| First UDL Modaraba |
|
|
|
|
|
|
|
|
|
|
| Annual
Report 2001 |
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|
|
| CONTENTS |
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| Corporate
Information |
|
|
| Directors'
Report |
|
|
| Auditors'
Report |
|
|
| Balance Sheet |
|
|
| Profit and Loss Account |
|
|
| Statement of Changes in
Financial Position |
|
| Statement
of Changes in Equity |
|
| Notes to the Accounts |
|
|
| Pattern of Certificates Holding |
|
|
|
| CORPORATE
INFORMATION |
|
|
| MODARABA
COMPANY |
|
| UDL
Modaraba Management (Private) Limited |
|
|
| BOARD
OF DIRECTORS |
|
| Abdul Malik |
|
Chairman |
|
| Khalid Malik |
|
Chief Executive |
|
| Rashid
Abdulla |
|
Director |
|
| Farid
Alam - Nominee Crescent |
Director |
|
| Investment
Bank Limited |
|
|
| COMPANY
SECRETARY |
|
| Zubair
Razzak Palwala |
|
|
| AUDITORS |
|
| M.
Yousuf Adil Saleem & Co. |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| Citibank
N. A. |
|
| Bolan
Bank Limited |
|
| Habib
Bank Limited |
|
| National
Bank of Pakistan |
|
| ANZ
Grindlays Bank Ltd. |
|
| Prime
Commercial Bank Ltd. |
|
| Union
Bank Limited |
|
| Muslim
Commercial Bank Ltd. |
|
| AI-Barka
Islamic Bank B.S.C. (E.C.) |
|
| AI-Faysal
Investment Bank Limited |
|
| Platinum
Commercial Bank Limited |
|
|
| REGISTRAR |
|
| Gangjees
Investment & Finance Consultants |
|
| 513
Clifton Centre, Khayaban-e-Roomi, |
|
| Kehkashan,
Block-5, Clifton, Karachi. |
|
|
| REGISTERED
OFFICE |
|
| 1st
Floor, N.I.C. Building, Abbasi Shaheed Road, |
|
| Off.
Shahrah-e-Faisal, Karachi. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors of UDL Modaraba Management (Private) Limited are pleased to present
their report and the audited financial |
|
| statements
of First UDL Modaraba for the year ended June 30, 2001. |
|
|
| FINANCIAL
RESULTS |
|
|
Rs. in '000' |
|
| Gross Profit |
|
49,328 |
|
| Net
Profit for the year |
|
26,126 |
|
| Un-appropriated
profit b/f |
|
21,218 |
|
| Transferred
to statutory reserves |
2,613 |
|
| Dividend
@ 10% |
|
26,386 |
|
| Un-appropriated
profit c/f |
|
18,345 |
|
|
| PERFORMANCE
REVIEW |
|
| Your
Modaraba has succeeded in maintaining gross profit levels despite the fact
that adverse economic conditions have |
|
| severely
affected business activities in the country. Net Profits, however, have
declined considerably as compared to last |
|
| year,
when reversal of provision for diminution in the value of investments was
made, whereas this year substantial provisions |
|
| have
been made to cover the diminution in the value of investments against the
fall of the stock market. Substantial |
|
| provisions
have also been made to cover doubtful debts against continuos defaults of
clients in the Cement and Auto |
|
| sectors. |
|
|
| ECONOMY |
|
| The
year 2000-2001 has been a difficult year as the economy failed to revitalize
as had been anticipated. The GDP growth |
|
| rate
declined to 2.6% as against 3.9% last year. Our country is caught in a deadly
debt trap and is struggling hard to get |
|
| rid
of external loans worth more than 35 billion US dollars. There are as yet no
signs of overcoming an ever-increasing |
|
| fiscal
deficit, a worsening balance of payments and unfavourable trade imbalances. |
|
|
| Factors
contributing towards the condition of our economy are external as well as
internal. External factors include a slow |
|
| down
of economies of USA and Japan, which has affected our exports, especially in
the textile sector. Internally, a history |
|
| of
bad governance, along with the worst drought in the country's history, did
not allow the economy to improve. |
|
|
| FUTURE
OUTLOOK |
|
| The
growth of any financial institution is directly related to a country's
overall economic condition, business environment |
|
| and
government fiscal policies. In view of the incident of September 11, 2001,
our country has already felt the brL1nt on |
|
| political
as well as economic fronts. However, support from the international community
in the form of debt relief, the lifting |
|
| of
duties/quotas on exports, etc. can definitely play a positive role. It is
expected that substantial direct foreign investment |
|
| will
come into the country and, along with the anticipated relaxation in terms of
repayment of debts, would play an important |
|
| role
in propelling the local economy in the right direction. Furthermore, on the
internal front, we are optimistic that Government |
|
| policies
towards better governance at all levels, will provide the support required
for the expected movement of the economy |
|
| in
a positive direction. |
|
|
| Referring
to our initial statement that the growth of a financial institution is
directly related to the performance of the |
|
| economy,
we expect that in the last two quarters of the financial year 2001-02, the
business scenario in the Leasing sector |
|
| should
'improve considerably. |
|
|
| EARNING
PER CERTIFICATE |
|
| The
Earning per Modaraba certificate works out to be Rs 0.99 this year, as
compared to Rs. 1.66 in the preceding year. |
|
|
| PATTERN
OF CERTIFICATE HOLDING |
|
| The
pattern of certificate holding of the Modaraba as at June 30, 2001 is
attached to this report. |
|
|
| AUDITORS |
|
| The
present Auditors M/s. M. Yousuf Adil Saleem & Co., Chartered Accountants,
are due for retirement and, being eligible, |
|
| offer
themselves for re-appointment for the year 2001-2002. |
|
|
| ACKNOWLEDGEMENT |
|
| The
Directors offer their sincere thanks to our valued clients, bankers, and
certificate holders for their confidence in the |
|
| Modaraba. |
|
|
| We
extend our appreciation to the State Bank of Pakistan, Securities &
Exchange Commission of Pakistan and Registrar |
|
| Modaraba
for their continued support and guidance, and to all members of the
management and staff for their dedication |
|
| and
hard work. |
|
|
|
On behalf of the board |
|
|
|
|
|
Sd/- |
|
|
Khalid Malik |
|
| Karachi:
November 26, 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, cash flow statement |
|
| and
statement of changes in equity, together with the notes to the accounts, for
the year ended June 30,2001 of First UDL |
|
| Modaraba
which are Modaraba Company's [UDL 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 account have been kept by the Modaraba
Company in respect of First UDL 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; |
|
|
| 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, cash flow
statement and statement of changes |
|
| in
equity, 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, the cash flows
and the changes in equity |
|
| for
the year ended on that date; |
|
|
| ii)
in our opinion, no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980. |
|
|
| 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 wish to draw attention that the Modaraba has
pursued the currently prevailing practice |
|
| and
form of documenting Morabaha and Musharika and Ijara/Lease transactions.
These documents, are in accord with |
|
| the
approval of the Religious Board. The execution of such transactions need to
be brought in greater conformity with the |
|
| spirit
of such documents. |
|
|
|
Sd/- |
|
|
M. Yousuf Adil Saleem & Co. |
|
| Karachi:
November 26, 2001 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 2001 |
|
|
|
Notes |
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
| Capital
and Reserves |
|
|
|
|
| Capital |
|
|
|
|
| Authorised |
|
| 50,000,000
(2000: 50,000,000) Modaraba |
|
| Certificates
of Rs. 10/- each |
|
500,000,000 |
500,000,000 |
|
|
========== |
========== |
|
|
| issued,
subscribed and paid-up |
|
3 |
263,865,890 |
263,865,890 |
|
|
| Statutory
reserve |
|
50,452,920 |
47,840,343 |
|
| Unappropriated
profit |
|
18,343,768 |
21,217,169 |
|
|
----------- |
----------- |
|
|
68,796,688 |
69,057,512 |
|
|
----------- |
----------- |
|
|
332,662,578 |
332,923,402 |
|
| Redeemable
capital-Secured |
|
4 |
343,300,000 |
343,300,000 |
|
| Morabaha
payable-Secured |
|
5 |
-- |
5,766,666 |
|
| Security
deposits |
|
20,320,385 |
46,236,000 |
|
| Deferred
liability-Gratuity |
|
901,000 |
686,000 |
|
|
|
| Current
Liabilities |
|
| Current
potion of long term |
|
| morabaha
payable |
|
5,766,666 |
12,683,340 |
|
| Creditors,
accrued and other liabilities |
|
62,173,991 |
53,584,675 |
|
| Due
to associated undertakings |
|
3,340,528 |
5,246,890 |
|
| Unclaimed
dividend |
|
28,997,368 |
6,596,204 |
|
|
----------- |
----------- |
|
|
100,278,553 |
78,111,109 |
|
| Contingencies |
|
7 |
-- |
-- |
|
|
----------- |
----------- |
|
|
797,462,516 |
807,023,177 |
|
|
========== |
========== |
|
| Fixed
Assets - Tangible |
|
| Assets
in own use |
|
8 |
3,274,505 |
4,248,411 |
|
| Assets
leased out |
|
9 |
195,141,971 |
343,002,542 |
|
|
|
|
| Long-term
advances and deposits |
|
10 |
640,931 |
852,850 |
|
|
| Long-term
investments |
|
11 |
25,514,232 |
33,093,029 |
|
|
|
|
|
| Current
Assets |
|
|
|
|
| Trade debts |
|
12 |
80,009,806 |
85,950,977 |
|
| Musharika
receivables |
|
13 |
296,907,178 |
124,860,402 |
|
| Advances,
deposits, prepayments and |
|
|
|
|
| other
receivables |
|
14 |
70,321,225 |
44,412,235 |
|
| Short-term
investments |
|
15 |
20,111,857 |
15,428,503 |
|
| Bank
balances |
|
16 |
105,540,811 |
155,174,228 |
|
|
----------- |
----------- |
|
|
572,890,877 |
425,826,345 |
|
|
----------- |
----------- |
|
|
797,462,516 |
807,023,177 |
|
|
========== |
========== |
|
| Auditors'
Report Annexed |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
Khalid Malik |
|
Abdul Malik |
|
Rashid Abdulla |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
Notes |
2001 |
2000 |
|
|
|
Rupees |
Rupees |
|
| Revenue
from: |
|
| Leasing
operations |
|
17 |
171,977,054 |
199,856,470 |
|
| Musharikas |
|
|
42,537,024 |
39,231,799 |
|
| Investments |
|
18 |
52,424,403 |
54,682,140 |
|
| Other
sources |
|
19 |
3,735,453 |
1,803,884 |
|
|
|
----------- |
----------- |
|
|
|
270,673,934 |
295,574,293 |
|
| Expenditure |
|
|
|
|
| Administrative
expenses |
|
20 |
17,645,706 |
15,741,060 |
|
| Amortization
on assets leased out |
|
9 |
131,634,317 |
146,135,507 |
|
| Financial
charges |
|
21 |
72,065,735 |
85,141,529 |
|
|
----------- |
----------- |
|
|
221,345,758 |
247,018,096 |
|
|
49,328,176 |
48,556,197 |
|
| Provision
/ (Reversal of provision) for |
|
| diminution
in the value of investments |
|
4,927,139 |
(4,967,050) |
|
| Provision
for doubtful debts |
|
15,372,409 |
5,000,000 |
|
|
----------- |
----------- |
|
|
20,299,548 |
32,950 |
|
|
----------- |
----------- |
|
|
29,028,628 |
48,523,247 |
|
| Modaraba
company's management fee |
|
(2,902,863) |
(4,852,325) |
|
|
----------- |
----------- |
|
| Profit
for the period |
|
26,125,765 |
43,670,922 |
|
| Unappropriated
profit brought forward |
|
21,217,169 |
21,493,223 |
|
|
----------- |
----------- |
|
| Profit
available for appropriations |
|
47,342,934 |
65,164,145 |
|
|
| Appropriations |
|
| Transferred
to statutory reserve |
|
(2,612,577) |
(4,367,092) |
|
| Interim
dividend · Nil (2000 · 15%) |
|
-- |
(39,579,884) |
|
| Final
dividend @10% (2000: nil) |
|
(26,386,589) |
-- |
|
|
----------- |
----------- |
|
|
(28,999,166) |
(43,946,976) |
|
|
----------- |
----------- |
|
| Unappropriated
profit carried forward |
|
18,343,768 |
21,217,169 |
|
|
========== |
========== |
|
| Earnings
per certificate - basic |
|
22.1 |
0.99 |
1.66 |
|
|
|
========== |
========== |
|
| Earnings
per certificate - diluted |
|
22.2 |
0.67 |
1.02 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements |
|
|
|
Khalid Malik |
|
Abdul Malik |
|
Rashid Abdulla |
|
|
|
|
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
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
for the year |
|
26,125,765 |
43,670,922 |
|
| Adjustment
for |
|
|
|
| Depreciation
on own assets |
|
1,388,832 |
1,300,740 |
|
| Provision
for gratuity |
|
215,000 |
386,000 |
|
| Provision
for investments |
|
4,927,139 |
(4,967,050) |
|
| Provision
for bad debts |
|
15,372,409 |
5,000,000 |
|
| Amortization
of assets leased out |
|
131,634,317 |
146,135,507 |
|
| Amortization
of deferred costs |
|
-- |
1,073,497 |
|
| (Gain)
/ loss on sale of fixed assets: |
|
|
|
| - own assets |
|
(232,826) |
(626,599) |
|
| -
assets leased out |
|
(1,539,538) |
1,107,304 |
|
| Dividend
income |
|
(4,714,061) |
(3,972,855) |
|
| Financial
charges |
|
72,065,735 |
85,141,529 |
|
|
---------- |
---------- |
|
|
245,242,772 |
274,248,995 |
|
|
|
|
| (Increase)/decrease
in operating assets |
|
|
|
| Short-term
investments |
|
(9,311,070) |
35,232,012 |
|
| Trade debts |
|
(9,431,238) |
11,341,849 |
|
| Musharika
receivables |
|
(172,046,776) |
(123,401,227) |
|
| Advances,
deposits, prepayments and other receivables |
|
(24,622,095) |
(4,959,791) |
|
|
---------- |
---------- |
|
|
(215,411,179) |
(81,787,157) |
|
|
|
|
| Increase/(decrease)
in current liabilities |
|
|
|
| Current
portion of long-term |
|
|
|
| morabaha-secured |
|
(6,916,674) |
(23,731,878) |
|
| Creditors,
accrued and other liabilities |
|
18,606,893 |
1,703,410 |
|
| Due
to associated undertakings |
|
(1,906,362) |
1,402,325 |
|
|
---------- |
---------- |
|
|
9,783,857 |
(20,626,143) |
|
| Financial
charges paid |
|
(82,083,312) |
(116,464,283) |
|
| Income
tax paid |
|
(551,362) |
44,031 |
|
|
---------- |
---------- |
|
| Net
cash (used in)/flow from operating activities |
|
{43,019,224) |
55,415,443 |
|
|
---------- |
---------- |
|
|
|
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
| Purchase
of fixed assets |
|
| - own assets |
|
(583,400) |
(1,990,360) |
|
| -
assets leased out |
|
(60,000,250) |
88,279,671) |
|
| Long-term
advances and deposits |
|
211,919 |
(212,564) |
|
| Long-term
investments |
|
7,279,374 |
(5,793,803) |
|
| Proceeds
from sale of fixed assets |
|
|
|
| - own assets |
|
401,300 |
657,000 |
|
| -
assets leased out |
|
77,766,042 |
16,767,812 |
|
| Dividends
received |
|
3,978,528 |
3,696,881 |
|
|
---------- |
---------- |
|
| Net
cash flow from/(used in) investing activities |
|
29,053,513 |
75,154,705) |
|
|
---------- |
---------- |
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Proceeds
/ (repayment) of morabaha |
|
(5,766,666) |
12,683,340 |
|
| Dividend
paid |
|
(3,985,425) |
35,030,351 |
|
| Long-term
security deposits |
|
(25,915,615) |
(7,655,407) |
|
|
---------- |
---------- |
|
| Net
cash used in financing activities |
|
(35,667,706) |
(55,369,098 |
|
|
---------- |
---------- |
|
| Net
cash used during the year |
|
(49,633,417) |
(75,108,360 |
|
| Bank
balance at the beginning of the year |
|
155,174,228 |
230,282,588 |
|
|
---------- |
---------- |
|
| Bank
balance at the end of the year |
|
105,540,811 |
155,174,228 |
|
|
========== |
========== |
|
|
|
Khalid Malik |
|
Abdul Malik |
|
Rashid Abdulla |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
| STATEMENT
OF CHANGES IN EQUITY |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
|
Share |
Statutory |
Unappropriated |
|
|
Capital |
Reserve |
Profit |
Total |
|
|
| Balance
as at June 30, 1999 |
|
263,865,890 |
43,473,251 |
21,493,223 |
328,832,364 |
|
| Profit
for the year |
|
-- |
-- |
43,670,922 |
43,670,922 |
|
| Transferred
during the year to |
|
|
| statutory
reserve @ 10% |
|
-- |
4,367,092 |
(4,367,092) |
-- |
|
| Interim
dividend @ 15% |
|
-- |
-- |
(39,579,884) |
(39,579,884) |
|
|
---------- |
---------- |
---------- |
---------- |
|
| Balance
as at June 30, 2000 |
|
263,865,890 |
47,840,343 |
21,217,169 |
332,923,402 |
|
| Profit
for the year |
|
-- |
-- |
26,125,765 |
26,125,765 |
|
| Transferred
during the year to |
|
|
| statutory reserve @ 10% |
|
-- |
2,612,577 |
(2,612,577) |
-- |
|
| Final
dividend @ 10% |
|
-- |
-- |
(26,386,589) |
(26,386,589) |
|
|
---------- |
---------- |
---------- |
---------- |
|
| Balance
as at June 30, 2001 |
|
263,865,890 |
50,452,920 |
18,343,768 |
332,662,578 |
|
|
========== |
========== |
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
|
Khalid Malik |
|
Abdul Malik |
|
Rashid Abdulla |
|
|
Chief Executive |
|
Director |
|
Director |
|
|
|
| NOTES
TO THE FINANCIAL STATEMENTS |
|
| FOR
THE YEAR ENDED JUNE 30, 2001 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| First
UDL Modaraba was formed in 1991 under the Modaraba Companies and Modaraba
(Floatation and Control) |
|
| Ordinance,
1980 and the Rules framed thereunder and is managed by UDL Modaraba
Management (Private) Limited, |
|
| a
company incorporated in Pakistan. It is a perpetual, multipurpose and
multidimensional Modaraba and is engaged |
|
| in
providing finance on morabaha and musharika arrangements, leasing, commodity
trading and trading in listed |
|
| and
non-interest bearing securities. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
| 2.1
Basis for preparation of the financial statements |
|
| These
accounts have been prepared in accordance with the requirements of the
Modaraba Companies and |
|
| Modaraba
(Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba
Rules, 1981 and |
|
| International
Accounting Standards as applicable in Pakistan. |
|
|
| 2.2
Overall valuation policy |
|
| These
financial statements have been prepared on the basis of historical cost
'convention' |
|
|
| 2.3
Staff retirement benefits |
|
| Staff
Provident Fund |
|
| The
Modaraba operates approved Provident Fund Scheme covering all its employees
who are eligible under |
|
| the
scheme. Equal monthly contributions are made by the Modaraba and the
employees to the Fund. |
|
|
| Gratuity |
|
| An
unfunded gratuity scheme is operated for permanent employees completing
prescribed period of service. |
|
| Provision
for obligations under the scheme is made by charging to the profit and loss
account. |
|
|
| 2.4
Fixed assets |
|
| Assets
in own use and depreciation |
|
| Fixed
assets 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. |
|
|
| Maintenance
and normal repairs are charged to income as and when incurred. Gains and
losses on disposal |
|
| of
fixed assets are included in income currently. |
|
|
| Assets
leased out and amortization |
|
| leased
assets are stated at cost less accumulated amortization. Amortization is
charged to income applying |
|
| the
annuity method whereby the amortizable values of assets are amortized over
the lease period. |
|
|
| Profit
or loss on disposal of leased assets is included in income currently. |
|
|
| 2.5
Trading stock |
|
| These
are stated at lower of cost and net realisable value determined on FIFO
basis, except for goods in |
|
| transit
which are stated at invoice value in addition to other charges paid thereon. |
|
|
| 2.6
Investments |
|
| Investments
are carried at lower of average cost and market value determined on aggregate
portfolio basis. |
|
|
| 2.7
Provision for doubtful debts and write-off |
