| First UDL Modaraba Management Private Limited |
|
|
|
|
|
|
|
| Annual
Report 1999 |
|
|
|
| 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 Certificates Holding |
|
|
|
| CORPORATE
INFORMATION |
|
|
| MODARABA
COMPANY |
|
| UDL
Modaraba Management (Private) Limited |
|
|
| BOARD
OF DIRECTORS |
|
| Abdul Malik |
|
Chairman |
|
| Khalid Malik |
|
Chief Executive |
|
| Rashid
Abdulla |
|
Director |
|
| Farooq
Ahmad Bhatty |
|
Director |
|
|
Nominee Crescent |
|
|
Investment Bank Limited |
|
| A.W. Rahi |
|
Managing Director |
|
|
| COMPANY
SECRETARY |
|
| Zubair
Razzak Palwala |
|
|
| AUDITORS |
|
| Sidat
Hyder Qamar & Co. |
|
| Chartered
Accountants |
|
|
| BANKERS |
|
| Muslim
Commercial Bank Ltd. |
|
| Habib
Bank Limited. |
|
| Citibank
N. A. |
|
| ANZ
Grindlays Bank Ltd. |
|
| Security
Investment Bank Ltd. |
|
| Crescent
Investment Bank Ltd. |
|
| AI-Faysal
Investment Bank Ltd. |
|
| Prime
Commercial Bank Ltd. |
|
|
| REGISTRAR |
|
| Gangjees
Investment & Finance Consultants |
|
| 513
Clifton Centre, Khayaban-e-Roomi, |
|
| Kehkashan,
Block-5 Clifton, Karachi. |
|
|
| REGISTERED
OFFICE |
|
| N.I.C.
Building, 1st Floor, Abbasi Shaheed Road, |
|
| Off
Shahrah-e-Faisal, Karachi. |
|
|
|
| DIRECTORS'
REPORT |
|
|
| The
Directors of UDL Modaraba Management (Private) Limited have pleasure in
presenting the Eighth |
|
| Annual
Report of First UDL Modaraba together with Audited Accounts for the year
ended June 30, 1999. |
|
|
| 1.
FINANCIAL RESULTS |
|
|
|
(Rupees in '000') |
|
|
| Net
Profit for the year after Tax |
|
36,634 |
|
| Transferred
to Statutory reserve after Tax |
|
7,327 |
|
| Un-appropriated
profit b/f |
|
18,572 |
|
| Dividend
@ 10% |
|
26,387 |
|
| Un-appropriated
profit c/f |
|
21,493 |
|
|
| 2.
THE ECONOMIC SCENARIO |
|
|
| The
economy has shown a net GDP growth rate of 3.1 percent as against growth rate
of 4.3 |
|
| percent
last year and as against projected growth rate of 6 percent. The growth of
agricultural |
|
| sector
as well as industrial sector also remained below expectation and showed a
decline ascompared |
|
| to
budgeted targets. Due to the nuclear tests of May 1998, the economic
sanctions and shyness of |
|
| external
capital lead to severe financial constraints. The Government is making
efforts to reach |
|
| agreement
with the IMF and World Bank to overcome the major to secure fiscal space .to
move |
|
| forward.
The Government has been able to control high rate of inflation which declined
to about |
|
| 6%
while it is expected that overall growth rate of GDP may be over 4%. Higher
long-term growth |
|
| can
be expected after restructuring the economic policies. |
|
|
| Leasing
sector in Pakistan has witnessed growth of 20% on an average. Under present
economic |
|
| conditions
it is unlikely that the present growth rate can be maintained. Banks and
DFI's have also |
|
| started
offering leases to many projects. As banks and DFI's have resources to offer
lower rate of |
|
| IRR's
which leasing modarabas and leasing companies cannot. |
|
|
| 3.
REVIEW OF OPERATIONS |
|
|
| Alhamdulliah
your Modaraba continued to make progress during the year under review. In
view of |
|
| difficult
economic and business conditions your Modaraba followed the policy of
consolidating its |
|
| position
in lease market and has executed new leases amount to Rs. 157.6 million (1998
Rs. |
|
| 131.7
million)the net investment in leases is placed at Rs. 418.7 million (1998 Rs.
429.1 million). |
|
|
| Other
business activities of the Modaraba like Musharikas were carried out at very
small scale. |
|
| Operations
in the stock market have already been curtailed, the major emphasis continues
to be |
|
| on
leasing business. |
|
|
| Administrative
expenses of the Modaraba have been kept under strict control. Despite high
inflation |
|
| the
expenses have not increased. |
|
|
| As
a result of prudent policies of the Management, gross profitability of the
Modaraba has increased |
|
| to
Rs. 73.4 million as compared to Rs. 62.2 million posted last year. However,
due to provisions |
|
| made
for diminution in the value of short term & long term investments of Rs.
25.1 million the net |
|
| profit
after tax has reduced to Rs. 36.6 million as compared to Rs. 42.4 million
last year. |
|
|
| 4.
YEAR 2000 COMPLIANCE |
|
|
| Computer
systems, procedures and software packages have been adjusted / re programmed
for |
|
| Y2K
Compliance o |
|
|
| 5.
EARNING PER CERTIFICATE |
|
|
| Earning
per Modaraba certificate works out to be Rs. 1.39 this year as against Rs.
1.60 in the |
|
| preceding
year. |
|
|
| 6.
FUTURE OUTLOOK |
|
|
| The
adverse economic conditions are likely to continue well into Fiscal year
2000. The industrial |
|
| growth
is not going to be very promising. We feel that leasing sector is going to be
further competitive |
|
| due
to intense rate war initiated by banks and DFI's entry into the leasing
activity. Your Management |
|
| however,
is proactively finalizing the plans to overcome the adverse factors by
entering into (a) |
|
| consumer
leasing (b) car leasing and small scale machinery leasing where IRR rates are
better and |
|
| defaults
are minimum. We will continue to maintain high quality portfolio with prudent
diversification |
|
| of
risk. We hope and pray to be able to maintain the sustained growth in our
leasing activity with |
|
| improved
profitability. |
|
|
| 7. AUDITORS |
|
|
| The
present auditors M/s. Sidat Hyder Qamar & Co. Chartered Accountants are
due for retirement |
|
| and
being eligible offer themselves for re-appointment for the year 1999-2000. |
|
|
| 8.
ACKNOWLEDGEMENT |
|
|
| The
Directors offer their sincere thanks to our valued client, bankers,
certificate holders for their |
|
| confidence
in the Modaraba. |
|
|
| We
extend our appreciation to State Bank of Pakistan, Securities & Exchange
Commission, Registrar |
|
| Modaraba
for their continued support and guidance and to all members of management
staff for |
|
| their
dedication and hard work. |
|
|
|
On behalf of the Board |
|
|
|
-sd- |
|
|
Khalid Malik |
|
| Karachi.
December 30, 1999 |
|
Chief Executive |
|
|
|
|
|
| AUDITOR'S
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 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 ;
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 30 June 1999; and the
profit and the |
|
| cash
flows for the year ended on that date; |
|
|
| ii)
in our opinion, zakat deductible at source under the Zakat and Ushr
Ordinance, 1980 was |
|
| 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. |
|
|
| We
wish to emphasize 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/- |
|
|
SIDAT HYDER QAMAR &
CO. |
|
| Karachi: December 30, 1999 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
|
Rupees |
Rupees |
|
|
| Capital
and Reserves |
|
|
| Capital |
|
|
| Authorised |
|
| 50,000,000
(1998: 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 |
|
4 |
43,473,251 |
36,146,414 |
|
| Accumulated
profit |
|
|
21,493,223 |
18,572,465 |
|
|
|
---------- |
---------- |
|
|
64,966,474 |
54,718,879 |
|
|
---------- |
---------- |
|
|
328,832,364 |
318,584,769 |
|
| Redeemable
capital - Secured |
|
5 |
343,300,000 |
343,300,000 |
|
| Morabaha
payable - Secured |
|
6 |
18,450,006 |
9,289,003 |
|
| Security
deposits |
|
53,891,407 |
73,541,528 |
|
| Deferred
liabilities - Gratuity |
|
300,000 |
-- |
|
| Current
Liabilities |
|
| Short-term
morabaha payable |
|
-- |
15,303,289 |
|
| Current
portion of long-term Morabaha |
|
|
|
| and
Musharika - Secured |
|
7 |
36,911,588 |
30,900,607 |
|
| Creditors,
accrued and other liabilities |
|
8 |
82,707,649 |
46,595,830 |
|
| Due
to associated undertakings |
|
3,844,565 |
5,263,888 |
|
| Unclaimed
dividend |
|
2,046,671 |
157,499 |
|
|
---------- |
---------- |
|
|
125,510,473 |
98,221,113 |
|
| Contingencies |
|
9 |
-- |
-- |
|
|
---------- |
---------- |
|
|
870,284,250 |
842,936,413 |
|
|
========== |
========== |
|
| Fixed
Assets - Tangible |
|
|
| Assets
in own use |
|
10 |
3,589,192 |
3,832.95 |
|
| Assets
leased out |
|
11 |
418,733,494 |
429,147,716 |
|
|
| Long-term
deposits |
|
| and
deferred costs |
|
12 |
1,713,783 |
2,505,886 |
|
|
|
|
| Long-term
investments |
|
13 |
24,909,227 |
50,727,649 |
|
| Current
Assets |
|
|
| Short-term
investments |
|
14 |
48,083,464 |
6,023,300 |
|
| Trade debts |
|
15 |
99,328.73 |
91,754,168 |
|
| Musharika
receivables |
|
16 |
11,544,162 |
39,914,921 |
|
| Advances,
deposits, prepayments and |
|
|
|
| other
receivables |
|
17 |
32,099,615 |
21,649,688 |
|
| Bank
balances |
|
18 |
230,282,588 |
197,380,136 |
|
|
|
---------- |
---------- |
|
|
421,338,554 |
356,722,213 |
|
|
---------- |
---------- |
|
|
870,284,250 |
842,936,413 |
|
|
========== |
========== |
|
| Auditors'
Report Annexed |
|
|
| The
annexed notes form an integral part of these financial statements. |
|
|
| KHALID
MALIK |
|
ABDUL MALIK |
|
RASHID ABDULLAH |
|
| Chief
Executive |
|
Director |
|
Director |
|
| UDL
Modaraba Management |
|
UDI. Modaraba Management |
|
UDL Modaraba Management |
|
| (Private)
Limited |
|
(Private) Limited |
|
(Private) Limited |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
Note |
1999 |
1998 |
|
| Revenue
from: |
|
|
Rupees |
Rupees |
|
| Leasing
operations |
|
19 |
223,879,748 |
206,624,284 |
|
| Musharika |
|
|
6,930,517 |
6,497,796 |
|
| Investments |
|
20 |
76,928,964 |
68,435,262 |
|
| Other
sources |
|
21 |
1,561,828 |
6,569,597 |
|
|
|
---------- |
---------- |
|
|
|
309,301,057 |
288,126,939 |
|
| Expenditure |
|
|
|
| Administrative
expenses |
|
22 |
15,060,252 |
14,645,394 |
|
| Amortization
on assets leased |
out |
|
11 |
142,751,179 |
123,714,797 |
|
| Financial
charges |
|
23 |
78,048,961 |
87,545,715 |
|
|
|
---------- |
---------- |
|
|
235,860,392 |
225,905,906 |
|
|
---------- |
---------- |
|
|
73,440,665 |
62,221,033 |
|
|
| Provision
for: |
|
| Diminution
in the value of investments |
|
(25,143,063) |
(12,011,932) |
|
| Doubtful
debts |
|
(8,000,000) |
-- |
|
|
---------- |
---------- |
|
|
(33,143,063) |
(12,011,932) |
|
|
---------- |
---------- |
|
|
40,297,602 |
50.209,101 |
|
| Modaraba
company's management fee |
|
(3,663,418) |
(4,564,464) |
|
|
---------- |
---------- |
|
| Profit
before taxation |
|
36,634,184 |
45,644,637 |
|
| Taxation |
|
-- |
(3,200,000) |
|
|
---------- |
---------- |
|
| Profit
after taxation |
|
36,634,184 |
42,444,637 |
|
| Unappropriated
profit / (loss) brought forward |
|
18,572,465 |
(15,383,245) |
|
|
---------- |
---------- |
|
| Profit
available for appropriations |
|
55,206,649 |
27,061,392 |
|
|
|
| Appropriations |
|
|
|
|
|
|
| Transferred
to statutory reserve |
|
(7,326,837) |
(8,488,927) |
|
| Interim
dividend @ 10% (1998: Nil) |
|
(26,386,589) |
-- |
|
|
---------- |
---------- |
|
|
(33,713,426) |
(8,488,927) |
|
|
---------- |
---------- |
|
| Unappropriated
profit carried forward |
|
21,493,223 |
18,572,465 |
|
|
========== |
========== |
|
| Earnings
per certificate |
|
27 |
1.39 |
1.61 |
|
|
========== |
========== |
|
| The
annexed notes form an integral part of these financial statements. |
|
|
| KHALID
MALIK |
|
ABDUL MALIK |
|
RASHID ABDULLAH |
|
| Chief
Executive |
|
Director |
|
Director |
|
| UDL
Modaraba Management |
|
UDL Modaraba Management |
|
UDL Modaraba Management |
|
| (Private)
Limited |
|
(Private) Limited |
|
(Private) Limited |
|
|
|
| STATEMENT
OF CHANGES IN FINANCIAL POSITION |
|
| (CASH
FLOW STATEMENT) |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
|
| CASH
FLOW FROM OPERATING ACTIVITIES |
|
| Profit
before taxation |
|
36,634,184 |
45,644,637 |
|
| Adjustment
of non cash items |
|
|
| Depreciation
on own assets |
|
1,328,459 |
1,507,097 |
|
| Provision
for gratuity |
|
300,000 |
-- |
|
| Provision
for investments |
|
25,143,063 |
12,011,932 |
|
| Provision
for bad debts |
|
8,000,000 |
-- |
|
| Amortization
of assets leased out |
|
142,751,179 |
123,714,797 |
|
| Amortization
of deferred costs |
|
1,227,202 |
1,254,719 |
|
| (Gain)
/ loss on sale of fixed assets |
|
|
|
| - own assets |
|
(221,315) |
(210,084) |
|
| assets
leased out |
|
(2,313,853) |
150,057 |
|
| Dividend
income |
|
(1,365,165) |
(1,801,160) |
|
|
---------- |
---------- |
|
|
211,483,754 |
182,271,995 |
|
|
| (Increase) / decrease in
operating assets |
|
| Short-term
investments |
|
(43,164,610) |
(28,182) |
|
| Trade debts |
|
(15,574,557) |
(7,376,325) |
|
| Musharika
receivables |
|
28,370,759 |
(18,243,501) |
|
| Advances,
deposits, prepayments and other receivables |
|
( 10,218,365) |
(2,103,329) |
|
|
---------- |
---------- |
|
|
(40,586,773) |
(27,751,337) |
|
|
| lncrease/(decrease)
in current liabilities |
|
| Short-term
morabaha |
|
(15,303,289) |
62,877 |
|
| Current
portion of long-term |
|
|
|
| morabaha
& musharika-secured |
|
6,010,981 |
30,900,607 |
|
| Creditors,
accured and other liabilities |
|
36,111,819 |
6,807,430 |
|
| Due
to associated undertakings |
|
(1,419,323) |
2,677,516 |
|
|
---------- |
---------- |
|
|
25,400,188 |
40,448,430 |
|
|
---------- |
---------- |
|
| Net
cash flow from operating activities |
|
196,297,169 |
194,969,088 |
|
|
|
1999 |
1998 |
|
|
Rupees |
Rupees |
|
| CASH
FLOW FROM INVESTING ACTIVITIES |
|
|
| Purchase
of fixed assets |
|
| - own assets |
|
(1,636,388) |
(1,428,498) |
|
| -
assets leased out |
|
(157,564,876) |
(131,715,767) |
|
| Long-term
deposits |
|
(435,099) |
24,300 |
|
| Long-term
investments |
|
1,779,805 |
-- |
|
| Proceeds
from sale of fixed assets-own |
|
773,000 |
818,568 |
|
| Dividends
received |
|
1,133,603 |
1,935,783 |
|
|
---------- |
---------- |
|
| Net
cash used in investing activities |
|
(155,949,955) |
(130,365,614) |
|
|
|
|
| CASH
FLOW FROM FINANCING ACTIVITIES |
|
| Redeemable
capital |
|
-- |
(19,606,737) |
|
| Proceeds
/(repayments) of morabaha |
|
9,161,003 |
(16,277,674) |
|
| Dividend
paid |
|
(24,497,415) |
-- |
|
| Long-term
security deposits |
|
7,891,650 |
20,497,366 |
|
|
---------- |
---------- |
|
| Net
cash used in financing activities |
|
(7,444,762) |
(15,387,045) |
|
|
---------- |
---------- |
|
| Net
cash generated during the year |
|
32,902,452 |
49,216,429 |
|
| Bank
balance at the beginning of the year |
|
197,380,136 |
148,163,707 |
|
|
---------- |
---------- |
|
| Bank
balance at the end of the year |
|
230,282,588 |
197,380,136 |
|
|
========== |
========== |
|
|
|
|
| KHALID
MALIK |
|
ABDUL MALIK |
|
RASHID ABDULLA |
|
| Chief
Executive |
|
Director |
|
Director |
|
| UDL
Modaraba Management |
|
UDL Modaraba Management |
|
UDL Modaraba Management |
|
| (Private)
Limited |
|
(Private) Limited |
|
(Private) Limited |
|
|
|
| NOTES
TO THE FINANCIAL STATEMENTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
| 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
multidimentional Modaraba and is engaged in providing finance on Morabaha and
Musharika<a |
|
| arrangements,
leasing, commodity trading and trading in listed and on-interest bearing
securities. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| 2.1
Overall valuation policy |
|
|
|
| These
financial statements have been prepared on the basis of historical cost
'convention'. |
|
|
| 2.2
Basis for preparation of financial statements, |
|
|
| These
financial statements have been prepared in accordance with International
Accounting |
|
| Standard
as adopted by Institute of Chartered Accountants of Pakistan, as applicable
in Pakistan. |
|
|
| 2,3
Staff retirement benefits |
|
|
| 2.3.1
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. |
|
|
| 2.3.2
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 the profit and loss account |
|
|
| 2.4
Fixed assets |
|
|
| 2.4.1
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. |
|
|
| 2.4.2
Assets leased out and amortization |
|
|
| Leased
assets are stated at cost less accumulated amortization. Amortization is
charged to |
