| First Grindlays Modaraba |
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| Annual
Report 2000 |
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|
| Contents |
|
|
| Modaraba
Information |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit
& Loss Account |
|
| Statement
of Changes in Equity |
|
| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern of Certificates Holding |
|
|
|
| Modaraba
Information |
|
|
| Directors
of Modaraba Company |
|
| Mr.
Azhar Hamid |
|
| Chairman |
|
|
| Mr.
Gohar S. Butt |
|
| Managing
Director & Chief Executive |
|
|
| Mr.
Asif Sindhu |
|
| Director |
|
|
| Auditors |
|
| A.
F. Ferguson & Co. |
|
| Chartered
Accountants |
|
|
| Bankers |
|
| Standard
Chartered Grindlays Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| Askari
Commercial Bank Limited |
|
| A1-Meezan
Investment Bank Limited |
|
| Faysal
Bank Limited |
|
| Citibank N. A. |
|
|
| Legal Advisors |
|
| Orr
Dignam & Co. |
|
| Mohsin
Tayebaly & Co. |
|
| S.
D. Rana & Co. |
|
|
| Registered
and Head Office |
|
| Standard
Chartered Grindlays Bank Building |
|
| P.O. Box 5556 |
|
| I.
I. Chundrigar Road |
|
| Karachi-74000 |
|
|
| Branch Offices |
|
| Standard
Chartered Grindlays Bank Building |
|
| P.O. Box 6131 |
|
| Tufail Road |
|
| Lahore Cantt. |
|
|
| Standard
Chartered Grindlays Bank Building |
|
| P.O. Box 1004 |
|
| No.
1 Diplomatic Enclave |
|
| Islamabad |
|
|
| Registrars and |
|
| Share
Registration Office |
|
| Ferguson
Associates (Pvt) Ltd. |
|
| P. O. Box 4716 |
|
| State
Life Building 1-A |
|
| Off
I.I. Chundrigar Road |
|
| Karachi-74000 |
|
|
|
| Fourteenth
Report of the Directors of Modaraba |
|
| Company
for the year ended June 30, 2000 |
|
|
| The
Board of Directors of Grindlays Services of Pakistan (Private) Limited, the |
|
| Management
Company of First Grindlays Modaraba (FGM), has pleasure in |
|
| presenting
the fourteenth Directors' report of FGM, together with audited |
|
| accounts
for the year ended June 30, 2000. |
|
|
| 1.
Financial Results |
|
| Financial
results are summarized as under: |
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|
|
|
|
|
Year |
Year |
|
|
|
ended |
ended |
|
|
|
30.06.2000 |
30.06.1999 |
|
|
|
(Rupees in
thousands) |
|
|
| Profit
for the year |
|
|
135,319 |
114,296 |
|
| Add:
Unappropriated profit brought forward |
|
15,053 |
6,085 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
|
150,372 |
120,381 |
|
|
|
|
|
|
| Appropriations: |
|
| Profit
distribution @ 30% (1999 @ 22%) |
|
112,266 |
82,328 |
|
| Statutory
reserve |
|
|
14,000 |
23,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
126,266 |
105,328 |
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
24,106 |
15,053 |
|
|
|
|
========== |
========== |
|
| Earning
per certificate |
|
|
3.62 |
3.05 |
|
|
|
|
========== |
========== |
|
|
| 2.
Profit Distribution |
|
| The
Board in its meeting held on September 04, 2000 has approved the |
|
| distribution
of profit of Rs. 3.00 (30%) per certificate of Rs. 10 each, |
|
| subject
to deduction of zakat and tax at source where applicable, for the |
|
| year
ended June 30, 2000. |
|
|
|
|
| An
amount of Rs. 14 million has been transferred to statutory reserve in |
|
| compliance
with the recently issued Prudential Regulations for Modarabas |
|
| (para
6 below) which regulations require that not less than 10% of the |
|
| Modaraba's
after tax profit be transferred to such reserve till such time |
|
| as
the reserve equals 100% of the paid up capital. Thereafter, a sum not |
|
| less
than 5% of the after tax profit is to be transferred. Under the |
|
| previous
Prudential Regulations not less than 20% of the Modaraba's |
|
| after
tax profits of each year was required to be transferred to this |
|
| reserve
account. |
|
|
| 3.
Credit Rating |
|
| During
the period under review FGM's credit rating was upgraded to A2 |
|
| from
A3 by Pakistan Credit Rating Agency (Pvt.) Limited (PACRA). This |
|
| represents
the highest credit rating in the entire modaraba sector. In |
|
| assigning
the aforementioned rating, PACRA has concluded that FGM is |
|
| in
outstanding financial condition with a consistent record of above |
|
| average
performance. |
|
|
| 4.
Review of Operations |
|
| The
Board is pleased to report that net profit for the year ended June 30, |
|
| 2000
of Rs. 135 million was 18% higher than the profit during the |
|
| corresponding
period last year. The main reason for this increase is |
|
| reduction
in cost of funds and lower provision for doubtful debts. Net |
|
| investment
in leased assets stood at Rs. 1.92 billion as at June 30, 2000 |
|
| as
against Rs. 1.81 billion last year. Lease disbursements during the |
|
| year
amounted to Rs. 715 million as against Rs. 769 million last year. |
|
|
| Historically,
plant, machinery and equipment used to account for |
|
| approximately
75% of lease disbursements which trend has changed in |
|
| recent
years. During the year under review 42% of disbursements were |
|
| for
plant, machinery and equipment. The downward trend is mainly due |
|
| to
slowdown in economic activity and depressed conditions for |
|
| investment.
Realizing this downward trend in disbursements of plant, |
|
| machinery
and equipment, steps were taken to generate more motor |
|
| vehicle
business and as a result 58% of the disbursement for the year |
|
| under
review was in this segment. In addition to partially making up for |
|
| the
fall in plant, machinery & equipment disbursements, this change will |
|
| result
in better profit margins. However,
plant, machinery and |
|
| equipment
represented 65% of the net leased asset portfolio as at June |
|
| 30, 2000. |
|
|
| The
sectorwise break-up of FGM's lease portfolio below reflects its policy |
|
| of
avoiding risk concentration in any given sector. |
|
|
| 5.
Sale of Grindlays by Australia and New Zealand Banking Group |
|
| Limited
(ANZ) to Standard Chartered plc |
|
| ANZ
has, on July 31, 2000, sold its Grindlays businesses in the Middle |
|
| East
and South Asia, and associated Grindlays Private Banking |
|
| business,
to Standard Chartered plc. The integration of Standard |
|
| Chartered
and Grindlays in Pakistan will result in the largest foreign |
|
| bank
in the country. |
|
|
|
|
|
|
| 6.
Prudential Regulations for Modarabas |
|
|
| We
are pleased to report that during April 2000 the Securities and |
|
| Exchange
Commission of Pakistan issued Prudential Regulations for |
|
| Modarabas.
These regulations required full compliance by June 30, 2000. |
|
|
|
|
| 7.
Business Outlook |
|
| Sluggish
economic conditions continue with the leasing environment |
|
| being
very competitive. However, there is a niche market for leasing and |
|
| FGM
has a fair share of this business. Future significant growth in |
|
| leased
assets and increase in profitability is dependent, inter-alia, on |
|
| improvement
in the economic environment and strengthening of the |
|
| economy. |
|
|
| 8.
Acknowledgement |
|
| The
Board places on record its appreciation of the services rendered by |
|
| the
staff members responsible for FGM's affairs. |
|
|
| 9. Auditors |
|
| The
present auditors Messrs. A. F. Ferguson & Co., being due for |
|
| retirement,
have offered themselves for re-appointment for the year |
|
| ending
June 30, 2001. Subject to approval by the Registrar of Modaraba |
|
| Companies
& Modarabas, their appointment has been confirmed by the |
|
| Board. |
|
|
On behalf of the Board |
|
|
|
|
|
Azhar Hamid |
|
| Dated:
September 04, 2000 |
|
Chairman |
|
|
|
| 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, Statement of Changes in Equity and |
|
| Cash
Flow Statement together with the notes to the accounts for the year |
|
| ended
June 30, 2000 of First Grindlays Modaraba, which are Modaraba |
|
| Company's
(Grindlays Services of Pakistan (Private) Limited) |
|
| representation
and we state that we have obtained all the information |
|
| and
explanations which we required and, after due verification thereof, |
|
| we report that: |
|
|
| (a)
In our opinion, proper books of account have been kept by the |
|
| Modaraba
Company in respect of First Grindlays 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 conformity with the Modaraba Companies |
|
| and
Modaraba (Floatation and Control) Ordinance, 1980, and |
|
| Modaraba
Companies and Modaraba Rules, 1981; and |
|
|
|
|
| (c)
In our opinion and to the best of our information and according to |
|
| the
explanations given to us; |
|
|
| (i)
the Balance Sheet and the related Profit and Loss Account, |
|
|
| Statement
of Changes in Equity and Cash Flow Statement, |
|
|
| which
are in agreement with the books of account, exhibit |
|
|
| respectively
a true and fair view of the state of the Modaraba's |
|
|
| affairs
as at June 30, 2000 and of the profit, changes in equity |
|
|
| and
the cash flows for the year ended on that date; |
|
|
|
| (ii)
zakat deductible at source under the Zakat and Ushr |
|
| Ordinance,
1980 has been deducted by the Modaraba and |
|
| deposited
in the Central Zakat Fund established under section |
|
| 7
of that Ordinance; and |
|
|
| (iii)
the business conducted, investments made and expenditure |
|
| incurred
by the Modaraba are in accordance with the objects, |
|
| terms
and conditions of the Modaraba. |
|
|
|
|
A. F. Ferguson & Co. |
|
| Karachi:
September 04, 2000 |
|
Chartered Accountants |
|
|
|
|
| Balance
Sheet as at June 30, 2000 |
|
|
|
|
Note |
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
| Certificate
capital |
|
| Authorised |
|
| 40,000,000
(1999: 40,000,000) |
|
| Modaraba
certificates of Rs. 10 each |
|
400,000,000 |
400,000,000 |
|
|
|
========== |
========== |
|
|
|
|
|
| Issued,
subscribed and paid-up |
|
3 |
374,220,000 |
374,220,000 |
|
| Reserves |
|
4 |
249,000,000 |
235,000,000 |
|
| Unappropriated
profit |
|
|
24,106,236 |
15,052,645 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
647,326,236 |
624,272,645 |
|
| REDEEMABLE
CAPITAL |
|
5 |
-- |
246,000,000 |
|
|
| LONG-TERM
FINANCES AND |
|
| DEFERRED
LIABILITIES |
|
|
|
| Morabaha
finance |
|
6 |
100,000,000 |
100,000,000 |
|
| Security
deposits from lessees |
|
|
137,761,147 |
114,813,029 |
|
| Staff gratuity |
|
|
|
1,808,173 |
469,639 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
239,569,320 |
165,282,668 |
|
|
|
|
| CURRENT
LIABILITIES |
|
| Current
maturity of |
|
|
|
| - long-term redeemable capital |
|
5 |
200,000,000 |
-- |
|
| - long-term morabaha finance |
|
6 |
50,000,000 |
33,333,333 |
|
| - security deposits from lessees |
|
|
41,984,427 |
23,815,386 |
|
| Short-term
redeemable capital |
|
|
-- |
10,000,000 |
|
| Short-term
musharika finances |
|
7 |
225,160,388 |
88,563,245 |
|
| Short-term
morabaha finances |
|
8 |
350,000,000 |
550,000,000 |
|
| Creditors,
accrued and other liabilities |
9 |
36,781,208 |
53,206,668 |
|
| Rentals
received in advance |
|
|
103,281,361 |
97,100,934 |
|
| Unclaimed
profit distribution |
|
|
6,512,823 |
5,498,525 |
|
| Profit
distribution |
|
|
112,266,000 |
82,328,400 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,125,986,207 |
943,846,491 |
|
|
|
|
------------------ |
------------------ |
|
|
|
2,012,881,763 |
1,979,401,804 |
|
|
|
========== |
========== |
|
|
|
|
| FIXED
ASSETS - Tangible |
|
|
|
| Assets
leased out |
|
10 |
1,922,135,021 |
1,811,396,722 |
|
| Assets
in own use |
|
11 |
8,159,626 |
9,133,304 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,930,294,647 |
1,820,530,026 |
|
| LONG-TERM
INVESTMENTS |
|
12 |
6,753,051 |
12,003,964 |
|
|
| CURRENT
ASSETS |
|
|
|
| Trade debts |
|
13 |
382,813,481 |
77,964,431 |
|
| Short-term
morabaha arrangement |
|
-- |
25,000,000 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
14 |
1,432,702 |
5,253,346 |
|
| Taxation
recoverable |
|
|
30,493,180 |
30,489,826 |
|
| Cash
and bank balances |
|
15 |
5,626,835 |
8,160,211 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
75,834,065 |
146,867,814 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
2,012,881,763 |
1,979,401,804 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Azhar Hamid |
|
Gohar S. Butt |
|
Asif Sindhu |
|
|
Chairman |
|
Chief Executive |
|
Director |
|
|
Grindlays Services of |
|
Grindlays Services of |
|
Grindlays Services of |
|
|
Pakistan (Private) Ltd. |
|
Pakistan (Private} Ltd. |
|
Pakistan (Private) Ltd. |
|
|
|
|
| Profit
and Loss Account |
|
| for
the year ended June 30, 2000 |
|
|
|
Note |
2000 |
1999 |
|
|
|
Rupees |
Rupees |
|
|
| Operating
income |
|
16 |
854,026,798 |
785,454,195 |
|
| Operating
expenses |
|
17 |
599,661,335 |
503,498,965 |
|
| Financial
charges |
|
18 |
121,838,474 |
146,649,343 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
721,499,809 |
650,148,308 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
132,526,989 |
105,305,887 |
|
|
|
|
|
|
| Other income |
|
19 |
17,828,112 |
20,419,621 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
150,355,101 |
125,725,508 |
|
|
|
|
| Modaraba
Company's management fee |
|
15,035,510 |
11,429,592 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
for the year |
|
|
135,319,591 |
114,295,916 |
|
|
|
|
| Unappropriated
profit brought forward |
|
15,052,645 |
6,085,129 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
available for appropriation |
|
|
150,372,236 |
120,381,045 |
|
|
| Appropriations: |
|
| Profit
distribution: 30% (1999: 22%) |
|
112,266,000 |
82,328,400 |
|
|
|
|
| Capital reserve: |
|
|
| Statutory |
|
|
14,000,000 |
23,000,000 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
126,266,000 |
105,328,400 |
|
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
24,106,236 |
15,052,645 |
|
|
|
|
========== |
========== |
|
| Earning
per certificate - Basic and Diluted |
20 |
3.62 |
3.05 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Azhar Hamid |
|
Gohar S. Butt |
|
Asif Sindhu |
|
|
Chairman |
|
Chief Executive |
|
Director |
|
|
Grindlays Services of |
|
Grindlays Services of |
|
Grindlays Services of |
|
|
Pakistan (Private) Ltd. |
|
Pakistan (Private} Ltd. |
|
Pakistan (Private) Ltd. |
|
|
|
| Statement
of Changes in Equity |
|
| for
the year ended June 30, 2000 |
|
|
|
|
|
CAPITAL
RESERVES |
|
|
|
|
|
|
Certificate |
Premium |
Statutory |
Unappropriated |
TOTAL |
|
|
|
capital |
on modaraba |
|
profit |
|
|
|
|
|
certificates |
|
|
|
|
|
Rupees |
|
|
|
|
|
| Balance
as at June 30, 1998 |
374,220,000 |
135,000,000 |
77,000,000 |
6,085,129 |
592,305,129 |
|
| Profit
for the year ended June 30, 1999 |
-- |
-- |
-- |
114,295,916 |
114,295,916 |
|
| Utilised
for profit distribution |
-- |
-- |
-- |
(82,328,400) |
(82,328,400) |
|
| Transferred
from profit and loss account |
-- |
-- |
23,000,000 |
(23,000,000) |
-- |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 1999 |
374,220,000 |
135,000,000 |
100,000,000 |
15,052,645 |
624,272,645 |
|
|
|
|
|
|
|
| Profit
for the year ended June 30, 2000 |
-- |
-- |
-- |
135,319,591 |
135,319,591 |
|
| Utilised
for profit distribution |
-- |
-- |
-- |
(112,266,000) |
(112,266,000) |
|
| Transferred
from profit and loss account |
-- |
-- |
14,000,000 |
(14,000,000) |
-- |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2000 |
374,220,000 |
135,000,000 |
114,000,000 |
24,106,236 |
647,326,236 |
|
|
|
========== |
========== |
========== |
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Azhar Hamid |
|
Gohar S. Butt |
|
Asif Sindhu |
|
|
Chairman |
|
Chief Executive |
|
Director |
|
|
Grindlays Services of |
|
Grindlays Services of |
|
Grindlays Services of |
|
|
Pakistan (Private) Ltd. |
|
Pakistan (Private} Ltd. |
|
Pakistan (Private) Ltd. |
|
|
|
| Cash
Flow Statement |
|
| for
the year ended June 30, 2000 |
|
|
|
|
Note |
2000 |
1999 |
|
|
|
|
Rupees |
Rupees |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations |
|
24 |
869,705,410 |
725,700,826 |
|
| Profit paid on |
|
|
|
| -
long-term redeemable capital |
|
|
(27,666,179) |
(22,250,201) |
|
| -
long-term morabaha finances |
|
|
(18,025,255) |
(8,787,290) |
|
