Sindh Modaraba Sep Qtr 2015

Sindh Modaraba Sep Qtr 2015

And Allah has permitted trading and forbidden usury Contents Vision & Mission Statements 02 Corporate Information 03 Directors’ Review 04 Con...

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And Allah has permitted trading and forbidden usury

Contents Vision & Mission Statements

02

Corporate Information

03

Directors’ Review

04

Condensed Interim Balance Sheet

05

Condensed Interim Profit and Loss Account

06

Condensed Interim Statement of Comprehensive Income

07

Condensed Interim Cash Flow Statement

08

Condensed Interim Statement of Changes in Equity

09

Notes to the Condensed Interim Financial Statements

10

2

Vision & Mission Statements

Vision Our vision is to be one of the leading Islamic Financial Institution within Modaraba sector by offering Shari’ah compliant solutions for an optimal satisfaction of customers

Mission The basic aim of Sindh Modaraba is to seek Allah’s blessing for transformation of our business dealings in accordance with the principles enshrined in the Islamic Shari’ah. And to develop an Islamic Institution by implementing Allah’s will in the line with the practices of His Prophet (P.B.U.H.) by meeting its stated objectives built on Trust, Integrity, Innovation and good governance for meeting expectation of its stakeholders.

3

Corporate Information Board of Directors Mr. Muhammad Bilal Shaikh Mr. Muhammad Sohail Khan Rajput Mr. Muhammad Naimuddin Farooqui Syed Shahnawaz Nadir Shah Mr. Muhammad Shahid Murtaza Mr. Asif Haider Mirza Mr. Moin Mohajir Mr. Javed Iqbal

-Chairman

-Non-Executive Director -Non-Executive Director -Non-Executive Director -Non-Executive Director -Independent Director -Independent Director -Independent Director -Chief Executive

CFO & Company Secretary Mr. Zulfiqar Ali

Registered/Head Office Audit Committee Mr. Muhammad Shahid Murtaza Mr. Muhammad Naimuddin Farooqui Syed Shahnawaz Nadir Shah Mr. Moin Mohajir

-Chairman -Member -Member -Member

Human Resource Committee Mr. Muhammad Bilal Shaikh Mr. Moin Mohajir Mr. Asif Haider Mirza Mr.Javed Iqbal

1st Floor,Advisor Imperial Court, Shariah Dr. Ziauddin Ahmed Mufti Zeeshan AbdulRoad Aziz Karachi Tel : (92-21) 35640708-9 web : www.sindhmodarabaltd.com Email : [email protected] Legal Advisor

-Chairman -Member -Member -Member

Bankers www.sindhmodarabaltd.com [email protected]

Sindh Bank Limited-Islamic Banking (Saadat)

Auditors Grant Thornton Anjum Rahman Chartered Accountants

Shariah Advisor Mufti Zeeshan Abdul Aziz

Legal Advisor Mohsin Tayebaly & Co.

Share Registrar Technology Trade (Pvt.) Ltd Dagia House, 241-C Block 2, P.E.C.H.S., Shahra-e-Quaideen Karachi. Tel: (92-21) 34391316

4

Directors’ Review The Board of Directors of Sindh Modaraba Management Limited, Management Company of Sindh Modaraba is pleased to present the un-audited Financial Statements of Sindh Modaraba for the quarter ended September 30, 2015. Operating Results The Modaraba continued its strategy of gradually building a high quality financing portfolio. During the quarter under review, facilities amounting to Rs. 61.62 million were granted to the highly credit worthy customers and bringing the total financing assets to Rs.215.45 million. Despite the prevailing low interest rate scenario and tough competition within the Islamic financial institutions, the Modaraba managed to earn profit of Rs. 4.53 million during the quarter. Future Prospects The management will continue to carefully expand its asset base by penetrating into the targeted sectors for achieving diversification in its asset profile. The foot prints of Sindh Modaraba are being expanded to Lahore and Islamabad to expand its customer’s universe. Under this critical build-up time the management is endeavoring to closely monitor the operating costs to keep it at optimal level. We are hopeful of achieving even better results in the remaining three quarters of current financial year. Acknowledgment On behalf of the Board of Directors, I extend many thanks to all stake holders’ i.e sponsors, shareholders, regulators, customers and employees for the guidance, trust and hard work that have enabled to establish Sindh Modaraba for achieving these results. We assure them of continued adherence to prudent practices and providing customized products and services to the customers.

Javed Iqbal Chief Executive Karachi: October 27, 2015

5

Condensed Interim Balance Sheet (Un-audited) As at September 30, 2015

Note

Sep. 30, 2015 (Un-Audited) ----Rupees----

June 30, 2015 (Audited) ----Rupees----

ASSETS Current assets Cash and bank balances Ijarah rental receivables Advances, prepayments and other receivables Current portion of Diminishing Musharaka Current portion of Long term loan Total current assets

4 5 6

Non - current assets Long term portion of Diminishing Musharaka Ijarah assets Long term loan Fixed assets Total non - current assets

6 7 8

TOTAL ASSETS

268,187,069 1,499,889 5,004,280 21,362,273 324,000 296,377,511

309,603,524 730,517 3,064,496 10,737,273 324,000 324,459,810

93,165,228 100,919,378 1,107,000 1,314,947 196,506,553

106,474,545 46,013,040 1,188,000 274,655 153,950,240

492,884,064

478,410,050

11,619,217

9,491,879

LIABILITIES AND EQUITY Current liabilities 9

Creditors, accrued and other liabilities Profit distribution payable

7,200,000

Non - current liabilities Long term security deposit

-

17,140,486

9,326,968

TOTAL LIABILITIES

35,959,703

18,818,847

500,000,000

500,000,000

450,000,000 5,006,120 1,918,241 456,924,361

450,000,000 7,672,962 1,918,241 459,591,203

492,884,064

478,410,050

CERTIFICATE HOLDERS' EQUITY Certificate capital Authorised certificate capital 50,000,000 certificates of Rs. 10 each Issued, subscribed, and paid - up certificate capital Unappropriated profit Statutory reserve TOTAL LIABILITIES AND EQUITY CONTINGENCIES AND COMMITMENTS

10

The annexed notes 1 to 14 form an integral part of these condensed interim financial statements.

For Sindh Modaraba Management Limited (Management Company)

___________

___________

___________________

Chairman

Chief Executive

Director

6

Condensed Interim Profit and Loss Account (Un-audited) For the Quarter Ended September 30, 2015

Note

Sep. 30, 2015 (Un-Audited) ----Rupees----

Income on Diminishing Musharaka Income on Ijarah Income on bank deposits

2,993,042 7,687,301 4,759,953 15,440,296 11 7

Administrative and operating expenses Depreciation - Ijarah assets

(3,552,326) (6,713,122) (10,265,448) 5,174,848

Other income

46,000 5,220,848

Management Company's remuneration Services sales tax on the Management Company's remuneration Workers' welfare fund

(522,085) (73,092) (92,513) 4,533,158

Profit for the quarter before taxation 12

Taxation Profit for the quarter after taxation

4,533,158

Earnings per certificate - basic and diluted

0.10

The annexed notes 1 to 14 form an integral part of these condensed interim financial statements.

For Sindh Modaraba Management Limited (Management Company)

___________

___________

___________________

Chairman

Chief Executive

Director

7

Condensed Interim Statement of Comprehensive Income (Un-audited) For the Quarter Ended September 30, 2015

Sep. 30, 2015 (Un-Audited) ----Rupees---Profit for the quarter after taxation

4,533,158

Other comprehensive income for the quarter - items that may be reclassified to profit and loss account - items that will not be reclassified to profit and loss account subsequently

-

Total comprehensive income for the quarter

4,533,158

The annexed notes 1 to 14 form an integral part of these condensed interim financial statements.

For Sindh Modaraba Management Limited (Management Company)

___________

___________

___________________

Chairman

Chief Executive

Director

8

Condensed Interim Cash Flow Statement (Un-audited) For the Quarter Ended September 30, 2015

Sep.30, 2015 (Un-Audited) -----Rupees----CASH FLOWS FROM OPERATING ACTIVITIES Profit for the quarter before taxation

4,533,158

Adjustments for non - cash and other items Depreciation - Ijarah assets Depreciation - Fixed assets Income on bank deposits Provision for provident fund

6,713,122 77,519 (4,759,953) 41,548 2,072,236

Working capital changes (Increase)/Decrease in advances, prepayments and other receivables (Increase)/Decrease in Ijarah rental receivables (Increase)/Decrease in Diminishing Musharaka (Increase)/Decrease in long term loan Increase/(Decrease) in creditors, accrued and other liabilities Increase/(Decrease) in long term security deposit

(2,296,517) (769,372) 2,684,317 81,000 2,085,790 7,813,518 9,598,736 5,116,686

Income received on bank deposits Net cash used in operations

21,320,816

CASH FLOWS FROM INVESTING ACTIVITIES Purchase of Ijarah assets Purchase of fixed assets Net cash used in investing activities

(61,619,460) (1,117,811) (62,737,271)

CASH FLOWS FROM FINANCING ACTIVITIES Net cash flows from financing activities

-

Net decrease in cash and cash equivalents Cash and cash equivalents at the beginning of the quarter Cash and cash equivalents at the end of the quarter

(41,416,455) 309,603,524 268,187,069

The annexed notes 1 to 14 form an integral part of these condensed interim financial statements.

For Sindh Modaraba Management Limited (Management Company)

___________

___________

___________________

Chairman

Chief Executive

Director

9

Condensed Interim Statement of Changes in Equity (Un-audited) For the Quarter Ended September 30, 2015

Issue of certificates Total comprehensive income for the period Transfer to statutory reserve Balance as at June 30, 2015 Profit distribution @Rs. 0.16 per certificate Total comprehensive income for the quarter Balance as at September 30, 2015

Unappropriated Issued, Statutory reserve Total profit subscribed, and paid - up certificate capital ------------------------------------------------Rupees----------------------------------------------450,000,000 450,000,000 9,591,203 9,591,203 (1,918,241) 1,918,241 450,000,000 7,672,962 1,918,241 459,591,203 450,000,000

(7,200,000) 4,533,158 5,006,120

1,918,241

(7,200,000) 4,533,158 456,924,361

The statutory reserve representing profit set aside as required under the Prudential Regulation for Modarabas as issued by the Securities and Exchange Commission of Pakistan, will be transferred at the year end.

The annexed notes 1 to 14 form an integral part of these condensed interim financial statements.

For Sindh Modaraba Management Limited (Management Company)

___________

___________

___________________

Chairman

Chief Executive

Director

10

Notes to the Condensed Interim Financial Statements (Un-audited) For the Quarter Ended September 30, 2015 1

LEGAL STATUS AND NATURE OF BUSINESS Sindh Modaraba (the Modaraba) has been floated under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 and the Rules framed thereunder and is managed by Sindh Modaraba Management Limited (the Management Company), which is a wholly owned subsidiary of Government of Sindh. The registered office of the Modaraba is situated at 1st Floor, Imperial Court, Dr. Ziauddin Ahmed Road, Karachi. The Modaraba is a perpetual, multi-purpose and multi-dimensional Modaraba and is primarily engaged in providing Shariah compliant financing facilities to credit worthy customers. The Modaraba is listed on Karachi Stock Exchange.

2

BASIS OF PREPARATION

2.1

Statement of compliance These condensed interim financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standards (IFRSs) issued by the International Accounting Standards Board, as are notified with the Companies Ordinance, 1984 and Islamic Financial Accounting Standards (IFASs) issued by the Institute of Chartered Accountants of Pakistan, the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 and the directives issued by the Securities and Exchange Commission of Pakistan (SECP). Wherever the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981, Islamic Financial Accounting Standards (IFASs) and the directives issued by the SECP differ with the requirements of (IFRSs), the requirements of the former prevail.

2.2

The Modaraba commenced its operations w.e.f February 09, 2015. Hence, the comparative figures for the quarter ended September 30, 2014 have not been presented.

2.3

Basis of measurement These condensed interim financial statements have been prepared under the historical cost convention.

2.4

Functional and presentation currency Items included in these condensed interim financial statements are measured using the currency of the primary economic environment in which the Modaraba operates. The financial statements are presented in Pakistani Rupees, which is the Modaraba's functional and presentational currency. Figures have been rounded off to the nearest Rupees, unless stated otherwise.

2.4

Use of significant estimates and judgments The preparation of financial statements in conformity with the approved accounting standards requires the management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, income and expenses. It also requires the management to exercise judgment in application of the Modaraba's accounting policies. The estimates, judgments and associated assumptions are based on the management's experience and various other factors that are believed to be reasonable under the circumstances. These estimates and assumptions are reviewed on an on-going basis.

3

SIGNIFICANT ACCOUNTING POLICIES The accounting policies and methods of computation adopted in the preparation of these condensed interim financial statements are the same as those applied in the preparation of audited annual financial statements of the Modaraba for the year ended 30 June 2015.

11

Notes to the Condensed Interim Financial Statements (Un-audited) For the Quarter Ended September 30, 2015

Sep. 30, 2015 (Un-Audited) ----Rupees----

Note 4

CASH AND BANK BALANCES Stamp paper in hand Cash in hand Balances with banks -on deposit accounts -on current accounts

4.1

June 30, 2015 (Audited) ----Rupees----

21,550 20,000

10,050 -

268,125,974 19,545 268,187,069

309,573,474 20,000 309,603,524

4.1

These represent balances held with Sindh Bank Limited - Islamic Banking Unit, related party. These carry profit at the rates ranging from 6.35% to 7.1% per annum. (June 30, 2015: 7.1% to 9%)

5

ADVANCES, PREPAYMENTS AND OTHER RECEIVABLES Advance for puchase of Ijarah assets Other Advances

1,956,000

Prepayments Accrued income from bank deposits Accrued income from Diminishing Musharaka Other receivables

6

-

549,005

214,309

231,163

127,640

1,460,182

1,816,915

787,930

845,882

20,000 5,004,280

59,750 3,064,496

DIMINISHING MUSHARAKA Receivables - Secured Less: Current portion of Diminishing Musharaka Long term portion of Diminishing Musharaka

114,527,501 (21,362,273) 93,165,228

6.1

117,211,818 (10,737,273) 106,474,545

6.1

These represent finances provided under Diminishing Musharaka arrangements for a period upto five years.

7

IJARAH ASSETS

Particulars

Cost As at

Depreciation

Additions

Jul.01,2015 Plant and machinery Motor Vehicles

June 30, 2015 7.1

46,634,838 46,634,838

16,515,720 45,103,740 61,619,460

-

46,634,838

As at

As at

Sep.30,2015

Jul.01,2015

Charge for the period

As at

WDV as at Sep.30,2015

Sep.30,2015

-

63,150,558 45,103,740 108,254,298

621,798 621,798

3,984,117 2,729,005 6,713,122

4,605,915 2,729,005 7,334,920

58,544,643 42,374,735 100,919,378

-

46,634,838

-

621,798

621,798

46,013,040

The Modaraba has entered into Ijarah arrangements for period upto three years against which security deposits ranging from 10% to 20% were obtained at the time of disbursement.

12

Notes to the Condensed Interim Financial Statements (Un-audited) For the Quarter Ended September 30, 2015 8

FIXED ASSETS

Cost Particulars Furniture and fixtures Vehicles Computer and accessories Office Equipment Total

As at Jul.01,2015 95,017 43,500 156,084 294,601

June 30, 2015

As at Sep.30,2015 95,017 43,500 733,320 889,404 384,491 384,491 1,117,811 1,412,412

Additions

-

294,601

Depreciation Depreciation Charge for the WDV as at Sep As at As at rate period 30, 2015 Jul.01,2015 Sep.30,2015 10% 3,313 2,375 5,688 89,329 20% 3,625 2,175 5,800 37,700 33.33% 13,008 53,744 66,752 822,652 20% 19,225 19,225 365,266 19,946 77,519 97,465 1,314,947

294,601

-

19,946

Sep 30, 2015 (Un-Audited) ----Rupees---9

274,655 June 30, 2015 (Audited) ----Rupees----

CREDITORS, ACCRUED AND OTHER LIABILITIES Preliminary expenses payable to the Management Company

7,189,552

7,189,552

Management Company remuneration payable (inclusive of sales tax)

1,879,425

1,284,259

Advance received against ijarah facility

779,600

Creditors and other liabilities

549,602 1,221,038 11,619,217

Accrued expenses

10

19,946

459,591 558,477 9,491,879

CONTINGENCIES AND COMMITMENTS There are no contingencies and commitments at the balance sheet date. (June 30, 2015: Nil)

11

ADMINISTRATIVE AND OPERATING EXPENSES Salaries, Allowances & Other Benefits

Sep 30, 2015 (Un-Audited) ------Rupees----2,593,023

Legal & Professional Charges

265,405

Registration & Subscription Fee

101,478

Repairs & Maintenance

80,595

Depreciation/Amortization Expense- Owned Assets Utility services

77,519 167,348

Insurance- Owned Assets

3,296

Postage, Courier & Telegraphs

1,585

Vehicle Running Expenses

1,490

Security Services

85,497

Generator running expense

119,036

Printing,Stationery & Photocopy

14,001

Entertainment

13,775

Rent, Rates & Taxes

25,000

Miscellaneous Total

3,278 3,552,326

13

Notes to the Condensed Interim Financial Statements (Un-audited) For the Quarter Ended September 30, 2015 12

TAXATION As per the Second Schedule to the Income Tax Ordinance, 2001, the income of a non-trading modaraba is exempt from income tax provided that it distributes at least 90% of its profits to its certificate holders for the year after making appropriation for statutory reserves. The Modaraba intends to continue to avail this exemption by distributing 90% of its profits to its certificate holders after making appropriation to statutory reserves for the year ending 30 June 2016. Accordingly, no provision in respect of current and deferred taxation has been made in these condensed interim financial statements.

13

RELATED PARTY BALANCES AND TRANSACTIONS The Modaraba has related party relationship with the Management Company, its associated companies, Directors and key management personnel. The details of related party transactions and balances as at September 30, 2015 are as follows:

Balances as at period end Sindh Bank Limited Bank deposits Accrued income from bank deposits Sindh Modaraba Management Limited Management Company remuneration payable Preliminary expenses payable

Sep 30, 2015 (Un-Audited) ------Rupees-----

June 30, 2015 (Audited) ------Rupees-----

268,125,974 1,460,182

309,573,474 1,816,915

1,629,205 7,189,552

1,107,120 7,189,552

Sindh Insurance Limited Insurance premium payable Generator sharing expense payable

148,642 109,215

Key Management Personnel Salaries and other benefits payable Long term loan

263,561 1,431,000

106,061 1,512,000

41,548

136,628

Staff Provident Fund Contribution payable

-

Sep 30, 2015 (Un-Audited) ------Rupees-----

Transactions for the period Sindh Bank Limited Income from deposits

4,759,953

Sindh Modaraba Management Limited Management Company remuneration

522,085

Sindh Insurance Limited Insurance premium paid Sharing of expenses

9,250 109,215

Key Management Personnel Salaries, allowances and benefits paid

920,551

Staff Provident Fund Contribution paid

205,276

14

Notes to the Condensed Interim Financial Statements (Un-audited) For the Quarter Ended September 30, 2015 14

GENERAL

14.1

Corresponding figures where necessary have been reclassified for the purpose of better presentation

14.2

These financial statements were authorised for issue on October 27, 2015 by the Board of Directors of the Management Company.

For Sindh Modaraba Management Limited (Management Company)

___________

___________

___________________

Chairman

Chief Executive

Director

15