| Modaraba Al-Mali |
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| Annual
Report 1999 |
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| CONTENTS |
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| Corporate
Information |
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| Directors'
Report |
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| Auditors'
Report |
|
| Balance Sheet |
|
|
| Profit
and Loss Account |
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| Cash
Flow Statement |
|
| Notes
to the Accounts |
|
| Pattern
of Certificate Holdings |
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|
|
| CORPORATE
INFORMATION |
|
|
| BOARD
OF DIRECTORS |
|
| Mr.
Syed Iradat Husain |
|
Chairman |
|
| Mr.
Maqbool Hussain |
|
Vice Chairman |
|
| Mr.
Mohammad Kamil |
|
Director |
|
| Mr.
Ashraf Kalam |
|
Director |
|
| Mr.
Ahmad H.I. Dada |
|
Director |
|
| Mr. Imdad Ali |
|
|
Director |
|
| Mr.
Faisal Hussain |
|
Director |
|
| Mr.
Zafar H. Naqvi |
|
Chief Executive |
|
|
| MANAGEMENT
TEAM |
|
| Mr.
Zafar H. Naqvi |
|
Chief Executive |
|
| Mr.
S. Shakeel-ur-Rehman |
|
Chief Manager |
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| Mr.
S. Masood Akhter |
|
Financial Controller |
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| Mr. D.V. Karia |
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|
Company Secretary |
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|
| AUDITORS |
|
| Ford,
Rhodes, Robson, Morrow |
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| Chartered
Accountants |
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| Finlay House |
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| I.I.
Chundrigar Road |
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| Karachi. |
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| BANKERS
& FINANCERS |
|
| Muslim
Commercial Bank Limited |
|
| Askari
Commercial Bank Limited |
|
| Metropolitan
Bank Limited |
|
| Allied
Bank of Pakistan Limited |
|
| Pak-Libya
Holding Co. (Pvt) Limited |
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| Bankers
Equity Limited |
|
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| REGISTERED
OFFICE |
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| 10th
Floor, Progressive Square |
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| Opposite
Nursery, Sharea Faisal |
|
| Karachi. |
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| Phones
:4547521-5 |
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| Fax:
(92-21) 4547526 |
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| DIRECTOR'S
REPORT |
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|
| The
Board of Directors of Al-Mal Corporation Limited have pleasure in presenting
the 13th Report of Modaraba |
|
| AI-Mali
together with Audited Accounts for the year ended June 30, 1999. |
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| 1.
Operating Results: |
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|
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|
(Rs. in
"000") |
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| The
summarized results for the period under report are as under: |
1999 |
1998 |
|
|
|
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| *
Total Operating income |
|
128,067 |
109,031 |
|
|
|
========== |
========== |
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|
|
|
|
| *
Net profit before management fee & taxation |
|
32,989 |
5,261 |
|
| *
Less: Management fee |
|
2,999 |
478 |
|
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|
------------------ |
------------------ |
|
|
|
29,990 |
4,783 |
|
| *
Less: Provision for Taxation |
|
412 |
4,361 |
|
|
|
------------------ |
------------------ |
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| *
Net Profit for the year |
|
29,578 |
422 |
|
| *
Add: Unappropriated profit b/f |
|
374 |
36 |
|
|
|
------------------ |
------------------ |
|
| *
Profit available for appropriation |
|
29,952 |
458 |
|
|
|
|
| *
Appropriations: |
|
|
| --
Statutory reserves |
|
|
5,916 |
84 |
|
| --
Cash dividend @ 12.5% (1998: Nil) |
|
22,821 |
-- |
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|
------------------ |
------------------ |
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|
|
28,737 |
84 |
|
|
|
------------------ |
------------------ |
|
| *
Unappropriated profit carried forward |
|
1,215 |
374 |
|
|
|
|
|
========== |
========== |
|
| *
Basic earnings per certificate |
|
|
1.62 |
0.02 |
|
|
========== |
========== |
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|
|
|
| 2.
Profit Distribution |
|
| Directors
take pleasure in announcing distribution of cash dividend @ 12.5% i.e.
Rs.1.25 per certificate. |
|
|
| 3.
Statutory Reserves |
|
| In
compliance with SBP Prudential Regulations, Directors have decided to
appropriate 20% of the year's |
|
| profits
to Statutory Reserves until it equals the Certificate Capital of the
Modaraba. |
|
|
| 21.
Business Operations |
|
| Despite
the recession witnessed by the country's economy, specially in view of
economic sanctions, your |
|
| modaraba
managed to perform reasonably well. We were able to negotiate new leases
amounting to Rs. |
|
| 117.01
million in 1998-99 as compared to Rs. 119.59 million during the year 1997-98.
However, income |
|
| before
provisions increased to Rs. 31.8 million as against Rs. 26.1 million earned
during the proceeding |
|
| year.
Profit before tax was 30.0 million. Provision for tax in respect of prior
years amounted to Rs. 0.4 |
|
| million.
In view of the tax exemption granted to the modarabas through Finance Act
1998, no provision |
|
| was
made against current year's tax. Through effective control, the overall
administrative expenses were |
|
| kept
at the same levels. The recovery efforts were quite successful. However, in
view of inherent financial |
|
| risks,
a provision of Rs. 2.24 million was made against the doubtful debts. The
earnings per certificate |
|
| were Rs. 1.62 |
|
|
| 5.
Future Prospects |
|
| The
future business prospects depend largely on the economic policies of the new
government. The |
|
| introduction
of effective legislature for recovery of overdues is expected to boost the
leasing and financial |
|
| sector.
We are negotiating with few banks and financial institutions for obtaining
additional morabaha lines |
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| to
augment our resource base. The management is confident that the improvement
in current year's |
|
| results
will continue in future years as well. |
|
|
| 6.
Millennium Bug |
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| Necessary
steps have been taken to ensure that hardware and software in use are year
2000 compliant. |
|
|
| 7. Auditors |
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| The
present auditors, Messrs. Ford, Rhodes, Robson, Morrow, Chartered
Accountants, are due for retirement, |
|
| and
being eligible, offer themselves for re-appointment for the year 1999-2000. |
|
|
| 8.
Pattern of Certificate holding |
|
| The
pattern of certificate holding is attached. |
|
|
| 9.
Acknowledgment |
|
| The
Directors wish to place on record their appreciation and thanks to
certificate holders for their continued |
|
| confidence
in the Modaraba, to the authorities for their guidance and to all the Members
of Management |
|
| and
staff for their dedication and hard work. |
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|
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|
On behalf of the Board, |
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|
|
|
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|
|
S. IRADAT HUSAIN |
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| Karachi:
Dated 06th December, 1999 |
|
Chairman |
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| AUDITOR'S
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 |
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| the
Cash Flow Statement together with the Notes to the Accounts for the year
ended June 30, 1999 of |
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| Modaraba
Al-Mali which are modaraba company's (AI-Mal Corporation 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 Modaraba |
|
| Al-Mali
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 |
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| 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 the Cash Flow
Statement, which |
|
| are
in agreement with the books of account, exhibit respectively a true and fair
view of the state |
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| of
the Modaraba's affairs as at June 30, 1999 and of the Profit and Cash Flows
for the year ended |
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| on that date; |
|
|
|
|
| (ii)
no zakat was deductible at source under the Zakat and Ushr Ordinance, 1980;
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. |
|
|
|
|
|
Ford, Rhodes, Robson, Morrow |
|
| Karachi:
6th December, 1999 |
|
Chartered Accountants |
|
|
|
| BALANCE
SHEET AS AT JUNE 30, 1999 |
|
|
| ASSETS |
|
|
June 30, |
June 30, |
|
|
|
|
1999 |
1998 |
|
| NON-CURRENT
ASSETS |
|
Note |
Rupees |
Rupees |
|
|
|
|
| Fixed
assets - Tangible |
|
|
3 |
|
|
|
|
| Assets
given on lease |
|
3.1 |
225,469,455 |
203,366,058 |
|
| Assets
in own use |
|
3.2 |
10,508,663 |
11,823,816 |
|
|
|
|
------------------ |
------------------ |
|
|
|
215,189,874 |
235,978,118 |
|
|
|
|
| Long
term investments |
|
4 |
6,631,599 |
5,066,267 |
|
| Long-term
deposits |
|
|
300,000 |
-- |
|
| Deferred
expenditure |
|
5 |
25,613 |
129,545 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
242,935,330 |
220,385,686 |
|
|
|
|
| CURRENT
ASSETS |
|
|
|
| Short
term musharaka finance-secured |
|
6 |
7,079,532 |
5,940,000 |
|
| Short
term morabaha finances-secured |
|
7 |
11,040,108 |
13,338,440 |
|
| Short
term investments |
|
8 |
5,013,195 |
4,527,011 |
|
| Lease
rentals receivable |
|
9 |
7,317,482 |
9,206,920 |
|
| Advances,
deposits, prepayments |
|
10 |
6,356,988 |
7,170,922 |
|
| and
other receivables |
|
|
|
| Cash
and bank balances |
|
11 |
11,766,802 |
3,184,816 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
|
48,574,107 |
43,368,109 |
|
|
|
|
------------------ |
------------------ |
|
| TOTAL
ASSETS |
|
|
291,509,437 |
263,753,795 |
|
|
|
|
|
========== |
========== |
|
|
| EQUITY
AND LIABILITIES |
|
|
|
|
|
|
|
|
| CAPITAL
AND RESERVES |
|
|
|
|
|
|
| Certificate
capital |
|
|
|
| Authorised-20,000,000
(1998: 20,000,000) |
|
|
| Modaraba
Certificates of Rs. 10/- each |
|
|
200,000,000 |
200,000,000 |
|
|
|
|
========== |
========== |
|
|
|
|
|
|
| Issued,
subscribed and paid-up |
|
|
12 |
182,574,000 |
182,574,000 |
|
| Reserves |
|
|
|
| Capital reserve |
|
|
|
| Statutory
reserve |
|
13 |
20,371,319 |
14,455,639 |
|
| Revenue
reserve |
|
|
| Unappropriated
profit |
|
|
|
1,214,903 |
373,934 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
21,586,222 |
14,829,573 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
204,160,222 |
197,403,573 |
|
| NON-CURRENT
LIABILITIES |
|
|
|
| Long
term morabaha finances |
|
14 |
1,192,826 |
6,350,000 |
|
| Deferred
liability |
|
15 |
28,442,256 |
23,257,207 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
29,635,082 |
29,607,207 |
|
|
|
|
|
| CURRENT
LIABILITIES |
|
|
|
| Current
maturity of morabaha finances |
|
14 |
4,179,159 |
4,368,052 |
|
| Current
maturity of deferred liability |
|
15 |
15,131,143 |
13,743,515 |
|
| Creditors,
accrued and other liabilities |
|
16 |
9,714,749 |
12,624,888 |
|
| Rentals
received in advance |
|
|
|
4,706,383 |
4,791,988 |
|
| Unclaimed
dividend |
|
|
|
1,160,949 |
1,214,572 |
|
| Proposed
dividend |
|
|
22,821,750 |
-- |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
57,714,133 |
36,743,015 |
|
| CONTINGENCIES |
|
17 |
|
|
|
|
|
|
------------------ |
------------------ |
|
| TOTAL
EQUITY AND LIABILITIES |
|
291,509,437 |
263,753,795 |
|
|
|
|
|
========== |
========== |
|
|
|
|
| The
annexed notes form an integral part of these accounts |
|
|
|
Zafar H. Naqvi |
|
Maqbool Hussain |
|
S. Iradat Husain |
|
|
Chief Executive |
|
Vice Chairman |
|
Chairman |
|
|
|
|
|
|
|
| PROFIT
AND LOSS ACCOUNT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
June 30, |
June 30, |
|
|
|
|
1999 |
1998 |
|
|
|
Note |
Rupees |
Rupees |
|
|
|
|
| Operating
income |
|
18 |
128,066,933 |
109,031,169 |
|
|
|
|
|
| Operating costs |
|
19 |
95,418,931 |
81,364,499 |
|
| Profit
distribution on borrowings |
|
20 |
1,733,967 |
2,726,425 |
|
|
|
|
------------------ |
------------------ |
|
|
|
97,152,898 |
84,090,924 |
|
|
|
|
|
|
|
30,914,035 |
24,940,245 |
|
| Other income |
|
|
21 |
921,558 |
1,187,214 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
31,835,593 |
26,127,459 |
|
| Provisions |
|
|
22 |
(1,153,752) |
20,866,348 |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
32,989,345 |
5,261,111 |
|
| Modaraba
company's management fee |
|
|
(2,999,031) |
(478,283) |
|
|
|
|
------------------ |
------------------ |
|
| Profit
before taxation |
|
|
29,990,314 |
4,782,828 |
|
|
|
|
| Taxation - |
Current |
|
23 |
-- |
(4,000,000) |
|
|
Prior years |
|
|
(411,915) |
(361,159) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(411,915) |
(4,361,159) |
|
|
|
|
------------------ |
------------------ |
|
| Profit
after taxation |
|
|
29,578,399 |
421,669 |
|
| Unappropriated
profit brought forward |
|
|
373,934 |
36,599 |
|
|
|
|
------------------ |
------------------ |
|
| Available
for appropriation |
|
|
29,952,333 |
458,268 |
|
|
|
|
|
|
| Appropriations |
|
|
|
|
| Proposed
dividend @ 12.5% (1998: nil) |
|
|
(22,821,750) |
-- |
|
| Transfer
to statutory reserve @ 20% |
|
|
(5,915,680) |
(84,334) |
|
|
|
|
------------------ |
------------------ |
|
|
|
|
(28,737,430) |
(84,334) |
|
|
|
|
------------------ |
------------------ |
|
| Balance
Carried forward |
|
|
1,214,903 |
373,934 |
|
|
|
|
========== |
========== |
|
| Basic
earnings per certificate |
|
24 |
1.62 |
0.02 |
|
|
|
|
========== |
========== |
|
|
| The
annexed notes form an integral part of these accounts. |
|
|
|
Zafar H. Naqvi |
|
Maqbool Hussain |
|
S. Iradat Husain |
|
|
Chief Executive |
|
Vice Chairman |
|
Chairman |
|
|
|
| CASH
FLOW STATEMENT |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
|
|
|
June 30, |
June 30, |
|
|
|
|
1999 |
1998 |
|
| CASH
FLOWS FROM OPERATING ACTIVITIES |
Note |
Rupees |
Rupees |
|
|
|
|
| Net
Profit before management fee and taxation |
|
|
32,989,345 |
5,261,111 |
|
| Adjustment
of non-cash and other items |
|
25 |
82,319,948 |
90,374,840 |
|
| Changes
in working capital |
|
|
|
|
|
|
| (Increase)/decrease
in trade and other receivables |
|
|
(380,128) |
17,262,515 |
|
| Decrease/(increase)
in short term investments |
|
|
508,568 |
(3,502,485) |
|
| (Decrease)/Increase
in trade payables |
|
|
(3,699,555) |
5,942,144 |
|
|
|
|
------------------ |
------------------ |
|
|
|
111,738,178 |
115,338,125 |
|
| Financial
charges paid |
|
(1,876,544) |
(2,844,257) |
|
| Income
taxes paid |
|
(347,756) |
(9,364,679) |
|
| Management
fee paid - net |
|
(1,489,000) |
(2,005,000) |
|
| Profit
received from bank |
|
676,430 |
1,304,339 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash from operating activities |
|
|
108,701,308 |
102,428,528 |
|
|
|
|
| CASH
FLOWS FROM INVESTING ACTIVITIES |
|
|
| Purchase
of fixed assets - Leased out |
|
|
(117,008,237) |
(119,590,822) |
|
|
- Owned |
|
|
|
(95,174) |
(221,050) |
|
| Purchase
of long term investments |
|
|
-- |
(190,000) |
|
| Proceeds
from sale of fixed assets - Leased out |
|
|
14,199,826 |
22,931,959 |
|
|
- Owned |
|
|
374,500 |
-- |
|
| Proceeds
from sale of long term investments |
|
|
540,350 |
235,820 |
|
| Dividend
received |
|
|
|
696,426 |
896,137 |
|
| Customer's
security deposits received - net |
|
|
6,572,677 |
2,646,369 |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash used in investing activities, |
|
(94,719,632) |
(93,291,587) |
|
|
|
|
| CASH
FLOWS FROM FINANCING ACTIVITIES |
|
| Repayment
of long term borrowings |
|
(5,346,067) |
(4,390,430) |
|
| Dividend paid |
|
|
(53,623) |
(10,868,980) |
|
|
|
|
------------------ |
------------------ |
|
| Net
cash used in financing activities |
|
|
(5,399,690) |
(15,259,410) |
|
|
|
|
------------------ |
------------------ |
|
| NET
INCREASE/(DECREASE) IN CASH AND CASH EQUIVALENTS |
8,581,986 |
(6,122,469) |
|
| CASH
AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR |
3,184,816 |
9,307,285 |
|
|
|
|
------------------ |
------------------ |
|
| CASH
AND CASH EQUIVALENTS AT END OF THE YEAR |
|
11,766,802 |
3,184,816 |
|
|
|
|
========== |
========== |
|
|
|
Zafar H. Naqvi |
|
Maqbool Hussain |
|
S. Iradat Husain |
|
|
|
Chief Executive |
|
Vice Chairman |
|
Chairman |
|
|
|
|
|
|
|
| NOTES
TO THE ACCOUNTS |
|
| FOR
THE YEAR ENDED JUNE 30, 1999 |
|
|
| 1.
LEGAL STATUS AND NATURE OF BUSINESS |
|
| Modaraba
Al-Mali is a multipurpose, perpetual Modaraba formed under the Modaraba
Companies and |
|
| Modaraba
(Floatation and Control) Ordinance, 1980, and the rules framed thereunder and
is managed by |
|
| Al-Mal
Corporation Limited. It is listed on the Karachi, Lahore and Islamabad Stock
Exchanges. It is |
|
| engaged
in the business of leasing, morabaha, musharaka financing and other related
business. |
|
|
| 2.
SIGNIFICANT ACCOUNTING POLICIES |
|
|
|
| (a)
Accounting convention |
|
| These
accounts have been prepared under the historical cost convention. |
|
|
| (b)
Staff gratuity |
|
| The
Modaraba operates an approved funded gratuity scheme for all its employees,
who have |
|
| completed
minimum qualifying period of service. Monthly contributions to the fund are
based on |
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| actuarial
valuation using the projected unit credit method'. |
|
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| Actuarial
valuation of the scheme is carried out once in every three years and the
latest valuation |
|
| was
carried out as at June 30, 1996.The fair value of the scheme's assets and
liabilities for past |
|
| services
of the employees at the latest valuation date were Rs.0.427 million and
Rs.0.523 million |
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| respectively.
The contribution rate is 8.14% per annum of basic salaries excluding
allowance for |
|
| deficit
at the rate of 1.31%. Significant assumptions used for valuation of this
scheme are: |
|
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| Expected
long term rate of increase in salary level 12 per cent per annum. |
|
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| Expected
long term rate of interest 12 per cent per annum. |
|
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| (c) Fixed assets |
|
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| (i)
Assets given out on lease and amortization |
|
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| All
lease transactions are accounted for as operating leases. |
|
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| Leased
assets are stated at cost to the Modaraba less accumulated amortization. |
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| Amortization
is charged to income applying the annuity method whereby the amortizable |
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| value
of assets is amortized over the lease period. |
|
|
| (ii)
Assets in own use and depreciation |
|
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| Assets
in own use are stated at cost less accumulated depreciation. Depreciation is
charged |
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| to
income applying the straight line method whereby the cost of asset is
written-off over its |
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| estimated
useful life. In respect of additions and disposals during the year
depreciation is |
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| charged
proportionately to the period of use. |
|
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| Maintenance
and normal repairs are charged to income as and when incurred. |
|
|
| (iii)
Gain or loss on disposal of assets, if any, is included in income currently. |
|
|
| (d)
Deferred expenditure |
|
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| Deferred
expenditure incurred in connection with the floatation of Modaraba and
right/bonus issue |
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| is
being written-off over a period of five years from the date of incurrence. |
|
|
| (e) Investments |
|
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| Short-term
investments are carried at lower of moving average cost and market value
determined |
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| on
an aggregate portfolio basis. In case of long-term investments, the effect of
permanent |
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| diminution,
if any, in the value of investments is charged to profit and loss account. |
|
|
| (f)
Revenue recognition |
|
|
| (i)
Lease rentals are recognised as income when due on a systematic basis over
the lease |
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| period.
Income pertaining to the periods falling between the due dates and the period
end is |
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| recognised
on an accrual basis. |
|
|
| (ii)
Dividend income is recorded at the time of closure of share transfer books of
the company |
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| declaring
dividend. |
|
|
| (iii)
Income from morabaha and musharaka transactions is recognised on accrual
basis taking |
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| into
account the duration of placement of funds and the estimated profit
receivable. |
|
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| (g) Taxation |
|
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| As
per the changes made through Finance Act, 1998 in clause 102E of Second
Schedule of Part |
|
| I
of Income Tax Ordinance, 1979, the Modaraba considers itself exempt from
income tax application. |
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| Therefore,
no provision with respect to current and deferred taxation has been made in
the accounts |
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