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First Habib Bank Modaraba
Annual Report 2001
CONTENTS
Product Range & Lease Portfolio
Corporate Information
Chairman's Review
Auditors' Report 
Balance Sheet
Profit and Loss Account
Cash Flow Statement
Notes to the Accounts
FHBM - Five Years at a glance
Notice of Annual Review Meeting
Pattern of Certificate Holding
PRODUCT RANGE
* Leasing
* Morabaha
* Musharika
* Portfolio Management/Underwriting/
Financial Advisory Services
CORPORATE INFORMATI'ON
BOARD OF DIRECTORS ZAKIR MAHMOOD
Chairman
KHALEEQ KAYANI
Director
SOHAIL MALIK
Director
NAEEM IQBAL
Director
SAEED UDDIN KHAN
Chief Executive
COMPANY SECRETARY MUHAMMAD AMIN CHHOTANI
AUDITORS M/s. FORD RHODES ROBSON MORROW
Chartered Accountants
BANKERS HABIB BANK LIMITED
Corporate Branch, Karachi
LEGAL ADVISOR MUHAMMAD ARIF ZIA
Advocate
SHARES REGISTRAR M/s. T.H.K. ASSOCIATES (PVT) LIMITED
Ground Floor, Shaikh Sultan Trust
Building No. 2, Beaumont Road, Karachi-75530
Tel: 5689021 & 5686658
Fax: 5685681
REGISTERED OFFICE 18-Habib Bank Plaza,
I.I. Chundrigar Road, Karachi-75650.
Tel: 2412294, 2410967, 2418000
Ext. 2257 & 2354
Fax: 2411860
CHAIRMAN REVIEW
By the Grace of Allah, your Modaraba has successfully completed a
decade of operations. On behalf of the Board of Directors of Habib Bank
Financial Services (Pvt.) Limited, the Managers of Modaraba, I feel
immense pleasure in presenting to you the 10tn Annual Report of First
Habib Bank Modaraba (FHBM) together with audited accounts for the
financial year ended 30th June 2001.
2001 was an extremely difficult year as in the backdrop of a combination of different
factors FHBM posted a Net Profit of Rs. 54.3 Mn as against 1%s. 104.4 Mn in the preceding
year. Downturn in the economy, increasing price competition from large size financial
sector players having adequate low cost resources and the Government policy of allowing
commercial banks to enter into the leasing business, which is the principal activity of
your Modaraba, led to severe strains on its ability to generate fresh good quality business
and increase revenues. The management is fully cognizant of the future challenges and
Business Plans / Strategy to successfully meet the same is in place. Prudent risk management
demands that provisions wherever necessary be made for potential losses to strengthen
the balance sheet. During 2001 a more stringent view of some previously rescheduled
large leases was taken in line with the Prudential Regulations. Similarly impairment of
the equity investment portfolio due to adverse trends in stock markets was also taken
into consideration. Accordingly, Provisions amounting to 1%s.33.6 Mn have to be booked
during the year on account of leases and equity investments. Your management has all
along strived to keep effective cost controls and a check over nonproductive expenditure.
Thus the administrative cost barring Legal & Professional charges and Depreciation
expenses increased by only 5.1% during the year under review.
FINANCIAL RESULTS
Financial results for the year 2001 are summarized below:-
(In Rupees)
2001 2000
Total Operating Income 250,248,561 273,211,303
Less: Operating Exp. 195,971,652 162,434,005
Profit before Taxation 54,276,909 110,777,298
Provision for Taxation -- 6,368,263
Net Profit for the year 54,276,909 104,409,035
Unappropriated Profit B/F 9,157,607 559,956
Profit available for distribution 63,434,516 104,968,991
APPROPRIATIONS
Transfer to Statutory Reserve 5,427,691 10,440,904
Proposed Dividend @14.50 % (2000: 21.5%) 57,575,440 85,370,480
Balance Carried Forward 431,385 9,157,607
DIVIDEND
The Board is pleased to announce a cash dividend of 14.5% to the Modaraba Certificate holders
for the period ended on 30th June 2001 subject to deduction of Zakat and withholding
tax at source, wherever applicable. The break up value of your Modaraba Certificate now
stands at Rs. 12.40 as against the face value of Rs.10. (2001: Rs 12.49).
OPERATING RESULTS
The operating income of FHBM decreased by 8.4% from Rs. 273.211 Million in the
preceding year to Rs. 250.249 million in the year under review due to income reversals
on account of rescheduled leases and sluggish business activity. However, shortfall in
lease rentals was partially compensated by an increase in dividend income and return
on PLS saving accounts. The income is derived totally through Islamic modes of financing.
In 2001, the amortization expenses increased by 7.3% on account of higher amount of
leases terminated during the year (2001: Rs.115.6 Mn, 2000: Rs. 12.6 Mn ).
FUTURE OUTLOOK
In 2001 some financial issues impacting upon the future sustainable improved profitability
have been largely addressed. The economic environment has lately improved due to higher
production of major crops and assistance from multilateral financial institutions, which
accompanied with the GOP plans for phased introduction of Islamic banking in Pakistan
offers good future prospects. We, however, believe that FHBM needs repositioning to meet
the emerging challenges as a leading provider of Shariah based financial products. Going
forward, we intend to focus on developing a market niche for Riba free products, writing
leases to prime quality clients as the main line of business alongwith other modes such
as Musharika, Morabaha etc, broadening our portfolio by carefully entering into consumer
leasing, improving systems and processes in line with best industry standards and finally
ensuring high value to all our stakeholders. The next 12 months will be challenging
necessitating decisions that will help us achieve our profitability goals in terms of increasing
revenues and containing expenses.
AUDITORS
The present auditors M/s. Ford Rhodes Robson Morrow, Chartered Accountants are due
for retirement and being eligible have offered themselves for re-appointment.
The Board has approved their re-appointment for the period July 2001 to June 2002.
ACKNOWLEDGEMENTS
The Board wishes to record its appreciation of the valuable contribution of Mian Abdus
Salam (outgoing Director) and welcomes Mr. Saeed Uddin Khan on the Board.
The Board also wishes to place on record its appreciation for the continued support and
guidance provided by Securities & Exchange Commission of Pakistan, Registrar Modaraba
Companies, State Bank of Pakistan, Leasing Association of Pakistan and Modaraba
Association of Pakistan, from time to time.
At the same time the Board appreciates the dedication and hard work put in by the
Management and all staff members of FHBM and HBFSL and look forward to their
continued loyalty in the coming years.
Finally the Board extends its gratitude and appreciation to the shareholders who have
remained committed to FHBM.
On behalf of the Board
ZAKIR MAHMOOD
Chairman
AUDITORS' REPORT TO THE CERTI'FICATE HOLDERS
We have audited the annexed Balance Sheet as at June 30, 2001 and the related Profit
and Loss Account and the Cash Flow Statement together with the notes to the accounts
for the year ended June 30, 2001 of FIRST HABIB BANK MODARABA which are modaraba
company's (Habib Bank Financial Services (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 HABIB BANK MODARABA as required by the Modaraba Companies
and Modaraba (Floatation and Control) Ordinance, 1980 and Modaraba Companies
and Modaraba Rules, 1981;
(a) 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 and the 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, 2001
and of the Profit and 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.
Karachi FORD, RHODES, ROBSON MORROW
November 03, 2001 Chartered Accountants
BALANCE SHEET AS AT JUNE 30, 2001
Note 2001 2000
Rupees Rupees
ASSETS
NON-CURRENT ASSETS
Fixed assets - tangible
Assets given on lease 3.1 377,783,681 528,450,062
Assets in own use 3.2 165,266 390,597
------------------ ------------------
377,948,947 528,840,659
Long term investments 4 16,916,016 14,696,920
Long term deposit 5 600,000 600,000
------------------ ------------------
395,464,963 544,137,579
CURRENT ASSETS
Short term investments 6 41,691,875 20,182,429
Morabaha finances 7 2,000,000 2,000,000
Lease rentals receivable 8 60,760,470 86,263,233
Prepayments and other receivables 9 5,941,283 4,582,974
Bank balances 10 150,776,493 36,384,297
------------------ ------------------
261,170,121 149,412,933
------------------ ------------------
TOTAL ASSETS 656,635,084 693,550,512
========== ==========
EQUITY AND LIABILITIES
CAPITAL AND RESERVES
Certificate capital
Authorised - 50,000,000
(2000: 50,000,000)
Certificates of Rs. 10 each 500,000,000 500,000,000
========== ==========
Issued, subscribed and paid-up 11 397,072,000 397,072,000
Reserves 20 95,406,506 98,705,037
------------------ ------------------
492,478,506 495,777,037
NON-CURRENT LIABILITIES
Deferred liability 12 43,276,850 59,087,497
CURRENT LIABILITIES
Current maturity of deferred liability 12 18,581,047 13,248,400
Accrued and other liabilities 13 27,152,867 21,313,411
Provision for taxation-net 12,327,172 13,060,623
Unclaimed profit distribution 5,243,202 5,693,064
Proposed profit distribution 57,575,440 85,370,480
------------------ ------------------
120,879,728 138,685,978
------------------ ------------------
TOTAL EQUITY AND LIABILITIES 656,635,084 693,550,512
========== ==========
The annexed notes form an integral part of these accounts.
Saeed Uddin Khan Naeem Iqbal Sohail malik
Chief executive Director Director
PROFIT AND LOSS ACCOUNT FOR THE YEAR ENDED JUNE 30, 2001
Note 2001 2000
Rupees Rupees
OPERATING INCOME 14 250,248,561 273,211,303
OPERATING COSTS
Depreciation on leased assets 150,110,679 139,907,725
Administrative expenses 15 6,218,432 5,531,604
Financial charges 16 46,229 3,351,979
------------------ ------------------
156,375,340 148,791,308
------------------ ------------------
93,873,221 124,419,995
Other charges 17 33,565,544 1,334,108
------------------ ------------------
60,307,877 123,085,887
Modaraba company's management fee (6,030,768) (12,308,589)
------------------ ------------------
PROFIT BEFORE TAXATION 54,276,909 110,777,298
Taxation - prior years -- (6,368,263)
------------------ ------------------
PROFIT AFTER TAXATION  54,276,909 104,409,035
UNAPPROPRIATED PROFIT BROUGHT FORWARD 9,157,607 559,956
------------------ ------------------
PROFIT AVAILABLE FOR APPROPRIATION 63,434,516 104,968,991
APPROPRIATIONS
Transfer to statutory reserve
@ 10% (2000: 10%) (5,427,691) (10,440,904
Proposed Profit distribution
@ 14.5% (2000: 21.5%) (57,575,440) (85,370,480)
------------------ ------------------
(63,003,131) (95,811,384)
------------------ ------------------
UNAPPROPRIATED PROFIT CARRIED FORWARD 431,385 9,157,607
========== ==========
BASIC EARNINGS PER CERTIFICATE 18 1.37 2.63
========== ==========
The annexed notes form an integral part of these accounts.
Saeed Uddin Khan Naeem Iqbal Sohail malik
Chief executive Director Director
CASH FLOW STATEMENT FOR THE YEAR ENDED JUNE 30, 2001
Note 2001 2000
Rupees Rupees
CASH FLOWS FROM OPERATING ACTIVITIES
Net Profit before taxation 54,276,909 110,777,298
Adjustment of non-cash and other items 19 176,380,925 134,259,578
------------------ ------------------
230,657,834 245,036,876
Changes in working capital
Decrease/(increase) in current assets 7,905,054 (17,087,138)
Increase in creditors, accrued
and other liabilities 6,230,365 12,387,808
------------------ ------------------
244,793,253 240,337,546
Financial charges paid (437,138) (3,469,313)
Income tax paid (733,451) (136,720)
Customer security deposit received 1,170,400 16,588,200
------------------ ------------------
Net cash from operating activities 244,793,064 253,319,713
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of fixed assets - Lease out (11,092,698) (178,701,018)
            - Owned (49,250) (114,500)
Investments in shares/securities-net (38,577,184) (7,659,103)
Morabaha finance -- 544,300
Dividend received 5,138,606 1,694,554
------------------ ------------------
Net cash used in investing activities (44,580,526) (184,235,767)
CASH FLOWS FROM FINANCING ACTIVITIES
Profit paid (85,820,342) (59,510,275)
------------------ ------------------
NET INCREASE IN CASH
AND CASH EQUIVALENTS 114,392,196 9,573,671
CASH AND CASH EQUIVALENTS
AT BEGINNING OF THE YEAR 36,384,297 26,810,626
CASH AND CASH EQUIVALENTS ------------------ ------------------
AT END OF THE YEAR 10 150,776,493 36,384,297
========== ==========
The annexed notes form an integral part of these accounts.
Saeed Uddin Khan Naeem Iqbal Sohail Malik
Chief executive Director Director
NOTES TO THE ACCOUNTS FOR THE YEAR ENDED JUNE 30, 2001
1. LEGAL STATUS AIFD NATURE OF BUSINESS
First Habib Bank Modaraba is a multi-purpose, perpetual 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. SIGMFICANT ACCOUNTING POLICIES
2.1 Accounting convention
These accounts have been prepared under the historical cost convention.
2.2 Revenue recognition
(i) Lease rentals are recognised as income on a systematic basis over the
lease period without considering grace period if any.
(ii) Profit from Morabaha transactions are recognised on pro-rata accrual
basis, calculated on number of days funds were utilised.
(iii) Dividend income is recognised when the right to the dividend is established.
(iv) Return on deposits with banks is recognised as income on an accrual
basis.
2.3 Fixed assets
(i) Assets given on lease and depreciation
All lease transactions are accounted for as operating leases.
Leased assets are stated at cost to the Modaraba less accumulated
depreciation. Depreciation is charged to income applying the annuity
method whereby the cost of an asset less salvage value is written off over
the lease period, which is considered to be the estimated useful life of
the asset. Depreciation on additions and disposals during the year is
charged proportionately from the date of commencement and to the date
of maturity respectively.
(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.
Maintenance and normal repairs are charged to income as and when
incurred. Gain or loss on disposal of assets is included in income currently.
2.4 Investments
Long term investments are stated at moving average cost. Provision is made
for decline other than temporary, if any, in the value of these investments.
Short term investments are carried at lower of moving average cost and market
value determined on an individual investment basis.
Gain or loss on disposal of investments, if any, is included in income currently.
2.5 Taxation
As per the current tax law, income from non-trading modarabas is exempt
from income tax provided that they distribute ninety percent cash dividend
to certificate holders out of current years total profit after reducing mandatory
reserves. On this premise, no provision with respect to current and deferred
taxation has been made in the accounts for the assessment year 2001-2002.
2.6 Trade debts and receivables
Provision is made for trade debts and receivables considered doubtful.
3. FIXED ASSETS-TANGIBLE
3.1 Assets given on lease
COST DEPRECIATION
Charge/ Book
As at As at As at (adjustment) As at value
July 1, Additions/ June 30, July 1, for the June 30, as at
Description 2000 (Disposals) 2001 2000 year 2001 June 30, 2001
Rupees Rupees Rupees
Plant and machinery  890,704,260 10,786,402 785,908,124 367,629,453 148,081,919 411,977,234 373,930,890
(115,582,538) (103,934,138)
Motor vehicles  7,997,058 -- 7,997,058 2,421,803 1,961,438 4,383,241 3,613,817
-- --
Computers -- 306,296 306,296 -- 67,322 67,322 238,974
-- --
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
2001 8,981,701,318 11,092,698 794,211,478 370,251,256 150,110,679 416,427,797 377,783,681
(115,582,538) (103,934,138)
========== ========== ========== ========== ========== ========== ==========
2000 732,641,956 178,701,018 898,701,318 241,720,187 139,907,725 370,251,256 528,450,062
(12,641,656) (11,376,656)
========== ========== ========== ========== ========== ========== ==========
3.1.1 Disposal of fixed assets given on lease
Original Accumulated Book Sale Gain/ Mode of Particulars
Particulars cost depreciation value proceeds (Loss) disposal of purchaser
Rupees
Plant and machinery 11,586,926 10,340,226 1,246,700 1,246,700 -- Lease expiry Gulistan Weaving Mills Limited
2nd Floor, Finlay House,
I.I. Chundrigar Road, Karachi
Plant and machinery 7,000,000 6,300,000 700,000 700,000 -- Lease expiry Maqbool Textile Mills Limited
24/3 Tufail Road, Multan
Plant and machinery 7,000,000 6,300,000 700,000 700,000 -- Lease expiry Ahmed Hassan Textile Mills Limited
46 Hassan Parwana Colony, Multan
Plant and machinery 89,400,000 80,460,000 8,940,000 6,940,000 -- Lease expiry Ghazi Power Limited
8/C, E3 Gulberg 3, Lahore
Plant and machinery 595,612 533,912 61,700 61,700 -- Lease expiry Mumtaz Hospital
56/2-Block K, North Nazimabad,
------------------ ------------------ ------------------ ------------------ ------------------ Karachi
2001 115,582,536 103,934,138 11,648,400 11,648,400 --
========== ========== ========== ========== ==========
2000 12,641,656 11,376,656 1,265,000 1,265,000 --
========== ========== ========== ========== ==========
3.2 Assets in own use
COST DEPRECIATION
Book
As at As at As at Charge As at value
July 1, June 30, July 1, for the June 30, as at Useful life
Description 2000 Additions 2001 2000 year 2001 June 30, 2001 in year
Rupees Rupees Rupees
Office improvements 22,396 -- 22,396 22,396 -- 22,396 -- 4
Furniture and fixtures 198,113 -- 198,113 191,178 6,937 198,113 -- 5
Office equipment 200,738 10,500 211,238 167,104 12,093 179,197 32,041 5
Computers 2,081,724 38,750 2,120,474 1,731,698 255,551 1,987,249 133,225 4
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
2001 2,502,971 49,250 2,552,221 2,112,374 274,581 2,386,955 165,266
========== ========== ========== ========== ========== ========== ==========
2000 2,388,471 114,500 2,502,971 1,887,383 224,991 2,112,374 390,597
========== ========== ========== ========== ========== ========== ==========
4. LONG TERM INVESTMENTS
Unless stated otherwise the holdings are in quoted ordinary shares/certificates/units of Rs. 10 each.
June 30, 2001
No. of shares/ Average cost
Certificates/Units per share/ June 30,
June 30, June 30, certificate/ Market 2000
2000 2001 unit Cost value Cost
Rupees
UNITS
42,920 42,920 NIT Units 14.28 612,958 416,324 612,958
MUTUAL FUND
10,000 10,000 21st ICP Mutual Fund 11.79 117,872 14,500 117,872
TEXTILE
12,700 12,700 Mohammad Farooq Textile Mills Limited 12.33 156,531 44,450 156,531
CHEMICAL AND PHARMACEUTICAL
190,000 355,000 Fauji Fertilizer Limited     47.93 17,015,966 12,753,375 10,119,637
148,500 163,350 Searle Pakistan Limited 11.77 1,922,600 2,368,575 1,922,600
BANKS
80,000 105,000 Askari Commercial Bank Limited 12.21 1,281,767 1,367,625 957,475
AUTO AND ALLIED ENGINEERING
54,000 56,000 Pak Suzuki Motors Company Limited 23.54 1,318,224 483,000 1,292,271
------------------ ------------------ ------------------
22,425,918 17,447,849 15,179,344
Provision for diminution in value of investments (5,509,902) -- (482,424)
------------------ ------------------ ------------------
16,916,016 17,447,849 14,696,920
========== ========== ==========
Aggregate market value as at June 30, 2000 12,262,727
==========
2001 2000
Rupees Rupees
5. LONG TERM DEPOSIT
Central Depository Company of Pakistan Limited 600,000 600,000
========== ==========
6. SHORT TERM INVESTMENTS
Unless stated otherwise the holdings are in quoted ordinary shares/certificates of Rs. 10 each.
June 30, 2001
No. of shares/ Average cost
Certificates/Units per share/ June 30,
June 30, June 30, certificate/ Market 2000
2000 2001 unit Cost value Cost
Rupees
TEXTILE
-- 130,000 Nishat Mills limited 25.92 3,370,012 2,249,000 --
INSURANCE
-- 100,000 Adamjee Insurance Company Limited 71.99 7,198,654 5,602,500 --
TRANSPORT AND COMMUNICATION
350,000 1,000,000 P.T.C.L. 'A' 23.16 23,157,579 18,050,000 9,314,929
FUEL AND ENERGY
-- 400,000 Hub Power Company Limited 20.82 8,329,121 7,680,000 --
675,000 805,000 Sui Northern Gas Pipeline Limited 17.30 13,929,841 8,110,375 13,572,166
------------------ ------------------ ------------------
55,985,207 41,691,875 22,887,095
Provision for diminution in value of investments (14,293,332) -- (2,704,666)
------------------ ------------------ ------------------
41,691,875 41,691,875 20,182,429
========== ========== ==========
Aggregate market value as at June 30, 2000 20,343,750
==========
Note 2001 2000
Rupees Rupees
7. MORABAHA FINANCES secured
Short term morabaha
finance - considered good 7.1 2,000,000 2,000,000
Current maturity of long term
morabaha finance - considered doubtful 7.2 10,077,104 10,077,104
------------------ ------------------
12,077,104 12,077,104
Provision for long term morabaha
finance considered doubtful (10,077,104) (10,077,104)
------------------ ------------------
2,000,000 2,000,000
========== ==========
7.1 The Modaraba has entered into short term morabaha agreement i.e sale of
goods on a deferred payment basis at a specified profit margin. Sale price
receivable under the agreement is secured by way of bank guarantee and
personal guarantees of the directors. Furthermore, the Modaraba is entitled
to claim damages in case of delayed payments.
7.2 The Modaraba has entered into long term morabaha agreement with a financial
institution. Sale price receivable under the agreement is secured by way of
personal guarantees of the directors and assignment of lease rentals in favour
of the Modaraba. Furthermore, the Modaraba is entitled to claim damages in
case of delayed payments.
8. LEASE RENTALS RECEIVABLE - secured
Considered good 60,760,470 86,263,233
Considered doubtful 30,693,263 14,195,646
------------------ ------------------
91,453,733 100,458,879
Provision for doubtful debts (30,693,263) (14,195,646)
------------------ ------------------
60,760,470 86,263,233
========== ==========
9. PREPAYMENTS AND
OTHER RECEIVABLES
Prepayments 139,975 58,725
Other receivables
Profit accrued on
- Morabaha finance 144,350 7,377
- PLS saving accounts 1,022,414 140,545
Dividend receivable 710,000 --
Central Excise Duty recoverable
from a customer 451,783 451,783
Provision for Central Excise Duty
recoverable from a customer (451,783) --
------------------ ------------------
-- 451,783
Income tax refundable 9.1 3,924,544 3,924,544
------------------ ------------------
5,941,283 4,582,974
========== ==========
9.1 This represents refund determined for the assessment year 1995-96 (Income
year eighteen months ended June 30, 1995), which has been claimed by the
modaraba while filing the return of income for the assessment year 1998-99
(Income year 1997-98) to reduce tax liability for the said assessment year,
which is pending finalisation.
10. BANK BALANCES
PLS account 145,533,291 30,691,233
PLS Profit dividend warrant accounts 5,243,202 5,693,064
------------------ ------------------
150,776,493 36,384,297
========== ==========
11. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL
30,000,000 (2000: 30,000,000) Certificates
of Rs. 10 each fully paid in cash 300,000,000 300,000,000
9,707,200 (2000: 9,707,200) Certificates
of Rs. 10 each fully paid bonus certificates 97,072,000 97,072,000
------------------ ------------------
397,072,000 397,072,000
========== ==========
12. DEFEND LIABILITY
Customers' security deposits 61,857,897 72,335,897
Current maturities shown under
current liabilities (18,581,047) (13,248,400)
------------------ ------------------
43,276,850 59,087,497
========== ==========
13. ACCRUED AND OTHER LIABILITIES
Accrue d liabilities 281,819 213,330
Profit accrued on musharika finance -- 390,909
Management fee payable 24,380,516 18,349,748
Unapplied lease payments -- 9,450
Penalty for delayed payments 13.1 2,490,532 2,349,974
------------------ ------------------
27,152,867 21,313,411
========== ==========
13.1 This represents charges on late payment of rentals recovered from the customers
of the Modaraba which according to the Religious Board are not to be taken
to income but used for charitable purposes only.
14. OPERATING INCOME
Lease rentals 233,915,638 260,462,444
Profit on Morabaha finances 498,773 493,170
Dividend income 5,848,606 1,527,739
Return on saving accounts 8,208,992 1,178,789
Gain on sale of investments 1,767,502 9,031,486
Other income 9,050 517,675
------------------ ------------------
250,248,561 273,211,303
========== ==========
15. ADMINISTRAT1VE EXPENSES
Salaries and allowances 22 2,875,322 2,637,394
Training expenses 27,179 166,750
Depreciation on assets in own use 3.2 274,581 224,991
Subscription 411,417 409,220
Legal and professional charges 580,698 203,949
Professional tax 100,000 100,000
Printing and stationery 529,318 225,939
Telephone 103,487 255,466
Postage 142,575 106,910
Advertising 27,500 60,938
Auditors' remuneration 15.1 99,909 98,909
Repairs and maintenance 172,224 116,870
Fuel and conveyance 29,377 54,730
Registrar services 731,026 728,476
Entertainment 80,952 87,139
Zakat on investments -- 20,000
Central excise duty written off -- 5,405
Miscellaneous expenses 32,867 28,518
------------------ ------------------
6,218,432 5,531,604
========== ==========
15.1 Auditors' remuneration
Statutory audit 55,000 55,000
Half yearly audit 35,000 35,000
Out of pocket expenses 9,909 8,909
------------------ ------------------
99,909 98,909
========== ==========
16. FINANCIAL CHARGES
Bank charges 46,229 358,641
Profit on musharika finance -- 2,993,338
------------------ ------------------
46,229 3,351,979
========== ==========
17. OTHER CHARGES
Provision for diminution in value
of long term investments 5,027,478 --
Provision for diminution in value
of short term investments 11,588,666 1,933,760
Provision for potential morabaha losses -- 3,810,942
Provision for lease rentals receivable 17.1 16,497,617 (4,410,594)
Provision for Central Excise Duty
recoverable from a customer 451,783 --
------------------ ------------------
33,565,544 1,334,108
========== ==========
17.1 This is net of the provision written back amounting to Rs. 1,356,483
(2000: Rs. 6,994,027).
18. BASIC EARNINGS PER CERTIFICATE
Basic earnings per certificate are calculated by dividing the net profit for the year
by the weighted average number of certificates outstanding during the year as follow:
Profit after taxation 54,276,909 104,409,035
========== ==========
Weighted average number of certificates
outstanding during the year 39,707,200 39,707,200
========== ==========
Basic earnings per certificate 1.37 2.63
========== ==========
No figure for diluted earnings per certificate has been presented as the Modaraba
has not issued any instruments which would have an impact on earnings per
certificate when exercised.
19. ADJUSTMENTS OF NON CASH AND OTHER ITEMS
Depreciation - Leased assets 150,110,679 139,907,725
                        - Owned assets 274,581 224,991
Provision for long term investments 5,027,478 --
Provision for short term investments 11,588,666 1,933,760
Provision made/(written back) on lease
rentals receivable 16,497,617 (4,410,594)
Provision against morabaha finance -- 3,810,942
Dividend income (5,848,606) (1,527,739)
Financial charges 46,229 3,351,979
Gain on sale of investments (1,767,502) (9,031,486)
Provision for Central Excise Duty
recoverable from a customer 451,783 --
------------------ ------------------
176,380,925 134,259,578
========== ==========
20. STATEMENT OF CHANGES IN EQUITY
Reserves ~/~:
Issued, Capital Revenue
subscribed reserve: reserve
and paid-up Statutory Unappropriated Total
capital reserve profit reserves Total
Rupees
Balance as at July 1, 1999 397,072,000 79,106,526 559,956 79,666,482 476,738,482
Net profit for the year -- -- 104,409,035 104,409.04 104,409,035
Profit distribution -- -- (85,370,480) (85,370,480) (85,370,480)
Transferred during the year -- 10,440,904 (10,440,904) -- --
------------------ ------------------ ------------------ ------------------ ------------------
Balance as at June 30, 2000 397,072,000 89,547,430 9,157,607 98,705,037 495,777,037
Net profit for the year -- -- 54,276,909 54,276,909 54,276,909
Profit distribution -- -- (57,575,440) (57,575,440) (57,575,440)
Transferred during the year -- 5,427,691 (5,427,691) -- --
------------------ ------------------ ------------------ ------------------ ------------------
Balance as at June 30, 2001 397,072,000 94,975,121 431,385 95,406,506 492,478,506
========== ========== ========== ========== ==========
The statutory reserve represents profits set aside as required under the Securities ~ ::
and Exchange Commission of Pakistan's prudential regulations for modarabas
2001 2000 ~.~
Rupees Rupees
21. TRANSACTIONS WITH ASSOCIATED UNDERTAKINGS
Reimbursement of various expenses 3,129,792 3,072,364
Modaraba company's management fee 6,030,768 12,308,589 ~:~
Profit on PLS accounts 8,208,992 1,178,789
22. REMUNERATION OF OFFICERS AND OTHER EMPLOYEES
The aggregate amount charged in the accounts for remuneration, including all
benefits, to officers and other employees of the Modaraba were as follows:
Officers Other employees Total
June 2001 June 2000 June 2001 June 2000 June 2001 June 2000
Rupees Rupees Rupees Rupees Rupees Rupees
Remuneration 2,106,894 1,797,657 593,400 603,913 2,700,294 2,401,570
Medical expenses 99,769 169,800 45.98 39,083 145,753 208,883
Retirement benefit 24,876 22,153 4,399 4,788 29,275 26,941
------------------ ------------------ ------------------ ------------------ ------------------ ------------------
2,231,539 1,989,610 643,783 647,784 2,875,322 2,637,394
========== ========== ========== ========== ========== ==========
Number of persons at the end of the year 4 4 4 4 8 8
========== ========== ========== ========== ========== ==========
23. RENTALS RECEIVABLE WITHIN ONE YEAR
Future lease rentals receivable and the periods in which same are due on the basis
of lease agreements executed up June 30, 2001 are:
Not later than one year 163,324,639 250,862,676
Later than one year and not later than five years 364,230,495 425,212,814
------------------ ------------------
527,555,134 676,075,490
========== ==========
24. FINANCIAL ASSETS AND LIABILITIES AS ON JUNE 30, 2001
(i) Financial assets and liabilities
Mark-up bearing Non-Mark-up bearing
Maturity after Maturity after
Maturity upto one year Maturity upto one year
one year upto five years Sub-Total one year upto five years Sub-Total Total
Financial assets
Long term investments -- -- -- -- 16,916,016 16,916,016 16,916,016
Long term deposit -- -- -- -- 600,000 600,000 600,000
Short term investments -- -- -- 41,691,875 -- 41,691,875 41,691,875
Morabaha finances 2,000,000 -- 2,000,000 -- -- -- 2,000,000
Lease rentals receivable -- -- -- 60,760,470 -- 60,760,470 60,760,470
Other receivables -- -- -- 1,876,764 -- 1,876,764 1,876,764
Bank balances 150,776,493 -- 150,776,493 -- -- -- 150,776,493
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
152,776,493 -- 152,776,493 104,329,109 17,516,016 121,845,125 274,621,618
========== ========== ========== ========== ========== ========== ==========
Financial liabilities
Security deposits
on lease contracts -- -- -- 18,581,047 43,276,850 61,857,897 61,857,897
Accrued and other liabilities -- -- -- 27,152,867 -- 27,152,867 27,152,867
Unclaimed profit distribution -- -- -- 5,243,202 -- 5,243,202 5,243,202
------------------ ------------------ ------------------ ------------------ ------------------ ------------------ ------------------
-- -- -- 50,977,116 43,276,850 94,253,966 94,253,966
========== ========== ========== ========== ========== ========== ==========
(ii) Foreign exchange risk management
Foreign currency risk arises mainly where receivables and payables exist due to
transactions with foreign undertakings. As there are no such transactions this risk
does not arise.
(iii) Fair values of financial assets and liabilities
The carrying values of all financial assets and liabilities reflected in the financial
statements approximate to their fair values.
(iv) Concentration of credit risk
Credit risk represents the accounting loss that would be recognised at the reporting
date if counter parties failed completely to perform as contracted. Out of total financial
assets of Rs.274.62 million, financial assets which are subject to credit risk amounted
to Pts.62.76 million. The Modaraba believes that it is not exposed to major concentration
of credit risk. To manage exposure to credit risk, the Modaraba applies credit limits
to its customers and also obtains collaterals. Concentration of credit risk on assets
leased out and morabaha financing are indicated in the following table by the percentage
of total balance receivable from these parties in the special industries/sectors.
Industry/sector
Lease rentals receivable and morabaha finances
2001 2000
Rupees % Rupees %
Textile (Spinning, Weaving,
Composite) 33,853,211 53.94 54,518,665 61.77
Cement 12,251,400 19.52 17,182,551 19.47
Sugar 10,550,204 16.81 10,084,721 11.43
Fuel & Energy 2,237,418 3.57 2,897,408 3.28
Auto & Allied Engineering 2,232,010 3.56 2,380,673 2.70
Information technology 784,245 1.25 -- --
Services 647,948 1.03 639,611 0.72
Pharmaceutical 136,302 0.22 149,034 0.17
Food 65,177 0.10 390,525 0.44
Individuals 2,555 -- -- --
Medical services -- -- 20,045 0.02
------------------ ------------------ ------------------ ------------------
62,760,470 100.00 88,263,233 100.00
========== ========== ========== ==========
25. GENERAL
25.1 Previous year's figures have been rearranged, wherever necessary, for the purpose of
comparison.
25.2 Figures have been rounded off to the nearest rupee.
Saeed Uddin Khan Naeem Iqbal Sohail Malik
Chief executive Director Director
FIVE YEARS AT A GLANCE
(PKR in Mn)
1997 1998 1999 2000 2001
Paid up Capital 397.07 397.07 397.07 397.07 397.07
Reserve 53.93 64.37 79.67 98.71 95.41
Total Equity 451.00 461.44 476.74 495.78 492.48
Total Assets 565.53 581.44 614.83 693.55 656.64
Total Income 172.59 191.51 229.21 273.21 250.25
Total Expenditure 89.68 104.22 148.66 162.43 195.97
Pre-Tax Profit 82.91 87.29 80.55 110.78 54.28
Provision for Taxation 7.14 17.29 5.69 6.37 --
Net Profit 75.77 70.00 74.86 104.41 54.28
Dividend Per Share (Rs.) 1.50 1.50 1.50 2.15 1.45
NOTICE OF ANNUAL REVIEW MEETING
Notice is hereby given that the 2nd Annual Review Meeting of Certificate Holders of First
Habib Bank Modaraba will be held on Monday, December 24, 2001 at 11.00 a.m. at 17th
Floor, Habib Bank Plaza, I.I. Chundrigar Road, Karachi to review the performance of the
Modaraba for the year ended June 30, 2001 in terms of Clause 20 of Prudential Regulations
for Modarabas issued vide Circular No.5/2000 of Registrar, Modaraba Companies &
Modarabas.
The Certificate Transfer Book will remain closed from 10th December, 2001 to 24th
December, 2001 (both days inclusive) for the purpose of entitlement of dividend. All
transfers received in order, upto close of business on 9th December, 2001 at our Registrar's
Office, M/s T. PI.K. Associates (Pvt) Limited, Ground Floor, Shaikh Sultan Trust Building
No.2, Beamount Road, Karachi, will be considered in time
By Order of the Board
Karachi:
Dated: 03-11-2001 Company Secretary
PATTERNOF SHAREHOLDING ASO F 30 JUNE 2001
No. of Having Shares Shares Held Percentage
Shareholders From To
852 1 100 45185 0.11
1210 101 500 341283 0.86
1733 501 1000 1497990 3.77
1379 1001 5000 3224145 8.12
247 5001 10000 1899516 4.78
65 10001 15000 807108 2.03
40 15001 20000 720091 1.81
18 20001 25000 413699 1.04
15 25001 30000 433701 1.09
6 30001 35000 196801 0.50
7 35001 40000 271348 0.68
7 40001 45000 301325 0.76
9 45001 50000 439636 1.11
4 50001 55000 207665 0.52
2 60001 65000 128306 0.32
1 65001 70000 65650 0.17
2 75001 80000 153500 0.39
2 95001 100000 199900 0.50
1 110001 115000 115000 0.29
2 130001 135000 266700 0.67
1 135001 140000 139832 0.35
1 150001 155000 150263 0.38
3 195001 200000 596559 1.50
1 200001 205000 205000 0.52
1 215001 220000 218167 0.55
1 245001 250000 250000 0.63
1 295001 300000 300000 0.76
1 385001 390000 386000 0.97
1 760001 765000 761884 1.92
1 830001 835000 832000 2.10
1 1105001 1110000 1105919 2.79
1 1320001 1325000 1322565 3.33
1 3970001 3975000 3970720 10.00
1 7940001 7945000 7941440 20.00
1 9795001 9800000 9798302 24.68
------------------ ------------------ ------------------
5619 39707200 100.00
========== ========== ==========
CATEGORIES OF SHAREHOLDERS
Particulars Shareholders Shareholding Percentage
Individual 5279 11363039 28.62
Investment Companies 4 209106 0.53
Insurance Companies 13 2457646 6.19
Joint Stock Companies 59 226706 0.57
Financial Institutions 23 15837576 39.89
Modaraba Companies 7 107412 0.27
Leasing Companies 3 5290 0.01
Others 10 8537207 21.50
Non-Resident (US $) 98 638550 1.61
Non-Resident (Rs.) 123 324668 0.82
------------------ ------------------ ------------------
Company Total 5619 39707200 100.00
========== ========== ==========
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