| First Constellation Modaraba |
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| Annual
Report 2001 |
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| Contents |
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| Corporate
Information |
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| Directors'
Report |
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| Auditors'
Report |
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| Balance Sheet |
|
| Profit and Loss Account |
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| Statement
of Changes in Financial Position |
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| Statement
of Changes in Equity |
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| Notes
to the Accounts |
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| Profit
Risk Exposure |
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| Pattern of Certificate Holders |
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| CORPORATE
INFORMATION |
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| DIRECTORS
OF MODARABA COMPANY |
|
| Mohammad
Yousuf Memon |
|
| R.A.Sattar |
|
| Mohammad
Zakaria |
|
| Mohammad
Zain |
|
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| AUDITOR |
|
| R.
H. & Company, |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| Askari
Commercial Bank Limited |
|
| Standard
Chartered Grindlays Bank |
|
| Faysal
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| Allied
Bank of Pakistan Limited |
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| National
Bank of Pakistan |
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| Bank
of Tokyo |
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| Platinum
Commercial Bank Limited |
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| Union
Bank Limited |
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| LEGAL
ADVISORS |
|
| Noor
Ahmed, Advocate |
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| MODARABA
COMPANY |
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| Constellation
Management Company (Private) Limited |
|
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| REGISTERED
OFFICE |
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| 2nd
Floor, Trade Centre, |
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| I.I.
Chundrigar Road, |
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| Karachi. |
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| REGISTRARS |
|
| MIPCO
Associates, |
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| 10th
Floor, Uni Centre, |
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| I.I.
Chundrigar Road, |
|
| Karachi. |
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| DIRECTORS'
REPORT |
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| TO
THE CERTIFICATE HOLDERS |
|
|
| The
Board of Directors Constellation Management Company (Pvt) Ltd., take pleasure
in presenting the Ninth |
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| Annual
report of First Constellation Modaraba together with Audited Accounts for the
period ended June 30, |
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| 2001. |
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|
| OPERATION
OVERVIEW: |
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| On
reviewing the operational results for the period ended June 30, 2001, it
becomes apparent that your |
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| Modaraba
has generated revenue of Rs.13,323,470/- compared to preceding year's revenue
of |
|
| Rs.
12,698,315/-, additionally, the operating profit of the period under review,
was Rs.8,321,905/-, whereas it |
|
| was
Rs.5,964,334/-, during previous period, the operating results are given
here-in-below:- |
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|
|
2001 |
20O0 |
|
|
Rupees |
Rupees |
|
| Operating
Income |
|
13,323,470 |
12,698,315 |
|
| Operating
Expenses |
|
(5,001,565) |
(6,733,981) |
|
|
---------- |
---------- |
|
|
8,321,905 |
5,964,334 |
|
| Less:
(Provision) for diminution in the |
|
|
|
| Value
of marketable securities (long term) |
|
(2,107,491 ) |
(6,839,343) |
|
|
---------- |
---------- |
|
|
6,214,414 |
(875,009) |
|
| Modaraba
company's Management fee |
|
(564,947) |
-- |
|
|
---------- |
---------- |
|
| Profit/(loss)
before tax |
|
5,649,467 |
(875,009) |
|
| Taxation: |
|
| -- Current |
|
-- |
(318,500) |
|
| -- Prior year |
|
(80,009) |
(328,171) |
|
|
---------- |
---------- |
|
|
(80,009) |
(646,671) |
|
| Profit/(Loss)
after tax |
|
5,569,458 |
(1,521,680) |
|
| Add:Profit/(Loss)
brought forward |
|
(1,209,907) |
311,773 |
|
|
---------- |
---------- |
|
| Profit/(Loss)
available for appropriation |
|
4,359,551 |
(1,209,907) |
|
| APPROPRIATION: |
|
| Statutory
reserves 20% (2001 ~ |
|
(1,113,892) |
-- |
|
| Profit
reserves for distribution 5.00% (2001) |
|
(3,231,250) |
-- |
|
|
---------- |
---------- |
|
| Un-appropriated
Profit/(Loss) carried forward |
|
14,409 |
(1,209,907) |
|
|
========== |
========== |
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| OVERVIEW
& HIGHLIGHTS OF YOUR MODARABA: |
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| As
evident, the Modaraba has earned operating profit, as stated above, this has
resulted in tightening the |
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| operating
expenditures during the period under review, so even after making
appropriations for provision of |
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| Long
Term Investments in shares, adequate profit was available, thus the
management of your Modaraba |
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| deemed
fit to distribute the profit to the certificate holders. |
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| STATUTORY
RESERVES: |
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| It
has been considered appropriate to set aside 20% or Rs. 1,113,892/- from the
amount of available profit |
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| after
tax of Rs.5,569,458/-, this profit has resulted during the year ending
mentioned above. |
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| PROFIT
DISTRIBUTION: |
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| From
above, it is apparent, that sufficient profit was. available during this
period ending, so the Board of |
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| Directors
of your Modaraba decided to pay a cash dividend of 5.00% (or Rs. 0.50 per
certificate of Rs.10/- |
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| par
value), this shall be paid to the certificate holders for the period under
review. |
|
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| It
may be note that the above profit distribution for the period under review is
90% of the profit generated |
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| during
the period under review. |
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| NINE
YEAR'S PERFORMANCE |
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| Your
Modaraba successfully paid the profit in form of CASH DIVIDENDS and BONUSES
and distributed to |
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| the
certificate holders, the position of your Modaraba's paying dividend / bonus
since its inception is |
|
| highlighted
below:- |
|
|
| PERIOD |
|
DIVIDEND |
BONUS |
|
| Dec. 31,1992 |
|
-- |
10.00% |
|
| Dec. 31, 1993 |
|
-- |
17.50% |
|
| Dec.31,1994 |
|
6.00% |
|
|
| Jun.30,1996* |
|
5.50% |
-- |
|
| Jun.301997 |
|
6.00% |
-- |
|
| Jun.30,1.998 |
|
5.00% |
-- |
|
| Jun.30,1999 |
|
5.50% |
-- |
|
| Jun.30,2000 |
|
-- |
-- |
|
| Jun.30,2001 |
|
5.00% |
-- |
|
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| [*
January 01, 1995 to June 30, 1996 (18 months)] |
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| TAXATION: |
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| The
Finance Act, 1999, exempted the income of all modarabas-from income tax
except a trading income, |
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| provided
that ninety percent of the Modaraba's profit is distributed to the
certificate holders, thus no provision |
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| has
been made for income tax for the assessment year 2001-2002. Furthermore, the
assessment order for |
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| the
assessment year 2000-2001 has already been issued by the authorities. |
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| FUTURE
OUTLOOK: |
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| It
is hoped that the economy may turn positive in near future, besides,
regulators are viewing favourably the |
|
| ideas
put forth by the modaraba sectors to resolve the resources mobilization
issues of the modarabas, so it |
|
| seems
likely that with the occurances of the afore-mentioned, your Modaraba may
also benefit from these, in |
|
| the
meanwhile, your Modaraba is cautious in channeling resources into long term
businesses, while short |
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| term
decisions are taken for financing. |
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| AUDITORS: |
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| The
present auditor M/s. R.H. & Company, Chartered Accountants, has retired
and offered their eligibility, |
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| this
is subject to approval of the Board and of the competent authority. |
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| ACKNOWLEDGEMENT: |
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| The
Board of Directors take this opportunity to express its gratitude to the
Registrar Modaraba, Securities |
|
| Exchange
Commission of Pakistan, State Bank of Pakistan and Modaraba Association of
Pakistan for their |
|
| continued
support and guidance. At this time, the Board of Directors also thank the
contribution made by the |
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| officials
and personnel of the Modaraba for their continued hard work, enthusiasm and
zeal. |
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ON BEHALF OF THE BOARD |
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| Karachi:
December 07, 2001 |
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CHIEF EXECUTIVE |
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| AUDITOR'S
REPORT |
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| TO
THE CERTIFICATE HOLDERS |
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|
| We
have audited the annexed balance sheet of FIRST CONSTELLATION MODARABA, as at
June 30, |
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| 2001,
and the related profit and loss account, cash flow statement and statement of
changes in equity |
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| together
with the notes forming part thereof, for the year then ended and we state
that we have obtained all |
|
| the
information and explanations which, to the best of our knowledge and belief,
were necessary for the |
|
| purposes
of our audit. |
|
|
| It
is the responsibility of the Modaraba's management to establish and maintain
a system of internal control, |
|
| and
prepare and present the above said statements in conformity with the approved
accounting standards |
|
| and
the requirements of the Modaraba Companies and Modaraba (Floatation and
Control) Ordinance, 1980 |
|
| and
Modaraba Companies and Modaraba Rules, 1981. Our responsibility is to express
an opinion on these |
|
| statements
based on our audit |
|
|
| We
conducted our audit in accordance with the auditing standards as applicable
in Pakistan. These |
|
| standards
require that we plan and perform the audit to obtain reasonable assurance
about whether the |
|
| above
said statements are free of any material misstatement. An audit includes
examining, on a test basis, |
|
| evidence
supporting the amounts and disclosures in the above said statements. An audit
also includes |
|
| assessing
the accounting policies and significant estimates made by management, as well
as, evaluating |
|
| the
overall presentation of the above said statements. We believe that our audit
provides a reasonable basis |
|
| for
our opinion and, after due verification, we report that:- |
|
|
| a)
in our opinion, proper books of account have been kept by the Modaraba
Company in respect of |
|
| First
Constellation Modaraba as required by the Modaraba Companies and Modaraba
(Floatation |
|
| and
Control) Ordinance, 1980 and Modaraba Companies and Modaraba Rules, 1981. and |
|
|
| b)
in our opinion: |
|
| i.
the balance sheet and profit & loss account together with the notes
thereon have been |
|
| drawn
up in conformity with the Modaraba Companies and Modaraba (Floatation and |
|
| Control)
Ordinance, 1980 and Modaraba Companies and Modaraba Rules, 1981, and are |
|
| in
agreement with the books of account and are further in accordance with
accounting |
|
| policies
consistently applied; |
|
|
| ii.
the expenditure incurred during the year was for the purpose of the
Modaraba's business. |
|
|
| iii.
the business conducted, investments made and the expenditures incurred during
the year |
|
| were
in accordance with the objects of the Modaraba. |
|
|
| c)
In our opinion and to the best of our information and according to the
explanations given to us, the |
|
| balance
sheet, profit and loss account, cash flow statement and statement of changes
in equity |
|
| together
with the notes forming part thereof conform with approved accounting
standards as |
|
| applicable
in Pakistan, and give the information required by the Modaraba Companies and |
|
| Modaraba
(Floatation and Control) Ordinance, 1980 and Modaraba Companies and Modaraba |
|
| Rules,
1981, in the manner so required and respectively give a true and fair value
of the state of |
|
| the
Modaraba's affairs as at June 30th, 2001 and of the profit, its cash flows
and changes in equity |
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| for
the year then ended; and |
|
|
| d)
In our opinion, Zakat deductible at source under Zakat and Ushr Ordinance,
1980 (XVIII of 1980), |
|
| was
deducted by the Modaraba and deposited in the Central Zakat Fund established
under |
|
| Section
7 of the ordinance. |
|
|
|
R. H. & COMPANY, |
|
| Karachi':
December 07, 2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
| Authorised |
|
| 30,000,000
Modaraba Certificates |
|
| of
Rs. 10/- each |
|
300,000,000 |
300,000,000 |
|
|
========== |
========== |
|
| Issued,
Subscribed and paid up |
|
|
|
| 5,000,000
Modaraba Certificates |
|
|
|
| of
Rs. 10/- each subscribed in cash |
|
50,000,000 |
50,000,000 |
|
| 1,462,500
Bonus Certificates of Modaraba |
|
|
|
| of
Rs. 10/- each issued as fully paid |
|
3 |
14,625,000 |
14,625,000 |
|
|
|
---------- |
---------- |
|
|
|
64,625,000 |
64,625,000 |
|
| Statutory
reserve |
|
4 |
2,005,941 |
892,049 |
|
| Unappropriated
profit/(Loss) |
|
14,409 |
(1,209,907) |
|
|
|
---------- |
---------- |
|
|
66,645,350 |
64,307,142 |
|
| Security
deposits on financing |
|
1,027,507 |
1,290,477 |
|
| CURRENT
LIABILITIES |
|
|
|
| Shod
term finance-secured |
|
5 |
32,000,000 |
37,000,000 |
|
| Accrued
and other liabilities |
|
6 |
3,383,781 |
2,938,176 |
|
| Reserve
for profit distribution |
|
3,231,250 |
-- |
|
|
---------- |
---------- |
|
|
38,615,031 |
39,938,176 |
|
|
---------- |
---------- |
|
|
106,287,888 |
105,535,795 |
|
|
========== |
========== |
|
| TANGIBLE
FIXED ASSETS |
|
|
|
| Cost
less accumulated amortization/depreciation |
|
|
|
| Assets
given on lease |
|
7.1 |
1,027,507 |
1,302,477 |
|
| Assets
in own use |
|
7.2 |
956,356 |
695,994 |
|
|
|
---------- |
---------- |
|
|
1,983,863 |
1,998,471 |
|
| LONG
TERM INVESTMENT |
|
8 |
2,363,375 |
3,976,260 |
|
| CURRENT
ASSETS |
|
|
|
| Short
term investment (Marketable securities) |
9 |
2,859,145 |
3,000,313 |
|
| Investment
with Financial Institutions |
|
|
30,000,000 |
-- |
|
| Morabaha
/ Musharika, advances, deposits |
10 |
27,229,353 |
37,387,273 |
|
| Prepayments
& other receivables |
|
11 |
408,895 |
858,486 |
|
| Short
term placements |
|
40,000,000 |
55,500,000 |
|
| Cash
and bank balance |
|
1,443,257 |
2,814,992 |
|
|
---------- |
---------- |
|
|
101,940,650 |
99,561,064 |
|
|
---------- |
---------- |
|
|
106,287,888 |
105,535,795 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
DIRECTOR |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| OPERATING
INCOME |
|
| Profit
on morabaha/musharika transactions |
|
96,935 |
286,119 |
|
| Lease
income & allied |
|
12 |
11,933,146 |
10,641,751 |
|
| Sundry
business income |
|
13 |
344,089 |
112,667 |
|
|
|
----------- |
----------- |
|
| Income
from operation |
|
|
12,374,170 |
11,040,537 |
|
| Other
income |
|
14 |
949,300 |
1,657,778 |
|
|
|
----------- |
----------- |
|
|
|
13,323,470 |
12,698,315 |
|
| Operating
Expenses |
|
15 |
(5,001,565) |
(6,733,981) |
|
|
|
|
----------- |
----------- |
|
|
8,321,905 |
5,964,334 |
|
| Less:
(Provision) for diminution in the |
|
| value
of marketable securities (long term) |
|
(2,107,491 ) |
(6,839,343) |
|
|
----------- |
----------- |
|
|
6,214,414 |
(875,009) |
|
| Modaraba
Company's Management fee |
|
564,947 |
-- |
|
|
----------- |
----------- |
|
| Profit/(Loss)
before tax |
|
5,649,467 |
(875,009) |
|
| Taxation |
|
| - Current |
|
-- |
(318,500) |
|
| - Prior
year |
|
80,009 |
(328,171) |
|
|
----------- |
----------- |
|
|
80,009 |
(646,671) |
|
|
----------- |
----------- |
|
| Profit/(Loss)
after tax |
|
5,569,458 |
(1,521,680) |
|
| Unappropriated
profit/(Loss) brought forward |
|
(1,209,907) |
311,773 |
|
|
----------- |
----------- |
|
| Profit/(Loss)
available for appropriation |
|
4,359,551 |
(1,209,907) |
|
| Appropriation: |
|
| Statutory
reserves (20%) |
|
(1,113,892) |
-- |
|
| Reserve
for profit distribution (2001 - 5.00%) |
|
(3,231,250) |
-- |
|
|
----------- |
----------- |
|
|
14,409 |
(1,209,907) |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
DIRECTOR |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
2001 |
2000 |
|
|
Rupees |
Rupees |
|
| A.
CASH FLOW FROM OPERATING ACTIVITIES |
|
| Profit/(Loss)
for the year |
|
5,569,458 |
(1,521,680) |
|
| Changes
not effecting working capital |
|
|
|
| Amortization
of assets given on lease |
|
12,000 |
48,000 |
|
| Depreciation
on assets in own use |
|
208,203 |
92,928 |
|
| Reversal
of Provision |
|
780,831 |
-- |
|
| Provision
for diminution in the value of |
|
|
|
| marketable
securities |
|
2,107,491 |
6,839,343 |
|
| Dividend
income |
|
(414,337) |
(839,218) |
|
| Capital
gain/loss on sale of marketable securities |
|
679,733 |
336,466 |
|
| Capital
gain on sale of fixed assets |
|
(186,392) |
(21,220) |
|
|
---------- |
---------- |
|
|
3,187,529 |
6,456,299 |
|
|
---------- |
---------- |
|
| Operating
profit before working Capital charges |
|
8,756,987 |
4,934,619 |
|
| (Increase)/decrease
in current assets |
|
|
|
| Morabaha/Musharika,
advance, deposit |
|
|
|
| and
other receivable |
|
10,607,422 |
(32,125,848) |
|
| Marketable
securities |
|
861,257 |
515,231 |
|
| Short
term placements |
|
(14,500,000) |
32,700,000 |
|
|
---------- |
---------- |
|
| Net
(increase)/decrease in current assets |
|
(3,031,321) |
1,089,383 |
|
| Tax paid |
|
(80,009) |
(328,171 ) |
|
|
---------- |
---------- |
|
| (Increase)/decrease
in current liabilities |
|
(3,111,330) |
761,212 |
|
| Creditor,
accured and other liabilities |
|
445,601 |
(2,577,367) |
|
|
---------- |
---------- |
|
| Net
increase in working capital |
|
(2,665,729) |
(1,816,155) |
|
|
---------- |
---------- |
|
| Net
cash from operating activities |
|
6,091,258 |
3,118,464 |
|
|
|
|
| B.
CASH FLOW FROM INVESTING ACTIVITIES |
|
|
|
| Capital
expenditures |
|
(509,173) |
(630,900) |
|
| Dividend
income |
|
414,337 |
839,218 |
|
| Capital
gain/loss on sale of marketable securities |
|
(679,733) |
(336,466) |
|
| Capital
gain on sale of fixed assets |
|
186,392 |
21,220 |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(588,177) |
(106,928) |
|
|
---------- |
---------- |
|
| C.
CASH FLOW FROM FINANCIAL ACTIVITIES |
|
|
|
| Security
deposit |
|
(262,970) |
131,088 |
|
| Dividend
paid |
|
-- |
(3,554,375) |
|
| Financial
charges |
|
(1,611,846) |
(64,777) |
|
| Short
term financing |
|
(5,000,000) |
2,000,000 |
|
|
---------- |
---------- |
|
|
(6,874,816) |
(1,488,064) |
|
|
---------- |
---------- |
|
| NET
DECREASE IN CASH & BANK BALANCE |
|
| (A + B + c) |
|
(1,371,735) |
1,523,472 |
|
|
|
|
| CASH
& BANK BALANCES AT THE |
|
|
|
| BEGINNING
OF THE YEAR/PERIOD |
|
2,814,992 |
1,291,520 |
|
|
---------- |
---------- |
|
| CASH
& BANK BALANCES AT THE |
|
|
|
| END
OF THE YEAR/PERIOD |
|
1,443,257 |
2,814,992 |
|
|
========== |
========== |
|
|
|
|
|
|
CHIEF EXECUTIVE |
|
DIRECTOR |
|
DIRECTOR |
|
|
|
|
|
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
|
|
|
|
Capital |
|
Reserves |
Total |
|
|
Issued, |
Statutory |
Unappropriated |
|
|
|
subscribed |
Reserve |
Profit |
|
|
|
--------------------------------Rupees-------------------------------- |
|
| Balance
as at June 30, 1999 |
|
64,625,000 |
892,049 |
311,773 |
65,828,822 |
|
| Net
(Loss) for the year |
|
-- |
-- |
(1,521,680) |
(1,521,680) |
|
| Profit
distribution in cash |
|
-- |
-- |
-- |
-- |
|
|
| Transfer
from profit and loss account |
-- |
-- |
-- |
-- |
|
|
|
----------- |
----------- |
----------- |
----------- |
|
|
| Balance
as at June 30, 2000 |
|
64,625,000 |
892,049 |
(1,209,907) |
64,307,142 |
|
|
|
|
|
| Net
Profit for the year |
|
-- |
-- |
5,569,458 |
5,569,458 |
|
|
| Profit
distribution in cash |
|
-- |
-- |
(3,231,250) |
(3,231,250) |
|
|
| Transfer
from profit & loss account |
-- |
1,113,892 |
(1,113,892) |
-- |
|
|
|
----------- |
----------- |
----------- |
----------- |
|
|
| Balance
as at June 30, 2001 |
|
64,625,000 |
2,005,941 |
14,409 |
66,645,350 |
|
|
|
========== |
========== |
========== |
========== |
|
|
|
|
| In
accordance with the new Prudential Regulations for Modarabas Circular No.
4/2001 dated June 14, 2001 issued |
|
| by
Registrar Modaraba, the Modaraba is required to transfer not less than 20% of
its after tax profits to statutory |
|
| reserve
until the reserve equals the paid-up capital. Thereafter, 5% of the after tax
profit are required to be |
|
| transferred
to the reserve. |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| First
Constellation Modaraba is a perpetual, multi-purpose and multi-dimensional
Modaraba registered |
|
| under
the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980
and the rules |
|
| framed
there under and is managed by Constellation Management Company (Private)
Limited, a |
|
| company
incorporated Pakistan. The Modaraba is listed on the Karachi Stock Exchange
(Guarantee) |
|
| Limited,
and is mainly engaged in the business of Leasing, Morabaha and allied
business activities |
|
| including
Securities services of non-interest bearing securities and other permissible
Islamic modes of |
|
| business. |
|
|
| 2.
SUMMERY OF SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
ACCOUNTING CONVENTION: |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.2
FIXED ASSETS: |
|
| Assets
leased out and amortization |
|
| The
Modaraba records of all leasing transaction as operating leases which is the
norm and |
|
| practice
of all Modaraba in Pakistan. This treatment is reflective of the standard
lease agreements |
|
| approved
for Modaraba by the Religious Board and are consistent with the principles of
Islamic |
