Quarterly Reportmodaraba.standardchartered.com/docs/2005/scm_mar05.pdf · Quarterly Report March...

(Formerly First Grindlays Modaraba)

Quarterly ReportMarch 31, 2005[Unaudited]

Quarterly ReportMarch 31, 2005 [Unaudited]

ContentsMODARABA INFORMATION

DIRECTORS’ REVIEW

BALANCE SHEET

PROFIT AND LOSS ACCOUNT

CASH FLOW STATEMENT

STATEMENT OF CHANGES IN EQUITY

NOTES TO THE ACCOUNTS

STANDARD CHARTERED IN PAKISTAN

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Modaraba Information

Directors of Modaraba Company

Mr. Badar KazmiChairman

Mr. Shariq SaleemManaging Director/Chief Executive

Mr. Rehan M. ShaikhDirector

Company Secretary

Audit Committee

Mr. Asif Iqbal Alam

Mr. Rehan M. ShaikhChairman

Mr. Cyrus J. MasaniMember

Mr. Faraz HaiderMember

Auditors Taseer Hadi Khalid & Co.Chartered Accountants

Bankers /Lending Institutions

Standard Chartered BankMuslim Commercial Bank Limited

Legal Advisors Fazle Ghani Khan & Co.Mohsin Tayebali & Co.Orr Dignam & Co.Sirajul Haque & Co.

Registered and Head Office

Standard Chartered BankMain BuildingP. O. Box 5556, I. I. Chundrigar RoadKarachi-74000Phone: 2412671-6

Branch Offices Standard Chartered Bank BuildingP. O. Box 6131, Tufail RoadLahore Cantt.Phone: (042) 6066277-8

Standard Chartered Bank BuildingP. O. Box 1004No. 1 Diplomatic EnclaveIslamabadPhone: (051) 2820904

Registrars andShare Registration Office

Ferguson Associates (Pvt.) Ltd.P. O. Box 4716State Life Building 1-AOff. I. I. Chundrigar RoadKarachi-74000

Web Address scmodaraba.com

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Directors’ ReviewFor the period ended March 31, 2005

The Board of Directors of Standard Chartered Services of Pakistan(Private) Limited (formerly Grindlays Services of Pakistan (Private)Limited), the management company of Standard Chartered Modarabais pleased to present the unaudited accounts for the nine months ended March 31, 2005.

1. Financial Highlights

Financial results are summarized as under:

Nine months endedMarch 31, 2005

Rupees in thousand


Rupees in thousand

Net Leased Assets / Musharika Investment

Certificate Holders’ Equity

Revenues

Amortisation

Operating Expenses

Financial Charges

Net profit

2,665,651830,376749,017567,039

25,94670,80489,171

2,078,624

807,490

692,566

504,376

23,127

62,689

86,746

2. Review of Operations

During the period under review leases of Rs. 1,198 million were writtencompared to Rs. 811 million during the corresponding period last year reflecting an increase of 48 per cent. It is this surge inbusiness activity that has resulted in a higher lease / musharikaportfolio of Rs. 2,665 million as at March 31, 2005 compared to Rs. 2,274 as at June 30, 2004.

Despite constant pressure on margins, we managed to maintain profitability levels through increase in volume of leases.

3. Economic Outlook

During the first nine months of the current fiscal year, robust performance has been shown by various sectors of the economy. Significantly the two key crops, cotton and wheat, are likely to recordabove-trend harvest, which will have a beneficial knock-on effect onthe rest of the economy. The manufacturing sector is also performing well on the back of the strength in consumer durable demand, above-trend growth in international trade and capacity expansions inkey manufacturing sector. The impetus from deregulation and low realinterest rates continues to drive growth in the telecommunications andfinancial sectors respectively. Allied with the impact of bumper harvest,we should witness exceptional growth in the services sectors. All thesefactors indicate that the economy is set to grow in excess of 7% in FY05.

4. Future Prospects

The economic fundamentals seem to be sound and promising indicating potential for growth in every sector of the economy. YourModaraba, therefore, has every reason to look into the future withoptimism. We will continue to place emphasis on service quality withfocus on quality clients. Efforts to expand the product range are underway and we constantly look forward to increased business opportunities.

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5. Acknowledgement

Balance Sheet as at March 31, 2005 (Unaudited)

UnauditedMarch 31, 2005

Rupees

AuditedJune 30, 2004

Rupees

Assets

Cash and bank balanceTrade debtsAdvances, deposit, prepayments and other receivablesTaxation recoverableCurrent maturity of diminishing MusharikaCurrent maturity of Mushakrika arrangement

13,240,70511,161,198

9,613,52226,980,470

502,815

16,902,9872,429,036

8,982,85728,901,384

-

102,199,945

Total Current Assets 61,498,710 159,416,209

Loans and advances to executivesLong-term portion of diminishing MusharikaLong-term portion of Musharika arrangementAssets leased out (note 3)Consumer Morabaha FinanceAssets in own use (note 4)

326,5874,924,496

200,000,0002,465,651,146

111,3554,257,069

322,696-

200,000,0001,972,007,562

7,642,077

Total Assets 2,736,769,363 2,339,388,544

Liabilities

Musharika financeCurrent maturity of Morabaha financeCreditors, accrued and other liabilitiesRentals received in advanceCurrent portion of security deposits from lesseesCurrent portion of redeemable capitalUnclaimed profit distributionProfit distribution

535,000,000100,000,000

33,075,312231,274,116

24,195,66893,881,98016,215,891

-

505,509,31350,000,00032,853,983

140,661,940

23,264,89686,370,66915,042,20293,555,000

Total Current liabilities 1,033,642,967 947,258,003

Long-term portion of security deposits from lesseesRedeemable capital and accrued profit thereon

149,919,791522,830,012

113,212,080537,713,167

Total Liabilities 1,906,392,770 1,598,183,250

Net Assets 830,376,593 741,205,294

Financed byCertificate capitalReservesUnappropriated profit

Contingencies and Commitments (note 5)

374,220,000358,000,000

98,156,593

374,220,000358,000,000

8,985,294

--

830,376,593 741,205,294

The annexed notes form an integral part of these financial statements.

Badar KazmiChairmanStandard Chartered Servicesof Pakistan (Private) Limited

Rehan M. ShaikhDirectorStandard Chartered Servicesof Pakistan (Private) Limited

Shariq SaleemChief ExecutiveStandard Chartered Servicesof Pakistan (Private) Limited S

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Long-term portion of Morabaha finance 200,000,000 -

-

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Profit and Loss Account

Lease rentals earnedProfit on musharika arrangementIncome on investmentsIncome on deposits with bank



Shariq SaleemChief ExecutiveStandard Chartered Servicesof Pakistan (Private) Limited

For the quarter and period ended March 31, 2005 (Unaudited)

Financial chargesAmortisation on assets leased out

(Impairment loss) / Reversals - Impairment loss against doubtful debts - Impairment loss on doubtful debts no longer required written back

Other income/(charges)

Modaraba company’s management fee

Profit for the period

Earnings per certificate

258,718,7059,577,419

-232

41,227,872

268,296,356

27,100,526199,967,958

227,068,484

(19,718,450)

21,509,422

8,696,443

30,205,865

8,244,591

21,961,274

2,196,127

0.53

207,319,4399,660,794

980,0001,599

41,511,067

217,961,832

20,066,886156,383,879

176,450,765

(19,718,450) (553,724)

- -

(553,724)

40,957,343

1,069,468

42,026,811

8,516,390

33,510,421

3,351,043

0.81


Operating expenses

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719,505,97829,309,780

-201,855

111,173,511

749,017,613

70,804,497567,039,605

637,844,102

20,050

111,193,561

13,832,421

125,025,982

25,946,761

99,079,221

9,907,922

2.38

Three Monthsended

March 31, 2005Rupees

Three Monthsended


Nine Monthsended


Nine Monthsended


662,334,47729,173,603

882,000175,672

125,500,818

692,565,752

62,689,113504,375,821

567,064,934

(19,718,450) (3,344,382)

19,738,500 2,327,218

(1,017,164)

124,483,654

(4,971,916)

119,511,738

23,127,248

96,384,490

9,638,449

19,765,147 30,159,378 89,171,299 86,746,041

2.32

Cash Flow Statement


Rupees


Rupees

Cash Flow from Operating Activities




For the period ended March 31, 2005 (Unaudited)

Cash Flow from Financing ActivitiesRedeemable capital less repaymentsMorabaha finances less repaymentsMusharika finances less repaymentsProfits paid to certificate holders

(45,616,783)250,000,00029,490,687

(92,381,311)

(5,257,488)50,000,00078,322,322

(145,644,208)

Net cash flows from financing activities 141,492,593 (22,579,374)

Net decrease in cash and cash equivalents Cash and bank balances at July 1

(3,662,282)16,902,987

(1,863,884)20,410,234

Cash and bank balances at March 31 13,240,705 18,546,350


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Cash generated from operations (note 8)Tax refund receivedProfit paid on:- redeemable capital- musharika finances- morabaha financesLeased assets purchased Consumer Morabaha FinanceProceeds/insurance claims on transfer of assets leased outSecurity deposits from lessees (net)

759,491,3411,920,914

(12,003,548)(11,458,932)

(6,912,423)(1,197,973,485)

(111,355)

150,285,27437,638,483

610,338,851-

(28,834,852)(3,578,168)

-(811,534,324)

-

231,561,541(8,107,891)

Net cash flows from operating activities (279,123,731) (10,154,843)

Cash Flow from Investing Activities

Fixed capital expenditureProceeds on disposal of assets in own useMusharika arrangements less repaymentsIncome on deposits with bankProfit received on musharika arrangements

Net cash flows investing activities

(321,232)2,320,000

102,199,945201,855

29,568,288

133,968,856

(3,174,818)1,870,0002,863,481

175,67229,135,998

30,870,333

Statement of Changes in Equity

CAPITAL RESERVES

Premium on modaraba

certificatesRupees

Balance as at June 30, 2003

Profit for the period July 1, 2003 to March 31, 2004

374,220,000

- - -

720,743,655




For the nine months period ended March 31, 2005 (Unaudited)

Certificatecapital

Rupees

Statutory

Rupees

Unappropriatedprofit

Rupees

Total

Rupees

135,000,000 200,000,000 11,523,655

86,746,041

Balance as at March 31, 2004

Profit for the period April 1, 2004 to June 30, 2004

Utilised for Profit distribution

Transfer from profit and loss account

374,220,000

- - -

807,489,696135,000,000 200,000,000 98,269,696

27,270,598 27,270,598

- - - (93,555,000) (93,555,000)

- - 23,000,000 (23,000,000) -

Balance as at June 30, 2004

Profit for the period July 1, 2004 to March 31, 2005

374,220,000 741,205,294135,000,000 223,000,000 8,985,294

- - - 89,171,299 89,171,299

Balance as at March 31, 2005 374,220,000 135,000,000 223,000,000 98,156,593 830,376,593


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86,746,041

Notes to the AccountsFor the period ended March 31, 2005 (Unaudited)

1. Legal Status and Nature of BusinessStandard Chartered Modaraba (formerly First Grindlays Modaraba)(the Modaraba) was formed under the Modaraba Companies andModaraba (Floatation and Control) Ordinance, 1980 and the Rulesframed thereunder and is managed by Standard Chartered Servicesof Pakistan (Private) Limited (formerly Grindlays Services of Pakistan(Private) Limited). The Management Company is a wholly owned subsidiary of Standard Chartered Bank. The address of its registeredoffice is Standard Chartered Bank Building, I. I. Chundrigar Road,Karachi, Pakistan.

The Modaraba is a perpetual modaraba and is primarily engaged in leasing of plant, machinery, motor vehicle (both commercial andprivate), computer equipment etc. The Modaraba may also invest in commercial and industrial ventures suitable for the Modaraba. TheModaraba is listed on the Karachi and Lahore Stock Exchanges.

2. Basis of Preparation

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These financial statements are unaudited and have been prepared inaccordance with the requirements of the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980, ModarabaCompanies and Modaraba Rules, 1981 and directives issued by theSecurities and Exchange Commission of Pakistan (SECP) [’theModaraba Regulations’] together with the approved accountingstandards as applicable in Pakistan to Modarabas. Approved Accounting Standards comprise of such International AccountingStandards (IASs) as notified under the provision of the CompaniesOrdinance, 1984 and made applicable to Modarabas under ‘theModaraba Regulations’. Wherever the requirements of ‘the ModarabaRegulations’ differ from the requirements of these standards, the requirements of ‘the Modaraba Regulations’ take precedence. The disclosure made in these financial statements have, however, been limited based on the requirements of the International Accounting Standard 34, Interim Financial Reporting.

The accounting policies adopted for the preparation of these financialstatements are consistent with those applied for the preparation of thepreceding audited published accounts.

The SECP vide Circular No. 10 of 2004 dated February 13, 2004 hasdeferred, till further orders, the applicability of the InternationalAccounting Standard - 17 “Leases” with effect from July 1, 2003.Accordingly, this IAS has not been taken into consideration for thepurposes of these financial statements.

Three months endedMarch 31, 2005

Rupees


Rupees

3. Assets Leased Out

Addition during the periodPlant, Machinery and equipmentMotor Vehicles

103,909,459205,038,558

519,199,162678,774,323

308,948,017 1,197,973,485

Transfers during the periodPlant, Machinery and equipmentMotor Vehicles

6,774,984152,214,950

163,066,565324,394,822

158,989,934 487,461,387



Shariq SaleemChief ExecutiveStandard Chartered Servicesof Pakistan (Private) Limited S

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8. Cash generated from operations


Rupees


Rupees

Profit for the period 89,171,299

567,039,6051,504,435

(12,994,971)(118,195)

19,718,450(19,738,500)

-(29,309,780)

(201,855)

49,842,10013,995,318

6,967,07973,616,356

Adjustment for non cash charges and other items:Amortisation on assets leased outDepreciation Net profit on transfer of assets leased outProfit on disposal of assets in own useImpairment loss against doubtful debts Impairment loss no longer required written backNet unrealised gain during the period in market value of investmentProfit on musharika arrangementsIncome on deposit with bankProfit on- redeemable capital- musharika finances- morabaha finances

Working capital changes - note 8.1

86,746,041

504,375,8212,414,3486,092,671

(776,576)3,344,382

(2,327,218)

(882,000)(29,173,603)

(175,672)

58,250,5562,329,5242,089,399

(21,968,822)

759,491,341 610,338,851

8.1 Working Capital Changes


Rupees


Rupees

(Increase) / Decrease in current assets

Trade debtsAdvances, deposits, prepayments and other receivables

(8,712,112)

(6,320,381)

6,215,431

12,070,354

(15,032,493) 18,285,785

Increase / (Decrease) in current liabilities

Creditors, accrued and other liabilities (excluding profit payable on redeemable capital, morabaha and musharika finances)

Rentals received in advance

(1,963,327)

90,612,176

(14,028,372)

(26,226,235)

(40,254,607)88,648,849

73,616,356 (21,968,822)

9. Corresponding Figures

Corresponding figures have been rearranged, wherever necessary, forthe purpose of comparison.

10. Date of Authorisation

These financial statements were authorised for issue on April 15,2005 by the Board of Directors of the Management Company.

About Standard Chartered

In Pakistan, Standard Chartered Group comprises ofStandard Chartered Bank and Standard Chartered Modaraba.

Standard Chartered has 29 branches in Pakistan; 12 in Karachi, 8 in Lahore, 3 in Islamabad, 2 in Rawalpindi and 1each in Quetta, Peshawar, Sialkot and Faisalabad and offersConsumer Banking (including Credit Cards), Corporate & Institutional Banking (including Cash Management products & services), Global Markets, and Custodial Services to its customers. Standard Chartered has been providing banking services in this region for over 140 years.

Standard Chartered Modaraba has 3 offices in Pakistan; 1 inKarachi, 1 in Lahore and 1 in Islamabad, and offers leasing and Islamic finance facilities to its customers. StandardChartered Modaraba has been providing services in Pakistanfor over 17 years.

Standard Chartered - leading the way in Asia, AfricaAnd the Middle East.

Standard Chartered employs 33,000 people in over 550locations in more than 50 countries in the Asia Pacific Region,South Asia, the Middle East, Africa, the United Kingdom andthe Americas. It is one of the world’s most international banks,with employees representing 80 nationalities.

Standard Chartered PLC is listed on both the London StockExchange and the Stock Exchange of Hong Kong and is in thetop 25 FTSE-100 companies, by market capitalisation.

It serves both Consumer and Wholesale Banking customers.Consumer Banking provides credit cards, personal loans, mortgages, deposit taking and wealth management services toindividuals and small to medium sized enterprises. WholesaleBanking provides corporate and institutional clients with services in trade finance, cash management, lending, securitiesservices, foreign exchange, debt capital markets and corporatefinance.

Standard Chartered is well-established in growth markets and aims to be the right partner for its customers. The Bank combines deep local knowledge with global capability.

The Bank is trusted across its network for its standard of governance and its commitment to making a difference in thecommunities in which it operates.

These ratings indicate lowexpectation of credit riskand very strong capacityfor timely payment of financial commitments.

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