| First IBL Modaraba |
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| Annual
Report 1999 |
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| TABLE
OF CONTENTS |
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| Corporate
Information |
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| Director's
Report |
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| Auditors'
Report to the Certificate Holders |
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| Balance Sheet |
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| Profit
and Loss Account |
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| Statement
of Changes in Financial Position (Cash Flow Statement) |
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| Notes
to the Accounts |
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| Pattern
of Certificate Holding |
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| CORPORATE
INFORMATION |
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| Modaraba
Company |
IBL Modaraba Management
(Private) Limited |
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| Board
of Directors |
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| Chief Executive |
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Inayat Ismail |
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| Director |
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Chisty B.S. Mujahid |
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| Director |
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Arshad Abdulla |
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| Company
Secretary |
Masood Anwer Khan |
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| Auditors |
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Daudally, Lalani &
Co. |
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Chartered Accountants |
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| Bankers |
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Muslim Commercial Bank
Ltd. |
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Citibank N.A. |
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United Bank Ltd. |
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Crescent Investment Bank
Ltd. |
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Habib Bank Ltd. |
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Prime Commercial Bank
Ltd. |
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National Bank of Pakistan
Ltd. |
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| Registrar |
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Khalid, Majid, Hussain,
Rehman |
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Chartered Accountants |
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16-K, Block- 6,
P.E.C.H.S., |
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Near Chanesar Halt
Station, |
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Off. Shahra-e-Faisal,
Karachi. |
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| Registered
Office |
First Floor, N.I.C.
Building |
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Abbasi Shaheed Road, |
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Karachi. |
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| DIRECTORS'
REPORT |
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| The
Board of Directors of IBL Modaraba Management (Pvt.) Ltd. is pleased to
present the Ninth Annual Report of |
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| First
IBL Modaraba with the audited accounts for the year ended 30th June 1999. |
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| Financial
Results: |
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|
Rs. in '000' |
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|
1999 |
1998 |
|
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| *
Gross revenue |
|
28,965 |
20,876 |
|
| *
Operating Profit |
|
8,317 |
9,069 |
|
| *
Net profit for the period |
|
12,751 |
1,075 |
|
| *
Un-appropriated profit brought forward |
|
1,950 |
1,090 |
|
|
|
14,701 |
2,165 |
|
| *
Transfer to statutory reserves |
|
2,550 |
215 |
|
| *
Profit distribution |
|
11,688 |
-- |
|
| *
Un-appropriated profit carried forward |
|
463 |
1,950 |
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|
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| The
Economic Sketch: |
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| The
state of economy remained depressed, during the year under review A further
impetus to tackle domestic debt |
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| burden,
is the targeted reduction in the fiscal deficit for the period FY99-FYO0. It
is slated for reduction from 4.3 |
|
| percent
of GDP in FY99 to 3.3 percent in FYO0. This will induce a degree of fiscal
discipline that will slow, if not |
|
| reverse
the excessive build-up of domestic debts and keep inflationary pressures in
control. The inflationary pressure |
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| has
been dropped to 6.2 percent, the lowest figure since FY94. Slow growth than
expected was witnessed in |
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| agricultural
and industrial sectors, as well as in export revenues. More specifically, the
fall in the export revenue is |
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| largely
because of the decline in the international cotton yarn price, the recession
in Asia and the bearish sentiments |
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| in
Pakistan's economy. |
|
|
| Review
of Operation: |
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| You
will be pleased to observe that Modaraba's gross revenue during year amounted
to Rs. 28.9 million, which |
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| shows
39 percent increase over the last year (1998: Rs. 20.87 million). After tax
profit has also enhanced to Rs. |
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| 12.751
million as compared to Rs. 1.075 million in last year |
|
|
| Distinct
business activities of Modaraba such as Leasing and Morabaha wee carried out
on very small scale. The |
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| prime
focus of your Modaraba was on Musharika investments. |
|
|
| Administrative
expenses went down by 20.49 percent over the last year due to stern
management control. |
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| Distribution |
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| The
Board has approved a final Dividend for the year ended June 30, 1999 at the
rate of 10% i.e. Re. 1/- per |
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| certificate
of Rs. 10/- each. |
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|
| Future
prospects: |
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| Restoration
of tax exemption status to Modaraba sector clearly indicates the improvement
in performance by enhancing |
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| the
profitability and dividend distribution. One of major constraint of Modarabas
is resource mobilization. State |
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| Bank
of Pakistan restricts Banks to provide funding facilities to Modarabas We are
hopeful that, this restriction will |
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| be
withdrawn in the near future. |
|
|
| Bailing
out effort of present regime from macro economic malaise is also anticipated
to be fruitful. This gives your |
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| Modaraba
management a great degree of confidence to diversify modaraba activities into
micro leasing improve the |
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| profitability. |
|
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| Y2K
Compliance |
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| The
management of your Modaraba is fully aware of upheavals of millennium bug,
and has already adopted various |
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| measures
to protect the software as well as hardware. |
|
|
| Earning
per certificate: |
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| Yield
on Modaraba certificate is calculated at Rs. 1.09 compared to Rs..09 in the
preceding year |
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|
| Auditors |
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| The
present auditors, Messrs. Daudally Lalani & Co. Chartered Accountants,
being due for retirement, have offered |
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| themselves
for re-appointment for the year ending June 30, 2000. Their appointment has
been confirmed by the |
|
| Board
of Directors, subject to the approval of Registrar of Modaraba companies and
Modarabas. |
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|
| Acknowledgment |
|
| The
Directors wish to place on record their appreciation and thanks to
certificate holders for their continued confidence |
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| in
the Modaraba, to the authorities for their guidance and to the members of
management and staff for their dedication |
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| and hard work. |
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|
On behalf of Board |
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| Karachi:
December 09, 1999 |
|
Chief Executive |
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|
| AUDITORS'
REPORT TO THE CERTIFICATE HOLDERS |
|
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| We
have audited the annexed Balance Sheet as at June 30, 1999 and the related
Profit and Loss Account and State- |
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| ment
of Changes in Financial Position (Cash Flow Statement), together with the
notes to the accounts, for the year |
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| ended
June 30, 1999 of FIRST IBL MODARABA which are modaraba Company's [IBL Modaraba Management |
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| (Private)
Limited] representation and we state that we have obtained all the
information and explanations which we |
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| 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 |
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| IBL
Modaraba as required by the Modaraba Companies and Modaraba (Floatation and
Control) Ordi- |
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| nance,
1980; and Modaraba Companies and Modaraba Rules, 1981; |
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|
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| b)
in our opinion, the Balance Sheet and the Profit and Loss Account have been
drawn up in conformity |
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| with
the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980
and Modaraba |
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| Companies
and Modaraba Rules, 1981; and |
|
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| c)
in our opinion and to the best of our information and according to the
explanations given to us; |
|
|
|
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| i)
the Balance Sheet and the related Profit and Loss Account and Statement Of
Changes in Finan- |
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| cial
Position (Cash Flow Statement), which are in agreement with the books of
account, exhibit |
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| respectively
a true and fair view of the state of Modaraba's affairs as at June 30, 1999
and the |
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| Profit
and changes in financial position (cash flows) for the year then ended; |
|
|
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| ii)
in our opinion no zakat was deductible at source under the Zakat and Ushr
Ordinance, 1980; and |
|
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| iii)
the business conducted, investments made and the expenditure incurred by the
Modaraba are |
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| in
accordance with the objects, terms and conditions of the Modaraba. |
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|
Daudally Lalani & Co. |
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| Karachi:
December 09, 1999 |
|
Chartered Accountants |
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| BALANCE
SHEET AS AT JUNE 30, 1999 |
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|
Note |
1999 |
1998 |
|
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|
Rupees |
Rupees |
|
|
|
|
| Capital
and Reserves |
|
|
|
|
|
|
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| CAPITAL |
|
|
|
| Authorised
Fund |
|
|
|
| 20,000,000
Modaraba Certificates of Rs. 10/- each |
|
|
200,000,000 |
200,000,000 |
|
|
|
|
========== |
========== |
|
| Issued,
Subscribed and paid - up fund |
|
|
| 11,687,500
Modaraba Certificates of Rs. 10/- each |
|
3 |
116,875,000 |
116,875,000 |
|
|
|
|
|
| Reserves |
|
3 |
13,276,128 |
12,213,040 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
130,151,128 |
129,088,040 |
|
|
|
|
| SECURITY
DEPOSITS |
|
|
258,720 |
656,086 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Due
to management company |
|
|
1,500,928 |
5,407,332 |
|
| Creditors,
Accrued and other Liabilities |
|
4 |
10,888,265 |
5,964,967 |
|
| Musharika
Arrangements |
|
5 |
55,827,600 |
30,680,905 |
|
| Unclaimed
Dividend |
|
|
567,836 |
761,016 |
|
| Profit
distribution payable |
|
|
11,687,500 |
-- |
|
| Provision
for Taxation |
|
|
2,161,530 |
6,752,637 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
82,633,659 |
49,566,857 |
|
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
213,043,507 |
179,310,983 |
|
|
|
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|
========== |
========== |
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|
| FIXED
ASSETS- Tangible at book value |
|
|
| Assets
in own use |
|
6 |
361,221 |
2,258,299 |
|
| Assets
leased out |
|
7 |
368,378 |
1,904,889 |
|
|
|
|
|
|
| LONG
TERM DEPOSITS |
|
|
71,900 |
223,759 |
|
| LONG
TERM MORABAHA ARRANGEMENT |
|
8 |
3,898,932 |
-- |
|
|
|
|
|
| CURRENT
ASSETS |
|
|
|
|
|
|
|
| Trade
debtors - Unsecured, Considered good |
|
|
46,325,674 |
58,269,066 |
|
| Marketable
Securities of quoted companies & Modarabas |
9 |
9,060,039 |
8,116,486 |
|
| Short
term Morabaha arrangement |
|
|
-- |
18,591,636 |
|
| Current
Maturity of long term Morabaha arrangement |
8 |
15,309,564 |
-- |
|
| Musharika
arrangement |
|
10 |
77,016,117 |
11,488,789 |
|
| Accrued Profit |
|
11 |
23,952,694 |
10,591,003 |
|
| Advances,
deposits and prepayments |
|
12 |
345,563 |
1,203,740 |
|
| Other
receivables |
|
13 |
7,559,253 |
4,328,060 |
|
| Cash
and bank balances |
|
14 |
28,774,172 |
62,335,256 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
208,343,076 |
174,924,036 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
213,043,507 |
179,310,983 |
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Inayat Ismail |
|
Chishty B. S. Mujahid |
|
Arshad Abdulla |
|
|
(Chief Executive) |
|
(Director) |
|
(Director) |
|
|
IBL Modaraba Management |
|
IBL Modaraba Management |
|
IBL Modaraba Management |
|
|
(Private) Limited |
|
(Private) Limited |
|
(Private) Limited |
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
Note |
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
| OPERATING
INCOME / (LOSS) |
|
|
| Trading Income |
|
15 |
-- |
3,421,472 |
|
| Morabaha
Profit |
|
|
863,014 |
4,276.50 |
|
| (Loss)
on sale of Marketable Securities |
|
|
(5,862,120) |
(4,102,658) |
|
| Dividend
income |
|
|
1,316,236 |
236,302 |
|
| Musharika
profit |
|
|
17,266,272 |
1,797,320 |
|
| Lease rentals |
|
|
1,249,596 |
2,341.69 |
|
| Other income |
|
16 |
14,132,393 |
12,905,649 |
|
|
|
|
------------------ |
------------------ |
|
|
|
28,965,391 |
20,876,277 |
|
| OPERATING
EXPENSES |
|
|
|
| Administrative |
|
17 |
4,211,423 |
5,296,992 |
|
| Financial
charges |
|
18 |
15,298,250 |
4,732,867 |
|
| Amortization
of leased assets |
|
|
1,139,145 |
1,777,646 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
20,648,818 |
11,807,505 |
|
|
|
|
------------------ |
------------------ |
|
| Operating
Profit |
|
|
8,316,573 |
9,068,772 |
|
|
|
|
------------------ |
------------------ |
|
| Profit/(Loss)
due to adjustment in the value of investments |
9 |
6,207,451 |
(4,072,457) |
|
| Provision
for doubtful rentals |
|
|
(498,377) |
(142,845) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
5,709,074 |
(4,215,302) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
14,025,647 |
4,853,470 |
|
|
|
|
| Modaraba
Management fee |
|
|
1,275,059 |
441,225 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
Before Taxation |
|
|
12,750,588 |
4,412,245 |
|
| Taxation |
|
19 |
-- |
3,337,614 |
|
|
|
|
------------------ |
------------------ |
|
| Profit
After Taxation |
|
|
12,750,588 |
1,074,631 |
|
| Unappropriated
profit brought forward |
|
|
1,950,185 |
1,090,480 |
|
|
|
|
------------------ |
------------------ |
|
|
|
14,700,773 |
2,165,111 |
|
| APPROPRIATION |
|
|
| Profit
distribution 10% (1998: Nil) |
|
11,687,500 |
-- |
|
| Transfer
to statutory reserve |
|
2,550,117 |
214,926 |
|
|
|
------------------ |
------------------ |
|
| Unappropriated
profit carried forward |
|
463,156 |
1,950,185 |
|
|
|
|
========== |
========== |
|
| Earning
per Certificate - Basic and diluted |
|
20 |
1.09 |
0.09 |
|
|
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Inayat Ismail |
|
Chishty B. S. Mujahid |
|
Arshad Abdulla |
|
|
(Chief Executive) |
|
(Director) |
|
(Director) |
|
|
IBL Modaraba Management |
|
IBL Modaraba Management |
|
IBL 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 |
|
|
12,750,588 |
4,412,245 |
|
|
|
|
| Adjustment
for non cash items: |
|
|
|
|
|
|
| Depreciation
on owned and leased assets |
|
434,970 |
832,143 |
|
| Amortization
on assets leased out |
|
1,139,145 |
1,777,646 |
|
| Deferred cost |
|
|
-- |
65,248 |
|
| (Profit)/loss
due to adjustment in Value of Investments |
|
(6,207,451) |
4,072,457 |
|
| Provision
For Doubtful rentals |
|
498,377 |
142,845 |
|
| Loss
on sale of marketable securities |
|
5,862,120 |
4,102,658 |
|
| Gain
on sale of fixed assets |
|
(137,065) |
(61,977) |
|
|
|
------------------ |
------------------ |
|
|
|
(1,590,096) |
10,931,020 |
|
|
|
|
| Adjustment
for separate consideration |
|
|
| Dividend
Income |
|
|
(1,316,236) |
(236,302) |
|
| Financial
charges |
|
|
15,298,250 |
4,732,867 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
from operating activities before working capital changes |
|
28,322,698 |
19,839,830 |
|
|
|
|
|
| (Increase)
/ Decrease in Current Assets |
|
|
| Stock -in - trade |
|
|
-- |
60,595,224 |
|
| Other
receivables |
|
|
(3,988,173) |
12,579,883 |
|
| Trade debtors |
|
|
11,943,392 |
(55,616,815) |
|
| Musharika
arrangements |
|
|
(65,527,328 |
(3,263,789) |
|
|
|
|
|
|
| Advances,
Deposits and Prepayments |
|
(11,715) |
59,676 |
|
| Morabaha
arrangements |
|
18,591,636 |
112,740 |
|
| Accrued profit |
|
(13,361,691) |
(6,692,097) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
(52,353,879) |
7,774,822 |
|
|
|
|
|
|
| Increase
/ (Decrease) in Current liabilities |
|
|
| Musharika
arrangements |
|
25,146,695 |
30,680,905 |
|
| Morabaha
arrangements |
|
-- |
18,428,475) |
|
| Creditors,
accrued & other liabilities |
|
(132,028) |
(126,168) |
|
| Due
to management company |
|
(3,906,404) |
423,725 |
|
|
|
------------------ |
------------------ |
|
|
|
21,108,263 |
12,549,987 |
|
|
|
------------------ |
------------------ |
|
| Cash
from operating activities after working capital changes |
|
(2,922,918) |
40,164,639 |
|
| Income tax paid |
|
(3,721,215) |
(1,084,043) |
|
| Financial
charges paid |
|
(8,490,351) |
(2,630,868) |
|
| Long
term morabaha arrangement |
|
(19,208,496) |
-- |
|
|
|
------------------ |
------------------ |
|
| Net
cash (used in) / generated from operating activities |
|
(34,342,980) |
36,449,728 |
|
|
|
|
|
|
|
|
|
|
|
|
|
1999 |
1998 |
|
|
|
|
Rupees |
Rupees |
|
|
|
|
|
| Cash
Flow from investing activities |
|
|
| Purchase
of assets in own use |
|
|
(147,000) |
(1,902,485) |
|
| Investment
in Marketable Securities |
|
|
(4,598,222) |
(76,771,260) |
|
| Proceeds
from sale of Marketable Securities |
|
|
4,000,000 |
68,275,978 |
|
| Proceeds
from sale of fixed Assets |
|
|
2,143,539 |
521,872 |
|
| Long
Term Deposits |
|
|
151,859 |
(143,039) |
|
| Dividend
received |
|
|
1,574,839 |
236,302 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash generated from / (used)in investing activities |
|
3,125,015 |
(9,782,632) |
|
|
|
|
| Cash
flow from financing activities |
|
|
| Arrangement
under finance lease |
|
-- |
1,829,385 |
|
| Paid
back obligation under finance lease |
|
(1,752,573) |
(475,249) |
|
| Security
deposit |
|
|
(397,366) |
-- |
|
| Profit
Distribution Paid |
|
|
(193,180) |
(11,532,368) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash (used)in financing activities |
|
|
(2,343,119) |
(10,178,232) |
|
|
|
|
------------------ |
------------------ |
|
| Net
(decrease) / increase in cash and cash equivalents |
|
(33,561,084) |
16,488,864 |
|
| Cash
& cash equivalents at the beginning of the year |
|
62,335,256 |
45,846,392 |
|
|
|
|
------------------ |
------------------ |
|
| Cash
& cash equivalents at the end of the year |
|
|
28,774,172 |
62,335,256 |
|
|
|
|
========== |
========== |
|
|
|
Inayat Ismail |
|
Chishty B. S. Mujahid |
|
Arshad Abdulla |
|
|
(Chief Executive) |
|
(Director) |
|
(Director) |
|
|
IBL Modaraba Management |
|
IBL Modaraba Management |
|
IBL Modaraba Management |
|
|
(Private) Limited |
|
(Private) Limited |
|
(Private) Limited |
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 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.
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. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
| a)
Basis for preparation of the accounts |
|
|
| These
financial statements have been prepared in compliance with the requirements
of International |
|
| Accounting
Standards as adopted by the Institute Of Chartered Accountants of Pakistan
which are applicable |
|
| to
the modaraba. |
|
|
|
|
| b)
Overall valuation policy |
|
| The
accounts have been prepared under the historical cost convention. |
|
|
| c)
Fixed assets and depreciation. |
|
|
|
| (i)
Fixed assets are stated at cost less accumulated depreciation. Depreciation
is charged to income applying |
|
| the
straight line method where by 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. |
|
| Gain
or loss on disposal of fixed assets are included in income currently |
|
|
| (ii)
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 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 income currently |
|
|
| (iii)
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. |
|
|
|
|
|
|
| Depreciation
is charged at the same rate as Modaraba's owned and leased out assets. |
|
|
|
|
| d)
Rates of exchange |
|
|
|
| Transaction
in foreign currencies are converted into rupees at the rates of exchange
ruling on the date of |
|
| transactions.
Assets and liabilities in foreign currencies are translated into rupees. |
|
|
|
|
| In
case of bills payable against import under |
- at the contracted rates
by forward exchange. |
|
| covered
contracts |
|
| In
case of other assets and liabilities |
- at the rate of exchange
ruling at the balance sheet date. |
|
|
| Exchange
gains and losses are included in income currently |
|
|
|
| e)
Trade Debts and Other Receivables |
|
| Debts
considered irrecoverable are written off and provision is made against those
considered doubtful of |
|
| recovery
in accordance with NBFIs regulation issued by State Bank Of Pakistan. |
|
|
| f)
Trading Stock |
