| Financial Link Modaraba |
|
|
|
|
|
|
|
|
|
|
| Annual
Report 2000 |
|
|
|
| CONTENTS |
|
|
|
| Corporate
Information |
|
| Directors' Review |
|
|
| Pattern
of Holding of Certificates |
|
| Auditors' Report |
|
|
| Balance Sheet |
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Financial Statements |
|
|
|
| CORPORATE
INFORMATION |
|
|
| MODARABA
COMPANY: |
Financial Link Limited |
|
|
| BOARD OF DIRECTORS : |
Shahid Hameed |
Chairman |
Nominee Director Pak.
Libya |
|
|
Holding Co. (Pvt) Ltd. |
|
|
|
Syed Ghazanfar Ali |
|
Nominee Director Pak
Libya |
|
|
Holding Co. (Pvt) Ltd. |
|
|
|
Tasnimul Haq Farooqui |
|
Nominee Director Pakistan |
|
|
Kuwait Investment |
|
|
Co. (Pvt) Ltd. |
|
|
|
Noman A. Qureshi |
|
Nominee Director Saudi
Pak |
|
|
Industrial &
Agricultural |
|
|
Investment Co. (Pvt) |
|
|
Ltd. |
|
|
|
Sajid Ali Abbasi |
|
Nominee Director The Bank
of |
|
|
Khyber |
|
|
|
Shahid Abdulla |
|
Nominee Director
International |
|
|
Brands (Pvt) Ltd. |
|
|
|
Farooq Hashmi |
|
Proposed Director |
|
|
| COMPANY
SECRETARY : |
Farooq Hashmi |
|
|
|
| AUDITORS: |
|
Khalid Majid Husain
Rahman, Chartered Accountants. |
|
|
|
| Bankers: |
|
Muslim Commercial Bank
Limited |
|
|
|
| REGISTRAR: |
|
Khalid Majid Husain
Rahman |
|
|
16-K, Block-6,
P.E.C.H.S., |
|
|
Off Shahra-e-Faisal,
Karachi. |
|
|
| REGISTERED
OFFICE : |
1st Floor, Modern Motors
House, |
|
|
Beaumont Road, Karachi. |
|
|
| POSTAL
ADDRESS: |
1st Floor, N.I.C.
Building, Abbasi Shaheed Road, |
|
|
Off Shahra-e-Faisal,
Karachi. |
|
|
|
|
| DIRECTORS'
REVIEW |
|
|
| The
Board of Directors of Financial Link Limited take pleasure in presenting the
audited accounts of the Financial |
|
| Link
Modaraba for the year ended June 30, 2000. |
|
|
| FINANCIAL
HIGHLIGHTS |
|
|
Rupees in thousand |
|
| Operating
Income/(Loss) |
|
5,617 |
|
| Less · Expenses |
|
1,232 |
|
| Profit on Musharika
obligations |
|
-- |
|
| Loss
on diminution in value of investment |
|
-- |
|
| Financial
Charges on lease assets |
|
2 |
|
|
------------ |
|
|
1,234 |
|
|
------------ |
|
| Operating
(loss) / Profit for the period |
|
4,383 |
|
| Other income |
|
58 |
|
|
------------ |
|
|
4,441 |
|
| Transfer
for Statutory Reserve |
|
444 |
|
|
------------ |
|
|
3,997 |
|
| Unappropriated
Loss brought forward |
|
(100,767) |
|
|
------------ |
|
| Profit
(loss) carried forward |
|
(96,770) |
|
|
========== |
|
| The
accumulated loss of the company for the period under review has been further
minimized as all the outstanding |
|
| liabilities
have been cleared by the management of Modaraba. |
|
|
| PROFIT
DISTRIBUTION |
|
| The
Board of Directors of Madaraba Company have not recommended any dividend for
the year ended June 30, |
|
| 2000.
Accordingly, no management fee has been given to the company for the period
under review. |
|
|
| FUTURE
OUTLOOK |
|
| All
the investments, pledged with various financial institutions, have been
already settled. Presently, FLM is actively |
|
| pursuing
a "Settlement Plan" according to which the management of the
Modaraba may be "taken-over" by one of |
|
| sponsoring
the institutions. After finalization of "Management take-over" the
modaraba is envisaged to be re activate- |
|
| ed
by way of injection of fresh capital, new sponsor ensuring its revival and
safeguarding the interests of the certificate |
|
| holders. |
|
|
| AUDITORS |
|
| The
Present auditors Messrs. Khalid Majid Husain Rahman, Chartered Accountants
being due for retirement, have |
|
| offered
themselves for re-appointment for the year ending June 30, 2001. Their
appointment has been confirmed by |
|
| the
Board of Directors, subject to the approval by the Registrar of Madaraba
Companies and Modaraba. |
|
|
| ACKNOWLEDGEMENT |
|
| The
Board wishes to place on record its appreciation for the dedicated, untiring
and positive efforts of all the |
|
| members
of staff and valuable guidance and assistance extended to us by the Board of
Directors, Registrar of |
|
| Modaraba
and the State Bank of Pakistan. |
|
|
|
on behalf of the Board |
|
|
FAROOQ HASHMI |
|
|
|
| Pattern
of holding of certificates held by the |
|
| Certificate
holders as on dune 30, 2000 |
|
|
| No. of |
Share |
Holding |
Total Shares |
|
| Shareholders |
From |
To |
Held |
|
|
| 24 |
1 |
100 |
2,400 |
|
| 2,316 |
101 |
500 |
1,247,300 |
|
| 53 |
501 |
1000 |
50,400 |
|
| 60 |
1001 |
5000 |
160,200 |
|
| 38 |
5001 |
10000 |
336,500 |
|
| 6 |
10001 |
15000 |
72,500 |
|
| 3 |
15001 |
20000 |
55,500 |
|
| 2 |
20001 |
25000 |
42,300 |
|
| 5 |
25001 |
30000 |
145,100 |
|
| 2 |
0.30 |
35000 |
67,000 |
|
| 2 |
40001 |
45000 |
82,300 |
|
| 1 |
45001 |
50000 |
50,000 |
|
| 3 |
55001 |
60000 |
173,500 |
|
| 5 |
60001 |
65000 |
324,000 |
|
| 1 |
65001 |
70000 |
66,500 |
|
| 2 |
95001 |
100000 |
200,000 |
|
| 1 |
115001 |
120000 |
116,300 |
|
| 1 |
145001 |
150000 |
145,400 |
|
| 1 |
290001 |
295000 |
290,500 |
|
| 3 |
295001 |
300000 |
900,000 |
|
| 1 |
340001 |
345000 |
345,000 |
|
| 1 |
345001 |
350000 |
348,600 |
|
| 1 |
370001 |
375000 |
375,000 |
|
| 1 |
375001 |
380000 |
376,000 |
|
| 1 |
580001 |
585000 |
580,800 |
|
| 1 |
695001 |
700000 |
696,900 |
|
| 1 |
745001 |
750000 |
750,000 |
|
| 1 |
1995001 |
2000000 |
2,000,000 |
|
| ----------- |
----------- |
----------- |
----------- |
|
| 2,737 |
|
10,000,000 |
|
| ========== |
========== |
========== |
========== |
|
|
|
| CATEGORIES
OF SHARE HOLDERS |
NUMBER |
SHARES HELD |
PERCENTAGE |
|
| JOINT
STOCK COMPANIES |
|
12 |
2,449,100 |
24.49 |
|
| FINANCIAL
INSTITUTIONS |
|
6 |
1,222,300 |
12.22 |
|
| LEASING/MODARABA
COMPANIES |
4 |
172,700 |
1.73 |
|
| MODARABA
COMPANIES |
|
1 |
2,000,000 |
20.00 |
|
| INSURANCE
COMPANIES |
|
2 |
87,500 |
0.88 |
|
| INVESTMENT
COMPANIES |
|
7 |
1,267,600 |
12.68 |
|
| INDIVIDUALS |
|
2705 |
2,800,800 |
28.01 |
|
| ASSOCIATED
COMPANIES |
|
0 |
0 |
0.00 |
|
| FOREIGN
INVESTORS |
|
0 |
0 |
0.00 |
|
| OTHERS |
|
0 |
0 |
0.00 |
|
|
----------- |
----------- |
----------- |
|
|
2737 |
10,000,000 |
100.00 |
|
|
========== |
========== |
========== |
|
|
|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
|
|
| We
have audited, the annexed balance sheet as at June 30, 2000 and the related
profit and loss account |
|
| and
statement of changes in financial position together with the notes to the
financial statements for the |
|
| year
ended June 30, 2000 of Financial Link Modaraba which are Modaraba Company's
(Financial Link |
|
| 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 Financial Link Modaraba as required by the Modaraba Companies and Modaraba |
|
| (Floatation
and Control) Ordinance, 1980, and Modaraba Companies and Modaraba Rules, |
|
| 1981; |
|
|
| (b)
in our opinion, the balance sheet and the profit and loss account have been
drawn up in con- |
|
| formality
with the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, |
|
| 1980,
and Modaraba Companies and Modaraba Rules, 1981; and |
|
|
| (c)
in our opinion, and to the best of our information and according to the
explanations given to |
|
| US; |
|
|
| (i)
the balance sheet and the related profit and loss account and statement of
changes in |
|
| financial
position, which are in agreement with the books of account, exhibit |
|
| respectively
a true and fair view of the state of the Modaraba's affairs as at June 30, |
|
| 2000
and the profit and the changes in the financial position for the year ended
on that |
|
| date; |
|
|
| (ii)
no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980;
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. |
|
|
| Without
qualifying our opinion, we draw attention to note 1.2 to the financial
statements which interalia |
|
| states
that the Modaraba has accumulated losses of Rs. 96..77 million (1999: Rs.
100.77 million). |
|
| Management
is working on a plan to reduce expenses. Therefore, these financial
statements have been |
|
| prepared
on a going concern assumption; and without qualifying our opinion, we draw
attention to note |
|
| 1.3
to the financial statements; the Board of Directors of the Modaraba company
is considering an offer |
|
| from
International Brands (Pvt.) Limited for management takeover of the Modaraba. |
|
|
|
KHALID MAJID HUSAIN RAHMAN |
|
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
| Authorised
capital |
|
| 25,000,000
modaraba certificates of Rs. 10 each |
|
250,000,000 |
250,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
| 10,000,000
modaraba certificates of Rs. 10/- each |
|
| fully paid in cash |
|
3 |
100,000,000 |
100,000,000 |
|
|
|
|
|
| Statutory reserve |
|
3 |
1,812,104 |
1,368,000 |
|
| Accumulated
Loss |
|
3 |
(96,770,428) |
(100,767,361) |
|
|
|
----------- |
----------- |
|
|
|
5,041,676 |
600,639 |
|
| OBLIGATIONS
UNDER FINANCE LEASE |
|
4 |
-- |
2,756 |
|
| CURRENT
LIABILITIES |
|
|
|
|
|
|
|
|
| Current
maturity of obligation under finance lease |
|
4 |
2,756 |
14545 |
|
| Musharika
obligations |
|
5 |
-- |
22,802,659 |
|
| Creditors,
accured expenses and other liabilities |
|
6 |
633,974 |
9,450,019 |
|
| Unclaimed
profit distribution |
|
69,016 |
69,016 |
|
|
----------- |
----------- |
|
|
705,746 |
32,336,239 |
|
|
----------- |
----------- |
|
|
5,747,422 |
32,939,634 |
|
|
========== |
========== |
|
|
| TANGIBLE
FIXED ASSETS |
|
7 |
41,657 |
32,774 |
|
|
|
|
| LONG
TERM INVESTMENTS |
|
8 |
4,560 |
20,552.65 |
|
|
| CURRENT
ASSETS |
|
| Short
term investments |
|
9 |
27,122 |
1,967,038 |
|
| Musharika
investment |
|
10 |
3,252,019 |
3,252,019 |
|
| Advances,
prepayments and other receivables |
|
11 |
1,437,840 |
5,930,006 |
|
| Cash
and bank balances |
|
12 |
984,224 |
1,205,146 |
|
|
|
|
----------- |
----------- |
|
|
5,701,205 |
12,354,209 |
|
|
----------- |
----------- |
|
|
5,747,422 |
32,939,634 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
|
|
|
Director |
|
Director |
|
Director |
|
|
Financial Link Limited |
|
Financial Link Limited |
|
Financial Link Limited |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
|
|
2000 |
1999 |
|
|
Note |
Rupees |
Rupees |
|
| Profit
on musharika |
|
733,710 |
1,056,045 |
|
| Loss
on sale of investments |
|
(18,476,900) |
(3,179,409) |
|
| Dividend Income |
|
181,748 |
3,128 |
|
|
----------- |
----------- |
|
|
(17,561,442) |
(2,120,236) |
|
|
|
|
| Operating
expenses |
|
13 |
1,497,574 |
1,133,945 |
|
| Profit
on musharika obligations |
|
-- |
3,857,505 |
|
| Financial
charges on leased asset |
|
2,435 |
5,323 |
|
| Amortization
of deferred cost |
|
-- |
872,220 |
|
|
----------- |
----------- |
|
|
1,500,009 |
5,868,993 |
|
|
----------- |
----------- |
|
| Operating
loss for the year |
|
(19,061,451 ) |
(7,989,229) |
|
| Reversal
of/(provision) for diminution in value |
|
|
|
| of investments |
|
23,178,330 |
(336,562) |
|
|
----------- |
----------- |
|
|
4,116,879 |
(8,325,791) |
|
| Other income |
|
14 |
324,158 |
1,803,181 |
|
|
|
|
----------- |
----------- |
|
| Profit/(Loss)
for the year |
|
4,441,037 |
(6,522,610) |
|
| Appropriation |
|
|
|
| Transfer
to statutory reserve |
|
444,104 |
-- |
|
|
----------- |
----------- |
|
| Accumulated
loss brought forward |
|
(100,767,361 ) |
(94,244,751) |
|
|
----------- |
----------- |
|
| Accumulated
loss carried forward |
|
(96,770,428) |
(100,767,361) |
|
|
========== |
========== |
|
| Earning
per modaraba certificate |
|
15 |
0.44 |
(0.65) |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
Director |
|
Director |
|
Director |
|
|
Financial Link Limited |
|
Financial Link Limited |
|
Financial Link Limited |
|
|
|
| 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 (Note 16) |
|
2,103,237 |
7,028,128 |
|
| Dividend
received |
|
182,221 |
2,655 |
|
|
----------- |
----------- |
|
| Net
cash generated from operating activities |
|
2,285,458 |
7,030,783 |
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Purchase
of fixed assets |
|
(14,400) |
(1,600) |
|
| proceeds
from sale of long term investments |
|
-- |
900,386 |
|
|
----------- |
----------- |
|
| Net
cash (used in)/generated from investing activities |
|
(14,400) |
898,786 |
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
| Payment
of musharika obligation |
|
(2,475,000) |
(7,900,000) |
|
| Payment
against finance lease |
|
(14,545) |
(11,658) |
|
| Payment
of finance charges |
|
(2,435) |
(5,323) |
|
|
----------- |
----------- |
|
| Net
cash used in financing activities |
|
(2,491,980) |
(7,916,981) |
|
|
|
----------- |
----------- |
|
| NET
(DECREASE)/INCREASE IN CASH AND BANK BALANCES |
(220,922) |
12,588 |
|
| OPENING
CASH AND BANK BALANCES |
|
1,205,146 |
1,192,558 |
|
|
|
----------- |
----------- |
|
| CLOSING
CASH AND BANK BALANCES |
|
984,224 |
1,20.5,146 |
|
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
Director |
|
Director |
|
Director |
|
|
Financial Link Limited |
|
Financial Link Limited |
|
Financial Link Limited |
|
|
|
| NOTES
TO THE FINANCIAL STATEMENTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2000 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| 1.1
Financial Link Modaraba was formed under the Modaraba Companies and Modaraba
(Floatation |
|
| and
Control) Ordinance, 1980 and the Rules framed thereunder and is managed by
Financial |
|
| Link
Limited. The Modaraba was floated on January 9, 1994 and commenced its
operation in |
|
| March
1994. The Modaraba is a perpetual and multipurpose modaraba, and is engaged
in ven- |
|
| ture
capital, equity investment, musharika financing arrangement and financial
advisory services. |
|
| The
Modaraba is listed on the Karachi Stock Exchange. |
|
|
| 1.2
The Modaraba has accumulated losses of Rs. 96.77 million as at June 30, 2000
(1999: Rs. |
|
| 100.77
million) as against its paid-up capital of Rs. 100 million and statutory
reserve of Rs. 1.81 |
|
| million.
The Modaraba earned a net profit of Rs. 4.44 million during the year (1999:
Net loss of |
|
| Rs.
6.52 million). Expenses of the Modaraba have been reduced significantly.
Therefore, these |
|
| financial
statements have been prepared under the going concern assumption. |
|
|
| 1.3
International Brands (Pvt) Limited has offered for management takeover of the
Modaraba. The |
|
| Board
of Directors of the Modaraba Company is considering the offer for final
approval. The |
|
| takeover
will take place subject to approval by Securities and Exchange Commission of
Pakistan. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
Accounting convention |
|
| These
financial statements have been prepared under the historical cost convention. |
|
|
| 2.2
Fixed assets and depreciation |
|
| 2.2.1 Owned |
|
| Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
charged to income |
|
| applying
the straight line method. Full year's depreciation is charged on additions
while no |
|
| depreciation
is charged on assets disposed off during the year. |
|
|
| Normal
repairs and maintenance are charged to income as and when incurred. |
|
| Gains
and losses if any, on disposal of assets are taken to the profit and loss
account. |
|
|
| 2.2.2 Leased |
|
| Assets
subject to finance leases is stated at the inception of the lease, at the
lower of the fair |
|
| value
of the assets and present value of minimum lease payments under the lease
agreement. |
|
| The
related obligation under the lease is accounted for as liability.
Depreciation is charged to |
|
| income
applying the straight line method in the same manner as for owned assets. |
|
|
| 2.3 Investments in listed securities |
|
| Long
term investments are stated at cost and provisions are made for other than
tem- |
|
| porary
diminution in value, if any. |
|
|
| Short
term investments are carried at the lower of average cost and market value |
|
| determined
on an aggregate portfolio basis. |
|
|
| 2.4
Revenue recognition |
|
| a)
Profit from musharika transactions is recognised on the basis of pro-rata
accrual of the |
|
| estimated
profit during the year. |
|
| b)
Gain/loss on sale of investments is accounted for in the period in which it
arises. |
|
| c)
Dividend income is recognised when the right to the dividend is established. |
|
| d)
Profit on PLS account is recognised on accrual basis. |
|
|
| 3.
CHANGES IN EQUITY |
|
|
Issued |
Reserve |
Accumulated |
Total |
|
|
subscribed |
under Prudential |
loss |
|
|
|
and paid-up |
Regulations |
|
|
|
capital |
for Modarabas |
|
|
|
..........................................
Rupees ......................................… |
|
| Balance
as at July 1, 1998 |
|
100,000,000 |
1,368,000 |
(94,244,751 ) |
7,123,249 |
|
| Net
loss for the year |
|
-- |
-- |
(6,522,610) |
(6,522,610) |
|
|
------------ |
------------ |
------------ |
------------ |
|
| Balance
as at June 30, 1999 |
|
100,000,000 |
1,368,000 |
(100,767,361) |
600,639 |
|
| Net
profit for the year |
|
-- |
-- |
4,441,037 |
4,441,037 |
|
| Transfer
from profit and loss account |
-- |
444,104 |
(444,104) |
-- |
|
|
------------ |
------------ |
------------ |
------------ |
|
| Balance
as at June 30, 2000 |
|
100,000,000 |
1,812,104 |
(96,770,428) |
5,041,676 |
|
|
========== |
========== |
========== |
========== |
|
| In
accordance with the Prudential regulations for Modarabas, the Modaraba is
required to trans- |
|
| fer
10% of its after tax profits to statutory reserve until the reserve equals
the paid-up capital. |
|
| Thereafter,
5% of the tax profits are required to be transferred to the reserve. |
|
|
| 4.
OBLIGATIONS UNDER FINANCE LEASE |
|
| 4.1
The rentals under the lease agreement aggregating Rs. 2,830 are payable in
equal monthly |
|
| installments
under lease agreements latest by 2001. Taxes, repairs, replacement and
insurance |
|
| costs,
if any, are to be borne by the Modaraba. The rate of financing is equal to
22.33% per |
|
| annum
which rate has been used as discounting factor. |
|
|
| 4.2
The minimum lease payments for which the Modaraba has committed to pay in
future under the |
|
| lease
agreement are due as follows: |
|
|
1999 |
2000 |
|
|
Rupees |
Rupees |
|
|
| Year
ending June 30, 2000 |
|
-- |
16,980 |
|
| Year
ending June 30, 2001 |
|
2,830 |
2,830 |
|
|
----------- |
----------- |
|
|
2,830 |
19,810 |
|
| Finance
charges allocated to future periods |
|
(74) |
(2,509) |
|
|
----------- |
----------- |
|
|
2,756 |
17,301 |
|
| Current
maturity of obligation under finance lease |
|
(2,756) |
(14,545) |
|
|
----------- |
----------- |
|
|
-- |
2,756 |
|
