| First Confidence Modaraba |
|
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| Contents |
|
|
| Modaraba Information |
|
| Directors'
Report |
|
| Auditors'
Report |
|
| Balance
Sheet |
|
| Profit
& Loss Account |
|
| Statement of Movement
in Equity and Reserves |
|
| Statement
of Changes in Financial Position |
|
| Notes
to the Accounts |
|
| Pattern
of Certificates Holding |
|
|
|
| Modaraba
Information |
|
|
|
| Modaraba
Company |
|
Confidence Modaraba
Management (Pvt.) Ltd. |
|
|
|
| Directors
of Modaraba Company |
Haji Mohammad |
|
Chief Executive |
|
|
|
Mohammad Saleem Adam |
|
|
|
Naveed Altaf |
|
|
|
Mohammad Nasir |
|
|
|
| Auditors
of the Modaraba |
|
Taseer Hadi Khalid &
Co. |
|
|
|
Chartered Accountants |
|
|
|
| Auditors
of the Modaraba Company |
Daudally, Lalani &
Company |
|
|
|
Chartered Accountants |
|
|
|
| Bankers |
|
Askari Commercial Bank
Limited |
|
|
Habib Bank AG Zurich |
|
|
Faysal Bank Limited |
|
|
Credit Agricole Indosuez |
|
|
Soneri Bank Limited |
|
|
Metropolitan Bank Limited |
|
|
Muslim Commercial Bank
Limited |
|
|
Prudential Commercial
Bank Limited |
|
|
| Registered
Office |
|
6th Floor, A1-Falah
Court, |
|
|
|
I.I. Chundrigar Road,
Karachi-74200 Pakistan |
|
|
|
Ph · 2634249-51,
2635011-13 |
|
|
|
Fax No. 00-9221-2631310 |
|
|
|
| Registrars
and |
|
| Share
Registration Office |
|
Hameed Majeed Associates
(Pvt.) Limited |
|
|
|
5th Floor, Karachi
Chamber, |
|
|
Hasrat Mohani Road,
Karachi. |
|
|
Ph · 2424826 - 2412754 |
|
|
|
| Report
of the Directors of Modaraba Company |
|
| For
the year ended 30 June 1999 |
|
|
| ALLAH
IN HIS BENIGN MERCY has granted us an opportunity to present the audited
accounts |
|
| of
the First Confidence Modaraba for the year ended 30 June 1999. |
|
|
| Financial Results |
|
|
| Financial
results are summarised as under:- |
|
|
Year ended |
Year ended |
|
|
30 June |
30 June |
|
|
1999 |
1998 |
|
| Total earnings before
reversal / (provision) |
|
| for
the diminution in the value of |
|
| marketable
securities |
|
13,766,942 |
12,484,073 |
|
|
|
|
|
| Reversal/(Provision)
for diminution in |
|
| value
of marketable securities |
|
1,974,596 |
(3,319,804) |
|
|
---------- |
---------- |
|
|
| Profit
before Modaraba Company's |
|
| Management
fee |
|
15,741,538 |
9,164,269 |
|
| Modaraba
Company's management fee |
|
1,431,049 |
833,115 |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
14,310,489 |
8.,331,154 |
|
|
|
|
| Taxation
- Current |
|
(9,301,589) |
(642,991)l |
|
| Taxation
- prior |
|
(1,867,506) |
-- |
|
|
---------- |
---------- |
|
|
(11,169,095) |
(642,991) |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
3,141,394 |
7,688.16 |
|
| Unappropriated
profit b/f |
|
1,807,580 |
1,707,051 |
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
4,948,974 |
9,395,214 |
|
|
| Appropriations: |
|
|
| Proposed
final profit distribution |
|
| 7 % (1998:
10 %) |
|
42,350,001 |
6,050,000 |
|
| Transfer
to statutory reserve |
|
628,280 |
1,537,634 |
|
|
---------- |
---------- |
|
|
4,863,280 |
7,587,634 |
|
|
---------- |
---------- |
|
| Unappropriated
profit c/f |
|
Rupees |
85,694 |
1,807,580 |
|
|
========== |
========== |
|
|
| Final
Cash Dividend: |
|
|
| The
Board of Directors in their meeting held on December 01, 1999 has approved
the distribution |
|
| of
profit of 70 Paisas i.e. 7 % per Modaraba certificate of Rs.10/- each,
subject to deduction of |
|
| zakat
and tax at source where applicable, for the year ended 30 June 1999. |
|
|
| An
amount of Rs.0.628 million representing 20% of after tax profit has been
transferred to |
|
| statutory
reserves in compliance with State Bank of Pakistan's directive for non-bank
financial |
|
| institutions. |
|
|
| To
determine the names of Certificate Holders 'entitled to receive final cash
dividend, the |
|
| certificate
transfer books of Modaraba will be closed from December 23, 1999 to December
29, |
|
| 1999
(both days inclusive). Transfer received in order at the registrars and
certificate registration |
|
| office
at the close of business hours on December 22, 1999 will be treated in time
for the |
|
| entitlement
of cash dividend. |
|
|
| Operations
During The Year Under Review |
|
|
| Despite
the uncertain and difficult economic conditions during the year under review
the First |
|
| Confidence
Modaraba has folded down all the storms against it and succeeded to maintain |
|
| highest
profitability levels and sound financial standings. The total earning for the
year under |
|
| review
after reversal for diminution in the value of marketable securities is Rs.
15.742 million as |
|
| compared
to Rs.9.164 million in the corresponding year that shows significant increase
of |
|
| Rs.6.577
million i.e. 71.77 % higher as compared to the corresponding year. A profit
after |
|
| Taxation
of Rs. 3.141 million was earned during the year as against Rs. 7.688 million
posted last |
|
| year.
This decline of profit caused by the current year provision of taxation of
Rs.9.302 million. |
|
|
| Scripts
held by Modaraba have shown some appreciation as on 30 June 1999 and made the
reason |
|
| for
the reversal of provision for the diminution in the value of marketable
securities by the extent |
|
| of
Rs. 1.975 million. |
|
|
| The
main stream of our business transactions diversified to the leasing. We are
inveterate to write |
|
| hallmark
leases on a selective basis our leasing income as on 30 June 1999, were Rs.
11.637 |
|
| million
as compared to Rs. 10.765 million last financial year. Recovery of rentals
continue to |
|
| remain
.excellent and our Modaraba did not written off or faced any bad debts since |
|
| commencement
of its leasing business. |
|
|
| Our
trading profit and other revenue income has also shown improvements as
compared to the |
|
| last
year. The total operating revenue stood as on 30 June 1999 is Rs. 15.038
million as compared |
|
| to
12.646 million in the last financial year. This confirms the improvement of
Rs. 2.392 million |
|
| i.e.
18.91% increase. |
|
|
| Taxation |
|
|
| The
charge for current taxation in the accounts is on the basis of Section 80C
and 80CC of the |
|
| Income
Tax Ordinance, 1979. |
|
|
| The
major part of profit has plunged back by the provision for current year
Taxation. The |
|
| management
has no way left except to provide provision for taxation in accordance with
the |
|
| amendments
brought into the Income Tax Ordinance, 1979 through the Finance Act, 1999. |
|
| Whereby,
the income of Modaraba on account of trading shall be taxed as a separate
block of |
|
| income
under presumptive tax regime. Before such amendments the trading activity of
the |
|
| Modaraba
is liable to tax at the normal rates of taxation i.e. 25 %. |
|
|
| The
Certificate Holders can understand that if there was no such provision of
taxation for the |
|
| current
year, as it has been brought in by the Finance Act, 1999 the Modaraba could
have been in |
|
| a
position to distribute 15% of the profit on each Modaraba Certificate of Rs.
10 each i.e. Rs. |
|
| 1.50.
We hope this provision of Rs. 9.302 million will reverse in the forthcoming
financial |
|
| statements
and the Modaraba will be in a better position to pay off handsome rate of
profit to its |
|
| Certificate
Holders. |
|
|
| The
management of the Modaraba has decided to file writ petition against the
certain |
|
| amendments
made in the Income Tax Ordinance, 1979 those have effects as of a prior year, |
|
| which
is inequitable in nature. The Management is confident of favorable outcome.
Details of the |
|
| said
amendments are given in notes to the accounts in note No. 20. |
|
|
| Completion
of "The Year 2000 Compliance of Computer System" |
|
|
| We
assure that the financial accounting system of the First Confidence Modaraba
has ready for |
|
| the
year 2000 compliance. The software duly completed for the year 2000
requirement and it has |
|
| integrated
and has capabilities to process all sorts of accounting and financial
transactions beyond |
|
| 31
st December 1999. |
|
|
| Earning
per Modaraba Certificate |
|
|
| Earning
on each Modaraba certificate of Rs. 10 each works out to be Rs. 0.52 this
year as against |
|
| Rs.
1.27 in the preceding year. |
|
|
| Future
Prospects |
|
|
| We
remain to utilize most of our funds in leasing business. The distinct tax
advantages and |
|
| efficient
approval process, has made leasing an attractive source of financing for
industrial and |
|
| corporate
sectors. Large as well as small companies have taken advantages of lease
financing. |
|
| Lease
finance accounts for hefty amount of the total private fixed capital
expenditure in the |
|
| country
this indicates that there still exists substantial scope for lease business. |
|
|
| However,
the growth of the leasing sector is fundamentally dependent upon the
continued |
|
| availability
of resources and the leasing are expected to receive considerable attention
as the |
|
| corporate
debt market evolves. We also expect the growth of earnings in trading and
other |
|
| businesses
and we do expect the healthy dividend payouts to continue in future. |
|
|
| The
following measures took by the government will further enhance the operating
activities of |
|
| the
Modaraba sector. |
|
|
| The
Finance Act 1998 has exempted non-trading income of Modarabas from tax, |
|
| provided
90 % of the total profits are distributed to the certificate holders. This |
|
| exemption
is applicable to the current financial year ending 30 June 1999. |
|
|
| Securities and Exchange Commission of
Pakistan is in the process of framing new rules |
|
| of
business for Modarabas in addition to rationalizing the Modaraba ordinance
and the |
|
| rules
framed there under. Recommendations have been made by the Modaraba |
|
| Association
of Pakistan. |
|
|
| We
hope the economic activities will be favorable in future and we remain
confident that we |
|
| should
get tremendous opportunities to grow our business activities. |
|
|
| Appointment
of Auditors |
|
|
| The
present Auditors Messrs. Taseer Hadi Khalid & Co., Chartered Accountants
being due for |
|
| retirement,
have offered themselves for re-appointment for the year ended 30 June 2000.
Subject |
|
| to
the approval by the Registrar Modaraba Companies and Modaraba, their
appointment has been |
|
| confirmed
by the Board. |
|
|
| Associated
Companies |
|
|
| The
names of Associated Companies in which the Directors of the company are also
holding |
|
| office
of the director are (i) Confidence Mutual Fund Limited, (ii) Confidence
Financial Services |
|
| Limited
& (iii) Confidence Modaraba Management (Pvt.) Ltd. (A Management company
of First |
|
| Confidence
Modaraba). |
|
|
| Pattern
of Certificate Holding |
|
|
| The
statement of pattern of Certificate Holding in the Modaraba as at 30 June
1999 is attached to |
|
| the
Annual Report. |
|
|
| Acknowledgment |
|
|
| We
thank all our Certificate Holders for their continued trust and support. We
are also thankful to |
|
| our
staff members for their hard work. It would not have been possible to achieve
this result |
|
| without
their dedication and commitment to the First Confidence Modaraba. We also
express |
|
| our
sincere thanks for the valuable guidance and support provided by the
Securities and Exchange |
|
| Commission
of Pakistan, Central Board of Revenue, State Bank of Pakistan and Registrar |
|
| Modaraba
Companies and Modaraba. |
|
|
|
For and on Behalf of
Board of Directors |
|
|
|
Haji Mohammad |
|
| Karachi:
December 01, 1999 |
|
Chief Executive |
|
|
|
| Auditors'
Report To The Certificate Holders |
|
|
|
| We
have audited the annexed balance sheet as at 30 June 1999 and the related
profit and loss |
|
| account
and statement of changes in financial position together with the notes to the
accounts for |
|
| the
year ended 30 June 1999 of First Confidence Modaraba which are Modaraba
Company's |
|
| [Confidence
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 Confidence Modaraba as required by the Modaraba Companies and |
|
| Modaraba
(Floatation and Control) Ordinance, 1980 and Modaraba Companies and |
|
|
| (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
explanation 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 30 June |
|
| 1999
and of the profit and the changes in financial position for the year ended on
that |
|
| date; |
|
|
| (ii)
zakat deductible at source under the zakat and Ushr Ordinance, 1980 have 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. |
|
|
|
Taseer Hadi Khalid &
Co. |
|
| Karachi:
01 DEC 1999 |
|
Chartered Accountants |
|
|
|
| Balance
Sheet |
|
| As
at 30 June 1999 |
|
|
|
|
|
30 June |
30 June |
|
|
Note |
1999 |
1998 |
|
| Capital
And Reserves |
|
|
| Certificate
Capital |
|
| Authorised |
|
| 10,000,000
Modaraba Certificates |
|
| of
Rs. 10 each |
|
100,000,000 |
100,000,000 |
|
|
========== |
========== |
|
| Issued,
subscribed and paid-up |
|
3 |
60,500,000 |
60,500.00 |
|
| Statutory
reserve |
|
4 |
10,086,427 |
9,458,147 |
|
| Unappropriated
profit |
|
85,694 |
1,807,580 |
|
|
---------- |
---------- |
|
|
70,672,121 |
71,765,727 |
|
| Long
Term Liabilities |
|
| Security
deposits on leases |
|
4,817,036 |
6,167,316 |
|
|
| Current
Liabilities |
|
| Short-term
musharaka finance-secured |
|
5 |
17,853,999 |
-- |
|
| Short
term morabaha finance-secured |
|
-- |
6,557,791 |
|
| Creditors,
accrued expenses and other liabilities |
6 |
498,469 |
5,567,932 |
|
| Management
fee payable |
|
1,431,049 |
833,115 |
|
| Unclaimed
profit distribution |
|
240,490 |
181,162 |
|
| Taxation |
|
20 |
9,301,589 |
975,731 |
|
| Proposed
profit distribution |
|
4,235,000 |
6,050,000 |
|
|
---------- |
---------- |
|
|
33,560,596 |
20,165,774 |
|
|
========== |
========== |
|
| Commitments |
|
7 |
|
|
|
|
---------- |
---------- |
|
|
|
Rupees |
109,049,753 |
98,098,774 |
|
| Tangible
Fixed Assets |
|
========== |
========== |
|
| Operating
assets-At cost less |
|
| accumulated
depreciation |
|
8 |
825,786 |
927,125 |
|
| Net
Investment In Lease Finance |
|
9 |
44,379,258 |
45,018,137 |
|
| Current
Assets |
|
|
|
| Stock-in-trade |
|
10 |
9,675,361 |
4,296,230 |
|
| Current
portion of net investment in lease Finance |
9 |
18,798,065 |
19,470,274 |
|
| Marketable
securities |
|
11 |
6,141,210 |
4,166,614 |
|
| Musharaka
arrangement |
|
|
50,000 |
-- |
|
| Trade
debts-unsecured - considered good |
|
-- |
3,727,636 |
|
| Advances,
deposits, prepayments & other receivables |
12 |
28,354,040 |
18,807,626 |
|
| Cash
and bank balances |
|
13 |
826,033 |
1,685,132 |
|
|
|
---------- |
---------- |
|
|
63,844,709 |
52,153,512 |
|
|
---------- |
---------- |
|
|
Rupees |
109,049,753 |
98,098,774 |
|
|
========== |
========== |
|
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
| Chief
Executive |
|
Director |
|
Director |
|
| Confidence
Modaraba |
|
Confidence Modaraba |
Confidence Modaraba |
|
| Management
(Pvt.) Ltd. |
|
Management (Pvt.) Ltd. |
Management (Pvt.) Ltd. |
|
|
|
| Profit
and Loss Account |
|
| For
the year ended 30 June 1999 |
|
|
|
|
Year ended |
Year ended |
|
|
Note |
30 June 1999 |
30 June 1998 |
|
|
| Trading
profit |
|
14 |
2,484,962 |
1,291,146 |
|
| Profit
on musharaka arrangement |
|
|
6,172 |
4,130 |
|
| Leasing
income |
|
|
11,636,637 |
10,765,265 |
|
| Other
revenue |
|
15 |
910,252 |
585,381 |
|
|
|
---------- |
---------- |
|
|
|
15,038,023 |
12,645,922 |
|
| Operating
Expenses |
|
|
|
|
| Administrative
and selling |
|
16 |
2,096,296 |
1,795,651 |
|
| Financial
charges |
|
17 |
38,271 |
90,408 |
|
|
|
---------- |
---------- |
|
|
|
2,134,567 |
1,886,059 |
|
|
|
---------- |
---------- |
|
| Operating
profit |
|
12,903,456 |
10,759,863 |
|
| Other
income |
|
|
18 |
863,486 |
1,724,210 |
|
|
|
|
|
---------- |
---------- |
|
|
13,766,942 |
12,484,073 |
|
| Reversal
/ (Provision) for diminution in the |
|
|
|
| value
of marketable securities |
|
1,974,596 |
(3,319.804) |
|
| Profit
before Modaraba Company's |
|
---------- |
---------- |
|
| management
fee |
|
15,741,538 |
9,164,269 |
|
| Modaraba
company's management fee |
|
1,431,049 |
833,115 |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
14,310,489 |
8,331,154 |
|
| Taxation
- current |
|
20 |
(9,301,589) |
(642.991 ) |
|
| - Prior |
|
(1,867,506) |
-- |
|
|
|
|
---------- |
---------- |
|
|
(11,169,095) |
(642,991) |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
3,141,394 |
7,688,163 |
|
| Unappropriated
profit brought forward |
|
1,807,580 |
1,707,051 |
|
|
---------- |
---------- |
|
| Profit
available for appropriation |
|
4,948,974 |
9,395,214 |
|
| Appropriations: |
|
|
|
| Proposed
final profit distribution @ 7 % (1998: 10%) |
|
4,235,000 |
6.050.000 |
|
| Transfer
to statutory reserve |
|
628,280 |
1.537,634 |
|
|
---------- |
---------- |
|
|
4,863,280 |
7,587,634 |
|
|
---------- |
---------- |
|
| Unappropriated
profit |
|
Rupees |
85,694 |
1,807,580 |
|
|
========== |
========== |
|
| These
accounts should be read in conjunction with the attached notes. |
|
|
| Chief
Executive |
|
Director |
|
Director |
|
| Confidence
Modaraba |
|
Confidence Modaraba |
|
Confidence Modaraba |
|
| Management
(Pvt.) Ltd. |
|
Management (Pvt.) Ltd. |
|
Management (Pvt.) Ltd. |
|
|
|
| Statement
of Movement in Equity and Reserves |
|
| For
the year ended 30 June 1999 |
|
|
Year ended |
Year ended |
|
|
30 June 1999 |
30 June 1998 |
|
|
| Net
Assets As At 01 July |
|
|
| Share Capital |
|
60,500,000 |
60,500,000 |
|
| Statutory
Reserves |
|
9,458,147 |
7,920,513 |
|
| Accumulated
Profit |
|
1,807,580 |
1,707,051 |
|
|
---------- |
---------- |
|
|
Rupees |
71,765,727 |
70,127,564 |
|
|
| Profit
for the year |
|
3,141,394 |
7,688,163 |
|
| Proposed
Dividend |
|
(4,235,000) |
(6,050,000) |
|
|
| Net
Assets As At 30 June |
|
|
| Sham Capital |
|
60,500,000 |
60,500,000 |
|
| Statutory
reserves |
|
10,086,427 |
9,458,147 |
|
| Accumulated
Profit |
|
85,694 |
1,807,580 |
|
|
---------- |
---------- |
|
|
Rupees |
70,672,121 |
71,765,727 |
|
|
========== |
========== |
|
|
|
|
| Chief
Executive |
|
Director |
|
Director |
|
| Confidence
Modaraba |
|
Confidence Modaraba |
|
Confidence Modaraba |
|
| Management
(Pvt.) Ltd. |
|
Management (Pvt.) Ltd. |
|
Management (Pvt.) Ltd. |
|
|
|
| Statement
of Changes in Financial Position |
|
| For
the year ended 30 June 1999 |
|
|
Year ended |
Year ended |
|
|
30 June 1999 |
30 June 1998 |
|
| Cash
Flows From Operating Activities |
|
|
| Profit
before taxation |
|
14,310,489 |
8,331,154 |
|
| Adjustments
for' |
|
|
|
| Depreciation |
|
211,339 |
395,090 |
|
| Gain
on sale of fixed assets |
|
-- |
(31,170) |
|
| Loss
on sale of marketable securities |
|
-- |
531,925 |
|
| Dividend
income |
|
(910,252) |
(1,117,306) |
|
| Profit
on musharaka arrangement |
|
(6,172) |
(4,130) |
|
| Profit
on short term morabaha finance |
|
-- |
9,973 |
|
| (Reversal)
/ Provision for diminution |
|
|
|
| in
value of marketable securities |
|
(1,974,596) |
3,319,804 |
|
|
---------- |
---------- |
|
| Operating
profit |
|
11,630,808 |
11,435,340 |
|
|
| Decrease
/ (Increase) in net investment in lease finance |
|
1,311,088 |
(12,412,307) |
|
|
---------- |
