contents nadeem maqbool adil a. ghaffar (chief executive) auditcommittee zahid bashir nadeem maqbool...
TRANSCRIPT
Page 1MISSION AND VISION
First Equity Modaraba is committed to strive for excellence in all areas of itsactivities.
We view our business objective of providing distinctive financial products and servicesthat promote commerce and industry within the context of our overall objective of
contributing to the nation’s prosperity.
Contents
CORPORATE INFORMATION
TEN YEARS AT A GLANCE
PATTERN OF CERTIFICATE HOLDING
STATEMENT OF COMPLIANCE WITH THE CODE OF CORPORATE GOVERNANCE
REPORT OF THE DIRECTORS
SHARI’AH REVIEW REPORT
AUDITORS REVIEW ON STATEMENT OF COMPLIANCE
AUDITORS’ REPORTS TO THE CERTIFICATE HOLDERS
BALANCE SHEET
PROFIT AND LOSS ACCOUNT
STATEMENT OF OTHER COMPREHENSIVE INCOME
CASH FLOW STATEMENT
STATEMENT OF CHANGES IN EQUITY
NOTES TO THE FINANCIAL STATEMENTS
NOTICE OF ANNUAL REVIEW MEETING
CONSOLIDATED FINANCIAL STATEMENTS
2
3
4
6
7
9
11
12
13
15
16
17
18
19
39
40
Page 2 FIRST EQUITY MODARABA
CORPORATE INFORMATION
Modaraba CompanyPremier Financial Services (Private) Limited
Board of Directors
Zahid Bashir
Nadeem Maqbool
Adil A. Ghaffar
(Chief Executive)
Audit CommitteeZahid Bashir
Nadeem Maqbool
Room No. 503 - 504
5th Floor,
Karachi Stock Exchange
Building, Karachi.
Tel: 32446020-3
Fax: 32460766
B-1004, 10th Floor
Lakson Square Building # 3,
Sarwar Shaheed Road,
Karachi
Tel: 35672815-8
Fax: 35686116
E-mail: [email protected]
Registered and Business Office
AuditorsAvais Hyder Liaquat NaumanChartered Accountants407, Progressive Plaza,Beaumont Road, Karachi-75530Tel: 92-21-35655975-6,35656082Fax: 92-21-35655977
BankersBank Al-Habib Ltd.Habib Metropolitan Bank Ltd.MCB Bank Ltd.National Bank of Pakistan.NIB Bank Ltd.The Bank of Khyber.United Bank Ltd.Bank Islami Pakistan Ltd.Meezan Bank Ltd.Registrar
THK Associates (Pvt.) Ltd.RegistrarState Life Building # 3,Dr. Ziauddin Ahmed Road, Karachi.Tel: 111-000-322Fax: 92-21-35655595
General CounselMoshin M. Tayebaly & Co.Advocates & Legal Consultants
Page 3
Page 4 PATTERN OF HOLDING OF CERTIFICATES
BY THE CERTIFICATE HOLDERS AS AT JUNE 30, 2015
1,8421,0481,130
744167703017271065
15873413233313211114111111113111111111112111111111111111111111
Certificate HoldingFrom To
Number ofCertificate Holders
TotalCertificates Held
1101501
1,0015,001
10,00115,00120,00125,00130,00135,00140,00145,00150,00155,00160,00165,00170,00175,00180,00190,00195,001
100,001105,001110,001115,001120,001125,001130,001135,001145,001150,001155,001160,001165,001170,001185,001190,001195,001200,001205,001220,001225,001250,001255,001285,001290,001305,001310,001315,001335,001340,001380,001400,001405,001410,001415,001425,001625,001795,001
1,010,0011,025,0011,115,0011,155,0011,195,0011,280,0011,320,0011,705,0012,495,0013,095,0013,435,0015,240,0015,925,001
100500
1,0005,000
10,00015,00020,00025,00030,00035,00040,00045,00050,00055,00060,00065,00070,00075,00080,00085,00095,000
100,000105,000110,000115,000120,000125,000130,000135,000140,000150,000155,000160,000165,000170,000175,000190,000195,000200,000205,000210,000225,000230,000255,000260,000290,000295,000310,000315,000320,000340,000345,000385,000405,000410,000415,000420,000430,000630,000800,000
1,015,0001,030,0001,120,0001,160,0001,200,0001,285,0001,325,0001,710,0002,500,0003,100,0003,440,0005,245,0005,930,000
103,282265,871777,540
1,695,5321,296,057
918,853553,245389,739742,978334,917223,779208,280729,852420,110405,872183,550263,620
74,100236,217165,334279,041300,000303,483107,200338,140234,042123,000128,875134,660137,500593,356152,812159,516325,125167,000171,630187,500191,195198,194608,762205,994221,500227,916251,000258,500289,081292,214308,197310,426320,000337,500688,000383,050401,233405,835411,184420,000429,000627,000795,198
1,014,0381,026,5001,116,0001,156,5001,196,5001,282,9553,218,0421,707,1352,500,0003,100,0003,436,1975,244,0005,925,784
5,208 52,440,000TOTAL
Page 5PATTERN OF HOLDING OF CERTIFICATES
BY THE CERTIFICATE HOLDERS AS AT JUNE 30, 2015
D I R E C T O R S , C E O A N D O T H E R S P O U S E A N D M I N O R C H I L D R E N
Zahid Bashir
Nazia Maqbool
Ambreen Zahid Bashir
Nadeem Maqbool
19,500
144,660
202,262
152,356
Categories ofCertificate Holders
Number ofCertificate Holders
Percentage%
CertificatesHeld
DIRECTORS, CEO & CHILDREN
ASSOCIATE COMPANIES
NIT & ICP
BANKS, DFI & NBFI
INSURANCE COMPANIES
MODARABAS & MUTUAL FUNDS
GENERAL PUBLIC (LOCAL)
GENERAL PUBLIC (FOREIGN)
OTHERS
TOTAL
11
4
2
6
5
6
3,961
1,171
42
5,208
705,745
203,912
1,700
1,755,187
2,349,909
489,631
34,699,953
1,132,933
11,101,030
52,440,000
1.35
0.39
0.01
3.35
4.48
0.93
66.17
2.16
21.16
100
Page 6 STATEMENT OF COMPLIANCE WITH THE
CODE OF CORPORATE GOVERNANCE
The statement is being presented to comply with the Code of Corporate Governance (CCG) contained in Regulation 35 of Listing Regulationsof Karachi Stock Exchange Limited, the Chapter XIII of Listing Regulations of Lahore Stock Exchange Limited and Chapter XI of ListingRegulations of the Islamabad Stock Exchange Limited for the purpose of establishing a framework of good governance, whereby a listedcompany is managed in compliance with the best practice of corporate governance.
The Board of Directors of Premier Financial Services (Pvt) Ltd the manager of First Equity Modaraba (company) has applied the principlescontained in the CCG in the following manner:
CategoryNon-ExecutiveDirectorsExecutive Directors
NamesMr Zahid BashirMr Nadeem MaqboolMr Adil A Ghaffar
At present the board includes:
The directors have confirmed that none of them is serving as a director on more than seven listed companies, including this company(excluding the listed subsidiaries of listed holding companies where applicable).All the resident directors of the company are registered as taxpayers and none of them has defaulted in payment of any loan to abanking company, a DFI or an NBFI or, being a member of a stock exchange, has been declared as a defaulter by that stock exchange.During the year no casual vacancy occur in the board.The company has prepared a “Code of Conduct” and has ensured that appropriate steps have been taken to disseminate it throughoutthe company along with its supporting policies and procedures.The Board has developed a vision/ statement, overall corporate strategy and significant policies of the Modaraba. A complete recordof particulars of significant policies along with the dates on which they were approved or amended has been maintained.All the powers of the Board have been duly exercised and decisions on material transactions, including appointment anddetermination of remuneration and terms and conditions of employment of the CEO, other executive and non-executive directors,have been taken by the Board.The meetings of the Board were presided over by the Chairman and, in his absence, by a director elected by the Board for this purposeand the Board met at least once in every quarter. Written notices of the Board meetings, along with agenda and working papers, werecirculated at least seven days before the meetings. The minutes of the meetings were appropriately recorded and circulated.Two of the Board members are certified directors and one enjoys the exemption from certification.No appointment of CFO, Company Secretary and Head of Internal Audit, including their remuneration and terms and conditions ofemployment was made during the year.The directors' report for this year has been prepared in compliance with the requirements of the CCG and fully describes the salientmatters required to be disclosed.The financial statements of the Modaraba were duly endorsed by CEO and CFO before approval of the board.The directors, CEO and executives do not hold any interest in the certificate of the Modaraba other than that disclosed in the pattern ofshareholding.The company has complied with all the corporate and financial reporting requirements of the CCG.The Board has formed anAudit Committee. It comprises of non-executive members.The meetings of the audit committee were held at least once every quarter prior to approval of interim and final results of theModaraba and as required by the CCG. The terms of reference of the committee have been formed and advised to the committee forcompliance.The Board has formed an HR and Remuneration Committee. It comprises non-executive and executive / CEO.The Board has set up an effective internal audit function that is considered suitably qualified and experienced for the purpose and isconversant with the policies and procedures of the company.The statutory auditors of the Modaraba have confirmed that they have been given a satisfactory rating under the quality control reviewprogram of the ICAP, that they or any of the partners of the firm, their spouses and minor children do not hold shares of the companyand that the firm and all its partners are in compliance with International Federation of Accountants (IFAC) guidelines on code ofethics as adopted by the ICAP.The statutory auditors or the persons associated with them have not been appointed to provide other services except in accordancewith the listing regulations and the auditors have confirmed that they have observed IFAC guidelines in this regard.The 'closed period', prior to the announcement of interim/final results, and business decisions, which may materially affect the marketprice of Modaraba's securities, was determined and intimated to directors, employees and stock exchanges.Material/price sensitive information has been disseminated among all market participants at once through stock exchange(s).We confirm that all other material principles enshrined in the CCG have been complied with except induction of independent directorand head of internal audit for which reasonable progress is being made by the company to seek compliance by the end of nextaccounting year.
On behalf of the Board
Adil A GhaffarChief Executive Officer
October 9, 2015Karachi
1.
2.
3.
4.5.
6.
7.
8.
9.10.
11.
12.13.
14.15.16.
17.18.
19.
20.
21.
22.23.
REPORT OF THE DIRECTORS OF THE
MODARABA COMPANY
Page 7
The Directors of the Premier Financial Services (Private) Limited, the management company of the ,are pleased to present their report and audited financial statements of the Modaraba together with the consolidated financial statements of theModaraba and Equity Textiles Limited, a wholly owned subsidiary, for the year ended June 30, 2015.
The profit for the year amounted to Rs. 11.40 million as compared to Rs 24.7 million for the last year translated in an earning per certificate ofRs. 0.22 as compared to Rs. 0.47 last year. Break-up value per certificate amounted to Rs. 12.03 against Rs. 12.33 last year.
Income 34,252,047ExpensesOperating Expenses (21,538,416)Bank Charges (2,688)
(21,541,104)Operating profit 12,710,943Other Income 431,953
13,142,896Management remuneration (1,314,288)Service sale tax on Management remuneration (197,143)
11,631,465Provision for Worker Welfare Fund (232,629)Profit for the year 11,398,836
Earning per Certificate 0.22
The directors are pleased to announce cash dividend of Rs. 0.17(1.70%) per certificate {2014: Rs. (3.75%) 0.375}in its meeting held onOctober 08, 2015 for the year ended June 30, 2015.The Certificate Share Transfer Book for the entitlement of profit distribution will remain closed from Saturday, November 14, 2015 toThursday, November 26, 2015 (both days inclusive)
Auditors qualified their opinion based on non-compliance of certain international accounting standards relating to adjusting cost to fair valueof marketable securities and any profit / loss should be taken / charge to profit and loss account for the year. Our principal stand for notaccepting auditors' qualification was based on the fact that, firstly, we do not foresee that these impairments are of permanent nature. Secondly,our Industry was established on the concept to distribute what it earns on yearly basis. Our regulators made it mandatory that to claim incometax exemption modarabas have to distribute 90% of profit for the year in the form of cash dividend to certificate holders. Therefore, adjustingcost to fair value would tantamount to distribution of either unrealized capital gain or recovery of cost.The Auditors also qualified their report on valuation of Trading Right Entitlement Certificate (TREC) and shares of Karachi Stock ExchangeLtd (KSEL) and Islamabad Stock Exchange Ltd (ISEL) based on the Technical Opinion of Institute of CharteredAccountants of Pakistan. Wedo not concur with the auditors' opinion. :1. TREC was given notional value of Rs. 15 M and Rs. 4 M by KSELand ISEL, respectively, for the purpose of Base Minimum Capital
in consultation with SECP;2. Shares of KSEL/ISEL
KSE founded in 1949 is the biggest and most liquid exchange in Pakistan. It was declared the “Best Performing Stock Market of theWorld for the year 2002”.With more than 560 listed companies, market capitalization of Rs 7.4 trillion and having listed capital ofmore than Rs. 1.189 trillion, average monthly turnover of 4.7 billion shares.At the year end the KSE-100 Index was 34,399 points.Break-up value per share was Rs. 10.17 as per the audited accounts of KSELfor the year ended June 30, 2015;ISE incorporated in 1989 in Islamabad. With 273 listed companies, market capitalization of Rs. 5.669 trillion and having listedcapital of more than Rs 902 billion, total volume traded was Rs. 25.8 million shares.At the year end the ISE Index was 3,595 points.Break Up value per share was Rs. 11.10 as per the audited accounts of ISELfor the year ended June 30, 2015;
Alhamdulillah, our profit for the year as reflected in our financial statements is Rs. 11.4 m. Musharakah investment portfolio was stable.During the year stock market was volatile and saw some major fluctuation. Our performance despite restrictions on investments in Shariahcompliant scrips only, is cause for satisfactory.ETL's book value increased from Rs. 24.66 in June 2014 to Rs. 28.29 in 2015. ETLwas able to realize profit of Rs. 65.28 million as against Rs.74.6 million translated into an earning per share (EPS) of Rs. 2.61 from Rs 2.98 last year.As highlighted earlier, the practical difficulties in complying with Stock Exchange (Corporatization, Demutualization and Integration) Act2012, as thisAct restricts TREC to companies only, as defined in Companies Ordinance, 1984. Our submission to SECPthat Modaraba being
FIRST EQUITYMODARABA(FEM)
Financial Results
Dividend Distribution
Auditors Qualification
Our Performance and Future Prospects
Rupees
REPORT OF THE DIRECTORS OF THE
MODARABA COMPANY
Page 8
regulated under its auspices and being a corporate legal entity, be considered as company for the purposes of thisAct has not been accepted bythe Regulators. Thereafter, we requested our prime regulator, Registrar Modaraba (RM) to allow us to create a wholly owned subsidiarycompany enabling us to protect and safe guard assets of the modaraba. Even though there is a precedent of FEM holding a wholly ownedsubsidiary (ETL), RM rejected our request. Thus having no other option, FEM filed a suit in the Honorable High Court of Sindh on April 202013 and Stay Order was granted. Subsequently, SECPissued brokerage renewal license in our favor.As required under SCSAM, FEM's financial transactions were duly vetted and audited by the independent Shariah Advisor and his report isannexed.
During the year under review, four board meeting were held and attend by the Directors as follows:-
As stated in previous years Report that the Board has decided to adopt the code of corporate governance as issued by the Securities andExchange Commission of Pakistan and made part of listing regulationAll activities are conducted as per the listing regulations of the stock exchanges. Vision & Mission statements, Core values and Code ofConduct have been prepared and approved by the Board and have been communicated to the employees. Significant policies as required underthe Code of Corporate Governance have been framed and are periodically reviewed by the Board.As required by the Code of Corporate Governance, Directors are pleased to report that:a. The financial statements prepared by the management of the Modaraba present fairly its true state of affairs, the result of its
operations, cash flows and changes in equity;b. Proper books of accounts of the Modaraba have been maintained;c. Appropriate accounting policies have been consistently applied in preparation of financial statements and accounting estimates are
based on reasonable and prudent judgment;d. International Financial Reporting Standards (IFRS), as applicable in Pakistan, have been followed in the preparation of financial
statements and any departure there from has been adequately disclosed in theAnnual Report.e. The system of internal control is consistently applied though out the year and has been effectively implemented and monitored with
ongoing efforts to improve it further;f. There is no doubt about the Modaraba's ability to continue as a going concern; andg. There has been no material departure from the best practice of corporate governance as detailed in the listing regulation of the Stock
Exchange (s).
The Modaraba's service rules provide an unfunded gratuity scheme for the permanent employees.
Bakr Tilly Mehmood Idrees Qamar
We acknowledge hard work with full dedication of our employees and are thankful to our business associates, clients and financial institutionsfor their confidence and support. We also appreciate the guidance and cooperation received from our regulators. They have our full supportand good wishes in their efforts at reforms.
Board of Directors
Code of Corporate Governance
Pattern of Shareholding - annexed
Key Operating and Financial Data - annexed
Staff Retirement Benefits
Auditors
Acknowledgement
The present auditors M/sAvais Hyder Liaquat Nauman, CharteredAccountants have completed their term of 5 years as per Code of CorporateGovernance. The Board has recommended the name of , Chartered Accountants. Their appointment issubject to the approval of the Registrar Modaraba.
Mr. Zahid BashirMr. Nadeem MaqboolMr. Adil A. Ghaffar
Name of Board Members Meetings Attended444
1.2.3.
On behalf of the Board
Adil A GhaffarChief Executive Officer
October 8, 2015Karachi
SHARI'AH REVIEW REPORT Page 9
Page 10 SHARI'AH REVIEW REPORT
Page 11REVIEW REPORT TO THE MEMBERS
ON STATEMENT OF COMPLIANCE WITH
BEST PRACTICES OF CODE OF CORPORATE GOVERNANCE
We have reviewed the enclosed statement of compliance with the best practices contained in the Code of Corporate Governance(the Code) prepared by the Board of Directors of Premier Financial Services (Private) Limited (the Management Company) forthe year ended June 30, 2015 to comply with the requirements of listing regulation No. 35(Chapter XI) of the Karachi StockExchange Limited, Lahore Stock Exchange Limited and Islamabad Stock Exchange Limited where the Modaraba is listed
The responsibility for compliance with the Code is that of the Board of Directors of the Management Company. Our responsibilityis to review, to the extent where such compliance can be objectively verified, whether the Statement of Compliance reflects thestatus of the Modaraba's compliance with the provision of the Code and report if it does not and to highlight any non-compliancewith the requirements of the Code.Areview is limited primarily to inquiries of the Management Company's personnel and reviewof various documents prepared by the Management Company to comply with the Code.
As a part of our audit of financial statements we are required to obtain an understanding of the accounting and internal controlsystem sufficient to plan the audit and develop an effective audit approach. We are not required to consider whether the Board ofDirectors' statement on internal control covers all risk and controls or to form an opinion on the effectiveness of such internalcontrols, the Management Company's corporate governance procedures and risks.
The Code requires the Management Company to place before the Audit Committee, and upon recommendation of the AuditCommittee, place before the board of Directors for their review and approval its related party transactions distinguishing betweentransactions carried out on terms equivalent to those that prevail in arm's length transactions and transactions which are notexecuted at arm's length price and recording proper justification for using such alternate pricing mechanism. We are only requiredand have ensured compliance of this requirement to the extent of the approval of the related party transactions by the Board ofDirectors upon recommendation of theAudit Committee. We have not carried out any procedures to determine whether the relatedparty transactions were undertaken at arm's length price or not.
Based on our review, nothing has come to our attention which causes us to believe that the Statement of Compliance does notappropriately reflect the Management Company's compliance, in all materials respects, which the best practices contained in theCode as applicable to the Modaraba, for the year ended June 30, 2015.
Further, we highlight instances of non-compliances with the requirements of the Code in respect of head of internal audit for theModaraba and independent director as reflected in the paragraph 23 where these are stated in the Statement of Compliance.
CharteredAccountantsKarachi.Dated: October 08, 2015
Engagement Partner:Adnan Zaman
Page 12 AUDITORS' REPORT
TO THE CERTIFICATE HOLDERS
We have audited the annexed balance sheet of FIRST EQUITY MODARABA(the Modaraba) as at June 30, 2015 and the related profit and lossaccount, statement of comprehensive income, cash flow statement and statement of changes in equity together with the notes forming partthereof (hereinafter referred to as the financial statements), for the year then ended and we state that we have obtained all the information andexplanations which, to the best of our knowledge and belief, were necessary for the purposes of our audit.
These financial statements are the Modaraba Company's [Premier Financial Services (Private) Limited] responsibility who is also responsibleto establish and maintain a system of internal control, and prepare and present the above said statements in conformity with the approvedaccounting standards as applicable in Pakistan and the requirements of the Modaraba Companies and Modaraba (Floatation and Control)Ordinance 1980 (XXXI of 1980), and the Modaraba Companies and Modaraba Rules, 1981. Our responsibility is to express an opinion on thesestatements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and performthe audit to obtain reasonable assurance about whether the financial statements are free of any material misstatement. An audit includesexamining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing theaccounting policies and significant estimates made by the Modaraba Company, as well as, evaluating the overall presentation of the financialstatements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we report that:
(a) Management of the Modaraba in the financial statements for the year ended June 30, 2013, had assigned values toTrading Rights Entitlement Certificates (TREC) of Karachi Stock Exchange Limited (KSE) and Islamabad StockExchange Limited (ISE) of Rs. 15 million and Rs. 4 million respectively that were based on the value assigned by KSEand ISE for base minimum capital requirement purposes applicable to the brokers of the stock exchange and hadrecognised 4,007,383 shares of KSE and 3,034,603 shares of ISE at their face values of Rs. 10/- each on exchange ofmembership card thereby the Modaraba recognized gain of Rs. 36.369 million which, in our opinion, was not inaccordance with International Accounting Standards and technical opinion of The Institute of Chartered Accountants ofPakistan (ICAP) issued in this respect.
(b) Modaraba has charged unrealised loss of Rs. 16.728 million, in respect of investment classified as financial asset at fairvalue through profit and loss, in other comprehensive income instead of profit and loss account as required under IAS 39.Had the Modaraba recognized the intangible asset and shares of KSE and ISE in accordance with the Technical Opinionof ICAP, its equity, intangible asset and long term investments would have been lower by Rs. 36.369 million, Rs. 7.7million and Rs. 28.6 million respectively and had the Modaraba charged the unrealized loss to the profit and loss account,Its profit for the year would have been lower by Rs. 16.728 million.
(c) Except for the matter discussed in paragraph (a) and (b) above, in our opinion, proper books of accounts have been keptby the Modaraba Company in respect of the Modaraba as required by the Modaraba Companies and Modaraba(Floatation and Control) Ordinance, 1980 (XXXI of 1980), and the Modaraba Companies and Modaraba Rules, 1981;
(d) Except for the matter discussed in paragraph (a) and (b) above, in our opinion:(i) the balance sheet and profit and loss account together with the notes thereon have been drawn up in conformity with theModaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (XXXI of 1980), and the ModarabaCompanies and Modaraba Rules 1981, and are in agreement with the books of accounts and are further in agreementwith accounting policies consistently applied;(ii) the expenditure incurred during the year was for the purpose of the Modaraba's business; and(iii) the business conducted, investments made and the expenditure incurred during the year were in accordance with the objects,terms and conditions of the Modaraba;
(e) Except for the matter discussed in paragraph (a) and (b) above, in our opinion and to the best of our information and according to theexplanations given to us, the balance sheet, profit and loss account, statement of comprehensive income, cash flow statement andstatement of changes in equity together with the notes forming part thereof confirm with the approved accounting standards asapplicable in Pakistan and give the information required by the Modabara Companies and Modaraba (Floatation and Control)Ordinance, 1980 (XXXI of 1980), and the Modaraba Companies and Modaraba Rules, 1981, in the manner so required andrespectively give a true and fair view of the state of Modaraba's affairs as at June 30, 2015 and of its profit, its total comprehensiveIncome, its cash flows and changes in equity for the year then ended;
(f) In our opinion, no Zakat was deductible at source under the Zakat and Ushr Ordinance, 1980 (XVIII of 1980).
CharteredAccountantsKarachi.Dated: October 08, 2015
Engagement Partner: Adnan Zaman
Page 13BALANCE SHEET
AS AT JUNE 30, 2015
2014Rupees
524,400,000
134,699,560
(13,149,967)
646,764,838
815,245Remeasurement of defined benefit liability - Actuarial gain
Authorized Certificate Capital
60,000,000 (2014: 60,000,000) modaraba
certificates of Rs. 10 each
Equity &Liabilities
Capital and reserves
Certificate holders' equity
Certificate capital
Reserves
Total certificates holders' equity
Unrealised loss on remeasurment of investments
2015Rupees
600,000,000600,000,000
524,400,000
126,433,396
(20,170,414)
630,754,173
91,191
6
7
Note
1,556,255
1,756,255
11,856,701
37,823,469
25,966,768
200,000
Deferred liabilities
Creditors, accrued and other liabilities
Total current liabilities
Total non-current liabilities
Current liabilities
Non-current liabilities
Unclaimed profit distribution
Security deposit
2,655,483
2,855,483
24,375,437
51,993,753
686,344,562Total equity and liabilities 685,603,409
27,618,316
200,000
8
9
Contingencies and commitments 10
Page 14 BALANCE SHEET
AS AT JUNE 30, 2015
2014Rupees
Assets
Non-CurrentAssets
2015RupeesNote
Fixed assets
-tangible
-intangible
Investment property
Long term investments
Advances-considered good
Deposits
TotalNon-CurrentAssets
15,777,617
19,000,000
2,071,667
324,387,730
2,510,000
1,150,000
364,897,014
15,426,202
19,000,000
1,951,667
326,007,730
2,510,000
1,150,000
366,045,599
11
12
13
14
Morabaha/Musharaka receivables-secured
Short term investments
Advances
Trade deposits and prepayments
Other receivables
Tax refunds due from government
Bank balances
CurrentAssets
Total CurrentAssets
TotalAssets
159,320,497
107,396,243
1,422,588
14,981,918
24,533,228
3,903,578
9,889,496
321,447,548
686,344,562
153,003,609
97,882,927
3,525,359
15,027,294
25,218,541
4,614,680
20,285,400
319,557,810
685,603,409
15
16
17
18
19
20
The annexed notes 1 to 36 form an integral part of these financial statements.
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
Page 15PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2015
The annexed notes 1 to 36 form an integral part of these financial statements.
2014Rupees
2015RupeesNote
Income
Expenditure
Operating expenses
Financial charges
Operating profit
Other income
Management remuneration
Service Sales Tax on management remuneration
Worker Welfare Fund
Profit before taxation
Taxation - Current
Profit for the year
Earnings per certificate - Basic & Diluted
46,224,523
(18,425,749)
(5,695)
(18,431,444)
27,793,079
713,980
28,507,059
25,200,247
(2,850,700)
-
0.471
(456,112)
(504,005)
24,696,242
24,696,242
34,252,047
(21,538,416)
(2,688)
(21,541,104)
12,710,943
431,953
13,142,896
11,631,465
(1,314,288)
-
0.217
(197,143)
(232,629)
11,398,836
11,398,836
21
22
23
24
25
26
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
Page 16 STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED JUNE 30, 2015
The annexed notes 1 to 36 form an integral part of these financial statements.
2014Rupees
2015Rupees
Profit for the year
Other comprehensive income
Unrealized (loss) on remeasurement of investments
Gain realized on disposal of investments
Items that will not be reclassified to profit & loss account
Remeasurement of defined benefit liability
Other comprehensive income
Total comprehensive income for the year
24,696,242
(10,787,319)
4,992,048
(5,795,271)
355,591
(5,439,680)
19,256,562
Items that will be reclassified to profit & loss account on disposal
11,398,836
(15,099,567)
8,079,120
(7,020,447)
(724,054)
(7,744,501)
3,654,335
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
Page 17CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2015
2014Rupees
2015RupeesNote
Profit before taxation
Adjustments for:
811
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
DepreciationProvision for gratuity
Dividend incomeLoss on sale of fixed asset
24,696,242
1,651,506351,700
(3,789,318)34,844
(1,751,268)Cash generated from operations before working capital changes 22,944,974
20
Working Capital changesDecrease/(increase) in operating assets
Morabaha/Musharaka receivables-securedAdvancesTrade deposits and prepayments
Other receivablesIncrease in operating liabilitiesCreditors, accrued and other liabilities
(9,281,437)1,779,560
44,6992,445,945
5,918,398907,165
Staff retirement benefit-gratuity paidDividend paidTaxes paidNet cash generated from operating activities
Cash flows from investing activities
Investments
Dividend receivedPurchase of tangible assetsNet cash (used in)generated from / investing activities
Net (decrease) / increase in cash and cash equivalentsCash and cash equivalents at beginning of the yearCash and cash equivalents at the end of the year
The annexed notes 1 to 36 form an integral part of these financial statements.
49,575,019
(531,875)(36,451)
(2,051,150)21,232,663
(64,387,724)3,771,518(301,980)
(60,918,186)
(39,685,523)
9,889,49619
11,398,836
1,680,912375,174
(4,185,556)13,303
(2,116,167)9,282,669
6,316,88850,573
(45,376)(529,265)
12,518,73618,311,556
9,889,496
-(18,013,452)(2,865,076)
6,715,697
872,8694,035,138
(1,227,800)3,680,207
10,395,904
20,285,400
Cash generated from operating activities
Page 18 STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2015
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
Page 19NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Legal Status and nature of business:
Statement of Compliance:
First Equity Modaraba (the Modaraba) was formed in 1991 under the Modaraba Companies and Modaraba (Floatation andControl) Ordinance, 1980 and the Rules framed there under and is managed by Premier Financial Services (Private) Limited (theModaraba Management Company), a company incorporated in Pakistan.The Modaraba is a perpetual, multipurpose modaraba and is able to undertake a variety of fund and fee based activities. Theseinclude trading, manufacturing, equity investment and their financing and facilitation. The Modaraba is a trading rightentitlement certificate holder of the Karachi and Islamabad stock exchanges of Pakistan and is currently operating its brokerageactivities in Karachi Stock Exchange.The Modaraba is listed on Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the Modaraba is situated at B-1004, 10th floor, Lakson Square Building 3, Sarwar Shaheed Road, Karachi. The Modaraba is holding Equity Textiles Limited as awholly owned subsidiary company.
These 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 (IFRS) issued by the InternationalAccounting Standards Board as are notified under the Companies Ordinance, 1984, the requirements of the Modaraba Companiesand Modaraba (Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 and directives issued bythe Securities and Exchange Commission of Pakistan (SECP). Wherever the requirements of the Modaraba Companies andModaraba (Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 and directives issued bySECP differ with the requirements of IFRS, the requirements of the Modaraba Companies and Modaraba (Floatation and Control)Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 or the directives issued by SECPprevail.
The Securities and Exchange Commission of Pakistan (SECP) has issued directive (vide SRO 865 (l) / 2005) that Islamic FinancialAccounting Standard 1 (IFAS-1) shall be followed in preparation of the financial statement by Companies and Modarabas whileaccounting for Morabaha transactions as defined by said Standard. The Modaraba has adopted the above said Standard.
The Securities and Exchange Commission of Pakistan (SECP) has issued directive (vide SRO 431 (l) / 2007) that Islamic FinancialAccounting Standard 2 (IFAS-2) shall be followed in preparation of the financial statement by Companies and Modarabas whileaccounting for Ijarah (Lease) transactions as defined by said Standard. The Modaraba has adopted the above said Standard.
The Securities and Exchange Commission of Pakistan (SECP) vide circular No. 10 of 2004 dated February 13, 2004 has deferred theapplication of IAS 17 "Leases" on modarabas till further orders.
The Modaraba has adopted the amendments to the following standards which became effective during the year:
The following standards, interpretations and improvements became effective for the current financial year but are either not relevantor do not have any material effect on the financial statements of the modaraba:IAS 19 - Employee Benefits (Amendment) - Defined benefit plans: Employee contributionsIAS 32 - Financial Instruments - Presentation - (Amendment) Offsetting financial assets and financial liabilitiesIAS 36 - Impairment ofAssets - (Amendment)- RecoveryAmount Disclosures for Non-FinancialAssetsIAS 36 - Impairment ofAssets - (Amendment) -RecoveryAmount Disclosures for Non-FinancialAssetsIAS 39 - Financial Instruments: Recognition and Measurement - (Amendment) Novation of Derivative and Continuation of hedgeAccountingIFRIC 21 - Levies
IFRS 2 Share-based Payment - Definitions of vesting conditionsIFRS 3 Business Combinations -Accounting for contingent consideration in a business combinationIFRS 3 Business Combinations - Scope exceptions for joint venturesIFRS 8 Operating Segments -Aggregation of operating segmentsIFRS 8 Operating Segments - Reconciliation of the total of the reportable segments' assets to the entity's assetsIFRS 13 Fair Value Measurement - Scope of paragraph 52 (portfolio exception)IAS 16 Property, Plant and Equipment and IAS 38 Intangible Assets - Revaluation method - proportionate restatement ofaccumulated depreciation / amortisationIAS 24 Related party Disclosures - Key management personnelIAS 40 Investment Property - Interrelationship between IFRS 3 and IAS 40 (ancillary services)The adoption of the above improvements to accounting standards and interpretations did not have any material effect on the financialstatements.
Initial application of standards, amendments or an interpretation to existing standards
Standards that became effective but not relevant to the company or do not have material effect
Improvements toAccounting Standards Issued by the IASB
1.
2.
.
2.1
2.2
2.3
2.4
2.5
2.5.1
2.5.2
Page 20 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Standards and interpretations issued but not yet effective for the current financial yearThe following are the standards and interpretations, which have been issued but are not yet effective for the current financial year:IFRS 10 Consolidated Financial Statements January 01, 2015IFRS 10, 12 & IAS 27 Investment Entities (Amendment) January 01, 2015
IFRS 9 Financial Instruments: Classification and Measurement January 01, 2018IFRS 14 Regulatory DeferralAccounts January 01, 2016IFRS 15 Revenue from Contracts with Customers January 01, 2018Securities and Exchange Commission of Pakistan (SECP) vide SRO 633(1)/2014 dated 10th July 2014 has approved the belowIFRSs:IFRS 10 - Consolidated Financial StatementsIFRS 11 - JointArrangementsIFRS 12 - Disclosure of interests in other entitiesIFRS 13 - Fair Value Measurements
These financial statements have been prepared under the historical cost convention except for certain financial assets which are statedat fair value.These financial statements have been prepared under the accrual basis of accounting except for cash flow information.
The preparation of financial statements in conformity with approved accounting standards requires the use of certain criticalaccounting estimates. It also requires management to exercise its judgment in the process of applying the Modaraba's accountingpolicies. Estimates and judgments are continually evaluated and are based on historical experience, including expectations of futureevents that are believed to be reasonable under circumstances. However, assumptions and judgments made by management in theapplication of accounting policies that have significant effect on the financial statements are not expected to result in materialadjustment to the carrying amounts of assets and liabilities in the next year. The areas involving a higher degree of judgments orcomplexity or areas where assumptions and estimates are significant to the financial estimates are as follows:
IFRS 10, 12 & IAS 27 Investment Entities:Applying the Consolidation Exception (Amendment) January 01, 2015IFRS 10 & IAS 28 Sale or Contribution ofAssets between an Investor and itsAssociate or January 01, 2016
Joint Venture (Amendment)IFRS 11 JointArrangements January 01, 2015IFRS 11 Accounting forAcquisition of Interest in Joint Operation (Amendment) January 01, 2016IFRS 12 Disclosure of interests in Other Entities January 01, 2015IFRS 13 Fair Value Measurement January 01, 2015IAS 1 Disclosure Initiative (Amendment) January 01, 2016IAS 16 & 38 Clarification ofAcceptable Method of Depreciation andAmortisation January 01, 2016
(Amendment)IAS 16 & 41 Agriculture Bearer Plants (Amendment) January 01, 2016IAS 27 Equity Method in Separate Financial Statements (Amendment) January 01, 2016
a) Useful life of depreciable assets/amortizable assets 5.1 & 5.2b) Impairment of assets 5.1.2 & 5.3.1c) Classification of investments 5.4d) Income tax 5.6e) Provision for staff gratuity 5.8f) Provision for non performing assets 5.12
The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies havebeen consistently applied to all the years presented, unless otherwise stated.
Fixed assets are stated at cost less accumulated depreciation and identified impairment loss, if any.Depreciation is charged to income applying the straight line method whereby the depreciable amount of an asset is written off over itsestimated useful life. Depreciation is charged at rates stated in note 11.
Standards issued by IASB but not yet notified by SECP
Tangible
Basis of measurement
Use of estimates
Note
Fixed assets
Significant accounting policies
2.5.3
2.5.4
3.1
3.2
5.1
5.1.1
3.
4.
5.
Page 21NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Depreciation on additions is charged from the month during which the asset is put to use. For disposals during the year, depreciation ischarged up to the month preceding the month of disposal.The assets' residual value and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.Maintenance and normal repairs are charged to income as and when incurred. Major renewals and improvements are capitalized.Expenditure incurred subsequent to the initial acquisition of assets are capitalised only when it meets the recognition criteria. Theprofit or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount ofthe asset is recognized as an income or expense.The Modaraba assesses at each balance sheet date whether there is any indication that fixed assets may be impaired. If such indicationexists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount.Where carrying values exceed the respective recoverable amounts, assets are written down to their recoverable amounts and theresulting impairment loss is recognized in income currently. The recoverable amount is the higher of an assets’ fair value less costs tosell and value in use. Where an impairment loss is recognized, the depreciation charge is adjusted in the future periods to allocate theassets’revised carrying amount over its estimated useful lives.
Intangible assets are stated at cost less impairment, if any. The carrying amount is reviewed at each balance sheet date to assesswhether it is in excess of its recoverable amount and where the carrying value exceeds estimated recoverable amount, it is writtendown to its estimated recoverable amount.
Property held to earn rentals or for capital appreciation or for both is classified as investment property. The investment property of theModaraba comprises of office premises and is valued using the cost method i.e.at cost less any accumulated depreciation and anyidentified impairment loss.Depreciation on office premises is charged to profit and loss account on the straight line method so as to write off the depreciableamount of office premises over its estimated useful life at the rate defined in note # 13. Depreciation on additions to investmentproperty is charged from the month in which a property is acquired or capitalized while no depreciation is charged for the month inwhich the property is disposed off.The Modaraba assesses at each balance sheet date whether there is any indication that investment property may be impaired. If suchindication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverableamount. Where carrying amounts exceed the respective recoverable amount, assets are written down to their recoverable amount andthe resulting impairment loss is recognised in profit and loss account.The recoverable amount is the higher of an asset’s fair value less
Intangible
Investment property
costs to sell and value in use. Where an impairment loss is recognised, the depreciation charge is adjusted in the future periods toallocate the asset’s revised carrying amount over its estimated useful life.The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amountof the asset is recognised as an income or expense
The deferred cost is written off over a period not exceeding five years in accordance with the requirements of third schedule ofModaraba Companies and Modaraba Rules, 1981.
Financial assets and financial liabilities are recognised when the Modaraba becomes a party to the contractual provisions of thefinancial instrument.
Financial assets and financial liabilities are measured initially at fair value plus transaction costs, except for financial assets andfinancial liabilities carried at fair value through profit or loss, which are measured initially at fair value.All regular way of purchases and sale of financial instruments are recognized/derecognized on the trade date.
Financial assets and financial liabilities are measured subsequently as described below.
For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:- loans and receivables;- financial assets at fair value through profit or loss;- available-for-sale financial assets; and- held to maturity (the Modaraba does not have any such investments).
Deferred cost and amortization
Financial instruments
Initial recognition
Subsequent measurement
Financial assets
5.1.2
5.2
5.3
5.4
5.4.1
Page 22 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Loans and receivables
Financial assets at fair value through profit or loss
Available for sale financial assets
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.Following financial assets fall into this category of financial instruments:- Deposits-Advances- Other receivables- Cash and cash equivalents
Investments which are acquired principally for the purposes of generating profit from short term fluctuation in price or are part of theportfolio in which there is recent actual pattern of short term profit taking are classified as 'financial assets at fair value through profitor loss.Financial assets in this category are measured at fair value with gains or losses recognised in profit and loss account. Theseinvestments are marked to market and are carried on the balance sheet at fair value. Net gains and losses arising on changes in fairvalue of these investments are taken to the profit and loss account for the year.
Investments intended to be held for indefinite period of time, which may be sold in response to needs for liquidity or changes in equityprices, are classified as 'available for sale financial assets'.Available-for-sale financial assets are those non-derivative financial assetsthat are designated as available-for-sale financial assets or are not classified as (a) loans and receivables (b) held to maturityinvestments (c) financial assets at fair value through profit or loss. Subsequent to initial recognition these investments are marked tomarket using the closing market rate and are carried on the balance sheet at fair value. Surplus/Deficit arising from re-measurement aretaken to comprehensive income until the investments are sold/disposed-off or untill the investments are determined to be impaired, atwhich time, cumulative surplus or deficit previously reported in the comprehensive income is included in the current year's profit andloss accountInvestments in equity instruments that do not have a quoted market price in an active market and whose fair value can not be reliablymeasured are measured at cost or fair value
A financial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired. A financialasset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimatedfuture cash flows of that asset. Musharika and Morabaha receivables considered doubtful are provided for in accordance with therequirements of the Prudential Regulations for Modarabas.An impairment loss on available for sale financial asset -equity instruments is reversed only on the disposal of financial asset. Reversalof provision on musharika and morabaha receivables are reversed in accordance with Prudential Regulations for Modarabas.
These are derecognised when the contractual rights to the cash flows from the financial assets expire, or when the financial asset and allsubstantial risks and rewards are transferred.
The Modaraba's financial liabilities include unclaimed profit distribution, creditors, accrued expenses and other liabilities.
Derecognition of financial liabilitiesThese are derecognised when they are extinguished, discharged, cancelled or expired.
Investment in subsidiary is initially recognized at cost. At subsequent reporting dates, the recoverable amounts are estimated todetermine the extent of impairment losses, if any, and carrying amounts of investments are adjusted accordingly. Impairment losses arerecognized as expense. Where impairment losses subsequently reverse, the carrying amounts of the investments are increased to therevised recoverable amounts but limited to the extent of initial cost of investments. A reversal of impairment loss is recognized in theprofit and loss account.
a) Income from Morabaha/Musharaka transactions is recognized on the basis of pro-rata accrual of the estimated profit earned duringthe year.b) Dividend income is recognized when the right to receive dividend is established.c) Brokerage commission and fee income is recognized when accrued.d) Profit on PLS deposits is recognized on an accrual basis.E) Capital gains or losses arising on sale of investments are taken to income in the period in which they arise.
Impairment of financial assets
Derecognition of financial assets
Financial liabilities
Investment in subsidiary
Revenue recognition
5.4.2
5.4.3
5.5
Page 23
Taxation
CurrentThe charge for taxation is based on taxable income at current rates of taxation after taking into account tax credits and tax rebatesavailable, if any or minimum tax under the provisions of the Income Tax Ordinance, 2001. For items covered under final tax regime,provision is made according to the final tax rate provided in the Income Tax Ordinance, 2001. The income of Modaraba other thantrading income is exempt from tax under Clause 100 of Part I of the Second Schedule to the Income Tax Ordinance, 2001. Provided thatnot less than 90% of its total profits in the year as reduced by the amount transferred to a mandatory reserve, as required under theprovisions of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 or the rules made thereunder, as aredistributed amongst the certificate holders.
DeferredDeferred tax is recognized using the balance sheet liability method in respect of all temporary differences arising from differencesbetween the carrying amount of assets and liabilities in the financial statements and the tax base. This is recognized on the basis ofexpected manner of the realization and the settlement of the carrying amount of assets and liabilities using the tax rates enacted orsubstantially enacted at the balance sheet date. Deferred tax assets are recognized for all deductible temporary differences and carryforward of unused tax losses, if any, to the extent that future taxable profits will be available against which the deductible temporarydifferences can be utilised. Deferred tax assets are reduced to the extent that is no longer probable that the related tax benefit will berealised.Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset isrealized or the liability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.However, deferred tax is not accounted for as the management believes that the temporary differences will not reverse in theforeseeable future.
All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at exchange rates prevailing at the balancesheet date. Transactions in foreign currencies are translated into Pak rupees at exchange rate prevailing at the date of transaction. Allnon-monetary items are translated into rupees at exchange rate prevailing on the date of transaction or on the date when fair values aredetermined. Exchange differences are included in income currently.
The Modaraba operates an Unfunded Gratuity for its permanent employees who complete the qualifying period of service. Provisionhas been made in accordance with actuarial recommendations using the Projected Unit Credit Method. The results of currentvaluation are summarized in Note 8.Actuarial gains / losses are recognized over the average lives of the employees.
A financial asset and financial liability is offset and the net amount is reported in the balance sheet if the Modaraba has a legallyenforceable right to set-off the recognized amounts and intends either to settle on a net basis or to realize the asset and settle theliability simultaneously.
Provisions are recognized in the balance sheet when the Modaraba has a legal or constructive obligation as a result of past event and itis probable that an outflow of resources embodying economic benefit will be required to settle the obligation and reliable estimate canbe made of the amount of the obligation.
Profit distribution to certificate holders is recognized as liability in the period in which such distribution is announced.
The carrying amount of Modaraba's assets are reviewed at each balance sheet date to determine whether there is any indication ofimpairment. If any such indication exists, the assets recoverable amount is estimated and impaired losses are recognized in the profitand loss account.
A segment is a distinguishable component of the Modaraba that is engaged in business activities from which the Modaraba earnsrevenues and incur expenses and its results are regularly reviewed by the Modaraba's Chief Operating Decision Maker to makedecision about resources to be allocated to the segment and assess its performance. Further, discrete financial information is availablefor each segment.Based on internal management reporting structure, services provided and products produced and sold, the Modaraba is organized intothe following four operating segments:
Foreign currency translation
Retirement benefits
Offsetting of financial assets and financial liabilities
Provisions
Profit distribution to certificates holders
Impairment
Segment reporting
5.6
5.6.1
5.6.2
5.7
5.8
5.9
5.10
5.11
5.12
5.13
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 24
236,322
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
- Musharakah facility- Brokerage Operation- Capital Market- OthersManagement monitors the operating results of above mentioned segments separately for the purpose of making decisions aboutresources to be allocated and of assessing performance.
All transactions with related party, if any, are recorded at an arm's length basis.
For the purposes of cash flow statement, Cash and cash equivalents comprise cash in hand and cash with banks.
Items include in the financial statements are measured using the currency of primary economic environment in which the Modarabaoperates.The financial statements are presented in Pakistani Rupees, which is the Modaraba's functional and presentation currency.
The Modaraba's objective when managing capital is to safe guard the Modaraba's ability to continue as a going concern so that it canprovide returns for certificate holders and benefits for other stakeholders and to maintain a strong capital base to support the sustaineddevelopment of its businesses.The Modaraba manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes ineconomic conditions. In order to maintain or adjust the capital structure, the Modaraba may adjust the amount of dividend paid tocertificate holders or issue new certificates.
IAS 19 ‘Employee Benefits’(revised 2011) which become effective for the annual periods commencing on or after January 01, 2013,amends the accounting for the defined benefit plan. The revised standard has been applied retrospectively in accordance with thetransition provisions of the said standard and IAS 8 ‘Accounting Policies, Changes inAccounting Estimates and Errors’. The impactof adaption of IAS 19 (revised 2011) has been in the following areas:The standard requires that all actuarial gains /loss should be recognized immediately in other comprehensive income (OCI).The standard has also removed the option of Corridor approach and the standard requires immediate recognition of past service costin profit and loss statement. There is no impact of these requirements in the current year as Modaraba has not opted for corridorapproach neither it has unrecognized past service costs at the time of adoption of the said standard.The quantitative impacts arising from amendments in IAS 19 (revised 2011) on the items of financial statements are as follows:
The Modaraba’s policy for Staff Retirement Benefits and disclosure relating thereto have been amended to comply with therequirements of IAS 19 (revised 2011).
The FinanceAct 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance).Through these
Related party transactions
Cash and cash equivalents
Functional and reporting currency
Capital Risk Management
Change in Accounting PolicyAdoption of amendments in IAS 19 ‘Employee Benefits’
Workers' Welfare Fund
5.14
5.15
5.16
5.17
5.185.18.1
(i)(Ii)
5.18.2
5.18.3
5.18.4
2014 20122013Rupees Rupees Rupees
Impact on balance sheetDecrease in reservesIncrease in remeasurement of defined benefit liabilityImpact on profit and loss accountIncrease in salaries, allowances and benefits-gratuity expenseImpact on other comprehensive incomeIncrease in gain on remeasurement of defined benefit liabilityImpact on cash flow statementDecrease in profit before taxationIncrease in adjustments relating to provision for gratuityImpact on statement of changes in equityIncrease in unappropriated losses/ decrease in profitIncrease in remeasurement of defined benefit liability
351,700
351,700351,700
351,700351,700
351,700
351,700
351,700236,322236,322
236,322
236,322
236,322236,322
236,322236,322
223,332223,332
223,332
223,332
223,332223,332
223,332223,332
Page 25
6.
7.
8.
6.1
8.1
8.2
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
amendments Workers' Welfare Fund (WWF) is payable @ 2% of the profit before taxation as per the financial statements or taxableincome which ever is higher.During the year 2011, the Honorable Lahore High Court (LHC) in a constitutional petition relating to the amendments brought in theWWF Ordinance, 1971 through the Finance Act 2006, and the Finance Act 2008, has declared the said amendments as unlawful andunconstitutional and struck them down. In March 2013, a larger bench of the Sindh High Court (SHC) in various constitutionalpetitions declared that amendments brought in the WWF Ordinance, 1971 through the FinanceAct, 2006, and the FinanceAct 2008, donot suffer from any constitutional or legal infirmity. The Management Company as a matter of abundant caution, has made the provision forWWF.
Certificates held by management company 5,532,296 (2014: 5,532,296).Certificates held by associated companies and undertakings 1,126,412 (2014: 1,126,,412).
In accordance with the Prudential Regulations for Modarabas, the Modaraba is required to transfer an amount not less than 20% andnot more than 50% of its after tax profits to statutory reserve until the reserve funds equals the certificate capital. Thereafter, a sum notless than 5% of the after tax profits is required to be transferred to the statutory reserve.
Staff gratuity
Employees, after completion of one year of service, shall be entitled for gratuity on leaving the company’s employment. Gratuity shallbe paid on the basis of one month’s last drawnmonthly gross salary for each completed year of service.Annual provision is based on actuarial valuation, which was carried out as at June 30, 2015 on September 23, 2015 using the ProjectedUnit Method.
Amount recognized in the balance sheet are as follows:Present value of defined benefit obligationFair value of plan assetsTotal defined benefit
Certificate capital
Reserves
Deferred liability
General description
462,200,00046,220,000 46,220,000 462,200,000
62,200,0006,220,000 6,220,000
524,400,00052,440,000 52,440,000 524,400,000
62,200,000
20152015 20142014
RupeesRupees
Modaraba certificates of Rs. 10 each fully paid-up in cash
Modaraba certificates of Rs. 10 each issued as fully paid-upbonus certificates
110,003,318148,356,187
-
2,279,767 2,279,767 (2,279,767) (2,279,767)
150,635,954
279,456,187131,100,000
131,100,000
-
281,735,954
(171,876,627)
--
27,120,000
27,120,000
(144,756,627)
(155,302,558)
-
-
134,699,560
- 11,398,836 11,398,836 11,398,836 24,696,242- -
- (19,665,000) (19,665,000)
- -
Opening balance
Transfer from Profit & Loss
Account
Transfer to statutary reserve
StatutoryReserve *
Certificatepremiumaccount
TotalCapitalReserve
AccumulatedLoss
TotalRevenueReserves
GeneralReserve
TotalReserves
2015
TotalReserves
2014
Closing balance
-
(162,757,558)
134,699,560
-
126,433,396
Dividends paid
Capital Reserves Revenue Reserves
2015Rupees
2,655,4832,655,483
2,655,483-
2,655,483
2014Rupees
1,556,2551,556,255
1,556,255-
1,556,255
Note
8.1
No ofCertificates
No ofCertificates
Page 26 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Movement in defined benefit obligation
Actuarial assumptions
Sensitivity analysis of principal assumptions
Charity Payable - reconcilation
Opening balanceCharged for the define benefit planCurrent service costNet interest
Remeasurement of defined benefit liabilityDue to financial assumptionsDue to demographic assumptionsDue to experience adjustments
Benefits paidClosing balance
Valuation discount rateSalary increase rate -Short term (period of next one year)Salary increase rate- long term
Discount rateSalary Increase rateWithdrawal rate
Expected maturity analysis of undiscounted defined obligation for the gratuity scheme is as follows:
Following risks are associated with Defined benefit plans:The risk arises when the actual lifetime of retirees in longer than expectation. This risk is measured at the plan level
over the entire retiree population.The most common type of retirement benefit is one where the benefit is linked with the final salary. The risk
arises when the actual increases are higher than expectation and impacts the liability accordingly.The risk of actual withdrawals varying with the actuarial assumptions can impose a risk to the benefit obligation.
The movement of liability can go either way.
The disclosure made in notes 8.5 to 8.7 are based on the information included in the actuarial valuation report of the Modaraba as ofJune 30, 2014.
Payable to clientsAccrued expensesCharity payableOther liabilities
Opening balanceAdditionDisbursementsClosing balance
This include Rs 4,829,780 (2014 : Rs 5,754,180) payable to Premier Financial Services (Private) Limited.
Longevity risks:
Salary increase risk:
Withdrawal risk:
Creditors, accrued and other liabilities
8.3
8.4
8.5
8.6
8.7
8.8
9.1
9.2
9.
1,556,255
168,971206,204375,175
341,123-
382,931724,054
-2,655,484
9.75%9.78%9.75%
1,623,0211,624,5601,556,496
16,277,2523,242,302
26,1034,829,780
24,375,437
255,42037,517
(266,834)26,103
2,092,021
141,700210,000351,700
(179,422)1,650
(177,819)(355,591)(531,875)1,556,255
13.25%0.00%
12.25%
1,495,0061,492,5271,556,012
3,797,3461,301,347
255,4206,502,588
11,856,701
227,39328,027
-255,420
8.4
1%1%
10%
9.19.2
2015Rupees
2014Rupees
Note
Rate per annum
Change inassumption
Increase inobligation
Decrease inobligation
Impact on obligation of change in assumptions
Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 yearsAt at June 30, 2015
Gratuity 902,214 15,196 15,972 73,892 15,284 2,200,849
Page 27
10.
11.
12.
12.1
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Contingencies and commitments
Tangible
Intangible
Modaraba has filed a suit against Samba Bank Ltd for the recovery of deposit amounting to Rs 21 million alongwith mark up. Thematter is pending before the Honourable High Court of Sindh. Management of the Modaraba and its legal advisor are of the opinion thatModaraba has reasonable chance and it appear unlikely that Modaraba may suffer any loss from the same.
Trading Right Entitled Certificate
This represents Trading Right Entitlment certificates (TREC) recieved from Karachi Stock Exchanges Ltd and Islamabad StockExchanges Ltd after Demutilization.
2015Rupees
19,000,00019,000,000
2014Rupees
19,000,00019,000,000
Note
12.1 & 12.2
520,804,134
652,055
1,055,685
27,243,821
6,275,259 1,040,207-
1,024,000
82,300
121,500
1,059,460
(61,000)
33
20
20
- 20
(107,340)
Office premises
Furniture & fixtures
Motor vehicles
As atJuly 01,
2014
As atJuly 01,
2014
Addition /(Deletion) /* Transfer
Chargedduring the
year /*Transfer /
Disposal %
Office Equipments
2015
196,509
4,535,438
20,804,134 7,315,466
627,015 523,622598,069 32,890(107,337)
1,116,185 808,392770,165 83,001(44,774)
28,303,281 12,879,15211,466,204 1,562,985
196,509 196,500196,500 -
5,559,438 4,033,0993,626,211 406,888
13,488,668
1,526,339
103,393
307,792
15,426,202
9
Computers
Cost Accumulated Depreciation
ParticularsAs at
June 30,2015
As atJune 30,
2015
Book Valueas at
June 30,2015
Rate
2015
51,150,207(2,400,000)Office premises
As atJuly 01,
2013
As atJuly 01,
2013
Addition /(Deletion) /* Transfer
Chargedduring the
year /*Transfer /
Disposal %
23,204,134 5,443,385 14,528,875
Cost Accumulated Depreciation
ParticularsAs at
June 30,2014
As atJune 30,
2014
Book Valueas at
June 30,2014
Rate
2014
20,804,134 6,275,259
(899,000) 20
- 20Furniture & fixtures
Motor vehicles
196,509
5,434,438
-196,500
4,135,389 389,821 909,227
9196,509
4,535,438
73,800
228,180
(3,166,250)
(169,500)
33
20Office Equipments
2015
578,255
997,005
30,410,341
52,257
49,219(134,654)
289,518
545,812
855,600
11,176,686
53,986
285,520
15,777,617
Computers 625,055
1,055,685
27,243,821
598,069
770,165
11,466,204
196,500
3,626,211
(318,333)
(898,999)
Page 28 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
In Stock Exchange (Corporatization, Demutualization and Integration) Act 2012 the prerequsite for TREC holder to register asBroker should be a company as defined in Companies Ordinance, 1984. Our submission to SECP that Modaraba although not acompany but being regulated under its auspices and a corporate legal entity, has not been accepted by the Regulators. Thereafter, wehave requested our prime regulator, Registrar Modaraba to allow us to create a wholly owned subsidiary enabling us to protect andsafe guard assets of the modaraba. The Registrar Modaraba did not understand our challenge and concern, we have left with no otheroption but to file a suit in the Honorable Sindh High Cout and got a stay order against the cancelation of Broker registration.
Fair value of the investment property, based on the valuation carried out by Consultancy Support & Service as at June 30, 2015 is Rs.23,432,500 (2014: Rs 20,000,000).
Listed securitiesUnlisted securities
Preference Share
The holdings are in ordinary shares of Rs. 10 each.
Equity Textiles Limited
Equity Textiles Limited is a wholly owned subsidiary of the Modaraba. Net assets value per share of Equity Textiles Limited is Rs.28.29 (2014: Rs. 24.66) as per financial statements as at June 30, 2015 audited by BDO Ebrahim & Company, CharteredAccountants.
The holding is in ordinary shares/units of Rs. 10 each of listed companies, unless otherwise stated:
Dawood Income Fund (Unit of Rs. 100 each)
Pakistan Telecommunication Company Limited
Javed Omer Vohra & Company Limited
First Dawood Mutual Fund
There was no trading on these scrips on June 30, 2015. Their last quoted /traded value is taken for valuation.Investment was made at inception and the carrying value was Rs 5,145,000. SECP took action against the management and as aresult the Trustee (Central Depository Company of Pakistan Limited) sold its investment and made the partial payment to shareholders. The Modaraba recieved Rs 4,935,859 in this matter.
Investment Property
Long term investments
Listed securities
Investment in subsidiary
Investment classified as available-for-sale financial assets
Investment in subsidiary
Investment classified as available-for-sale financial assets
Open-end mutual funds
Fixed Line Telecommunication
Financial Services
Equity investment instruments
12.2
13.
14.
14.1
14.1.1
14.214.2.1
14.2.1.114.2.1.2
250,000,000250,000,000
1,959,12972,219,86174,178,990
1,828,740326,007,730
250,000,000
847,188
861,000
41,800
209,141
1,959,129
250,000,000250,000,000
2,167,86972,219,86174,387,730
-324,387,730
250,000,000
847,188
1,069,740
41,800
209,141
2,167,869
14.1
14.2.114.2.2
14.3
14.2.1.1
14.2.1.1
14.2.1.1 &14.2.1.2
2015Rupees
2014Rupees
Note
52,400,000 2,400,000 328,333 120,000-Office premises
As atJuly 01,
2014
Transferredfrom
tangiblefixed assetTransfer
Chargedduring the
year %
448,333 1,951,667
Cost Accumulated Depreciation
ParticularsAs at
June 30,2015
As atJune 30,
2015
Book Valueas at
June 30,2015
Rate
2015
25,000,000
11,968
42,000
22,000
735,000
25,000,000
11,968
42,000
22,000
735,000
2015Number
2014Number
Page 29NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015Unlisted securitiesThe holding is in ordinary shares of Rs. 10 each.
Sapphire Power Generation LimitedKarachi Stock Exchange LimitedIslamabad Stock Exchange LimitedCallmate Telips Telecom Limited
Net assets value per share of Sapphire Power Generation Limited is Rs. 69.72 (2013: Rs. 85.67) as per financial statements as atJune 30, 2014 audited by RiazAhmad, Saqib, Gohar & Company, CharteredAccountants.Net assets value per share of Karachi Stock Exchange Limited and Islamabad Stock Exchange Limited is Rs. 10.17 (2014: Rs.10.08) and Rs 11.10 (2014: Rs. 10.68) as per financial statements as at June 30, 2014 audited by Ernst & Young Ford Rhodes SidatHyder, CharteredAccountants and BDO Ebrahim & Company, CharteredAccountants respectively.The company is in the process of winding up, hence net assets value per share is not available.
The holding is in ordinary shares of Rs. 10 each.Mari Petroleum Ltd
Musharaka - considered goodMorabaha - considered doubtful
Provision for non performing assets
The Modaraba has entered into Morabaha and Musharaka agreements under which the Modaraba has provided funds for workingcapital requirements on profit and loss sharing basis. These are secured against pledge, hypothecation of stock and receivables,demand promissory notes, personal guarantee of directors / proprietors and mortgage of property. Expected rate of profit onMusharaka transactions during the year range between 12% to 16 % per annum ( 2014: 12 % to 20% per annum).All the amounts are short term. The carrying amount is considered a reasonable approximation of fair value.
Listed securities
The holding is in ordinary shares/units of Rs. 10 each of listed companies, unless otherwise stated:
Attock RefineryMari Petroleum Company LimitedHascol Petroleum Company LimitedNational Refinery LimitedOil & Gas Development Co LimitedPakistan Petroleum LimitedShell Pakistan Limited
Engro Foods Limited
AkzoNobel Pakistan LimitedLotte Chemical Pakistan PTALimitedGhani Global Gass LimitedICI Pakistan LimitedWah Noble Chemicals Limited
D.G. Khan Cement Company LimitedDewan Cement Limited
Preference Shares
Investment classified as financial asset at fair value through profit or loss
Listed securities
Oil and Gas
Food
Chemicals
Construction and materials
Morabaha/Musharaka receivables-secured
Short term investments
14.2.2
14.2.2.1
14.2.2.2
14.2.2.3
14.3
15.1
15.2
16.1
15.
16.
1,800,00040,073,83030,346,030
172,219,861
1,828,740
153,003,60917,380,055
170,383,664(17,380,055)153,003,609
97,882,927
-9,770,3101,145,100
-5,359,276
-12,597,408
-
1,787,352934,200655,900
1,115,062805,600
-4,145,460
1,800,00040,073,83030,346,030
172,219,861
-
159,320,49717,380,055
176,700,552(17,380,055)159,320,497
107,396,243
12,397,7369,261,064
-4,264,326
-12,966,852
6,050,532
102,530
692,736291,195
---
923,580-
14.2.2.114.2.2.214.2.2.3
15.2
16.1
2015Rupees
2014Rupees
Note
50,0004,007,3833,034,603
78,150
-
58,40024,800
-19,800
-57,80021,900
1,000
4,10040,500
---
10,500-
50,0004,007,3833,034,603
78,150
182,784
-20,85010,000
-29,900
-49,800
-
5,600135,000
35,0002,600
16,000
-285,000
2015Number
2014Number
Page 30 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Fauji Cement Company LimitedCherat Cement Company LimitedFecto Cement LimitedLucky Cement LimitedLafarge Pakistan Cement LimitedPioneer Cement Limited
Pakistan International Bulk Terminals Limited
Nishat Mills Limited
Tariq Glass Industries Limited
IBLHealthcare LimitedThe Searle Pakistan Limited
HondaAtlas Car (Pakistan) LimitedPak Suzuki LimitedGhaniAutomobile Limited
Pakistan Telecommunication Company LimitedNetsol Technologies Limited
K-Electric Limited
Bank Islami Pakistan Limited
EmployeeAdvance tax
The maximum aggregate amount due from employees at the end of any month during the year was Rs. 804,526 (2014: Rs.1,136,358). These are secured against the property documents retained by the Modaraba.
DepositsPrepayments
Sale proceeds of investmentsReceivable from clientsDividendOthers
Considered goodConsidered doubtful
Less: Provision for doubtful debts
Receivable from clients and others include receivable from related parties amounting to Rs. 358,628 (2014: Rs. 26,817).
Transport
Personal goods
Household goods
Pharma and biotech
Automobile and parts
Fixed line telecommunication
Electricity
Banks
Receivable from clients
Advances - considered good
Trade deposits and prepayments
Other receivables
17.
18.
19.
17.1
19.1
19.2
3,487,000174,060
-6,131,516
--
8,985,800
-
-
986,1007,215,525
7,391,3842,789,8245,822,200
12,207,750-
2,973,600
1,402,50097,882,927
660,2832,865,0763,525,359
14,772,665254,629
15,027,294
(3,457)24,064,703
168,217989,078
25,218,541
24,064,70312,500,00036,564,703
(12,500,000)24,064,703
1,452,620949,170
2,700,000-
10,283,1302,333,000
-
4,286,536
518,100
-3,560,616
7,354,110--
13,384,4852,870,420
9,249,855
1,503,650107,396,243
710,856711,732
1,422,588
14,767,556214,362
14,981,918
327,97923,226,360
17,800961,089
24,533,228
23,226,36012,500,00035,726,360
(12,500,000)23,226,360
17.1
19.1&19.2
2015Rupees
2014Rupees
Note2015Number
2014Number
75,50014,50054,000
-643,50050,000
-
38,300
16,500
-20,400
79,000--
525,50098,000
1,089,500
152,500
100,0002,000
-11,800
--
251,000
-
-
8,65022,500
33,8006,400
677,000
595,500-
354,000
137,500
Page 31NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Bank balances
Income
Operating expenses
in current accountsin saving accountsin Islamic bank investment accounts
Profit on MusharakaBrokerage commissionCapital gainDividendRentalCommission and fees
Salaries, allowances and benefitsTraveling, conveyance and entertainmentTelephone and postageElectricityInsurancePrinting, stationery and advertisingFees and subscriptionsVehicle running and maintenanceDepreciationFacilities and servicesRepair and maintenanceAnnual review meetingAuditor's remunerationLegal and professionalTraining and developmentShariahAdvisorZakat deductionKSE & SECPChargesWithholding & CVTtaxOthers
The aggregate amount charged in the financial statements for remuneration, including benefits to 8 (2014 : 8) employees of themodaraba is:
Salaries, allowances and benefits include provision for gratuity of Rs. 297,858 ( 2014: Rs. 351,700 ). Officers are also provided withfree use of the Modaraba maintained cars.
Remuneration of officers and other employees
20.
21.
22.
22.1
22.2
1,994,643311,027
17,979,73020,285,400
17,756,8382,852,1295,829,2344,185,5561,200,0002,428,290
34,252,047
4,338,679495,753922,061408,737201,089
1,160,6811,628,6221,251,0481,682,9854,508,446
922,40991,382
251,802531,682
-150,000
2,225721,206
2,194,60775,002
21,538,416
1,795,379319,212
7,774,9059,889,496
18,162,4771,368,642
21,799,0393,789,318
-1,105,047
46,224,523
4,360,627634,018265,587465,274279,212287,696
1,061,4221,608,5701,651,5064,508,4521,000,378
62,500318,145405,919
1,000131,250
-360,946951,576
71,67118,425,749
22.1
11
22.3
2015Rupees
2014Rupees
Note
2015 2014
OfficersOther
Employees OfficersOther
Employees
Salaries and allowances
Leave fare & Encashment
Expenses reimbursed: Medical
1,599,000
175,00029,832
1,803,832
1,655,100
74,340187,033
1,916,473
1,932,000
303,430
86,105
2,321,535
1,412,765
186,455
142,750
1,741,970
Page 32 NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Auditor's remunerationAudit feeHalf yearly reviewOther fees
Bank Charges
Profit on Investment accounts with Islamic bankLoss on sale of tangible fixed assets
Assessment upto and including the tax year 2014 have been finalized under section 120 of the Income Tax Ordinance, 2001 (theOrdinance) which is subject to audit under section 170 of the Ordinance.The income of non-trading Modarabas is exempt from tax provided that not less than ninety percent of their profits for the year asreduced by the amount transferred to mandatory reserves are distributed to the certificate holders. As the Management Company ofthe Modaraba, subsequent to the year end, has approved the required distribution, no provision for taxation has been made in thesefinancial statements.
Profit for the year
Weighted average number of certificates outstanding during the year
Earnings per certificate - basic and diluted
There is no dilution effect on the basic earnings per share of the modaraba as the modaraba has no such commitments.
The board of directors of the Modaraba Management Company has overall responsibility for the establishment and oversight of theModaraba's risk management framework. The Modaraba has exposure to the following risks from its use of financial instruments:- Credit risk- Liquidity risk- Market risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur afinancial loss, without taking into account the fair value of any collateral. Concentration of credit risk arises when a number ofcounterparties are engaged in similar business activities or have similar economic features that would cause their ability to meetcontractual obligations to be similarly affected by changes in economic, political or other conditions. Concentrations of credit riskindicate the relative sensitivity of the Modaraba's performance to developments affecting a particular industry.Credit risk of the Modaraba arises principally from the investments, Musharaka/Morahaba receivables, advances, trade deposits andother receivables. The carrying amount of financial assets represents the maximum credit exposure. To reduce the exposure to creditrisk, the Modaraba has developed a formal approval process whereby credit limits are applied to its customers. The managementcontinuously monitors the credit exposure towards the customers and makes provision against those balances considered doubtfulfor recovery.
Financial Charges
Other income
Taxation
Earnings per certificates - basic and diluted
Risk management policies and objectives
Current
Financial risk management
Credit and concentration risk
22.3
26.1
23.
24.
25.
26.
27.
130,00025,00096,802
251,802
2,6882,688
445,256(13,303)431,953
11,398,836
52,440,000
0.217
130,00025,000
163,145318,145
5,6955,695
748,824(38,844)713,980
24,696,242
52,440,000
0.471
2015Rupees
2014Rupees
Page 33NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
BusinessOpen-end mutual fundsOil and GasChemicalsConstruction and materialsPersonal goodsAutomobile and partsPharma and biotechFixed line telecommunicationElectricityFoodBankFinancial servicesEquity investment instrumentsStock ExchangeEngineeringOthers
The Carrying amount of financial assets represents the maximum credit exposure before any credit enhancements. The maximumexposure to credit risk at the reporting date is:
InvestmentMorabaha/Musharaka receivables-securedAdvances-considered goodTrade deposits and prepaymentsOther receivables
Liquidity risk is the risk that the Modaraba will encounter difficulty in meeting its financial obligations as they fall due. Liquidityrisk arises because of the possibility that the Modaraba could be required to pay its liabilities earlier than expected or difficulty inraising funds to meet commitments associated with financial liabilities as they fall due. The Modaraba's approach to managingliquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normaland stressed conditions, without incurring unacceptable losses or risking damage to the Modaraba's reputation.
Assets
Long term investmentsMorabaha & Musharaka receivablesShort term investmentsAdvancesTrade depositsOther receivablesTax refunds due from governmentBank balances
Liabilities
Deferred liabilitySecurity DepositCreditors, accrued and other liabilitiesProvision for taxationUnclaimed profit distribution
Net balance
Liquidity risk
847,18844,940,510
983,93118,641,500
254,804,6367,354,1103,560,616
17,324,64511,049,855
102,5301,503,650
41,800209,141
70,419,86013,819,560
190,098,672635,702,204
Over five years
250,000,000-------
250,000,000
250,000,000
423,890,657153,003,609
6,035,35916,177,29425,218,541
624,325,460
------
847,18828,872,094
5,298,11413,938,036
250,000,00016,003,408
8,201,62513,068,750
4,773,600-
1,402,50041,800
209,14170,419,86015,939,498
209,338,385638,353,999
Less thanOne year
-153,003,60997,882,927
3,525,35914,772,66525,218,541
4,614,68020,285,400
319,303,181
--
24,375,437-
27,618,31651,993,753
267,309,428
0.150.461.711.03
43.860.461.560.80
-1.25
-0.010.04
12.352.44
32.09100.00
431,783,973159,320,497
3,932,58816,131,91824,533,228
635,702,204
Total
326,007,730153,003,60997,882,927
6,035,35915,922,66525,218,541
4,614,68020,285,400
648,970,911
2,655,483200,000
24,375,437-
27,618,31654,849,236
594,121,675
0.134.520.832.18
39.162.511.282.050.75
-0.220.010.03
11.032.50
32.80100.00
Over one yearbut less than
five years76,007,730
--
2,510,0001,150,000
---
79,667,730
2,655,483200,000
---
2,855,48376,812,247
Rupees %Rupees %2015 2014
2015Rupees
2014Rupees
2015
Page 34
Assets
Long term investmentsMorabaha & Musharaka receivablesShort term investmentsAdvancesTrade depositsOther receivablesTax refunds due from governmentBank balances
Liabilities
Deferred liabilitySecurity DepositCreditors, accrued and other liabilitiesProvision for taxationUnclaimed profit distribution
Net balance
Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in market interest rates or themarket price due to a change in credit rating of the issuer or the instrument, change in market sentiments, speculative activities,supply and demand of securities and liquidity in the market.
Operational Risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technologyand infrastructure supporting the Modaraba’s operations either internally within the Modaraba or externally at the Modaraba’sservice providers, and from external; factors other than credit, market and liquidity risks such as those arising from legal andregulatory requirements and generally accepted standards of investment management behavior. Operational risks arise from all ofthe Modaraba’s activities.The Modaraba’s objective is to manage operational risk so as to balance limiting of financial losses and damage to its reputation withachieving its objective of generating returns for certificate holders. The primary responsibility for the development andimplementation of controls over operational risk rests with the Board of Directors of the Management Company. This responsibilityencompasses the controls in the following areas:- Requirements for appropriate segregation of duties between various functions, roles and responsibilities;- Requirements for the reconciliation and monitoring of transactions;- Compliance with regulatory and other legal requirements- Documentation of controls and procedures;- Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address therisks identified;- Ethical and business standards;- Risk mitigation, including insurance where this is effective.
The Modaraba is of the view that the fair market value of most of the financial assets and financial liabilities are not significantlydifferent from their carrying amounts.
Morabaha/Musharaka receivablesAdvancesTrade deposits
Market risk
Operational Risk
Financial instruments by category
Fair value of financial instruments
Financial assetsLoans and receivables
28.
28.1
Over five years250,000,000
-------
250,000,000
250,000,000
------
153,003,6096,035,359
15,922,665
Less thanOne year
-159,320,497107,396,243
1,422,58814,767,55624,533,228
3,903,5789,889,496
321,233,186
--
11,856,701-
25,966,76837,823,469
283,409,717
Total324,387,730159,320,497107,396,243
3,932,58815,917,55624,533,228
3,903,5789,889,496
649,280,916
1,556,255200,000
11,856,701-
25,966,76839,579,724
609,701,192
159,320,4973,932,588
15,917,556
Over one yearbut less than
five years74,387,730
2,510,0001,150,000
-----
78,047,730
1,556,255200,000
---
1,756,25576,291,475
2014
2015Rupees
2014Rupees
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 35NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Other receivablesBank balances
Short term investments
Long term investments
Financial liabilitiesFinancial liabilities at amortised costCreditors, accrued and other liabilitiesUnclaimed profit distribution
On balance sheet gap
The above analysis is based on the contractual/expected maturities of assets and liabilities which may not necessarily correspondwith actual maturities.
Tangible assetsIntangible assetsInvestment propertyLong term investmentsMorabaha & Musharaka receivablesShort term investmentsAdvancesTrade deposits and prepaymentsOther receivablesTax refunds due from governmentBank balances
Deferred liabilitiesSecurity DepositCreditors, accrued and other liabilitiesProvision for taxationUnclaimed profit distribution
Net balance
AssetsTangible assetsIntangible assetsInvestment propertyLong term investmentsMorabaha & Musharaka receivablesShort term investmentsAdvancesTrade deposits and prepaymentsOther receivablesTax refunds due from governmentBank balances
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Maturities of assets and liabilities
Assets
Liabilities
29.
25,218,54120,285,400
97,882,927
74,178,990392,527,491
24,375,43727,618,31651,993,753
340,533,738
Over fiveYears
15,426,20219,000,000
1,951,667--------
36,377,869
------
36,377,869
15,777,61719,000,000
2,071,667--------
36,849,284
Over onemonth to one
year
----
125,175,89897,882,927
3,525,35914,877,29425,218,541
4,614,68020,285,400
304,495,139
--
20,181,939-
27,618,31647,800,255
256,694,884
----
138,090,938107,396,243
1,422,58814,831,91824,533,228
3,903,5789,889,496
300,067,989
24,533,2289,889,496
107,396,243
74,387,730395,377,338
11,856,70125,966,76837,823,469
357,553,869
Total
15,426,20219,000,000
1,951,667326,007,730153,003,60997,882,927
6,035,35916,177,29425,218,541
4,614,68020,285,400
685,603,409
2,655,483200,000
24,375,437-
27,618,31654,849,236
630,754,173
15,777,61719,000,000
2,071,667324,387,730159,320,497107,396,243
3,932,58816,131,91824,533,228
3,903,5789,889,496
686,344,562
Over one yearto five years
---
326,007,730--
2,510,0001,150,000
---
329,667,730
2,655,483200,000
---
2,855,483326,812,247
---
324,387,730--
2,510,0001,150,000
---
328,047,730
2015Rupees
2014Rupees
Upto onemonth
----
27,827,711--
150,000---
21,379,559
--
4,193,498--
4,193,49817,186,061
----
21,229,559--
150,000---
21,379,559
2015
2014
Page 36
After 1 Yr Sub totalWithin 1 Yr
2015
After 1 Yr Sub totalWithin 1 Yr
Effectiveyield /
profit riskYield / profit bearing maturing Non yield / profit bearing maturing
Total
-
12% to 16%
5% to 7%
-
-
- - -%
74,387,730
74,387,730
74,387,730
74,387,730 74,387,730Long term investments
Morabaha / Musharakah
receivables
Advances
Trade deposits
Other receivables
Bank balances
Short term investments
RupeesAfter 1 Yr Sub totalWithin 1 Yr
2014
After 1 Yr Sub totalWithin 1 Yr
Effectiveyield /
profit riskYield / profit bearing maturing Non yield / profit bearing maturing
Total
159,320,497 159,320,497 159,320,497- - -
107,396,243 107,396,243 107,396,243
8,094,117 8,094,117
274,810,857
274,810,857
349,198,587
349,198,587
- - -
1,422,588
14,767,556
24,533,228 24,533,228 24,533,228
1,795,379 1,795,379
42,518,751 46,178,751
9,889,496
395,377,338
-
-
-
3,660,000
-
- - -- 2,510,000
1,150,000
3,932,588 3,932,588
15,917,556 15,917,556- - --
- - --
-
Financial Liabilities
Unclaimed profit distribution
On Balance Sheet Gap
Creditors, accrued and other
liabilities 11,856,701 11,856,701 11,856,701
25,966,768 25,966,768 25,966,768
34,582,793 34,582,793 37,823,469
7,935,958 3,660,000 11,595,958 357,553,869
-
-
-
-
-
-
-
-
-
-
-
-
-
-
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
LiabilitiesDeferred liabilitiesCreditors, accrued and other liabilitiesProvision for taxationUnclaimed profit distribution
Net balance
Yield/Profit rate risk exposure
The above analysis is based on the contractual/expected maturities of assets and liabilities which may not necessarily correspond with actual maturities.Yield risk is the risk of decline in earning due to adverse movement of the yield curve.Profit rate risk is the risk that the value of the financial instruments will fluctuate due to changes in the market profit rates.
30.
Over fiveYears
-----
36,849,284
Over onemonth to one
year
--
7,663,20325,966,76833,629,971
266,438,018
Total
1,556,255200,000
11,856,70125,966,76839,579,724
646,764,838
Over one yearto five years
1,556,255200,000
--
1,756,255326,291,475
Upto onemonth
--
4,193,498-
4,193,49817,186,061
-
12% to 16%
5% to 7%
-
-
- - -%
74,178,990
74,178,990
74,178,990 74,178,990Long term investments
Morabaha / Musharakah
receivables
Advances
Trade deposits
Other receivables
Bank balances
Short term investments
Rupees
153,003,609 153,003,609 153,003,609- - -
97,882,927
18,290,757
269,177,293
18,290,757
343,356,283
- - 97,882,927 -
3,525,359
14,772,665
25,218,541
1,994,643
45,511,208
1,994,643
49,171,208
20,285,400
392,527,491
25,218,541 25,218,541
-
-
-
3,660,000
- 97,882,927
- - -- 2,510,000
1,150,000
6,035,359
15,922,665 15,922,665
6,035,359
- - --
- - --
-
Financial Liabilities
Unclaimed profit distribution
On Balance Sheet Gap
Creditors, accrued and other
liabilities 24,375,437 24,375,437
27,618,316
51,993,753 51,993,753 51,993,753
(6,482,545) 3,660,000 (2,822,545) 340,533,738
27,618,316 27,618,316
24,375,437-
-
-
-
-
-
-
-
269,177,293 74,178,990 343,356,283
-
-
-
-
-
-
Description
Financial Assets
Description
Financial Assets
Page 37NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Segment information
Transactions with related parties
The Modaraba has three primary sources of revenue i.e. Musharaka facility, brokerage operations and capital market based on thenature of business and related risk associated with each type of business segment which are not deemed by the management to thesufficiently significant to disclose as separate items are reported under others.Segment assets and liabilities included all assets and liabilities related to the segment relevant proportion of the assets and liabilitiesallocated to the segment on reasonable basis.Segment revenue and expenses included all revenue and expenses related to the segment and relevant proportion of the revenue andexpenses allocated to the segment on reasonable basis.
The related parties of the Modaraba comprise the Modaraba Management Company, subsidiary company, staff retirement funds,directors of the Modaraba Management Company and key management personnel. Transactions with related parties are entered intoat arm's length.Transactions with related parties other than remuneration and benefits to officers and employees under the terms of theiremployment are as follows:
- Current account payable
- Investment in Equity Textiles Limited
- Deferred liability staff gratuity- Brokerage house client receivable
Balance outstanding at year endModaraba Management Company
Subsidiary company
Receivable from associated companyOther related parties (including key management personnel)
31.
32.
32.1
4,829,780
250,000,000418,367
2,655,483358,712
5,754,180
250,000,000349,099
1,556,25526,817
27,026,779
367,678,254 313,983,581
317,925,155 372,360,981
685,603,409 686,344,562
(13,883,883) (12,859,648)
(1,314,288) (2,850,700)
(197,143) (456,112)
(232,629) (504,005)
11,398,836
11,398,836
24,696,242
24,696,242
- -
46,938,503
41,366,707
5,280,419
(907,800)
44,244,512
44,244,512
16,277,252 16,277,252 3,950,979
38,571,984 32,628,745
54,849,236 36,579,72416,277,252
17,756,838
17,756,838
153,003,609
-
-
- -
-
- - -
-
-153,003,609
10,014,790
8,545,788
170,430,133
170,430,133
Segment Revenues
Segment Result
Unallocated Cost
Operating expenses
Management fee
Service Sale Tax
WWF
Profit before taxation
Taxation
Profit for the year
Other information
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
Rupees
MusharakahFacility
BrokerageOperation
CapitalMarkets
2015
Total TotalOthers
2014
1,631,953 34,684,000
1,631,953
-
-
-
-
-
-
2015Rupees
2014Rupees
Page 38
Transactions during the yearModaraba Management Company
Other related parties (including key management personnel)
- Reimbursement with service Sale Tax- Reimbursement
- Contribution to staff gratuity fundRelationship
Services acquired Associated companyBrokerage commission earned Associated company
Total number of employees of the Modaraba as at June 30, 2015 are 8 (2014: 8).
Figures have been rounded off to the nearest rupee.
These financial statements were authorized for issue in accordance with a resolution of the Board of Directors on October 08, 2015.The Board of Directors of the Management Company has approved dividend at the rate of Re. 0.17 per certificate (2014: Re. 0.375per certificate) for the year ended June 30, 2015, resulting in a total distribution of profit amounting to Rs. 8,914,800/- (2014: Rs.19,665,000/-), in its meeting held on October 08, 2015, which is more than 90% of the net profit for the year ended June 30, 2015,after appropriation to the statutory (mandatory) reserve as required under the Modaraba Regulations.
Figures in these financial statements have been rounded off to the nearest rupee.The corresponding figures, wherever necessary, have been re-arranged /re-classified for the purpose of comparison.Prior year figures have been reclassified for the purpose of better presentation and comparison.
Number of employees
Corresponding Figures
Authorization for issue
General
32.2
35.135.2
36.136.236.3
33.
34.
35.
36.
197,1434,508,446
1,099,228
227,412476,623
3,306,8124,508,452
351,700
247,15569,704
2015Rupees
2014Rupees
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
NOTES TO THE FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 39NOTICE FOR BOOK CLOSURE
AND ANNUAL REVIEW MEETING
The 16th Annual Review Meeting of certificate holders of First Equity Modaraba will be held on ThursdayNovember 26, 2014 at 10:30 am. at Banquet Hall Regent Plaza Hotel & Convention Centre Shahrah-e-FaisalKarachi to review the performance of the Modaraba for the financial year ended June 30, 2015.
The certificate transfer book of the Modaraba shall remain closed from Saturday November 14, 2015 to ThursdayNovember 26, 2015 (both days inclusive) for the purpose of entitlement of cash profit distribution dividend. Alltransfers received by our certificate registrar M/s THK Associates (Pvt) Ltd. State Life Building # 3, Dr. ZiauddinAhmed Road, Karachi before the close of business on Friday, November 13, 2015 will be treated valid for attendingtheAnnual Review Meeting.
October 08, 2015 by order of the BoardQazi Obaid UllahCompany Secretary
Page 40
Page 41AUDITORS' REPORT
TO THE CERTIFICATE HOLDERS
We have audited the annexed consolidated financial statements comprising consolidated balance sheet of FIRST EQUITY MODARABA (theModaraba) and its subsidiary company as at June 30, 2015 and the related consolidated profit and loss account, consolidated statement ofcomprehensive income, consolidated cash flow statement and consolidated statement of changes in equity together with the notes forming partthereof (hereinafter referred to as the financial statements), for the year then ended. We have also expressed separate opinion on the financialstatements of Modaraba. The financial statements of subsidiary company were audited by another auditor, whose report has been furnished to usand our opinion, in so far as its relates to the amounts included for the subsidiary company, is based solely on the report of such other auditorswho expressed an unqualified opinion.
These consolidated financial statements are the Modaraba Company's [Premier Financial Services (Private) Limited] responsibility who is alsoresponsible to establish and maintain a system of internal control, and prepare and present the above said statements in conformity with theapproved accounting standards as applicable in Pakistan and the requirements of the Modaraba Companies and Modaraba (Floatation andControl) Ordinance 1980 (XXXI of 1980), Modaraba Companies and Modaraba Rules, 1981 and the Companies Ordinance, 1984. Ourresponsibility is to express an opinion on these consolidated financial statements based on our audit.
We conducted our audit in accordance with the auditing standards as applicable in Pakistan. These standards require that we plan and performthe audit to obtain reasonable assurance about whether the consolidated financial statements are free of any material misstatement. An auditincludes examining on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includesassessing the accounting policies and significant estimates made by the Modaraba Company, as well as, evaluating the overall presentation ofthe consolidated financial statements. We believe that our audit provides a reasonable basis for our opinion and, after due verification, we reportthat:
(a) Management of the Modaraba in the financial statements for the year ended June 30, 2013, had assigned values to Trading RightsEntitlement Certificates (TREC) of Karachi Stock Exchange Limited (KSE) and Islamabad Stock Exchange Limited (ISE) Rs. 15million and Rs. 4 million respectively that were based on the value assigned by KSE and ISE for base minimum capital requirementpurposes applicable to the brokers of the stock exchange and had recognised 4,007,383 shares of KSE and 3,034,603 shares of ISE attheir face values of Rs. 10/- each on exchange of membership card thereby the Modaraba recognized gain of Rs. 36.369 millionwhich, in our opinion, was not in accordance with InternationalAccounting Standards and technical opinion of The Institute ofCharteredAccountants of Pakistan (ICAP) issued in this respect.
(b) Modaraba has charged unrealised loss of Rs. 16.728 million, in respect of investment classified as financial asset at fair value throughprofit and loss, in other comprehensive income instead of profit and loss account as required under IAS 39.Had the Modaraba recognized the intangible asset and shares of KSE and ISE in accordance with theTechnical Opinion of ICAP, itsequity, intangible asset and long term investments would have been lower by Rs. 36.369 million, Rs. 7.7 million and Rs. 28.6 millionrespectively and had the Modabra charged the unrealized loss to the profit and loss account, its profit for the year would have beenlower by Rs. 16.728 million.
In our opinion, except for the matters stated in paragraph (a) and (b) above, the consolidated financial statements examined by us, present fairlythe financial position of First Equity Modaraba and its subsidiary company as at June 30, 2015 and the results of their operations,comprehensive income, their cash flows and changes in equity for the year then ended in accordance with approved accounting standards asapplicable in Pakistan.
CharteredAccountantsKarachi.Dated: October 08, 2015
Engagement Partner: Adnan Zaman
Page 42 CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 2015
2014Rupees
Equity &Liabilities
2015RupeesNote
Remeasurement of defined benefit liability - Actuarial gain
Authorized Certificate Capital
Surplus on revaluation of fixed assets
60,000,000 (2014: 60,000,000) modaraba
certificates of Rs. 10 each
Capital and reserves
Certificate holders' equity
Certificate capital
Reserves
Total certificates holders' equityUnrealised loss on remeasurment of investments
Deferred liabilities
Deferred Mark upLong term financing
Subordinated loan
Creditors, accrued and other liabilities
Current portion of long term liabilities
Short term borrowings
Total current liabilities
Total non-current liabilities
Current liabilities
Non-current liabilities
Unclaimed profit distribution
Accrued mark up
Security deposit
Total equity and liabilities
Contingencies and commitments
600,000,000600,000,000
524,400,000 524,400,000
187,492,272
(20,170,414)
691,813,806
396,256,172
439,104,58425,537,448
203,408,950
200,000
668,250,982
200,000
853,396,432
-
91,948
94,551,341
810,742
(13,149,967)
606,612,116
420,140,893
510,782,76649,537,448
252,876,218
40,000,000
18,166,501 59,286,520
93,928,184 57,428,186
176,149,285 137,864,786
19,722,294 19,925,020
27,618,316 25,966,768
335,584,580 300,471,280
2,091,905,540 2,180,620,720
6
7
8
9
10
11
12
13
14
15
16
17
Page 43CONSOLIDATED BALANCE SHEET
AS AT JUNE 30, 2015
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
2014Rupees
2015RupeesNote
AssetsNon-CurrentAssetsFixed assets-tangible
-intangible
Investment property
Long term investments
Advances
Deposits
TotalNon-CurrentAssets
CurrentAssetsStore and spares
Stock-in-trade
Trade debts
Morabaha/Musharaka receivables-secured
Short term investments
AdvancesTrade deposits and prepayments
Other receivablesTax refunds due from government
Tax-net
Cash and bank balances
Total CurrentAssets
TotalAssets
The annexed notes 1 to 49 form an integral part of these financial statements.
1,223,964,011
1,324,583,408
1,268,537,035
1,367,656,432
19,000,000 19,000,000
1,951,667 2,071,66776,007,730 74,387,730
2,510,000
1,150,000
2,510,000
1,150,000
29,440,537
214,722,397
93,542,674153,003,609
124,862,544
38,406,84023,167,882
26,918,541
20,987,246
10,639,864
31,629,998
767,322,132
2,091,905,540
26,392,239
197,654,563
161,835,541159,320,497
131,772,758
38,451,88026,327,143
28,886,955
24,387,804
1,334,370
16,600,538
812,964,288
2,180,620,720
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
Page 44 CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE YEAR ENDED JUNE 30, 2015
2014Rupees
2015RupeesNote
Income
Expenditure
Operating expenses
Distribution and selling expenses
Operating profit
Financial Charges
Management fee
Other Income
Other Charges
Service Sales Tax on management remuneration
Impairment in associated company
Share of profit / (loss) in associated company
Profit before taxation
Taxation
Profit for the year
- current
- prior
- deferred
Earnings per certificate - basic and diluted
221,646,648
(36,028,548)
(15,117,068)
(51,145,616)
170,501,032
(76,568,945)
93,932,087
1,281,706
95,213,793
(5,544,585)
(2,850,700)
(456,112)
-
(2,901,431)
83,460,965
(20,996,096)
(708,990)
33,682,101
11,977,015
95,437,980
1.82
200,762,263
(45,050,873)
(16,940,059)
(61,990,932)
138,771,331
(71,492,500)
67,278,831
1,951,525
69,230,356
(5,761,443)
(1,314,288)
(197,143)
(10,685,020)
3,073,446
54,345,908
(15,905,952)
(285,243)
30,422,755
14,231,560
68,577,468
1.31
33
34
35
36
37
38
39
40
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
The annexed notes 1 to 49 form an integral part of these financial statements.
Page 45
20142015
CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED JUNE 30, 2015
The annexed notes 1 to 49 form an integral part of these financial statements.
RupeesRupees
Profit for the year
Other comprehensive income
Unrealized (loss) on remeasurement of investments
Gain realized on disposal of investments
Items that will not be reclassified to profit & loss account
Remeasurement of defined benefit liability
Share of gain / (loss) on remeasurement of defined benefit liability
in associated company
Other comprehensive income
Total comprehensive income for the year
95,437,980
(10,787,319)
4,992,048
(5,795,271)
355,591
(10,805)
(5,450,485)
89,987,495
Items that will be reclassified to profit & loss account on disposal
68,577,468
(15,099,567)
8,079,120
(7,020,447)
(724,054)
5,260
(7,739,241)
60,838,227
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
Page 46 CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2015
2014Rupees
2015Rupees
Depreciation
Profit before taxationAdjustments for:
Provision for gratuity
Dividend income(Gain) / loss on sale of asset
Provision for doubtful debtImpairment in associated companyFinancial charges
Share of profit in associated company
83,460,965
134,151,011351,700
(3,789,318)2,901,431
34,844
Cash generated from operations before working capital changes
396,066-
76,568,945
210,614,679294,075,644
Cash flows from operating activities
AdvancesTrade deposits and prepayments
Other receivablesTax refund from government authoritiesIncrease/(decrease) in operating liabilities
Creditors, accrued and other liabilities
Short term borrowing
Staff retirement benefit-gratuity paidFinancial charges paidDividend paidTaxes paidNet cash generated from operating activities
(39,911,247)(17,656,808)(21,931,308)
(531,875)
(36,451)(19,774,107)157,608,558
(64,387,724)-
4,752,652
(70,608,999)(130,244,071)
54,345,908
126,809,645375,174
(4,185,556)(3,073,446)
(342,140)1,721,890
10,685,02071,489,812
203,480,399257,826,307
(3,048,298)(17,067,834)
66,570,9776,316,888
45,0403,159,2612,124,462
4,449,055
(18,013,452)
(41,120,019)38,284,49959,714,031
(71,692,538) (94,193,345)
-
(26,545,814)201,288,534
(9,827,131)440,003
4,525,722(82,219,484)(87,080,890)
Working Capital changesDecrease/(increase) in operating assetsStore, Spares and Loose tools
Stock-in-trade
Trade debtsMorabaha/Musharaka receivables-secured
(880,487)93,693,613
(46,329,815)(9,281,437)(2,097,403)
532
531,744
-
Cash flows from investing activities
InvestmentsProceeds from sale of tangible assets
Dividend receivedPurchases of tangible assetsNet cash (used in)generated investing activities
Page 47
2014Rupees
2015Rupees
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
Cash flows from financing activities
Subordinated loanLong term financingNet cash generated from financing activities
Net (decrease) / increase in cash and cash equivalentsCash and cash equivalents at beginning of the yearCash and cash equivalents at the end of the year
-(70,346,630)(70,346,630)
(42,982,143)59,582,68116,600,538
(40,000,000)(59,178,184)(99,178,184)
15,029,46016,600,53831,629,998
The annexed notes 1 to 49 form an integral part of these financial statements.
CONSOLIDATED CASH FLOW STATEMENT
FOR THE YEAR ENDED JUNE 30, 2015
Page 48
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE YEAR ENDED JUNE 30, 2015
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 49
Legal Status and nature of business:The group
Statement of compliance
The group consist of First Equity Modaraba (the Modaraba) and its subsidiary, Equity Textiles Limited (ETL) (subsidiary company).
First Equity Modaraba (the Modaraba) was formed in 1991 under the Modaraba Companies and Modaraba (Floatation and Control)Ordinance, 1980 and the Rules framed there under and is managed by Premier Financial Services (Private) Limited (the ModarabaManagement Company), a company incorporated in Pakistan.The Modaraba is a perpetual, multipurpose modaraba and is able to undertake a variety of fund and fee based activities. These includetrading, manufacturing, equity investment and their financing and facilitation. The Modaraba is a trading right entitlement certificateholder of the Karachi and Islamabad stock exchanges of Pakistan and is currently operating its brokerage activities in Karachi StockExchange.The Modaraba is listed on Karachi, Lahore and Islamabad Stock Exchanges. The registered office of the Modaraba is situated at B-1004, 10thfloor, Lakson Square Building 3, Sarwar Shaheed Road, Karachi. The Modaraba is holding Equity Textiles Limited as a wholly ownedsubsidiary company.
Equity Textiles Limited (ETL) was incorporated in Pakistan on May 31, 2005 as a public limited company under the Companies Ordinance,1984. The registered office of ETL is situated at 3rd Floor, Cotton Exchange Building, I.I. Chundrigar Road, Karachi. The principal activitiesof ETLis manufacturing and sale of textile products. ETLcommenced commercial operations onApril 1, 2007.
Subsidiaries are all entities over which the group has the power to govern the financial and operating policies generally accompanying ashareholding of more than one half of the voting rights or the parent - subsidiary relationship meet the definition as given in section 3 of theCompanies Ordinance, 1984. The existence and effect of potential voting rights that are currently exercisable or convertible are consideredwhen assessing whether the group controls another entity. Subsidiaries are fully consolidated from the date on which control is transferred tothe group and are de-consolidated from the date that control ceases.The purchase method of accounting is used to account for the acquisition of subsidiaries by the group. The cost of an acquisition is measured asthe fair value of the assets given, equity instruments issued and liabilities incurred or assumed at the date of exchange, plus costs directlyattributable to the acquisition. Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination aremeasured initially at their fair values at the acquisition date, irrespective of the extent of any minority interest. The excess of the cost ofacquisition over the fair value of the group’s share of the identifiable net assets acquired is recorded as goodwill. If the cost of acquisition is lessthan the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the profit and loss account.
Inter-company transactions, balances and unrealized gains/losses on transactions between group companies are eliminated.
Items included in the consolidated financial statements are measured using the currency of the primary economic environment in which thegroup operates. The consolidated financial statements are presented in Pakistani Rupees which is the functional and presentation currency ofall the group companies.
These consolidated financial statements include the accounts of group [First Equity Modaraba and its subsidiary company Equity TextileMills Limited - (100% - Holding)]. Financial Statements of subsidiary company have been consolidated on a line-by-line basisAll material inter-company balances, transactions and resulting unrealized profit and losses have been eliminated.
These financial statements have been prepared in accordance with approved accounting standards as applicable in Pakistan. Approvedaccounting standards comprise of such International Financial Reporting Standards (IFRS) issued by the International Accounting StandardsBoard as are notified under the Companies Ordinance, 1984, the requirements of the Modaraba Companies and Modaraba (Floatation andControl) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 and directives issued by the Securities and ExchangeCommission of Pakistan (SECP). Wherever the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance,1980, Modaraba Companies and Modaraba Rules, 1981 and directives issued by SECP differ with the requirements of IFRS, the requirementsof the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, Modaraba Companies and Modaraba Rules, 1981 orthe directives issued by SECPprevail.The Securities and Exchange Commission of Pakistan (SECP) has issued directive (vide SRO 865 (l) / 2005) that Islamic FinancialAccounting Standard 1 (IFAS-1) shall be followed in preparation of the financial statement by Companies and Modarabas while accountingfor Morabaha transactions as defined by said Standard. The Modaraba has adopted the above said StandardThe Securities and Exchange Commission of Pakistan (SECP) has issued directive (vide SRO 431 (l) / 2007) that Islamic FinancialAccounting Standard 2 (IFAS-2) shall be followed in preparation of the financial statement by Companies and Modarabas while accountingfor Ijarah (Lease) transactions as defined by said Standard. The Modaraba has adopted the above said Standard.The Securities and Exchange Commission of Pakistan (SECP) vide circular No. 10 of 2004 dated February 13, 2004 has deferred theapplication of IAS 17 "Leases" on modarabas till further orders.
During the year, certain amendments to the Standards or new interpretation become effective. However, the amendments or interpretations didnot have any material effect on the financial statement of modaraba.
First Equity Modaraba
Equity Textiles Ltd
Consolidation procedure
Basis of consolidation
New standards, interpretations and amendments to published approved accounting standards
Subsidiaries
Transactions eliminated on consolidation
Functional and reporting currency of group
Standards, amendments or interpretations which may become effective during the year
1.
2.
1.1
1.2
1.3
1.4
2.1
2.2
2.3
2.4
2.52.5.1
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 50
Standards that became effective but not relevant to the company or do not have material effect
Improvements toAccounting Standards Issued by the IASB
Amendments not yet effective
The following standards, interpretations and improvements became effective for the current financial year but are either not relevant or donot have any material effect on the financial statements of the modarabaIAS 19 - Employee Benefits (Amendment) - Defined benefit plans: Employee contributionsIAS 32 - Financial Instruments - Presentation - (Amendment) Offsetting financial assets and financial liabilitiesIAS 36 - Impairment ofAssets - (Amendment)- RecoveryAmount Disclosures for Non-FinancialAssetsIAS 39 - Financial Instruments: Recognition and Measurement - (Amendment)
Novation of Derivative and Continuation of hedgeAccountingIFRIC 21 - Levies
IFRS 2 - Share-based Payment - Definitions of vesting conditionsIFRS 3 - Business Combinations -Accounting for contingent consideration in a business combinationIFRS 3 - Business Combinations - Scope exceptions for joint venturesIFRS 8 - Operating Segments -Aggregation of operating segmentsIFRS 8 - Operating Segments - Reconciliation of the total of the reportable segments' assets to the entity's assetsIFRS 13 - FairValue Measurement - Scope of paragraph 52 (portfolio exception)IAS 16 - Property, Plant and Equipment and IAS 38 IntangibleAssets - Revaluation method - proportionate restatement of accumulateddepreciation / amortisationIAS 24 - Related party Disclosures - Key management personnelIAS 40 - Investment Property - Interrelationship between IFRS 3 and IAS 40 (ancillary services)The adoption of the above improvements to accounting standards and interpretations did not have any material effect on the financialstatements.
The following amendments and interpretations with respect to the approved accounting standards as applicable in Pakistan would beeffective from the dates as mentioned below against the respective standards or interpretationIFRS 5 Non-currentAssets Held for Sale and Discontinued Operations:Amendments resulting
from September 2014Annual Improvements to IFRSsIFRS 7 Financial Instruments: Disclosures -Amendments resulting from September 2014
Annual Improvements to IFRSs (Servicing Contracts andApplicability of the offsettingamendments in condensed interim financial statements)
IFRS 9 Financial Instruments - Finalised version, incorporating requirements for classificationand measurement, impairment, general hedge accounting and derecognition
IFRS 10 Consolidated Financial Statements -Amendments regarding the sale or contribution ofassets between an investor and its associate or joint venture
IFRS 10 Consolidated Financial Statements -Amendments regarding the application of theconsolidation exception
IFRS 11 JointArrangements -Amendments regarding the accounting for acquisitions of an interestin a joint operation
IFRS 12 Disclosure of Interests in Other Entities -Amendments regarding the application of theconsolidation exception
IAS 1 Presentation of Financial Statements -Amendments resulting from the disclosure initiative January 01, 2016IAS 16 Property, Plant and Equipment -Amendments regarding the clarification of acceptable
methods of depreciation and amortisation and amendments bringing bearer plants into thescope of IAS 16
IAS 19 Employee Benefits -Amendments resulting from September 2014Annual Improvementsto IFRSs
IAS 27 Separate Financial Statements (as amended in 2011) -Amendments reinstating theequity method as an accounting option for investments in in subsidiaries, joint venturesand associates in an entity's separate financial statements
IAS 28 Investments inAssociates and Joint Ventures -Amendments regarding the applicationof the consolidation exception
IAS 34 Interim Financial Reporting -Amendments resulting from September 2014AnnualImprovements to IFRSs
IAS 38 IntangibleAssets -Amendments regarding the clarification of acceptable methodsof depreciation and amortisation
IAS 39 Financial Instruments: Recognition and Measurement:Amendments to permit an entity toelect to continue to apply the hedge accounting requirements in IAS 39 for a fair value hedgeof the interest rate exposure of a portion of a portfolio of financial assets or financialliabilities when IFRS 9 is applied, and to extend the fair value option to certain contractsthat meet the 'own use' scope exception
IAS 41 Agriculture -Amendments bringing bearer plants into the scope of IAS 16 January 01, 2016IFRS 2 Share-based Payment -Amendments resulting from Annual Improvements
2010-2012 Cycle (definition of 'vesting condition')
January 01, 2016
January 01, 2016
January 01, 2018
January 01, 2016
January 01, 2016
January 01, 2016
January 01, 2016
January 01, 2016
January 01, 2016
January 01, 2016
January 01, 2016
January 01, 2016
January 01, 2014
January 01, 2018
July 01, 2014
2.5.2
Page 51NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
IFRS 3 Business Combinations -Amendments resulting from Annual Improvements2010-2012 Cycle (accounting for contingent consideration) and 2011-2013 Cycle (scope exception for joint ventures)
IFRS 8 Operating Segments -Amendments resulting from Annual Improvements 2010-2012Cycle (aggregation of segments, reconciliation of segment assets)
IFRS 10 Consolidated Financial Statements -Amendments for investment entities January 01, 2014IFRS 12 Disclosure of Interests in Other Entities -Amendments for investment entities January 01, 2014IFRS 13 Fair Value Measurement -Amendments resulting from Annual Improvements 2011-2013
Cycle (scope of the portfolio exception in paragraph 52)IAS 16 Property, Plant and Equipment -Amendments resulting from Annual Improvements
2010-2012 Cycle (proportionate restatement of accumulated depreciation on revaluation)IAS 19 Employee Benefits -Amended to clarify the requirements that relate to how
contributions from employees or third parties that are linked to service should be attributedto periods of service
IAS 24 Related Party Disclosures -Amendments resulting from Annual Improvements 2010-2012Cycle (management entities)
IAS 27 Separate Financial Statements -Amendments for investment entities January 01, 2014IAS 32 Financial Instruments - Presentation -Amendments relating to the offsetting of assets and
liabilitiesIAS 36 Impairment ofAssets -Amendments arising from recoverable amount disclosures for
non financial assetsIAS 38 IntangibleAssets -Amendments resulting from Annual Improvements 2010-2012
Cycle (proportionate restatement of accumulated depreciation on revaluation)IAS 39 Financial Instruments: Recognition and Measurement -Amendments for novations of
derivativesIAS 40 Investment Property -Amendments resulting from Annual Improvements 2011-2013
Cycle (interrelationship between IFRS 3 and IAS 40)
The following International Financial Reporting Standards or interpretations issued by IASB would be effective from the dates mentionedbelow against the respective standard or interpretation:IFRS 10 Consolidated Financial Statements January 01, 2015IFRS 10, 12 & IAS 27 Investment Entities (Amendment) January 01, 2015IFRS 10, 12 & Investment Entities:Applying the Consolidation Exception (Amendment) January 01, 2016IFRS 10 & Sale or Contribution ofAssets between an Investor and itsAssociate or
Joint Venture (Amendment)IFRS 11 JointArrangements January 01, 2015IFRS 11 Accounting forAcquisition of Interest in Joint Operation (Amendment) January 01, 2016IFRS 12 Disclosure of interests in Other Entities January 01, 2015IFRS 13 Fait Value Measurement January 01, 2015IAS 1 Disclosure Initiative (Amendment) January 01, 2016IAS 16 & 38 Clarification ofAcceptable Method of Depreciation andAmortisation (Amendment) January 01, 2016IAS 16 & 41 Agriculture Bearer Plants (Amendment) January 01, 2016IAS 27 Equity Method in Separate Financial Statements (Amendment) January 01, 2016
The following new standards and interpretations have been issued by the InternationalAccounting Standards Board (IASB), which have notbeen adopted locally by the Securities and Exchange Commission of Pakistan:IFRS 1 First TimeAdoption of International Financial Reporting StandardsIFRS 9 Financial InstrumentsIFRS 14 Regulatory DeferralAccountsIFRS 15 Revenue from Contracts with CustomersThe Company expects that the adoption of the above amendments and interpretations of the standards will not have any material impact andtherefore will not affect the Company's financial statements in the period of initial application.
The Modaraba has adopted the amendments to the following accounting standards which became effective during the year:Standards issued by IASB but not yet notified by SECPIFRS 9 Financial Instruments: Classification and Measurement January 01, 2018IFRS 14 Regulatory DeferralAccounts January 01, 2016IFRS 15 Revenue from Contracts with Customers January 01, 2018Securities and Exchange Commission of Pakistan (SECP) vide SRO 633(1)/2014 dated 10th July 2014 has approved the below IFRSs:- IFRS 10 - 'Consolidated Financial Statements"- IFRS 11 - 'JointArrangements'- IFRS 12 - 'Disclosure of interests in other entities'- IFRS 13 - ‘FairValue Measurement'
July 01, 2014
July 01, 2014
July 01, 2014
July 01, 2014
July 01, 2014
July 01, 2014
January 01, 2014
January 01, 2014
July 01, 2014
January 01, 2014
July 01, 2014
IAS 27IAS 28 January 01, 2016
Standards or interpretations not yet effective
Standards or interpretations not yet effective
Amendments that are effective in current year but not relevant to the Modaraba
2.5.3
2.5.4
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 52
Basis of measurement
Use of estimates
Significant accounting policies
These financial statements have been prepared under the historical cost convention method except for certain financial assets which arestated at fair value and subsidiary's fixed assets which have been stated at revalued amounts.These financial statements have been prepared under the accrual basis of accounting except for cash flow information.
The preparation of financial statements in conformity with approved accounting standards requires the use of certain critical accountingestimates. It also requires management to exercise its judgment in the process of applying the Modaraba's accounting policies. Estimates andjudgments are continually evaluated and are based on historical experience, including expectations of future events that are believed to bereasonable under circumstances. However, assumptions and judgments made by management in the application of accounting policies thathave significant effect on the financial statements are not expected to result in material adjustment to the carrying amounts of assets andliabilities in the next year. The areas involving a higher degree of judgments or complexity or areas where assumptions and estimates aresignificant to the financial estimates are as follows:
a) Useful life of depreciable assets/amortizable assets 5.1 & 5.2b) Impairment of assets 5.1.3 & 5.4.1c) Classification of investments 5.4d) Income tax 5.12e) Provision for staff gratuity 5.14f) Provision for non performing assets 5.19
The significant accounting policies adopted in the preparation of these financial statements are set out below. These policies have beenconsistently applied to all the years presented, unless otherwise stated.
Fixed assets are stated at cost/revalued amount less accumulated depreciation and identified impairment loss, if any. Capital work-in-progress is stated at cost. Cost of operating fixed assets comprises historical cost, borrowing cost and other expenditures pertaining to theacquisition, construction, erection and installation of these assets.The Parent company charges depreciation on the straight line method and subsidiary company charge depreciation on reducing balancemethod, whereby the depreciable amount of an asset is written off over its estimated useful life. Depreciation is charged at rates stated in note17. Full Depreciation is charged on additions, except major additions or extensions to production, facilities which are depreciated on pro-ratabasis for the duration of use during the year. Parent company charges depreciation on additions from the month during which the asset is putto use. For disposals during the year, depreciation is charged up to the month preceding the month of disposal but subsidiary charge nodepreciation on assets deleted during the year. The Modaraba accounts for impairment, where indication exists, by reducing the carryingvalue to the estimated recoverable amount.The assets' residual value and useful lives are reviewed and adjusted, if appropriate, at each balance sheet date.Maintenance and normal repairs are charged to income as and when incurred. Major renewals and improvements are capitalized.Expenditures incurred subsequent to the initial acquisition of assets are capitalized only when it meets the recognition criteria. The profit orloss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of the asset isrecognized as an income or expense.The group assesses at each balance sheet date whether there is any indication that fixed assets may be impaired. If such indication exists, thecarrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amounts. Where carryingvalues exceed the respective recoverable amount, assets are written down to their recoverable amounts and the resulting impairment loss isrecognized in income currently. The recoverable amount is the higher of an assets’ fair value less costs to sell and value in use. Where animpairment loss is recognized, the depreciation charge is adjusted in the future periods to allocate the assets’revised carrying amount over itsestimated useful lives.
Capital work-in-progress are stated at cost and consist of expenditure incurred, advances made and other costs directly attributable tooperating fixed assets in the course of their construction and installation. Cost also includes applicable borrowing costs. Transfers are madeto relevant operating fixed assets category as and when assets are available for use intended by the management.
Intangible assets are stated at cost less impairment, if any. The carrying amount is reviewed at each balance sheet date to assess whether it isin excess of its recoverable amount and where the carrying value exceeds estimated recoverable amount, it is written down to its estimatedrecoverable amount.
Property held to earn rentals or for capital appreciation or for both is classified as investment property. The investment property of theModaraba comprises of office premises and is valued using the cost method i.e. at cost less any accumulated depreciation and any identifiedimpairment loss.Depreciation on office premises is charged to profit and loss account on the straight line method so as to write off the depreciable amount of
Parent
Note
Fixed assets
Investment property
Tangible
Capital work-in-progress
Intangible
3.
4.
5.
3.1
3.2
5.15.1.1
5.1.2
5.1.3
5.2
Page 53NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
office premises over its estimated useful life at the rate defined in note # 18. Depreciation on additions to investment property is charged fromthe month in which a property is acquired or capitalized while no depreciation is charged for the month in which the property is disposed off.The Modaraba assesses at each balance sheet date whether there is any indication that investment property may be impaired. If suchindication exists, the carrying amounts of such assets are reviewed to assess whether they are recorded in excess of their recoverable amount.Where carrying amounts exceed the respective recoverable amount, assets are written down to their recoverable amount and the resultingimpairment loss is recognised in profit and loss account. The recoverable amount is the higher of an asset’s fair value less costs to sell andvalue in use. Where an impairment loss is recognised, the depreciation charge is adjusted in the future periods to allocate the asset’s revisedcarrying amount over its estimated useful life.The gain or loss on disposal or retirement of an asset represented by the difference between the sale proceeds and the carrying amount of theasset is recognised as an income or expense.
The deferred cost is written off over a period not exceeding five years in accordance with the requirements of third schedule of ModarabaCompanies and Modaraba Rules, 1981.
Financial assets and financial liabilities are recognised when the Modaraba becomes a party to the contractual provisions of the financialinstrument.
Financial assets and financial liabilities are measured initially at fair value plus transaction costs, except for financial assets and financialliabilities carried at fair value through profit or loss, which are measured initially at fair value.All regular way of purchases and sale of financial instruments are recognized/derecognized on the trade date.
Financial assets and financial liabilities are measured subsequently as described below.
All the financial assets and financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions ofthe instruments. The particular recognition methods adopted are disclosed in the individual policy statements associated with each item.Anygain or loss on de-recognition of the financial assets and financial liabilities is taken to profit and loss account currently.
For the purpose of subsequent measurement, financial assets are classified into the following categories upon initial recognition:• loans and receivables;• financial assets at fair value through profit or loss;• available-for-sale financial assets; and• held to maturity (the Modaraba does not have any such investments).
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market.Following financial assets fall into this category of financial instruments:
• Deposits•Advances• Other receivables• Cash and cash equivalents
Investments which are acquired principally for the purposes of generating profit from short term fluctuation in price or are part of theportfolio in which there is recent actual pattern of short term profit taking are classified as 'financial assets at fair value through profit or loss'.Financial assets in this category are measured at fair value with gains or losses recognised in profit and loss account. These investments aremarked to market and are carried on the balance sheet at fair value. Net gains and losses arising on changes in fair value of these investmentsare taken to the profit and loss account for the year.
Investments intended to be held for indefinite period of time, which may be sold in response to needs for liquidity or changes in equity prices,are classified as 'available for sale financial assets'. Available-for-sale financial assets are those non-derivative financial assets that aredesignated as available-for-sale financial assets or are not classified as (a) loans and receivables (b) held to maturity investments (c) financialassets at fair value through profit or loss. Subsequent to initial recognition these investments are marked to market using the closing marketrate and are carried on the balance sheet at fair value. Surplus/Deficit arising from re-measurement are taken to comprehensive income untilthe investments are sold/disposed-off or untill the investments are determined to be impaired, at which time, cumulative surplus or deficitpreviously reported in the comprehensive income is included in the current year's profit and loss accountInvestments in equity instruments that do not have a quoted market price in an active market and whose fair value can not be reliablymeasured are measured at cost or fair value.
Afinancial asset is assessed at each reporting date to determine whether there is any objective evidence that it is impaired.Afinancial asset isconsidered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cashflows of that asset. Musharika and Morabaha receivables considered doubtful are provided for in accordance with the requirements of thePrudential Regulations for Modarabas.An impairment loss on available for sale financial asset -equity instruments is reversed only on the disposal of financial asset. Reversal ofprovision on musharika and Morabaha receivables are reversed in accordance with Prudential Regulations for Modarabas.
Deferred cost and amortization
Financial instruments
Initial recognition
Subsequent measurement
Subsidiary Company
Financial assets
Loans and receivables
Financial assets at fair value through profit or loss
Available for sale financial assets
Impairment of financial assets
5.3
5.4
5.4.1
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 54
Derecognizing of financial assets
Financial liabilities
Derecognition of financial liabilities
Investment in associate
Parent companyCurrent
Deferred
These are derecognised when the contractual rights to the cash flows from the financial assets expire, or when the financial asset and allsubstantial risks and rewards are transferred.
The Modaraba's financial liabilities include unclaimed profit distribution, creditors, accrued expenses and other liabilities.
These are derecognised when they are extinguished, discharged, cancelled or expired.
Associated companies, where the Modaraba holds 20% or more of the voting power of the investee company and where the company hassignificant influence, but not control, over the financial and operating policies, are accounted for using the equity method.Investment in associate is stated in consolidated financial statements using the equity method of accounting. Under the equity method,investments in associate is carried in the balance sheet at cost as adjusted for post acquisition changes in the Modaraba's share of net assets ofthe associate, less any impairment in the value of individual investment. When the Modaraba's share of losses in an associate equals orexceeds its interest in the associate including any other unsecured receivables if any, the Modaraba does not recognise further losses, unless ithas incurred obligations or made payments on behalf of associate.
These are valued at weighted average cost except for items in transit, which are valued at cost comprising invoice value, plus other chargespaid thereon. Provision is made for slow moving and obsolete items.
These are valued at the lower of cost and net realizable value except waste, which is valued at net realizable value determined on the basis ofcontract price. The cost is determined as follows:Raw materials Weighted average costWork-in-progress and finished goods Weighted average manufacturing cost including a proportion of production overheadsWaste Net realizable valueNet realisable value represents estimated selling prices in the ordinary course of business less expenses incidental to making the sale.
Trade debts are carried at the amounts billed / charged which is fair value of consideration to be received in the future.An estimate is made fordoubtful receivables based on review of outstanding amounts at the year end, if any. Provision is made against those having no activityduring the current period and are considered doubtful by the management. Balances considered bad and irrecoverable are written off whenidentified.
Other receivables are recognized at nominal amount which is fair value of the consideration to be received in the future.
Liabilities for trade and other amounts payable are carried at cost which is the fair value of the consideration to be paid in the future for goodsand services received.
(a) Income from Morabaha/Musharaka transactions is recognized on the basis of pro-rata accrual of the estimated profit earnedduring the year.
(b) Dividend income is recognized when the right to receive dividend is established.(c) Brokerage commission and fee income is recognized when accrued.(d) Profit on PLS deposits is recognized on an accrual basis.(e) Capital gains or losses arising on sale of investments are taken to income in the period in which they arise.(f) Sales are recognized on dispatch of goods to customers, when risk and rewards of ownership are transferred. Waste sales are
recognized when delivery is made to customers.(g) Profit on investment accounts with Islamic banks is recognized on an accrual basis.(h) Rent from investment property is recorded on accrual basis
Financing and borrowings are recorded at the amounts received. Financial charges are accounted for on accrual basis. Financial charges onlong term financing is capitalized up to the date of commissioning of respective property, plant and equipment acquired out of the proceeds ofsuch long term financing. Other financial charges are charged to profit and loss account in the year in which they are incurred.
The charge for taxation is based on taxable income at current rates of taxation after taking into account tax credits and tax rebates available, ifany or minimum tax under the provisions of the Income Tax Ordinance, 2001. For items covered under final tax regime, provision is madeaccording to the final tax rate provided in the Income Tax Ordinance, 2001. The income of Modaraba other than trading income is exemptfrom tax under Clause 100 of Part I of the Second Schedule to the Income Tax Ordinance, 2001. Provided that not less than 90% of its totalprofits in the year as reduced by the amount transferred to a mandatory reserve, as required under the provisions of the Modaraba Companiesand Modaraba (Floatation and Control) Ordinance, 1980 or the rules made thereunder, as are distributed amongst the certificate holders.
Deferred tax is recognized using the balance sheet liability method in respect of all temporary differences arising from differences between
Stores, spares and loose tools
Stock-in-trade
Trade debts
Other receivables
Creditors, accrued and other liabilities
Revenue recognition
Borrowing cost
Taxation
5.4.2
5.4.3
5.5
5.6
5.7
5.8
5.9
5.10
5.11
5.12
Page 55NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
the carrying amount of assets and liabilities in the financial statements and the tax base. This is recognized on the basis of expected manner ofthe realization and the settlement of the carrying amount of assets and liabilities using the tax rates enacted or substantially enacted at thebalance sheet date. Deferred tax assets are recognized for all deductible temporary differences and carry forward of unused tax losses, if any, tothe extent that future taxable profits will be available against which the deductible temporary differences can be utilised. Deferred tax assetsare reduced to the extent that is no longer probable that the related tax benefit will be realised.Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or theliability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.However, deferred tax is not accounted for as the management believes that the temporary differences will not reverse in the foreseeable future.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively enacted at the reporting date,and any adjustment to tax payable in respect of previous years
Deferred taxation is accounted for using the balance sheet liability method providing for temporary differences between the carrying amountof assets and liabilities in the financial statements and the corresponding tax bases used in the computation of the taxable profit. Deferred taxliabilities are generally recognized for all taxable temporary timing differences and deferred tax assets to the extent that it is probable thattaxable profits will be available against which the deductible temporary differences, unused tax losses and tax credits can be utilized.Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the period when the asset is realized or theliability is settled, based on tax rates that have been enacted or substantively enacted at the balance sheet date.Deferred tax is calculated based on the rates that have been enacted or substantively enacted upto the balance sheet date and are expected toapply to the period when the difference arises
All monetary assets and liabilities in foreign currencies are translated into Pak Rupees at exchange rates prevailing at the balance sheet date.Transactions in foreign currencies are translated into Pak rupees at exchange rate prevailing at the date of transaction.All non-monetary itemsare translated into rupees at exchange rate prevailing on the date of transaction or on the date when fair values are determined. Exchangedifferences are included in income currently.
Assets and liabilities in foreign currencies are translated at the rates of exchange prevailing at balance sheet date or at the contracted rates whileforeign currency transactions are recorded at the rates of exchange prevailing at the transaction date or at the contracted rates. Exchange gainsand losses are charged to income currently.
The Modaraba operates an Unfunded Gratuity for its permanent employees who complete the qualifying period of service. Provision has beenmade in accordance with actuarial recommendations using the Projected Unit Credit Method. The results of current valuation are summarizedin Note 12 of this financial statement.Actuarial gains / losses are recognized over the average lives of the employees.Subsidiary company
The Company operates a funded employees’ provident fund scheme for its permanent employees. Equal monthly contributions at therate of 6 percent of basic pay are made both by the Company and employees to the Fund.
Compensated absences are accounted for in the period in which the absences are earned.
A financial asset and financial liability is offset and the net amount is reported in the balance sheet if the Modaraba has a legally enforceableright to set-off the recognized amounts and intends either to settle on a net basis or to realize the asset and settle the liability simultaneously.
The Company enters in to derivative financial instruments. These are initially recorded at cost and are re-measured to fair value at subsequentreporting dates. Any resulting gain or loss is recognized in current year income. Derivatives with positive market values are included in otherreceivables and derivatives with negative market values are included in other liabilities in the balance sheet.
Provisions are recognized in the balance sheet when the Modaraba has a legal or constructive obligation as a result of past event and it isprobable that an outflow of resources embodying economic benefit will be required to settle the obligation and reliable estimate can be madeof the amount of the obligation.
Profit distribution to certificate holders is recognized as liability in the period in which such distribution is announced
The carrying amount of Modaraba's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment.If any such indication exists, the assets recoverable amount is estimated and impaired losses are recognized in the profit and loss account.
Asegment is a distinguishable component of the Modaraba that is engaged in business activities from which the Modaraba earns revenues andincur expenses and its results are regularly reviewed by the Modaraba's Chief Operating Decision Maker to make decision about resources tobe allocated to the segment and assess its performance. Further, discrete financial information is available for each segment.
Subsidiary companyCurrent
Deferred
Parent company
Subsidiary company
Parent company
Defined contribution plan
Employee compensated absences
Foreign currency translation
Retirement benefits
Offsetting of financial assets and financial liabilities
Derivative financial instruments
Provisions
Profit distribution to certificates holders
Impairment
Segment reporting
5.13
5.14
5.15
5.16
5.17
5.18
5.19
5.20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 56
Based on internal management reporting structure, services provided and products produced and sold, the Modaraba is organized into thefollowing four operating segments:- Musharaka facility- Brokerage operation- Capital market- Textile Business- OthersManagement monitors the operating results of above mentioned segments separately for the purpose of making decisions about resources tobe allocated and of assessing performance.
All transactions with related parties, if any, are recorded at an arm's length basis.
Transactions and contracts with the related parties are based on the policy that all transactions between the Company and related parties arecarried out at an arm’s length.These prices are determined in accordance with the methods prescribed in the Companies Ordinance, 1984.
For the purposes of cash flow statement, Cash and cash equivalents comprise cash in hand and cash with banks net of borrowing consideredas being in the nature of financing activities. .
Items include in the financial statements are measured using the currency of primary economic environment in which the Modaraba operates.The financial statements are presented in Pakistani Rupees, which is the Modaraba's functional and presentation currency.
The Modaraba's objective when managing capital is to safeguard the Modaraba's ability to continue as a going concern so that it can providereturns for certificate holders and benefits for other stakeholders and to maintain a strong capital base to support the sustained developmentof its businesses.The Modaraba manages its capital structure by monitoring return on net assets and makes adjustments to it in the light of changes ineconomic conditions. In order to maintain or adjust the capital structure, the Modaraba may adjust the amount of dividend paid to certificateholders or issue new certificates.
IAS 19 ‘Employee Benefits’ (revised 2011) which become effective for the annual periods commencing on or after January 01, 2013,amends the accounting for the defined benefit plan. The revised standard has been applied retrospectively in accordance with the transitionprovisions of the said standard and IAS 8 ‘Accounting Policies, Changes inAccounting Estimates and Errors’.The impact of adaption of IAS19 (revised 2011) has been in the following areas:The standard requires that all actuarial gains /loss should be recognized immediately in other comprehensive income (OCI).The standard has also removed the option of Corridor approach and the standard requires immediate recognition of past service cost in profitand loss statement. There is no impact of these requirements in the current year as Modaraba has not opted for corridor approach neither it hasunrecognized past service costs at the time of adoption of the said standard.The quantitative impacts arising from amendments in IAS 19 (revised 2011) on the items of financial statements are as follows:
The Modaraba’s policy for Staff Retirement Benefits and disclosure relating thereto have been amended to comply with the requirements ofIAS 19 (revised 2011).Subsidiary accounting judgment and critical estimates / assumptionsThe preparation of financial statements in conformity with approved accounting standards requires the management to:-
Related party transactions
Cash and cash equivalents
Functional and reporting currency
Capital Risk Management
Change in Accounting Policy
Parent
Subsidiary Company
Adoption of amendments in IAS 19 ‘Employee Benefits’
5.21
5.22
5.23
5.24
5.255.25.1
(i)(ii)
5.25.2
5.25.3
236,322
2014 20122013Rupees Rupees Rupees
Impact on balance sheet
Decrease in reservesIncrease in remeasurement of defined benefit liabilityImpact on profit and loss accountIncrease in salaries, allowances and benefits-gratuity expenseImpact on other comprehensive incomeIncrease in gain on remeasurement of defined benefit liabilityImpact on cash flow statementDecrease in profit before taxationIncrease in adjustments relating to provision for gratuityImpact on statement of changes in equityIncrease in unappropriated losses/ decrease in profitIncrease in remeasurement of defined benefit liability
351,700
351,700351,700
351,700351,700
351,700
351,700
351,700236,322236,322
236,322
236,322
236,322236,322
236,322236,322
223,332223,332
223,332
223,332
223,332223,332
223,332223,332
Page 57NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
- exercise its judgment in process of applying the Company’s accounting policies, and- use of certain critical accounting estimates and assumptions concerning the future.These involve critical accounting estimates and significant assumptions concerning the future are discussed below:-Income taxesThe Company takes into account relevant provisions of the prevailing income tax laws while providing for current and deferred taxes asexplained in note 4.6 to these financial statements.Property, plant and equipmentManagement has made estimates of residual values, useful lives and recoverable amounts of certain items of property, plant and equipment.Any change in these estimates in future years might affect the carrying amounts of the respective items of property, plant and equipment withcorresponding effect on the depreciation charge and impairment loss.Stores and sparesManagement has made estimates for realizable amount of slow moving and obsolete stores and spares items to determine provision for slowmoving and obsolete items. Any future change in the estimated realizable amounts might affect carrying amount of stores and spares withcorresponding affect on amounts recognized in profit and loss account as provision / reversal.Workers' Welfare FundThe Finance Act 2008 introduced an amendment to the Workers' Welfare Fund Ordinance, 1971 (WWF Ordinance). Through theseamendments Workers' Welfare Fund (WWF) is payable @ 2% of the profit before taxation as per the financial statements or taxable incomewhich ever is higher.During the year 2011, the Honorable Lahore High Court (LHC) in a constitutional petition relating to the amendments brought in the WWFOrdinance, 1971 through the Finance Act 2006, and the Finance Act 2008, has declared the said amendments as unlawful andunconstitutional and struck them down. In March 2013, a larger bench of the Sindh High Court (SHC) in various constitutional petitionsdeclared that amendments brought in theWWF Ordinance, 1971 through the FinanceAct, 2006, and the FinanceAct 2008, do not suffer fromany constitutional or legal infirmity. The Management Company as a matter of abundant caution, has made the provision forWWF.
Certificate capital
Reserves
Certificates held by management company 5,532,296 (2014: 5,532,296).Certificates held by associated companies and undertakings 1,126,412 (2014: 1,126,,412).
In accordance with the Prudential Regulations for Modarabas, the Modaraba is required to transfer an amount not less than 20% and not morethan 50% of its after tax profits to statutory reserve until the reserve funds equals the paid-up capital. Thereafter, a sum not less than 5% of theafter tax profits is required to be transferred to the statutory reserve.
a)
b)
c)
5.27
6.
7.
462,200,00046,220,000 46,220,000 462,200,000
62,200,0006,220,000 6,220,000
524,400,00052,440,000 52,440,000 524,400,000
62,200,000
20152015 20142014
RupeesRupees
Modaraba certificates of Rs. 10 each fully paid-up in cash
Modaraba certificates of Rs. 10 each issued as fully paid-upbonus certificates
No ofCertificates
No ofCertificates
(48,368,315)148,356,187
150,635,954
-
2,279,767 2,279,767 (2,279,767) (2,279,767)
279,456,187
281,735,954
131,100,000
131,100,000
-
-
(212,024,846)
-
27,120,000
27,120,000
(184,904,846)
(94,243,682)
-
-
94,551,341
-- -68,577,468 68,577,468 68,577,468
(19,665,000)
44,028,463 44,028,463 44,028,463 47,481,676
(19,665,000) (19,665,000)
95,437,980
-
-
-
Opening balance - restated
Transfer from Profit & LossAccount
Transfer to statutary reserve
StatutoryReserve *
Certificatepremiumaccount
TotalReserve
AccumulatedLoss
TotalReserves
GeneralReserve
TotalReserves
2015
TotalReserves
2014
Closing balance
-
(121,363,682)
94,551,341
-
187,492,272
Profit distribution
Capital Reserves Revenue Reserves
--
Incremental depreciation onrevaluation surplus net offdeferred tax -
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 58
Surplus on revaluation of fixed assets
Subordinated Loan
Long term financing
Opening balanceRevaluation during the yearLess: transfer to unappropriated profit in respect
charged during the year- (net of deferred tax)Related deferred tax liability
Closing balanceRelated deferred tax effect onOpening balanceEffect of rate adjustmentLess: incremental depreciation charged during the year
to the profit and loss account.Closing balanceNet Closing balance
The loan was obtained from a Sponsor of the Company subordinated to the repayments of other financing facilities from Habib Bank Limitedavailed by the Company. The loan carried mark-up at the rate of one month KIBOR plus 2% payable on a quarterly basis. The loan has beenrepaid during the year.
Habib Bank Limited - Demand FinanceThe Bank of Punjab - Demand Finance
Less: Current portion shown under current liabilities
Demand finance IIIDemand finance
This finance was secured against first pari passu hypothecation charge on present and future plant and machinery, first pari passu equitablemortgage charge on present and future land and building, equitable mortgage over personal property and personal guarantees of all thedirectors of the Company. The finance carried mark up at 3 month KIBOR plus 1.50% per annum on quarterly basis. The facility wasrepayable in 16 equal quarterly installments, commencing from February 2011. The facility has been repaid during the year.This finance is obtained for the construction of grid station and is secured against first pari passu hypothecation charge on present and futureplant and machinery, first pari passu equitable mortgage charge on present and future land and building, equitable mortgage over personalproperty and personal guarantees of all the directors of the Company. The finance carries mark up at 6 month KIBOR plus 2% per annum onquarterly basis. The facility is repayable in 12 equal quarterly installments, commencing from July 2014.
Demand finance IDemand finance II
'This amount is payable against demand finance as a sub limit of import letter of credit sight / DA 720 days opened with Bank of Punjab forimport of plant and machinery. This facility is secured against existing first pari passu charge of Rs. 643.72 million on all present and futurefixed assets of the Company with 25% margin duly registered with SECP. The loan was rescheduled on March 31, 2014 and the Company'sold facilities of running finance and PAOA was merged with demand finance. As per the revised terms, the facility is additionally securedwith equitable mortgage of project building and personal guarantee of three directors of the Company. The charge over the said project rankspari passu with the charge registered with Habib Bank Limited. The finance carries markup at the rate of 3 month KIBOR plus 200 bps with afloor of 11% per annum payable on quarterly basis. The loan is now repayable in 43 quarterly installments commencing fromApril 15, 2010.The accompanying suspended mark up was also rescheduled with the same facility.'The facility is created against conversion of accrued markup upto September 30, 2009 on all facilities except LTF-EOP loan. The facility issecured against equitable mortgage of project building and personal guarantee of three directors of the Company. The charge over the saidproject ranks pari passu with the charge registered with Habib Bank Limited. The loan was rescheduled on March 31, 2014 and theCompany's old facilities of running finance and PAOA was merged with demand finance. This loan is repayable in 39 quarterly installmentscommencing fromApril 15, 2010.
of incremental depreciation
transferred
Secured - Financial institution
Habib Bank Limited - Demand Finance
The Bank of Punjab
8.
9.
10.
9.1
10.1
10.1.1
10.1.2.
10.2
10.2.1
10.2.2
2015Rupees
647,477,404
44,028,46320,719,27764,747,740
582,729,664
227,336,511(20,143,742)
(20,719,277)186,473,492396,256,172
-
12,250,000496,782,768509,032,768(69,928,184)439,104,584
-12,250,00012,250,000
452,231,99844,550,770
496,782,768
2014Rupees
719,419,337
47,481,67624,460,25771,941,933
647,477,404
251,796,768-
(24,460,257)227,336,511420,140,893
40,000,000
24,500,000519,710,952544,210,952(33,428,186)510,782,766
5,250,00019,250,00024,500,000
464,231,99855,478,954
519,710,952
Note
9.1
10.110.2
10.1.110.1.2
10.2.110.2.2
Page 59NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Deferred mark up
Deferred liabilities
Deferred markupLess: Current portion shown under current liabilities
Deferred taxation liabilityStaff gratuity
The net balance for deferred taxation is in respect of the following temporary differences:
Accelerated tax depreciation allowanceRevaluation of operating fixed assets
losses carried forwardturnover tax
Employees, after completion of one year of service, shall be entitled for gratuity on leaving the company’s employment. Gratuity shall bepaid on the basis of one month’s last drawn monthly gross salary for each completed year of service.Annual provision is based on actuarial valuation, which was carried out as at June 30, 2015 on September 23, 2015 using the Projected UnitMethod.Amount recognized in the balance sheet are as follow:Present value of defined benefit obligationFair value of plan assetsTotal defined benefit obligation
Opening balanceCharged for the define benefit planCurrent service costNet interest
Remeasursement of defined benefit liabilityDue to financial assumptionsDue to demographic assumptionsDue to experience adjustments
Benefits paidClosing balance
Valuation discount rateSalary increase rate -Short term (period of next one year)Salary increase rate- long term
Discount rateSalary Increase rateWithdrawal rate
Deferred taxation liability/asset
Deferred tax liabilities
Deferred tax assets
Staff gratuityGeneral description
Movement in defined benefit obligation
Actuarial assumptions
Sensitivity analysis of principal assumptions
11.
12.
12.1
12.212.2.1
12.2.2
12.2.3
12.2.4
12.2.5
2015Rupees
49,537,44824,000,00025,537,448
200,753,4662,655,484
203,408,950
101,220,233186,473,492287,693,725
-(86,940,259)200,753,466
2,655,484-
2,655,484
1,556,255
168,971206,204375,175
341,123-
382,931724,054
-2,655,484
9.75%9.78%9.75%
1,623,0211,624,5601,556,496
2014Rupees
73,537,44824,000,00049,537,448
251,319,9631,556,255
252,876,218
106,000,972220,142,317326,143,289
(3,540,175)(71,283,151)251,319,963
1,556,255-
1,556,255
2,092,021
141,700210,000351,700
(179,422)1,650
(177,819)(355,591)(531,875)1,556,255
13.25%0.00%
12.25%
1,495,0061,492,5271,556,012
Note
12.112.2
1%1%10%
Rate per annum
Change inassumption
Increase inobligation
Decrease inobligation
Impact on obligation of change in assumptions
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 60
Expected maturity analysis of undiscounted defined obligation for the gratuity scheme is as follows:
Following risks are associated with Defined benefit plans:The risk arises when the actual lifetime of retirees in longer than expectation. This risk is measured at the plan level over the
entire retiree population.The most common type of retirement benefit is one where the benefit is linked with the final salary. The risk arises when
the actual increases are higher than expectation and impacts the liability accordingly.The risk of actual withdrawals varying with the actuarial assumptions can impose a risk to the benefit obligation. The
movement of liability can go either way.
The disclosure made in notes 12.2.5 to 12.2.7 are based on the information included in the actuarial valuation report of the Modaraba as ofJune 30, 2014.
Habib Bank Limited - PledgeHabib Bank Limited - Hypothecation
The facility is obtained for import / purchase of raw cotton bales and to finance working capital inventory. This facility is secured againstpledge of raw cotton with 10% margin and pledge of cotton / blended yarn with 15% margin. The finance carries mark-up at the rate of 1month KIBOR + 125 basis points to be calculated on monthly basis. The total sanctioned limit is Rs. 250 million (2014: Rs. 250 million).The facility was obtained for working capital requirements. This facility was secured against first pari passu charge of Rs. 57 million onstocks and receivables of the Company. The finance carries markup at the rate of 1 month KIBOR plus 125 basis points to be calculated onmonthly basis. The total sanctioned limit was Rs. 10 million.
Habib Bank Limited Demand FinanceBank of Punjab Demand FinanceHabib Bank Limited - Grid Station
Deferred mark up
CreditorsAccrued expensesCharityPayable to clientsAdvance from customerRention money payablesSale tax paybleWithholdolding tax payableWorkers Profit Participation FundWorkers' Welfare FundOther liabilities
This includes Rs. 13.214 million (2014: Rs. 13.214 million) due to associated undertakings.This includes Rs 4,829,780 (2014 : Rs 5,754,180) payable to Premier Financial Services (Private) Limited
Financial institutionsSponsors
Longevity risks:
Salary increase risk:
Withdrawal risk:
Short term borrowings
Current portion of long term liabilities
Creditors, accrued and other liabilities
Accrued Mark Up
Secured - financial institutions (Running finance arrangements)
Secured – financial institution
12.2.6
12.2.7
12.2.8
13.1
13.2
15.115.2
13.
14.
15.
16.
2015Rupees
18,166,501-
18,166,501
-62,928,184
7,000,00069,928,18424,000,00093,928,184
39,782,529106,009,496
26,10316,277,252
549,0053,172,4461,536,392
182,7012,741,6372,553,3753,318,349
176,149,285
14,696,8125,025,482
19,722,294
2014Rupees
49,888,1589,398,362
59,286,520
5,250,00222,928,184
5,250,00033,428,18624,000,00057,428,186
49,991,68965,143,408
255,4203,797,3461,682,3552,984,5082,292,273
59,7503,365,5901,789,8596,502,588
137,864,786
15,571,8574,353,163
19,925,020
Note
13.113.2
15.1
15.2
Year 1 Year 2 Year 3 Year 4 Year 5 Over 5 yearsAt at June 30, 2015
Gratuity 902,214 15,196 15,972 73,892 15,284 2,200,849
Page 61NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Contingencies and commitments
Tangible
There is a contingent liability in respect of bank guarantees issued by the Company's banker in the ordinary course of business in favor of SuiSouthern Gas Company Limited and HESCO aggregating to Rs. 25.60 million (2014: Rs. 24.556 million).During the prior year, two separate cases have been decided in the International Court of Arbitration against the Company in respect ofliabilities aggregating to US$ 611,523. The plaintiffs through their legal advisor served the Company with a notice to pay the amount as perthe award and filed suits against the Company in the Honorable High Court of Sindh for enforcement of award. No provision has been madein the financial statements for the liability that may arise in the event of a decision against the Company as the management is of the opinion,based on advice of legal advisor, that the decision is likely to be in the favor of the Company.Modaraba has filed a suit against Samba Bank Ltd for the recovery of deposit amounting to Rs 21 million alongwith mark up. The matter ispending before the Honourable High Court of Sindh. Management of the Modaraba and its legal advisor are of the opinion that Modaraba hasreasonable chance and it appear unlikely that Modaraba may suffer any loss from the same
Commitment in respect of letters of credit as at the balance sheet date amounted to Rs. 26.887 million (2014: Rs. 34.169 million).
Operating fixed assetsCapital work in progress
Contingencies
Commitments
17.
18.
18.1
2015Rupees
1,223,964,011-
1,223,964,011
2014Rupees
1,258,845,4859,691,550
1,268,537,035
Note
18.118.2
Owned
2015
Leasehold landFactory buildingColony buildingPlant & machineryGas generatorElectric installationsOffice premisesGrid StationOffice equipments
Factory equipmentComputers
Motor vehicles
Furniture & fixtures
Rupees
As atJuly 01,
2014Addition /*Transfer
Surpluson
revaluation
As atJune 30,
2015
As atJune 30,
2015
As atJuly 01,
2014
Chargedduring the
year
Book valueAs at
June 30,2015
Rate
%
Cost Accumulated depreciation2015
Particulars
40,140,000301,838,78558,423,768
1,417,575,075110,674,82782,204,31820,848,634
-1,055,685
4,719,9151,760,945
17,005,948
1,201,2342,057,449,134
-5,594,127
-
---
23,809,569121,500(61,000)
-397,300
(107,340)3,136,000
(1,286,508)-
58,852,538
90,456,186
---------
--
-
--
40,140,000307,432,91258,423,768
1,476,427,613110,674,82782,204,31820,848,63423,809,569
1,116,185
4,719,9152,050,905
18,855,440
1,201,2342,147,905,320
3,101,027103,562,81622,988,647
565,814,56446,786,58534,762,887
6,296,110-
772,528
1,874,5261,225,526
10,701,385
717,048798,603,649
370,39020,203,082
3,543,51287,857,242
6,388,8244,744,1431,040,207
198,41387,258
(44,773)284,539224,570
(107,337)1,652,702
(1,201,948)96,836
125,337,660
3,471,417123,765,89826,532,159
653,671,80653,175,40939,507,030
7,336,317198,413815,013
2,159,0651,342,759
11,152,139
813,884923,941,309
36,668,583183,667,01431,891,609
822,755,80757,499,41842,697,28813,512,31723,611,156
301,172
2,560,850708,146
7,703,300
387,3501,223,964,011
311010101010
5 & 10
20
2033 & 20
20
20
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 62
OwnedLeasehold landFactory buildingColony buildingPlant & machineryGas generatorElectric installationsOffice premises
Office equipments
Factory equipmentComputers
Motor vehicles
Furniture & fixtures2014
Rupees
As atJuly 01,
2013Addition /*Transfer
Surpluson
revaluation
As atJune 30,
2014
As atJune 30,
2014
As atJuly 01,
2013
Chargedduring the
year
Book valueAs at
June 30,2014
Rate
%
Cost Accumulated depreciation2014
Particulars
40,140,000271,811,45858,423,768
1,380,130,738110,674,82782,204,31823,248,634
997,005
4,719,9151,058,455
16,894,948
1,201,2341,991,505,300
-30,027,327
-37,444,337
--
(2,400,000)
228,180(169,500)
-628,69073,800
1,010,000(899,000)
-65,943,834
-------
-
--
-
--
40,140,000301,838,78558,423,768
1,417,575,075110,674,82782,204,31820,848,634
1,055,685
4,719,9151,760,945
17,005,948
1,201,2342,057,449,134
2,726,89683,368,51419,051,411
471,991,92239,687,89129,491,617
5,464,236
855,600
1,558,369966,940
9,987,980
663,250665,814,626
374,13120,194,302
3,937,23693,822,642
7,098,6945,271,2701,150,207(318,333)
51,582(134,654)
316,157258,586
1,612,404(898,999)
53,798132,789,023
3,101,027103,562,81622,988,647
565,814,56446,786,58534,762,887
6,296,110
772,528
1,874,5261,225,526
10,701,385
717,048798,603,649
37,038,973198,275,96935,435,121
851,760,51163,888,24247,441,43114,552,524
283,157
2,845,389535,419
6,304,563
484,1861,258,845,485
301010101010
5 & 10
20
2033 & 20
20
20
Depreciation for the year has been allocated as follows:
Administrative expense
Cost of saleAdministrative expense
Had there been no revaluation, the net book value of the specific classes of property, plant and equipment would have been as follows:Factory buildingColony buildingPlant & machineryGas generatorElectric installationsFactory equipment
This comprises of:Civil worksBorrowing costs
This represents Trading Right Entitlment certificates (TREC) recieved from Karachi Stock Exchanges Ltd and Islamabad Stock ExchangesLtd after Demutilization.In Stock Exchange (Corporatization, Demutualization and Integration) Act 2012 the prerequsite for TREC holder to register as Brokershould be a company as defined in Companies Ordinance, 1984. Our submission to SECP that Modaraba although not a company but beingregulated under its auspices and a corporate legal entity, has not been accepted by the Regulators. Thereafter, we have requested our primeregulator, Registrar Modaraba to allow us to create a wholly owned subsidiary enabling us to protect and safe guard assets of the modaraba.The Registrar Modaraba did not understand our challenge and concern, we have left with no other option but to file a suit in the HonorableSindh High Cout and got a stay order against the cancelation of Broker registration.
Modaraba business
Textile Business
Capital Work-In-Progress
Intangible
18.1.1
18.1.2
18.2
19.119.
2015Rupees
1,562,986
120,924,4111,496,205
123,983,602
70,717,19111,963,457
347,424,09925,063,58418,611,4411,241,389
475,021,161
---
19,000,000
2014Rupees
1,641,504
131,078,2931,421,212
134,141,009
78,574,65713,292,730
386,026,77727,848,42720,679,379
1,379,321527,801,291
9,125,170566,380
9,691, 550
19,000,000
Note
19.1
Page 63NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
52,400,000 2,400,000 328,333 120,000-Office premises
As atJuly 01,
2014
Transferredfrom
tangiblefixed assetTransfer
Chargedduring the
year %
448,333 1,951,667
Cost Accumulated Depreciation
ParticularsAs at
June 30,2015
As atJune 30,
2015
Book Valueas at
June 30,2015
Rate
2015
Investment Property
Long term investments
Modaraba is holding one of its office premises to investment property. Modaraba will generate rental income on this property fromnext year.Fair value of the investment property, based on the valuation carried out by Consultancy Support & Services as at June 30, 2015 is Rs.23,432,500 (2014: Rs. 15,000,000)
Listed securitiesUnlisted securitiesPreference Share
The holding is in ordinary shares/units of Rs. 10 each of listed companies, unless otherwise stated:
Dawood Income Fund (Unit of Rs. 100 each)
Pakistan Telecommunication Company Limited
Javed Omer Vohra & Company Limited
First Dawood Mutual Fund
There was no trading on these scrips on June 30, 2015. Their last quoted /traded value is taken for valuation.
Investment was made at inception and the carrying value was Rs 5,145,000. SECP took action against the management and as aresult the Trustee (Central Depository Company of Pakistan Limited) sold its investment and made the partial payment to shareholders. The Modaraba recieved Rs 4,935,859 in this matter.
The holding is in ordinary shares of Rs. 10 each.
Sapphire Power Generation LimitedKarachi Stock Exchange LtdIslamabad Stock Exchange LtdCallmate Telips Telecom Limited
Investment classified as available-for-sale financial assets
Investment classified as available-for-sale financial assets
Open-end mutual funds
Fixed Line Telecommunication
Financial Services
Equity investment instruments
Listed securities
Unlisted securities
20.
21.
21.121.1.1
21.1.1.1
21.1.1.2
21.2
1,959,12972,219,861
1,828,74076,007,730
847,188
861,000
41,800
209,141
1,959,129
1,800,00040,073,83030,346,030
172,219,861
2,167,86972,219,861
-74,387,730
847,188
1,069,740
41,800
209,141
2,167,869
1,800,00040,073,83030,346,030
172,219,861
21.121.221.3
21.1.1.1
21.1.1.1
21.1.1.1 &21.1.1.2
21.2.121.2.221.2.221.2.3
2015Rupees
2014Rupees
Note
52,400,000 2,400,000 328,333 120,000-Office premises
As atJuly 01,
2014
Transferredfrom
tangiblefixed assetTransfer
Chargedduring the
year %
448,333 1,951,667
Cost Accumulated Depreciation
ParticularsAs at
June 30,2015
As atJune 30,
2015
Book Valueas at
June 30,2015
Rate
2015
11,968
42,000
22,000
735,000
50,0004,007,3833,034,603
78,150
11,968
42,000
22,000
735,000
50,0004,007,3833,034,603
78,150
2015Number
2014Number
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 64
Net assets value per share of Sapphire Power Generation Limited is Rs. 69.72 (2013: Rs. 85.67) as per financial statements as at June 30,2014 audited by RiazAhmad, Saqib, Gohar & Company, CharteredAccountants.Net assets value per share of Karachi Stock Exchange Ltd and Islamabad Stock Exchange Ltd is Rs.10.17 (2014: Rs. 10.08) and Rs 11.10(2014: Rs. 10.68) as per financial statements as at June 30, 2014 audited by Ernst & Young Ford Rhodes Sidat Hyder, CharteredAccountantsand BDO Ebrahim & Company, CharteredAccountants respectively.The company is in the process of winding up, hence Net assets value per share is not available.
Mari Petroleum
- in hand- in transit
Raw material- in hand- in transit
Work in ProcessFinished goods
Secured - considered goodUnsecured - considered good
Unsecured - considered doubtfulLess: Provision for bad debts against local debtors
This comprises of amounts receivable from:Suraj Cotton Mills LimitedThe aging of related party balances at the balance sheet date is as follows:Past due by over 60 days
Musharaka - considered goodMorabaha - considered doubtful
Provision for non performing assets
The Modaraba has entered into musharaka agreements under which the Modaraba has provided funds for working capital requirements onprofit and loss sharing basis. These are secured against pledge, hypothecation of stock and receivables, demand promissory notes, personalguarantee of directors / proprietors and mortgage of property. Expected rate of profit on musharaka transactions during the year rangebetween 12% to 16 % ( 2014: 12 % to 16%).
Investments in associated company
Listed securities
Preference SharesThe holding is in ordinary shares of Rs. 10 each.
Store and spares
Stock-in-trade
Trade debts
Morabaha/Musharaka receivables-secured
Short term investments
Investment classified as financial asset at fair value through profit or loss
21.2.1
21.2.2
21.2.3
21.3
24.1
24.2
25.1
22.
23.
24.
25.
26.
1,828,7401,828,740
29,440,537-
29,440,537
114,992,056-
6,812,61392,917,728
214,722,397
619,90892,922,76693,542,674
9,565,353(9,565,353)
-93,542,674
619,908
619,908
153,003,60917,380,055
170,383,664(17,380,055)153,003,609
26,979,617
97,882,927124,862,544
--
26,392,239-
26,392,239
103,135,16818,678,526
9,346,24266,494,627
197,654,563
-161,835,541161,835,541
7,843,463(7,843,463)
-161,835,541
-
-
159,320,49717,380,055
176,700,552(17,380,055)159,320,497
24,376,515
107,396,243131,772,758
24.1
25.1
26.1
26.2
2015Rupees
2014Rupees
Note2015Number
2014Number
- 182,874
Page 65NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Investments in associated company
Oil and Gas
Food
Chemicals
Construction and materials
Transport
Personal goods
Household goods
Pharma and biotech
Automobile and parts
Fixed line telecommunication
Electricity
Banks
The holdings are in ordinary shares of Rs. 10 each.
Premier Insurance LimitedPurchased of holding in associated companyShare of (loss) / profitImpairment in associated companyLess: dividend income
During the year, Premier Insurance Limited has consolidated its shares in ratio of 1:2 resulting inchange in face value of shares from Rs. 5 toRs. 10.
The holding is in ordinary shares/units of Rs. 10 each of listed companies, unless otherwise stated:
Attock RefineryMari Petroleum Company LimitedHascol Petroleum Company LimitedNational Refinery LimitedOil & Gas Development Co LimitedPakistan Petroleum LimitedShell Pakistan Limited
Engro Foods Limited
AkzoNobel Pakistan LimitedLotte Chemical Pakistan PTALimitedGhani Global Gass LimitedICI Pakistan LimitedWah Noble Chemicals Limited
D.G. Khan Cement Company LimitedDewan Cement LimitedFauji Cement Company LimitedCherat Cement Company LimitedFecto Cement LimitedLucky Cement LimitedLafarge Pakistan Cement LimitedPioneer Cement Limited
Pakistan International Bulk Terminals Limited
Nishat Mills Limited
Tariq Glass Industries Limited
IBLHealthcare LimitedThe Searle Pakistan Limited
HondaAtlas Car (Pakistan) LimitedPak Suzuki LimitedGhaniAutomobile Limited
Pakistan Telecommunication Company LimitedNetsol Technologies Limited
K-Electric Limited
Bank Islami Pakistan Limited
Listed securities
26.1
26.2
24,376,51510,700,000
3,078,706(10,685,020)
(490,584)26,979,617
-9,770,3101,145,100
-5,359,276
-12,597,408
-
1,787,352934,200655,900
1,115,062805,600
-4,145,4603,487,000
174,060-
6,131,516--
8,985,800
-
-
986,1007,215,525
7,391,3842,789,8245,822,200
12,207,750-
2,973,600
1,402,50097,882,927
28,269,886-
(2,912,237)-
(981,134)24,376,515
12,397,7369,261,064
-4,264,326
-12,966,852
6,050,532
102,530
692,736291,195
---
923,580-
1,452,620949,170
2,700,000-
10,283,1302,333,000
-
4,286,536
518,100
-3,560,616
7,354,110--
13,384,4852,870,420
9,249,855
1,503,650107,396,243
2015Rupees
2014Rupees
Note2015Number
2014Number
490,567
58,40024,800
-19,800
-57,80021,900
1,000
4,10040,500
---
10,500-
75,50014,50054,000
-643,50050,000
-
38,300
16,500
-20,400
79,000--
525,50098,000
1,089,500
152,500
964,151
-20,85010,000
-29,900
-49,800
-
5,600135,000
35,0002,600
16,000
-285,000100,000
2,000-
11,800--
251,000
-
-
8,65022,500
33,8006,400
677,000
595,500-
354,000
137,500
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 66
Advances - considered good
Trade Deposits and Prepayments
Other Receivables
Tax refund from government authorities
Taxation - Net
Cash and bank balances
Income
To employeesTo supplier of goodsAgainst letter of creditOthers
DepositsMargin depositPrepayments
Sale proceeds of investmentsReceivable from clientsInsurance claimDividendCotton claimsOthers
Considered goodConsidered doubtful
Less: Provision for doubtful debts
Movement in provision for doubtful debtsOpening provision
The insurance claim was receivable from Premier Insurance Limited, an associated undertaking which has been received during year.Receivables from client includes receivable from related parties of Rs 358,628 (2014: Rs. 26,817).All the amounts are short term. The carrying amount is considered a reasonable approximation of fair value.
Sales tax refundableIncome tax refundable
Advance income taxLess : Provision for taxation
Cash in handBank balances
-in current accounts-in Islamic bank-In saving accounts
Effective mark-up rate in respect of PLS accounts ranges from 5% to 7% (2014: 5% to 7%) per annum.
Income from modaraba's businessIncome from textile's business
Receivable from clients
27.
28.
29.
30.
31.
32.
33.
29.1
29.1.1
29.229.2.129.3
32.1
1,560,07736,769,364
77,399-
38,406,840
14,772,6658,140,588
254,62923,167,882
(3,457)24,061,246
-168,217
-2,689,078
26,918,541
24,061,24612,500,00036,561,246
(12,500,000)24,061,246
12,500,00012,500,000
7,390,25913,596,98720,987,246
26,545,816(15,905,952)
10,639,864
822,513
12,516,72817,979,730
311,02731,629,998
34,252,047166,510,216200,762,263
1,035,19537,372,542
44,143-
38,451,880
14,767,55611,345,225
214,36226,327,143
327,97923,226,360
2,589,57617,80064,151
2,661,08928,886,955
23,226,36012,500,00035,726,360
(12,500,000)23,226,360
12,500,00012,500,000
11,839,31412,548,49024,387,804
22,330,466(20,996,096)
1,334,370
753,817
7,752,6047,774,905
319,21216,600,538
46,224,523175,422,125221,646,648
27.1
29.129.2
32.1
33.133.2
2015Rupees
2014Rupees
Note
Page 67NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Income from modaraba's business
Income from textile's business
Cost of sale
Profit on musharakaBrokerage commissionCapital gainDividendsRentalsCommission and fees
Sales- Local- Exports- Waste sales
Commission to selling agent
Cost of sale
Raw material consumedStore consumedPacking material consumedSalaries, wages and other benefitsProvident fund contributionFuel and powerInsuranceRepair & maintenanceDepreciationOther manufacturing overheads
Work in Process-opening stock-closing Stock
Cost of goods manufactured
Finished goods-opening stock-closing Stock
Opening stockPurchased during the year
Closing stock
Raw material consumed
33.1
33.2
33.3
33.3.1
17,756,8382,852,1295,829,2344,185,5561,200,0002,428,290
34,252,047
2,084,515,87924,168,81953,889,255
2,162,573,953(48,791,241)
2,113,782,712(1,947,272,496)
166,510,216
1,455,815,49839,435,68627,802,462
120,461,0731,918,225
185,293,9758,400,7315,896,843
123,632,5282,504,947
1,971,161,968
9,346,242(6,812,613)
1,973,695,597
66,494,627(92,917,728)
1,947,272,496
103,135,1681,467,672,3861,570,807,554(114,992,056)1,455,815,498
18,162,4771,368,642
21,799,0393,789,318
-1,105,047
46,224,523
2,383,380,28625,967,08250,278,570
2,459,625,938(58,489,135)
2,401,136,803(2,225,714,678)
175,422,125
1,784,943,11037,799,13026,902,101
106,855,8321,574,425
150,291,5788,245,8206,907,711
131,078,2931,937,299
2,256,535,299
9,324,421(9,346,242)
2,256,513,478
35,695,827(66,494,627)
2,225,714,678
246,327,9281,641,750,3501,888,078,278(103,135,168)1,784,943,110
33.3
33.3.1
18.1.1
2015Rupees
2014Rupees
Note
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 68
Operating expenses
Distribution and Selling Expenses
Salaries, allowances and benefitsProvident fund contributionTraveling, conveyance and entertainmentTelephone and postageRent, rates and taxesElectricityInsurancePrinting, stationery and advertisingFees and subscriptionsVehicle running and maintenanceDepreciationFacilities and servicesRepair and maintenanceAnnual Review MeetingAuditors' remunerationLegal and professionalShariahAdvisorTraining and developmentKSE & SECPChargesZakatWithholding & CVT taxDonationCartage expenseOthers
The aggregate amount charged in the consolidated financial statements for remuneration, including benefits to 511 (2014: 518) employeesof the Modaraba is:
Salaries, allowances and benefits include provision for gratuity of Rs. 297,858 ( 2014: Rs.351,700). Officers are also provided with free useof Modaraba maintained cars.
Audit feeHalf yearly reviewOther fees
Freight loading and unloadingClearing & forwarding - exportsExport development chargesPressing comber noil
Remuneration of officers and other employees
Auditor's remuneration
34.
35.
34.1.
34.2
34.3
13,189,261323,110862,703
1,106,8011,139,636
408,737521,761
1,971,3052,351,9162,168,7093,179,1904,508,4461,334,055
91,382431,802
2,427,708150,000
-721,206
2,2252,194,6075,333,334
42,130590,849
45,050,873
310,00025,00096,802
431,802
15,466,8411,090,131
66,463316,624
16,940,059
11,723,621262,161
1,098,648417,442118,400465,274632,163534,616
1,579,8362,521,0353,072,7184,508,4521,288,284
62,500488,145
3,460,510131,250
1,000360,946
-951,576
2,100,000112,098137,873
36,028,548
130,00025,000
113,576268,576
13,525,8151,392,316
71,022127,915
15,117,068
34.1
18.1.1
34.3
2015Rupees
2014Rupees
Note
2015 2014
OfficersOther
Employees OfficersOther
Employees
Salaries and allowances
Gratuity and Leave fare
Expenses reimbursed: Medical
4,977,698
423,979
278,811
5,680,488
6,305,916
397,450
510,143
7,213,509
4,880,086
303,430
466,105
5,649,621
1,710,351
186,455
627,750
2,524,556
Page 69NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Financial Charges
Other income
Other charges
Taxation
Earnings per certificates - basic and diluted
Risk Management Policies and Objectives:
Mark up / interest on :Long term loan - securedShort term loan & running finance - securedLoan from directorsBank charges
Financial risk management
Credit and concentration risk
Profit on PLS depositsGain on sale of fixed assetsInterest incomeExchange gain
Exchange loss - netProvision for doubtful debtsWorker Welfare FundWorkers Profit Participation Fund
The charge for current tax is based on taxable income at current rates of taxation after taking into account tax credits and rebates availableand minimum tax as applicable under the Income Tax Ordinance, 2001.Assessments, in respect of First Equity Modaraba, upto and including the tax year 2014 have been finalized under section 120 of the IncomeTax Ordinance, 2001 (the Ordinance) which is subject to audit under section 170 of the Ordinance.
Profit for the year
Weighted average number of certificates outstanding during the year
Profit per certificate - basic and diluted
There is no dilution effect on the basic earnings per share of the Modaraba as the Modaraba has no such commitments.
The board of directors has overall responsibility for the establishment and oversight of the Modaraba's risk management framework. TheModaraba has exposure to the following risks from its use of financial instruments:- Credit risk- Liquidity risk- Market risk
Credit risk is the risk that one party to a financial instrument will fail to discharge an obligation and cause the other party to incur a financialloss, without taking into account the fair value of any collateral. Concentration of credit risk arises when a number of counterparties areengaged in similar business activities or have similar economic features that would cause their ability to meet contractual obligations to besimilarly affected by changes in economic, political or other conditions. Concentrations of credit risk indicate the relative sensitivity of theModaraba's performance to developments affecting a particular industry.Credit risk of the Modaraba arises principally from the investments, musharaka/morahaba receivables, advances, trade deposits and otherreceivables. The carrying amount of financial assets represents the maximum credit exposure. To reduce the exposure to credit risk, theModaraba has developed a formal approval process whereby credit limits are applied to its customers. The management continuouslymonitors the credit exposure towards the customers and makes provision against those balances considered doubtful for recovery.
36.
37.
38.
39.
40.
41.
40.1
51,696,32511,874,4374,252,0933,669,645
71,492,500
445,256342,140
1,164,129-
1,951,525
23,4651,721,8901,274,4512,741,6375,761,443
68,577,468Number52,440,000
Rupees1.31
53,107,48115,519,745
4,767,5613,174,158
76,568,945
748,824(34,844)461,568106,158
1,281,706
-396,066
1,782,9293,365,5905,544,585
95,437,980Number52,440,000Rupees
1.82
2015Rupees
2014Rupees
Note
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 70
BusinessOpen-end mutual fundsOil and GasChemicalsConstruction and materialsAutomobile and partsPersonal goodsPharma and biotechFixed line telecommunicationElectricityFoodBankNon life insuranceFinancial servicesEquity investment instrumentsStock ExchangeEngineeringOthers
The Carrying amount of financial assets represents the maximum credit exposure before any credit enhancements. The maximum exposureto credit risk at the reporting date is:
InvestmentTrade debtsMorabaha/Musharaka receivables-securedAdvances-considered goodTrade deposits and prepaymentsOther receivables
Liquidity risk is the risk that the Modaraba will encounter difficulty in meeting its financial obligations as they fall due. Liquidity risk arisesbecause of the possibility that the Modaraba could be required to pay its liabilities earlier than expected or difficulty in raising funds to meetcommitments associated with financial liabilities as they fall due. The Modaraba's approach to managing liquidity is to ensure, as far aspossible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, withoutincurring unacceptable losses or risking damage to the Modaraba's reputation.
Assets
Long term investmentsTrade debtsMorabaha & musharaka receivablesShort term investmentsAdvancesTrade depositsOther receivablesBank balances
LiabilitiesSubordinated loanSecurity DepositLong term financingDeferred Mark upCurrent portion of long term liabilitiesShort term borrowingsCreditors, accrued and other liabilitiesAccrued mark upUnclaimed profit distribution
Net balance
Liquidity risk
847,18844,940,510
983,93118,641,500
7,354,1104,804,6363,560,616
17,324,64511,049,855
102,5301,503,650
10,792,47541,800
209,14170,419,86013,819,560
418,246,497624,642,504
Over five years----
2,510,000---
2,510,000
---
25,537,448-----
25,537,448(23,027,448)
200,870,27493,542,674
153,003,60940,916,84024,317,88226,918,541
539,569,820
847,18828,872,094
5,298,11413,938,03616,003,408
-8,201,625
13,068,7504,773,600
-1,402,500
26,979,61741,800
209,14170,419,86015,939,498
333,574,589539,569,820
Less thanOne year
-93,542,674
153,003,609124,862,544
38,406,84022,913,25326,918,54131,629,998
491,277,459
----
93,928,18418,166,501
176,149,28519,722,29427,618,316
335,584,580155,692,879
0.147.190.162.981.180.770.572.771.770.020.241.730.010.03
11.272.21
66.96100
206,160,488161,835,541159,320,497
40,961,88027,477,14328,886,955
624,642,504
.
Total76,007,73093,542,674
153,003,609124,862,544
40,916,84024,063,25326,918,54131,629,998
570,945,189
-200,000
439,104,58425,537,44893,928,18418,166,501
176,149,28519,722,29427,618,316
800,426,612(229,481,423)
0.165.350.982.582.97
-1.522.420.88
-0.265.000.010.04
13.052.95
61.82100
Over one yearbut less than
five years76,007,730
----
1,150,000--
77,157,730
-200,000
439,104,584------
439,304,584(362,146,854)
Rupees %Rupees %2015 2014
2015Rupees
2014Rupees
2015
Page 71NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Assets
Long term investmentsTrade debtsMorabaha & musharaka receivablesShort term investmentsAdvancesTrade depositsOther receivablesBank balances
LiabilitiesSubordinated loanSecurity DepositLong term financingDeferred Mark upCurrent portion of long term liabilitiesShort term borrowingsCreditors, accrued and other liabilitiesTaxation - netUnclaimed profit distribution
Net balance
Market risk is the risk that the value of the financial instrument may fluctuate as a result of changes in market interest rates or the marketprice due to a change in credit rating of the issuer or the instrument, change in market sentiments, speculative activities, supply and demandof securities and liquidity in the market.
Operational Risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the processes, technology andinfrastructure supporting the Modaraba’s operations either internally within the Modaraba or externally at the Modaraba’s serviceproviders, and from external; factors other than credit, market and liquidity risks such as those arising from legal and regulatoryrequirements and generally accepted standards of investment management behavior. Operational risks arise from all of the Modaraba’sactivities.The Modaraba’s objective is to manage operational risk so as to balance limiting of financial losses and damage to its reputation withachieving its objective of generating returns for certificate holders. The primary responsibility for the development and implementation ofcontrols over operational risk rests with the Board of Directors of the Management Company. This responsibility encompasses the controlsin the following areas:- Requirements for appropriate segregation of duties between various functions, roles and responsibilities;- Requirements for the reconciliation and monitoring of transactions;- Compliance with regulatory and other legal requirements- Documentation of controls and procedures;- Requirements for the periodic assessment of operational risks faced, and the adequacy of controls and procedures to address the risksidentified;- Ethical and business standards;- Risk mitigation, including insurance where this is effective.
The Modaraba is of the view that the fair market value of most of the financial assets and financial liabilities are not significantly differentfrom their carrying amounts.
Morabaha/Musharaka receivablesTrade debtsAdvancesTrade depositsOther receivablesBank balances
Market risk
Operational Risk
Financial instruments by category
Fair value of financial instruments
Financial assetsLoans and receivables
42.
42.1
Over five years
----
2,510,000---
2,510,000
---
49,537,448-----
49,537,448(47,027,448)
153,003,60993,542,67440,916,84024,063,25326,918,54131,629,998
Less thanOne year
-161,835,541159,320,497131,772,758
38,451,88026,112,78128,886,95516,600,538
562,980,950
----
57,428,18659,286,520
137,864,786-
25,966,768300,471,280262,509,670
Total
74,387,730161,835,541159,320,497131,772,758
40,961,88027,262,78128,886,95516,600,538
641,028,680
40,000,000200,000
510,782,76649,537,44857,428,18659,286,520
137,864,786-
25,966,768900,991,494
(259,962,814)
159,320,497161,835,541
40,961,88027,262,78128,886,95516,600,538
Over one yearbut less than
five years
74,387,730----
1,150,000--
75,537,730
40,000,000200,000
510,782,766------
550,982,766(475,445,036)
2014
2015Rupees
2014Rupees
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 72
Financial assets at fair value through profit or loss
Available-for-sale financial assets
Short term investments
Long term investments
Subordinated loanSecurity DepositLong term financingShort term loansDeferred Mark upCurrent portion of long term liabilitiesCreditors, accrued and other liabilitiesAccrued mark upTaxation - netUnclaimed profit distribution
On balance sheet gap
The above analysis is based on the contractual/expected maturities of assets and liabilities which may not necessarily correspondwith actual maturities.
AssetsTangible assetsIntangible assetsInvestment propertyLong term investmentsLong term investmentsStock-in-tradeTrade debtsMorabaha & musharaka receivablesShort term investmentsAdvancesTrade deposits and prepaymentsOther receivablesTax refund from government authoritiesBank balances
LiabilitiesSubordinated loanSecurity DepositLong term financingDeferred Mark upDeferred liabilitiesShort term loanCurrent portion of long term liabilitiesCreditors, accrued and other liabilitesAccrued mark upUnclaimed profit distribution
Net balance
Financial liabilities
Maturities of assets and liabilities43.
124,862,544
76,007,730570,945,189
-200,000
439,104,58418,166,50125,537,44893,928,184
176,149,28519,722,294
-27,618,316
800,426,612(229,481,423)
Over fiveYears
13,189,28019,000,000
------------
32,189,280
---
25,537,448------
25,537,4486,651,832
Over onemonth to one
year
----
29,440,537214,722,39793,542,674
125,175,898124,862,54438,371,19614,851,09326,918,54131,627,110
-605,969,316
-----
18,166,50193,928,184
148,514,88419,722,29427,618,316
307,950,179298,019,137
131,772,758
74,387,730641,028,680
40,000,000200,000
510,782,76659,286,52049,537,44857,428,186
137,864,78619,925,020
-25,966,768
900,991,494(259,962,814)
Total
1,223,964,01119,000,000
1,951,66776,007,73029,440,537
214,722,39793,542,674
153,003,609124,862,54440,916,84024,317,88226,918,54131,627,11031,629,998
2,091,905,540
-200,000
439,104,58425,537,448
203,408,95018,166,50193,928,184
176,149,28519,722,29427,618,316
1,003,835,5621,088,069,978
Over one yearto five years
1,210,774,731-
1,951,66776,007,730
-----
2,510,0001,150,000
---
1,292,394,128
-200,000
439,104,584-
203,408,950-----
642,713,534649,680,594
2015Rupees
2014Rupees
Upto onemonth
-------
27,827,711-
35,6448,316,789
--
31,629,99867,810,142
-------
27,634,401--
27,634,40140,175,741
2015
Page 73NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
AssetsTangible assetsIntangible assetsDeferred costLong term investmentsStore and sparesStock-in-tradeTrade debtsMorabaha & musharaka receivablesShort term investmentsAdvancesTrade deposits and prepaymentsOther receivablesTax refund from government authoritiesBank balances
LiabilitiesSubordinated loanSecurity DepositLong term financingDeferred Mark upDeferred liabilitiesShort term loanCurrent portion of long term liabilitiesAccrued mark upTaxation - netUnclaimed profit distribution
Net balance
Yield/Profit rate risk exposure44.
Over fiveYears
13,189,28019,000,000
------------
32,189,280
---
49,537,448------
49,537,448(17,348,168)
Over one monthto one year
----
26,392,239197,654,563161,835,541
95,500,000131,772,758
38,416,23614,851,093(9,894,896)25,722,174
-682,249,708
---
-59,286,52057,428,18619,925,020
--
246,870,111435,379,597
Total
1,268,537,03519,000,000
-74,387,73026,392,239
197,654,563161,835,541159,320,497131,772,758
40,961,88027,477,14328,886,95525,722,17416,600,538
2,180,620,720
40,000,000200,000
510,782,76649,537,448
252,876,21859,286,52057,428,18619,925,020
-25,966,768
1,153,867,7121,026,753,008
Over one yearto five years
1,255,347,755--
74,387,730-----
2,510,0001,150,000
---
1,335,467,152
40,000,000200,000
510,782,766
252,876,218-----
803,858,984531,608,168
Upto one month
-------
63,820,497-
35,64411,476,05038,781,851
-16,600,538
130,714,580
---
-----
25,966,76853,601,16977,113,411
2014
-
-
12% to 20%
5% to 7%
-
-
-
-
93,542,674 93,542,674 93,542,674
-
-
-%
76,007,730
76,007,730
76,007,730 76,007,730
- -
Long term investments
Trade debts
Morabaha / Musharakah
receivables
Advances
Trade deposits
Other receivables
Bank balances
Short term investments
RupeesAfter 1 Yr Sub totalWithin 1 Yr
2015
After 1 Yr Sub totalWithin 1 Yr
Effectiveyield /
profit riskYield / profit bearing maturing Non yield / profit bearing maturing
Total
153,003,609 153,003,609 153,003,609- - -
124,862,544 124,862,544 124,862,544
18,290,757 18,290,757
296,156,910 372,164,640
- - -
38,406,840
22,913,253
26,918,541 26,918,541 26,918,541
13,339,241 13,339,241
195,120,549 198,780,549
31,629,998
570,945,189
-
-
-
3,660,000
-
- - -- 2,510,000
1,150,000
40,916,840 40,916,840
24,063,253 24,063,253- - --
- - --
-
Financial Liabilities
Security deposit - 200,000 200,000 200,000- - -
(363,296,854)
18,166,501 18,166,501 18,166,501
93,928,184 93,928,184 93,928,184
184,062,225 (179,034,629)
Long term financing
Short term loan
Current portion of long term liabilities
Unclaimed profit distribution
On Balance Sheet Gap
Creditors, accrued and other
liabilities 195,871,579 221,409,027 221,409,027
27,618,316 27,618,316 27,618,316
223,489,895 249,027,343 800,426,612
(28,369,346) (21,877,448) (50,246,794) (229,481,423)
25,537,448
25,537,448
-
-
- 439,104,584
439,304,584 551,199,269
439,104,584 439,104,584
-
112,094,685
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Financial Assets
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 74
193,856,567
(36,193,652)
(16,940,059)
(30,456,752)
(15,117,068)
(71,492,500)
(5,761,443)
(76,568,945)
(5,544,585)
(1,511,431) (3,306,812)
(10,685,020) -
2,448,643,032
217,356,558
5,280,419
(907,800)
17,756,838
17,756,838
10,014,790 2,113,782,712
8,545,788 166,510,216
Segment Revenues
Segment Result
Unallocated Cost
Operating expenses
Distribution & Selling expenses
Financial Charges
Other Charges
Management fee with Service Sale Tax
Impairment in associated company
Rupees
MusharakahFacility
BrokerageOperation
CapitalMarkets
TextileBusiness
2015
Total TotalOthers
2014
1,951,525
1,951,525
2,148,786,284
The above analysis is based on the contractual/expected maturities of assets and liabilities which may not necessarily correspond withactual maturities.Yield risk is the risk of decline in earning due to adverse movement of the yield curve.Profit rate risk is the risk that the value of the financial instruments will fluctuate due to changes in the market profit rates.
The Modaraba has four primary source of revenue i.e. musharaka facility, brokerage operations, textile unit and capital market based onthe nature of business and related risk associated with each type of business segment which are not deemed by the management to thesufficiently significant to disclose as separate items are reported under others.Segment assets and liabilities included all assets and liabilities related to the segment relevant proportion of the assets and liabilitiesallocated to the segment on reasonable basis.Segment revenue and expenses included all revenue and expenses related to the segment and relevant proportion of the revenue andexpenses allocated to the segment on reasonable basis.
Segment information
-
--
45.
-
-
12% to 20%
5% to 7%
-
-
-
-
161,835,541 161,835,541 161,835,541
-
-
-%
74,387,730
74,387,730
74,387,730 74,387,730
-
(436,595,036)
-
Long term investments
Financial Assets
Trade debts
Morabaha / Musharakah
receivables
Advances
Trade deposits
Other receivables
Bank balances
Short term investments
RupeesAfter 1 Yr Sub totalWithin 1 Yr
2014
After 1 Yr Sub totalWithin 1 Yr
Effectiveyield /
profit riskYield / profit bearing maturing Non yield / profit bearing maturing
Total
159,320,497 159,320,497 159,320,497- - -
131,772,758 131,772,758 131,772,758
8,094,117 8,094,117
59,286,520 59,286,520 59,286,520
57,428,186 57,428,186 57,428,186
299,187,372
182,472,666
373,575,102
(253,922,370)
- - -
38,451,880
28,886,955 28,886,955 28,886,955
16,600,538
26,112,781
8,506,421 8,506,421
263,793,578 267,453,578 641,028,680
-
-
-
3,660,000
-
- - -- 2,510,000
1,150,000
40,961,880 40,961,880
27,262,781 27,262,781- - --
- - --
-
Financial Liabilities
Security deposit
Subordinated loan
Long term financing
Short term loan
Current portion of long term liabilities
Unclaimed profit distribution
On Balance Sheet Gap
Creditors, accrued and other
liabilities 157,789,806 207,327,254 207,327,254
25,966,768 25,966,768 25,966,768
183,756,574 273,294,022 900,991,494
80,037,004 (85,877,448) (5,840,444) (259,962,814)
49,537,448
89,537,448
-
-
- 200,000 200,000
40,000,000 40,000,000 40,000,000
200,000
- - -
- 510,782,766
510,982,766
510,782,766 510,782,766
627,497,472
-
116,714,706
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Page 75NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Transactions with related parties
Number of employees
Authorization for issue
The related parties of the Modaraba comprise management company, staff retirement funds, directors of the management company and keymanagement personnel. Transactions with related parties other than remuneration and benefits to officers and employees under the terms oftheir employment are as follows:
Modaraba Management Company- Current account payableReceivable fromAssociatedOther related parties (other than key management personnel)- Deferred liability staff gratuity- Brokerage house clients receivablesSubordinated loan from sponsor
Modaraba Management Company- ReimbursementOther related parties (including key management personnel)- Contribution to staff gratuity fund- Remuneration and other benefitsDonationPurchase of sharesServices acquired Associated CompanyBrokerage commission earned Associated CompanyPurchases of goods and services Associated CompanySales of goods and services Associated CompanyServices rendered Associated CompanyReimbursementContribution towards employees Retirement Benefit PlansProfit on Subordinated loan from Sponsor Director
Total number of employees of the Modaraba as at June 30, 2015 are 511 (2014: 518)
These financial statements were authorized for issue in accordance with a resolution of the Board of Directors on October 08, 2015.
Balance outstanding at year end
Transactions during the year Relationship
46.
47.
48.
46.1
46.2
4,829,780418,367
2,655,483358,712
-
4,508,446
375,1753,876,6563,333,333
10,700,000227,412476,623
11,814,192676,918
16,269,611-
2,241,3354,252,093
5,754,180349,099
1,556,25526,817
40,000,000
4,508,452
351,7003,150,239
--
247,15515,909
62,749,1035,549,530
18,470,356-
1,836,5864,767,561
1,997,372,443 2,033,078,207
94,533,097 147,542,513
2,091,905,540 2,180,620,720
3,073,446
54,345,908
14,231,560
(2,901,431)
83,460,965
95,437,98068,577,468
11,977,015
44,244,512
44,244,512
16,277,252
16,277,252
959,051,423 1,096,121,112
44,784,139 57,746,600
1,003,835,562
1,088,069,978
1,153,867,712
1,026,753,008
153,003,609
-
-
- -
-
- - - -
-
-153,003,609
170,430,133 1,629,694,189
1,629,694,189170,430,133
942,804,400
942,804,400
Share of profit / (loss) in associated company
Profit before taxation
Taxation
Profit for the year
Other information
Segment assets
Unallocated assets
Total assets
Segment liabilities
Unallocated liabilities
Total liabilities
-
-
-
- -
-
-
Rupees
MusharakahFacility
BrokerageOperation
CapitalMarkets
TextileBusiness
2015
Total TotalOthers
2014
2015Rupees
2014Rupees
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED JUNE 30, 2015
Page 76
The Board of Directors of the Management Company has approved dividend at the rate of Re. 0.17 per certificate (2014: Re. 0.375per certificate) for the year ended June 30, 2015, resulting in a total distribution of profit amounting to Rs. 8,914,800/- (2014: Rs.19,665,000/-), in its meeting held on October 08, 2015, which is more than 90% of the net profit for the year ended June 30, 2015,after appropriation to the statutory (mandatory) reserve as required under the Modaraba Regulations.
Figures in these financial statements have been rounded off to the nearest of rupee.The corresponding figures, wherever necessary, have been re-arranged for purpose of comparison.
General
48.1
49.149.2
49.
Adil A. Ghaffar
Chief Executive Officer
Premier FinancialServices (Private) Limited
Zahid Bashir
Director
Premier FinancialServices (Private) Limited
Nadeem Maqbool
Director
Premier FinancialServices (Private) Limited