| Financial Link Modaraba |
|
|
|
|
|
|
|
|
|
| Annual
Report 2001 |
|
|
| CONTENTS |
|
|
| Corporate
Information |
|
| Directors'
Review |
|
| Pattern
of Holding of Certificates |
|
| Auditors'
Report |
|
| Balance Sheet |
|
| Profit
& Loss Account |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Financial Statements |
|
|
|
| CORPORATE
INFORMATION |
|
|
| MODARABA
COMPANY |
Financial Link Limited |
|
|
|
| BOARD
OF DIRECTORS |
Shahid Hameed |
Chairman |
Nominee Director Pak
Libya |
|
|
Holding Co. (Pvt) Ltd. |
|
|
|
Syed Ghazanfar Ali |
Nominee Director Pak
Libya |
|
|
Holding Co. (Pvt) Ltd. |
|
|
|
Tasnimul Haq Farooqui |
Nominee Director Pakistan |
|
|
Kuwait Investment |
|
|
Co. (Pvt) Ltd. |
|
|
|
Muhammad Saeed Akhtar |
Nominee Director Saudi
Pak |
|
|
Industrial &
Agricultural |
|
|
Investment Co. (Pvt) |
|
|
Ltd. |
|
|
|
Sajid Ali Abbasi |
|
Nominee Director The Bank
of |
|
|
Khyber |
|
|
|
Shahid Abdulla |
|
Nominee Director
International |
|
|
Brands (Pvt) Ltd. |
|
|
|
Farooq Hashmi |
|
Proposed Director |
|
|
|
| COMPANY
SECRETARY |
Farooq Hashmi |
|
|
|
| AUDITORS |
|
Husain Rahman, Chartered
Accountants. |
|
|
|
| Banker |
|
Muslim Commercial Bank
Limited |
|
|
|
| REGISTRAR |
|
Husain Rahman |
|
|
1st Floor, Modern Motor
House, |
|
|
Beaumont Road, Karachi. |
|
|
| REGISTERED
OFFICE |
1st Floor, Modern Motors
House, |
|
|
Beaumont Road, Karachi. |
|
|
| POSTAL
ADDRESS |
1st Floor, N.I.C.
Building, Abbasi Shaheed Road, |
|
|
Off Shahra-e-Faisal,
Karachi. |
|
|
|
| DIRECTORS'
REVIEW |
|
|
| The
Board of Directors of Financial Link Limited take pleasure in presenting the
audited accounts of the Financial |
|
| Link
Modaraba for the year ended June 30, 2001. |
|
|
| FINANCIAL
HIGHLIGHTS |
|
|
|
|
Rupees in thousand |
|
|
| Operating
Income/(Loss) |
|
20 |
|
|
| Less: Expenses |
|
|
|
7572 |
|
| Loss
of diminution in value of investments |
|
2 |
|
| Write
off of Profit receivable |
|
|
11,626 |
|
| Financial
Charges on lease assets |
|
2 |
|
|
------------------ |
|
|
|
1,927 |
|
|
------------------ |
|
| Operating
(loss) / Profit for the period |
|
(1,907) |
|
| Other income |
|
|
|
19 |
|
|
------------------ |
|
|
|
(1,888) |
|
|
|
|
| Unappropriated
Loss brought forward |
|
(96,770) |
|
|
|
|
------------------ |
|
| Profit
(loss) carried forward |
|
|
98,558 |
|
|
|
|
========== |
|
|
| PROFIT
DISTRIBUTION |
|
| The
Board of Directors of Madaraba Company have not recommended any dividend for
the year ended June 30, |
|
| 2001.
Accordingly, no management fee has been given to the company for the period
under review. |
|
|
| FUTURE
OUTLOOK |
|
| All
the investments, pledged with various financial institutions, have been
already settled. Presently, FLM is actively |
|
| pursuing
a "Settlement Plan" according to which the management of the
Modaraba may be "taken-over" by financial |
|
| institution.
After finalization of "Management take-over," the modaraba is
envisaged to be reactivated by way of injec- |
|
| tion
of fresh capital, ensuring its revival and safeguarding the interests of the
certificate holders. |
|
|
| AUDITORS |
|
| The
Present auditors Messrs. Husain Rahman, Chartered Accountants being due for
retirement, have offered them- |
|
| selves
for re-appointment for the year ending June 30, 2002. Their appointment has
been confirmed by the Board of |
|
| Directors,
subject to the approval by the Registrar of Madaraba Companies and Modaraba. |
|
|
| ACKNOWLEDGEMENT |
|
| The
Board wishes to place on record its appreciation for the dedicated, untiring
and positive efforts of all the |
|
| members
of staff and valuable guidance and assistance extended to us by the Board of
Directors, Registrar of |
|
| Modaraba
and the State Bank of Pakistan. |
|
|
|
|
on behalf of the Board |
|
|
|
|
|
|
|
|
|
FAROOQ HASHMI |
|
| Karachi:
December 24, 2001. |
|
Company Secretary |
|
|
|
| Pattern
of holding of certificates held by the |
|
| Certificate
holders as on June 30, 2001 |
|
|
| No. of |
Share |
Holding |
Total Shares |
|
| Shareholders |
From |
To |
Held |
|
|
| 24 |
1 |
100 |
2,400 |
|
| 2,519 |
101 |
500 |
1,248,800 |
|
| 52 |
501 |
1000 |
49,400 |
|
| 60 |
1001 |
5000 |
159,700 |
|
| 38 |
5001 |
10000 |
336,500 |
|
| 6 |
10001 |
15000 |
72,500 |
|
| 3 |
15001 |
20000 |
55,500 |
|
| 2 |
20001 |
25000 |
42,300 |
|
| 5 |
25001 |
30000 |
145,100 |
|
| 2 |
30001 |
35000 |
67,000 |
|
| 2 |
40001 |
45000 |
82,300 |
|
| 1 |
45001 |
50000 |
50,000 |
|
| 3 |
55001 |
60000 |
173,500 |
|
| 5 |
60001 |
65000 |
324,000 |
|
| 1 |
65001 |
70000 |
66,500 |
|
| 2 |
95001 |
100000 |
200,000 |
|
| 1 |
115001 |
120000 |
116,300 |
|
| 1 |
145001 |
150000 |
145,400 |
|
| 1 |
290001 |
295000 |
290,500 |
|
| 3 |
295001 |
300000 |
900,000 |
|
| 1 |
340001 |
345000 |
345,000 |
|
| 1 |
345001 |
350000 |
348,600 |
|
| 1 |
370001 |
375000 |
375,000 |
|
| 1 |
375001 |
380000 |
376,000 |
|
| 1 |
580001 |
585000 |
580,800 |
|
| 1 |
695001 |
700000 |
696,900 |
|
| 1 |
745001 |
750000 |
750,000 |
|
| 1 |
1995001 |
2000000 |
2,000,000 |
|
| ------------------ |
|
------------------ |
|
| 2,739 |
|
|
10,000,000 |
|
| ========== |
|
========== |
|
|
| CATEGORIES
OF SHARE HOLDERS |
NUMBER |
SHARES HELD |
PERCENTAGE |
|
|
| 1.
JOINT STOCK COMPANIES |
|
13 |
2,449,600 |
24.50 |
|
| 2.
FINANCIAL INSTITUTIONS |
|
6 |
1,222,300 |
12.22 |
|
| 3.
LEASING/MODARABA COMPANIES |
4 |
172,200 |
1.72 |
|
| 4.
MODARABA COMPANIES |
|
1 |
2,000,000 |
20.00 |
|
| 5.
INSURANCE COMPANIES |
|
2 |
87,500 |
0.88 |
|
| 6.
INVESTMENT COMPANIES |
|
7 |
1,267,600 |
12.68 |
|
| 7.
INDIVADUALS |
|
2706 |
2,800,800 |
28.00 |
|
| 8.
ASSOCIATED COMPANIES |
|
0 |
0 |
0.00 |
|
| 9.
FOREIGN INVESTORS |
|
0 |
0 |
0.00 |
|
| 10. OTHERS |
|
0 |
0 |
0.00 |
|
|
|
------------------ |
------------------ |
------------------ |
|
|
|
2,739 |
10,000,000 |
100.00 |
|
|
========== |
========== |
========== |
|
|
|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
|
|
|
|
| We
have audited the annexed balance sheet as at June 30, 2001 and the related
profit and loss account |
|
| and
statement of changes in financial position together with the notes to the
financial statements for the |
|
| year
ended June 30, 2001 of Financial Link Modaraba which are Modaraba Company's
(Financial Link |
|
| Limited)
representation and we state that we have obtained all the information and
explanation which we |
|
| required
and after due verification thereof, we report that: |
|
|
| (a)
in our opinion, proper books of account have been kept by the Modaraba
Company in |
|
| respect
of Financial Link Modaraba as required by the Modaraba Companies and Modaraba |
|
| (Floatation
and Control) Ordinance, 1980 and Modaraba Companies and Modaraba Rules, |
|
| 1981; |
|
|
|
|
| (b)
in our opinion, the balance sheet and the profit and loss account have been
drawn up in con- |
|
| formity
with the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, |
|
| 1980
and Modaraba Companies and Modaraba Rules, 1981; and |
|
|
| (c)
in our opinion and to the best of our information and according to the
explanations given to us: |
|
|
| (i)
the balance sheet and the related profit and loss account and statement of
changes in |
|
| financial
position, which are in agreement with the books of account, exhibit |
|
| respectively
a true and fair view of the state of the Modaraba's affairs as at June 30, |
|
| 2001
and the losses and the changes in the financial position for the year ended
on that |
|
| date; |
|
|
| (ii)
no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980;
and |
|
|
| (iii)
the business conducted, investments made and expenditure incurred by the
Modaraba |
|
| are
in accordance with the objects, terms and conditions of the Modaraba. |
|
|
| Without
qualifying our opinion, we draw attention to the following: |
|
|
| (a)
note 1.2 to the financial statements which interalia states that the Modaraba
has accumulated loss- |
|
| es
of Rs. 98.66 million (2000: Rs. 96.77 million). Management is working on a
plan to reduce |
|
| expenses.
Therefore, these financial statements have been prepared on a going concern
assump- |
|
| tion; and |
|
|
|
|
| (b)
note 1.3 to the financial statements; the Board of Directors of the Modaraba
company is consider- |
|
| ing
an offer from a financial institution for management takeover of the
Modaraba; and |
|
|
| (c)
note 1.4 to the financial statements; due to pending approval for appointment
of Chief Executive of |
|
| the
Modaraba Company from Securities and Exchange Commission of Pakistan, the
financial |
|
| statements
of the Modaraba have been signed by three directors of the Modaraba Company.
This |
|
| is
in contravention of section 12(1) of the Modaraba Companies and Modaraba
Rules, 1981. |
|
|
|
|
|
HUSAIN RAHMAN |
|
| Karachi:
December 24, 2001. |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
|
| CAPITAL
AND RESERVES |
|
|
|
| Authorised
capital |
|
|
|
|
| 25,000,000
modaraba certificates of Rs. 10 each |
|
250,000,000 |
250,000,000 |
|
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up capital |
|
| 10,000,000
modaraba certificates of Rs. 10/- each |
|
| fully
paid in cash |
|
3 |
100,000,000 |
100,000,000 |
|
|
|
3 |
1,812,104 |
1,812,104 |
|
| Statutory
reserve |
|
|
|
|
|
|
3 |
(98,658,664) |
(96,770,428) |
|
| Accumulated
Loss |
|
|
------------------ |
------------------ |
|
|
|
|
3,153,440 |
5,041,676 |
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturity of obligation under finance lease |
4 |
-- |
2,756 |
|
| Accrued
expenses |
|
|
544,773 |
633,974 |
|
| Unclaimed
profit distribution |
|
|
69,016 |
69,016 |
|
|
|
------------------ |
------------------ |
|
|
|
|
613,789 |
705,746 |
|
|
|
|
------------------ |
------------------ |
|
|
|
3,767,229 |
5,747,422 |
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these financial statements. |
|
|
| TANGIBLE
FIXED ASSETS |
|
5 |
43,340 |
41,657 |
|
| LONG
TERM INVESTMENTS |
|
6 |
4,175 |
4,560 |
|
|
|
| CURRENT
ASSETS |
|
|
|
| Short
term investments |
|
7 |
25,473 |
27,122 |
|
| Musharika
investment |
|
8 |
3,352,019 |
3,252,019 |
|
| Advances,
prepayments and other receivables |
9 |
236,218 |
1,437,840 |
|
| Cash
and bank balances |
|
10 |
106,004 |
984,224 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
3,719,714 |
5,701,205 |
|
|
|
|
------------------ |
------------------ |
|
|
|
3,767,229 |
5,747,422 |
|
|
========== |
========== |
|
|
|
Director |
|
Director |
|
Director |
|
|
Financial Link Limited |
|
Financial Link Limited |
|
Financial Link Limited |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
|
| Profit
on musharika |
|
3,507 |
733,710 |
|
| Loss
on sale of investment |
|
(13) |
(18,476,900) |
|
| Dividend
Income |
|
16,875 |
181,748 |
|
|
|
------------------ |
------------------ |
|
|
|
20,369 |
(17,561,442) |
|
|
|
|
|
|
| Operating
expenses |
|
11 |
757,285 |
1,231,573 |
|
| Write
off of profit receivable |
|
|
1,166,719 |
-- |
|
| Write
off of other receivables |
|
|
-- |
266,001 |
|
| Finance
charges on leased assets |
|
|
1,953 |
2,435 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
1,925,957 |
1,500,009 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
loss for the year |
|
|
(1,905,588) |
(19,061,451) |
|
|
| (Provision)
of/Reversal for diminution in value |
|
| of investments |
|
|
(1,871) |
23,178,330 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(1,907,459) |
4,116,879 |
|
| Other income |
|
12 |
19,223 |
324,158 |
|
|
|
|
------------------ |
------------------ |
|
| (Loss)/profit
for the year |
|
|
(1,888,236) |
4,441,037 |
|
| Appropriation |
|
|
|
|
| Transfer
to statutory reserve |
|
|
-- |
444,104 |
|
|
|
------------------ |
------------------ |
|
| Accumulated
loss brought forward |
|
(96,770,428) |
(100,767,361) |
|
|
|
|
------------------ |
------------------ |
|
| Accumulated
loss carried forward |
|
|
(98,658,664) |
(96,770,428) |
|
|
|
|
========== |
========== |
|
| (Loss)/earnings
per certificate |
|
13 |
(0.19) |
0.44 |
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
Director |
|
Director |
|
Director |
|
|
Financial Link Limited |
|
Financial Link Limited |
|
Financial Link Limited |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
|
| Cash
generated from operations (Note 14) |
|
(919,649) |
2,100,802 |
|
| Dividend
received |
|
16,875 |
182,221 |
|
| Interest
received |
|
35,160 |
-- |
|
|
|
------------------ |
------------------ |
|
| Net
cash (used in)/generated from operations |
|
(867,614) |
2,283,023 |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Purchase
of fixed assets |
|
(8,000) |
(14,400) |
|
| proceeds
from sale of long term investments |
|
150 |
-- |
|
|
|
------------------ |
------------------ |
|
| Net
cash used in investing activities |
|
(7,850) |
(14,400) |
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Payment
of musharika obligation |
|
|
-- |
(2,475,000) |
|
| Payment
against finance lease |
|
|
(2,756) |
(14,545) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash used in financing activities |
|
(2,756) |
(2,489,545) |
|
|
|
|
------------------ |
------------------ |
|
| NET
DECREASE IN CASH AND BANK BALANCES |
(878,220) |
(220,922) |
|
| OPENING
CASH AND BANK BALANCES AS AT JULY 01 |
984,224 |
1,205,146 |
|
|
|
|
------------------ |
------------------ |
|
| CASH
AND BANK BALANCES AS AT JUNE 30 |
|
106,004 |
984,224 |
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
Director |
|
Director |
|
Director |
|
|
Financial Link Limited |
|
Financial Link Limited |
|
Financial Link Limited |
|
|
|
| NOTES
TO THE FINANCIAL STATEMENTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
|
|
|
|
| 1.1
The Financial Link Modaraba was formed under the Modaraba Companies and
Modaraba |
|
| (Floatation
and Control) Ordinance, 1980 and the Rules framed thereunder and is managed
by |
|
| Financial
Link Limited. The Modaraba is a perpetual and multipurpose modaraba, and is |
|
| engaged
in venture capital, equity investment, musharika financing arrangement and
financial |
|
| advisory
services. The Modaraba is listed on the Karachi Stock Exchange. |
|
|
| 1.2
The Modaraba has accumulated losses of Rs. 98.66 million as at June 30, 2001
(2000: Rs. 96.77 |
|
| million)
as against its paid-up capital of Rs. 100 million and statutory reserve of
Rs. 1.81 million |
|
| (2000:
Rs. 1.81 million). The Modaraba earned a net loss of Rs. 1.89 million during
the year |
|
| (2000:
Net Profit of Rs. 4.44 million). Expenses of the Modaraba have been reduced
significantly, |
|
| Therefore,
these financial statements have been prepared under the going concern
assumption. |
|
|
|
|
| 1.3
A financial institution has offered for management takeover of the Modaraba.
The Board of |
|
| Directors
of the Modaraba Company is considering the offer for final approval. The
takeover will |
|
| take
place subject to approval by Securities and Exchange Commission of Pakistan. |
|
|
| 1.4
The Board of Directors in their 27th meeting held on December 20, 2000 have
appointed Mr. |
|
| Farooq
Hashmi as Chief Executive of the Modaraba Company. The Management Company is |
|
| still
awaiting approval of appointment from the Securities and Exchange Commission
of Pakistan. |
|
| Due
to pending approval of the Chief Executive, these financial statements have
been signed by |
|
| three
directors of the Modaraba Company. This is in contravention of section 12(1)
of the |
|
| Modaraba
Companies and Modaraba Rules, 1981. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
|
|
| 2.1
Accounting convention |
|
|
|
| These
financial statements have been prepared under the "historical cost
convention". |
|
|
| 2.2
Fixed assets and depreciation |
|
|
|
|
|
| 2.2.1 Owned |
|
|
|
| Fixed
assets are stated at cost less accumulated depreciation. Depreciation is
charged to income |
|
| applying
the straight-line method. Full year's depreciation is charged on additions
while no depre- |
|
| ciation
is charged on assets disposed off during the year. |
|
|
| Normal
repairs and maintenance are charged to income as and when required. |
|
| Gains
and losses if any, on disposal of assets are taken to the profit and loss
account. |
|
|
|
|
| 2.2.2
Asset subject to finance lease |
|
| Asset
subject to finance lease is stated, at the inception of the lease, at the
lower of fair value of |
|
| the
asset and present value of minimum lease payments under the lease agreement.
The relat- |
|
| ed
obligation under the lease is accounted for as liability. Depreciation is
charged to income |
|
| applying
the straight-line method in the same manner as for owned assets. |
|
|
| 2.3
Investments in listed securities |
|
| Long
term investments are stated at cost and provisions as made for other than
temporary |
|
| diminution
in value, if any. |
|
|
|
|
| Short
term investments are carried at the lower of average cost and market value
determined on |
|
| an
aggregate portfolio basis. |
|
|
| 2.4
Revenue recognition |
|
|
|
| (a)
Profit from musharika transactions is recognised on the basis of pro-rata
accrual of the |
|
| stimated
profit during the year. |
|
|
|
| b)
Gain/loss on sale of investments is accounted for in the period in which it
arises. |
|
| c)
Dividend income is recognised when the right to the dividend is established. |
|
| d)
Profit on PLS account is recognised on accrual basis. |
|
|
|
|
| 3.
CHANGES IN EQUITY |
|
|
|
Issued |
Reserve |
Accumulated |
Total |
|
|
subscribed |
under Prudential |
loss |
|
|
|
and paid-up |
Regulations |
|
|
|
capital |
for Modarabas |
|
|
|
|
Rupees |
|
|
| Balance
as at July 1, 1999 |
100,000,000 |
1,368,000 |
(100,767,361) |
600,639 |
|
| Net
profit for the year |
-- |
-- |
4,441,037 |
4,441,037 |
|
| Transfer
from profit and loss account |
-- |
444,104 |
(444,104) |
-- |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2000 |
100,000,000 |
1,812,104 |
(96,770,428) |
5,041,676 |
|
| Net
loss for the year |
-- |
-- |
(1,888,236) |
(1,888,236) |
|
|
|
------------------ |
------------------ |
------------------ |
------------------ |
|
| Balance
as at June 30, 2001 |
100,000,000 |
1,812,104 |
(98,658,664) |
3,153,440 |
|
|
========== |
========== |
========== |
========== |
|
|
| In
accordance with the Prudential regulations for Modarabas, the Modaraba is
required to trans- |
|
| fer
10% of its after tax profits to statutory reserve until the reserve equals
the paid-up capital. |
|
| Thereafter,
5% of the tax profits are required to be transferred to the reserve. |
|
|
|
|
| 4.
OBLIGATIONS UNDER FINANCE LEASE |
|
|
|
|
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
|
| Year
ending June 30, 2001 |
|
-- |
2,830 |
|
| Finance
charges allocated to future periods |
|
-- |
(74) |
|
|
|
------------------ |
------------------ |
|
|
|
-- |
2,756 |
|
| Current
maturity of obligation under finance lease |
|
-- |
(2,756) |
