaraba, it will be pertinent to have a brief review of the national
economic scenario. |
|
|
| MACRO
ECONOMIC SCENARIO |
|
| The
economy during the financial year 1999-2000 showed some signs of improvement
and stability. |
|
| However,
a combination of domestic and external shocks coupled with structural shifts
kept the |
|
| economy
under stress. The political uncertainty and the change of government in
October 1999 were |
|
| major
domestic shocks to the economy. On external front, a breakdown in
negotiations with IMF in |
|
| September
1999, the rise in world oil prices, the dispute with Hubco and serious
concerns of some |
|
| international
quarters on the military government were major contributing factors. The
economic |
|
| agenda
of the new government that is based on accountability, improved governance
and widening of |
|
| tax
net created major structural shifts in the economy. Although the economy of
the country is |
|
| weathered
many shocks in the past, its capacity to absorb domestic and external shocks
along with |
|
| fundamental
structural changes at the same times has been tested to limits during the
year. The |
|
| combination
of a slowdown in the informal economy and the cumulative cut in productive
public |
|
| spending
over the last few years has reduced the opportunities for economic expansion
and |
|
| employment
generation to a considerable extent. |
|
|
| During
the year under review, the real sector witnessed a turnaround and GDP growth
rose to 4.8 |
|
| percent
from 3.1 percent a year earlier mainly contributed by strong agriculture
performance. Bumper |
|
| crops
in cotton and wheat coupled with an increase in production of rice, led top
agriculture growth of |
|
| 7.2
percent, which improved self- sufficiency in food and quantitative increase
in exports. The |
|
| manufacturing
sector did not perform better as compared to previous year. The expansion of
11 |
|
| percent
in textile sector was more than offset due to decline in sugar sector. |
|
|
| Fixed
investment grew by 4.4 percent. This increase was driven by private
investment in textile, |
|
| agriculture
and related services while investment in other sectors remained low. A larger
volume |
|
| national
saving financed this investment while share of external resources declined
considerably. |
|
|
| With
stagnant rupee deposit base and lower off-take of credit by the private
sector, financial sector |
|
| experienced
a tighter liquidity poison during the year. There was a systematic shift out
of bank |
|
| deposits.
Net credit to the non-government sector fell sharply from Rs. 118.8 billion
in the previous year |
|
| to
only Rs. 26.2 billion. |
|
|
| The
scenario discussed above has effected the normal lending and overall demand
especially for fixed |
|
| investment,
declined considerably and impacted the performance of leasing companies and |
|
| modarabas. |
|
|
| MERGER |
|
| We
are pleased to report that the Honorable Lahore High Court has approved the
merger of First |
|
| Confidence
Modaraba with First Crescent Modaraba (FCM) with effect from July 01, 1999. |
|
|
| OPERATING
AND INVESTING PERFORMANCE |
|
| As
on 30 June 2000, total assets of First Crescent Modaraba were Rs.1,860.70
million as against the |
|
| outstanding
of Rs. 1,414.65 million on the corresponding date of last year. During the
year under |
|
| review
lease disbursement of Rs. 286.81 million were made. Net investment in leasing
business as on |
|
| June
30, 2000 amounted to Rs. 643.37 million. Depreciation charge for the year
under review was |
|
| Rs.271.91
million as compared to Rs. 188.91 million charged in the last year. |
|
|
| STOCK
MARKET OPERATIONS |
|
| The
stock market experienced some bullish trends in the January-March 2000 period
and recovered |
|
| from
a very low level to around 2000 points. However, the index closed at 1521
points on June 30, 2000. |
|
|
| The
Modaraba earned an income of Rs. 28.65 million on its investments during the
year 1999-2000. |
|
|
| REGULATIONS |
|
| During
the year, prudential regulations for Modarabas were introduced after
incorporating the long |
|
| needed
changes for the Modaraba sector. We hope that the process of rationalizing
the Modaraba |
|
| Ordinance
and relevant rules and regulations by the Securities and Exchange Commission
of Pakistan |
|
| will
produce favorable results during the year. |
|
|
| RESOURCE
MOBILIZATION |
|
| As
at 30th June 2000, the Modaraba had an outstanding amount of Rs. 1,347.60
mobilized under |
|
| Morabaha
/ Musharika arrangements etc. as against Rs. 976.05 million for the last year
showing an |
|
| increase
of 38% over the previous year. |
|
|
| BALANCE
SHEET & OPERATING RESULTS |
|
| After
merger, total assets of the Modaraba increased by Rs. 446.05 million (31.53%)
during 1999-2000 |
|
| to
Rs. 1,860.70 million. The Modaraba earned an operating profit before
provisions of Rs. 31.80 million |
|
| during
the year. The stock market performed well for a couple of months and the
Modaraba was able to |
|
| realize
reasonable gains. The net profit after tax for the year was Rs. 18.46 million
as against Rs. 12.10 |
|
| million last year. |
|
|
| The
subject year was the second year for which the government has revived the
income tax exemption |
|
| for
modaraba if atleast 90 % of its profits for the year are distributed among
the certificate holders. No |
|
| provision
for taxation has been made in these accounts for activities other than
trading in view of the |
|
| subject
exemption. Composition of the net profit after provisions is as follows:- |
|
|
|
|
|
(Rs. in million) |
|
|
|
|
Amount for the |
Amount for the |
% change over |
|
|
|
Year Ended |
Year Ended |
previous year |
|
|
|
30 June 2000 |
30 June 1999 |
|
|
| INCOME |
|
| Rental/Profit
on lease and Morabaha financing |
432.61 |
355.75 |
21.60 |
|
| Dividend
/ Capital Gains |
|
28.65 |
3.52 |
713.92 |
|
| Fees
and Commission etc. |
|
8.03 |
2.60 |
208.85 |
|
| Profit
on placements etc. |
|
3.26 |
7.63 |
(57.27) |
|
| Revenue
from other services |
|
2.98 |
1.16 |
-- |
|
| Trading income |
|
6.67 |
-- |
-- |
|
|
|
------------------ |
------------------ |
------------------ |
|
|
Total Income = |
|
482.20 |
370.66 |
30.09 |
|
|
|
|
========== |
========== |
========== |
|
|
|
|
|
|
| EXPENDITURE |
|
|
|
| Charges
/ profit / return paid on lease, Morabaha and |
|
| Musharika |
|
428.94 |
323.71 |
(32.51) |
|
| Provisions |
|
4.10 |
20.63 |
80.13 |
|
| Loss
on sale of investments/fixed assets |
-- |
1.81 |
-- |
|
| Establishment
& other operating expenses |
21.46 |
14.34 |
(49.65) |
|
|
|
------------------ |
------------------ |
------------------ |
|
|
Total Expenditure = |
454.50 |
360.49 |
(26.08) |
|
|
|
========== |
========== |
========== |
|
|
|
|
| NET
PROFIT (Before Management fee & tax) |
27.70 |
10.17 |
-- |
|
| Management
fee |
|
(2.52) |
(0.92) |
-- |
|
| Provision
for taxation |
|
(6.72) |
2.85 |
-- |
|
|
|
------------------ |
------------------ |
------------------ |
|
| NET
PROFIT / (LOSS) |
|
18.46 |
12.10 |
-- |
|
| Un-appropriated
profit b/f |
|
0.25 |
0.36 |
-- |
|
|
|
------------------ |
------------------ |
------------------ |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
18.71 |
12.46 |
-- |
|
|
|
------------------ |
------------------ |
------------------ |
|
| APPROPRIATIONS |
|
|
|
| Transfer
to Statutory Reserve |
|
(1.85) |
(2.42) |
-- |
|
| Transfer
to / (from) General Reserve |
5.80 |
4.20 |
-- |
|
| Profit
distribution @10% (1999: 7.50%) |
(22.62) |
(14.07) |
-- |
|
|
|
------------------ |
------------------ |
------------------ |
|
| Un-appropriated
profit |
|
0.04 |
0.17 |
-- |
|
|
|
------------------ |
------------------ |
------------------ |
|
|
| PROFIT
DISTRIBUTION |
|
| A
profit distribution of Re. 1.00 (10.00%) per certificate of Rs. 10 each has
been approved by the Board |
|
| of
Directors in its meeting held on January 29, 2001 for the year ended June 30,
2000. The distribution |
|
| will
be subject to zakat and tax at source where applicable. |
|
|
| THE
MILLENNIUM BUG |
|
| By
the grace of God, the Modaraba became fully Year 2000 compliant in June 1999.
The transition from |
|
| twentieth
to twenty first century took place pretty smoothly and no significant
problems were identified. |
|
|
| OBJECTIVES
FOR 2000-2001 |
|
| The
Modaraba plans to enhance both the quality and quantity of its earnings by
concentrating on small |
|
| and
medium sized leases and generating cheaper resources for financing the
activity. The Modaraba |
|
| also
plans to increase its trading activities in a planned manner. |
|
|
| The
Modaraba also plans to start the portfolio management services for its
clients besides the |
|
| continuation
of advisory services on lease syndication during the year 2000-2001. |
|
|
| AUDITORS: |
|
| The
Auditors M/s. Riaz Ahmad & Company, Chartered Accountants, retire and
offer themselves for re- |
|
| election. |
|
|
| ACKNOWLEDGEMENT |
|
| We
would like to thank the Securities and Exchange Commission of Pakistan,
Registrar of Modarabas |
|
| and
the State Bank of Pakistan for their continued guidance and support not only
as the regulators for |
|
| the
growth and betterment of the financial sector but for their co-operation in
the merger. We would also |
|
| like
to thank lending institutions and our certificate holders for their
co-operation and support for the |
|
| merger. |
|
|
| In
the end, the Directors appreciate the dedication and hard work put in by the
officers and staff of the |
|
| Modaraba. |
|
|
|
|
MAHMOOD AHMED |
|
| Dated:
January 29, 2001 |
|
Chief Executive |
|
|
|
|
| Auditors'
Report To The Certificate Holders |
|
|
| We
have audited the annexed Balance Sheet as at 30 June 2000 and the related
Profit and Loss |
|
| Account
and Statement of Changes in Financial Position (Cash Flow Statement) together
with the |
|
| Notes
to the Accounts for the year ended 30 June 2000 of FIRST
CRESCENT MODARABA which are |
|
| modaraba
company's [Crescent Business 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 kept by the modaraba
company in respect of |
|
| First
Crescent Modaraba as required by the Modaraba Companies and Modaraba
(Floatation |
|
| and
Control) Ordinance, 1980, and Modaraba Companies and Modaraba Rules, 1981;
and |
|
|
|
|
| (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 (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 30 June 2000 |
|
| and
the Profit and the Changes in the 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. |
|
|
|
|
RIAZ AHMAD & COMPANY |
|
| LAHORE:-
January 29, 2001 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet as at June 30, 2000 |
|
|
| EQUITY
AND LIABILITIES |
|
NOTE |
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
|
| CAPITAL
AND RESERVES |
|
|
|
| Certificate
capital |
|
| Authorized
30 000 000 modaraba certificates |
|
| of
Rupees 10 each |
|
300,000,000 |
300,000,000 |
|
|
|
========== |
========== |
|
|
|
|
| Issued,
subscribed and paid up capital |
3 |
226,187,090 |
187,670,180 |
|
| Reserves
and surplus |
|
|
|
| Capital reserve |
|
4 |
35,754,002 |
23,822,000 |
|
| Revenue
reserve-General |
|
5 |
44,183,002 |
45,482,407 |
|
| Unappropriated
profit |
|
|
42,439 |
165,279 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
306,166,533 |
257,139,866 |
|
|
|
|
| NON-CURRENT
LIABILITIES |
|
|
|
| Finances
under morabaha and musharaka |
|
|
| arrangements |
|
6 |
469,769,539 |
350,225,643 |
|
| Redeemable
capital |
|
7 |
261,500,000 |
257,000,000 |
|
| Long
term deposits |
|
8 |
75,366,650 |
67,090,918 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
806,636,189 |
674,316,561 |
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
portion of long term |
|
|
|
| finances
and deposits |
|
9 |
78,960,301 |
68,482,500 |
|
| Finances
under musharaka arrangements |
10 |
575,976,606 |
324,082,070 |
|
| Creditors,
accrued and other liabilities |
11 |
70,340,086 |
76,554,670 |
|
| Profit
distribution |
|
|
22,618,709 |
14,075,264 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
747,895,702 |
483,194,504 |
|
| CONTINGENCIES
AND COMMITMENTS |
12 |
|
|
|
------------------ |
------------------ |
|
| TOTAL
EQUITY AND LIABILITIES |
|
1,860,698,424 |
1,414,650,931 |
|
|
|
|
========== |
========== |
|
|
|
|
| NON-CURRENT
ASSETS |
|
|
|
| Tangible
operating fixed assets |
|
13 |
649,617,668 |
603,492,167 |
|
| Long
term investments |
|
14 |
303,367,238 |
224,843,427 |
|
| Deferred costs |
|
15 |
192,933 |
749,877 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
953,177,839 |
829,085,471 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Finances
under morabaha |
|
|
|
| arrangements |
|
16 |
2,429,262 |
21,266,297 |
|
| Finances
under musharaka |
|
|
|
| arrangements |
|
17 |
521,243,489 |
374,338,394 |
|
| Advances,
deposits, prepayments |
|
|
| and
other receivables |
|
18 |
221,631,607 |
125,620,004 |
|
| Stores
and spares |
|
|
72,866 |
158,388 |
|
| Cash
and bank balances |
|
19 |
162,143,361 |
64,182,377 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
907,520,585 |
585,565,460 |
|
|
------------------ |
------------------ |
|
| TOTAL
ASSETS |
|
|
1,860,698,424 |
1,414,650,931 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts, |
|
|
|
|
|
MAHMOOD AHMED |
|
RASHID AHMED |
|
ZAHEER A. SHAIKH |
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
DIRECTOR |
|
|
|
|
|
|
|
| Profit
and Loss account for the year ended June 30, 2000 |
|
|
|
|
NOTE |
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
| OPERATING
INCOME |
|
| Lease rentals |
|
|
368,196,692 |
311,516,282 |
|
| Profit
on morabaha and musharaka finances |
|
64,415,730 |
44,229,488 |
|
| Revenue
from other services |
|
20 |
2,985,269 |
1,160,589 |
|
| Fee,
commission and other income |
21 |
39,929,949 |
13,751,309 |
|
| Trading income |
|
22 |
6,670,713 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
482,198,353 |
370,657,668 |
|
|
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Financial
charges |
|
23 |
152,528,749 |
132,893,625 |
|
| Depreciation |
|
|
271,909,297 |
188,909,250 |
|
| Cost
of other services |
|
24 |
4,495,546 |
1,697,832 |
|
| Other
expenses and charges |
|
25 |
21,459,955 |
16,353,861 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
450,393,547 |
339,854,568 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
profit before provisions |
|
31,804,806 |
30,803,100 |
|
|
|
|
------------------ |
------------------ |
|
| Provision
for diminution in value of investments |
|
2,509,210 |
25,768,238 |
|
| Provision/(reversal)
for doubtful receivables |
|
1,593,251 |
(5,139,413) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
4,102,461 |
20,628,825 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
FOR THE YEAR |
|
27,702,345 |
10,174,275 |
|
| MODARABA
COMPANY'S MANAGEMENT FEE |
|
2,518,395 |
924,934 |
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
25,183,950 |
9,249,341 |
|
|
| PROVISION
FOR TAXATION |
|
| Prior year |
|
|
(502,527) |
2,848,555 |
|
| Current year |
|
26 |
(6,225,673) |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(6,728,200) |
2,848,555 |
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
|
18,455,750 |
12,097,896 |
|
|
|
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
165,279 |
634,316 |
|
| PROFIT
BROUGHT FORWARD AS ON 01 JULY |
|
| 1999
OF FIRST CONFIDENCE MODARABA |
|
85,694 |
-- |
|
| LOSS
BROUGHT FORWARD AS ON 01 FEBRUARY |
|
|
| 1999
OF AL ATA LEASING MODARABA |
|
-- |
(271,669) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
250,973 |
362,647 |
|
|
------------------ |
------------------ |
|
| PROFIT
AVAILABLE FOR APPROPRIATIONS |
|
18,706,723 |
12,460,543 |
|
|
|
| APPROPRIATIONS |
|
