| First IBL Modaraba |
|
|
|
|
|
|
|
| Annual
Report 2001 |
|
|
|
| CONTENTS |
|
|
| Corporate
Information |
|
| Directors' Report |
|
| Auditors'
Report to the Certificate Holders |
|
| Balance
Sheet |
|
| Profit
and Loss Account |
|
| Statement
of Changes in Financial Position |
|
| (
Cash Flow Statement ) |
|
| Statement of Changes in Equity |
|
| Notes
to the Accounts |
|
| Pattern of Certificate Holding |
|
|
|
| CORPORATE
INFORMATION |
|
|
| MODARABA
COMPANY |
|
IBL Modaraba Management
(Private) Limited |
|
|
|
|
|
| BOARD
OF DIRECTORS |
|
Inayat Ismail |
|
Chief Executive |
|
|
|
Arshad Abdulla |
|
Director |
|
|
|
Chisty B. S. Mujahid |
|
Director |
|
|
|
|
|
| COMPANY
SECRETARY |
|
Masood Anwer Khan |
|
|
|
|
|
| AUDITORS |
|
Daudally, Lalani &
Co. |
|
|
|
Chartered Accountants |
|
|
|
| BANKERS |
|
Muslim Commercial Bank
Limited |
|
|
Citibank, N.A. |
|
|
United Bank Limited |
|
|
Habib Bank Limited |
|
|
Prime Commercial Bank
Limited |
|
|
National Bank of Pakistan |
|
|
Platinium Commercial Bank
Limited |
|
|
Bolan Bank Limited |
|
|
| REGISTRAR |
|
Husain Rahman |
|
|
Chartered Accountants |
|
|
1st Floor, Modern Motors
House |
|
|
Beaumont Road, Karachi |
|
|
| REGISTERED
OFFICE |
|
First Floor, NIC Building |
|
|
Abbasi Shaheed Road,
Karachi |
|
|
|
| DIRECTOR'S
REPORT TO THE CERTIFICATE HOLDERS |
|
|
| The
Board of Directors of IBL Modaraba Management (Private) Limited would like to
present their 11th Annual Report |
|
| of
the First IBL Modaraba, along with the audited accounts for the year ended
June 30, 2001. |
|
|
| FINANCIAL
RESULTS |
|
|
Rupees in Million |
|
|
2001 |
2000 |
|
| Musharika
Income |
|
32.34 |
26.13 |
|
| Gross
Operating Income |
|
34.18 |
35.56 |
|
| Administrative
Expenses |
|
3.59 |
6.64 |
|
| Operating
Profit |
|
11.18 |
14.13 |
|
| Transfer
to Statutory Reserve |
1.07 |
1.48 |
|
| Profit
Distribution |
|
8.77 |
12.27 |
|
|
| PERFORMANCE
REVIEW |
|
| Despite
an adverse economic and business environment, your Modaraba has been able to
maintain its level of gross |
|
| operating
income of Rupees 34.18 million for the current year, as compared to Rupees
35.56 million last year. |
|
|
| The
major contribution of this year's income is from Musharika investment, which
has increased by 24 % as compared |
|
| to
last year. We have also been able to reduce our administrative expenses by
Rupees 3.25 million. However, reduced |
|
| dividend
income and higher financial charges, coupled with a reduced reversal of the
provision for diminution in the |
|
| value
of investments ( 2001: Rupees 0.75 million / 2000 Rupees 2.6 million ) has
affected the net profitability of |
|
| the
Modaraba. |
|
|
| THE
ECONOMIC SCENARIO |
|
| The
economic scenario for the financial year under review continued to come under
pressure from debt servicing |
|
| and
the additional burden of low GDP growth due to drought conditions ( 2.6% as
against 3.9 % last year). This |
|
| situation
has slightly improved in the later months of the financial year. On the other
hand government regulatory |
|
| bodies
are insistent about the implementation of tight financial and monetary
policies through tax reforms, and the |
|
| restructuring
of CBR and various government owned corporations, as well as speeding up the
privatization of some |
|
| corporations
and banks. |
|
|
| The
year under review, shows a declining trend in market interest rates.
Recently, the State Bank of Pakistan has |
|
| further
reduced 2 % markup on export refinance facility. This situation has increased
the competition in the financial |
|
| sector.
The stock market is still unstable and depressed and has maintained a
volatile tendency. Although the Securities |
|
| &
Exchange Commission of Pakistan has made several structural reforms, results
are yet to be seen. |
|
|
| PROFIT
DISTRIBUTION |
|
| We
are pleased to announce that the Board has approved a Cash Dividend at the
rate of 7.5%, i.e. Rupees 0.75 |
|
| per
certificate of Rupees 10/- each. |
|
|
| EARNINGS
PER CERTIFICATE |
|
| The
earnings per Modaraba certificate works out to be Rupees 0.92, as against
Rupees 1.27 in the preceding year. |
|
|
| AUDITORS |
|
| The
present auditors M/s. Daudally, Lalani & Co. Chartered Accountants, being
due for retirement, have offered them |
|
| selves
for re - appointment for the year ending June 30, 2002. The Board of
Directors, subject to the approval of |
|
| Registrar
Modaraba Companies and Modarabas, has confirmed their appointment. |
|
|
| PATTERN OF CERTIFICATE HOLDING |
|
| The
Statement of the Pattern of Certificate holding is annexed with this
report. |
|
|
| ACKNOWLEDGEMENT |
|
| The
Directors offer their sincere thanks to our valued clients, bankers, and
certificate holders for their confidence i |
|
| in
the Modaraba. |
|
|
| We
extend our appreciation to the State Bank of Pakistan, Securities and
Exchange Commission of Pakistan and |
|
| Registrar
Modaraba for their continuous support and guidance. We would also like to
thank our team members for |
|
| their
commitment, dedicated efforts and valuable contribution. |
|
|
|
On behalf of the Board |
|
| Karachi:
December 03, 2001 |
|
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, Statement |
|
| of
Changes in Equity and Statement of Changes in Financial Position/Cash Flow
Statement) together with the notes |
|
| to
the accounts for the year ended June 30, 2001 of FIRST IBL MODARABA, Karachi
which are Modaraba Company's |
|
| [IBL
Modaraba Management (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 accounts have been kept by the Modaraba
Company in respect of First IBL |
|
| 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 the related Profit and Loss Account, Statement of Changes
in Equity 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, Changes in Equity and Changes in Financial Position (Cash
Flow) 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: |
|
DAUDALLY, LALANI & CO. |
|
| December
03, 2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET |
|
| AS
AT JUNE 30, 2001 |
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| CAPITAL
AND RESERVES |
|
| CAPITAL |
|
| Authorised |
|
| 20,000,000
(2000: 20,000,000) |
|
| modaraba
certificates of Rs.10/- each |
|
200,000,000 |
200,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid up capital |
|
3 |
116,875,000 |
116,875,000 |
|
| Statutory
reserve |
|
15,370,713 |
14,297,065 |
|
| Unappropriated
profit |
|
2,445,329 |
1,548,120 |
|
|
---------- |
---------- |
|
|
134,691,042 |
132,720,185 |
|
| SECURITY
DEPOSITS |
|
168,720 |
168,720 |
|
|
| CURRENT
LIABILITIES |
|
| Musharika
arrangements |
|
4 |
102,597,233 |
125,971,047 |
|
| Creditors,
accrued and other liabilities |
|
5 |
7,233,257 |
10,341,562 |
|
| Due
to management company |
|
2,041,935 |
1,900,330 |
|
| Provision
for taxation |
|
1,893,974 |
2,061,530 |
|
| Profit
distribution payable |
|
8,765,625 |
12,271,875 |
|
|
---------- |
---------- |
|
|
122,532,024 |
152,546,344 |
|
|
---------- |
---------- |
|
|
257,391,786 |
285,435,249 |
|
|
========== |
========== |
|
| TANGIBLE
FIXED ASSETS |
|
| Assets
in own use |
|
6 |
37,334 |
85,139 |
|
| Assets
leased out |
|
7 |
657,887 |
887,360 |
|
|
---------- |
---------- |
|
|
695,221 |
972,499 |
|
| LONG
TERM DEPOSIT |
|
71,900 |
71,900 |
|
| CURRENT
ASSETS |
|
| Trade
debtors - unsecured, considered good |
|
21,909,781 |
34,575,918 |
|
| Marketable
securities of quoted companies |
|
|
|
| and
modarabas |
|
8 |
21,286,670 |
34,358,934 |
|
|
|
|
|
| Musharika
arrangements |
|
9 |
180,589,651 |
188,093,475 |
|
| Accrued
profit on musharika arrangements |
|
17,211,860 |
15,443,899 |
|
| Advances,
deposit and prepayments |
|
10 |
153,178 |
326,692 |
|
| Other
receivables |
|
11 |
14,614,203 |
10,452,342 |
|
| Bank
balances |
|
12 |
859,322 |
1,139,590 |
|
|
|
----------- |
----------- |
|
|
256,624,665 |
284,390,850 |
|
|
----------- |
----------- |
|
|
257,391,786 |
285,435,249 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
|
|
2001 |
2000 |
|
|
Note |
Rupees |
Rupees |
|
| OPERATING
INCOME |
|
| Musharika
income |
|
32,336,796 |
26,128,026 |
|
| Morabaha
income |
|
-- |
3,601,012 |
|
| (loss)
/ Gain on sale of marketable securities |
|
(982,268) |
454,127 |
|
| Dividend
income |
|
1,973,992 |
2,138,120 |
|
| Lease rentals |
|
338,304 |
111,390 |
|
| Other
income |
|
13 |
508,210 |
3,132,551 |
|
|
----------- |
----------- |
|
|
34,175,034 |
35,565,226 |
|
|
|
|
| OPERATING
EXPENSES |
|
|
|
| Administrative
expenses |
|
14 |
3,586,222 |
6,843,553 |
|
| Financial
charges |
|
15 |
19,180,672 |
14,497,233 |
|
| Amortization
of leased assets |
|
229,473 |
96,018 |
|
|
----------- |
----------- |
|
|
22,996,367 |
21,436,804 |
|
|
----------- |
----------- |
|
| Operating
profit |
|
11,178,667 |
14,128,422 |
|
| Reversal
of provision for diminution |
|
|
|
| in
the value of investments |
|
8 |
750,758 |
2,611,462 |
|
| Provision
for doubtful lease rentals |
|
-- |
(249,960) |
|
|
----------- |
----------- |
|
|
750,758 |
2,361,502 |
|
|
----------- |
----------- |
|
|
11,929,425 |
16,489,924 |
|
| Modaraba
Company's management fee |
|
(1,192,943) |
(1,646,992) |
|
|
----------- |
----------- |
|
| Profit
for the year |
|
10,736,482 |
14,840,932 |
|
| Un
appropriated profit brought forward |
|
1,548,120 |
463,156 |
|
|
----------- |
----------- |
|
| Profit
available for appropriations |
|
12,284,602 |
15,304,088 |
|
| APPROPRIATIONS |
|
|
|
| Profit
distribution @7.5% (2000 · 10.5 %) |
|
(8,765,625) |
(12,271,875) |
|
| Transfer
to statutory reserve |
|
(1,073,648) |
(1,484,093) |
|
|
----------- |
----------- |
|
|
(9,839,273) |
(13,755,968) |
|
|
----------- |
----------- |
|
|
2,445,329 |
1,548,120 |
|
|
========== |
========== |
|
| Earnings
per certificate - Basic and diluted |
16 |
0.92 |
1.27 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
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
for the year |
|
10,736,482 |
14,840,932 |
|
|
|
|
| Adjustments
for: |
|
|
|
| Depreciation |
|
47,805 |
291,281 |
|
| Amortization
on assets leased out |
|
229,473 |
96,018 |
|
| Gain
due to adjustment in value of investment |
|
(750,758) |
(2,611,462) |
|
| Provision
for doubtful lease rentals |
|
-- |
249,960 |
|
| Loss
/ (Gain) on sale of investments |
|
982,268 |
(454,127) |
|
| Gain
on disposal of fixed assets |
|
-- |
(312,199) |
|
| Dividend
income |
|
(1,973,992) |
(2,138,120) |
|
| Financial
charges |
|
19,180,672 |
14,497,233 |
|
|
---------- |
---------- |
|
| Operating
profit before changes in working capital |
|
28,451,950 |
24,459,516 |
|
|
| Decrease
/ (Increase) in current assets |
|
| Trade
debtors |
|
12,666,137 |
11,749,756 |
|
| Marketable
securities of quoted companies and modarabas |
12,840,754 |
(22,233,306) |
|
| Musharika
arrangements |
|
7,503,824 |
(111,077,358) |
|
| Accrued
profit on musharika arrangements |
|
(1,767,961) |
8,508,795 |
|
| Advances
and prepayments |
|
24,395 |
31,806 |
|
| Other
receivables |
|
(3,450,478) |
(3,151,933) |
|
|
----------- |
----------- |
|
|
27,816,671 |
(116,172,240) |
|
|
| (Decrease)/Increase
in current liabilities |
|
| Musharika
arrangements |
|
(23,373,814) |
70,143,447 |
|
| Creditors,
accrued and other liabilities |
|
(2,352,799) |
1,444,467 |
|
| Due
to management company |
|
141,605 |
399,402 |
|
|
----------- |
----------- |
|
|
(25,585,008) |
71,987,316 |
|
|
----------- |
----------- |
|
| Cash
generated from / (used in) operations |
|
30,683,613 |
(19,725,408) |
|
| Income
tax paid |
|
(18,437) |
(112,935) |
|
| Financial
charges paid |
|
(20,340,831) |
(17,279,680) |
|
|
----------- |
----------- |
|
| Net
cash generated from / (used in) operating activities |
|
10,324,345 |
(37,118,023) |
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
| Purchase
of assets in own use |
|
-- |
(879,000) |
|
| Proceeds
from sale of tangible fixed assets |
|
-- |
561,000 |
|
| Proceed
from long term morabaha arrangement |
|
-- |
19,208,496 |
|
|
----------- |
----------- |
|
| Dividend
received |
|
1,262,609 |
2,147,004 |
|
|
|
|
| Net
cash generated from investing activities |
|
1,262,609 |
21,037,500 |
|
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
|
|
| Security
deposit paid |
|
-- |
(90,000) |
|
| Profit
distribution paid |
|
(11,867,222) |
(11,464,059) |
|
|
----------- |
----------- |
|
| Net
cash used in financing activities |
|
(11,867,222) |
(11,554,059) |
|
|
----------- |
----------- |
|
| Net
decrease in cash and cash equivalents |
|
(280,268) |
(27,634,582) |
|
| Cash
and cash equivalents at the beginning of the year |
|
1,139,590 |
28,774,172 |
|
|
----------- |
----------- |
|
| Cash
and cash equivalents at the end of the year |
|
859,322 |
1,139,590 |
|
|
========== |
========== |
|
|
|
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
Issued |
|
|
|
subscribed |
|
|
|
and paid-up |
|
Unappro- |
|
|
|
certificate |
Statutory |
priated |
|
|
|
capital |
reserve |
profit |
Total |
|
|
-----------------------------RUPEES-------------------------------- |
|
| Balance
as at June 30, 1999 |
|
116,875,000 |
12,812,972 |
463,156 |
130,151,128 |
|
| Profit
for the year |
|
-- |
-- |
14,840,932 |
14,840,932 |
|
| Transfer
from profit and loss account |
-- |
1,484,093 |
(1,484,093) |
-- |
|
| Profit
Distribution 2000 |
|
-- |
-- |
(12,271,875) |
(12,271,875) |
|
|
---------- |
---------- |
---------- |
---------- |
|
| Balance
as at June 30, 2000 |
|
116,875,000 |
14,297,065 |
1,548,120 |
132,720,185 |
|
| Profit
for the year |
|
-- |
-- |
10,736,482 |
10,736,482 |
|
| Transfer
from profit and loss account |
-- |
1,073,648 |
(1,073,648) |
-- |
|
| Profit
Distribution 2001 |
|
-- |
-- |
(8,765,625) |
(8,765,625) |
|
|
---------- |
---------- |
---------- |
---------- |
|
| Balance
as at June 30, 2001 |
|
116,875,000 |
15,370,713 |
2,445,329 |
134,691,042 |
|
|
========== |
========== |
========== |
========== |
|
|
|
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| First
IBL Modaraba is registered under the Modaraba Companies and Modaraba
(Floatation and Control) |
|
| Ordinance,
1980 and the rules framed there under and is managed by IBL Modaraba
Management (Private) -: |
|
| Limited,
a company incorporated in Pakistan. The Modaraba is perpetual and multi -
purpose, engaged in the |
|
| business
of morabaha, operating lease, musharika, trading, investment in marketable
securities and other |
|
| related
business. The Modaraba is listed on Karachi, Lahore and Islamabad stock
exchanges. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
Basis for preparation of the accounts |
|
| These
accounts have been prepared in compliance with the requirements of Modaraba
(Floatation and |
|
| Control)
Ordinance, 1980 and International Accounting Standards as adopted by the
Institute of Chartered |
|
| Accountants
of Pakistan which are applicable to the Modaraba. |
|
|
| 2.2
Overall valuation policy |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| 2.3
Fixed assets and depreciation |
|
| These
are stated at cost less accumulated depreciation. Depreciation is charged to
income applying |
|
| the
straight-line method, whereby the cost of an asset is written off over its
estimated useful life. Full |
|
| year's
depreciation is charged on additions while no depreciation. is charged on
assets disposed off |
|
| during
the year. |
|
|
| Major
repairs and renewals are capitalized. Maintenance and normal repairs are
charged to income |
|
| as
and when incurred. Gain or loss, if any on disposal of fixed assets is
included in profit and loss |
|
| account
currently. |
|
|
| 2.3.1
Assets leased out and amortization |
|
| Leased
assets are stated at cost less accumulated amortization. Amortization is
charged to profit and |
|
| loss
account applying the annuity method whereby the original cost less residual
value of assets is |
|
| amortized
over the lease period. |
|
|
| Gain
or loss on disposal of assets leased out is included in profit and loss
account currently. |
|
|
| 2.3.2
Leased assets |
|
| Assets
acquired under finance lease are included in fixed assets at present value of
minimum lease |
|
| payments.
Financial charges are calculated at the markup rate implicit in the lease and
charged to |
|
| profit
and loss account. |
|
|
| 2.4
Rates of exchange |
|
| Transactions
in foreign currencies are converted into Pak rupees at the rates of exchange
ruling on |
|
| the
date of transactions. Assets and liabilities in foreign currencies are
translated into Pak rupees at |
|
| the
rate of exchange ruling at the balance sheet date, while those covered under
forward exchange |
|
| contracts
are valued at the contracted rates. |
|
|
| Exchange
gains and losses are included in income currently. |
|
|
| 2.5
Trade debts and other receivables |
|
| Debts
considered irrecoverable are written off and provision is made against those
considered doubtful |
|
| of
recovery in accordance with prudential regulations issued by Securities and
Exchange Commission |
|
| of Pakistan. |
|
|
| 2.6
Trading stock |
|
| Trading
stock is valued at lower of cost or market value. Goods in transit are stated
at invoice value |
|
| plus
other charges paid thereon. |
|
|
| 2.7
Investments |
|
| Long
term investments are valued at cost less provision for permanent diminution
in the value of investments. |
|
| Short
term marketable securities are valued at lower of average cost or market
value on an aggregate |
|
| portfolio
basis, in total, and the resulting diminution in value, if any, is charged to
profit and loss account. |
|
| The
provision for diminution in value is reversed to the extent of subsequent
improvement in the value |
|
| of
marketable securities. |
|
|
| Profit
or loss on sale of investment is accounted for in the year in which it
arises. |
|
|
| 2.8
Revenue recognition |
|
| Profit
on sale of goods is recognized on dispatch of goods to customer. |
|
| Dividend
income is recognized when right is established which usually coincide with
the date of book |
|
| closure
of the entities declaring the dividends. |
|
|
| Profit
on morabaha and musharika arrangements are recognized on the accrual basis,
based on period |
|
| of
arrangement. |
|
|
| Rental
income is recognized as and when rentals become due on a systematic basis
over the lease |
|
| period. |
|
|
| 2.9 Taxation |
|
|
| 2.9.1
Current |
|
| Provision
for current taxation is based on taxable income at the current rates of
taxation after |
|
| taking
into account tax credits available, if any. |
|
|
| 2.9.2
Deferred |
|
| The
Modaraba accounts for deferred taxation using the liability method on all
major timing differences. |
|
| However, it
does not account for deferred tax debits. |
|
|
| 3.
ISSUED, SUBSCRIBED AND PAID UP CAPITAL |
|
|
|
| 2000 |
2001 |
