| First Constellation Modaraba |
|
|
|
|
|
|
|
| Annual
Report 2000 |
|
|
|
|
| Contents |
|
|
| Corporate
information |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Statement of Changes in
Financial Position |
|
| Statement of Changes in Equity |
|
| Notes
to the Accounts |
|
| Profit Risk Exposure |
|
| Pattern
of Certificate Holders |
|
|
|
|
|
|
| CORPORATE
INFORMATION |
|
|
| DIRECTORS
OF MODARABA COMPANY |
|
| Mohammad
Yousuf Memon |
|
| R.A.Sattar |
|
| Mohammad
Zakaria |
|
| Mohammad
Zain |
|
|
| AUDITOR |
|
| Gardezi
& Company, |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| Askari
Commercial Bank Limited |
|
| Standard
Chartered Grindlays Bank |
|
| Faysal
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| Allied
Bank of Pakistan Limited |
|
| National
Bank of Pakistan |
|
| Bank
of Tokyo |
|
| Platinum
Commercial Bank Limited |
|
| Union
Bank Limited |
|
|
| LEGAL
ADVISORS |
|
| Noor
Ahmed, Advocate |
|
|
| MODARABA
COMPANY |
|
| Constellation
Management Company (Private) Limited |
|
|
| REGISTERED
OFFICE |
|
| 2nd
Floor, Trade Centre, |
|
| I.I.
Chundrigar Road, |
|
| Karachi. |
|
|
| REGISTRARS |
|
| MIPCO
Associates, |
|
| 10th
Floor, Uni Centre, |
|
| I.I.
Chundrigar Road, |
|
| Karachi. |
|
|
|
| DIRECTORS'
REPORT |
|
| To
The Certificate Holders |
|
|
| The
Board of Directors Constellation Management Company (Pvt) Ltd, takes pleasure
in presenting the |
|
| Eighth
Annual report of First Constellation Modaraba together with Audited Accounts
for the period ended |
|
| June
30, 2000. |
|
|
| OPERATION
OVERVIEW |
|
| Viewing
the operation during the period ended June 30, 2000, it is apparent that your
Modaraba has |
|
| generated
revenue of Rs. 12.698 million compared to preceding year's revenue of Rs.
11.142 million, |
|
| moreover,
the operating profit for the period under review was Rs. 5,964,334/- whereas
it was |
|
| Rs
5,939,445/- during previous period, as evident from the following:- |
|
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
|
| Operating
income |
|
12,698,315 |
11,941,506 |
|
| Operating
expenses |
|
(6,733,981) |
(6,002,445) |
|
|
----------- |
----------- |
|
| Profit
before Management fee & taxes |
|
5,964,334 |
5,939,061 |
|
|
|
|
| Less:
(Provision) for diminution in the value |
|
|
|
| of
marketable securities (long term) |
|
(6,839,343) |
(5,189,118) |
|
|
----------- |
----------- |
|
|
(875,009) |
749,943 |
|
| Transfer
statutory reserves |
|
-- |
4,156,329 |
|
|
----------- |
----------- |
|
| Profit/(loss)
before Management fee & taxes |
|
(875,009) |
4,906,272 |
|
| Modaraba
Company's Management fee |
|
-- |
(446,025) |
|
|
----------- |
----------- |
|
| Profit/(Loss)
before tax |
|
(875,009) |
4,460,247 |
|
| Taxation: |
|
| -- Current |
|
(318,500) |
-- |
|
| -- Prior year |
|
(328,171) |
-- |
|
|
----------- |
----------- |
|
|
(646,671) |
-- |
|
| Profit/(Loss)
after tax |
|
(1,521,680) |
4,460,247 |
|
| Add:
Profit brought forward |
|
311,773 |
297,950 |
|
|
----------- |
----------- |
|
| Profit/(1oss)
available for appropriation |
|
(1,209,907 |
4,758,197 |
|
| APPROPRIATIONS: |
|
|
|
| Statutory
Reserves (20% - 1999) |
|
-- |
(892,049) |
|
| Profit
reserves for distribution (5.50% - 1999) |
|
-- |
(3,554,375) |
|
|
----------- |
----------- |
|
| Un-appropriated
Profit/(Loss) carried forward |
|
(1,209,907) |
311,773 |
|
|
========== |
========== |
|
|
|
|
| Though,
the Modaraba has earned operating profit but on account of incorporation for
Provision of |
|
| Diminution
on Long Term Investment of Rs. 6,839,383/- based on average market price
during the year |
|
| ended
June 30, 2000, the Modarba's profitability has been eaten away by this
provision of Long Term |
|
| Investment,
this was done in order for presenting and reflecting the true position of
Long Term Investment |
|
| portfolio
held by the Modaraba. |
|
|
| STATUTORY
RESERVES |
|
| No
reserves have been allocated, as after making of provision for Long Term
Investment, the Modaraba's |
|
| profitability
has been wiped-out, and hence no statutory reserves has been made for this
year. |
|
|
| FUTURE
OUTLOOK |
|
| Modaraba
shall hopefully perform better in future, as all of the Modaraba's Short Term
Investment and Long |
|
| Term
Investment are more or less at current stock market levels, hence all future
profitability shall not get |
|
| used-up
on account of additional decline in value of Long and Short Term Investments,
besides the |
|
| economy
is being revamped by the government and further improvement in the economy
shall also help the |
|
| Modaraba
future businesses. |
|
|
| Needless
to mention, that your Modaraba is continually working hard in the
conventional areas of finance, as |
|
| other
avenues of investments pose more risk for the time being, however, to enhance
yields, all areas of |
|
| investments
shall be reviewed from time to time, in order to take full advantage of
available opportunities |
|
| and
the Modaraba shall fully concentrate to take benefits, from other areas of
investments. |
|
|
| TAXATION |
|
| The
Finance Act, 1999, exempted the income of all Modarabas except a trading
income from payment of |
|
| income
tax, provided that ninety percent of the Modaraba's Profit is distributed to
certificate holders, since no |
|
| profit
distribution can take place this year owing to afore-stated reasons, thus
adequate provision has been |
|
| made
for income tax of the assessment year 2000-2001. It may be added here that
the tax authorities have |
|
| already
issued the assessment order for the assessment year 1999-2000 (accounting
year ended June 30 |
|
| 1999)
to the Modaraba. |
|
|
| AUDITORS |
|
| The
present auditors M/s Gardazi & Company, Chartered Accountants, have
retired and offered their |
|
| eligibility,
this is, however, subject to the approval of the Board and the competent
authority. |
|
|
| ACKNOWLEDGEMENTS |
|
| The
Board of Directors also wishes to express its gratitude to Registrar
Modaraba, Securities and Exchange |
|
| Commission
of Pakistan, State Bank of Pakistan and Modaraba Association of Pakistan for
their continued |
|
| support
and guidance. At this time, the Board of Directors also thanks the
contribution made by the officials |
|
| and
personnel of the Modaraba for their continued hard work, enthusiasm and zeal. |
|
|
|
ON BEHALF OF THE BOARD |
|
|
| Karachi:
December 04, 2000 |
|
CHIEF EXECUTIVE |
|
|
|
| AUDITOR'S
REPORT |
|
| TO
THE CERTIFICATE HOLDERS |
|
|
|
| We
have audited the annexed balance sheet of FIRST CONSTELLATION MODARABA, as at
June 30, |
|
| 2000,
and the related profit and loss account, cash flow statement and statement of
changes in equity |
|
| together
with the notes forming part thereof, for the year then ended and we state
that we have obtained all |
|
| the
information and explanations which, to the best of our knowledge and belief,
were necessary for the |
|
| purposes
of our audit. |
|
|
| It
is the responsibility of the company's management to establish and maintain a
system of internal control, |
|
| and
prepare and present the above said statements in conformity with the approved
accounting standards |
|
| and
the requirements of the Modaraba Companies and Modaraba (Floatation and
Control) Ordinance, 1980 |
|
| and
Modaraba Companies and Modaraba Rules, 1981. Our responsibility is to express
an opinion on these |
|
| statements
based on our audit. |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These |
|
| standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the |
|
| above
said statements are free of any material misstatement. An audit includes
examining, on a test basis, |
|
| evidence
supporting the amounts and disclosures in the above said statements. An audit
also includes |
|
| assessing
the accounting policies and significant estimates made by management, as well
as, evaluating |
|
| the
overall presentation of the above said statements. We believe that our audit
provides a reasonable basis |
|
| for
our opinion and, after due verification, we report that:- |
|
|
| a)
in our opinion, proper books of account have been kept by the Modaraba
Company in respect of |
|
| First
Constellation 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: |
|
|
| i.
the balance sheet and profit & loss account together with the notes
thereon 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 are |
|
| in
agreement with the books of account and are further in accordance with
accounting |
|
| policies
consistently applied; |
|
|
| ii.
the expenditure incurred during the year was for the purpose of the
Modaraba's business. |
|
|
| iii.
the business conducted, investments made and the expenditure incurred during
the year |
|
| were
in accordance with the objects of the Modaraba. |
|
|
| c)
In our opinion and to the best of our information and according to the
explanations given to us, the |
|
| balance
sheet, profit and loss account, cash flow statement and statement of changes
in equity |
|
| together
with the notes forming part thereof conform with approved accounting
standards as |
|
| applicable
in Pakistan, and give the information required by the Modaraba Companies and |
|
| Modaraba
(Floatation and Control) Ordinance, 1980 and Modaraba Companies and Modaraba |
|
| Rules,
1981, in the manner so required and respectively give a true and fair value
of the state of |
|
| the
Modaraba's affairs as at June 30th, 2000 and of the profit, its cash flows
and changes in equity |
|
| for
the year then ended; and |
|
|
| d)
In our opinion Zakat deductible at source under Zakat and Ushr Ordinance,
1980 (XVIII of 1980), |
|
| was
deducted by the Modaraba and deposited in the Central Zakat Fund established
under |
|
| Section
7 of the ordinance. |
|
|
|
Gardezi & Company, |
|
| Karachi:
December 04, 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 2000 |
|
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
| Authorised |
|
| 30,000,000
Modaraba Certificates |
|
| of
Rs. 10/- each |
|
300,000,000 |
300,000,000 |
|
|
========== |
========== |
|
| Issued,
Subscribed and paid up |
|
| 5,000,000
Modaraba Certificates |
|
| of
Rs. 10/- each subscribed in cash |
|
50,000,000 |
50,000,000 |
|
|
| 1,462,500
Bonus Certificates of Modaraba |
|
| of
Rs.10/- each issued as fully paid |
|
14,625,000 |
14,625,000 |
|
|
----------- |
----------- |
|
|
64,625,000 |
64,625,000 |
|
| Statutory
reserve |
|
892,049 |
892,049 |
|
| Unappropriated
profit/(Loss) |
|
(1,209,907) |
311,773 |
|
|
|
----------- |
----------- |
|
|
64,307,142 |
65,828,822 |
|
| Security
deposits on financing |
|
1,290,477 |
1,159,389 |
|
|
| CURRENT
LIABILITIES |
|
| Short
term finance-secured |
|
5 |
37,000,000 |
35,000,000 |
|
| Accrued
and other liabilities |
|
6 |
2,938,176 |
5,515,543 |
|
| Reserve
for profit distribution |
|
-- |
3,554,375 |
|
|
----------- |
----------- |
|
|
39,938,176 |
44,069,918 |
|
|
----------- |
----------- |
|
|
105,535,795 |
111,058,129 |
|
|
========== |
========== |
|
| TANGIBLE
FIXED ASSETS |
|
| Cost
less accumulated amortization/depreciation |
|
| Assets
given on lease |
|
7.1 |
1,302,477 |
1,747,589 |
|
| Assets
in own use |
|
7.2 |
695,994 |
165,302 |
|
|
|
----------- |
----------- |
|
|
1,998,471 |
1,912,891 |
|
|
| LONG
TERM INVESTMENT |
|
8 |
3,976,260 |
10,856,787 |
|
|
| CURRENT
ASSETS |
|
| Short
term investment (Marketable securities) |
9 |
3,000,313 |
2,677,020 |
|
| Morabaha
/ Musharika, advances, deposits |
10 |
37,387,273 |
2,318,820 |
|
| Prepayments
& other receivables |
|
11 |
858,486 |
3,801,091 |
|
| Short
term placements |
|
55,500,000 |
88,200,000 |
|
| Cash
and bank balance |
|
2,814,992 |
1,291,520 |
|
|
----------- |
----------- |
|
|
99,561,064 |
98,288,451 |
|
|
----------- |
----------- |
|
|
105,535,795 |
111,058,129 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements, |
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
DIRECTOR |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
| OPERATING
INCOME |
|
| Profit
on Morabaha/Musharika transactions |
|
286,119 |
130,369 |
|
| Lease
& allied income |
|
12 |
10,641,751 |
11,131,091 |
|
| Sundry
business income |
|
13 |
112,667 |
185,508 |
|
|
|
------------ |
------------ |
|
| Income
from operation |
|
|
11,040,537 |
11,446,968 |
|
| Other
income |
|
14 |
1,657,778 |
494,538 |
|
|
|
------------ |
------------ |
|
|
|
12,698,315 |
11,941,506 |
|
| Operating
Expenses |
|
15 |
(6,733,981) |
(6,002,445) |
|
|
|
|
------------ |
------------ |
|
|
|
5,964,334 |
5,939,061 |
|
| Less:
(Provision) for diminution in the |
|
| value
of marketable securities (long term) |
|
(6,839,343) |
(5,189,118) |
|
|
------------ |
------------ |
|
|
(875,009) |
749,943 |
|
| Transfer
statutory reserves |
|
-- |
4,156,329 |
|
|
------------ |
------------ |
|
|
(875,009) |
4,906,272 |
|
| Modaraba
company's management fee |
|
-- |
(446,025) |
|
|
------------ |
------------ |
|
| Profit/(Loss)
before tax |
|
(875,009) |
4,460,247 |
|
| Taxation |
|
| -- Current |
|
318,500 |
-- |
|
| -- Prior year |
|
328,171 |
-- |
|
|
------------ |
------------ |
|
|
646,671 |
-- |
|
|
------------ |
------------ |
|
| Profit/(Loss)
after tax |
|
(1,521,680) |
4,460,247 |
|
| Unappropriated
profit brought forward |
|
311,773 |
297,950 |
|
|
------------ |
------------ |
|
| Profit/(Loss)
available for appropriation |
|
(1,209,907) |
4,758,197 |
|
| Appropriation: |
|
|
|
| Statutory
reserves (1999 - 20%) |
|
-- |
(892,049) |
|
| Reserve
for profit distribution (1999 - 5.5%) |
|
-- |
(3,554,375) |
|
|
------------ |
------------ |
|
|
(1,209,907) |
311,773 |
|
|
========== |
========== |
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
DIRECTOR |
|
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
2000 |
1999 |
|
|
Rupees |
Rupees |
|
| A.
CASH FLOW FROM OPERATING ACTIVITIES |
|
| Profit/(Loss)
for the year |
|
(1,521,680) |
4,460,247 |
|
| Changes
not effecting working capital |
|
|
|
| Amortization
of assets given on lease |
|
48,000 |
344,739 |
|
| Depreciation
on assets in own use |
|
92,928 |
350,775 |
|
| Provision
for diminution in the value of |
|
|
|
| marketable
securities |
|
6,839,343 |
1,032,789 |
|
| Dividend
income |
|
(839,218) |
(304,708) |
|
| Capital
gain/loss on sale of marketable securities |
|
336,466 |
-- |
|
| Capital
gain on sale of fixed assets |
|
(21,220) |
-- |
|
|
----------- |
----------- |
|
|
6,456,299 |
1,423,595 |
|
|
----------- |
----------- |
|
| Operating
profit before working Capital charges |
|
4,934,619 |
5,883,842 |
|
| (Increase)/decrease
in current assets |
|
|
|
| Morabaha/Musharika
transactions |
|
(35,702,809) |
3,608,641 |
|
| Marketable
securities |
|
515,231 |
-- |
|
| Advance,
deposit and other receivable |
|
3,576,691 |
(2,581,507) |
|
| Short
term placements |
|
32,700,000 |
(8,200,000) |
|
|
----------- |
----------- |
|
| Net
(increase)/decrease in current assets |
|
1,089,383 |
(7,172,866 |
|
| Tax paid |
|
328,171 |
256,528 |
|
|
----------- |
----------- |
|
| (Increase)/decrease
in current liabilities |
|
761,212 |
(6,916,338 |
|
| Creditor,
accured and other liabilities |
|
(2,577,367) |
(2,063,964 |
|
|
----------- |
----------- |
|
| Net
increase in working capital |
|
(1,816,155) |
(8,980,302) |
|
|
----------- |
----------- |
|
| Net
cash from operating activities |
|
3,118,464 |
(3,096,460 |
|
|
| B.
CASH FLOW FROM INVESTING ACTIVITIES |
|
| Capital
expenditures |
|
(630,900) |
(850) |
|
| Dividend
income |
|
839,218 |
304,708 |
|
| Capital
gain/loss on sale of marketable securities |
|
(336,466) |
-- |
|
| Capital
gain on sale of fixed assets |
|
21,220 |
-- |
|
|
----------- |
----------- |
|
| Net
cash used in investing activities |
|
(106,928) |
303,858 |
|
|
----------- |
----------- |
|
| CASH
FLOW FROM FINANCIAL ACTIVITIES |
|
| Security
deposit |
|
131,088 |
181,460 |
|
| Dividend
paid |
|
(3,554,375 |
(3,231,250) |
|
| Financial
charges |
|
(64,777) |
(120,128) |
|
| Short
term financing |
|
2,000,000 |
5,000,000 |
|
|
----------- |
----------- |
|
|
(1,488,064) |
1,830,082 |
|
|
----------- |
----------- |
|
| NET
INCREASE IN CASH & BANK BALANCE |
|
|
|
| (A + B + c) |
|
1,523,472 |
(962,520) |
|
|
| CASH
& BANK BALANCES AT THE |
|
| BEGINNING
OF THE YEAR/PERIOD |
|
1,291,520 |
2,254,040 |
|
|
| CASH
& BANK BALANCES AT THE |
|
----------- |
----------- |
|
| END
OF THE YEAR/PERIOD |
|
2,814,992 |
1,291,520 |
|
|
========== |
========== |
|
|
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
DIRECTOR |
|
|
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
|
|
Capital |
|
Reserves |
Total |
|
|
Issued, |
Statutory |
Unappropriated |
|
|
|
subscribed |
Reserve |
Profit |
|
|
|
----------------------------------Rupees------------------------------ |
|
|
| Balance
as at June 30, 1998 |
|
64,625,000 |
4,156,329 |
297,950 |
69,079,279 |
|
| Reserves
transfer |
|
|
(4,156,329) |
|
(4,156,329) |
|
| Net
Profit for the year |
|
|
4,460,247 |
4,460,247 |
|
| Profit
distribution in cash |
|
|
(3,554,375) |
(3,554,375) |
|
| Transfer
from profit and loss account |
|
892,049 |
(892,049) |
|
|
|
------------ |
------------ |
------------ |
------------ |
|
| Balance
as at June 30, 1999 |
|
64,625,000 |
892,049 |
311,773 |
65,828,822 |
|
|
|
|
| Net
loss for the year |
|
|
(1,521,680) |
(1,521,680) |
|
|
| Profit
distribution in cash |
|
|
-- |
|
-- |
|
| Transfer
from profit & loss account |
-- |
-- |
|
|
|
------------ |
------------ |
------------ |
------------ |
|
| Balance
as at June 30, 2000 |
|
64,625,000 |
892,049 |
(1,209,907) |
64,307,142 |
|
|
========== |
========== |
========== |
========== |
|
| In
accordance with the new Prudential Regulations for Modarabas Circular No.
5/2000 dated April 201 2000 issued |
|
| by
Registrar Modaraba, the Modaraba is required to transfer not less than 10% of
its after tax profits to statutory |
|
| reserve
until the reserve equals the paid-up capital. Thereafter, 5% of the after tax
profit are required to be |
|
| transferred
to the reserve. |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| First
Constellation Modaraba is a perpetual, multi-purpose and multi-dimensional
Modaraba registered |
|
| under
the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980
and the rules |
|
| framed
there under and is managed by Constellation Management Company (Private)
Limited, a |
|
| company
incorporated Pakistan. The Modaraba is listed on the Karachi Stock Exchange
(Guarantee) |
|
| Limited,
and is mainly engaged in the business of Leasing, Morabaha and allied
business activities |
|
| including
Securities services of non-interest bearing securities and other permissible
Islamic modes of |
|
| business. |
|
|
| 2.
SUMMERY OF SIGNIFICANT ACCOUNTING POLICIES' |
|
| 2.1
ACCOUNTING CONVENTION |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
FIXED ASSETS |
|
| Assets
leased out and amortization |
|
| The
Modaraba records of all leasing transaction as operating leases which is the
norm and |
|
| practice
of all Modaraba in Pakistan. This treatment is reflective of the standard
lease agreements |
|
| approved
for Modaraba by the Religious Board and are consistent with the principles of
Islamic |
|
| Sharia.
The concept of finance lease as envisaged by International Accounting
Standard 17 does |
|
| not
exist in Islamic Sharia. |
|
|
| Lease
Assets are stated at cost less accumulated amortization. Amortization is
charged to Income |
|
| applying
the straight line method whereby the cost of an asset less salvage value is
written off over |
|
| its
initial lease period. |
|
|
| Assets
in own use and depreciation |
|
| Assets
in own use are stated at c |
