| Invest.Capital Investment Bank - 2009 |
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Balance Sheet As at 30 June 3009
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Note 2009 2008
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Restated
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ASSETS
Non-current assets
Property plant and equipment 5 946,975,923 219,032,307
Intangible assets 6 36,875,167 25,717,126
Goodwill 7 - 92,238,600
Long term investments 8 175,439,446 -
Net investment in Ijarah financessets
under Ijarah arrangements 9 1,288,310,042 -
Long term musharakah finance - secured 10 199,165,051 -
Long term loans - considered good 11 77,676,402 19,761,385
Long term deposits and receivables
unsecured and considered good 12 31,167,622 13,293,609
Deferred taxation 13 17,395,273 (1,005,306)
2,773,004,926 369,037,721
Current assets
Short-term investments 14 930,272,720 127,635,482
Takaful reserve fund investments 15 28,743,840 -
Short term musharakah finances 16 242,706,495 -
Short term finances - secured 17 67,259,002 -
Trade debts - unsecured 18 1,445,525,869 1,352,383,735
Assets acquired in satisfaction of finances 19 99,500,000 -
ljarah rentals receivable 20 17,310,385 -
Current maturity of non-current assets 21 1,555,101,175 6,451,816
Receivable under reverse repurchase transaction 20 195,000,000 -
Advances, deposits, prepayments
and other receivables 22 243,184,563 53,390,993
Stock in trade 23 1,042,320 -
Cash and bank balances 24 248,331,938 59,434,825
5,073,978,305 1,599,296,852
TOTAL ASSETS Rupees 7,846,983,232 1,968,334,573
EQUITY AND LIABILITIES
Share capital and reserves
Authorised capital 485,000,000 (2008: 285,000,000)
ordinary shares of Rs.10/- each Rupees 4,850,000,000 2,850,000,000
Issued, subscribed and laid-up capital 25 2,727,668,652 746,423,700
Capital reserve on amalgamation (2,022,075,684) (347,923,700)
Surplus / (deficit) on revaluation of
available-for-sale investments - net 26 4,207,388 (12,076,479)
Accumulated profit/(loss) 148,123,206 (18,261,890)
Share deposit money 27 121,000,000 121,000,000
978,923,562 489,161,631
Surplus on revaluation of property,
plant and equipment 28 19,664,012 21,646,918
Non-current liabilities
Liability against assets subject to finance lease 29 18,966,849 1,291,051
Deferred liability for staff gratuity 30 6,060,503 -
Security deposits from lessees 31 672,796,487 -
Long term certificates of musharakah 32 177,095,000 -
Certificates of investments and deposits 33 3,635,000 -
Long term musharakah and murabahah borrowings 34 201,829,565 -
Musharakah Term Finance Certificates 35 462,055,287 -
Redeemable capital - Term Finance Certificate 36 128,380,000 -
Loan from a Director - unsecured 37 194,445,115 -
Long-term loan 38 202,014,347 -
Deferred liabilities 39 1,909,446 -
2,069,187,599 1,291,051
Current liabilities
Current portion of long term liabilities 40 1,395,718,700 3,603,698
Short term certificates of musharakah 41 283,280,000 -
Short term certificates of investments and deposit 42 71,650,000 -
Short term borrowings 43 2,266,569,027 1,262,703,702
Short term musharakah borrowings 44 48,000,000 -
Creditors, accrued and other liabilities 45 713,990,332 189,927,573
4,779,208,059 1,456,234,973
TOTAL EQUITY AND LIABILITIES Rupees 7,846,983,232 1,968,334,573
CONTINGENCIES AND COMMITMENTS 46
=======================================================================================Profit and Loss Account For the year year ended 30 June 2009=======================================================================================
Note 2009 2008
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(Restated)
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Brokerage, commission and fees 47 116,710,760 185,620,250
Income from Continuous Funding System 3,695,660 --
Gain on sale of listed shares - net 17,925,868 68,975,490
Unrealised loss on remeasurment of
investments carried at fair value through
profit / loss account (11,982,860) (2,575,076)
126,349,429 252,020,665
Impairment in the value of investments classified
as available-for-sale
Transfer from statement of changes in equity (14,186,409) -
For the period (53,422,291) -
(67,608,700) -
Administrative and operating expenses 48 (239,921,926) (212,413,403)
(181,181,197) 39,607,261
Other income 49 510,238,254 43,915,509
329,057,057 83,522,770
Impairment loss on goodwill 7 (92,238,600) -
Financial charges - net 50 (60,848,822) (88,794,049)
Profit / (loss) before taxation 175,969,635 (5,271,279)
Provision for taxation 51 (10,619,487) (14,894,010)
Profit/ (loss) for the year Rupees 165,350,148 (20,165,289)
Earnings / (loss) per share Basic Rupees 52 2.215 (0.082)
Diluted Rupees 52 1.906 (0.078)
=======================================================================================Cash Flow Statement For the ended 30 June 2009=======================================================================================
Note 2009 2008
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CASH FLOWS FROM OPERATING ACTIVITIES
Profit/ loss before taxation 175,969,635 (5,271,279)
Adjustments for non cash charges and other items:
Depreciation of property and equipment 29,223,241 11,932,137
Amortization of intangibles 420,506 585,911
Gain on bargain purchase (482,172,079) -
Goodwill written off 92,238,600 -
Financial charges - net 60,848,822 88,794,049
Loss/(gain) on disposal of fixed assets 3,703,771 (243,307)
Unrealised loss on remeasurment of investments
carried at fair value through profit or loss 11,982,860 -
Impairment in the value of investments
classified as available-for-sale 67,608,700 2,575,076
(216,145,578) 103,643,866
Cash flow from operating activities
before working capital changes (40,175,943) 98,372,587
(Increase) / decrease in current assets
Trade Debts 93,142,134 (487,852,081)
Amalgamation working capital adjustment 153,541,946 -
Advances, deposits, prepayments and other receivables 48,264,539 (27,354,308)
108,664,351 (515,206,390)
Increase (decrease) in current liabilities
Amalgamation working capital adjustment - (43,738,600)
Trade creditors, accrued and other liabilities 374,032,739 (1,152,788,948)
374,032,738 (1,196,527,548)
Cash flow from operating activities
alter working capital changes 442,521,146 (1,613,361,350)
Financial charges paid (56,932,318) (64,756,828)
Income tax paid (10,682,345) (14,946,920)
(67,614,663) (79,703,748)
Net cash flow from operating activities 374,906,483 (1,693,065,099)
CASH FLOWS FROM INVESTING ACTIVITIES
Capital expenditure (95,800,023) (50,442,566)
Long term loans (2,978,862) 984,626
Long term deposit 1,141,243 (6,343,654)
Investments (775,077,167) (71,931,583)
Sale proceeds from disposal of tangible fixed assets 6,315,250 2,618,793
Net cash flow from investing activities (866,399,560) (125,114,384)
CASH FLOWS FROM FINANCING ACTIVITIES
Receivables under reverse repurchase transactions (195,000,000) 222,323,762
Share deposit money - 121,000,000
Repayment of liability against
assets subject to finance lease (3,806,062) (3,902,871)
Short term finance (630,265,310) 1,163,324,685
Long-term loans 143,517,111 -
Borrowings 1,365,944,450 -
Net cash flow from financing activities 680,390,189 1,502,745,576
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 188,897,112 (315,433,907)
CASH AND CASH EQUIVALENTS AT BEGINNING OF THE YEAR 59,434,825 374,868,732
CASH AND CASH EQUIVALENTS AT END OF THE YEAR Rupees 24 248,331,938 59,434,825
=======================================================================================Statement of Changes in Equity For the year ended 30 June 2009=====================================================================================================================================================
Capital
Issued, reserve on (Deficit) / Accumulated Share deposit Total
subscribed and amalgamation surplus on profit / (loss) money
paid-up capital revaluation of
available for
sale investment
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Balance as at 01 July 2007 - - - - - -
Shares of legal parent 100,000,000 - - 764,088 - 100,764,088
Issue of shares on amalgamation to ICSL
shareholders in ratio 1:7 (note 1) 2,450,000,000 - - - - 2,450,000,000
Reversal on amalgamation (note 1) - (2,388,554,050) - - - (2,388,554,050)
Issue of shares to creditors 237,054,050 - - - - 237,054,050
Adjustment of reserve on reduction of capital (2,040,630,350) 2,040,630,350 - - - -
Share deposit money - - - - 121,000,000 121,000,000
Incremental depreciation charge for the year
released from surplus on revaluation of
fixed asset - - - 442,222 - 442,222
Unrealised loss on remeasurement of
investments classified as available-for-sale - - (12,076,479) - - (12,076,479)
Loss for the year - - - (19,468,200) - (19,468,200)
Total recognised loss for the year - - (12,076,479) (19,025,978) - (31,102,457)
Balance as at 30 June 2008, as reported previously 746,423,700 (347,923,700) (12,076,479) (18,261,890) 121,000,000 489,161,631
Effect on incremental depreciation release from the
surplus on revaluation of fixed asset (less
recorded in the previous year) - - - 697,089 - 697,089
Effect of incremental depreciation on loss for the
year (less recorded in the previous year) - - - (697,089) - (697,089)
Balance as at 30 June 2008, restated 746,423,700 (347,923,700) (12,076,479) (18,261,890) 121,000,000 489,161,631
Issue of shares on amalgamation to AZLCL
shareholders in ratio 1:2.4 (note 1) 1,178,570,352 - - - - 1,178,570,352
Issue of shares on amalgamation to AZLM
shareholders in ratio 1:2.6 (note 1) 802,674,600 - - - - 802,674,600
Reserve on amalgamation (note 4) - (1,674,151,984) - - - (1,674,151,984)
Incremental depreciation charged for the
period - released from surplus on revaluation
of fixed asset - - - 1,034,948 - 1,034,948
Unrealised loss on remeasurement of investments
classified as available-for-sale - - 2,097,458 - - 2,097,458
Impairment in the value of investment classified
as available-for-sale taken to profit and loss
account - - 14,186,409 - - 14,186,409
Profit for the year - - - 165,350,148 - 165,350,148
Total recognised profit for the year - - 16,283,867 166,385,096 - 182,668,963
Balance as at 30 June 2009 Rupees 2,727,668,652 (2,022,075,684) 4,207,388 148,123,206 121,000,000 978,923,562
=====================================================================================================================================================Notes to the Financial Statements For the year ended 30 June 20091. LEGAL STATUS AND OPERATIONS 1.1. Invest Capital Investment Bank Limited ( 'the Company' ) was formed after the amalgamation of Asset Investment Bank Limited ('AIBL') with Invest Capital and Securities (Private) Limited ('ICSL') through the order of Lahore High Court, Rawalpindi Bench dated 27 March 2007 for the sanction of the arrangement of amalgamation. Pursuant to the same order the name of AIBL was changed to Invest Capital Investment Bank Limited. The Company is a public limited company incorporated in Pakistan under the Companies Ordinance, 1984. The Securities & Exchange Commission of Pakistan ( 'SECP') has issued a license to the company to carry out investment finance activities as a Non Banking Finance Company. The Company is listed on Karachi, Lahore and Islamabad stock exchanges. The registered office of the Company is situated in Karachi. 1.2. In compliance with regulation no. 7(2)(n) of the NBFC Rules, 2003, the Company has to separate its brokerage business from the other business activities. The Company is in the process of segregating its brokerage business from other business activities and proposes to transfer the brokerage business to a subsidiary company incorporated for this purpose. The requirment for compliance with aforesaid regulation has been extended till 30 June 2010 by SECP vide S.R.O 886 dated 13 October 2009. 1.3. The Company has entered in a scheme of arrangement for the amalgamation by way of merger of Al-Zamin Leasing Corporation Limited (AZLCL) and Al-Zamin Leasing Modaraba (AZLM) with and into Invest Capital Investment Bank Limited ("InvestBank"). The scheme of arrangement is under Sections 284 to 288 read with section 503 (1) (c) of the Companies Ordinance, 1984. The scheme is effective from 30 June 2009 (close of business). Accordingly on 30 June 2009 (close of business) all the assets and liabilities and obligations of the AZLCL and AZLM are vested with and assumed by the Company. The Company in consideration will issue 117,857,040 its shares to the shareholders of AZLCL at a swap ratio of 24 shares of Rs. 10 each of the Company for 10 shares of Rs. 10 each of AZLCL and will also issue 80,267,460 its shares to the certificate holders of AZLM at a swap ratio of 26 shares of Rs. 10 each of the Company for 10 certificates of Rs. 10 each of AZLM. The Securities and Exchange Commission of Pakistan has approved the above merger, while the Competition Commission of Pakistan has also issued the no objection certificate to this matter. The Honourable High Court of Sindh has approved the amalgamation by way of merger through order dated 8 December 2009. Accordingly, these financial statements are merged financial statements of the Company, AZLCL and AZLM. As the merger is effective as of 30 June 2009, the profit and loss account for the years ended 30 June 2008 and 30 June 2009, represents the results of operations of Invest Capital Investment Bank Limited. Further, the corresponding figures reported in the balance sheet represents by balance of Invest Capital Investment Bank Limited as of 30 June 2008. 1.4. AZLCL is a Non-Banking Finance Company (NBFC) and regulated by the Securities and Exchange Commission of Pakistan (SECP), under the Non Banking Finance Companies (Establishment and Regulation) Rules 2003 (NBFC Rules, 2003) and the Non Banking Finance Companies and Notified Entities Regulations 2008 (NBFC Regulations, 2008). AZLCL was incorporated in Pakistan as a public limited company under the Companies Ordinance, 1984, on April 07, 1987. The Company was engaged in leasing business (both under the finance lease and operating lease arrangements). During the year, the SECP vide its letter No. SC/NBFC(1)/ALCL/2008-469 dated October 23, 2008 renewed the AZLCL's license for undertaking the business of Investment Finance Services (IFS) against an application submitted to SECP in April, 2008. 1.5. AZLM was formed in 1992 under the Modaraba Companies and Modaraba (Floatation and Control) Ordinance, 1980 (Modaraba Ordinance) and the Modaraba Companies and Modaraba Rules, 1981 (Modaraba Rules) and was being managed by Al-Zamin Modaraba Management (Private) Limited (Modaraba Management Company), a company incorporated in Pakistan under the Companies Ordinance, 1984 and registered with the Registrar of Modaraba Companies and Modaraba (Registrar) under the Modaraba Ordinance. AZLM was a multi purpose Modaraba and the principal business of the AZLM was financing under leasing, musharakah and murabahah arrangements and operation of Compressed Natural Gas (CNG) / Diesel filling stations. In respect of the CNG / Diesel related projects, the AZLM, either directly or indirectly through joint venture operations, was engaged in the following projects: Joint ventures Centre Gas (Private) Limited and UMA Enterprises (partnership concern) Own projects (managed by the Modaraba as its integral part) -.Star Petroleum (Faisalabad) -.Vigor CNG Station (Kamoki, near Lahore) In addition to the above, a similar project is also being set up in Faisalabad. 2. BASIS OF PREPARATION 2.1. Statement of compliance These financial statements have been prepared in accordance with the approved accounting standards as applicable in Pakistan. Approved accounting standards comprise of such International Financial Reporting Standard (IFRSs) issued by the International Accounting Standards Board as are notified under the Companies Ordinance, 1984, the Non-Banking Finance Companies (Establishment and Regulation) Rules, 2003 (the NBFC Rules), the Non-Banking Finance Companies and Notified Entities Regulations, 2008 (the NBFC Regulations) and the directives issued by the Securities And Exchange Commission of Pakistan (SECP). Wherever the requirements of the Companies Ordinance 1984, the NBFC Rules, the NBFC Regulations or the directives issued by SECP differ with the requirements of IFRS, the requirements of the Companies Ordinance, 1984, the NBFC Rules, the NBFC Regulations or the directives issued by the SECP prevail. SECP has deferred the applicability of International Accounting Standard (IAS) 39, 'Financial Instruments: Recognition and Measurement' and International Accounting Standard (IAS) 40, Investment Property' through Circular No. 19 dated 13 August 2003 for Non-Banking Finance Companies (NBFCs) providing investment finance services, discounting services and housing finance services. In addition, the SECP has also deferred the application of International Financial Reporting Standard (IFRS) 7, 'Financial Instruments: Disclosures 'through SRO 411(1) / 2008 on such Non-Banking Finance Companies as are engaged in investment finance services, discounting services and housing finance services. 2.2. Basis of measurement These financial statements have been prepared under the historical cost convention except that certain investments and certain property, plant and equipments are stated at fair values / revalued amounts. Further, assets and liabilities acquired/transferred due to merger are stated at fair values. 2.3. Functional and presentation currency These financial statements are presented in Pakistan Rupees which is the Company's functional and presentation currency and rounded off to the nearest rupee. 2.4. Accounting estimates and judgements The preparation of financial statements in conformity with approved accounting standards, as applicable in Pakistan, requires the management to make judgments, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and associated assumptions are based on historical experience and various other factors that are believed to be reasonable under the circumstances, the results of which form the basis of making the judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates. The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods. Information about significant areas of estimation, uncertainty and critical judgments in applying accounting policies that have the most significant effect on amounts recognized in the financial statements as follow: Net investment in Ijirah Finance / assets under ijarah in arrangements (notes 3.6 & 9) Musharakah and other finance (notes 3.6, 10 & 16) Property, plant and equipments (notes 3.3 & 5) Intangible assets (notes 3.4 & 6) Goodwill (notes 3.4 & 7) Investments (note 3.5) Stock in trade (note 3.25) Ijarah rentals receivables (notes 3.12.1 & 20) Asset acquired in satisfaction of finances (notes 3.24 & 19) Trade debts (notes 3.10 & 18) Deferred taxation (notes 3.11 & 13) Long term loans (note 3.6) 2.5. Accounting standards and interpretations not yet effective The following standards, amendments and interpretations of approved accounting standards are effective for accounting periods beginning on or after 1 July 2009: Revised IAS 1 - "Presentation of Financial Statements" (effective for annual periods beginning on or after 1 January 2009) introduces the term total comprehensive income, which represents changes in equity during a period other than those changes resulting from transactions with owners in their capacity as owners. Total comprehensive income may be presented in either a single statement of the investor (effectively combining both the income statement and all non-owner changes in equity in a single statement), or in an income statement and a separate statement of comprehensive income. Revised IAS 23 - "Borrowing Costs" (effective for annual periods beginning on or after 1 January 2009) removes the option to expense borrowing costs and requires that an entity capitalise borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset as part of the cost of that asset. The application of this standard is not likely to have an effect on the Company's financial statements. IAS 27 - "Consolidated and Separate Financial Statements" (effective for annual periods beginning on or after 1 July 2009) requires accounting for changes in ownership interest by the group in a subsidiary, while maintaining control, to be recognised as an equity transaction. When the group loses control of subsidiary, any interest retained in the former subsidiary will be measured at fair value with gain or loss recognised in the profit or loss. Amendment to IAS 32 - "Financial Instruments: Presentation" and IAS 1 - "Presentation of Financial Statements" (effective for annual periods beginning on or after 1 January 2009) - Puttable financial instruments and obligations arising on liquidation requires puttable instruments, and instruments that impose on the entity an obligation to deliver to another party pro rata share of the net assets of the entity only on liquidation, to be classified as equity if certain conditions are met. The amendment is not expected to have an effect on the Company's financial statements. Amendments to IAS 39 and IFRIC 9 - "Embedded derivatives" (effective for annual periods beginning on or after 1 January 2009). Amendments require entities to assess whether they need to separate an embedded derivative from a hybrid (combined) financial instrument when financial assets are reclassified out of the fair value. The amendment is not expected to have an effect on the Company's financial statements. The International Accounting Standards Board made certain amendments to existing standards as part of its Second annual improvement project. The effective dates for these amendments vary by standard and most will be applicable to the Company's 2010 financial statements. Amendments to IAS 39 - "Financial Instruments: Recognition and measurement - Eligible hedged items" (effective for annual periods beginning on or after 1 July 2009) clarifies the application of existing principles that determine whether specific risks or portions of cash flows are eligible for designation in a hedging relationship. The amendment is not expected to have an effect on the Company's financial statements. IFRS 2 (Amendment) - "Share-based payment - Vesting Conditions and Cancellations" (effective for annual periods beginning on or after 1 January 2009) clarifies the definition of vesting conditions, introduces the concept of non-vesting conditions, requires non-vesting conditions to be reflected in grant-date fair value and provides the accounting treatment for non-vesting conditions and cancellations. The amendment is not expected to have an effect on the Company's financial statements. Amendment to IFRS 2 - "Share-based Payment - Group Cash-settled Share-based Payment Transactions" (effective for annual periods beginning on or after 1 January 2010). Currently effective IFRS requires attribution of group share-based payment transactions only if they are equity-settled. The amendment resolves diversity in practice regarding attribution of cash-settled share-based payment transactions and require an entity receiving goods or services in either an equity-settled or a cash-settled payment transaction to account for the transaction in its separate or individual financial statements. The amendment is not expected to have an effect on the Company's financial statements. Revised IFRS 3 - "Business Combinations" (applicable for annual periods beginning on or after 1 July 2009) broadens among other things the definition of business resulting in more acquisitions being treated as business combinations, contingent considerations to be measured at fair value, transaction costs other than share and debt issue costs to be expensed, any pre-existing interest in an acquiree to be measured at fair value, with the related gain or loss recognised in profit or loss and any non-controlling (minority) interest to be measured at either fair value, or at its proportionate interests in identifiable assets and liabilities of an acquiree, on a transaction-by-transaction basis. The application of this standard is not expected to have an effect on the Company's financial statements. IFRS 4 - "Insurance Contracts" (effective for annual periods beginning on or after 1 January 2009). The IFRS makes limited improvements to accounting for insurance contracts until the Board completes the second phase of its project on insurance contracts. The standard also requires the entity issuing insurance contracts (an insurer) to disclose information about those contracts. The standard is not applicable to the Company's financial statements. IFRS 5 (Amendment) - "Non-current assets held-for-sale and discontinued operations" (effective from 1 July 2009). The amendment clarifies that all of a subsidiary's assets and liabilities are classified as held for sale if a partial disposal sale plan results in loss of control. The amendment is not expected to have an effect on the Company's financial statements. Amendment to IFRS 7 - "Improving disclosures about Financial Instruments" (effective for annual periods beginning on or after 1 January 2009). These amendments have been made to bring the disclosure requirements of IFRS 7 more closely in line with US standards. The amendments introduce a three-level hierarchy for fair value measurement disclosures and require entities to provide additional disclosures about the relative reliability of fair value measurements. The amendment is not expected to have an effect on the Company's financial statements apart from certain increase in disclosures. IFRS 8 - "Operating segments" (effective for annual periods beginning on or after 1 January 2009) introduces the management's approach to segment reporting. IFRS 8 will require a change in presentation and disclosure of segment information based on the internal reports that are regularly reviewed by the Company's chief operating decision maker in order to assess each segment's performance and to allocate resources to them. This IFRS is not expected to have an effect on the Company's financial statements apart from certain increase in disclosures. IFRIC 15 - "Agreement for Construction of Real Estate" (effective for annual periods beginning on or after 1 October 2009) clarifies the recognition of revenues by real estate developers for sale of units, such as apartments or houses, 'off-plan', that is, before construction is complete. This IFRIC is not relevant to the Company's operations. IFRIC 16 - "Hedge of Net Investment in a Foreign Operation" (effective for annual periods beginning on or after 1 October 2008) clarifies that net investment hedging can be applied only to foreign exchange differences arising between the functional currency of a foreign operation and the parent entity'/s functional currency and only in an amount equal to or less than the net assets of the foreign operation, the hedging instrument may be held by any entity within the group except the foreign operation that is being hedged and that on disposal of a hedged operation, the cumulative gain or loss on the hedging instrument that was determined to be effective is reclassified to profit or loss. The Interpretation allows an entity that uses the step-by-step method of consolidation an accounting policy choice to determine the cumulative currency translation adjustment that is reclassified to profit or loss on disposal of a net investment as if the direct method of consolidation had been used. The IFRIC is not relevant to the Company's operations. IFRIC 17 - "Distributions of Non-cash Assets to Owners" (effective annual periods beginning on or after 1 July 2009) states that when a company distributes non cash assets to its shareholders as dividend, the liability for the dividend ismeasur ed at fair value. If there are subsequent changes in the fair value before the liability is discharged, this is recognised in equity. When the non cash asset is distributed, the difference between the carrying amount and fair value is recognised in the income statement. As the Company does not distribute non-cash assets to its shareholders, this interpretation has no effect on the Company's financial statements. IFRIC 18 - "Transfers of Assets from Customers" (to be applied prospectively to transfers of assets from customers received on or after 1 July 2009). This interpretation clarifies the requirements of IFRSs for agreements in which an entity receives from a customer an item of property, plant and equipment that the entity must then use either to connect the customer to a network or to provide the customer with ongoing access to a supply of goods or services (such as a supply of electricity, gas or water). This interpretation is not relevant to the Company's operations. 2.6. Initial application of a standard or an interpretation The following standards, amendments and interpretations became effective during the current year: IFRS 7 - Financial Instruments: Disclosures (effective for annual periods beginning on or after 28 April 2008) supersedes IAS 30 - Disclosures in the Financial Statements of Banks and Similar Financial Institutions and the disclosure requirements of IAS 32 - Financial Instruments: Disclosure and Presentation. The application of this standard did not had any impact on the Company's financial statements other than increase in disclosures. IAS 29 - Financial Reporting in Hyperinflationary Economies (effective for annual periods beginning on or after 28 April 2008). The Company does not have any operations in Hyperinflationary Economies and therefore the application of the standard did not had any effect on the Company's financial statements. IFRIC 13 Customer Loyalty Programmes (effective for annual periods beginning on or after 01 July 2008) addresses the accounting by entities that operate or otherwise participate in customer loyalty programmes under which the customer can redeem credits for awards such as free or discounted goods or services. The application of IFRIC 13 effect on the Company's financial statements. IFRIC 14 IAS 19- The Limit on Defined Benefit Asset, Minimum Funding Requirements and their interaction (effective for annual periods beginning on or after 1 January 2008). IFRIC 14 clarifies when refunds or reductions in future contributions in relation to defined benefit assets should be regarded as available and provides guidance on minimum funding requirements (MFR) for such asset. The interpretation had no effect on Company's financial statements for the year ended 30 June 2009. 3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 3.1. Business combinations Business combinations are accounted for using the purchase method. Under this method the cost of acquisition is measured as the fair value of the assets given and the liabilities incurred or assumed at the date of exchange, plus costs directly attributable to the acquisition. Identified assets acquired, liabilities and contingent liabilities assumed are fair valued at the acquisition date. The excess of cost of acquisition over the fair value of identifiable net assets acquired is recorded as goodwill where as the excess of identifiable net assets acquired over the cost of acquisition is recorded as gain on bargain purchase. For details please refer note 4 also. 3.2. Staff retirement benefits Defined contribution plan The Company operates a defined contribution plan. i.e. recognized provident fund scheme for all its eligible employees in accordance with the trust deed and rules made there under. Equal monthly contributions at the rate of 10% of basic salary are made to the fund by the Company and the employees. Similar plans were also operated by Al-Zamin Leasing Corporation Limited (AZLCL) and Al-Zamin Leasing Modaraba (AZLM) and the investments and members' contributions of AZLCL and AZLM will be transferred to the Company's provident fund. Defined benefit plan A funded gratuity scheme in AZLCL and an unfunded gratuity scheme in AZLM were also operated by them on the effective date of merger. Obligation under these plans are determined through actuarial valuations carried out under the "Projected Credit Method" and the last valuation was carried out on 30 June 2009. Actuarial gains and losses are recognised as income or expense when the net cumulative unrecognised actuarial gains and losses for each individual plan at the end of the previous accounting period exceed ten percent of the higher of defined benefit obligation and fair value of the planned assets at that date. These gains or losses are recognised over the expected average working lives of the employees participating in the plan. Currently the company's management has decided that no new employee shall be entitled to these benefits, except that these schemes would continue to be operative for those employees who were earlier entitled to these benefits. Compensated absences AZLM also makes provision in the financial statements for its liability towards compensated absences based on the leaves accumulated up to the balance sheet date in accordance with the service rules. 3.3. Property, plant and equipments Owned Property, plant and equipment, except office premises and leasehold premises are stated at cost less accumulated depreciation and accumulated impairment losses (if any). Office premises and leadhold premises are stated at revalued amount less accumulated depreciation and accumulated impairment losses (if any). Land is carried at cost. Surplus on revaluation of office premises and leasehold premises is credited to the surplus on revaluation account. Depreciation is charged to income applying the reducing balance method over the estimated useful life of related assets, at the rates specified in Note 5 to these financial statements. Up to the previous year, full year's depreciation was charged in the year of additions, while no depreciation was charged in the year of disposal. From the current year, the management has decided to charge depreciation on additions from the month the asset is available for use up to the month of disposal. The management believes that the above change reflects a more systematic allocation of depreciable amount of these assets over their useful lives. The above revision has been accounted for as change in accounting estimates in accordance with the requirements of International Accounting Standard 8 "Accounting Policies, Changes in Accounting Estimates and Errors". Accordingly, the effect of the change in accounting estimates has been recognised prospectively in the profit and loss account of the current year. The effect of above change on depreciation expense is as follows: =======================================================================================
2009
=======================================================================================
Rupees
=======================================================================================
Decrease in depreciation expense 5,627,523
=======================================================================================Normal repairs and maintenance are charged to income as and when incurred. Major renewals and improvements are capitalized.Gains and Losses on disposal of fixed assets are included in income currently. Leased assets Assets held under finance lease are accounted for by recording the asset and related liability at fair value of the asset or, if lower, the present value of minimum lease payments. The outstanding obligation under the lease less finance charges allocated to future periods is shown as a liability. Financial charges are allocated to accounting periods in a manner so as to provide a constant periodic rate of charge on the outstanding liability. Depreciation is charged on the leased assets on the basis similar to that of owned tangible assets. 3.4. Intangible assets An intangible asset is recognized as an asset if it is probable that future economic benefits will flow to the entity and the cost of such assets can be measured reliably. These are stated at cost less any accumulated depreciation and impairment losses, if any. Membership cards of Karachi Stock Exchange (Guarantee) Limited (KSE) and National Commodity Exchange Limited (NCEL). Previously these were carried at revalued amount. However, these are now being carried at cost less impairment loss, if any, as the management considers that active market as defined in IAS 38 "Intangible assets" in respect of these cards do not exist. This has been more fully explained in Note 58 to these financial statements. Goodwill Goodwill represents the excess of cost of an acquisition over fair value of the net identifiable assets acquired at the date of acquisition. Goodwill is tested annually for impairment and carried at cost less accumulated impairment. Software Computer softwares are initially measured at cost and subsequently stated at cost less accumulated amortisation and accumulated impairment losses, if any. Cost of these assets is amortised using the straight line basis reflecting the pattern in which the economic benefits of the assets are consumed by the Company. 3.5. Investments All investments are initially recognised at cost, being the fair value of the consideration given including the transaction costs associated with the investment except in case of held for trading investments, in which case these are charged off to the profit and loss account. All purchases and sale of investments are recognised / derecognised on the trade date. After initial recognition, these are categorised and accounted for as follow: 3.5.1. Investment at fair value through profit or loss This category has two sub-categories, namely; financial instruments held for trading, and those designated at fair value through profit or loss upon initial recognition. -.Financial instruments held for trading Investments which are acquired principally for the purposes of generating profit from short term fluctuation in price or are part of the portfolio in which there is recent actual pattern of short term profit taking are classified as held for trading. -.Financial instruments designated at fair value through profit or loss upon initial recognition Investments designated at fair value through profit or loss upon initial recognition include those group of investments which are managed and their performance evaluated on fair value basis in accordance with the entity's documented investment strategy. After initial recognition, the above investments are remeasured at fair value determined with reference to the year-end quoted rates (equity shares and investments in units of closed end funds at respective stock exchange rates, while the units of open end funds at their declared net asset value per unit). Gains or losses on remeasurement of these investments are recognised in the profit and loss account. 3.5.2. Held-to-maturity Investments with fixed maturity, where management has both the intention and ability to hold to maturity, are classified as held to maturity. These investments are initially recorded at cost. Such investments are subsequently measured at amortized cost. Amortized cost is calculated by taking into account any discount or premium on acquisition, over the period to maturity. Any gain/loss arising on derecognition/impairment in value of such investments, is recognized in the profit and loss account. 3.5.3. Available-for-sale Investments which do not fall under the above categories and which may be sold in response to the need for liquidity or changes in market rates are classified as available for sale. These are initially measured at cost, being fair value of the consideration given. Subsequent to initial recognition, investments in quoted securities are marked to market, using the last quoted rate at the close of the financial year (refer note 3.5.1). Any resultant gain or loss are taken directly to equity, until the investments are sold or until the investments are determined to be impaired, at which time the cumulating gain or loss previously reported in the equity is included in the current year's profit and loss account. Fair value of unquoted investment is estimated based on appropriate valuation method, if it is practicable to determine it. 3.5.4. Investments in joint ventures These investments are initially recognised at cost. Thereafter, the Company's share of the changes in the net assets of the joint ventures is accounted for at the end of each period under the equity basis of accounting. Share of profit and loss of the joint ventures is accounted for in the Company's profit and loss account, where as change in the joint ventures equity, which has not been recognised by them in their profit and loss account, is recognised directly in the equity of the Company. 3.6. Net investment in Ijarah finance / assets leased under Ijarah arrangements, musharakah finance, long term and short term loans / finances Ijarah agreements commencing upto 30 June 2008 are accounted for as finance lease and are included in the financial statements as "Net investment in Ijarah finance" at an amount equal to the present value of the lease payments, including estimated residual value (net of allowance for non-operating lease). The Company has adopted Islamic Financial Accounting Standard 2-Ijarah for all Ijarah commencing on or after 1 July 2008. The assets subject to Ijarah commencing on or after 1 July 2008 are stated at cost less accumulated depreciation and impairment losses, if any. Depreciation is charged on these assets using straight line method over the period of the lease. Gains and losses on disposals are determined by comparing proceeds with the carrying amount of the corresponding assets. Other lending arrangements comprising of musharakah finance, long terms and short term loans and finances are stated net of impairment provisions. Allowance against non-performing balance is made in accordance with Prudential Regulations for NBFC's issued by the Securities and Exchange Commission of Pakistan (SECP) and is charged to the profit and loss account currently. 3.7. Receivable from terminated / matured contracts These are stated net of impairment losses, if any. Impairment loss is recognised for doubtful receivables on the basis of Prudential Regulations for Non-Banking Finance Companies issued by the SECP or based on the judgment of management, whichever is higher. Bad debts are written off when identified. 3.8. Financial instruments All the financial assets and financial liabilities are recognized at the time when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized when the Company looses control of the contractual rights that comprise the financial assets. Financial liabilities are derecognized when they are extinguished, that is, when the obligation specified in the contract is discharged, cancelled or expires. Any gain or loss on derecognition of the financial assets and financial liabilities is taken to income currently. 3.9. Offsetting of financial assets and financial liabilities Financial assets and a Financial liabilities are offset and the net amount is reported in the balance sheet if the Company has a legal enforceable right to set off the transaction and also intends either to settle on a net basis or to realize the asset and settle the liability simultaneously. Income and expenses arising from such assets and liabilities are also accordingly offset. 3.10. Trade debts and other receivables These are stated net of provision for doubtful debts. Full provision is made against debts considered doubtful. 3.11. Taxation Current Provision for current taxation is based on taxable income at the current rates of taxation after taking into account available tax credits and rebates, or minimum tax payable under the Income Tax Ordinance, 2001, whichever is higher, and charge / credit for the prior years. Deferred Deferred tax is recognised using the balance sheet liability method in respect of all temporary differences arising from differences between the carrying amount of assets and liabilities in the financial statements and their tax base. This is recognised on the basis of the expected manner of the realization or settlement of the carrying amount of assets and liabilities using the tax rates enacted or substantially enacted at the balance sheet date. Deferred tax assets are recognised to the extent that it is probable that future taxable profit will be available against which the deductible temporary differences can be utilised. Deferred tax assets are reduced to the extent that is no longer probable that the related tax benefit will be realised. The Company also recognises deferred tax liability on surplus on revaluation of fixed assets and available-for-sale investments, which is adjusted against the related surplus in accordance with the requirements of International Accounting Standard 12 'Income Taxes'. Deferred income tax relating to items recognised directly in equity is recognised in equity and not in profit and loss. 3.12. Revenue recognition 3.12.1. Finance lease/ Ijarah income -.The Company follows the finance method for recognising income on Ijarah contracts commencing prior to 30 June 2008 and accounted for as finance leases. Under this method the unearned income i.e. the excess of aggregate Ijarah rentals (including residual value) over the cost of the asset under Ijarah facility is deferred and then amortised over the term of the Ijarah, so as to produce a constant rate of return on net investment in the Ijarah. -.For Ijarah arrangements commencing on or after 1 July 2008, Ijarah rentals are recognized as income on accrual basis, as and when the rentals become due. -.Documentation charges, front-end fee and other Ijarah income are recognised as income on receipt basis. Unrealized lease income pertaining to non-performing leases is held in suspense account, where necessary, in accordance with the requirements of the Prudential Regulations. -.Leases in which a significant portion of the risk and reward is retained by the Company are classified as operating lease. Rental income from operating leases is recognised on a straight line under the time proportion basis (on an accrual basis). 3.12.2. Income on debt investment securities, bank deposits, long term loans, balances receivable under reverse repurchase agreement, murabahah and musharakah investments and finances. Income on above assets is recognised on a time proportion basis under the effective yield method. 3.12.3. Dividend income Dividend income from investments (other than investment in joint ventures) is recognised when the right to receive the same is established i.e. at the time of closure of share transfer books of the company declaring the dividend. 3.12.4. Gain on sale of investments Gain or loss on sale of investments is taken to income in the period in which it arises. 3.12.5. Unrealised income on non-performing assets Unrealized income is suspensed, where necessary (on non-performing assets including the non-performing lease / Ijarah portfolio, musharakah, murabahah and other loans and lendings), in accordance with the requirements of the Prudential Regulations for Non-Banking Finance Companies issued by the SECP. The unrealised suspended income is recognised in income on receipt basis. 3.12.6. Sale of CNG / Diesel Income from the sale of CNG / Diesel are recognised on the filling of the related vehicles, etc. 3.12.7. Brokerage, fees and commission Brokerage, advisory fee and commission income is recognized on accrual basis on the rendering/ performance of services. 3.13. Gain on sale and lease back transaction This is amortised over the period of the lease obligation. 3.14. Borrowing costs Borrowing costs are charged as expense in the period these are incurred. 3.15. Cash and cash equivalents Cash and cash equivalents for the purpose of cash flow statement comprise cash in hand and at bank and includes short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk of change in value. 3.16. Trade and other payables Trade and other payables are recognised initially at fair value plus directly attributable cost, if any, and subsequently measured at amortised cost. 3.17. Earnings per share Basic EPS is calculated by dividing the profit or loss attributable to ordinary shareholders of the Company by the weighted average number of ordinary shares outstanding during the period. Diluted EPS is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding for the effects of all dilutive potential ordinary shares. 3.18. Segment reporting A segment is a distinguishable component of the Company that is engaged in providing products and services (business segment), or in providing products or services within a particular economic environment (geographical segment), which is subject to risk and rewards that are different from those of other segments. The Company's primary format of reporting is based on business segments. Business segments Brokerage It consists of equity brokerage, forex brokerage, money market brokerage and online trading brokerage. The brokerage activities include services provided in respect of share brokerage, brokerage on continuous funding system, money market brokerage and share subscription commission. Investment and treasury It consists of capital market, money market investment and treasury functions. The activities include profit on bank deposit, term deposit receipts, capital gains on equity and debt securities, mark-up income on term finance certificates and Sukuks and dividend income. Leasing / Ijarah. It includes all types of leases viz operating lease, finance lease and Ijarah and is a major source of revenue for the Company. Other operations It consists of advisory, consultancy function, musharkah, murabahah and all other functions not included in other segments. Geographical segments The Company operates in Pakistan only. 3.19. Fiduciary assets Assets, if any, held in trust or in a fiduciary capacity are not treated as assets of the company and accordingly are not included in these financial statements. 3.20. Foreign currency transactions Foreign currency transactions are translated into Pak Rupees at the exchange rates prevailing on the date of transaction. Monetary assets and liabilities in foreign currencies are translated into Pak Rupees at the exchange rates prevailing at the balance sheet date. Exchange differences are taken to profit and loss account. 3.21. Securities purchased / sold under resale / repurchase agreements (repo borrowings and reverse repo lendings) Securities sold under repurchase agreement (Repo) are retained in the books as investments and its counter-part liability is included in repurchase agreement borrowings. The difference between sale and repurchase price is treated as mark-up expense and recognized over the period of contract. Securities purchased under agreement to resell (reverse Repo) are included in lending to financial institutions. The difference between purchase and resale price is treated as mark-up income and recognized over the period of the contract. 3.22. Impairment Financial assets A financial asset is assessed at each balance sheet date to determine whether there is any objective evidence that it is impaired. A financial asset is considered to be impaired if objective evidence indicates that one or more events have had a negative effect on the estimated future cash flows of the asset and as per the guideline of the NBFC regulations. An impairment loss in respect of a financial asset measured at amortised cost is calculated as the difference between its carrying amount and the present value of estimated cash flows discounted at the original effective interest rate and as per the guideline of NBFC regulations. All impairment losses are recognised in the profit and loss account. Non-financial assets The carrying amount of the Company's assets are reviewed at each balance sheet date to determine whether there is any indication of impairment. If such indication exists, the asset's recoverable amount is estimated in order to determine the extent of impairment loss, if any. Impairment losses are recognised as expense in profit and loss account. The recoverable amount is the higher of an asset's fair value less costs to sell and value in use. 3.23. Provisions Provisions are recognized when the Company has a present legal or constructive obligation as a result of past events and it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate of the obligation can be made. 3.24. Assets acquired in satisfaction of finance These are stated at lower of recoverable amount or the original claim of the company. Difference between the above two is charged to the profit and loss account. 3.25. Stock in trade These are valued at lower of cost and net realisable value. Net realisable value signifies the estimated selling price in the ordinary course of the business less estimated cost of completion and selling expenses. Cost is determined under the First In First Out (FIFO) basis. 3.26. Murahabah borrowings and financing Consequent to adoption of Islamic Financial Accounting Standards 1 - murabahah, issued by the Institute of Chartered Accountants of Pakistan, the Company accounts for murabahah as follows: Funds disbursed for purchase of goods are recorded as 'Advance for murabahah'. On the culmination of murabahah i.e. on sale of goods to the customers, murabahah financings are recorded at the deferred sale price net of profit. Goods purchased but remaining unsold at the balance sheet date are recorded as inventories. Profit on murabahah is recognised on accrual basis. However, profit for the period from the date of disbursement to the date of culmination of murabahah is recognised immediately upon the later date. Funds received against sale of goods are recorded as 'murabahah payable'. On the culmination of murabahah i.e. on purchase of goods from the counter party, murabahah payables are recorded at the deferred purchase price net of expenses. Expenses on murabahah is recognised on accrual basis. However, expenses for the period from the date of receipt to the date of culmination of murabahah is recognised immediately upon the later date. 4. BUSINESS COMBINATION Pursuant to scheme of amalgamation by way of merger, Al-Zamin Leasing Modaraba and Al-Zamin Leasing Corporation Limited were merged with and into the Company effective from 30 June 2009 (at close of business). If the merger had occurred on 1 July 2008, Al-Zamin Leasing Modaraba (AZLM) and Al-Zamin Leasing Corporation Limited (AZLCL), respectively, would have reduced company's profit before tax by approximately Rs. 167.217 million and Rs. 206.746 million and company's profit after tax respectively by Rs. 171.752 million and Rs. 143.470 million. The details of net assets acquired and gain on bargain purchase are as follows: =======================================================================================
Purchase consideration: 2009
=======================================================================================
80,267,460 shares to be issued to the certificate holders
of AZLM at fair value of Rs. 1.55 per share 124,414,563
117,857,035 shares to be issued to the shareholders
of AZLCL at fair value of Rs. 1.55 per share 182,678,404
307,092,967
Fair value of net assets acquired:
AZLM 236,654,687
AZLCL 552,610,359
789,265,046
Gain on bargain purchase, included in other income 482,172,079
Difference between the face value of the Company's share and market
value of the shares (198,124,495 shares
@ Rs. 8.45) - taken to equity Rupees 1,674,151,983
=======================================================================================The swap ratio for the amalgamation by way of merger of Al-Zamin Leasing Modaraba and Al-Zamin Leasing Corporation Limited with and into Invest Capital Investment Bank Limited was determined on the basis of unaudited financial statements as at 31 March 2009. The swap ratio was the weighted average of adjusted book value per share and market value per share during the period. The respective weight of adjusted book value and market value during the period was 90 percent and 10 percent. For the purpose of calculation of gain on bargain purchase, market value at the effective date of merger i.e. 30 June 2009 has been considered.Swap ratio as of 31 March 2009 was approved by the Securities and Exchange Commission of Pakistan. The assets and liabilities arising from the acquisition as of 30 June 2009 are as follows: =============================================================================================================================
Fair value *Acquirees'
AZLM AZLCL Total carrying amount
=============================================================================================================================
Assets
Current Assets
Cash and bank balances 54,785,398 98,756,548 153,541,946 153,541,946
Short term investments 25,105,053 64,170,689 89,275,742 89,275,742
Short term finances - 67,259,002 67,259,002 67,259,002
Takaful reserve fund investments 28,743,840 - 28,743,840 28,743,840
Short term musharakah and murabahah 242,706,495 - 242,706,495 242,706,495
Assets acquired in satisfaction of finances provided - 99,500,000 99,500,000 99,500,000
Advances and prepayments and other receivables 108,588,829 79,939,589 188,528,418 188,528,418
Ijarah rentals receivables 17,310,385 - 17,310,385 17,776,932
Current maturity of long term receivables 908,766,475 638,512,214 1,547,278,689 1,551,857,155
Stock in trade 1,042,322 - 1,042,322 1,042,322
1,387,048,797 1,048,138,042 2,435,186,839 2,440,231,852
Non-current assets
Long term musharakah - secured 199,165,051 - 199,165,051 199,165,051
Net investment in Ijarah finance
ssets under Ijarah arrangements 970,287,500 318,022,542 1,288,310,042 1,345,310,042
Long term investments 108,834,948 66,604,496 175,439,444 179,560,987
Long term loans - 56,306,825 56,306,825 56,306,825
Long term security deposits and advances 8,354,119 10,661,136 19,015,255 19,015,255
Property, plan and equipment 312,889,079 406,301,084 719,190,163 751,228,374
**Intangible assets 11,000,000 500,000 11,500,000 797,354
Deferred taxation (24,362,897) 44,542,518 20,179,621 166,243,245
1,586,167,800 902,938,601 2,489,106,401 2,717,627,133
Total assets Rupees 2,973,216,597 1,951,076,643 4,924,293,240 5,157,858,985
Liabilities
Current liabilities
Short term borrowings/musharakah
borrowings and bank finance facilities 92,848,587 223,337,598 316,186,185 316,186,185
Short term certificates of musharakah 283,280,000 - 283,280,000 283,280,000
Certificates of investments and deposits - 71,650,000 71,650,000 71,650,000
Creditors, accrued and other liabilities 90,617,911 46,986,127 137,604,038 137,604,038
Profit distribution payable 5,907,468 - 5,907,468 5,907,468
Current maturity of long term liabilities 912,315,484 413,047,418 1,325,362,902 1,325,362,902
1,384,969,450 755,021,143 2,139,990,593 2,139,990,593
Long term and deferred liabilities
Deferred liabilities 6,060,503 1,909,446 7,969,949 7,969,949
Security deposits from lessees 503,985,310 168,811,177 672,796,487 672,796,487
Long term certificates of musharakah 177,095,000 - 177,095,000 177,095,000
Loan from a Director - 194,545,117 194,545,117 250,000,000
Long term loan - 127,764,347 127,764,347 127,764,347
Liabilities against assets subject to Ijarah finance 566,795 18,400,054 18,966,849 18,966,849
Long term musharakah and murabahah borrowings 201,829,565 - 201,829,565 201,829,565
Musharakah Term Finance Certificates 462,055,287 - 462,055,287 462,055,287
Redeemable capital - Musharakah
Term Finance Certificates - 128,380,000 128,380,000 128,380,000
Certificates of investments and deposits - 3,635,000 3,635,000 3,635,000
1,351,592,460 643,445,141 1,995,037,601 2,050,492,484
Total liabilities 2,736,561,910 1,398,466,284 4,135,028,194 4,190,483,077
Net assets acquired Rupees 236,654,687 552,610,359 789,265,046 967,375,908
Purchase consideration 307,092,967
Gain on bargain purchase, included
in other income (note 49) Rupees 482,172,079
============================================================================================================================= * The carrying value of net assets of Al-Zamin Leasing Corporation Limited as at 30 June 2009, audited by another firm of chartered accountants is Rs. 554.852 million.** The fair value of intangible asset acquired as part of the acquisition is Rs. 11 million representing computer software and is related to Al-Zamin Leasing Modaraba. 5. PROPERTY, PLANT AND EQUIPMENT =======================================================================================
Note 2009 2008
=======================================================================================
Operating assets 5.1 920,422,163 171,902,617
Capital work in progress 5.4 26,553,760 47,129,690
Rupees 946,975,923 219,032,307
=======================================================================================5.1. Operating asset 2009========================================================================================================================================================
COST Rate DEPRECIATION Written down
As at Additions / Addition As at (%) As at For the Addition As at value as at
1 July (disposal) due to merger/ 30 June 1 July year / due to merger/ 30 June 30 June
2008 revaluation/ 2009 2008 (disposal) transfer/ 2009 2009
transfer/ (reversal) (written off)
========================================================================================================================================================
OWNED ASSETS
Land 85,012,000 55,853 169,694,000 254,761,853 1.03 - - - - 254,761,853
Building - - 193,573,354 193,573,354 5 - - 453,082 453,082 193,120,272
Office premises 12,405,600 - 22,750,000 180,904,000 5 1,209,546 675,000 1,085,959 1,760,959 179,143,041
1,094,400 (1,209,546)
144,654,000
Leasehold premises 15,000,000 - (3,000,000) 12,000,000 5 750,000 600,000 - 600,000 11,400,000
(750,000)
Office renovation 1,055,453 32,727,241 - 32,727,241 33.33 1,015,812 8,777,505 - 8,767,596 23,959,645
(1,055,453) (1,025,721)
Furniture and fixture 14,156,720 - 21,605,707 30,326,826 10 5,767,076 790,436 7,356,818 10,178,926 20,147,900
(5,435,601) (3,735,404)
Office equipment 32,743,677 49,433,894 18,980,585 93,853,225 10 13,254,793 11,882,770 8,410,967 28,303,892 65,549,333
(7,304,931) (5,244,638)
Electric fittings 2,797,544 - - - 10 1,439,639 101,842 - - -
(2,797,544) (1,541,481)
Motor vehicles 37,623,908 13,504,487 18,539,055 64,989,384 20 12,270,267 6,172,291 5,704,488 22,147,929 42,841,455
(8,934,066) 4,256,000 (3,961,314) -
1,962,197
Plant and machinery - - 17,934,748 17,934,748 10 - - 1,067,468 1,067,468 16,867,280
200,794,902 95,721,475 610,081,849 881,070,631 35,707,133 28,249,844 25,587,897 73,279,852 807,790,779
(25,527,595) - (15,508,558) (1,209,546)
LEASED ASSETS -
held for own use
Motor vehicles 11,185,000 - 6,721,775 13,650,775 20 4,370,152 973,397 3,436,198 6,817,550 6,833,225
- - (4,256,000) - - (1,962,197)
Plant and machinery - - 12,610,887 12,610,887 10 - - 459,812 459,812 12,151,075
Office equipment - - 20,926,378 20,926,378 10 - - 12,979,294 12,979,294 7,947,084
11,185,000 - 36,003,040 47,188,040 4,370,152 973,397 14,913,107 20,256,656 26,931,384
OWNED ASSETS HELD FOR OPERATING LEASE ARRANGEMENTS
Generator - - 85,700,000 85,700,000 10 - - - - 85,700,000
Rupees 211,979,902 95,721,475 731,784,889 1,013,958,671 40,077,285 29,223,241 40,501,004 93,536,508 920,422,163
(25,527,595) (15,508,558) (1,209,546)
========================================================================================================================================================5.1.1. Details of CNG/Diesel related projects transfer due to merger, included in note 5.1 above are as follows:============================================================================================================================
Freehold land Building Plant and Furniture and Office Total
equipment
machinery fixture
============================================================================================================================
Cost 45,198,000 22,179,354 30,545,632 52,800 22,000 97,997,786
Accumulated depreciation - 546,049 1,535,720 10,237 6,086 2,098,092
Net book value as at 30 June 2009 Rupees 45,198,000 21,633,305 29,009,912 42,563 15,914 95,899,694
============================================================================================================================Freehold land of Rs. 61.576 million included in CNG/Diesel related projects is mortgaged against a murabahah borrowing from a commercial bank.=======================================================================================================================================================
2008 (Restated)
=======================================================================================================================================================
COST Rate DEPRECIATION Written down
As at Additions / Transfer As at (%) As at For the Transfer / As at value as at
1 July (disposal) 30 June 1 July year / write-off 30 June 30 June
2007 2008 2007 (disposal) 2008 2008
=======================================================================================================================================================
OWNED ASSETS
Land and building 60,769,000 24,243,000 - 85,012,000 - - - - 85,012,000
Office premises 12,405,600 - - 12,405,600 5 620,280 589,266 - 1,209,546 11,196,054
Leasehold premises 15,000,000 - - 15,000,000 5 - 750,000 - 750,000 14,250,000
Office renovation - 1,055,453 - 1,055,453 33.33 - 19,818 995,994 1,015,812 39,641
Furniture and fixture 9,806,004 4,596,952 - 14,156,720 10 4,022,765 932,183 999,834 5,767,076 8,389,644
(246,236) (187,706)
Office equipment 28,064,270 4,728,907 - 32,743,677 10 9,708,298 2,165,432 1,394,878 13,254,793 19,488,884
(49,500) (13,815)
Electric fittings 2,797,544 - - 2,797,544 10 1,288,761 150,878 - 1,439,639 1,357,905
Motor vehicles 20,185,171 20,414,872 - 37,623,908 20 7,162,618 6,370,848 1,594,994 12,270,267 25,353,641
(5,165,135) 2,189,000 (2,858,193)
149,027,589 55,039,184 2,189,000 200,794,902 22,802,722 10,978,425 4,985,700 35,707,133 165,087,769
(5,460,871) (3,059,714) -
LEASED ASSETS
held for own use
Motor vehicles 13,374,000 - (2,189,000) 11,185,000 20 3,734,672 1,703,712 (1,068,232) 4,370,152 6,814,848
Rupees 162,401,589 55,039,184 - 211,979,902 26,537,394 12,682,137 3,917,468 40,077,285 171,902,617
(5,460,871) (3,059,714) -
=======================================================================================================================================================5.2. Disposal of operating fixed assetsThe following is a statement of assets disposed off during the year: ==================================================================================================================================================
Particulars Cost Accumulated Written Sale Gain / Particulars of buyers Mode of disposal
depreciation down value proceeds (loss)
==================================================================================================================================================
Vehicles:
Honda CD-70 53,886 (47,136) 6,750 7,233 483 Jan Muhammad Through negotiation.
Toyota Corolla 669,000 (615,365) 53,635 57,466 3,831 Awias Ahmed Through negotiation.
Toyata Prado 3,005,180 (761,312) 2,243,868 2,825,000 581,132 Javed Yousuf Ahmad jee As per Company policy.
Honda City 835,000 (538,586) 296,414 345,000 48,586 Shahis Rasheed Allahwala As per Company policy.
Honda City 835,000 (532,886) 302,114 345,000 42,886 Sohail Yousaf As per Company policy.
Honda Civic-VTI 1,028,000 (258,961) 769,039 805,977 36,938 Javed Yousuf Ahmadjee As per Company policy.
Honda City 952,000 (560,422) 391,578 490,000 98,422 Mehmood Qureshi As per Company policy.
Suzuki Cultus 620,000 (229,813) 390,187 415,000 24,813 Rasheed Khan Through negotiation.
Honda City 936,000 (416,832) 519,168 601,791 82,623 Asif Hussain As per Company policy.
8,934,066 (3,961,313) 4,972,753 5,892,467 919,714
Others
Office Equipment 7,304,931 (5,244,638) 2,060,293 85,483 (1,974,810) Miscellaneous Sold as scrap & written off.
Furniture & Fixtures 5,435,601 (3,735,404) 1,700,188 12,300 (1,687,888) Miscellaneous Sold as scrap & written off.
Electric Fittings 2,797,544 (1,541,481) 1,256,055 325,000 (931,055) Miscellaneous Written off
Office Renovation 1,055,453 (1,025,721) 29,732 - (29,732) - Written off
16,593,529 (11,547,244) 5,046,268 422,783 (4,623,485)
Total: 2009 Rupees 25,527,595 (15,508,558) 10,019,021 6,315,250 (3,703,771)
Total: 2008 Rupees 5,460,874 (3,059,714) 2,401,160 2,644,467 243,307
==================================================================================================================================================5.3. During the year, as of 30 June 2009, revaluation of office premises and leasehold premises was carried out. The revaluation was carried out under market value basis by an independent valuer M/S Zafar Iqbal & Co. resulting in a net deficit of Rs.0.696 million over book value as detailed in note 28. Leasehold premises represents revalued amount of a room at Karachi Stock Exchange building. This amount has been reclassified from Membership cards and Rooms as an indenture of sub lease was extended between the Karachi Stock Exchange and the Company and the corresponding figures has been reclassified.Above deficit has been credited to surplus on revaluation of assets. Had there been no revaluations, the value of the assets as of 30 June 2009 would have been as under: =======================================================================================
Cost Net book
=======================================================================================
Office premisess 3,610,622 2,654,139
Leasehold premises 100,000 -
Rupees 3,710,622 2,654,139
=======================================================================================5.4. Capital work-in-progress=======================================================================================
Note 2009 2008
=======================================================================================
Development charges relating to freehold land 5,000,000 -
CNG Station at Faisalabad 5.4.1 21,453,760 -
Renovation and office equipment 100,000 47,129,690
Rupees 26,553,760 47,129,690
=======================================================================================5.4.1. This represents expenditure incurred for the establishment of a CNG Station at Faisalabad. Al-Zamin Leasing Modaraba has entered in a partnership agreement with another party under which: the Modaraba will provide equipments for the CNG station and 50% of the cost of construction; the other party has agreed to provide land for the CNG station and shall bear remaining 50% of the cost of construction.Currently, cost of construction is being borne by the Modaraba only and the above partner has agreed to settle its dues from the operation of the CNG station. Profit sharing ratio shall be 50% each. 5.5. Land and building respectively includes carrying values of Rs. 74.5 million and Rs. 42 million which have been let out under operating lease arrangements. 6. INTANGIBLE ASSETS =======================================================================================
Note 2009 2008
=======================================================================================
(Restated)
=======================================================================================
Membership cards 6.1 24,350,000 24,350,000
Computer software 6.2 12,525,167 1,367,126
Rupees 36,875,167 25,717,126
=======================================================================================6.1. This represents cost of membership cards of the Karachi Stock Exchange (Guarantee) Limited and National Commodity Exchange Limited.6.2. Computer software =======================================================================================
2009 2008
=======================================================================================
Opening balance - cost 2,759,688 2,688,838
Additions during the year 78,548 70,850
Addition due to merger 11,500,000 -
14,338,236 2,759,688
Accumulated amortization at the beginning of the year 1,392,562 806,651
Amortization for the year @ 30% per annum 420,506 585,911
1,813,069 1,392,562
Rupees 12,525,167 1,367,126
=======================================================================================7. GOODWILLDuring the year the management decided to write off the goodwill previously recognised as the management believes that the future economic benefits associated with the previously recognised goodwill will not flow to the Company. The goodwill had arisen on the formation of the company as a result of the amalgamation of Asset Investment Bank Limited and Invest Capital and Securities (Private) Limited. Refer note 1 also. 8. LONG TERM INVESTMENTS =======================================================================================
Note 2009 2008
=======================================================================================
Investment in related parties 8.1 62,240,756 -
Available for sale investments:
Ordinary shares & certificates of listed and
unlisted entities 8.2 83,503,946 -
Mutual Funds 8.3 18,595,774 -
Term Finance Certificates 8.4 11,098,970 -
Rupees 175,439,446 -
=======================================================================================8.1. INVESTMENTS IN RELATED PARTIES=======================================================================================
Note 2009 2008
=======================================================================================
Joint ventures
CNG / Diesel filling stations
Centre Gas (Private) Limited 8.1.1 34,535,703 -
UMA Enterprises 8.1.2 27,705,053 -
Rupees 62,240,756 -
=======================================================================================8.1.1. The summarised financial information and the share of profit given below are based on the audited financial statements of Centre Gas (Private) Limited ("the Company") as of 30 June 2009 audited by another firm of auditors who have expressed an unqualified opinion on those financial statements.=======================================================================================================
Total Total Total Total Revenue Net profit
current assets current liabilities for the for the
assets liabilities year year
=======================================================================================================
Centre Gas (Private)
Limited Rupees 25,452,991 44,141,041 2,154,370 2,566,070 28,781,748 3,851,720
=======================================================================================================The company's paid-up share capital is Rs. 5 million comprising 5,000 ordinary shares of Rs.1,000 each. The equity as at 30 June 2009 was Rs.41.575 million.8.1.2. The summarised financial information and the share of profit given below are based on audited financial statements of UMA Enterprise as of 30 June 2009 audited by another firm of auditors who expressed an unqualified opinion on those financial statements. =======================================================================================================
Total Total Total Total Revenue Net profit
current assets current liabilities for the for the
assets liabilities year year
UMA Enterprises Rupees 9,095,542 44,233,729 5,885,979 13,341,097 54,202,871 16,355,978
=======================================================================================================During the year ended 30 June 2006, Al-Zamin Leasing Modaraba (AZLM) entered in a partnership agreement with two other parties namely, Universal Textile Mills (Private) Limited (Universal) and Madni Petroleum & CNG Service (Private) Limited (Madni). Under the agreement, a partnership firm UMA Enterprises (UMA) has been established for a minimum period of 20 years with an option to renew the said partnership deed for a further period of 10 years with the mutual consent of all the parties. UMA is engaged in the business of procurement, instalment, maintenance and operation of a retail outlet / CNG station, etc. Under the terms of the agreement, Universal has provided land on which the CNG station has been established (for twenty years lease renewable for another ten years), Madni is responsible for the management of the project and AZLM was responsible for providing the finances up to Rs. 25 million required for the establishment of the project (which has already been provided). Financial control of the Enterprise vests with AZLM.The profit and losses from the project are shared by the AZLM at 40%. The project commenced its operations in July 2007. 8.2. Available for sale investments - Ordinary shares / Certificates =====================================================================================================
Number of shares
/ certificates
(of Rs. 10 each Fair Value / Carrying Value
=====================================================================================================
2009 2008 2009 2008
=====================================================================================================
Listed
14,500 - AMZ Ventures Limited 7,685 -
7,500 - Askari Bank Limited 114,600 -
2,500 - Atlas Bank Limited 8,475 -
15,600 - Attock Refinery Limited 1,946,724 -
159,958 - Bank Al-Falah Limited 1,687,556 -
50,000 - BankIslami Pakistan Limited 318,500 -
33,000 - D.G. Khan Cement Company Limited 978,450 -
1,000 - Dost Steel Limited 5,340 -
112,000 - English Leasing Limited 165,760 -
60,500 - Engro Chemical Pakistan Limited 7,770,015 -
45,500 - Fauji Fertilizers Bin Qasim Limited 804,895 -
8,000 - Fauji Fertilizers Company Limited 695,600 -
520,000 - First Equity Modaraba Limited 514,800 -
82,541 - First Fidelity Leasing Modaraba 214,875 -
10,000 - First Habib Modaraba 57,700 -
13,440 - Habib Bank Limited 1,156,646 -
130,000 - Hub Power Company Limited 3,521,700 -
2,500 - IGI Investment Bank Limited 10,450 -
8,800 - Javed Omer Vohra & Company Limited 118,536 -
30,000 - Lucky Cement Limited 1,755,900 -
18,000 - National Bank of Pakistan 1,206,540 -
25,000 - Network Leasing Corporation Limited 258,000 -
107,500 - NIB Bank Limited 510,625 -
7,000 - Pak Suzuki Motor Company Limited 475,300 -
59,400 - Pakistan Oil Fields Limited 8,666,460 -
15,355 - Pakistan Petroleum Limited 2,910,387 -
27,500 - Pakistan State Oil Company Limited 5,875,375 -
20,000 - Samba Bank Limited 59,600 -
10,000 - Saudi Pak Leasing Company Limited 19,900 -
1,112,300 - Southern Electric Power Company Limited 3,570,483 -
25,000 - The Bank of Punjab 274,500 -
12,500 - TRG Pakistan Limited 16,875 -
5,500 - United Bank Limited 210,595 -
2,000 - World Call Telecom Limited 5,000 -
135,000 - Zeal Pak Cement Factory Limited 62,100 -
24,375 - Arif Habib Securities Limited 673,725 -
17,200 - Arif Habib Limited 1,150,508 -
7,000 - Mari Gas Company Limited 1,041,810 -
12,500 - Oil & Gas Development Co Limited 983,000 -
5,500 - Adamjee Insurance Company Limited 461,945 -
24,000 - Azgard Nine Limited 531,350 -
17,500 - Nishat Mills Limited 661,850 -
25,000 - Pakistan Telecommunication Company Limited 431,000 -
4,000 - Packages Limited 628,160 -
5,000 - Pakistan Refinery Limited 449,000 -
2,100 - EFU General Insurance Co. Limited 184,989 -
4,100 - ICI Pakistan Limited 575,025 -
10,000 - Eye Television Network Limited 287,500 -
50,000 - Maple Leaf Cement Factory Limited 213,000 -
3,437 - Jahangir Siddiqui & Co. Limited 79,704 -
2,500 - JS Investments Limited 42,350 -
5,000 - Sui Northern Gas Pipelines Limited 159,750 -
Un-Listed - - -
500,000 - Central Depository Company of Pakistan Limited 15,640,000 -
1,333,333 - Dawood Islamic Bank Limited 8.2.1 13,333,333 -
1,140 - Innovative Investment Bank Limited - -
Rupees 83,503,946 -
=====================================================================================================8.2.1. This represents investment of Rs. 13.33 million in 1,333,333 ordinary shares of Rs. 10 each of Dawood Islamic Bank Limited, an unlisted bank. Aforesaid shares are blocked with the State Bank of Pakistan and cannot be sold / transferred without the prior approval of the State Bank of Pakistan for a period of three years from 30 November 2006, 31 January 2008 and 7 February 2008, (representing date of purchase of each lot included in total holding of 1,333,333 ordinary shares of the Bank) or as specified by the State Bank of Pakistan. The break-up value per share at 30 June 2009 based on the reviewed financial statements is Rs. 10.11.8.2.2. Details of shares pledged with Saudi Pak Industrial and Agricultural Investment Company Limited (SAPICO), against a financing facility from them are as follows: =======================================================================================
2009
=======================================================================================
Number of shares
Scrip Name pledged
=======================================================================================
Adamjee Insurance Company Limited 5,000
Arif Habib Limited 17,200
Arif Habib Securities Limited 24,375
Attock Refinery Limited 15,000
Azgard Nine Limited 16,100
D.G Khan Cement Company Limited 15,000
Engro Chemical Pakistan Limited 45,500
Eye Television Network Limited 10,000
Fauji Fertilizer Company Limited 5,500
Fauji Fertilizer Bin Qasim Limited 25,000
ICI Pakistan Limited 4,100
Jahangir Siddiqui & Company Limited 3,437
Lucky Cement Limited 25,000
Mari Gas Company limited 7,000
Nishat Mills Limited 17,500
Oil and Gas Development Limited 12,500
Packages Limited 4,000
Pakistan Oil Fields Limited 47,400
Pakistan Telecommunication Company Limited 25,000
Pakistan State Oil Limited 22,500
=======================================================================================Subsequent to the year end, the borrowing from SAPICO was repaid and above shares have since then been released.8.3. Available for sale investments - Mutual Funds ===============================================================================================
Number of units 2009 2008
===============================================================================================
2009 2008
===============================================================================================
Close-end - listed
===============================================================================================
1,599,500 - Safeway Mutual Fund 17,292,674 -
50,000 - Pakistan Strategic Allocation Fund Limited 171,500 -
276,000 - Pakistan Premier Fund Limited 1,131,600 -
Rupees 18,595,774 -
===============================================================================================8.4. Available for sale investments - Term Finance Certificates===============================================================================================
Number of
certificates
===============================================================================================
Note 2009 2008
===============================================================================================
2009 2008
===============================================================================================
Listed
===============================================================================================
1,000 - Saudi Pak Leasing Corporation Limited 8.4.1 4,998,000 -
1,551 - Trust Investment Bank Limited 8.4.1 6,100,970 -
Rupees 11,098,970 -
===============================================================================================8.4.1. Details of listed Term Finance Certificates are as follows:================================================================================================================== Name of the Company Repayment frequency Rate per annum Maturity date ================================================================================================================== Saudi Pak Leasing Corporation Limited Semi-annually 6 months KIBOR plus 1.50% March 13, 2013 Trust Investment Bank Limited Semi-annually 6 months KIBOR plus 1.80 basis July 04, 2013 ==================================================================================================================9. NET INVESTMENT IN IJARAH FINANCE/ASSETS UNDER IJARAH ARRANGEMENT =======================================================================================
Note 2009 2008
=======================================================================================
Ijarah contracts commencing upto 30 June 2008 - accounted for
as finance leases 9.1 2,437,626,243 -
Ijarah contracts commencing 1 July 2008
- accounted for under IFAS 2 9.2 269,955,116 -
2,707,581,359 -
Current portion of net investment in Ijarah finance 21 (1,419,271,317) -
Rupees 1,288,310,042 -
=======================================================================================9.1. Net investment in Ijarah finance=========================================================================================================================
2009 2008
=========================================================================================================================
Due within Due after Total Due within Due after Total
one year one year but one year one year but
within five years within five years
=========================================================================================================================
Minimum lease payments receivable 1,269,600,236 807,121,217 2,076,721,453 - - -
Residual value of leased assets 371,119,934 600,010,104 971,130,038 - - -
Lease contracts receivable 1,640,720,170 1,407,131,321 3,047,851,491 - - -
Unearned lease income (including
suspensed income) (194,902,841) (137,447,750) (332,350,591) - - -
Provision for potential lease losses (26,546,012) (251,328,645) (277,874,657) - - -
(221,448,853) (388,776,395) (610,225,248) - - -
Rupees 1,419,271,317 1,018,354,926 2,437,626,243 - - -
=========================================================================================================================9.1.1. Above balances as of 30 June 2009, represent the addition due to the merger of Al-Zamin Leasing Corporation Limited and Al-Zamin Leasing Modaraba with and into Invest Capital Investment Bank Limited.Above entities had entered into various lease agreements with profit rates ranging from 6.44% to 34.81% per annum. These agreements usually are for three to five years period. These are generally secured against leased assets, personal / corporate guarantees and promissory notes given by the lessees and other collaterals. The above net investment in finance lease includes non-performing lease portfolio of Rs. 602.168 million. Details of these leases are as follows: 9.1.2. Category of classification ============================================================================================
2009 2008
============================================================================================
Principal Provision Provision Principal Provision Provision
outstanding required held outstanding required held
============================================================================================
Other assets especially mentioned
Substandard 184,175,779 56,906,655 56,906,655 - - -
109,782,238 14,205,240 14,205,240 - - -
Doubtful 120,160,036 38,911,079 38,911,079 - - -
Loss 188,049,515 167,851,683 167,851,683 - - -
Rupees 602,167,568 277,874,657 277,874,657 - - -
============================================================================================9.2. Assets under Ijarah arrangementsThe following is a statement of assets leased out: ==========================================================================================================
COST DEPRECIATION
==========================================================================================================
As at Transfer As at As at Transfer As at Net carrying
1 July due to merger 30 June 1 July due to merger 30 June value as at
2008 2009 2008 2009 30 June 2009
==========================================================================================================
Plant and machinery - 39,094,500 39,094,500 - 5,880,830 5,880,830 33,213,670
Equipment - 198,991,424 198,991,424 - 27,261,948 27,261,948 171,729,476
Vehicles - 63,477,832 63,477,832 - 11,309,265 11,309,265 52,168,567
Livestock - 15,088,380 15,088,380 - 2,244,977 2,244,977 12,843,403
2009 Rupees - 316,652,136 316,652,136 - 46,697,020 46,697,020 269,955,116
==========================================================================================================Above Ijarah arrangements carry profit rates ranging between 13.21% to 27.49% per annum.9.2.1. Ijarah rentals receivable in respect of above assets =======================================================================================
Note 2009 2008
=======================================================================================
Ijarah rentals receivable 18,977,230 -
Provision against Ijarah rentals receivable 9.2.2 (1,666,845) -
Rupees 17,310,385 -
=======================================================================================9.2.2. Provision against Ijarah rentals receivable========================================================================================================================
Category of classification 2009 2008
========================================================================================================================
Principal Provision Provision Principal Provision Provision
outstanding required held outstanding required held
========================================================================================================================
Other assets especially mentioned Rupees 1,666,845 1,666,845 1,666,845 - - -
========================================================================================================================9.2.3. Contractual rentals receivable========================================================================================================================
2009 2008
========================================================================================================================
Due within one Due after one Total Due within Due after Total
year year best within one year one year
five years but within
five years
========================================================================================================================
Total future rentals receivable Rupees 112,652,880 199,126,660 311,779,540 - - -
========================================================================================================================10. LONG TERM MUSHARAKAH FINANCE � secured=======================================================================================
Note 2009 2008
=======================================================================================
Companies (non- financial institutions) 125,944,282 -
Individuals 138,932,400 -
264,876,682 -
Receivable within one year shown under current assets (64,827,218) -
200,049,464 -
Provision against impaired balances 10.2 (884,413) -
Rupees 199,165,051 -
=======================================================================================10.1. This represents investments under musharakah basis for working capital and project financing . These are secured against mortgage of properties, musharakah finance (borrowing), demand promissory note and personal guarantee of sponsor directors. Profit rates range between 12.01% to 42.42%. These are payable in monthly / quarterly instalments by 30 June 2013.10.2. This represents provision against a non-performing receivable balance of Rs. 2.221 classified as loss. 11. LONG TERM LOANS - considered good =======================================================================================
Note 2009 2008
=======================================================================================
Considered good
Executives 11.1, 11.2 & 11.3 27,162,274 21,616,614
Other employees 11.1 & 11.2 9,028,032 4,333,187
Customers 11.3 110,545,908 -
146,736,214 25,949,801
Considered doubtful
Customers 11.3 1,254,428 -
Less: Provision - -
1,254,428 -
147,990,642 25,949,801
Current maturity 21 (70,314,240) (6,188,416)
Rupees 77,676,402 19,761,385
=======================================================================================11.1. This respectively includes Rs. 22.356 million and Rs. 6.147 million unsecured loans (considered good) to the executives and employees of the Company disbursed in accordance with the Company's policy and terms of employment. These are repayable in monthly installments over the period ranging from 1 to 10 years and do not carry any interest.11.2. This respectively includes Rs. 4.806 million and Rs. 2.881 million loans to the executives and employees of former Al-Zamin Leasing Corporation Limited representing the house and car loans provided as per the entity's policy. The house loans are repayable in 240 monthly instalments and carry a variable mark-up rate based on State Bank of Pakistan discount rate prevailing on the last day of a calendar year minus 400 bps with a minimum of 5% per annum. The loans are secured by equitable mortgage on the property through the title documents of the property. Car loans are repayable in 60 monthly instalments and carry a variable mark-up rate based on Company's cost of funds. 11.3. These represent long-term finances to various customers of Al-Zamin Leasing Corporation Limited and carry mark-up at the rate ranging from 9.85% to 21.97% per annum. These are secured against registered charge on assets of the customers, pledge / hypothecation of stocks and collateral in certain cases. 11.4. Reconciliation of the carrying amount of loans to executives =======================================================================================
2009 2008
=======================================================================================
Balance at the beginning of the year 21,616,614 19,658,550
Employees promoted to executive category 56,483 886,948
Disbursements during the year 10,863,000 7,342,208
Transfer due to merger 4,805,878 -
37,341,975 27,887,706
Repayments during the year (10,179,701) (6,271,092)
Closing Balance Rupees 27,162,274 21,616,614
=======================================================================================12. LONG TERM DEPOSITS AND RECEIVABLES - unsecured and considered good=======================================================================================
Note 2009 2008
=======================================================================================
Security Deposits
For assets acquired on leases 688,400 1,107,400
Deposit with Karachi Stock Exchange (Guarantee) Limited 3,010,000 3,310,000
Deposit with National Commodity Exchange Limited 3,502,000 3,502,000
Others 12.1 24,655,622 5,637,609
31,856,022 13,557,009
Current maturity 21 (688,400) (263,400)
Rupees 31,167,622 13,293,609
=======================================================================================12.1. This represents security deposits paid for utilities services, office premises, etc. 13. DEFERRED TAX ASSET � net 13.1. Deferred tax on items recognised in the surplus on revaluation of assets: =======================================================================================
Note 2009 2008
=======================================================================================
Taxable temporary differences:
Surplus on revalution of fixed assets 13.4 (1,194,350) (1,005,306)
Surplus on revalution of available for sale 13.4 (1,589,998) -
(2,784,348) (1,005,306)
=======================================================================================13.2. Deferred tax arising on merger=======================================================================================
Note 2009 2008
=======================================================================================
Deductible temporary differences (tax effect)
privision against doubtful finance lease and
other receivable 109,839,748 -
carry forward of income tax losses 199,298,314 -
liabilities against asset subject to finance lease 9,908,553 -
319,046,615 -
Taxable temporary differences (tax effect)
accelerated tax depreciation (298,866,994) -
13.3 20,179,621 -
Rupees 17,395,273 (1,005,306)
=======================================================================================13.3. At 30 June 2009, net deferred tax asset amounting to Rs. 146 million has not been recognised as a matter of prudence.13.4. This change has been respectively recognised in the surplus on revaluation of fixed assets and surplus on revaluation of available for sale investments. 14. SHORT-TERM INVESTMENTS =======================================================================================
Note 2009 2008
=======================================================================================
Investments at fair value through profit or loss 2009 2008
Quoted securities
Term finance certificates - 47,540
Ordinary shares 14.1 49,236,754 -
Preference shares - cumulative 14.2 461,872 -
Mutual Funds 14.3 76,276,116 41,628,924
Available-for-sale
Government securities 14.4 777,597,394 -
Other quoted securities
Term finance certificates 14.5 84,000 70,000
Units of closed ended mutual funds - 9,500
Ordinary shares 14.6 25,616,584 85,879,518
Un - quoted securities
Dawood Family Takaful
Limited (100,000 ordinary shares) 14.7 1,000,000 -
Rupees 930,272,720 127,635,482
=======================================================================================14.1. Investments at fair value through profit and loss - ordinary shares============================================================================================================
2009 2008 2009 2008
============================================================================================================
No of shares Name of company Market value
============================================================================================================
(of Rs. 10 each)
============================================================================================================
78,437 - Bank Alfalah Limited 827,510 -
10,600 - Habib Bank Limited 912,236 -
195,500 - NIB Bank Limited 928,625 -
21,600 - United Bank Limited 827,064 -
41,000 - Meezan Bank Limited 451,000 -
15,000 - Attock Cement Limited 1,053,300 -
21,000 - Hub Power Company Limited 568,890 -
6,000 - Pakistan State Oil Limited 1,281,900 -
2,000 - Shell Pakistan Limited 447,800 -
46,950 - Sui Northern Gas Pipeline Limited 1,500,053 -
40,000 - Sui Southern Gas Company Limited 560,000 -
10,000 - Oil & Gas Development Company Limited 786,400 -
19,000 - Pakistan Oilfields Limited 2,772,100 -
50,000 - Pakistan Telecommunications Limited 862,000 -
35,055 - Fauji Fertilizer Company Limited 3,047,686 -
102,500 - Fauji Fertilizer Bin Qasim Limited 1,813,225 -
83,500 - Pakistan PTA Limited 238,810 -
38,025 - Packages Limited 5,971,446 -
23,500 - ICI Pakistan Limited 3,295,874 -
33,620 - Engro Chemical Pakistan Limited 4,317,816 -
11,500 - Mari Gas Company Limited 1,711,545 -
16,000 - Tri-Pack Film Limited 1,598,240 -
18,800 - Arif Habib Limited 1,257,532 -
20,000 - D.G Khan Cement Company Limited 593,000 -
22,000 - Eye Television Network Limited 632,500 -
10,000 - Pakistan International Container Terminal 534,300 -
23,400 - Azgard Nine Limited 518,076 -
26,880 - Netsole Technologies Limited 480,077 -
27,000 - JS Investment Limited 457,380 -
11,495 - Central Insurance Company Limited 425,200 -
17,189 - Jahangir Siddiqui & Company Limited 398,613 -
150,000 - Karachi Electric Supply Company Limited 397,500 -
24,420 - Javed Omer Vohra & Company Limited 328,938 -
35,000 - Fauji Cement Company Limited 230,650 -
12,500 - Sitara Peroxide Limited 230,500 -
2,000 - Pakistan Refinery Limited 179,600 -
2,500 - Lucky Cement Limited 146,325 -
22,500 - Invest & Finance Securities Limited 135,000 -
107,500 - TRG Pakistan Limited 145,125 -
1,000 - Adamjee Insurance Company Limited 83,990 -
1,650 - Bestway Cement Limited 42,141 -
58,500 - AMZ Ventures Limited 31,005 -
11,250 - Dewan Cement Limited 30,938 -
6,500 - Maple Leaf Cement Factory Limited 27,690 -
2,000 - Ahmed Hassan Textile Mills Limited 56,000 -
6,166 - Arif Habib Bank Limited 43,100 -
445 - Askari Bank Limited 6,800 -
22,500 - Atlas Bank Limited 76,275 -
10,000 - Attock Refinery Limited 1,247,900 -
2,000 - Century Paper & Board Mills Limited 26,380 -
4,114 - Crescent Steel & Allied Products Limited - a related party 73,929 -
1,000 - Dost Steel Limited 5,340 -
24,500 - First Habib Modaraba 141,365 -
4,000 - Ghandara Nissan Limited 21,400 -
3,000 - Honda Atlas Cars Pakistan Limited 38,550 -
7,500 - IGI Investment Bank Limited 31,350 -
10,000 - KASB Bank Limited 103,200 -
500 - Kohinoor Energy Limited 14,500 -
315 - Kohinoor Power Company Limited 2,356 -
15,000 - Kot Addu Power Company Limited 633,900 -
2,000 - MCB Bank Limited 310,060 -
20,020 - National Bank of Pakistan 1,341,941 -
13,800 - Orix Leasing Pakistan Limited 110,400 -
3,000 - Pak Suzuki Motor Company Limited 203,700 -
15,000 - Lafarge Pakistan Cement Limited 40,500 -
5,000 - Pakistan Petroleum Limited 947,700 -
74,000 - Samba Bank Limited 220,520 -
10,000 - Saudi Pak Leasing Company Limited 19,900 -
10,000 - Shakarganj Mills Limited 51,000 -
20,000 - Silk Bank Limited 108,200 -
6,344 - Soneri Bank Limited 69,530 -
34,850 - Southern Electric Power Company Limited 111,869 -
10,000 - Standard Chartered Bank Limited 84,900 -
88 - The Bank of Punjab 966 -
5,449 - Worldcall Telecom Limited 13,623 -
Rupees 49,236,754 -
============================================================================================================14.1.1. Ordinary shares having market value of Rs. 47.629 million are pledged with commercial banks against various financing facilities.14.2. At fair value through profit or loss - Preference shares � cumulative ============================================================================================================
2009 2008 2009 2008
============================================================================================================
No of shares Market value
============================================================================================================
57,734 - Pakistan International Container Terminal Rupees 461,872 -
Limited. Rate of preference dividend: 10%
Face value of preference shares: Rs.10 each
Terms of redemption:
Redeemable within 7 years of issue
============================================================================================================14.3. At fair value through profit or loss============================================================================================================
Mutual funds
============================================================================================================
2009 2008 2009 2008
No of units Market value
============================================================================================================
Open-end - listed
1,701,500 - Pak Oman Advantage Fund 15,313,500 23,750,000
296,981 - AKD Income Fund 13,262,061 -
10,451 - Dawood Islamic Fund 1,067,243 -
10,429 - HBL Multi Asset Fund 844,112 -
373,904 - NAFA Stock Fund 2,269,039 -
288,374 - Namco Income Fund 29,388,953 -
34,305 - United Growth and Income Fund 3,360,488 -
6,764 - United Stock Advantage Fund 437,870 -
Total carried forward Rupees 65,943,266 23,750,000
============================================================================================================
Close-end - listed
============================================================================================================
1,920,400 - Namco Balanced Fund 9,064,288 17,878,924
200 - Atlas Fund of Funds 600 -
523 - JS Growth Fund 1,998 -
779 - JS Value Fund 3,466 -
307,575 - Pakistan Premier Fund Limited 1,261,058 -
320 - PICIC Energy Fund 1,440 -
10,332,850 17,878,924
Rupees 76,276,116 41,628,924
============================================================================================================14.4. Government securities (available-for-sale)=======================================================================================
Note 2009 2008
=======================================================================================
Market value
=======================================================================================
Pakistan Investment Bond 14.4.1 49,498,850 -
Market Treasury Bills 14.4.2 728,098,544 -
Rupees 777,597,394 -
=======================================================================================14.4.1. These Pakistan Investment Bonds have a tenor of five years with maturity on 30 August 2013. These carry an effective yield of 11.50%.14.4.2. These treasury bills have a tenor of one year with maturity on 26 March 2010, 8 April 2010 and 3 June 2010. These carry an effective yield of 12.15%. 14.5. Term finance certificates This represents 20 unsecured subordinated term finance certificates (2008: 20) of United Bank Limited @ Rs. 4,000 each (2008: Rs. 4,000 each) and carry interest rate of six months KIBOR plus 1.5% with maturity on 4 February 2013. Average cost per term finance certificate is Rs. 3,500 (2008: Rs. 3,500). 14.6. Ordinary shares (available-for-sale) ==============================================================================================================
2009 2008 2009 2008
==============================================================================================================
No. of shares Name Market value
==============================================================================================================
- 10,000 Standard Chartered Bank Limited - 235,100
37,500 2,500 Arif Habib Securities Limited 1,036,500 403,700
- 41,750 Askari Bank Limited - 1,677,932
100,000 362,350 Bank of Punjab Limited 1,098,000 11,279,955
- 3,500 Faisal Bank Limited - 122,640
- 100 First Cap Sec Corp Limited - 5,920
- 26,105 NIB Bank Limited - 296,814
50,000 20,303 National Bank of Pak Limited 3,353,509 2,994,693
700 7,000 MCB Bank Limited 108,521 2,284,660
100,000 92,625 BankIslami Pakistan Limited 637,000 1,371,776
67,500 72,500 MY Bank Limited 247,050 1,357,200
- 3,000 Adamjee Insurance Limited - 812,160
- 5,500 Samin Textile Limited - 152,460
3,500 3,500 Dandot Cement Limited 29,050 76,650
- 3,500 DG Khan Cement Limited - 234,990
- 1,000 Lucky Cement Limited - 97,930
- 50,000 Zeal Pak Limited - 137,000
6,125 4,900 Shell Pakistan Limited 1,371,388 2,043,300
- 10,000 Fauji Fertilizer Company Limited - 1,323,200
50,000 59,000 Fauji Fertilizer Bin Qasim Limited 884,500 2,122,230
13,500 13,500 Glaxo Smithkline Limited 1,617,435 2,295,000
Total carried forward Rupees 10,382,953 31,325,310
Total brought forward 10,382,953 31,325,310
- 10,000 Sitara Peroxide Limited - 543,200
- 60,000 Bosicor Pakistan Limited - 804,000
10,000 10,000 Pakages Limited 1,570,400 2,518,900
150,000 190,000 P.T.C.L (A) 2,586,000 7,341,600
300,000 1,037,444 Saudi Pak Com Bank Limited 1,623,000 15,717,277
45,000 165,700 Oil and Gas Development Company Limited 3,538,800 20,606,452
- 500 Azgard Nine Limited - 30,780
- 150,868 Worldcall Telecom Limited - 2,190,603
- 383 Askari Bank Limited - 15,393
452,000 800,000 National Asset Leasing Limited 45,200 496,000
- 320 Security Leasing Corporation Limtied - 2,205
51,453 51,264 First Dawood Investment Bank 157,961 3,585,917
25,000 25,000 First Islamic Modaraba 8,250 77,000
700,000 700,000 Harum Textile Limited - 602,000
- 4,000 DadaBhoy Cement Limited - 22,600
- 10 Pioneer Cement Limited - 282
10,000 - KASB Securities Limited 115,100 -
1,000 - United Bank Limited 38,290 -
4,000 - Pak Oilfields Limited 583,600 -
5,000 - Pakistan Petroleum Limited 947,700 -
21,700 - Engro Chemicals Limited 2,786,931 -
7,900 - Sitara Chemicals Limited 1,232,400 -
Rupees 25,616,584 85,879,518
Cost Rupees 24,362,051 97,957,576
==============================================================================================================14.7. Based on the latest available audited financial statements as at 31 December 2008, break-up value of the investment in Dawood Family Takaful Limited is Rs.988,000.15. TAKAFUL RESERVE FUND INVESTMENTS ==============================================================================================================
Available-for-sale - listed
No of units 2009 2008
==============================================================================================================
2009 2008 Note (Market value)
==============================================================================================================
Open-end mutual funds
94,021 - Faysal Balanced Growth Fund 7,145,577 -
66,078 - AKD Opportunity Fund 2,325,931 -
56,721 - KASB Balanced Fund 2,424,844 -
45,942 - National Investment Trust 1,233,543 -
174,998 - Meezan Islamic Fund 6,173,945 -
19,303,840 -
Closed-end mutual funds
2,000,000 - NAMCO Balanced Fund 15.1 9,440,000 -
Rupees 28,743,840 -
==============================================================================================================15.1. These units were pledged with Saudi Pak Industrial and Agricultural Investment Company Limited (SAPICO) against a financing facility from them, which has since been settled and units released.15.2. Refer note 36.3 for the details of these investments. 16. SHORT TERM MUSHARAKAH FINANCES � secured =======================================================================================
2009 2008
=======================================================================================
Musharakah - secured
Considered good 175,343,631 -
Impaired balance 71,818,348 -
247,161,979 -
Provision against impaired balances (4,455,484) -
Rupees 242,706,495 -
=======================================================================================This represents funds given (investments) for working capital purposes for the periods ranging between 92 to 367 days and are secured against mortgaged properties, demand promissory notes and personal guarantee of sponsor directors and carries profit rates ranging between 12% to 34.69 % per annum.17. SHORT-TERM FINANCES � SECURED =======================================================================================
2009 2008
=======================================================================================
Considered good 45,401,985 -
Considered doubtful 23,949,766 -
Provision there against (2,092,749) -
21,857,017 -
Rupees 67,259,002 -
=======================================================================================These represent short-term finances receivable within a year and carry mark-up ranging from 20.08% to 25.91% per annum. These are secured against registered charge on assets of the customers, pledge / hypothecation of stocks and collateral in certain cases.18. TRADE DEBTS � unsecured =======================================================================================
2009 2008
=======================================================================================
Considered good 1,445,525,869 1,352,383,735
Considered doubtful - 3,858,985
1,445,525,869 1,356,242,720
Provision for doubtful debts - (3,858,985)
Rupees 1,445,525,869 1,352,383,735
=======================================================================================19. ASSETS ACQUIRED IN SATISFACTION OF FINANCES PROVIDED=======================================================================================
Note 2009 2008
=======================================================================================
DA Country and Golf Club Membership Seats 125,000,000 -
Provision held (25,500,000) -
19.1 Rupees 99,500,000 -
=======================================================================================19.1. In previous periods, Al-Zamin Leasing Corporation Limited (AZLCL) had placed a sum of Rs.125 million with Innovative Investment Bank Limited (IIBL) [formerly; Crescent Standard Investment Bank Limited (CSIBL)] which was unsecured.Subsequently, upon failing to meet its obligations when they became due, CSIBL assigned 114 Platinum Memberships of DA Country and Golf Club at Rs.1.100 million per membership to AZLCL. However, the principal agreement between Sysmax (Private) Limited, the developer of golf course, and CSIBL was terminated by Sysmax. In accordance with the provisions of the said agreement, CSIBL referred the dispute to arbitration. Further, during the year ended 30 June 2008, on a petition filed by IIBL against Sysmax, the Honourable High Court of Sindh passed an order wherein it was stated that Sysmax assigns to IIBL 350 memberships of DA Country and Golf Club on which IIBL will have lien until the disposal of arbitration proceedings between the parties as a security for IIBL's claim in the arbitration proceedings and IIBL will be entitled to sell these memberships only when it succeeds in its claim in the arbitration. In case IIBL does not succeed in the arbitration, assignment and lien shall stand revoked and Sysmax shall be entitled to sell these memberships. Subsequent to year end, IIBL and Sysmax entered into a Deed of Compromise and Final Settlement dated 3 September 2009 wherein it was confirmed that Sysmax shall assign 250 Platinum Memberships of DA Country and Golf Club at a price of Rs.1.4 million each, as full and final settlement of IIBL's claim against Sysmax. Accordingly, IIBL approached AZLCL for settlement of its placement with AZLCL amounting to Rs. 50 million and the above liability towards AZLCL. Under the scheme of settlement agreed in the Settlement Agreement between IIBL and AZLCL which was reached in October 2009, both the parties agreed to settle the claim against each other as under: a) the placement of IIBL with the AZLCL amounting to Rs.50 million will be adjusted to settle the IIBL's liability towards AZLCL in part; and b) it has been mutually agreed that IIBL shall transfer / assign 45 Platinum Memberships of DA Country and Golf Club immediately after acquiring the full transfer rights of 250 memberships from Sysmax and the removal of status quo order from the Honourable High Court of Sindh. However, as a matter of prudence, the company has made a provision of Rs. 25.5 million in the financial statements of the current year. 20. IJARAH RENTALS RECEIVABLE AND RECEIVABLE UNDER REVERSE REPURCHASE ARRANGEMENTS 20.1. Ijarah rentals receivable =======================================================================================
Note 2009 2008
=======================================================================================
Ijarah rentals receivable 9.2.1 18,977,230 -
Provision against Ijarah rentals receivable (1,666,845) -
Rupees 17,310,385 -
=======================================================================================20.2. Receviable under reverse repurchase transactionThis carries profit rate at 13.90 percent per annum and is due for maturity on 4 September 2009. It is secured against ordinary shares. 21. CURRENT MATURITIES OF NON-CURRENT ASSETS =======================================================================================
Note 2009 2008
=======================================================================================
Net investment in Ijarah finance
/ assets under Ijarah arrangements 9 1,419,271,317 -
Musharakah receivables 10 64,827,218 -
Long term loans 11 70,314,240 6,188,416
Long term deposits and receivables 12 688,400 263,400
Rupees 1,555,101,175 6,451,816
=======================================================================================22. ADVANCES, DEPOSITS, PREPAYMENTS AND OTHER RECEIVABLES=======================================================================================
Note 2009 2008
=======================================================================================
Advances - unsecured, considered good
against purchases and expenses 11,571,502 575,000
to staff 22.1 2,257,963 -
Advance against lease 3,154,500 -
Deposit with Privatisation Commission 22.2 10,000,000 -
Income tax - net 22.3 37,401,393 28,043,250
Others 103,280 176,000
Receivable from Centre Gas (Private) Limited 22.4 10,000,000 -
Prepayments 22,374,847 8,608,565
Other receivables 22.5 262,640,067 15,988,178
359,503,552 53,390,993
Provision against impaired balances (116,318,989) -
Rupees 243,184,563 53,390,993
=======================================================================================22.1. Aggregate amount due from the executives is Rs.0.437. Maximum amount due from executives at the end of any month during the year aggregated to Rs.0.683 million.22.2. This represents amount deposited with the Privatisation Commission, Government of Pakistan, on behalf of a consortium for the acquisition of 51% shares of First Women Bank Limited. The Company has 9% share in the consortium. The above balance was provided for in the year 2003, in view of the fact that the arrangement with the consortium did not materialise. 22.3. It includes an amount of Rs. 2.537 million (2008: Rs. 2.537 million) as tax recoverable. In the original assessments made by the Deputy Commissioner of Income Tax (DCIT), the rate used for assessments years 1993-94 to 1998-99 was that of the banking companies. However, in the appeals filed against the original assessments upto the assessment year 1997-98, the Commissioner of Income Tax (Appeals) [CIT (A)] directed the DCIT to apply the rate as applicable to a public company. The Tax department filed appeal against this order of CIT (A) to Income Tax Appellate Tribunal (ITAT). The ITAT, in its decision on the issue of the applicability of tax rate in respect of assessment years 1991-92 to 1997-98 held that investment banks are not banking companies and therefore the rate applicable to a public company should be applied. However, this case was taken to Lahore High Court by the tax authorities against the ITAT orders. In the original assessments made by the DCIT for the assessment years 1994-95 to 2000-01 except for assessment year 1997-98, the dividend income was taxed by applying the rate applicable to the business income of a banking company instead of applying the reduced rate of 5% as prescribed by law. The CIT (A) and ITAT have confirmed that such income is taxable at the reduced rate of 5%. However, the Tax authorities have filed appeals against the ITAT orders in the Lahore High Court for assessment years 1995-96 and 1996-97. For assessment year 1997-98, the High Court has already decided the matter of taxation of dividend income against the tax authorities. 22.4. This represent payment by Al-Zamin Leasing Modaraba (AZLM) to the other shareholder of Centre Gas (Private) Limited ("the Company"), a joint venture entity for the purchase of the remaining 50% equity of the Company. Under the terms of agreement with the other shareholder, total purchase consideration was Rs. 38 million, out of which Rs. 10 million was paid to them. The remaining balance of Rs. 28 million was payable after the approval of Securities and Exchange Commission of Pakistan (SECP). However, SECP declined AZLM's request for the increase of its stake in the Company in excess of the above limit. As a result, subsequent to the year end, this amount was received by AZLM from the other shareholder of the Company. 22.5. Other Receivables =======================================================================================
2009 2008
=======================================================================================
Accrued interest / mark-up 3,530,835 -
Accrued profit on murabaha and musharakah investment 23,697,458 -
Receivable against sale of investment 2,315,533 -
Insurance rentals receivable 13,474,765 -
Insurance claims receivable 26,629,357 -
Other terminated lease / musharakah receivables 36,524,761 -
Repossessed assets (against terminated leases) 44,360,982 -
Insurance premium recoverable 2,243,861 -
Operating lease rentals receivable 5,296,500 -
Receivable against terminated leases 14,333,523 -
Others 90,232,492 15,988,178
262,640,067 15,988,178
Provision held against other receivables (101,088,443) -
Rupees 161,551,624 15,988,178
=======================================================================================23. STOCK IN TRADEThis represents stock of petrol and diesel as on 30 June 2009 held at Star filling station in Faisalabad. 24. CASH AND BANK BALANCES =======================================================================================
Note 2009 2008
=======================================================================================
Balance with banks in:
Current accounts in local currency with:
State Bank of Pakistan 6,490,033 109,565
Commercial banks 15,494,557 32,671,609
21,984,590 32,781,174
Term deposit accounts - local curency 24.1 60,000,000 -
Deposit accounts - local currency 24.2 165,420,326 26,554,403
225,420,326 26,554,403
247,404,916 59,335,577
Cash in hand
Local currency 927,022 99,248
Rupees 248,331,938 59,434,825
=======================================================================================24.1. This represents term deposit with a commercial bank and carry profit rate at 13.14% per annum.24.2. These bank accounts carry mark-up ranging from 1% to 11% (2008: 1.2% to 9.25%). 25. ISSUED, SUBSCRIBED AND PAID-UP CAPITAL =======================================================================================
Note 2009 2008
=======================================================================================
272,766,865 (2008: 74,642,370) Ordinary shares of
Rs. 10 /- each issued for cash 25.1 Rupees 2,727,668,652 746,423,700
=======================================================================================25.1. Reconciliation of ordinary shares=======================================================================================
Number of Ordinary
=======================================================================================
shares of Rs. 10 each
=======================================================================================
2009 2008
=======================================================================================
Opening balance of ordinary shares of Rs. 10/- each 74,642,370 10,000,000
Ordinary shares issued on amalgamation/ merge 4 198,124,495 245,000,000
Ordinary shares issued to creditors - 23,705,405
Ordinary shares reduced on reduction of share capital - (204,063,035)
Closing balance of ordinary shares of Rs. 10/- each 272,766,865 74,642,370
=======================================================================================26. SURPLUS / (DEFICIT) ON REVALUATION OF AVAILABLE- FOR-SALE INVESTMENTS � net=======================================================================================
Note 2009 2008
=======================================================================================
Quoted securities
Ordinary Shares and certificates 1,254,534 (12,078,057)
Government Securities 4,528,850 -
Term finance certificates 14,002 -
Units of closed end mutual funds - 1,578
5,797,386 (12,076,479)
Deferred tax liability 13 (1,589,998) -
Rupees 4,207,388 (12,076,479)
=======================================================================================27. SHARE DEPOSIT MONEYThis represents the amount received from the sponsor shareholders of the company and is not repayable. This amount would be converted into the share capital of the company. The amount was considered as part of the equity for the purposes of determination of swap ratio, which was also approved by the Securties and Exchange Commission of Pakistan. 28. SURPLUS ON REVALUATION OF PROPERTY, PLANT AND EQUIPMENT ===============================================================================================================
2009 2008 (Restated)
===============================================================================================================
Office Leasehold Total Office Leasehold Total
premises premises premises premises
===============================================================================================================
Opening balance 8,402,224 14,250,000 22,652,224 8,844,446 15,000,000 23,844,446
Revaluation during the year 2,303,946 (3,000,000) (696,054) - - -
Transfer to accumulated profit / loss
in respect of incremental depreciation (504,657) (530,291) (1,034,948) (422,596) (716,715) (1,139,311)
Related deferred tax liability of
incremental depreciation (30,652) (32,209) (62,861) (19,626) (33,285) (52,911)
(535,309) (562,500) (1,097,809) (442,222) (750,000) (1,192,222)
1,768,637 (3,562,500) (1,793,863) (442,222) (750,000) (1,192,222)
10,170,861 10,687,500 20,858,361 8,402,224 14,250,000 22,652,224
Less: Related deferred tax liability on:
Revaluation as on 1 July 372,891 632,415 1,005,306 392,517 665,700 1,058,217
Incremental depreciation charged
on related assets (30,652) (32,209) (62,861) (19,626) (33,285) (52,911)
Revaluation during the year 269,727 (17,823) 251,904 - - -
611,966 582,383 1,194,349 372,891 632,415 1,005,306
Rupees 9,558,895 10,105,117 19,664,012 8,029,333 13,617,585 21,646,918
===============================================================================================================29. LIABILITY AGAINST ASSETS SUBJECT TO FINANCE LEASEFuture minimum lease payments under finance lease together with the present value of the net minimum lease payments are as follows: =========================================================================================================
2009 2008
=========================================================================================================
Minimum Present Minimum Present
Note payments payments
=========================================================================================================
Not later than one year 22,096,448 17,145,935 3,909,319 3,603,698
After one year but not more than five years 22,506,858 18,966,849 1,303,088 1,291,051
Total minimum lease payments 44,603,306 36,112,784 5,212,407 4,894,749
Amounts representing finance charges of future years (8,490,522) - (317,658) -
Present value of minimum lease payments 36,112,784 36,112,784 4,894,749 4,894,749
Current portion 40 (17,145,935)(17,145,935)(3,603,698) (3,603,698)
Rupees 18,966,849 18,966,849 1,291,051 1,291,051
=========================================================================================================These liabilities carry profit rates ranging from 12.98% to 18.72% per annum (2008: 6.27% to 14.02% per annum). The Company has an option to purchase the leased asset upon completion of the lease period by adjusting the security deposit and has intention to exercise the option.30. DEFERRED LIABILITY FOR STAFF GRATUITY 30.1. Un-fund gratuity scheme for employees of Al-Zamin Leasing Modaraba 30.1.1. General description Employees of Al-Zamin Leasing Modaraba are entitled to gratuity equivalent to one month's basic salary for every completed year of service or part thereof in excess of six months starting from 1 July 2005. The gratuity is an unfunded scheme. 30.1.2. Principal actuarial assumptions The latest actuarial valuation was carried out as at 30 June 2009 using the Project Unit Credit Method. The main assumptions used for the actuarial valuations were as follows: =======================================================================================
2009 2008
=======================================================================================
Discount rate 12% -
Estimated salary increase-per annum 11% -
Estimated service length of the employees 12 years -
=======================================================================================30.1.3. Reconciliation of payable to defined benefit plan=======================================================================================
2009 2008
=======================================================================================
Present value of defined benefit obligations 6,267,461 -
Unrecognized actuarial loss (206,958) -
Rupees 6,060,503 -
=======================================================================================30.1.4. Changes in present value of defined benefit obligations=======================================================================================
2009 2008
=======================================================================================
Obligation at the beginning of the year 4,438,122 -
Effect of actuarial valuation for the first time (452,837) -
Current service cost 1,763,115 -
Interest cost 478,234 -
Benefit paid during the year (166,131) -
Unrecognized actuarial loss on obligation 206,958 -
Obligation at the end of the year Rupees 6,267,461 -
=======================================================================================30.1.5. Charge for defined benefit plan in the financial statements of Al-Zamin Leasing Modaraba=======================================================================================
2009 2008
=======================================================================================
Current service cost 1,763,115 -
Interest cost 478,234 -
Effect of actuarial valuation for the first time (452,837) -
Rupees 1,788,512 -
=======================================================================================30.2. Fund gratuity scheme for employees of Al-Zamin Leasing Corporation Limited30.2.1. Principal actuarial assumptions The latest actuarial valuation was carried out as at 30 June 2009 using the Project Unit Credit Method. The main assumptions used for the actuarial valuations were as follows: =======================================================================================
2009 2008
=======================================================================================
Discount rate 12% -
Estimated salary increase-per annum 11% -
Estimated service length of the employees 12 years -
=======================================================================================30.2.2. The actuarial valuation carried out resulted in:=======================================================================================
Note 2009 2008
=======================================================================================
Present value of defined benefit obligation 30.2.2 5,332,581 -
Fair value of plan assets 30.2.3 (2,620,946) -
Unrecognised actuarial losses 30.2.4 (1,744,472) -
Total Liability Rupees 967,163 -
=======================================================================================30.2.3. Changes in present value of defined benefit obligation=======================================================================================
2009 2008
=======================================================================================
Present value of defined benefit obligation 4,589,078 -
Interest cost for the year 550,689 -
Current service cost for the year 868,310 -
Actuarial gains on present value of defined benefit obligation (675,496) -
Rupees 5,332,581 -
=======================================================================================30.2.4. Changes in fair value of plan assets=======================================================================================
2009 2008
=======================================================================================
Fair value of plan assets 3,895,611 -
Expected return on plan assets 467,473 -
Actuarial losses on plan assets (1,742,138) -
Rupees 2,620,946 -
=======================================================================================30.2.5. Changes in actuarial gains / (losses)=======================================================================================
2009 2008
=======================================================================================
Unrecognised actuarial (losses) / gains (693,467) -
Actuarial losses recognised during the
year as per paragraph 58A of IAS 19 - -
Actuarial losses arising during the year (1,066,642) -
(1,066,642) -
Actuarial losses / (gains) charged during the year 15,637 -
Rupees (1,744,472) -
=======================================================================================30.2.6. Charge for the year in the financail statements of Al-Zamin Leasing=======================================================================================
2009 2008
=======================================================================================
Corporation Limited
Current service cost 868,310 -
Interest cost 550,689 -
Expected return on plan assets (467,473) -
Actuarial losses / (gains) 15,637 -
Rupees 967,163 -
=======================================================================================31. SECURITY DEPOSITS FROM LESSEES=======================================================================================
Note 2009 2008
=======================================================================================
Security deposits on lease contracts 1,052,335,633 -
Current portion 40 (379,539,146) -
Rupees 672,796,487 -
=======================================================================================These represent security deposits received against finance lease and Ijarah contracts and are repayable / adjustable on the expiry of the lease period.32. LONG TERM CERTIFICATES OF MUSHARAKAH �unsecured =======================================================================================
Note 2009 2008
=======================================================================================
Certificates of musharakah - associated under 32.2 12,420,000 -
others 247,815,000 -
260,235,000 -
Payable within one year shown under current 40 (83,140,000) -
Rupees 177,095,000 -
=======================================================================================32.1. These represent the mobilization of funds under the scheme of certificates of musharakah. These carry profit rates ranging between 13.25 % to 19% per annum and are due for repayment between 08 June 2009 and 26 June 2014 representing initial maturities of original borrowings in respective acquiree entities.32.2. This carry profit rates ranging between 13.75% to 15% per annum and are due for repayment between 19 July 2009 and 7 February 2010. 32.3. Refer note 41.2 also for the details of Redemption Reserve Fund. 33. CERTIFICATES OF INVESTMENTS AND DEPOSITS � unsecured =======================================================================================
Note 2009 2008
=======================================================================================
Long-term
For one year or more 4,224,400 -
Payable within one year shown under
current liabilities 40 (589,400) -
Rupees 3,635,000 -
=======================================================================================Al Zamin Leasing Corporation Limited has a scheme of registered Certificates of Investment (COIs) and Certificates of Deposit (CODs) for resource mobilisation. The term of COIs / CODs ranges from one month to five years and return thereon ranges from 7.3% to 17.89% per annum.34. LONG TERM MUSHARAKAH AND MURABAHAH BORROWINGS �secured =======================================================================================
Note 2009 2008
=======================================================================================
Musharakah borrowings
From commercial banks 34.1 66,666,668 -
Murabahah borrowings from:
Commercial Banks 34.3 222,916,661 -
Other financial institutions 34.4 154,746,217 -
34.2 377,662,878 -
444,329,546 -
Payable within one year shown
under current maturity 40 (242,499,981) -
Rupees 201,829,565 -
=======================================================================================34.1. These finances carry profit rate of 3 months KIBOR+1.5% per annum and are payable in quarterly instalments. These are secured against hypothecation of specific leased assets and floating charge on the assets of AZLM. The principal repayment will be start from 12 September 2009 on quarterly basis. The maturity date is 12 June 2011.34.2. Murabahah borrowings =======================================================================================
2009 2008
=======================================================================================
Murabahah payable - gross 448,298,880 -
Deferred murabahah expense (66,232,474) -
Profit payable shown in creditors,
accrued and other liabilities (4,403,528) -
Murabahah payable Rupees 377,662,878 -
=======================================================================================34.3. These finances carry profit rates ranging from six months average KIBOR plus 3% per annum and three months KIBOR plus 1.9% to 2.75% per annum payable in monthly and quarterly instalments. These are secured against hypothecation of specific leased assets, floating charge on the assets of Al-Zamin Leasing Modaraba (AZLM) and corporate guarantee by the management company of AZLM. These finances are payable from 21 September 2008 to 05 February 2012 representing the initial maturities of original borrowings in respective acquiree entities.34.4. These finances carry profit rates ranging from six months average KIBOR plus 3% to 3.25% per annum and three months KIBOR plus 3 % per annum payable in monthly quarterly and half yearly instalments. These are secured against hypothecation of specific leased assets, floating charge on the assets of AZLM and corporate guarantee by the management company of AZLM. These finances are payable from 16 July 2008 and 5 February 2012 representing the initial maturities of original borrowings in respective acquiree entities. 35. MUSHARAKAH TERM FINANCE CERTIFICATES =======================================================================================
Note 2009 2008
=======================================================================================
(TFCs - privately placed) - secured 2009 2008
Commercial banks 35.1 345,000,000 -
Other financial institutions 35.1 355,000,000 -
Privately placed term finance certificates - 35.2 45,000,000 -
745,000,000 -
Current maturity 40 (278,333,334) -
466,666,666 -
Total initial transaction cost 7,400,000 -
Amortization to date (2,788,621) -
4,611,379 -
Rupees 462,055,287 -
=======================================================================================35.1. These finances carry profit rate 6 months KIBOR+1.9% per annum and are payable in half yearly instalments. At the year-end profit rate was 12.43% per annum. These are secured against first pari passu charge of specific leased assets and associated lease receivables of Al-Zamin Leasing Modaraba. The principal repayment will start from 12 November 2009 on half yearly basis in equal instalments of Rs. 116.667 million. The maturity date is 12 May 2012.35.2. The principal and profit on privately placed TFCs issued on July 10, 2004 is payable semi annually at a base rate plus 175 bps. The applicable rate as of balance sheet date for this TFC is 17.41% per annum. Base rate is six months ask KIBOR. The tenor of this TFC is five years unless call option is exercised. These are secured by joint pari-passu charge on all present and future leased assets and its related receivables of the Al-Zamin Leasing Corporarion Limited. 36. REDEEMABLE CAPITAL - TERM FINANCE CERTIFICATES =======================================================================================
Note 2009 2008
=======================================================================================
Transfer due to merger of:
Al-Zamin Leasing Modaraba (Musharakah
Term Finance Certificates - MTFCs) 36.1 to 36.3 110,500,000 -
Al-Zamin Leasing Corporation Limited 36.4 128,380,000 -
238,880,000 -
Current maturity 40 (110,127,231) -
128,752,769 -
Total initial transaction cost 10,383,663 -
Amortization to date (10,010,894) -
372,769 -
Rupees 128,380,000 -
=======================================================================================36.1. The MTFCs are secured by a floating charge on the un-encumbered leased assets and associated lease receivables of the Company (Al Zamin Leasing Modaraba). The MTFCs are listed on the Karachi Stock Exchange and currently carry an instrument rating of A (Single A) by JCR VIS Credit Rating Company Limited dated 29 September 2008.36.2. Profit and loss sharing The minimum profit expected is 9.5% per annum to be paid on half yearly basis (after considering the initial costs, the effective yield 9.9% per annum. The basis of profit sharing will be the sum of the revenue from Al-Zamin Leasing Modaraba's lease and musharakah investment portfolio after adjusting operating expenses and provision for lease losses (but excluding financial charges, provision for diminution in value of investments and other provisions). If AZLM generates profit in excess of minimum 9.5% on the 2nd tranche as mentioned above, the MTFC investors will have a share in the excess profit in the same ratio as have been the basis of sharing minimum expected profit. If AZLM suffers any business loss in any given year during the tenor of MTFCs, the loss will be allocated to the MTFCs investors in the ratio of capital provided by all the long term funds providers to AZLM including the equity holders. The share in loss of each MTFC investors will be first applied against the Takaful Fund (discussed below) maintained by the AZLM for this purpose. However, at the time of repayment of principal, if the loss remains unadjusted then the loss will be adjusted against the principal amount of the respective MTFCs. 36.3. Takaful reserve fund Under the Scheme of Musharakah based Term Finance Certificates (MTFC) issued by AZLM , a Takaful Reserve Fund (Takaful) is required to be maintained for the purpose of mitigating the risk of losses attributable to the MTFC investors. At 30 June 2009 investments of Rs.28.743 million were being held in Takaful Reserve Fund as explained in note 15 to these financial statements. In addition, AZLM will arrange to contribute, on behalf of the MTFC holders, to the Takaful Reserve Fund an amount equal to 1/10th of the excess of the minimum profit every year during which MTFCs remains outstanding. In case 1/10th of the minimum expected profit or, the excess profit is insufficient, then whatever the excess profit will be transferred to the Takaful Reserve Fund as the contribution of the MTFC investors. The contribution, thus calculated, shall be made in the form of admissible securities. Upon repayment of the principal amount at each maturity of the MTFC, the balance of Takaful Fund, if any will be distributed amongst the MTFC investors and AZLM in the ratio of their contribution in the Takaful Reserve Fund. 36.4. Term Finance Certificates (TFCs) were issued by Al-Zamin Leasing Corporation Limited on 5 September 2002. These are perpetual unless put / call option attached to these is exercised. The TFC holders will have the put option for redemption at face value on the 60th month from the issue date and at the end of every three years thereafter. Likewise the Company will have the call option. Consequently the said options are available on 5 September 2010. The TFC holders and issuer will have to give a 30 days written notice before exercising their put / call option. These are secured by joint pari passu charge on all present and future leased assets and its related receivables of Al-Zamin Leasing Corporation Limited. 37. LOAN FROM A DIRECTOR � unsecured This represents the present value of interst free balance of Rs. 250 million received from a director and repayable by the company during the year ending 30 June 2011. 38. LONG TERM LOAN �secured =======================================================================================
Note 2009 2008
=======================================================================================
Facility I 38.1 121,750,000 -
Facility II 38.2 160,793,388 -
Facility III 38.2 40,198,345 -
Facility IV 38.2 20,099,176 -
Facility V 38.3 85,017,111 -
Facility VI 38.4 58,500,000 -
486,358,020 -
Current maturity 40 (284,343,673) -
Rupees 202,014,347 -
=======================================================================================38.1. This finance carries markup rate of 17.25% and is payable in monthly installments from 13 January 2007. It is secured by joint pari-passu charge on all present and future leased assets and its related receivables of Al-Zamin Leasing Corporation Limited.38.2. These finances carry markup rate of 14.60% and are payable in monthly installments from 29 June 2007. These are secured by joint pari-passu charge on all present and future leased assets and its related receivables of Al-Zamin Leasing Corporation Limited. 38.3. This represents the long term loan obtained by the Company from a Commercial Bank repayable in 24 monthly installments commencing from July 2009.The loan carries mark-up of 3 months KIBOR plus 2% spread with no floor and cap. The facility is secured against the pledge of shares of listed company. 38.4. This represents the long term loan obtained by the Company from a Commercial Bank payable in 24 equal monthly installments commencing from July 2009. The loan carries mark-up of 1 month KIBOR plus 4.5% spread with no floor or cap. The facility is secured against the equitable mortgage of property. 39. DEFERRED LIABILITY =======================================================================================
2009 2008
=======================================================================================
Deferred revenue Rupees 1,909,446 -
=======================================================================================This represents gain on sale and lease back transaction of certain office equipments and generators, etc.40. CURRENT MATURITY OF LONG TERM LIABILITIES =======================================================================================
Note 2009 2008
=======================================================================================
Security deposit from lessees 31 379,539,146 -
Certificates of musharakah 32 83,140,000 -
Liabilities under finance lease arrangements 29 17,145,935 3,603,698
Long term musharakah 34 242,499,981 -
Musharakah Term Finance Certificates 35 278,333,334 -
Term Finance Certificates 36 110,127,231 -
Long term loan 38 284,343,673 -
Certificates of investments and deposits 33 589,400 -
Rupees 1,395,718,700 3,603,698
=======================================================================================41. SHORT TERM CERTIFICATES OF MUSHARAKAH � unsecured=======================================================================================
2009 2008
=======================================================================================
Financial institutions
associated undertakings 2,500,000 -
others 140,365,000 -
Public and private companies 18,755,000 -
Individuals
key management personnel 805,000 -
others 109,515,000 -
Others
associated undertakings 10,455,000 -
others 885,000 -
Rupees 283,280,000 -
=======================================================================================41.1. Above finances have been obtained for 90 to 365 days at a profit rates ranging between 9% to 20% per annum.41.2. Redemption reserve fund Under the terms and conditions for the issuance of certificates of musharakah, both long term (note 32) and short term, AZLM is required to maintain a Redemption Reserve Fund equal to at least 5% of the contribution received, which may be utilised for redemption purposes. The amount so set aside in the Redemption Reserve Fund can be invested in a manner considered prudent by AZLM . Accordingly, at 30 June 2009, Rs. 30 million had been invested in Musharakah agreements. 41.3. Certificates of musharakah borrowings from key management personnel carry profit rate at 12.75% per annum (2008: 11%) and is due for repayment on 6 October 2009. 41.4. Certificate of musharakah borrowings from associated undertaking carry profit rates ranging between 12.75% to 15.25% per annum (2008: 10% to 11% per annum) and is due for repayment on 27 March 2010. 42. SHORT TERM CERTIFICATES OF NVESTMENTS AND DEPOSITS � unsecured =======================================================================================
2009 2008
=======================================================================================
Rupees 71,650,000 -
=======================================================================================This represents the scheme of registered Certificates of Investment (COIs) and Certificates of Deposit (CODs) for resource mobilisation by Al-Zamin Leasing Corporation Limited. The term of COIs / CODs ranges from one month to one year and return thereon ranges from 7.3% to 17.98% per annum.43. SHORT TERM BORROWINGS =======================================================================================
Note 2009 2008
=======================================================================================
Payable under repurchase transcations:
secured 43.1 965,944,450 -
Clean borrowings 43.2 400,000,000 -
1,365,944,450 -
Banks finance facilities - secured
Facility I 43.3 49,907,324 190,245,686
Facility III 43.4 340,595,896 150,332,107
Facility IV - 146,919,209
Facility V 43.5 & 43.6 211,989,879 775,206,700
Facility VI 43.7 29,945,294 -
Facility VII 43.8 90,458,666 -
Facility VIII 43.9 44,848,587 -
767,745,645 1,262,703,702
Unsecured
From Non-Banking Finance Companies 43.10 126,378,932 -
From Others 43.11 6,500,000 -
132,878,932 -
Rupees 2,266,569,027 1,262,703,702
=======================================================================================43.1. These are funds borrowed in the local inter bank market against pledge of securities at rate ranging from 13.20% to 13.60% per annum for the periods ranging from 2 days to 90 days.43.2. Money at call and short notice carries mark-up at 16% per annum for the periods ranging from 31 days to 38 days. 43.3. The aggregate facility amounting to Rs. 101 million (2008: Rs. 200 million) has been obtained from a commercial bank which is secured against hypothecation charge over present and future receivables of the company. The mark up rate on facility is 3 months KIBOR+ 3.21% per annum (2008: 3 months KIBOR+3.21% per annum) on outstanding balance. 43.4. The aggregate facility amounting to Rs. 350 million (2008: Rs. 350 million) has been obtained from a commercial bank which is secured against pledge of shares of companies quoted at Karachi Stock Exchange. The mark up rate on facility is 3 months KIBOR+ 3.00% per annum (2008: 3 months KIBOR+1% per annum with floor of 11% per annum) on outstanding balance. 43.5. The aggregate facility amounting to Rs. 215 million (2008: Rs. 600 million) have been obtained from a commercial bank which is secured against pledge of shares of companies quoted at Karachi Stock Exchange. The mark up rate is 1 month KIBOR+ 3.00% per annum (2008: 1 month KIBOR+ 1.40% per annum) on outstanding balance. 43.6. The aggregate facility amounting to Rs. 700 million (2008: Rs. 700 million) have been obtained from a commercial bank which is secured against pledge of shares of companies quoted at Karachi Stock Exchange. The mark up rate is 1 month KIBOR+ 1.40% per annum (2008: 1 month KIBOR+ 1.40% per annum) on outstanding balance. 43.7. The aggregate facility amounting to Rs. 50 million has been obtained from a commercial bank which is secured against pledge of shares of companies quoted at Karachi Stock Exchange. The mark up rate is 3 months KIBOR+ 2.25% per annum on outstanding balance. 43.8. This running finance facilities are available up to Rs.107.35 (2008: Rs.250) million on yearly renewal basis carrying mark-up at the rate ranging from 14.97% to 16.06% per annum. These finances are secured by way of joint pari-passu charge on all present and future leased assets of Al-Zamin Leasing Corporation Limited and its related receivables, and partially against pledge of shares having market value of Rs.11.684 million. 43.9. Al-Zamin Leasing Modaraba has arranged finance facilities from certain banks amounting to Rs. 45 million. The facilities carry mark-up rates ranging between 6 months KIBOR+ 3% to 3 months KIBOR+ 3.1% (with a floor rates ranging between 7.5% to 11%) per annum and are secured against floating charge on leased assets. 43.10. This represents finance facilities carrying mark-up at the rate ranging from 17.16% to 21.90% having a maturity latest by July 31, 2009. 43.11. This represents finance facilities carrying mark-up at the rate ranging from 18.98% to 21.90% having a maturity latest by July 31, 2009. 44. SHORT TERM MUSHARAKAH BORROWINGS � unsecured =======================================================================================
Note 2009 2008
=======================================================================================
Financial institutions 44.1 40,000,000 -
Leasing Companies and Modarabas 44.2 8,000,000 -
Rupees 48,000,000 -
=======================================================================================44.1. Above finances have been obtained for 184 to 365 days at profit rates ranging between 18.5% to 20% per annum.44.2. This finance has been obtained for 92 days at a profit rate 13% per annum and is due for repayment on 1 September 2009. 45. CREDITORS, ACCRUED AND OTHER LIABILITIES =======================================================================================
Note 2009 2008
=======================================================================================
Trade creditors 45.1 489,022,717 118,230,580
Accrued expenses 45.2 41,789,923 37,150,400
Profit / mark-up payable on:
Long term musharakah and murabahah borrowings 4,914,015 -
Long term loans 13,846,834 -
Short term musharakah borrowings 2,147,132 -
Short term loans 5,156,391 -
Musharakah term finance certificates borrowings 976,441 -
Redeemable capital 8,860,547 -
Repo borrowings 12,222,815 9,618,880
Term Finance Certificates (privately placed) borrowings 14,623,287 -
Certificates of musharakah borrowings 19,736,333 -
Certificates of Investment / deposit 2,842,585 -
Running finance 16,401,814 17,050,848
Provision for compensated absences 1,380,847 -
Advance lease rent / security deposits 45.3 7,995,039 -
Advance lease rentals 526,055 -
Advance against termination of leases 854,359 -
Unclaimed dividend 6,103,621 -
Provision against overhauling of generators 3,059,230 -
Other liabilities 45.4 & 45.5 61,530,347 7,876,865
Rupees 713,990,332 189,927,573
=======================================================================================45.1. This represents credit balances of certain trade debtors of the Company.45.2. This includes an amount of Rs. 9.619 million (2008: Rs. 9.619 million) recognized as a liability in respect of guarantees issued by the Company, on the basis of decrees passed by the Honourable Banking Court against the company for the principal amount of Rs. 8.5 million and mark-up up to the date of decrees. 45.3. This represents the amount of lease rentals received in advance and security deposits received against the leases approved but not disbursed as of 30 June 2009. 45.4. Included their in is a sum of Rs.1.863 (2008: Rs.1.863) million payable to a former director of ULCL (merged with Al-Zamin Leasing Capital Limited). 45.5. This include Rs. 9.21 million payable to Al-Zamin Modaraba Management (Private) Limited in respect of certain operating expenses incurred by them on behalf of Al-Zamin Leasing Modaraba. 46. CONTINGENCIES AND COMMITMENTS 46.1. Contingencies =======================================================================================
Note 2009 2008
=======================================================================================
Guarantees issued on behalf of customers 5,237,547 5,237,547
Penalties imposed by SBP 46.1.1 8,990,000 8,990,000
Claim of return on deposits by a depositor not
admitted by the company 46.1.2 1,717,000 1,717,000
Rupees 15,944,547 15,944,547
=======================================================================================46.1.1. Penalties of Rs. 8.99 million (2008: Rs. 8.99 million) have been imposed on by State Bank of Pakistan (SBP), but the same have not been accounted for as the management has taken up the case with SBP for the wavier of these penalties.46.1.2. This represents claim by House Building Finance Corporation which had not been recognized by the Company. The case is pending in the Sindh High Court, Karachi. 46.2. Commitments Lease financing contracts committed but not executed at the balance sheet date amounted to Rs. 8.870 million. 47. BROKERAGE, COMMISSION AND FEES =======================================================================================
2009 2008
=======================================================================================
Money market and forex 53,684,888 35,477,521
Equity 61,867,581 150,142,729
Commodity 1,158,291 -
Rupees 116,710,760 185,620,250
=======================================================================================48. ADMINISTRATIVE AND OPERATING EXPENSES=======================================================================================
Note 2009 2008
=======================================================================================
Directors' remuneration 54 8,610,876 8,486,196
Salaries, allowances and other
benefits of other staff members 48.1 109,279,816 92,712,251
Traveling, conveyance and vehicle running expenses 9,592,913 7,775,361
Office rent 14,219,221 11,970,234
Utility charges 4,326,741 2,047,859
Postage, telephone and telegram 7,996,177 5,968,672
Repair and maintenance 3,739,879 3,222,479
Insurance 3,223,230 2,556,520
Depreciation 5 29,223,241 12,682,137
Amortization 6 420,506 585,911
Fees and subscription 12,314,799 15,496,691
Entertainment 1,303,610 902,770
Newspaper and periodicals 141,576 97,064
Printing and stationery 2,757,129 3,544,741
Legal and professional charges 1,967,880 3,781,640
Auditors' remuneration 48.2 3,550,000 450,000
Service charges 3,047,306 13,551,311
CDC charges 2,588,069 4,589,077
Consultancy fees 11,421,136 12,925,055
Office expenses 2,379,942 4,473,771
Diesel expense of generator 1,757,762 -
Advertisement 1,934,782 3,545,885
Medical expense 48,650 22,447
Donations 48.3 - 50,000
Debts written off 3,787,729 -
Others 288,954 975,331
Rupees 239,921,926 212,413,403
=======================================================================================48.1. This includes retirement benefits of Rs. 4.788 million (2008: Rs. 3.658 million) in respect of the provident fund of the employees.48.2. Auditors' remuneration =======================================================================================
2009 2008
=======================================================================================
Annual audit fee 350,000 300,000
Audit fee for merged financial statements 3,000,000 -
Half yearly review fee 150,000 100,000
Other certification 50,000 -
Out of pocket expenses - 50,000
Rupees 3,550,000 450,000
=======================================================================================48.3. Directors, their spouses and dependents have no interest in donee.49. OTHER INCOME =======================================================================================
Note 2009 2008
=======================================================================================
Dividend income 4,792,525 2,457,900
Markup on term finance certificates 12,520 12,377,786
(Loss) / gain on sale of fixed assets 5.2 (3,703,771) 243,307
Interest income 4,825,214 14,290,033
Bad debts recovered - 324,686
Underwriting & distribution commission 5,561,351 7,821,520
Liabilities no longer payable written back 2,902,236 -
Gain on sale of Government securities 8,965,908 -
Gain on bargain purchase 482,172,079 -
Others 4,710,193 6,400,276
Rupees 510,238,254 43,915,509
=======================================================================================50. FINANCIAL CHARGES=======================================================================================
2009 2008
=======================================================================================
Markup on short term finance 60,021,073 87,035,489
Interest on finance Lease 297,694 797,520
60,318,767 87,833,009
Bank charges 530,056 961,040
Rupees 60,848,822 88,794,049
=======================================================================================51. TAXATION=======================================================================================
2009 2008
=======================================================================================
Current 8,213,768 14,946,920
Prior year 2,468,581 -
Deferred (62,861) (52,910)
Rupees 10,619,487 14,894,010
=======================================================================================51.1. Reconciliation of tax charge for the year=======================================================================================
2009 2008
=======================================================================================
Profit / (Loss) before taxation Rupees 175,969,635 (5,271,279)
Tax at the applicable tax rate of 35% (2008: 35%) 61,589,372 (1,844,948)
Reversal due to final tax regime / presumtive tax regime 61,589,372 1,844,948
Tax effect of transaction due to
merger-exempt from taxation (123,178,744) -
Tax effect under final tax regime/presumtive tax regime 8,213,768 14,946,920
Tax effect of amount relating to prior year 2,468,581 -
Others (62,861) (52,910)
Rupees 10,619,487 14,894,010
=======================================================================================51.2. TaxationFormer Ghandhara Leasing Limited (merged with Al-Zamin Leasing Modaraba in 2001) Appeal in respect of former Ghandhara Leasing Limited (merged with Al-Zamin Leasing Modaraba in 2001) before the Commissioner of Income Tax (Appeal) relating to the assessment years 1999-2000 and 2000-2001 against certain disallowances have been set aside for reassessment. In case of adverse decision, additional tax liability of Rs. 6.77 million (30 June 2007: Rs 11.03 million) may arise Rs. which has not been provided in these financial statements as the management expects favourable out come of these appeals. Former First Professionals Modaraba (merged with Al-Zamin Leasing Modaraba in 2003) Assessment of former First Professionals Modaraba (the Modaraba) have been finalized upto the assessment year 2002-2003 for which the Modaraba had filed the last return of income in an independent capacity and, thereafter, it was merged with Al-Zamin Leasing Modaraba. Appeals for assessment years 1998-1999, 1999-2000, 2000-2001, 2001-2002 and 2002-2003 were filed with the Commissioner of Income Tax (Appeals) (CIT (A)) by the Modaraba. Appeal for assessment year 1998-1999 has been set-aside. The Income Tax Department (the Department) has filed an appeal against the set-aside order issued by CIT (A) for assessment year 1998-1999 before Income Tax Appellate Tribunal (ITAT) which was dismissed. The set-aside proceedings for assessment year 1998-1999 have not been initiated yet. Appeals for assessment years 1999-2000, 2000-2001, 2001- 2002 and 2002-2003 have been decided in favour of the Modaraba. The Department has filed appeals against the orders issued by CIT (A) before Income Tax Appellate Tribunal (ITAT). In the meantime, the pending appeals filed by the Modaraba before the ITAT in respect of the assessment years 1999-2000 and 2000-2001 have been decided, whereby the claim of exemption in respect of the aforesaid assessment years have been allowed. Since the matter of exemption has been decided by the ITAT's decision, management does not anticipate unfavourable outcome in respect of pending appeals filed by the Department for assessment years 1999-2000, 2000-2001, 2001-2002 and 2002-2003. Former International Multi Leasing Corporation Limited (IMLCL - merged with Al-Zamin Leasing Modaraba in 2008) Assessments of IMLCL (the Company) are deemed to be assessed up to and including the tax year 2008. Assessments for assessment year 2002-2003 and tax year 2003 have been finalized and demand of Rs. 1.185 million (net of provision held) and Rs. 4.55 million respectively was created. The Company filed appeals before Income Tax Appellate Tribunal (ITAT) against the appeal orders issued by Commissioner of Income Tax (Appeals) (CIT (A)), outcome of appeals before ITAT are still pending. However, the management is confident that it will be decided in favour of the company. Al-Zamin Leasing Modaraba The assessments of the Modaraba have been finalized up to and including assessment year 2002-2003. Returns of income up to the tax year 2008 have been filed under the provisions of section 120 of the Income Tax Ordinance, 2001 which are deemed to be assessed unless selected for audit by the taxation authorities. Former Universal Leasing Company Limited (merged with Al-Zamin Leasing Corporation Limited in 2008) Income tax assessment with respect to assessment year 2000-2001 (income year ended June 30, 2000) of Universal Leasing Company Limited (ULCL) has been finalised by the Deputy Commissioner of Income Tax (DCIT) and demand of Rs.15.859 million raised. The management filed a complaint before the Honourable Federal Tax Ombudsman (FTO) on the point of jurisdiction of the assessment, which has been decided in favour of the ULCL. However, the department, has filed a representation before the President of Pakistan against the order passed by the Honourable FTO. The management and its tax advisor are confident that the outcome of the case will be in favour of ULCL, consequently, no provision has been made in these financial statements for the demand of Rs.15.859 million. The DCIT has made assessments for the assessment year 1999-2000 (income year ended June 30, 1999) of ULCL and raised a demand of Rs.7.682 million by disallowing various expenses, making additions in income on account of lease rentals and imposing penalty on set off of undetermined loss against income for prior assessment years. The management has made a provision of Rs.2.451 million for the said year and for balance tax demand disputed the add backs and filed appeal with Appellate Authorities. Pending outcome of the matter, no provision has been made in these financial statements for the balance demand raised as the management and its tax advisors are confident that the outcome of the case will be in favour of ULCL. 52. BASIC & DILUTED EARNINGS / (LOSS) PER SHARE =======================================================================================
2009 2008
=======================================================================================
(Restated)
=======================================================================================
Earnings / (loss) after taxation (both for the purpose
of basic & diluted earnings / (loss) per share Rupees 165,350,148 (20,165,289)
Weighted average number of ordinary shares
for the purpose of basic earnings / (loss) per share 74,642,370 245,719,873
Effect of diluted potential ordinary shares 12,100,000 12,100,000
Weighted average number of ordinary shares
for the purpose of diluted earnings / (loss) per share 86,742,370 257,819,873
Earnings / (Loss) per share - basic Rupees 2.215 (0.082)
Earnings / (Loss) per share - diluted Rupees 1.906 (0.078)
=======================================================================================53. CASH AND CASH EQUIVALENTS=======================================================================================
2009 2008
=======================================================================================
Cash and bank balances Rupees 248,331,938 59,434,825
=======================================================================================54. REMUNERATION OF CHIEF EXECUTIVE, DIRECTORS AND EXECUTIVES==============================================================================
2009 2008
==============================================================================
Chief Chief
Executive Executives Executive Executives
==============================================================================
Managerial remuneration 7,443,632 54,450,749 6,513,000 38,993,900
Bonus 671,000 10,570,933 1,539,000 10,340,875
Retirement benefits 496,244 3,142,716 434,196 2,374,922
Rupees 8,610,876 68,164,398 8,486,196 51,709,697
Number of persons 1 34 1 21
==============================================================================The Chief Executive and certain Executives are provided with free use of company maintained car. The above does not include remuneration paid to Chief Executives, Directors and Executives of the acquiree entities.55. RELATED PARTY TRANSACTIONS Related parties comprise of major shareholders, associated companies with or without common directors, retirement benefit fund, directors, other key management personnel and their close family members. Contributions to the retirement benefit plans are made as per the terms of employment / actuarial advise. Remuneration of key management personnel are in accordance with their terms of employment. Loans to the employees are in accordance with their terms of employment. Other transactions with related parties are entered into at agreed rates. Details of transactions and balances at year end with related parties, other than those which have been disclosed elsewhere in these financial statements, are as follows: =======================================================================================
Note 2009 2008
=======================================================================================
Transactions during the year
Brokerage and advisory income
earned from related parties Rupees 3,619,320 1,354,706
Contribution to staff retirement fund Rupees 5,284,584 3,658,191
Key management compensation Rupees 76,775,274 60,195,893
Balances
Loans to executives 11 Rupees 22,907,025 21,616,614
Certificate of Musharakah borrowing from financial
institution under common directorship Rupees 2,500,000 -
Certificates of Musharakah borrowing from
trust under common directorship / trusteeship Rupees 17,920,000 -
Musharakah Term Finance Certificate borrowings
from financial institution under
common directorship Rupees 647,700 -
Musharakah Term Finance Certificate borrowings
from trust under common
directorship/trusteeship Rupees 336,600 -
Payable to Al-Zamin Modaraba
management Company 45.5 Rupees 9,210,500 -
Investment in shares of Centre
Gas (Private) Limited 8.1 Rupees 34,535,703 -
Investment in UMA Enterprises 8.1 Rupees 27,705,053 -
Certificate of Musharakah borrowing
from UMA Enterprises Rupees 4,500,000 -
Guarantee given to SNGPL in favour of Centre Gas (Private) Limited
off balance sheet item Rupees 4,200,000 -
Musharakah Term Finance Certificate borrowing
from key management personnel Rupees 1,492,600 -
Loan from a director 37 Rupees 194,445,115 -
Receivable from Centre Gas
(Private) Limited 22.4 Rupees 10,000,000 -
Net liability to defined benefit plans 30 Rupees 7,027,666 -
=======================================================================================56. FINANCIAL RISK MANAGEMENT56.1. Financial risk factors The Company's activities are exposed to a variety of financial risks from its use of financial instruments, including: Credit risk - Liquidity risk - Market risk The Board of Directors has overall responsibility for the establishment and oversight of Company's risk management framework. The Board is also responsible for developing and monitoring the Company's risk management policies. 56.2. Credit risk Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligation, and arises principally from the Company's receivables from customers and investment securities. The Company has established procedures to manage credit exposure including credit approvals, credit limits, collateral and guarantee requirements. These procedures incorporate both internal guidelines and requirements of the NBFC Rules and the NBFC Regulations. The Company also manages risk through an independent credit department which evaluates customers' credit worthiness and obtains adequate securities where applicable. All investing transactions are settled / paid for upon delivery. The Company's policy is to enter into financial instrument contract by following internal guidelines such as approving counterparties and approving credits. The credit quality of Company's bank balances and investments portfolio are assessed with reference to external credit ratings. Concentration of credit risk arises when a number of counterparties are engaged in similar business activities, or activities in the same geographical region, or have similar economic features that would cause their ability to meet contractual obligations to be similarly affected by changes in economic, political or other conditions. Concentration of credit risk indicates the relative sensitivity of the Company's performance to developments affecting a particular industry or geographic location. Out of the total assets of Rs. 7,847 million (2008: Rs. 1,968 million) the assets which were subject \ to credit risk amounted to Rs. 4,553 million (2008: Rs. 1,483 million). The maximum exposure to credit risk at the reporting date is: =======================================================================================
Note 2009 2008
=======================================================================================
Long term investments 11,098,970 -
Net investment in Ijarah / assets
under Ijarah arrangements 56.2.1 1,655,245,726 -
Musharakah - secured 263,992,269 -
Loans to employees - unsecured and considered good 147,990,642 25,949,801
Deposits 24,655,622 5,637,609
Short-term investments 66,405,138 23,750,000
Takaful reserve fund investment 19,303,840 -
Short term musharakah and murabahah finance 242,706,495 -
Short term finances - secured 67,259,002 -
Trade debts - unsecured 1,445,525,869 1,352,383,735
Ijarah rentals receivable 17,310,385 -
Receivable under reverse
repurchase transactions 195,000,000 -
Advances and other receivables 156,321,078 15,988,178
Bank balances 240,914,883 59,226,012
Rupees 4,553,729,919 1,482,935,336
=======================================================================================56.2.1. Net investment in Ijarah finance / assets under Ijarah arrangements=======================================================================================
Note 2009 2008
=======================================================================================
2,707,581,359 -
Security deposits held 31 (1,052,335,633) -
Rupees 1,655,245,726 -
=======================================================================================56.2.2. Impairment losses and past due balancesThe age analysis of net investment in finance lease/ Ijarah, musharakah, murabahah, short therm finance exposures and other receivables was as follows: =======================================================================================
2009 2008
=======================================================================================
Gross Impairment Gross Impairment
loss loss
recognised recognised
=======================================================================================
Past due 1-90 days 85,897,654 32,145,245 - -
Past due 91 days - 180 days 198,789,789 63,054,647 - -
Past due 181 days to one year 289,456,789 53,075,731 - -
Past due one year to two years 178,796,907 51,867,771 - -
More than two years 1,197,951,849 228,649,743 - -
Not ost due 1,950,892,988 428,793,137 - -
1,767,455,064 - - -
Total Rupees 3,718,348,052 428,793,137 - -
=======================================================================================Impairment is recognized by the Company on the basis of provision requirements of Prudential regulations for NBFCs issued by the SECP which includes the subjective evaluation of the portfolio also carried by the Compay on an ongoing basis (and consideration of forced sales value of properties, where ever considered necessary, in accordance with the prudential regulations). Based on the past experience, consideration of financial position, past track records and recoveries, the Company believes that additional provision against past due balances is not required.Below are the differences between the balances as per balance sheet and maximum exposure. These differences are due to the fact that these are not exposed to credit risk. =======================================================================================
2009 2008
=======================================================================================
Long term investments 164,340,476 -
Net investment in Ijarah / assets under
Ijarah arrangement 1,052,335,633 -
Deposits 6,512,000 7,656,000
Short-term investments 863,867,582 103,885,482
Takaful reserve fund investment 9,440,000 -
Other receivables 86,863,485 37,402,815
Bank balances 7,417,055 208,813
Rupees 2,190,776,231 149,153,110
=======================================================================================56.3. Liquidity riskLiquidity risk is the risk that the Company will not be able to meet its financial obligations as they fall due. The Company's approach to manage liquidity is to ensure, as far as possible, that it will always have sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions, without incurring unacceptable losses or risking damage to the Company reputation. To guard against the risk, the Company has diversified funding sources and assets are managed with liquidity in mind, maintaining a healthy balance of cash and cash equivalents and readily marketable securities. The maturity profile is monitored to ensure adequate liquidity is maintained. The table below summarises the maturity profile of the Company's financial liabilities. The contractual maturities of financial liabilities at the year end have been determined on the basis of the remaining period at the balance sheet date to the contractual maturity date. Contractual interest payment are required to be paid on respective contractual maturity at the rates disclosed in respective liabilities notes and are included in this maturity profile (in contractual cash flows). ==================================================================================================================
2009
==================================================================================================================
Carrying Contractual Up to Over three Over one
amount cash flows three months year
months to one year
==================================================================================================================
Financial liabilities
Liability against asset subject to finance le 36,112,784 44,603,306 7,124,719 16,645,191 20,833,396
Certificates of Musharakah 543,515,000 563,251,333 111,341,333 274,815,000 177,095,000
Certificates of investments and deposit 75,874,400 78,716,985 20,902,435 54,179,550 3,635,000
Musharakah and murabahah borrowings 492,329,546 499,390,693 79,686,142 217,874,986 201,829,565
Musharakah Term Finance Certificates 740,388,621 755,988,349 85,183,062 208,750,001 462,055,287
Redeemable capital-Musharakah
Term Finance Certificates 238,507,231 247,367,778 36,392,355 82,595,423 128,380,000
Loan from a director 194,445,115 250,000,000 - - 250,000,000
Long term loans 486,358,020 496,526,350 81,254,248 213,257,755 202,014,347
Short term borrowings 2,266,569,027 2,271,725,418 567,931,354 1,703,794,063 -
Trade creditors, accrued and other liabilitie 700,074,801 700,074,801 700,074,801 - -
Rupees 5,774,174,545 5,907,645,013 1,689,890,449 2,771,911,968 1,445,842,595
==================================================================================================================
2008
==================================================================================================================
Carrying Contractual Up to Over three Over one
amount cash flows three months year
months to one year
==================================================================================================================
Financial liabilities
Liability against asset subject to
finance lease 4,894,749 5,212,407 1,008,924 2,900,395 1,303,088
Short term borrowings 1,262,703,702 1,279,754,550 315,675,926 947,027,776 -
Payable under repo transactions 118,230,580 127,849,460 127,849,460 - -
Trade creditors, accrued and
other liabilities 45,027,265 45,027,265 45,027,265 - -
Rupees 1,430,856,296 1,457,843,682 489,561,575 949,928,171 1,303,088
==================================================================================================================56.4. Market riskMarket risk is the risk that changes in market price, such as foreign exchange rates, interest rates and equity prices will effect the Company's income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposure within acceptable parameters, while optimizing the return. The Company is exposed to interest rate risk and equity rate risk only. 56.4.1. Interest rate risk Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. At the reporting date, the interest rate profile of the Modaraba's interest bearing financial instruments and the periods in which these will mature were as follows: ===============================================================================================================================================================
2009
===============================================================================================================================================================
Profit / mark-up bearing Non-profit / Total
Upto three Three months More than Sub-total mark-up
months to one year one year bearing
===============================================================================================================================================================
Financial Assets
Long term investments - - 11,098,970 11,098,970 164,340,476 175,439,446
Net investment in Ijarah / assets
under Ijarah arrangements 354,817,829 1,064,453,488 1,288,310,042 2,707,581,359 - 2,707,581,359
Long term musharakah - secured 16,206,805 48,620,414 199,165,051 263,992,269 - 263,992,269
Loans to employees - unsecured and considered good 17,578,560 52,735,680 49,172,739 119,486,979 28,503,663 147,990,642
Deposits - unsecured and considered good - - - - 24,655,622 24,655,622
Short-term investments 777,597,394 84,000 - 777,681,394 152,591,326 930,272,720
Takaful reserve fund investment - - - - 28,743,840 28,743,840
Short term musharakah and murabahah - 242,706,495 - 242,706,495 - 242,706,495
Short term finances - secured 16,814,751 50,444,252 - 67,259,002 - 67,259,002
Trade debts - unsecured - - - - 1,445,525,869 1,445,525,869
Ijarah rentals receivables - - - - 17,310,385 17,310,385
Receivable under reverse repurchase transaction 195,000,000 - - 195,000,000 - 195,000,000
Advances, deposits and other receivables - - - - 166,321,078 166,321,078
Cash and bank balances Rupees 225,420,326 - - 225,420,326 22,911,612 248,331,938
Rupees 1,603,435,664 1,459,044,328 1,547,746,802 4,610,226,794 2,050,903,871 6,661,130,665
Financial Liabilites
Liability against asset subject to finance lease 17,145,935 36,112,784 53,258,719 - 53,258,719
Certificates of Musharakah 91,605,000 274,815,000 177,095,000 543,515,000 - 543,515,000
Certificates of investments and deposits 18,059,850 54,179,550 3,635,000 75,874,400 - 75,874,400
Musharakah and murabahah borrowings 72,624,995 217,874,986 201,829,565 492,329,546 - 492,329,546
Term Finance Certificates 58,333,334 175,000,001 511,666,666 745,000,000 - 745,000,000
Redeemable capital-Musharakah
Term Finance Certificates 27,531,808 82,595,423 128,752,769 238,880,000 - 238,880,000
Loan from a director - - 194,445,115 194,445,115 - 250,000,000
Long term loans 71,085,918 213,257,755 202,014,347 486,358,020 - 486,358,020
Short term borrowings 562,774,963 1,703,794,063 - 2,266,569,026 - 2,266,569,026
Trade creditors, accrued and other liabilities 722,074,801 - - 722,074,801 - 722,074,801
1,641,236,604 2,721,516,777 1,455,551,246 5,818,304,627 - 5,873,859,512
On balance sheet gap 2009 (a) Rupees (37,800,940) (1,262,472,450) 92,195,556 (1,208,077,833) 2,050,903,871 787,271,153
===============================================================================================================================================================
2008
===============================================================================================================================================================
Profit / mark-up bearing Non-profit / Total
Upto three Three months More than Sub-total mark-up
months to one year one year bearing
===============================================================================================================================================================
Financial Assets
Loans to employees - unsecured and considered good - - - - 25,949,801 25,949,801
Deposits - unsecured and considered good - - - - 5,637,609 5,637,609
Short-term investments 47,540 70,000 - 117,540 127,517,942 127,635,482
Trade debts - unsecured - - - - 1,352,383,735 1,352,383,735
Advances, deposits, prepayments - - - - 15,988,178 15,988,178
and other receivables
Bank balances 26,554,403 - - 26,554,403 32,880,422 59,434,825
Rupees 26,601,943 70,000 - 26,671,943 1,560,357,687 1,587,029,630
Financial liabilities
Liability against asset subject to finance lease 900,925 2,702,774 1,291,051 4,894,749 - 4,894,749
Short term borrowings 1,262,703,702 - - 1,262,703,702 - 1,262,703,702
Trade creditors, accrued and other liabilities 189,927,573 - - 189,927,573 - 189,927,573
Rupees 1,453,532,200 2,702,774 1,291,051 1,457,526,024 - 1,457,526,024
On balance sheet gap 2008 (a) Rupees (1,426,930,257) (2,632,774) (1,291,051) 1,430,854,081 1,560,357,687 129,503,606
=============================================================================================================================================================== (a) The on-balance sheet gap represents the net amounts of on-balance sheet items.(b) Rates of profit / mark-up on financial assets and liabilities are as follows: =======================================================================================
2009 2008
=======================================================================================
% %
=======================================================================================
Long term investments 14.00-15.00 -
Net investment in Ijarah / assets under Ijarah arrangements 7.67-38.03 -
Long term musharakah - secured 11.5-42.42 -
Long term loans to employees-unsecured and considered good 10.49-24.82 -
Short-term investments 14.00-15.00 -
Short term musharakah and murabahah 10-43.35 -
Receivable under reverse repurchase transaction 13.2-16 -
Bank balances 1.00-13.00 1.00-8.25
Liabilities against assets subject to Ijarah finance 12.98-18.72 13.5-14.00
Long term certificates of musharakah 10.25-14.25 -
Certificates of investments and deposits 5.84- 21.90 -
Long term musharakah and murabahah borrowings 7-17.15 -
Musharakah term finance certificates 8.00-17.00 -
Redeemable capital - musharakah term finance certificates 12.43-17.00 -
Long-term loan 15 - 17 -
Short term certificates of musharakah 8.25-12.25 -
Short term certificates of investments and deposits 5.84- 21.90 -
Short term borrowings 14.74-16.77 14.77-16.34
Short term Musharakah borrowings 10.25-12.75 -
Payable under repo transactions 13.2-16 -
======================================================================================= Fair value sensitivity analysis for fixed rate financial assets instrumentsThe Company does not account for any fixed rate financial assets and liabilities at fair value through profit and loss. Therefore, a change in interest rates at the reporting date would not affect profit and loss account. At 30 June 2009, financial assets of Rs. 3,252 million and financial liabilities of Rs. 1,711 million carried fixed interest. Cash flow sensitivity analysis for variable rate financial liabilities instruments A estimated change of 100 basis points in interest rates at the reporting date would have decreased / increased profit for the year by the amounts shown below. This analysis assumes that all other variables remain constant. The analysis is performed on the same basis for 2008. ================================================================================================
Effect
on profit Carrying
before tax value
================================================================================================
As at 30 June 2009
Cash flow sensitivity-Variable rate financial liabilities Rupees 41,067,494 4,106,749,377
Cash flow sensitivity-Variable rate financial assets Rupees 13,580,098 1,358,009,763
As at 30 June 2008
Cash flow sensitivity-Variable rate financial liabilities Rupees 12,675,985 1,267,598,451
Cash flow sensitivity-Variable rate financial assets Rupees 593,356 59,335,577
================================================================================================The sensitivity analysis prepared is not necessarily indicative of the effects on profit for the year and assets / liabilities of the Company.56.4.2. Equity price risk Equity price risk is the risk of unfavourable changes in the fair value of equity securities as a result of changes in the levels of Stock Exchange indexes and the value of individual shares (including the units of mutual funds). The equity price risk exposure arises from the Company's investments in equity securities for which prices in the future are uncertain. The Company's policy is to manage price risk through diversification and selection of securities within specified limits set by internal risk management guidelines and the requirements of NBFC regulations. As at 30 June 2009, the fair value of equity securities (including the units of mutual funds) exposed to price risk was Rs. 159.357 million. The following table illustrates the sensitivity of the net loss for the year and the equity to an increase or decrease of 10% in the fair values of the Company's equity securities (including the units of mutual funds) . This level of change is considered to be reasonably possible based on observation of current market conditions. The sensitivity analysis is based on the Company's equity securities at each balance sheet date, with all other variables held constant. =======================================================================================
2009 2008
=======================================================================================
Profit and loss account
Investments at fair value through
profit and loss account Rupees 452,885 -
Company's equity as at the year end Rupees 578,338 (1,207,806)
=======================================================================================Since the mutual funds (with exposure to interest bearing securities) are not being managed by the company, these funds are being managed from the price risk prospective.56.5. Fair value of financial instruments Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm's length transaction. Consequently, differences may arise between the carrying values and fair values. The carrying values of the financial assets and financial liabilities approximate their fair values. Underlying the definition of fair value is the presumption that the Company is a going concern without any intention or requirement to curtail materially the scale of its operations or to undertake a transaction on adverse terms. 56.6. Capital risk management The Company's objective when managing capital is to safeguard the Company's ability to continue as a going concern so that it can continue to provide returns for shareholders and benefits for other stakeholder and to maintain a strong capital base to support the sustained development of its businesses. The Company manages its capital structure which comprises capital and reserves by monitoring return on net assets and makes adjustments to it in the light of changes in economic conditions. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividend paid to shareholders, appropriation of amounts to capital reserves or / and issue new shares. =======================================================================================
(Rupees
=======================================================================================
Year ending in million)
=======================================================================================
Minimum equity requirement 30 June 2009 850
Minimum equity requirement 30 June 2010 850
Minimum equity requirement 30 June 2011 850
Minimum equity requirement 30 June 2012 1,200
Minimum equity requirement 30 June 2013 1,700
=======================================================================================Capital requirements applicable to the Company are set and regulated by the Securities and Exchange Commission of Pakistan. These requirements are put in place to ensure sufficient solvency margins. The Company manages its capital requirements by assessing its capital structure against the required level on a regular basis. Subsequent to year end, pursuant to SRO 764(I)/2009 dated 02 September 2009 issued by SECP, the equity requirement as per NBFC Regulations 2008 for the leasing and investment finance companies have been deferred to 30th June 2011.57. SEGMENT INFORMATION Invest Capital Investment Bank's activities are broadly categorized in two primary business segments namely brokerage businesses, investment and financing activities within Pakistan. As defined in note 1, although the Company has obtained license for investment banking during the year, the Company has not performed any activity relating to investment banking. The Company has following reportable business segments on the basis of service characteristics: The Company has following reportable business segments on the basis of service characteristics: ============================================================================================================================================================================
2009 2008
============================================================================================================================================================================
Investment Brokerage Leasing / Other Total Investment Brokerage Leasing / Other Total
activities Ijarah operations activities Ijarah operations
============================================================================================================================================================================
Segment Information
Segment revenue - 138,332,289 - - 138,332,289 - 254,595,741 - 254,595,741
Unallocated revenue - - - - 327,902,880 - - - 43,915,508
Rupees 466,235,169 298,511,248
Segment results - 58,740,729 - - 58,740,729 - 252,020,665 - 252,020,665
Unallocated revenue - - - - 327,902,880 - - - 43,915,508
Unallocated expenses - - - - (329,160,526) - - - (212,413,403)
Impairment loss on goodwill - - - - (60,848,822) - - - (88,794,049)
Loss before taxation - - - - (3,365,740) - - - (5,271,280)
Provision for taxation - - - - (10,298,115) - - - (14,529,642)
Loss after taxation - - - - Rupees (13,663,855) - - - Rupees (19,800,922)
Other information - - - -
Segment assets 647,401,597 2,523,782,838 2,724,891,744 625,094,540 6,521,170,719 - 1,486,831,217 - 1,486,831,217
Unallocated assets - - - - 1,325,812,515 - - - 482,508,662
Total assets - - - - Rupees 7,846,983,234 - - - Rupees 1,969,339,879
Segment liabilities 468,579,875 2,487,405,560 1,052,335,633 2,090,015,398 6,098,336,466 - 1,380,934,282 - 1,380,934,282
Unallocated liabilities - - - - 750,059,193 - - - 77,597,047
Total liabilities - - - - Rupees 6,848,395,659 - - - Rupees 1,458,531,329
Capital expenditure - - - - Rupees 652,205,903 - - - Rupees 51,192,566
Segment depreciation - - - - Rupees 107,872,364 - - - Rupees 11,932,137
============================================================================================================================================================================ Geographical segmentsThese financial statements represents operations of the Company in Pakistan only. 58. GENERAL Reclassification Follwoign reclassifications and adjustment to be corresponding figures have been made in the current financial year. ===========================================================================================================
Reclassification from Reclassification to (Rupees)
===========================================================================================================
Rooms Membership cards and room Leasehold premises 15,000,000
Membership cards Membership cards and room Intangible assets 82,500,000
Renovation and office equipment Advance, deposits, prepayments
and other receivables Capital work in progress 47,129,690
===========================================================================================================These reclassifications have been made to ensure presentations in accordance to the substantial reality of the balances and for better presentation / comparison purposes.Correction of Error Membership cards During the year the management reversed the surplus booked with respect to membership cards as it considers that active market as defined in IAS 38 Intangible Assets' does not exists in respect of these assets. The error has been corrected retrospectively in accordance with IAS 8 Accounting Policies, Change in Accounting Estimates and Errors' and has following impact on the financial statements (figures relates to the corresponding year): =======================================================================================
(Rupees)
=======================================================================================
Decrease in surplus on revaluation of assets 58,150,000
Decrease in carrying values of membership cards - Intangible assets 58,150,000
======================================================================================= Deferred TaxDuring the year the management has recognized deferred tax liability with respect to its revaluation surplus on fixed assets. The error has been corrected retrospectively in accordance with IAS 8 Accounting Policies, Change in Accounting Estimates and Errors' and has following impact on the financial statements (figures relates to the corresponding year): =======================================================================================
(Rupees)
=======================================================================================
Decrease in surplus on revaluation of assets (1,005,306)
Increase in deferred tax liability 1,005,306
Decrease in loss for the year ended 30 June 2008 (52,911)
Decrease in retained earning as at 30 June 2008 (52,911)
=======================================================================================59. DATE OF AUTHORISATIONThese financial statements were authorized for issue on 24 December 2009 by the Board of Directors of the Company. |