| First Fidelity Leasing Modaraba |
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| Annual
Report 2000 |
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| CONTENTS |
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| Company
Information |
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| Notice
of Meeting |
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| Operational
Highlights |
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| Directors'
Report |
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| Auditors'
Report to the Certificate Holders |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position |
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| Notes
to the Accounts |
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| Pattern
of Certificate Holdings |
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| COMPANY
INFORMATION |
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| Board
of Directors |
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| Chairman |
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Mr. Javaid B. Sheikh |
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| Chief Executive |
|
Mr. Wasim-UI-Haq Osmani |
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| Directors |
|
Mr. Masood Akbar |
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|
Mr. Arshad I. Khan |
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| Corporate
Secretary |
Mr. Imran Hameed |
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| Auditors |
|
Riaz Ahmad & Company |
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Chartered Accountants |
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| Legal Advisor |
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Cornelius, Lane &
Mufti |
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Advocates &
Solicitors |
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| Bankers |
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Muslim Commercial Bank
Limited |
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Habib Bank A.G. Zurich |
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Union Bank Limited |
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Gulf Commercial Bank
Limited |
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| Modaraba
Company |
Fidelity Capital
Management (Private) |
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|
Limited (wholly owned
subsidiary of |
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|
Fidelity Investment Bank
Limited) |
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| Principal
Place of Business |
97-A, Aziz Avenue, Canal
Bank, |
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Lahore-54660 |
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| Registrars |
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Hameed Majeed Associates |
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H.M. House, 7-Bank
Square, |
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The Mall, Lahore. |
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| NOTICE
OF ANNUAL REVIEW MEETING |
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| Notice
is hereby given that an Annual Review Meeting (ARM) of the
certificate-holders of First Fidelity |
|
| Leasing
Modaraba will be held on Saturday, December 30, 2000 at 12:30 p.m. at 97-A,
Aziz Avenue, |
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| Canal
Bank, Lahore to: |
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| 1.
Review the performance of the Modaraba during the year ended June 30, 2000. |
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| 2.
Transact any other business with the permission of the Chairman. |
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By Order of the Board |
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| Lahore |
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|
IMRAN HAMEED |
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| Dated:
December 09,2000 |
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Company Secretary |
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| NOTES: |
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| 1.
The certificate transfer Books of the Modaraba wile be closed from December
20, 2000 to |
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| December
30, 2000 (both days inclusive). All certificate holders whose names are
entered in |
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| the
Register of Certificate holders on December 19, 2000 shall be entitled to
attend the meeting. |
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|
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| 2.
Any Individual entitled to attend the Meeting must bring his/her National
Identity Card with him/ |
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| her
to prove his/her identity. Representatives of corporate members should bring
the usual |
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| documents
required for such purpose. |
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| DIRECTORS'
REPORT |
|
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| The
Directors are pleased to present the 9th Annual Report of the Modaraba
together with the |
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| audited
accounts and the auditors' report for the year ended June 30, 2000. |
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| BUSINESS
ENVIRONMENT |
|
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| The
economic scenario has witnessed mixed reactions during the year 1999-2000.
The political |
|
| government
was trying to win back international community-multilateral aid agencies
support, which |
|
| was
curtailed as a result of detonation of atomic bomb by Pakistan, that in
October 1999 it was |
|
| taken
over by the military. The reasons for military take-over were different than
economic |
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| performance.
Thus economic policies were not drastically altered however military
government |
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| brought
in people of good international repute so as to achieve the same objective of
winning back |
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| international
support. |
|
|
| The
present government is lucky that it did achieve some international support as
it was able to get |
|
| restructuring
of Pakistan sovereign bonds and other debts. GDP growth rate crossed 4 % in
the |
|
| current
financial year as against 3.1% in the last financial year. The windfall in
GDP growth came |
|
| mainly
through bumper cotton and wheat crops. The textile sector, backbone of
Pakistan economy, |
|
| therefore
has witnessed a turn around after a long time. Apart from textile other
industrial growth |
|
| remained
hampered primarily because of slow economy, fuelled by rising imports as a
result of |
|
| lowering
of duties without a corresponding decrease in duties on import of raw
materials. |
|
|
| The
government was able to take certain difficult steps which a political
government could not take |
|
| like
Survey of assets and Application of GST. The application of GST and survey of
assets though |
|
| tend
to hamper economic growth, can be termed as first step towards documentation
of the economy. |
|
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| The
change of government was received positively by stock market, as the
barometer of the |
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| economy,
the stock market index, reflected an overall improvement. It was obviously
because of |
|
| the
economic agenda of the current regime and their resolve to stick to long term
policies. The |
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| index
at one point in time in April crossed 2000 points mark. However as bullish
rally was not |
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| sustainable
index closed at 1521 on June 30, 2000. |
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| COMPANY'S
PERFORMANCE |
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| Despite
subdued business environment, the Modaraba during the year earned a profit
after taxation |
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| of
Rs 26.20 million as compared to Rs 25.25 million earned in the corresponding
period last year. |
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| The
leased assets have increased from Rs 133.53 million to Rs 167.84 million
registering a growth |
|
| of
25.70% over last year. Adequate provisions have been made in the accounts
against doubtful |
|
| lease
rentals which stand at Rs 20.34 million. Similarly adequate provisions have
been made |
|
| against
capital market portfolio which stand at Rs 5.77 million. The provision is
more than enough |
|
| to
absorb any effects of permanent diminution in the value of investments. |
|
|
| We
would like to point out that SBP under government policies was instrumental
in bringing down |
|
| interest
rates in the country. Such lowering of rates has put pressure on modarabas as
they have |
|
| not
been able to reduce profit rates to the same level, commercial banks are able
to do because of |
|
| their
low cost of funds. As such this has made morabaha & leasing by modarabas
a bit difficult. Still |
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| we
were able to operate in our niche market with certain reduction in the profit
rates. Overall the |
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| Modaraba's
performance during the year in the present economic scenario was
satisfactory. |
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|
| FUTURE
OUTLOOK |
|
| The
government has presented a three year development plan for 2000-2003 with a
total outlay of |
|
| Rs
700 billion aimed at rapid revival and acceleration of economic growth after
three years of mis- |
|
| management
and soaring level of foreign as well as domestic debt. GDP growth target is
fixed at |
|
| 6%.
Export growth is projected at 13.8%, import is anticipated to increase by 5%
only and current |
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| account
deficit is estimated to be 0.5% of GDP. Foreign exchange reserves are
expected to be |
|
| around
US $ 3 billion equivalent to 12 weeks import. Though the targets are
ambitious and difficult, |
|
| these
can be achieved through astute economic policies which should not be changed
in the |
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| midway
to render these ineffective. |
|
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| The
Modaraba focus will remain on small borrowers to take benefit of low
percentage of default by |
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| these
borrowers. The Modaraba experience in this category is very good and we
intend to pursue |
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| this
more aggressively in the year 2001. In the case of one large stuck-up loan of
modaraba, under |
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| the
direction of NAB, the borrower has been allowed a time period upto February
2001 for sale of |
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| its
surplus land and make repayment to its lenders. The lease has been adequately
provided for, |
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| any
amounts recovered will be available for reinvestment to earn extra profit and
further improve |
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| financial
health of the Modaraba. Given the improvement in overall economy as envisaged
by the |
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| government,
we foresee a good future for the Modaraba. |
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| APPROPRIATION |
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| The
Board has made the following appropriations: |
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|
|
|
Rupees |
|
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| Net
profit after taxation for the year |
|
26,205,928 |
|
| Un-appropriated
profit brought forward |
|
425,102 |
|
|
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|
------------------ |
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| Profit
available for appropriation |
|
26,631,030 |
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|
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|
------------------ |
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| Transfer
to statutory reserve |
|
2,620,593 |
|
| Transfer
to Final Dividend payable account Rs 1.10 per certificate |
22,696,739 |
|
|
|
|
------------------ |
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|
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|
25,317,332 |
|
|
|
|
------------------ |
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| Un-appropriated
profit carried forward |
|
1,313,698 |
|
|
|
|
========== |
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| Earning
per certificate |
|
Rs 1.27 |
|
|
| DECLARATION
OF DIVIDEND |
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| The
Directors are pleased to announce a final dividend of 11% i.e. Rs 1.10 per
certificate for the |
|
| year
ended June 30, 2000. The Certificate Transfer Books of the Modaraba will
remain closed from |
|
| December
20, 2000 to December 30, 2000 (both days inclusive) for determination of
dividend |
|
| entitlement. |
|
|
| AUDITORS |
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| The
present auditors Messrs. Riaz Ahmad & Co., Chartered Accountants, being
due for retirement. |
|
| have
offered themselves for re-appointment for the year ending June 30, 2001.
Subject to approval |
|
| by
the Registrar of Modaraba Companies & Modarabas, their appointment has
been confirmed by |
|
| the Board. |
|
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| CERTIFICATE
HOLDING PATTERN |
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| A
statement reflecting the pattern of certificate holding is attached to the
Annual Report. |
|
|
| ACKNOWLEDGEMENT |
|
| In
the end, I conclude by reaffirming Management's commitment to a prudent
approach based on |
|
| high
standards of professional ethics and moral integrity with a note of thanks to
all the staff members |
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| of
the Modaraba for their commitment and dedication. On behalf of the Board of
Directors, I wish to |
|
| thank
Securities and Exchange Commission of Pakistan for their guidance and
support, and to our |
|
| valuable
clients for reposing trust and confidence in your Modaraba. |
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|
For and on behalf of the |
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|
|
Board of Directors |
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| Lahore |
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|
JAVAID B. SHEIKH |
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| November
28, 2000 |
|
Chairman |
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|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
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| 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 FIDELITY LEASING
MODARABA |
|
| which
are modaraba company's (Fidelity Capital 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 Fidelity Leasing Modaraba as required by the Modaraba Companies and
Modaraba |
|
| (Floatation
and Control) Ordinance, 1980, and Modaraba Companies and Modaraba Rules, |
|
| 1981; and |
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|
|
|
|
|
| (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
de- |
|
| ducted
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. |
|
|
| LAHORE |
|
|
RIAZ AHMAD & COMPANY |
|
| Dated:
December 01, 2000 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| EQUITY
AND LIABILITIES |
|
|
|
| CAPITAL
AND RESERVES |
|
|
|
| Authorized
capital |
|
| 30,000,000
Modaraba Certificates of |
|
| Rupees 10 each |
|
|
300,000,000 |
300,000,000 |
|
|
|
|
========== |
========== |
|
|
|
|
| Issued,
subscribed and paid up capital |
3 |
206,333,990 |
206,333,990 |
|
| Reserves
and surplus |
|
|
|
| Capital reserve |
|
4 |
25,365,584 |
22,744,991 |
|
| Revenue
reserve |
|
|
6,313,698 |
5,425,102 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
238,013,272 |
234,504,083 |
|
|
|
|
| NON-CURRENT
LIABILITIES |
|
|
|
| Finance
under morabaha arrangement |
5 |
30,464,222 |
17,062,089 |
|
| Long
term deposits |
|
6 |
22,542,627 |
12,106,719 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
53,006,849 |
29,168,808 |
|
| CURRENT
LIABILITIES |
|
|
|
| Current
portion of long term finance and deposits |
7 |
8,406,461 |
5,746,375 |
|
| Finance
under musharika arrangement |
8 |
31,700,000 |
-- |
|
| Accrued
and other liabilities |
|
9 |
7,918,072 |
2,771,293 |
|
| Dividend
payable |
|
|
22,696,739 |
20,633,399 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
70,721,272 |
29,151,067 |
|
| CONTINGENCIES
AND COMMITMENTS |
|
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
361,741,393 |
292,823,958 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
JAVAID B. SHEIKH |
|
|
WASIM-UL-HAQ OSMANI |
|
|
Chairman |
|
|
Chief Executive |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
|
| ASSETS |
|
|
|
|
|
| NON-CURRENT
ASSETS |
|
|
|
| Tangible
fixed assets |
|
10 |
169,556,700 |
134,031,365 |
|
| Investments |
|
11 |
41,825,867 |
35,925,297 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
211,382,567 |
169,956,662 |
|
|
|
| CURRENT
ASSETS |
|
|
|
| Finances
under morabaha arrangements |
12 |
68,500,000 |
36,618,009 |
|
| Advances,
deposits, prepayments and |
|
|
| other
receivables |
|
13 |
53,961,581 |
27,724,427 |
|
| Cash
and bank balances |
|
14 |
27,897,245 |
58,524,860 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
150,358,826 |
122,867,296 |
|
|
|
|
------------------ |
------------------ |
|
|
361,741,393 |
292,823,958 |
|
|
|
========== |
========== |
|
|
|
|
ARSHAD I. KHAN |
|
|
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
|
2000 |
1999 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
| REVENUES |
|
| Lease rentals |
|
|
67,225,009 |
46,960,444 |
|
| Profit
on morabaha finances |
|
|
13,487,731 |
7,442,404 |
|
| Other income |
|
15 |
5,903,112 |
11,537,202 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
86,615,852 |
65,940,050 |
|
|
|
|
| OPERATING
COST |
|
|
|
| Depreciation
on assets leased out |
|
10.1 |
41,688,758 |
30,714,299 |
|
| Administrative
and general expenses |
16 |
5,814,272 |
4,803,029 |
|
| Financial
and other charges |
|
17 |
10,049,620 |
3,632,297 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
57,552,650 |
39,149,625 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
29,063,202 |
26,790,425 |
|
| MODARABA
COMPANY'S MANAGEMENT FEE |
|
2,642,109 |
2,435,493 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
|
26,421,093 |
24,354,932 |
|
| PROVISION
FOR TAXATION |
|
18 |
215,165 |
(891,640) |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AFTER TAXATION |
|
|
26,205,928 |
25,246,572 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
425,102 |
861,243 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
26,631,030 |
26,107,815 |
|
|
|
| APPROPRIATIONS |
|
| Transferred
to statutory reserve |
|
|
2,620,593 |
5,049,314 |
|
| Final
dividend Rs.1.10 per certificate |
|
| (1999:
Rs. 1 per certificate) |
|
|
22,696,739 |
20,633,399 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
25,317,332 |
25,682,713 |
|
|
|
|
------------------ |
------------------ |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
1,313,698 |
425,102 |
|
|
|
|
========== |
========== |
|
| EARNING
PER CERTIFICATE |
|
20 |
1.27 |
1.22 |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
JAVAID B. SHEIKH |
|
WASIM-UL-HAQ OSMANI |
|
ARSHAD I. KHAN |
|
|
Chairman |
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
|
|
(17,452,672) |
8,286,744 |
|
| Lease rentals |
|
|
49,100,089 |
42,592,423 |
|
| Profit
paid on morabaha finances |
|
|
(8,066,831) |
(3,073,932) |
|
| Profit
received on morabaha finances |
|
12,518,423 |
7,462,564 |
|
| Income tax paid |
|
|
(24,734) |
(14,146) |
|
|
|
|
------------------ |
------------------ |
|
| NET
CASH FLOWS FROM OPERATING ACTIVITIES |
36,074,275 |
55,253,653 |
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Dividend
received |
|
|
2,789,312 |
1,073,967 |
|
| Sale
proceeds from sale of shares/certificates |
|
1,615,734 |
390 |
|
| Lessees
security deposits |
|
|
8,590,423 |
2,018,666 |
|
| Proceeds
from sale of leased assets |
|
4,242,255 |
2,738,353 |
|
| Proceeds
from sale of own assets |
|
|
-- |
1,000 |
|
| Fixed
assets acquired - Own use |
|
|
(1,640,500) |
(472,800) |
|
| Fixed
assets acquired - Leased out |
|
(80,238,668) |
61,761,960) |
|
|
|
|
------------------ |
------------------ |
|
| NET
CASH USED IN INVESTING ACTIVITIES |
|
(64,641,444) |
56,402,384) |
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Finances
under morabaha arrangement - Obtained |
|
24,286,768 |
24,692,000 |
|
| Finances
under morabaha arrangement - Repaid |
|
(6,379,064) |
(4,062,836) |
|
| Dividend paid |
|
|
(19,968,150) |
(22,581,470) |
|
|
|
|
------------------ |
------------------ |
|
| NET
CASH USED IN FINANCING ACTIVITIES |
|
(2,060,446) |
(1,952,306) |
|
|
|
| NET
(DECREASE) IN CASH AND |
|
| CASH
EQUIVALENT |
|
|
(30,627,615) |
(3,101,037) |
|
| CASH
AND CASH EQUIVALENT AT THE |
|
|
|
| BEGINNING
OF THE YEAR |
|
|
58,524,860 |
61,625,897 |
|
|
|
|
|
|
| CASH
AND CASH EQUIVALENT AT |
|
------------------ |
------------------ |
|
| THE
END OF THE YEAR |
|
|
27,897,245 |
58,524,860 |
|
|
========== |
========== |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
|
| CASH
GENERATED FROM OPERATIONS |
|
| Profit
before taxation |
|
|
26,421,093 |
24,354,932 |
|
|
|
|
| Adjustment
for non-cash charges and other items: |
|
|
| Provision
for diminution in the value of investments, |
|
| doubtful
lease rentals and other receivables |
|
(6,434,267) |
251,492 |
|
| Depreciation |
|
|
42,111,580 |
30,836,039 |
|
| Profit
paid on morabaha finances |
|
|
8,873,155 |
3,265,649 |
|
| Dividend
income |
|
|
(2,789,312) |
(1,073,967) |
|
| Profit
on morabaha finances given |
|
(13,487,731) |
(7,442,404) |
|
| Loss
on sale of fixed assets |
|
|
-- |
6,117 |
|
| (Gain)
on sale of shares/certificates |
|
-- |
(390) |
|
| Lease rentals |
|
|
(67,225,009) |
(46,960,444) |
|
|
|
|
------------------ |
------------------ |
|
| Working
capital changes |
|
|
(4,922,181) |
5,049,720 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(17,452,672) |
8,286,744 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| WORKING
CAPITAL CHANGES |
|
|
|
| (Increase)/decrease
in operating assets |
|
|
|
| Finances
under morabaha arrangements |
|
(31,881,991) |
5,600,000 |
|
| Advances,
deposits, prepayments and other receivables |
(8,415,396) |
(22,850) |
|
|
------------------ |
------------------ |
|
|
|
(40,297,387) |
5,577,150 |
|
| Increase/(decrease)
in operating liabilities |
|
|
|
| Musharika
finances |
|
|
31,700,000 |
-- |
|
| Accrued
and other liabilities |
|
|
3,675,206 |
(527,430) |
|
|
|
------------------ |
------------------ |
|
|
|
35,375,206 |
(527,430) |
|
|
|
------------------ |
------------------ |
|
|
|
(4,922,181) |
5,049,720 |
|
|
========== |
========== |
|
|
|
JAVAID B. SHEIKH |
|
WASIM-UL-HAQ OSMANI |
|
ARSHAD I. KHAN |
|
|
Chairman |
|
Chief Executive |
|
Director |
|
|
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