| First Habib Modaraba |
|
|
|
|
|
|
|
|
| Annual
Report 2001 |
|
|
|
| Our
motto is
. |
|
| to
maintain financial discipline |
|
| to
hold professional and moral code. |
|
|
| Our
vision is
. |
|
| to
promote operating excellence. |
|
| to
achieve marketing perfection. |
|
|
| Our
ambition is
|
|
| to
develop and efficient and motivated workforce. |
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| to
provide state-of the-art financial services. |
|
|
| Our
ultimate goal is
. |
|
| to
give best customer service. |
|
| to
deliver more than we promise. |
|
|
|
| Contents |
|
|
| CORPORATE
INFORMATION |
|
| DIRECTORS'
REPORT |
|
| AUDITORS'
REPORT |
|
| BALANCE
SHEET |
|
| PROFIT
AND LOSS ACCOUNT |
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| NOTES
TO THE ACCOUNTS |
|
| PATTERN
OF CERTIFICATE HOLDINGS |
|
|
|
| CORPORATE
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Wazir Husain Jafree |
|
| Mr.
Muhammad Shoaib |
|
| Mr.
F. H. Mukhi |
|
| Mr.
Abbas Ali Muhammad |
|
| Mr.
S. Shahanshah H. Rizvi |
|
| Mr.
Sheikh Ehsanuddin |
|
|
| AUDITORS |
|
| Ford,
Rhodes, Robson, Morrow |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| Askari
Commercial Bank Limited |
|
| Bank
AL Habib Limited |
|
| Faysal
Bank Limited |
|
| Gulf
Commercial Bank Limited |
|
| Habib
Bank AG Zurich |
|
| Habib
Bank Limited |
|
| Metropolitan
Bank Limited |
|
| Muslim
Commercial Bank Limited |
|
| Soneri
Bank Limited |
|
| Union
Bank Limited |
|
|
| REGISTERED
OFFICE |
|
| 5th
Floor, Hirani Centre, |
|
| I.
I. Chundrigar Road, |
|
| Karachi. |
|
|
| REGISTRAR |
|
| Noble
Computer Services (Pvt) Limited |
|
| 14-Ban91ore
Town Housing Society, |
|
| Shahrah-e-Faisal, |
|
| Karachi. |
|
|
|
| REPORT
OF THE DIRECTORS FOR THE YEAR |
|
| ENDED
JUNE 30, 2001 |
|
|
| The
Board of Directors of the Management Company are pleased to present audited
accounts for the year ended 30th June, |
|
| 2001. |
|
|
| FINANCIAL
RESULTS
' |
|
|
(Rupees in 000) |
|
|
Year ended |
Year ended |
|
|
June 30, |
June 30, |
|
|
2001 |
2000 |
|
| Total
Operating Income |
|
413,608 |
365,790 |
|
| Total
Operating Expenses |
|
337,490 |
287,394 |
|
|
---------- |
---------- |
|
|
76,118 |
78,396 |
|
|
|
|
| Less:
Modaraba Co.'s Management Fee |
|
7,612 |
7,127 |
|
|
|
|
---------- |
---------- |
|
| Profit
for the year |
|
68,506 |
71,269 |
|
|
| Less:- Provision for Taxation |
|
| Current year |
|
-- |
-- |
|
| Prior Year |
|
-- |
2,791 |
|
|
---------- |
---------- |
|
|
-- |
2,791 |
|
|
---------- |
---------- |
|
| Net Profit |
|
68,506 |
68,478 |
|
| Add
· Unappropriated profit B/F |
|
8,502 |
3,572 |
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
77,008 |
72,050 |
|
|
========== |
========== |
|
|
| APPROPRIATIONS |
|
| Cash
dividend @ 22.50% (Rs. 1.125 per Certificate of Rs. 5/- each) |
56,700 |
56,700 |
|
| (2000
cash dividend @ 22.50% i.e. Rs. 1.125 per Certificate of Rs. 5/- each) |
|
|
| Transfer
to statutory reserve @ 10% of the profit (2000 @ 10%) |
6,850 |
6,848 |
|
|
| Transfer
to General Reserve |
|
10,000 |
-- |
|
|
| Un-appropriated
profit C/F |
|
3,458 |
8,502 |
|
|
---------- |
---------- |
|
|
77,008 |
72,050 |
|
|
========== |
========== |
|
|
|
|
| PROFIT
DISTRIBUTION |
|
| The
Directors are pleased to declare a 22.50% cash dividend i.e. Rs. 1.125 |
|
| per
certificate of Rs. 5/-each. |
|
|
| ECONOMIC
REVIEW |
|
|
|
| During
the year the Government took certain fiscal and monetary initiatives |
|
| to
improve the economic indicators and to enhance investors' confidence. |
|
| The
economic agenda of the Government which is based on accountability, |
|
| improved
governance, widening the tax net, created structural shifts in the |
|
| economy.
These structural changes will definitely prove to be the foundations |
|
| for
more sustainable and equitable growth in future. |
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|
|
| The
slow down in industrial and investment activity, increasing cost of |
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| production,
weakening of Pak Rupees, growing debt burden, deteriorated |
|
| law
and order situation and declining of public sector development |
|
| expenditures
all are main causes of our ailing economy and also major |
|
| challenges
for the Present Government. |
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|
|
|
| Last
year Country's over all growth was adversely affected by the worst |
|
| drought
which resulted in a fall in the real GDP growth
which only grew by |
1997 1998 1999 2000 2001 |
|
| 2.6
percent as against 4.8 percent of previous year. The fiscal deficit has |
|
| emer9ed
as prime cause of macro economic imbalances of our country. |
|
| The
debt servin9 is one of the serious fiscal problem faced by us because |
|
| it
does not only consumes bulk of our revenue share but also minimizes |
|
| pace
of development program for Social & Economic restructuring. |
|
|
| However,
the policies pursued so far have helped in restoring Pakistan's |
|
| creditability
with the international financial institutions. The overall outlook |
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| of
the economy has improved followed by successive IMF tranche approval |
|
| and
disbursement. The budget deficit declined to 5.5 percent of GDP from |
|
| 6.5
percent a year earlier. The country's export enhanced by approximately |
|
| 7
percent resulted in improvement of trade balances. The foreign exchange |
|
| reserve
has also improved. |
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|
|
|
| BUSINESS
OPERATION |
|
|
| Leasing
sector, which has experienced an extraordinary growth in past is |
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| now
facing challenges due to competition and reducing spreads. Due to |
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| intense
competition amongst the market players particularly with the |
|
| commercial
and investment banks, the margins of leasing profit has shown |
|
| declining
trend. Shortage of good quality customer, slower recovery and |
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| growing
defaults remains major problem of overall financial sector |
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| particularly
in leasing business. |
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| Besides
all, in this crucial environment your Modaraba is comfortably well |
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| positioned.
We have not only maintained the business but also increased |
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| its
business size. Alhamdolillah, your Modaraba's balance sheet size has |
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| reached
to Rupees one billion mark. The new leases amounting to |
|
| Rs.
595.0 million were written as compared to last
year of Rs. 362.0 million. |
1997 1998 1999 2000 2001 |
|
| The
gross lease rentals have also increased to Rs. 409.0 million from |
|
| Rs.
363.0 million. The net profit of the Modaraba has also been maintained. |
|
|
| The
Shrinkage of margin is due to cut-throat competition in reducing lease |
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| rates
which remained main problem for leasing sector. It has exerted |
|
| pressures
on earning spreads of your Modaraba too. However, due to |
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| prudent
policies and having proper market perception with adequate |
|
| business
vision your Modaraba has been able to maintain its profitability |
|
| and
successfully expanded the diversified asset-portfolio and improved |
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| market share. |
|
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| Effective
financial control minimized the Modaraba's cost of funds. |
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| However,
due to enhancement in asset base size the financial cost has |
|
| risen
as compared to last year. |
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|
|
|
| The
Management of your Modaraba always gives emphasis on effective |
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| risk
control measures with judicious selection of sector and groups. Due |
|
| to
careful and rational lending approach the recovery ratio in your Modaraba |
|
| has
always been remained excellent with no default since operation of |
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| business. |
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|
|
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| In
appreciation of excellent performance and good profit distribution your |
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| Modaraba
has been receiving. "Modaraba Association Excellence Award" |
|
| for
the last two years. |
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|
| FUTURE
PROSPECTUS |
|
| Looking
ahead, the Modaraba recognizes the challenges of the future. The |
|
| aftermath
of recent terrorist attacks in United States the global economy |
|
| received
unprecedented shock. The scale of damage and financial cost |
|
| of
devastation is yet to be calculated. The estimates of global economic |
|
| growth
will be revised. IMF has revised its forecast for global economic |
|
| growth
for the year 2002 i.e. from 3.2 percent to 2.7 percent. |
|
|
|
|
| Despite
the Pakistan's recent economic performance our weak economy |
|
| may
not immune from the situation of after 11th September, 2001. The |
|
| country's
export earnings and home remittances are likely to be impacted |
|
| as
the slow down in world economy particularly in USA. The domestic |
|
| investor's
sentiment will remain fragile in light of the uncertain situation. |
|
| Similarly
new foreign investment in the Oil and Gas Sectors might remained |
|
| on
hold till the situation becomes clearer, while country's privatisation |
|
| process
may also face an interruption. The costs of Shipping and Insurance |
|
| will also rise. |
|
|
|
|
|
|
| Your
Management will be carefully watching the forthcoming economic |
|
| change
in the country and world over. The financial sector will have to be |
|
| prepared
to address efficiently the needs of future challenges and sharpen |
|
| the
focus on new developments. In the long run, Pakistan's decision to |
|
| support
the US-led coalition may prove to be positive point in its economic |
|
| history.
However, the financial outcome depends on number of factors |
|
| revolving
around particularly, situation on the borders and within the country. |
|
|
| The
competition within the leasing sector is expected to further intensify |
|
| as
large sized companies will persistently pursue new startegies to face |
|
| the
dimensional changes in the financial sector. |
|
|
| The
Management with its proven track-record of decades would use its |
|
| acumen
and hindsight to ensure smooth business. Under these |
|
| circumstances
we will go very cautiously in a prudent manner. Our future |
|
| strategy
will be to consolidated the business, maintain sustainable growth, |
|
| preserve
the matching funds for lease business, enhance the good assets |
|
| in
existing quality portfolio and explore new areas of business. |
|
|
| We
shall continue to promote an environment where people are valued as |
|
| assets.
We shall continue to invest in development of human resources |
|
| through
training and professional growth as we believe that intellectual |
|
| capital
leads to "Good Governance". |
|
|
| Being
the pioneer in Modaraba Sector, we are committed to continuously |
|
| creating
value for our certificate holders, providing efficient and quality service |
|
| to
our clients and promote sound business practice. |
|
|
| CREDIT
RATING |
|
|
| Due
to continued sound and solid financial position of First Habib Modaraba |
|
| (FHM)
M/s. Pakistan Credit Rating Agency (Pvt.) Limited (PACRA) has |
|
| been
maintaining its rating of A3 since last several years. First Habib |
|
| Modaraba
is enjoying highest rating band in the whole Modaraba sector. |
|
| As
per PACRA's assessment, FHM is one of the two Modarabas which |
|
| have
been placed in "A" category. The rating denotes an outstanding |
|
| financial
condition with a consistent record of above average performance. |
|
|
| While
assigning the rating, PACRA has recognised the sustainable |
|
| improvement
in the performance of the Modaraba and further strengthening |
|
| of
high quality asset portfolio. The rating also take into account steady |
|
| growth
and ability to maintain a consistently good performance by FHM |
|
| despite
continuing difficult operating environment. The effective, |
|
| risk-management
policies demonstrate the management's ability to meet |
|
| the
challenges of prevailing recessionary conditions. |
|
|
| AUDITORS |
|
| The
retiring auditors M/s. Ford, Rhodes, Robson, Morrow, Chartered |
|
| Accountants,
have consented to their re-appointment for the year ending |
|
| 30th
June, 2002. The directors have confirmed their appointment subject |
|
| to
required official approval. |
|
|
|
|
|
| ACKNOWLEDGMENT |
|
| The
directors are pleased to put on their record the profound gratitude to |
|
| Modarabas'
valued customers, hard working employees, capable senior |
|
| management
and cooperation from banks and financial institutions. The |
|
| entire
success of Modaraba is owed to all. |
|
|
| The
guidance and co-operation of Registrar of Modaraba, Securities & |
|
| Exchange
of Commission of Pakistan are acknowledge with thanks. |
|
|
|
For and on behalf of Board of Directors |
|
|
|
Wazir Husain Jafree |
|
| Karachi:
October 25, 2001 |
|
Chairman & Chief Executive |
|
|
|
| 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 (Cash Flow Statement) together with the notes
to the accounts for the year then ended |
|
| of
First Habib Modaraba which are Modaraba Company's (Habib Modaraba Management
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 |
|
| 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 and Statement of
Changes in |
|
| Financial
Position (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
the profit and the changes in the financial position (cash flow statement)
for the year ended |
|
| on that date; |
|
|
| (ii)
Zakat deductible at source if any, 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 for the Modaraba. |
|
|
|
Ford, Rhodes, Robson, Morrow |
|
| Karachi:
October 25, 2001 |
|
Chartered
Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| TANGIBLE
FIXED ASSETS |
|
3 |
|
| Fixed
Assets leased out |
|
910,875,653 |
634,895,760 |
|
| Fixed
Assets in own use |
|
3,569,093 |
4,656,561 |
|
|
---------- |
---------- |
|
|
914,444,746 |
639,552,321 |
|
| LONG
TERM ADVANCES AND DEPOSIT |
4 |
1,217,568 |
539,338 |
|
| CURRENT
ASSETS |
|
|
|
|
| Short
Term Investments |
|
5 |
38,086,030 |
36,807,339 |
|
| Advances,
prepayments and other receivables |
6 |
1,376,825 |
1,241,792 |
|
| Lease
rentals receivable - considered good |
|
3,458,801 |
2,246,447 |
|
| Cash
and bank balances |
|
7 |
46,282,249 |
6,653,846 |
|
|
---------- |
---------- |
|
|
89,203,905 |
46,949,424 |
|
|
---------- |
---------- |
|
|
1,004,866,219 |
687,041,083 |
|
|
========== |
========== |
|
| CAPITAL
AND RESERVES |
|
| CERTIFICATE
CAPITAL: |
|
| Authorised: |
|
| 60,000,000
(2000: 60,000,000) certificates of Rs. 5/- each |
|
300,000,000 |
300,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
8 |
252,000,000 |
252,000,000 |
|
| Reserves |
|
9 |
116,812,437 |
105,006,442 |
|
|
|
|
|
| CERTIFICATE
HOLDERS' EQUITY |
|
368,812,437 |
357,006,442 |
|
| DEFERRED
LIABILITIES |
|
10 |
80,002,432 |
56,071,151 |
|
| CURRENT
LIABILITIES |
|
|
|
| Finance
arrangements |
|
11 |
95,000,000 |
71,000,000 |
|
| Short-term
certificate of musharaka |
|
12 |
354,159,626 |
112,000,000 |
|
| Lessees'
security deposits-current portion |
|
14,259,937 |
13,422,625 |
|
| Creditors
and accrued liabilities |
|
13 |
28,535,039 |
14,630,294 |
|
| Provision
for taxation |
|
1,931,013 |
2,128,247 |
|
| Unclaimed
profit distribution |
|
5,465,735 |
4,082,324 |
|
| Proposed
profit distribution |
|
56,700,000 |
56,700,000 |
|
|
---------- |
---------- |
|
|
556,051,350 |
273,963,490 |
|
|
---------- |
---------- |
|
|
1,004,866,219 |
687,041,083 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Sd/- |
|
Sd/- |
|
Sd/- |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT FOR THE YEAR |
|
| ENDED
JUNE 30, 2001 |
|
|
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| INCOME |
|
| Lease rentals |
|
408,869,973 |
363,184,540 |
|
| Other
income |
|
14 |
3,459,078 |
2,605,862 |
|
|
|
---------- |
---------- |
|
|
412,329,051 |
365,790,402 |
|
| EXPENSES |
|
|
|
| Depreciation
on fixed assets leased out |
|
287,570,593 |
252,358,480 |
|
| Financial
charges |
|
15 |
35,654,021 |
20,645,967 |
|
| Other
expenses |
|
16 |
14,265,356 |
14,385,400 |
|
|
|
---------- |
---------- |
|
|
337,489,970 |
287,389,847 |
|
|
---------- |
---------- |
|
|
74,839,081 |
78,400,555 |
|
| Provision
for diminution in the value of investments |
|
| write
back(made) |
|
1,278,691 |
(3,160) |
|
|
|
|
|
| Profit
before management fee |
|
76,117,772 |
78,397,395 |
|
| Modaraba
company's management fee |
|
(7,611,777) |
(7,127,036) |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
68,505,995 |
71,270,359 |
|
|
|
|
|
| TAXATION |
|
| Current |
|
-- |
-- |
|
| Prior year's |
|
-- |
2,791,800 |
|
|
---------- |
---------- |
|
|
- |
|
-- |
2,791,800 |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
68,505,995 |
68,478,559 |
|
| Unappropriated
profit brought forward |
|
8,502,296 |
3,571,593 |
|
|
---------- |
---------- |
|
|
77,008,291 |
72,050,152 |
|
| APPROPRIATIONS |
|
|
|
| Proposed
profit distribution @ 22.50% (2000: 22.50%) |
|
56,700,000 |
56,700,000 |
|
| Transfer
to statutory reserve @ 10% of the profit (2000: @ 10%) |
|
|
| as
per requirement of Prudential Regulations for Modarabas |
6,850,600 |
6,847,856 |
|
| Transfer
to General Reserve |
|
|
10,000,000 |
-- |
|
|
|
---------- |
---------- |
|
|
|
73,550,600 |
63,547,856 |
|
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
|
3,457,691 |
8,502,296 |
|
|
|
========== |
========== |
|
| EARNINGS
PER CERTIFICATE |
|
22 |
1.36 |
1.36 |
|
|
========== |
========== |
|
| The
annexed notes form integral part of these accounts. |
|
|
|
Sd/- |
|
Sd/- |
|
Sd/- |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
| 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 |
|
| Profit
before taxation |
|
68,505,995 |
71,270,359 |
|
| Adjustments
for: |
|
|
|
| Profit
on disposal of fixed assets |
|
| Leased out |
|
(1,619,625) |
(1,026,155) |
|
| In own use |
|
-- |
(34,755) |
|
|
---------- |
---------- |
|
|
(1,619,625) |
(1,060,910) |
|
|
| Depreciation
- assets leased out |
|
287,570,593 |
252,358,480 |
|
| -
assets in own use |
|
1,508,658 |
1,454,257 |
|
|
|
|
|
| Provision
for gratuity |
|
308,765 |
314,765 |
|
| Profit
on PLS deposit account |
|
(1,112,595) |
(145,720) |
|
| Dividend |
|
(510,015) |
(579,360) |
|
|
| Financial
charges on: |
|
| Musharaka |
|
10,895,552 |
19,173,031 |
|
| Certificates
of musharaka |
|
24,662,721 |
1,422,623 |
|
| Morabaha |
|
62,500 |
-- |
|
|
---------- |
---------- |
|
|
35,620,773 |
20,595,654 |
|
|
---------- |
---------- |
|
| Operating
profit before chan9es in operating assets |
|
390,272,549 |
344,207,525 |
|
| Movement
in working capital: |
|
| (Increase)/decrease
in current assets: |
|
|
|
| Short
term investments |
|
(1,278,691) |
(8,051,966) |
|
| Advances,
prepayments and other receivables |
|
(92,860) |
(552,150) |
|
| Rentals
receivables |
|
(1,212,354) |
507,917 |
|
|
(2,583,905) |
(8,096,199) |
|
|
---------- |
---------- |
|
| Increase/(decrease)
in current liabilities |
|
273,631,723 |
58,532,773 |
|
|
---------- |
---------- |
|
|
271,047,818 |
50,436,574 |
|
|
---------- |
---------- |
|
| Cash
generated from operations |
|
661,320,367 |
394,644,099 |
|
|
| Income-tax
paid |
|
(197,234) |
(1,042,501) |
|
| Financial
charges paid |
|
(29,188,125) |
(19,990,556) |
|
|
---------- |
---------- |
|
| Net
cash generated from operating activities (A) |
|
631,935,008 |
373,611,042 |
|
|
========== |
========== |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Purchase
of fixed assets in own use |
|
(421,190) |
(5,902,185 |
|
| Purchase of fi |
