| First Habib Bank Modaraba |
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| Annual
Report 2000 |
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| CONTENTS |
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| Board
of Directors |
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| Company
Information |
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| Chairman's
Review |
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| Auditors'
Report |
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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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| Business
Progress |
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| Pattern
of Certificate Holding |
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| ZAKIR
MAHMOOD |
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| KHALEEQ
KAYANI |
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| SOHAIL
MALIK |
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| NAEEM IQBAL |
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| MIAN
ABDUS SALAM |
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| COMPANY
INFORMATION |
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| BOARD
OF DIRECTORS |
ZAKIR MAHMOOD |
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|
Chairman |
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|
KHALEEQ KAYANI |
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|
Director |
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|
SOHAIL MALIK |
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Director |
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NAEEM IQBAL |
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Director |
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MIAN ABDUS SALAM |
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Chief Executive |
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| COMPANY
SECRETARY |
MUHAMMAD SAMIULLAH |
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| AUDITORS |
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M/s. FORD RHODES ROBSON
MORROW |
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|
Chartered Accountants |
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| BANKERS |
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HABIB BANK LIMITED |
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Corporate Branch, Karachi |
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| LEGAL
ADVISOR |
MUHAMMAD ARIF ZIA |
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|
Advocate |
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| REGISTERED
OFFICE |
18-Habib Bank Plaza, |
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I. I. Chundrigar Road,
Karachi-75650. |
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Phone # 2412294, 2410967 |
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2418000 Ext. 2257 &
2354 |
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Fax # 2411860 |
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| SHARES
REGISTRAR |
M/s. T.H.K. ASSOCIATES
(PVT) LIMITED |
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Ground Floor, Shaikh
Sultan Trust |
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Building # 2, Beaumont
Road, Karachi-75530 |
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Phone # 5689021 &
5686658 |
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Fax # 5685681 |
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| CHAIRMAN'S
REVIEW |
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| By
the Grace of Allah, your Modaraba has successfully completed its 9th year of
operations. On behalf |
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| of
the Board of Directors of Habib Bank Financial Services (Pvt.) Limited, the
Managers of Modaraba, |
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| I
feel immense pleasure in presenting to you the 9th Annual Report of First
Habib Bank Modaraba |
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| together
with audited accounts for the financial year ended 30th June, 2000. |
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| FINANCIAL
RESULTS |
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| Financial
results of your Modaraba for the year under review are summarized below:- |
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|
2000 |
1999 |
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| Total
Operating Income |
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|
273,211,303 |
229,205,062 |
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| Less:
Operating Exp. |
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|
162,434,005 |
148,656,278 |
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| Profit
before Taxation |
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|
110,777,298 |
80,548,784 |
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| Provision
for Taxation |
|
|
6,368,263 |
5,690,664 |
|
| Net
Profit for the year |
|
|
104,409,035 |
74,858,120 |
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| Unappropriated
Profit B/F |
|
|
559,956 |
234,260 |
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| Profit
available for distribution |
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|
104,968,991 |
75,092,380 |
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| APPROPRIATIONS |
|
| Transfer
to Statutory Reserve |
|
|
10,440,904 |
14,971,624 |
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| Proposed
Dividend @ 21.5% |
|
|
85,370,480 |
59,560,800 |
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|
|
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| Balance
Carried Forward |
|
|
9,157,607 |
559,956 |
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| The
company has shown a tremendous increase in the Net Profit from Rs. 74.858
million to Rs. 104.409 |
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| million
depicting an increase of Rs. 29.551 million i.e. 39.48% increase over the
preceding year. This |
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| significant
increase is due to the Company's Policy of writing leases only for those
entities who have |
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| strong
cash flows from existing operations, sound track record of profitability and
have enjoyed an |
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| excellent
reputation with their bankers and leasing companies in respect of the
repayment of their dues. |
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| DIVIDEND |
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| The
Board is pleased to announce a cash dividend of 21.5% to the Modaraba
Certificateholders for |
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| the
period ended 30th June 2000 subject to deduction of Zakat and withholding tax
at source, wherever |
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| applicable. |
|
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| SHARE
TRADING & TURNOVER |
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| Total
shares turnover during financial year ended 30th June 2000 was 3.5 million
shares. FHBM's |
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| highest
share price in the year under review was Rs. 9.95 and lowest Rs. 6.15.
Currently the share is |
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| being
traded around Rs. 9.25 per share. |
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| OPERATING
RESULTS |
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| The
operating income of FHBM increased from last year's figure of Rs. 229.205
million to Rs. 273.211 |
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| million
registering an increase of Rs. 44.006 million i.e. 19.20%. This income is
derived totally through |
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| Islamic
Modes of Financing. The net profit over the period has increased by Rs.
29.551 million i.e. |
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| 39.48%
from last year's figures of Rs. 74.858 million to Rs. 104.409 million. |
|
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| Our
leased assets at cost at Rs. 528.841 million at the end of the period under
review, recorded an |
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| increase
of Rs. 37.418 million i.e. 7.61% over last year figure of Rs. 491.423
million. |
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| FUTURE
PROSPECTS |
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| The
leasing activity in Pakistan started in mid-eighties with the establishment
of single company in 1985, |
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| the
leasing sector consists of 32 companies which amply reflects the growth
witnessed in leasing business. |
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| The
competition within the sector has also increased manifold with the companies
having no option but |
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| to
resort to efficient service and economical pricing. |
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| The
economic downturn that has been witnessed in recent past has led to huge
liquidity in the hands |
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| of
financial institutions. In such a scenario, quality clients are very hard to
find. Moreover with the excess |
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| liquidity,
all financial institutions resort to undercutting of rates of IRR with the
result that spreads shrink |
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| down
to bare minimum. |
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| The
company intends to continue its efforts to consolidate its position and tap
opportunities for sustained |
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| growth.
Further to ensure efficient and profitable utilization of the available
resources, the company |
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| will
continue maintaining a diversified portfolio of quality clients. |
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| The
present auditors M/s. Ford Rhodes Robson Morrow, Chartered Accountants are
due for retirement |
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| and
being eligible have offered themselves for re-appointment. |
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| The
Board has approved their re-appointment for the period July 2000 to June
2001. |
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| ACKNOWLEDGEMENTS |
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| The
Board welcomes Mr. Naeem Iqbal on the Board. |
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| The
Board also wishes to place on record its appreciation for the continued
support and guidance |
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| provided
by Securities & Exchange Commission of Pakistan, Registrar Modaraba
Companies, State |
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| Bank
of Pakistan, Leasing Association of Pakistan, Modaraba Association of
Pakistan, from time to time. |
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| At
the same time the Board appreciates the dedication and hard work put in by
the Management and |
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| all
staff members of FHBM & HBFSL and look forward to their continued loyalty
in the coming years |
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| Finally
the Board extends its gratitude and appreciation to the shareholders who have
remained |
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| committed
to FHBM. |
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On behalf of the Board |
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|
ZAKIR MAHMOOD |
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Chairman |
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| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
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| We
have audited the annexed Balance Sheet as at June 30, 2000, and the related
profit and loss |
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| account
and statement of changes in financial position together with the notes to the
accounts for the |
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| year
ended June 30, 2000 of FIRST HABIB BANK MODARABA which are modaraba company's |
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| (Habib
Bank Financial Services (Pvt.) Limited) representation and we state that we
have obtained all |
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| 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 |
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| of
First Habib Bank Modaraba as required by the Modaraba Companies and Modaraba |
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| (Floatation
and Control) Ordinance, 1980, and Modaraba Companies and Modaraba Rules, |
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| 1981; |
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|
|
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| (b)
In our opinion, the balance sheet and the profit and loss account have been
drawn up in conformity |
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| with
the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980
and |
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| Modaraba
Companies and Modaraba Rules, 1981; and |
|
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| (c)
In our opinion and to the best of our information and according to the
explanations given to us; |
|
|
| (i)
the balance sheet and related profit and loss account and statement of
changes in financial |
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| position,
which are in agreement with the books of account, exhibit respectively a true
and |
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| fair
view of the state of the Modaraba's affairs as at June 30, 2000 and the
profit and |
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| the
changes in the financial position for the year ended on that date; |
|
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| (ii)
Zakat deductible at source under the Zakat and Ushr Ordinance, 1980, has been
deducted |
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| by
the Modaraba and deposited in the central zakat fund established under
section 7 of |
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| that
Ordinance; and |
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|
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| (iii)
the business conducted, investments made and expenditure incurred by the
Modaraba are |
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| in
accordance with the objects, terms and conditions of the Modaraba. |
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| Karachi: |
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|
Ford, Rhodes, Robson Morrow |
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| November
20, 2000 |
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Chartered Accountants |
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| BALANCE
SHEET AS AT JUNE 30, 2000 |
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Note |
2000 |
1999 |
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|
Rupees |
Rupees |
|
| TANGIBLE
FIXED ASSETS |
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| Assets
given on lease |
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| - at cost less accumulated
amortization |
3.1 |
528,450,062 |
490,921,769 |
|
| Assets
in own use |
|
| -
at cost less accumulated depreciation |
3.2 |
390,597 |
501,088 |
|
|
|
|
------------------ |
------------------ |
|
|
|
528,840,659 |
491,422,857 |
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| LONG
TERM DEPOSIT |
|
4 |
600,000 |
600,000 |
|
| LONG
TERM INVESTMENTS |
|
5 |
14,696,920 |
10,197,520 |
|
| Quoted
shares, market value Rs. 12,262,727 |
|
|
| (1999:
Rs. 8,388,342) |
|
|
|
|
|
|
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| CURRENT
ASSETS |
|
|
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| Short
term investments |
|
6 |
|
|
|
201,824,291 |
9,925,000 |
|
| Morabaha
finances |
|
7 |
2,000,000 |
6,355,242 |
|
| Lease
rentals receivable |
|
8 |
862,632,331 |
64,402,501 |
|
| Prepayments
and other receivables |
9 |
4,582,974 |
5,112,789 |
|
| Cash
and bank balances |
|
10 |
36,384,297 |
26,810,626 |
|
|
|
|
------------------ |
------------------ |
|
|
|
149,412,933 |
112,606,158 |
|
|
|
------------------ |
------------------ |
|
|
|
693,550,512 |
614,826,535 |
|
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|
========== |
========== |
|
|
| CAPITAL
AND RESERVES |
|
|
|
|
| Certificate
capital |
|
| Authorised |
|
|
|
| 50,000,000
(1999: 50,000,000) Modaraba |
|
|
| Certificates
of Rs. 10 each |
|
500,000,000 |
500,000,000 |
|
|
|
========== |
========== |
|
|
| Issued,
subscribed and paid-up |
|
11 |
397,072,000 |
397,072,000 |
|
|
|
|
|
|
|
|
| Reserves |
|
12 |
98,705,037 |
79,666,482 |
|
|
|
|
|
------------------ |
------------------ |
|
|
| Certificate
holders' equity |
|
|
495,777,037 |
476,738,482 |
|
|
|
|
|
|
|
|
| DEFERRED
LIABILITY |
|
|
|
|
|
| Security
deposits on lease contracts |
13 |
59,087,497 |
52,002,697 |
|
|
|
|
|
|
|
|
| CURRENT
LIABILITIES |
|
| Current
portion of security deposits on lease contracts |
13,248,400 |
50,100,001 |
|
| Creditor,
accrued and other liabilities |
14 |
213,134,111 |
9,042,937 |
|
|
| Provision
for taxation- net |
|
|
13,060,623 |
6,829,080 |
|
|
| Unclaimed
profit distribution |
|
|
5,693,064 |
5,642,539 |
|
|
| Proposed
profit distribution |
|
|
85,370,480 |
59,560,800 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
138,685,978 |
86,085,356 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
693,550,512 |
614,826,535 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
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| The
annexed notes form an integral part of these accounts. |
|
|
|
|
FIRST HABIB BANK MODARABA |
|
|
|
Managed by |
|
|
|
HABIB BANK FINANCIAL SERVICES (PRIVATE) LIMITED |
|
|
|
Mian Abdus Salam |
|
Naeem Iqbal |
|
Sohail Malik |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
Note |
2000 |
1999 |
|
|
|
|
|
Rupees |
Rupees |
|
| INCOME |
|
| Lease rentals |
|
|
260,462,444 |
204,574,605 |
|
| Return
on Morabaha transactions |
|
|
493,170 |
12,861,550 |
|
| Dividend
income |
|
|
1,527,739 |
1,943,415 |
|
| Return
on saving accounts |
|
|
1,178,789 |
2,640,244 |
|
| Gain
on sale of investments- net |
|
|
9,031,486 |
7,113,782 |
|
| Other income |
|
15 |
517,675 |
71,466 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
273,211,303 |
229,205,062 |
|
|
|
|
|
|
| EXPENDITURE |
|
| Amortization
of leased assets |
|
3.1 |
139,907,725 |
121,147,691 |
|
| Administrative
and operating expenses |
16 |
5,531,604 |
4,666,892 |
|
| Modaraba
Company's management fee |
17 |
12,308,589 |
6,041,159 |
|
|
|
|
------------------ |
------------------ |
|
|
157747918 |
131,855,742 |
|
|
------------------ |
------------------ |
|
|
115,463,385 |
97,349,320 |
|
| Provision
for diminution in the value |
|
| of
short term investment- net |
|
1,933,760 |
770,906 |
|
| Provision
for doubtful lease rentals |
|
2,583,433 |
12,013,463 |
|
| Provision
for potential morabaha losses |
|
3,810,942 |
3,172,904 |
|
| Provision
against doubtful lease rentals written back |
(6,994,027) |
-- |
|
|
------------------ |
------------------ |
|
|
|
|
1,334,108 |
15,957,273 |
|
|
|
|
------------------ |
------------------ |
|
| OPERATING
PROFIT |
|
|
114,129,277 |
81,392,047 |
|
| Financial
charges |
|
18 |
3,351,979 |
843,263 |
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
BEFORE TAXATION |
|
|
110,777,298 |
80,548,784 |
|
|
| PROVISION
FOR TAXATION |
|
| Current |
|
19 |
-- |
-- |
|
| Prior |
|
|
6,368,263 |
5,690,664 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
6,368,263 |
5,690,664 |
|
|
|
|
------------------ |
------------------ |
|
| NET
PROFIT FOR THE YEAR |
|
|
104,409,035 |
74,858,120 |
|
| UNAPPROPRIATED
PROFIT BROUGHT FORWARD |
559,956 |
234,260 |
|
|
|
|
|
------------------ |
------------------ |
|
| PROFIT
AVAILABLE FOR APPROPRIATION |
|
104,968,991 |
75,092,380 |
|
|
|
|
|
|
|
| APPROPRIATIONS |
|
| Transfer
to statutory reserve |
|
| @
10% (1999: 20%) on profit after tax |
|
10,440,904 |
14,971,624 |
|
| Proposed
profit distribution @ 21.5% (1999: 15%) |
|
85,370,480 |
59,560,800 |
|
|
|
|
------------------ |
------------------ |
|
|
95,811,384 |
74,532,424 |
|
|
------------------ |
------------------ |
|
| UNAPPROPRIATED
PROFIT C/F TO REVENUE RESERVE |
9,157,607 |
559,956 |
|
|
|
========== |
========== |
|
| BASIC
EARNINGS PER CERTIFICATE |
20 |
2.63 |
1.89 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form integral part of these accounts. |
|
|
|
|
FIRST HABIB BANK MODARABA |
|
|
|
Managed by |
|
|
|
HABIB BANK FINANCIAL SERVICES (PRIVATE) LIMITED |
|
|
|
Mian Abdus Salam |
|
Naeem Iqbal |
|
Sohail Malik |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION (CASH FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Net
profit before taxation |
|
110,777,298 |
80,548,784 |
|
| Adjustment
for non cash and other items |
|
|
|
| Amortization
of leased assets |
|
|
139,907,725 |
121,147,691 |
|
| Provision
against morabaha finance |
|
3,810,942 |
3,172,904 |
|
|
| Provision
against investments |
|
|
1,933,760 |
770,906 |
|
|
| Depreciation
on assets in own use |
|
224,991 |
233,543 |
|
|
| Amortization
of deferred costs . |
|
|
-- |
31,415 |
|
|
| Dividend
income |
|
|
(1,527,739) |
(1,943,415) |
|
|
| Financial
charges |
|
|
147,701,658 |
843,263 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
147,701,658 |
124,256,307 |
|
|
|
------------------ |
------------------ |
|
|
| Profit
before working capital changes |
|
258,478,956 |
204,805,091 |
|
|
|
|
|
|
| Increase
in current assets |
|
(21,497,732) |
(22,346,817) |
|
| Increase
in creditors, accrued and other liabilities |
|
12,387,808 |
7,063,380 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
generated from operations |
|
249,369,032 |
189,521,654 |
|
| Financial
charges paid |
|
(3,469,313) |
(335,020) |
|
| Taxes paid |
|
|
(136,720) |
(1,261,234) |
|
| Customer's
security deposits-net |
|
16,588,200 |
14,622,633 |
|
| Long
term deposit |
|
-- |
(600,000) |
|
|
|
|
------------------ |
------------------ |
|
| NET
CASH INFLOW FROM OPERATING ACTIVITIES |
262,351,199 |
201,948,033 |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Purchase
of - Leased assets |
|
(178,701,018) |
(237,257,802) |
|
|
|
| - Own assets |
|
|
(114,500) |
(189,488) |
|
|
|
| Investment
in shares/securities- net |
|
(16,690,589) |
(9,813,686) |
|
|
|
| Morabaha
finance |
|
544,300 |
92,776,076 |
|
|
|
| Dividend
received |
|
1,694,554 |
1,776,600 |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
| NET
CASH USED IN INVESTING ACTIVITIES |
|
(193,267,253) |
(152,708,300) |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
69,083,946 |
49,239,733 |
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
| Profit paid |
|
|
(59,510,275) |
(56,612,789) |
|
|
|
|
|
|
------------------ |
------------------ |
|
|
|
| NET
INCREASE / (DECREASE) IN CASH |
|
|
|
|
|
| AND
CASH EQUIVALENTS |
|
9,573,671 |
(7,373,056) |
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
|
|
|
|
| AT
BEGINNING OF THE YEAR |
|
10 |
26,810,626 |
34,183,682 |
|
|
|
| CASH
AND CASH EQUIVALENTS |
|
------------------ |
------------------ |
|
|
|
| AT
END OF THE YEAR |
|
10 |
36,384,297 |
26,810,626 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
FIRST HABIB BANK MODARABA |
|
|
|
Managed by |
|
|
|
HABIB BANK FINANCIAL SERVICES (PRIVATE) LIMITED |
|
|
|
Mian Abdus Salam |
|
Naeem Iqbal |
|
Sohail Malik |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
| 1.
MODARABA AND ITS OPERATIONS |
|
| First
Habib Bank Modaraba is a perpetual, multi-purpose and multi-dimensional
Modaraba formed under |
|
| the
Modaraba Companies and Modarabas (Floatation and Control) Ordinance, 1980,
and the rules |
|
| framed
thereunder and is managed by Habib Bank Financial Services (Private) Limited,
a wholly owned |
|
| subsidiary
of Habib Bank Limited. The Modaraba is currently engaged in various modes of
Islamic funding |
|
| and
other related business. It is listed on the Karachi, Lahore and Islamabad
Stock Exchanges. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
| (a)
Overall valuation policy |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
|
|
| (b) Fixed assets |
|
|
|
| (i)
Assets given on lease and amortization |
|
|
| All
lease agreements are accounted for as operating leases. |
|
|
| Leased
assets are stated at net cost to the modaraba less accumulated amortization. |
|
| Amortization
is charged to income applying the annuity method whereby the amortizable |
|
| value
of assets is amortized over the lease period. Amortization on additions and
disposals |
|
| during
the year is charged proportionately from the date of commencement and to the
date |
|
| of
maturity respectively. |
|
|
| Profit
or loss on disposal of assets is included in income currently. |
|
|
|
|
|
| (ii)
Assets in own use and depreciation |
|
|
|
| These
are stated at cost less accumulated depreciation. Depreciation is charged to
income |
|
| applying
the annuity method whereby the cost of an asset is written-off over its
estimated |
|
| useful
life. Full year's depreciation is charged on additions during the year
whereas no |
|
| depreciation
is charged in the year of disposal (refer note 3.2.1). |
|
|
|
| Maintenance
and normal expenses are charged to income as and when incurred, profit or |
|
| loss
on disposal of assets is included in income currently. |
|
|
| (c) Investments |
|
