| Trust Modaraba Limited |
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| Annual
Report 2000 |
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| CONTENTS |
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| Corporate
Profile |
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| Directors'
Report |
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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 Sources And Application of Funds |
|
| Notes
to the Accounts |
|
| Pattern
of Certificate Holdings |
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|
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| Corporate
Profile |
|
|
| Board
of Directors |
Mr. Muhammad Yousaf
Shaikh |
Chairman |
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|
Mr. Muhammad Fazil Mirza |
Managing Director |
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& Chief Executive |
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Mr. Alamgir B. Kashmiri |
Director |
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Mr. Masaud Ahmed Shaikh |
Director |
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(Nominee of The Bank of
Punjab) |
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|
Mr. C.M. Saleem Cheema |
Director |
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| Corporate
Secretary |
Mr. Ijaz Ahmad Khan |
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| Auditors |
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Ijaz Amin & Company |
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Chartered Accountants |
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| Legal Advisors |
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Kasuri & Associates |
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|
Legal Practitioners. |
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| Bankers |
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The Bank of Punjab |
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National Bank of Pakistan |
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Allied Bank of Pakistan |
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|
Crescent Investment Bank
Limited |
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Muslim Commercial Bank
Limited |
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Metropolitan Bank Limited |
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| Principal
Place of Business |
1st Floor, Kasuri Tower,
4 Fane Road, |
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Lahore-Pakistan. |
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Tel: (042) 7320153-4,
7352049 |
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Fax: (042) 7357011 |
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| Registrars |
|
Shares Department |
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Trust Management Services
(Pvt.) Ltd. |
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|
1st Floor, Kasuri Tower,
4 Fane Road, |
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Lahore-Pakistan. |
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Tel: (042) 7320153-4,
7352049 |
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Fax: (042) 7357011 |
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| DIRECTORS'
REPORT |
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| Asslaam-o-Alaykum
Wa Rahmatouh Allah Wa Barakatouh, |
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| The
Directors of Trust Management Services (Private) Limited, Managers of Trust
Modaraba, are |
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| pleased
to place before you this annual report and performance overview of Trust
Modaraba for the |
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| financial
year ended 30 June 2000. |
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|
| Operational
Overview |
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| Trust
Modaraba has posted a net profit of Rs. 22.876 million for the FY 2000,
compared to |
|
| Rs.
29.847 million during the FY 1999, down by 23.36%. This drop is predominantly
attributed to |
|
| subdued
business volumes arising out of enfeeble economic scenario prevailed all the
way through |
|
| FY
2000, which in turn, resulted in reduced gross revenues. On the other side,
operating expenses |
|
| also
show a reduction of 16.29% over the FY 1999. |
|
|
| Brief
Financials |
|
|
FY 2000 |
FY 1999 |
|
|
|
(Rupees in
thousand) |
|
|
| Certificate
Holders' Equity |
|
|
407,976 |
405,575 |
|
| Fund
Mobilization |
|
|
247,035 |
246,795 |
|
| Lease Finance |
|
|
296,328 |
311,377 |
|
| Morabaha/Musharika
Finance |
|
|
302,098 |
331,573 |
|
|
| Revenues |
|
|
106,470 |
130,132 |
|
| Expenses/Provision |
|
|
81,052 |
96,828 |
|
| Profit
before Management Fee |
|
|
25,418 |
32,831 |
|
| Management
Fee |
|
|
2,541 |
2,984 |
|
| Net Profit |
|
|
22,876 |
29,847 |
|
|
| Payout |
|
| The
directors are also pleased to approve cash dividend, at the rate of 7.5% (Re.
0.75 per certificate) |
|
| to
the certificate holders of Trust Modaraba for the year ended 30 June 2000. |
|
|
| Morabaha
Financing |
|
| Profit
on Morabaha Financing recorded during the FY 2000 stands at Rs. 40.518
million in contrast |
|
| to
Rs. 50.453 million in the preceding financial year, a decline of 19.69%. This
is owed equally to |
|
| reduction
in total exposure in morabaha segment, that is 8.89%, and maturity of a
number of |
|
| morabaha
finance facilities with' higher implicit profit rates. Nonetheless your
modaraba re- |
|
| invested
over Rs. 150 million in this very segment during the FY 2000 and held back
substantial |
|
| fresh
exposures (FY 2000: Rs. 302.098 million, FY 1999: Rs. 331.573 million) in the
midst of |
|
| continuing
uncertain conditions our economy is experiencing over the period. |
|
|
| Your
managers have launched an assertive and effective recovery drive against
non-performing |
|
| customers
and you will be pleased to learn that during FY 2000, Rs.15.299 million have
been |
|
| recovered
only on account of morabaha profit receivables, which constitute 68.13% of
total |
|
| outstanding
amount in this head of account. |
|
|
| Lease
Financing |
|
| Income
from Lease Operations totaled Rs. 62.934 million for the FY 2000 compared to
Rs. 75.544 |
|
| million
in the last financial year, down by 16.69%. This revenue center contributed
59.11% to the |
|
| total
revenue of Rs. 106.470 million. Gross lease portfolio stood at Rs. 269.328
million, marginally |
|
| reduced
by 4.83%. No substantial exposures were assumed in the backdrop of low
capital |
|
| investment
demand in terms of expansion and BMR activities by the manufacturing sector
except |
|
| textile industry. |
|
|
| We
are pleased to note that our pressing efforts towards recovery of outstanding
lease rentals have |
|
| yielded
satisfactory pay-offs as the same has been brought down from Rs. 140.549
million to |
|
| Rs.
99.674 million in preceding 12-month period, downhill by 29.08%. |
|
|
| Stock
Market Operations |
|
| Country's
stock markets by and large tracked the state of economy during the FY 2000.
Though KSE- |
|
| 100
scored a net gain of little over 450 points during the FY 2000, it traded
around 1500 points level |
|
| for
the most part of reporting period with solitary exception to a speculators'
led volatile bull run |
|
| touching
2054 mark in late March before falling again to 1522 points at the close of
FY 2000. Now a |
|
| days,
there is an emerging perception that stock market are speculators' playground
rather than |
|
| portraying
genuine investment. However, your Modaraba managed Rs. 1.356 million on
account |
|
| of
dividend income and capital gain compared to Rs. 2.853 million in FY 1999. |
|
|
| Fund
Mobilization |
|
| During
the period under review, in addition to locking in low profit rate on
existing fund |
|
| mobilization
at the time of their renewals, fresh funds to the tune of Rs.20.000 million
were |
|
| mobilized
from a development financial institution. However, keeping in view the
business milieu, |
|
| your
management decided not to materialize a credit line of Rs.20.000 million duly
sanctioned by |
|
| another
financial institution. As of 30 June 2000, Modaraba's total fund mobilization
stands at |
|
| Rs.
247.035 million. |
|
|
| Earning
Per Certificate |
|
| The
earning per certificate of Trust Modaraba for the FY 2000 is Re. 0.83 ( FY
1999: Rs. 1.09). |
|
|
| Future Outlook |
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| Our
economy is somehow showing signs of recovery. However, the major impact of
present |
|
| regime's
economic revival plan principally focusing on radical tax reforms, economy's |
|
| documentation,
revival of sick industrial units and broad-based privatization programme on |
|
| recovery
slop is hitherto looked for. Nevertheless, managers of your Modaraba hope for
better |
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| socio-economic
scenario and pledge their all out professional endeavors to add maximum value
to |
|
| your
Modaraba. On the whole, we will continue with our existing multi-faceted
corporate policy |
|
| featuring
adequate flexibility, shaping pertinently from consolidation to growth
subject to operating |
|
| business
order. Morabaha financing and leasing inhabit our major exposure further
diversifiable by |
|
| prudent
stock market operations. Recovery of outstanding receivable amounts is our
top priority |
|
| and
efforts in this regard would be even intensified apart from ensuring timely
receipts of sums due |
|
| in
case of regular customers. Fund mobilization poses no difficulty subject to
surfacing of attractive |
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| investment
avenues and quality clientele. |
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|
|
|
| Change
of Directors |
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| During
the FY 2000, Mr. Umar Mahmud Kasuri (Chairman), Mr. Irtiza Hussain
(Director), Mrs. |
|
| Souryia
Anwar (Director) and Mr. R.D. Ahmad (Director) resigned from the Board of
Directors of |
|
| Trust
Management Services (Private) Limited (TMSL), while Mr. Muhammad Yousaf
Shaikh |
|
| (Chairman),
Mr. Alamgir B. Kashmiri (Director), and Mr. C.M. Saleem Cheema (Director)
joined the |
|
| TMSL's
Board of Directors. The competent authority has accorded its approval of the
above-noted |
|
| change
in directorship. |
|
|
| Auditors |
|
|
| The
auditors Messrs Ijaz Amin & Company, being due for retirement, had
offered themselves for re- |
|
| appointment
for the year ending 30 June 2001. |
|
|
| Acknowledgments |
|
| The
Directors of Trust Management Services (Private) Limited, managers of Trust
Modaraba, place |
|
| on
record their appreciation of professional commitment and devotion of the
staff towards the |
|
| operations
of the Modaraba. |
|
|
|
| The
Directors also wish to express their sense of gratitude to Securities &
Exchange Commission of |
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| Pakistan,
Registrar Modaraba Companies and Modarabas, our Bankers and above all,
certificate |
|
| holders
of Trust Modaraba for their continuous support and guidance. |
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|
For and on behalf of the Board of Directors |
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|
|
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|
Muhammad Fazil Mirza |
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| Lahore:
12 December, 2000 |
|
Chief Executive |
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|
|
| Auditors'
Report to the Certificate Holders |
|
|
| We
have audited the annexed Balance Sheet as at 30th June 2000 and the related
Profit and |
|
| Loss
Account and Statement of Sources and Application of Funds together with the
notes to the |
|
| accounts
for the year ended 30th June 2000 of TRUST MODARABA, which are Modaraba |
|
| company's
[Trust Management Services (Private) Limited] representation and we state
that we |
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| have
obtained all the information and explanations which we required and, after
due |
|
| verification
therefore, we report that:- |
|
|
| (a)
in our opinion, proper books of accounts have been kept by the Modaraba |
|
| company
in respect of Trust Modaraba as required by the Modaraba Companies |
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| and
Modarabas (Floatation and Control) Ordinance, 1980 and Modaraba |
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| Companies
and Modaraba Rules, 1981; |
|
|
|
|
| (b)
in our opinion, the Balance Sheet and the Profit and Loss Account have been |
|
| drawn
up in conformity with the Modaraba Companies and Modarabas |
|
| (Floatation
and Control) Ordinance, 1980, and Modaraba Companies and |
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| 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 Sources and Application of Funds, 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 30th June 2000 and |
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| the
Profit and the changes in the Sources and Application of Funds for |
|
| the
year ended on that date; |
|
|
|
|
| (ii)
Zakat deductible at source under the Zakat and Ushr Ordinance, 1980, |
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| has
been deducted by the Modaraba and deposited in the Central Zakat |
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| Fund
established under section 7 of that Ordinance; and |
|
|
|
|
| (iii)
the business conducted, investments made and expenditure incurred |
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| by
the Modaraba are in accordance with the objects, terms and |
|
| conditions
of the Modaraba. |
|
|
|
|
| (iv)
the Modaraba has an effective system of internal controls in operation. |
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|
|
|
IJAZ AMIN & COMPANY |
|
| LAHORE:
4th December, 2000 |
|
Chartered Accountants |
|
|
|
|
|
| Balance
Sheet as at 30 June 2000 |
|
|
|
|
|
|
|
NOTE |
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
| SHARE
CAPITAL AND RESERVES |
|
|
|
| SHARE
CAPITAL |
|
| Authorized |
|
| 50,000,000
Modaraba Certificates |
|
| of Rs. 10 each |
|
|
|
500,000,000 |
500,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid up |
|
4 |
273,000,000 |
273,000,000 |
|
|
|
|
|
|
| RESERVES
AND SURPLUS |
|
|
|
| Capital Reserve |
|
5 |
44,386,959 |
42,099,367 |
|
| General Reserve |
|
|
|
90,400,000 |
90,400,000 |
|
| Unappropriated
Profit |
|
|
189,220 |
75,894 |
|
|
|
------------------ |
------------------ |
|
|
|
|
134,976,179 |
132,575,261 |
|
|
|
|
------------------ |
------------------ |
|
|
|
407,976,179 |
405,575,261 |
|
|
|
|
|
|
| CUSTOMERS'
SECURITY DEPOSITS |
6 |
10,919,570 |
18,596,091 |
|
| LONG
TERM MORABAHA FINANCE |
7 |
12,500,000 |
-- |
|
| DEFERRED
LIABILITY |
|
8 |
1,293,112 |
899,747 |
|
|
|
| PROVISION
FOR DIMINUTION IN |
|
| VALUE
OF INVESTMENTS |
|
9 |
44,916,750 |
54,977,131 |
|
|
|
| CURRENT
LIABILITIES |
|
| Current
portion of customers' security deposits |
|
2,964,195 |
6,581,090 |
|
| Finances
under Morabaha and |
|
| Musharika
arrangements |
|
10 |
234,534,815 |
246,794,923 |
|
| Creditors,
accrued and other liabilities |
11 |
14,373,051 |
17,407,967 |
|
| Provision
for taxation |
|
12 |
3,942,594 |
5,057,594 |
|
| Dividend
payable |
|
20,475,000 |
27,300,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
276,289,655 |
303,141,574 |
|
|
------------------ |
------------------ |
|
|
|
753,895,266 |
783,189,804 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
Chief Executive |
|
Director |
|
|
|
|
|
|
|
| TANGIBLE
FIXED ASSETS |
|
13 |
|
| Operating
assets in own use |
|
|
17,433,136 |
6,193,560 |
|
| Operating
assets given on lease |
|
|
197,062,969 |
177,132,879 |
|
|
|
|
------------------ |
------------------ |
|
|
214,496,105 |
183,326,439 |
|
|
|
|
| DEFERRED
COST |
|
14 |
419,604 |
693,406 |
|
|
|
|
|
| LONG
TERM INVESTMENTS |
|
15 |
84,354,155 |
90,098,769 |
|
|
|
|
|
| LONG
TERM FINANCES UNDER |
|
|
| MORABAHA
AND MUSHARIKA |
|
|
| ARRANGEMENTS |
|
16 |
7,866,876 |
8,352,728 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Finances
under Morabaha & |
|
|
|
| Musharika
arrangements |
|
17 |
293,263,809 |
322,738,610 |
|
| Short
term investments |
|
18 |
-- |
2,638,050 |
|
| Advances,
deposits, prepayments & |
|
|
|
| other
receivables |
|
19 |
124,490,616 |
174,836,954 |
|
| Bank balances |
|
20 |
29,004,101 |
504,848 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
446,758,526 |
500,718,462 |
|
|
|
------------------ |
------------------ |
|
|
|
753,895,266 |
783,189,804 |
|
|
========== |
========== |
|
|
|
|
|
|
Director |
|
|
|
| Profit
& Loss Account for the year ended 30 June 2000 |
|
|
|
|
|
|
NOTE |
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
| REVENUE |
|
| Income
from leasing operations |
|
|
62,933,732 |
75,544,604 |
|
| Profit
on Morabaha finances |
|
|
40,517,689 |
50,452,712 |
|
| Dividend
on equity investments |
|
|
897,037 |
2,669,514 |
|
| Processing,
documentation, other fees and charges |
|
631,044 |
847,000 |
|
| Gain/(loss)
on sale of short term investments |
21 |
458,861 |
183,890 |
|
| Miscellaneous
income |
|
|
359,620 |
146,219 |
|
| Gain
on sale of fixed assets |
|
13.3 |
671,793 |
288,202 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
106,469,776 |
130,132,141 |
|
| EXPENSES |
|
| Operating
expenses |
|
22 |
33,924,289 |
49,615,610 |
|
| Financial
charges |
|
23 |
47,127,800 |
47,212,000 |
|
|
------------------ |
------------------ |
|
|
|
|
81,052,089 |
96,827,610 |
|
| Operating
profit before provisions |
|
25,417,687 |
33,304,531 |
|
|
|
|
------------------ |
------------------ |
|
| Provision
for diminution in value of |
|
|
|
| investments
made/(added back) |
|
-- |
473,015 |
|
|
------------------ |
------------------ |
|
|
|
|
25,417,687 |
32,831,516 |
|
| Modaraba
company's management fee |
|
2,541,769 |
2,984,683 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
22,875,918 |
29,846,833 |
|
| Provision
for taxation |
|
|
-- |
-- |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
22,875,918 |
29,846,833 |
|
| Unappropriated
profit brought forward |
|
75,894 |
398,428 |
|
| Transfer
from general reserve |
|
|
-- |
3,100,000 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
|
22,951,812 |
33,345,261 |
|
|
| APPROPRIATIONS |
|
| Transfer
to capital reserve |
|
2,287,592 |
5,969,367 |
|
| Proposed
dividend |
|
|
20,475,000 |
27,300,000 |
|
|
------------------ |
------------------ |
|
|
|
|
22,762,592 |
33,269,367 |
|
|
|
|
------------------ |
------------------ |
|
| UNAPPROPRIATED
PROFIT CARRIED FORWARD |
189,220 |
75,894 |
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
| Statement
of Sources and Application of funds for the year ended 30 June 2000 |
|
|
|
|
|
|
|
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
|
| NET
CASH INFLOW FROM OPERATING |
|
| ACTIVITIES
(NOTE "A") |
|
|
86,405,040 |
23,583,323 |
|
|
|
| Cash
flows from investing activities |
|
| Fixed
assets additions |
|
|
(14,188,873) |
(3,041,776) |
|
| Adjustment
of depreciation on rescheduling |
|
|
|
| of
financing arrangement |
|
|
(40,224,286) |
-- |
|
| Sale
proceeds of fixed assets |
|
|
3,866,166 |
42,237,571 |
|
| Short
term investments |
|
|
2,638,050 |
(2,799,515) |
|
| Long
term investments |
|
|
.5,744,614 |
(1,987,921) |
|
| Finances
under long term Morabaha arrangements |
|
485,852 |
(8,352,728) |
|
| Gain/(loss)
on sale of investments |
|
|
458,861 |
1 83,890 |
|
| Dividend
income |
|
|
897,037 |
2,669,514 |
|
| Customers'
security deposits |
|
|
(7,676,521) |
(7,105,025) |
|
| Deferred cost |
|
|
(86,197) |
-- |
|
| Provision
used to adjust the long term investments |
|
(10,060,381) |
(5,317,453) |
|
|
------------------ |
------------------ |
|
| NET
CASH FLOW |
|
|
(58,145,678) |
(21,527,257) |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Increase/(decrease)
long term Morabaha finance activities |
12,500,000 |
-- |
|
| Increase/(decrease)
long term Morabaha finance activities |
(12,260,108) |
(1,639,146) |
|
|
------------------ |
------------------ |
|
| NET
CASH FLOW |
|
|
239,892 |
(1,639,146) |
|
|
|
|
------------------ |
------------------ |
|
| NET
INCREASE IN CASH AND BANK BALANCES |
28,499,254 |
416,920 |
|
|
|
| CASH
AND BANK BALANCES AT THE BEGINNING OF |
|
| THE YEAR |
|
|
504,848 |
87,928 |
|
|
|
|
------------------ |
------------------ |
|
| CASH
AND BANK BALANCES AT THE END OF THE YEAR |
29,004,101 |
504,848 |
|
|
|
========== |
========== |
|
|
|
|
|
|
|
|
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
| NOTE "A" |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
|
| Profit
for the year - before taxation |
|
22,875,918 |
29,846,833 |
|
|
|
| Add/(Less)
Adjustment for |
|
| Depreciation |
|
|
20,049,120 |
35,183,201 |
|
| Gain
on Disposal of fixed assets |
|
|
(671,793) |
(288,202) |
|
| Amortization
of deferred cost |
|
|
360,000 |
360,000 |
|
| Provision
for diminution in value of investments |
|
-- |
473,015 |
|
| (Gain)/loss
on sale of investments |
|
|
(458,861) |
(183,890) |
|
| Dividend
income |
|
|
(897,037) |
(2,669,514) |
|
| Provision
for gratuity |
|
|
449,978 |
417,672 |
|
| Gratuity paid |
|
|
(56,613) |
(17,925) |
|
| Dividend paid |
|
|
(26,531,737) |
(7,098,491) |
|
|
------------------ |
------------------ |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Before
working capital change |
|
|
|
|
15,118,975 |
56,022,699 |
|
| CHANGES
IN WORKING CAPITAL |
|
| Decrease/(increase)
in current assets: |
|
| Finances
given under Morabaha arrangements |
|
|
|
| Advances,
deposits, prepayments and other receivables |
29,474,801 |
3,457,157 |
|
|
|
50,346,338 |
(46,033,574) |
|
|
|
|
------------------ |
------------------ |
|
|
79,821,139 |
(42,576,417) |
|
| Increase/(decrease)
in current liabilities: |
|
| Creditors,
accrued and other liabilities |
|
(3,803,179) |
12,066,736 |
|
| Customers'
security deposits |
|
|
(3,616,895) |
4,960,305 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(7,420,074) |
17,027,041 |
|
| Cash
inflow from operating activities |
|
| Before Taxation |
|
|
87,520,040 |
30,473,323 |
|
| Taxes paid |
|
|
(1,115,000) |
(6,890,000) |
|
|
| Net
cash inflow from operating activities |
|
------------------ |
------------------ |
|
| After Taxation |
|
|
86,405,040 |
23,583,323 |
|
